Arthur J. Altmeyer


By Arthur J. Altmeyer
Chairman, Social Security Board
At National Conference of Social Work
Buffalo, New York, May 23, 1946


I am grateful for this opportunity to discuss with you some of the problems of a national health program. Most of you, I know, are interested in this subject, not as health experts or technicians, but as administrators and professional workers who see the suffering, family breakdown, destitution and dependency caused by illness and by the costs and losses that follow in its wake. Like millions of other people, you are not satisfied that we are doing all we can to prevent illness and premature death, or to protect families and individuals against the economic burdens of sickness.

There is overwhelming evidence that people have learned about the wonders of modern public health and medicine, and that they are not content to be without the services which scientific progress has made possible. There is equally good evidence that millions of people are burdened by the costs of sickness, and that they want something done to relieve them of the burden or to ease it for them. And there is no longer any doubt that these aspirations and achievements are within our reach--if we try for them.

In their demand for more and better health services, and for protection against sickness costs, people have naturally turned to Government--having found that their own individual efforts and the efforts of voluntary associations are not sufficient. When the public turns to Government, some people become frightened about dangers they think they see at the end of that road. I do not share their fear. I think that, in our democracy, Government is an instrument for the public service and an expression of the public will. We strengthen our democracy, and our faith in the processes of our democracy, when we make it possible for our Government to serve us by doing for us what we want but cannot do for ourselves acting as individuals.


The Nation made a new beginning, in dealing with problems of national health, when Congress enacted in 1935 the health provisions of the Social Security Act. Everyone familiar with the history of that legislation knows that Congress acted on the basis of overwhelming evidence as to need and as to public support. But the steps for national health taken in 1935 were small and halting. In the ten years between 1935 and 1945, the public demand for broader and more substantial health programs became louder and stronger--not, as is sometimes alleged, because only particular individuals or agencies were concerned about health, but because of a swelling public demand. A new high point was reached on November 19, 1945, when President Truman gave expression to public interest in health in a full-length Message to Congress--the first of its kind in American history. He summarized national health needs and recommended a comprehensive program of legislation.

Up to a few years ago we still heard it frequently said that there are only small or limited national health needs. Though any great health need is still occasionally denied, it is my impression that this issue is now behind us. Even those who differ on just what should be done or how, are in substantial agreement about major needs and even about some of the programs that should be undertaken.

We still hear allegations that ours is the healthiest country on earth, in spite of mortality and sickness data that prove this is not so. However, with our vast natural resources, our high level of well-being for a large proportion of the population, and with the development of our public health work, this country could be the healthiest on earth. More important than international comparisons, we could be much healthier than we are. We have the knowledge and the means at our disposal to make life, family living and our whole society more secure.

When new health programs are suggested, some people regard them as criticism of our present practices or our past accomplishments. In defense of the past, they point to the impressive reduction in death rates since 1900 and say this is due to the superior medical services rendered in this country. There is no reason why anyone proposing improvement for the future should deprecate the great advances that have been made in the practice of medicine or in public health services. It should be recognized, however, that most of the reduction in death rates has been due mainly to public health work--better sewage disposal, better food inspection, and other efforts on the part of the Government. In other words, the spread of infectious diseases has been reduced mainly through governmental action of various kinds, and this accounts for most of the improvement in mortality rates.

It is more important to recognize that we have not yet reached an irreducible minimum of disease and death. In fact, while controlling epidemic diseases, generally the diseases of early life, we have exchanged them in large part for the diseases of later life. We now have a large residue of disease that is not controlled through primary emphasis on mass control, as was diphtheria or smallpox, but which calls for individual care, like heart disease and cancer. We can still point with pride to past and present reductions in the number of the dead; but at the same time we can express our concern and we can undertake to do something about the health of the living.

In order to continue to improve the health of the people of this country, we must continue to rely on community health measures and to improve them. But, to make any significant progress, we must also rely more and more on the individual treatment of diseases that cannot be prevented. Basically, this means that all individuals, regardless of their financial condition, must have ready access to adequate medical care.


The President's program is aimed at raising not only the level of community health, but also the level of individual health. It consists of five interrelated proposals:

1. Federal aid for the construction of hospitals and related facilities;

2. Larger Federal aid for expansion of public health, maternal, and child health services;

3. Federal aid for medical research and education;

4. A national system for the prepayment of medical costs;

5. Expansion of social insurance to furnish protection against loss of wages from sickness and disability.

This is a well-integrated plan, each part of which complements the others and depends on every other part for its fullest success.

