no.

Mr. ALTMEYER. It does not provide the means of getting that money.

Senator AIKEN. That would have to be provided by different committees than this one?

Mr. ALTMEYER. That is right.

Senator AIKEN. And probably would originate in the House if it was in the nature of a special tax or assessment?

Mr. ALTMEYER. That is right.

Senator DONNELL. Mr. Altmeyer, has it not been planned that the financing of this S. 1606 would be along the lines contemplated by S. 1050, the other Wagner-Murray-Dingell bill?

Mr. ALTMEYER. I think so. Of course, it is conceivable that you might finance it through an earmarked income tax instead of a pay roll tax.

Senator ELLENDER. Mr. Altmeyer, have you or any of your staf made any study of these countries that you have just referred to a to this involuntary method?

Mr. ALTMEYER. Yes.

Senator ELLENDER. What has been the tendency there with respect to physicians being put on a salary basis? Has it increased from th time the laws in the respective countries became effective or just what is the situation there in that respect?

Mr. ALTMEYER. No; I do not think that there has been any marke. tendency that way. As you know, right now in Britain there is proposal before the Parliament to extend very much the coverage an benefits provided under their health insurance system, and to turn it into a health service plan, covering the entire population. Under that plan it is proposed that the doctors be paid a part salary, a part bas salary, and a per capita fee in addition. That is proposed and it is not in effect at the present time. I am not clear whether the British medical association is opposed to that change, and I do not know what the outcome will be.

Senator ELLENDER. Do you not?

Mr. ALTMEYER. No.

Senator ELLENDER. I can imagine what is going to happen.

Mr. ALTMEYER. I might say in some countries, the doctors them selves have preferred to be paid on a salary basis and give part of their time to clinics, a certain number of hours a day or week. I South America and Mexico that is the typical way of the doctor rendering service. They are private practitioners, but they come into a clinic for a certain part of their time and are paid accordingly. Senator ELLENDER. Under the terms of the bill as I understand it. doctors may elect to give their services for a regular monthly or yearly stipend.

Mr. ALTMEYER. Yes, sir.

Senator ELLENDER. Ís that correct?

Mr. ALTMEYER. That is right.

Senator ELLENDER. Well, what would be the method of carrying that out? Let us assume in a community where there are 50 doctors, of them elect to give their service on a monthly basis and the rest do no". Mr. ALTMEYER. There would have to be à division of the amount. the total amount of money alloted to that community on the bas of the doctors who elected to accept their remuneration in one form

and the doctors who elected to receive it in another form. It would have to be upon the basis of the case load, so to speak, of the patients served.

Senator ELLENDER. Well, would the fees be so limited, I mean limited in the same manner?

Mr. ALTMEYER. Are you talking about the salaried 'doctor? Senator ELLENDER. As I understand you, the salary would be based on the amount of funds alloted to that community.

Mr. ALTMEYER. Well, I thought that you posed the question, if some doctors in that community elected to get their money one way and other doctors another way.

Senator ELLENDER. I did not intend to go into that phase of it, but I am wondering how it would be operated as between those doctors that elect to receive pay on a monthly basis for their services, and the others who wanted to join the plan and who elect to do theirs on a fee basis for each person treated.

Mr. ALTMEYER. There would first have to be a determination of the reasonable cost of the services to be rendered the people in that community. Then there would have to be discussion with the local practitioners of the reasonable division between the doctors who want to be paid on this basis and the doctors who want to be paid on that basis. Senator ELLENDER. In other words, the money would be divided up, shall we put it that way, as among those who choose to do the work on a fee basis, and those on a salary basis.

Now, how often would that have to be done, that is the allocation? Mr. ALTMEYER. Well, you would reach a basic agreement that I would think would extend at least for a year. In the light of experience that might very well be adjusted from time to time. It might be a continuing agreement subject to adjustment.

Senator ELLENDER. So that if in year, the amount of money that is allocated to a community should be less than the amount alloted in a prior year, those doctors receiving fees and those receiving salaries would be reduced accordingly, is that right, assuming there would be a reduction?

Mr. ALTMEYER. If there would be a reduction, but I do not know why there would be a reduction.

Senator ELLENDER. I do not know. There might be more sickness. You might have an epidemic in some community. How would you take care of such a situation?

