CORNELL UNIVERSITY LIBRARY NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS THE GIFT OF THE FAMILY OF Dr. I M. RuBINOW 1875-1936 Non-Contributory Old Age Pensions and Health Insurance Report of the Special Committee on Social Insurance Boston Chamber of Commerce II. Iii. IV. VI. Vil. VIII. IX. TABLE OF CONTENTS Recommendations of the Committee with regard to Non-contributory Old Age Pensions. Recommendations of the Committee with regard to Health Insurance. Nature and Extent of Investigation. Non-contributory Old Age Pensions. Health Insurance—History of Movement. Need of Some Form of Relief under Existing Condi- tions. Arguments For Health Insurance. Arguments Against Health Insurance. Provisions of the Legislative Bill in Massachusetts. Costs. REPORT OF THE SPECIAL COMMITTEE ON SOCIAL INSURANCE CONCERNING NON-CONTRIB- UTORY OLD AGE PENSIONS AND HEALTH INSURANCE. February 6, 1917. To the Executive Committee and Board of Directors: Your Special Committee on Social Insurance which was organized on December 1, 1916, has studied the various plans and proposals for non-contributory old age pensions and com- pulsory health insurance of different countries, and especially those presented in Massachusetts in recent years and empha- sized by Governor McCall in his inaugural. (Senate Bill No. 1, 1917.) The proposals before the Legislature for non-contributory old age pensions are embodied in Senate Bill 280 and House Bills 370 and 513; but the age requirement, length of residence, amount of income and amount of benefit vary in the different proposals. The plan of compulsory health insurance is given in House Bill No. 1074 introduced by a committee headed by Mr. Michael M. Davis, Jr., and follows, with some important changes, the Doten Bill, House No. 1015 of 1916, which was based upon the tentative draft of a bill presented to several legislatures by the American Association for Labor Legisla- tion. I. Recommendations of the Committee with regard to Non-Contributory Old Age Pensions Your committee has considered various plans for non- contributory old age pensions and is unanimously opposed to any measure with the non-contributory feature for the follow- ing reasons: 1. There is no such need for legislative provision for old age in Massachusetts as there was in any foreign country in which legislation has been enacted. Pensions in any case would be less necessary than health insurance. Health insur- ance and accident compensation lead to preventive measures and increase the earning power of workers, but old age pen- sions are remedial, not preventive, and are, therefore, less valuable socially. 2. Those foreign systems which involve contributions from employers and employees are, however, preferable to the English system of outright payments. In France and Germany the worker gets his pension as a matter of right even when he is not poor. In England and under the proposed plan for Mas- sachusetts only the poor may have pensions. That is, the proposed plan has essentially a poor law character and is not an industrial measure. : ‘ = Non-contributory pensions weaken the inducement to thrift. 4, The inevitable effect of the establishment of a system of non-contributory old age pensions would be a constant pres- sure to lower the age limit and increase the amount of the pension. 5. The proposed Massachusetts law would tend greatly to increase the taxes; and Massachusetts is at present making a radical experiment with its tax laws. The pensions now proposed are low, the age of eligibility is high, and few ex- cept the almshouse old are recommended to be dealt with. The proposed tax burden will therefore increase greatly in suc- ceeding years. 6. To raise the necessary money large extra taxes would have to be levied on the capital and industries of the Common- wealth. This would result in the first instance in a serious dis- turbance to present industrial conditions. It might also have a tendency to lower wages. 7. Owing to the uncertainty of conditions due to the great war, it would be unwise for the Commonwealth to assume a large increase in its liabilities. 8. The constitutionality of such legislation is extremely doubtful. II. Recommendations of the Committee with regard to Health Insurance : 1. Your committee believes that it is both possible and desirable to devise a plan which will result in the improved health of the people, be effectively managed and not prohibi- tory in cost. Many plans differing in costs and benefit are pos- sible. Any system will involve many provisions and be highly organized in administration. 2. The subject of health insurance is not yet ripe for legislation because of great uncertainty as to insurance car- riers, medical administration and cost. At the same time the situation which this measure attempts to meet, is serious, and the State should give the matter thorough consideration with a view to the adoption of some adequate form of relief, prefer. ably at the outset an experimental measure of limited scope in the least difficult part of the field. 3. The particular bill (House 1074) now before the legis. lature is too comprehensive in its scope for an initial measure, and in its technical details and language does not conform to legislative precedents in this State. 4 4. If insurance is to be adopted, a plan under which the cost is shared by employer and employee is better than one un- der which the State contributes. Your committee, therefore, disapproves the provision in this bill of premiums of 40%, 40% and 20% to be paid by employer, employee and State respec- tively, and recommends that the cost of insurance be paid in equal parts by the employer and employee. The expenses of supervision should be borne by the State. The true function of the State in this whole matter should be the undertaking at public expense of an advanced policy for the prevention of sickness. 