If we agree that the goal is to provide both community-wide services and access to medical care for all, then hospital and health facilities must he made available throughout the country. There are about 1,200 counties, 40 percent of all, in which there are about 15,000,000 people having no hospitals or none that meets even minimum standards. The Nation's hospital facilities are disproportionately concentrated in the urban areas and in the wealthier States. Needless to say, the areas lacking such facilities are in general also characterized by relative poverty, high mortality rates, and the prevalence of preventable and curable disease. Without hospitals, health centers or other public health facilities, communities cannot have the services or the professional personnel they need. It is encouraging that the Senate has already passed legislation (the Hill-Burton Bill) authorizing grants for construction of health facilities. We hope it will soon receive favorable consideration in the House.

A by-product of a hospital construction program, even more desirable than the physical facilities themselves, would be a better distribution of medical and allied personnel. Doctors gravitate to areas where there are good facilities as an indispensable equipment for good medical care. They hesitate to practice--indeed, they have for years been choosing not to practice--where they must perform miracles with a bag of instruments or their own office equipment. More hospitals and their better location make possible~more doctors and their better distribution.

But hospitals and health facilities, and even doctors, dentists and nurses, are not enough. Taken by themselves, they imply diagnosis and cure--but they do not spell prevention--of disease. For the last ten years, the States have been aided by Federal grants in the promotion of general public health work, maternal and child health services, and services for crippled children. More recently, Congress provided Federal grants for venereal disease and tuberculosis control. There is general agreement that public health progress, interrupted by the war, has been much greater in proportion than the added funds thus made available. However, wide differences still exist in the health records of the various States. The opportunities for further progress are very large, even if measured by the modest standard of doing as well in all or most States as we are already doing in some.

Many diseases are still mysteries to the public health and the medical professions, and prevention is still not possible. Hence the importance of the President's proposal for grants to support and encourage medical research and professional education. Such financial aid would eventually result in more knowledge and a better quality of medical care. We are not only concerned with bringing medical care within reach of all who need it, but to raise the quality of medical care generally. If opportunities for medical research and continuing postgraduate education were made available throughout the country, a better distribution of personnel and of better equipped personnel would also result.

These three proposals (the construction of needed hospitals, a more adequate public health program, and research and education) are the background for the fourth: prepayment of medical costs. However adequate facilities and personnel may be, the barrier of cost still remains between the individual and the medical service he needs. Few people have large enough incomes to absorb the expenses of unexpected illness. Providing free medical care to recipients of public aid or to low-income families and individuals is not enough. The overwhelming mass of normally self-supporting persons will not declare themselves needy or take a means test in order to secure medical care without direct charge. If any kind of a means test stands in the way, they will continue to do as they have been doing--forgo asking for medical care until it is too late, and we will continue to lose the great value of early diagnosis and treatment as a means of prevention as well as cure. The President proposed protection against sickness costs for all by means of regular payments in small amounts so that the question of ability to pay will not arise when medical care is needed.

Even these provisions would not, however, eliminate the financial distress that results from loss of earnings during periods of illness or disability. Medical service is not the only factor in the care of sickness or in protection against its financial effects. A worker who is ill and avoids taking time from his work, postpones or jeopardizes his return to health. The worker confronted with a period of illness must have some means of support for himself and his dependents until he is able to return to work. And if he is permanently disabled he needs an insurance pension as in the case of the worker forced to retire by old age. Disability insurance is therefore needed both as an integral part of a comprehensive health program and as a social-insurance measure.

I have already remarked that formerly there was more controversy about many of these matters than there is now. We are making progress toward achieving these substantial agreements that are essential to legislative action in our democracy.

As recently as 1938 and 1939, the American Medical Association minimized or denied major health needs, was opposed to Federal aid for hospital constructions, was fearful of Federal entrance into the field of medical education and research, and favored only limited expansion of the Federal role in public health. Much water has gone over the dam since then. Everyone has seen how, without major Federal action, the problems and needs persist because States and localities are unable to deal with them. And, too, the war has had a lot to do with drawing us together into one Nation that must use all its national resources to meet national needs. Though there are still some important differences on ways and means, it is encouraging that the AMA now endorses in principle all of the President s major proposals except compulsory health insurance.

Even on the major area of difference, we should not overlook progress and agreement. Only a little more than ten years ago (1932), even the recommendation of voluntary insurance for medical care brought strong objections; it was described by the Journal of the AMA as "socialism and communism--inciting to revolution." However, in 1938, the AMA declared it had never opposed the principle of insurance, it approved the principle of hospital service insurance and, with respect to medical care, repeated "its conviction that voluntary indemnity insurance may assist many income groups to finance their sickness costs without subsidy." Finally, late in 1945, while still condemning compulsory health insurance, the AMA sponsored a program of voluntary health insurance--under medical society auspices--to cover the Nation. Thus, there is real ground for encouragement and farther progress. The public and the professional associations now agree that the real problem, the main problem, is to spread the costs of medical care in order to break down the economic barriers between patients and doctors. Since the issue today is voluntary vs. compulsory insurance, we need to have a clear evaluation of the possibilities presented by each.