Mr. ALTMEYER. Then you would want to provide, if you had anything like that, a free fund to put into that community.

Senator ELLENDER. All of those contingencies can be met by that?

FINANCING THE PLAN

Mr. ALTMEYER. I would envisage an allocation by States, with a small free fund so that in case of epidemic or unusual circumstances, in a State, you could make some funds available as between the States. Then from the State level you would have to break it down into communities.

Senator ELLENDER. I did not intend to go into the allocation feature of the bill, but since you have raised the question, the allocation is made in proportion to what-the population or the money collected, or the need, or just what?

Mr. ALTMEYER. It is not spelled out in the bill at all. I think the fundamental criterion ought to be the need.

Senator AIKEN. I am asking rather elementary questions, but what would the effect of this bill be upon those people who have no earning power whatsover, who are now served when they are sick, if they ar sick at all, or treated by government doctors, and I mean doctors hire by the local government? That is some hired by the year, and son hired in industry, I suppose that you would call it by piece work, by the visit. They would be receiving medical care under the terms of this bill and thereby relieve the local community of the expen which is now considerable.

Mr. ALTMEYER. That is provided in this bill under title I, part C. whereby a community may pay a premium into this insurance syste if it elects or it can furnish the service directly. The State would receive a grant-in-aid from the Federal Government on a variable gran: basis-the poorer the State the greater the proportion of the Feder... grant to help it pay its premium or to pay for the service if it rerdered the service directly through salaried doctors, fees to privat practitioners, or some other arrangement.

Senator AIKEN. Then the community or the county or State would pay this premium in lieu of a pay roll tax which the earning patient would naturally pay?

Mr. ALTMEYER. Yes, sir.

Senator ELLENDER. To pursue the question of allocation that we were talking about before the Senator from Vermont asked you : question, do you not think it would be advisable for the committee t spell out into the bill the yardstick by which these funds should b allocated to the States?

Mr. ALTMEYER. I think it would be very fine.

Senator ELLENDER. And your view is that emphasis should be p on need.

Mr. ALTMEYER. Yes, sir.

Senator DONNELL. Mr. Altmeyer, in section 201, if I may question the witness further, it is provided in subdivision (a) that every indvidual who is currently insured and has been determined by the boar to be eligible for benefits, under this title in the current benefit year shall be entitled to receive personal health service benefits. I woul like to ask you who is it that the bill contemplates shall be currently insured. Is that defined in the bill?

Mr. ALTMEYER. It is defined later on roughly this way: A perso can qualify

Senator DONNELL. In what section, please.

Mr. ALTMEYER. On page 70, section 215. I can summarize that to save you time.

Senator DONNELL. That is section 215. If you will be kind enoug to summarize it, Mr. Altmeyer.

Mr. ALTMEYER. There are two ways in which a person can become eligible under the general provisions outlined in section 215. Senator DONNELL. That is by which he may be insured?

Mr. ALTMEYER. Yes, sir. Either if he has earned $150 in the last year or if he has been insured and has earned $50 or more in half f the calendar quarters during the last 3 years. That is what th.amounts to in substance. There is a so-called two quarters lag period

to give the Government the opportunity to post to the individual accounts, but the two criteria are earnings of $150 in the last calendar year or employment in half of the calendar quarters during the last 3 years, and employment being defined as wages of $50 or more in a quarter.

Senator DONNELL. Is there any age qualification?

Mr. ALTMEYER. No, sir.

Senator DONNELL. That is, any person who comes within these qualifications that you have mentioned regardless of age, youth, or old age, would be currently insured?

Mr. ALTMEYER. Yes, sir; and in addition the persons that Senator Aiken mentioned, on whose behalf premiums have been paid in, who are not able to work and have not therefore developed this automatic eligibility status, and the beneficiaries under the Federal Old Age and Survivors Insurance System are covered by a premium paid on their behalf.

Senator DONNELL. Has any estimate been made as to how many individuals in the United States would be currently insured under the terms of this bill?

Mr. ALTMEYER. Yes; it is estimated that between 105 and 112 million persons, counting both workers and their dependents.

Senator DONNELL. Has there been any estimate made as to the total annual expense of providing the personal health service benefits under this bill for these 105 to 112 million persons?

Mr. ALTMEYER. Yes, sir.

Senator DONNELL. What is the estimate of that?

Mr. ALTMEYER. The estimate is $3,000,000,000 in a early year of the system which would work out

Senator DONNELL. That is per year?

Mr. ALTMEYER. Yes, sir; which would work out to be equivalent to about 32 percent of pay rolls in an average year. That is the total over-all cost. What I wanted to say is that 32 percent of pay rolls is large enough in an early year to include the costs paid for the beneficiaries under Old Age and Survivors Insurance, and some special payments that would be made out of the Treasury for dental and home nursing care. The pay-roll tax implied in the bill would be 3 percent and not 32 percent. The equivalent of a half percent would be met by general revenues.

Senator DONNELL. I am not quite clear on that. Do you mean it is contemplated that there shall be an employers' and an employees' tax on pay rolls?

Mr. ALTMEYER. This bill, of course, is entirely silent on that point. Senator DONNELL. I understand, that is S. 1050; is it contemplated that there shall be employers' pay-roll tax and employees' pay-roll tax? Mr. ALTMEYER. Yes, sir.

Senator DONNELL. In what percentage?

Mr. ALTMEYER. One and a half percent each.

Senator DONNELL. Now suppose, or has it been estimated, Mr. Altmeyer, whether or not that aggregate of 12 percent from the employers and 112 percent from the employees will meet this annual expenditure of $3,000,000,000?

Mr. ALTMEYER. It will meet most of it.

85907-46-pt. 1-13

Senator DONNELL. It will do that?

Mr. ALTMEYER. A pay-roll tax of 3 percent would raise about twe and a half billion dollars, or a little more. In addition, there would be roughly half a billion dollars of general revenues.

Senator DONNELL. Two and a half billion through pay rolls, s that there would have to be $500,000,000 per year raised from gov. ernmental sources, from one place or the other; is that right? Mr. ALTMEYER. Yes, sir.

Senator DONNELL. Now, I understood you to say earlier that there are two possible plans of financing this matter, either the plan under S. 1050, which I understand is the pay-roll tax from employer or eployee, or an ear-marked income tax; is that right?

Mr. ALTMEYER. Yes, sir.

Senator DONNELL. Would that ear-marked income tax be paid b every income-tax payer, or would it be confined solely to the person who derive these benefits, this 105 to 112 million persons?

Mr. ALTMEYER. It would be paid by everybody, probably subject to a minimum exemption. All those people would then automatically acquire eligibility through their income-tax payments.

Senator DONNELL. Has there been given consideration as to whi of these two financing plans is preferable, namely, the one unde? S. 1050, the pay-roll tax from employer and employee, supplemente by governmental payment, or, on the other hand, the ear-marked i

come tax?

Mr. ALTMEYER. Yes, sir; there has been a lot of consideration give to that. Over in the House Ways and Means Committee at the prese time, for example, there are hearings going on to extend the Federa. Old Age and Survivors Insurance System. As you know, there are about 20 million persons not covered at the present time. There discussion going on as to ways and means of covering them.

My testimony over there was to the effect that as far as the em ployed persons who work for others, the simplest way is to collect a a pay-roll tax. For the self-employed persons not on anybody's pa roll, what amounts to an earmarked income tax would be the be way to collect it.

Senator DONNELL. Do you favor a combination of the two plans. pay-roll tax and an earmarked income tax?

Mr. ALTMEYER. Yes, sir; I think that that would be the most pr tical way to start. We have, as you know, already set up in Baltimor records covering about 83 million individuals, and we have all the methods worked out for reporting by employers. Those reports could be used as a basis for determining eligibility under this heal insurance bill that is proposed, without any major additional expen

Senator DONNELL. So, as I understand, you would favor imposi both a pay-roll tax upon the employers and employees and an earmarked income tax?

Mr. ALTMEYER. For those you could not reach through the pay-ro".

tax.

Senator DONNELL. I see. Has there been any document or publication that has been prepared for study by the members of Congress an to the relative merits of the two plans of financing, Mr. Altmeyer!

Mr. ALTMEYER. We are just finishing a report at the request of the chairman which will touch on that feature.