The costs of sickness have been distributed for some people through voluntary insurance plans for many years. At present, benefits to which the insured are entitled under the many different types of voluntary plans vary in many ways. Only a few million persons, probably not more than 2 or 3 percent of the population, have what can be termed relatively complete protection against medical bills.

By far the largest enrollment in voluntary health insurance for service benefits is in Blue Cross hospital plans. Membership has grown tremendously within the past 10 or 15 years but it still covers only about 15 percent of the population of the United States. Protection against hospital costs is valuable; but the cost of hospitalization accounts for only about a fifth of medical costs paid by families and voluntary hospitalization insurance doesn't protect against even all of this. Insurance of this type can, at best, serve only a fractional part of the national need. About 2 million Blue Cross members are enrolled in prepayment programs for medical services which are coordinated with Blue Cross; the other 18 or 19 million are eligible for hospital benefits only. Blue Cross membership is concentrated in medium-sized and large cities and their environs. Rural membership is very small.

The Blue Cross plans have demonstrated, on the one hand, the relative ease of insuring a substantial fraction of the middle-income group against hospital costs and, on the other hand, the great difficulty of insuring the low-income or rural groups through voluntary methods. Ordinarily, the plans have failed to insure those who most need this protection--the low-income groups and those in small cities and towns, in medium or small business establishments or self-employed.

The difficulties of enrolling the public in voluntary hospitalization plans are small compared to those of medical-care plans. There are in the United States at this time voluntary prepayment medical care plans with an enrollment of between 5 and 6 million persons, whose members are entitled to service benefits. The organizations differ greatly in the scope of services provided, and various limitations are placed on the amount of care furnished; membership is frequently restricted to those below a specified age or income; persons with preexisting disabilities may be excluded entirely or entitled to only limited service. Industrial plans, which in early 1945 included about 30 percent of the members of these prepayment plans, usually provide relatively complete care, but eligibility is in most cases restricted to employees of one organization and the scope of the plans is limited in many other ways.

In early 1945, about half of the persons who were members of the plans providing service benefits were members of plans sponsored by State and county medical societies. The typical medical-society plan is limited in its benefits, is expensive, and often either limits the membership to those under a specified income (usually $2,000 or $2,500) or allows the doctor to make additional charges for those with incomes over a specified amount or those using a private room in the hospital. Thus, the families with incomes over the limit, do not really know what insurance protection they bought with their premiums.

During the past 10 years there has been a rapidly increasing growth in industrial group insurance through which employees are reimbursed in cash for all or a portion of their hospital and medical fees (principally surgical). Policies of this type formerly covered only employees, but recently the coverage in many instances has been extended to employees' dependents. At the end of 1944, approximately 7 to 8 million persons were eligible for hospitalization indemnity payments; of this number about 6 million were also eligible for surgical indemnities. Although this is a step in the right direction, insurance of this type is not a satisfactory substitute for a comprehensive health insurance program. Both the number of persons served and the benefits received are too limited. Comprehensive protection of this type would be more expensive than most persons could afford to pay.

This in summary, is voluntary health insurance as it now exists in the United States. Membership is limited, services are incomplete, prices are high in comparison with services provided under some of the plans, and in many instances additional charges are made for the more expensive services. The plans themselves are unevenly distributed throughout the country; each is individually planned and administered; and--with the exception of the Blue Cross hospitalization plans--there is practically no coordination among them.

The crucial tests of a health insurance program is not its good intentions, but the population coverage it achieves and the scope of protection it furnishes. By these criteria, voluntary insurance against the costs of medical care has been tried and found wanting. This failure is not due to lack of effort, earnestness or skill on the part of individuals or organizations sponsoring these programs; nor is it the result of lack of interest on the part of the American people. The rapid enrollment of Blue Cross and medical-society plans indicates that even the limited protection afforded by these plans is welcomed by the public. The failure of voluntary insurance is due to the fact that the task is too large and too difficult to be accomplished by organizations or associations representing only a portion--and in most instances a very small portion--of the public. No type of voluntary plan, either here or abroad, has ever even approximated the goal of including all of the population in a region. As a rule, those who are most in need of protection are not covered. Voluntary insurance is necessarily expensive, because it is constantly exposed to an adverse selection of risk among those who enroll or stay enrolled. Comprehensive insurance requires the united effort of the entire public. Experience the world over has shown that only through Government action can large-scale or complete coverage be achieved.


The inescapable conclusion is that governmental action is necessary. There are two possible courses of action, State medicine and health insurance. State medicine is not advocated in the President's health programs. Under State medicine medical practice would be administered by the State, with medical personnel employed by the State. In contrast, a health insurance plan could preserve every desirable feature of the private practice of medicine in all its professional aspects. It seems to me that there is no legitimate reason for doctors to protest against any system that would leave the conditions of practice unchanged while arranging a method for the payment of their fees. If any particular plan contains any provision or detail that is likely to be bad, they should point it out and help design a better alternative.

In considering health insurance, much is now made of the fact that it would be compulsory. Compulsion is a bad word. However, health insurance would not be compulsory in the sense that individual doctors could not continue the private practice of medicine just as they do today, or that patients could not continue to obtain the services of doctors just as they do today.

In a democracy we need not fear governmental action, because no major program can be forced upon the people against their will. Not only must a majority of the people be in favor of governmental action, but the interests of the minority are protected under our Constitution.

As a matter of fact, the medical profession is not opposed to other forms of social insurance on the grounds that they are compulsory. Today we have in effect in this country compulsory unemployment insurance and compulsory old-age and survivors insurance. And the American Medical Association has specifically endorsed compulsory health insurance to cover the wage loss due to sickness. Indeed, it has also accepted compulsory health insurance for industrial disability, since workmen's compensation is obviously only a form of health insurance to spread the cost of medical care in the case of industrial accidents and diseases.


What then is the reason for the opposition of the AMA to health insurance? Some people believe that it is actuated by selfish motives, I do not. However, I confess that I cannot understand why in their campaign against health insurance the doctors would join hands and accept financial and other support from pharmaceutical manufacturers that produce and sell to the public products which the AMA frowns upon. These are their natural enemies, not only scientifically, but economically.

I believe that doctors are genuinely concerned about the bad effects that compulsory health insurance might have on the quality of medical care and on the intimate relationship which must exist between doctors and patients. But note that 1932 and 1933, when endorsing the Minority Report of the Committee on the Costs of Medical Care, the AMA was equally severe in ascribing these evils to voluntary insurance, which they now endorse and sponsor, but which at that time they condemned more strongly than compulsory insurance.

I believe that the prevalent concern among doctors about quality of care and doctor-patient relations is due to misunderstanding, although I think we must all recognize that there are difficulties and dangers involved in any course of action. I think that the doctors not only have a right to be heard, but have a right to participate actively in the planning of any program to provide adequate medical care. However, consumers as well as doctors also have a right to be heard, and to participate in planning methods of paying for adequate medical care. Consumers do not have these rights in the plans being organized and sponsored by the medial societies.

I believe that the medical profession as a whole, as well as the public, would benefit from a health insurance system. The lure of large city practice would fade somewhat with the assurance of payment for service in poorer areas where medical service is needed most. Hospital facilities, under the construction program proposed by the President, would be better distributed and would also attract medical practitioners. The number of qualified doctors would increase as a result of financial aid to medical schools and the assurance of income to practitioners. Young doctors could be paid decent salaries as interns and staff physicians, and they would be able to acquire a remunerative practice more quickly than at present. Health insurance would relieve physicians of being obliged to serve as bill collectors and income tax experts. It still permits high-priced specialists to practice as they prefer; but it would rationalize the system of charging for services rendered and it could pay fair fees to qualified specialists as well as to general practitioners.


Health insurance represents a pragmatic evolutionary approach to the problem of assuring access to adequate medical care. It reduces the problem to manageable proportions. By providing the money with which to pay for services, it makes possible adequate support of the professions, the hospitals and the laboratories. By raising its funds on a broad economic base, it can have financial stability. As history shows, it can even survive total war and changes in forms of government.

The health insurance patterns that have evolved over the past two or three centuries are diverse and flexible--as is to be expected from its evolutionary history. There is no one single pattern. In every case it has shown that it is flexible because it works with and builds upon the personnel and facilities that a nation possesses. Thus, it is the genius of health insurance that it can utilize the services of the doctors, dentists and nurses, of the hospitals and laboratories, and the other personnel and facilities that we have; it can use the organized group clinics; and it can use the voluntary organizations that already exist for the prepayment of costs, for the provision of services, or for the distribution of prepayment funds. The flexibility is there, because health insurance is basically a method of distributing costs.

In conclusion, I want to emphasize the importance of the over-all national health program and of its interlocking parts. Some parts of the program have already been passed or have been reported favorably in the one or the other branch of Congress. Hearings are being held on two major bills now. America is on the march in its quest for health and social security. The breadth and the intensity of public interest and support are greater than ever before. There will be legislative action. Now, and in the coming months, every group that is specifically involved or concerned must meet a public challenge that calls for statesmanship and vision that is as general as it is wise.