5. Your committee urges that a small paid commission, with ample time for investigation, be appointed to examine the nature of the special health problems of Massachusetts, to dis- cover the probable cost of alternative plans of insurance, to inquire into the ways and probable cost of a progressive method of sickness prevention, and to draft an act to give effect to its recommendations. Ill. Nature and Extent of Investigation Owing to the limited amount of time at its disposal the committee has confined its study to non-contributory old age pensions and compulsory health insurance, and has disre- garded invalidity benefits and unemployment insurance which are also included in the subject of social insurance. The investigation of the committee has included the fol- lowing steps: 1. It has familiarized itself with the most important recent literature on the subject of social insurance. 2. It has heard Dr. I. M. Rubinow, Mr. Michael M. Davis, Jr., and Professor Carroll W. Doten explain the proposals of the bill on health insurance. 3. It has attempted to determine the cost to the state, to industry and to the wage-earner of the introduction of non- contributory old age pensions and compulsory health insurance. 4. It has held numerous meetings at which the members have discussed all phases of the subject. IV. Old Age Pensions There are several plans of old age pensions in different countries. The six possible types are: 1. Universal non-contributory—not found in any country. All persons over a certain age to be paid a certain amount each year by the state. This sum is to be derived from taxes and the beneficiary is not called upon to contribute. 2. Partial non-contributory—England, Australia, Den- mark, Iceland, France and New Zealend. Covers only the deserving aged poor. 3. Compulsory contributory insurance, with State subsidy ~—Germany and France. Obligatory on all persons from the sixteenth to seventieth year of'age whose annual earnings do 5 not exceed $476 and included in certain gainful occupations. The State contributes a fixed sum toward every pension ani also bears the expenses of administration. ; 4. Voluntary contributory insurance, with State subsidy —Belgium, Italy, Serbia and Spain. A scheme of subsidized thrift by means of a State contribution-to insurance funds pro- vided by individual savings. 5. Voluntary insurance under. public administration— Canada and Massachusetts savings bank insurance. A sale of insurance and annuities at cheap rates under a government guarantee. There is no State subsidy but the expenses of ad- ministration are borne by the State. 6. Voluntary insurance offered by private insurance com- panies or established by employers of labor under private man- agement—industrial plants. Each industrial group provides for its own insurance either through a contributory or non- contributory scheme. Three Questions Presented. Three questions are presented under these plans: a. Should the plan be contributory or non-contributory ? Should the expenses be borne in whole or in part by the beneficiaries in the form of contributions, or should the cost be borne entirely by the State in general taxes? ‘ pb. If the contributory principle is chosen,— Should participation in the plan be compulsory or voluntary? If the non-contributory principle is chosen, the matter of compulsion does not call for consideration. ce. Should the scheme be universal or partial? Should the benefits extend to all without restriction, or should they be confined to certain specified persons? Bills for the establishment of non-contributory old age pen- ions have been introduced into the Legislature annually since 1903. These bills usually provide that the State shall contribute anywhere from $65 to $500 per year to all persons who have attained the age of 60, 65 or 70, who do not have an income of $200 per year or children to support them, who have been resi- dent within the State from 10 to 30 years, who have not been convicted of certain crimes, and who do not receive a pension from the Federal, State or municipal government. A Commission on Old Age Pensions, Annuities and Insur- ance reported to the Legislature in January, 1910 (House 1400) that it found serious practical difficulties standing in the way of the establishment of any general system of old age pensions by this Commonwealth or any single state. Another Commission on Pensions reported in March, 1914 (House 2450) on the pensions being paid to employees of the Commonwealth, counties, cities and towns; the case of persons engaged in other employment and receiving pensions; the ad- visability of a service pension plan on a contributory basis; 6 some general pension system for old age or other disability ; and presented bills regulating the pensions to be paid by the ‘Commonwealth, counties, cities and towns. No action has been taken on these bills by the Legislature. V. Health Insurance—History of the Movement. The term “‘health”’ insurance is used in this report as pref- erable to ‘‘sickness’’ insurance. The purpose, of these measures is to insure the proper conditions of working and living in order that sickness may be prevented and the death rate re- duced. Incidentally, a benefit is provided for sickness, and the insured is returned as soon as possible to the normal condi- tion of living and working. Compulsory, voluntary and subsidized State health insur- ance have long been known in European countries. Voluntary insurance against sickness is taken advantage of only by the thrifty and well-paid industrial workers and does not reach those who need it most. The State subsidized voluntary insur- ance of Switzerland, Sweden, France, Italy, Spain, Belgium and Denmark has encountered the same fault; and has established the fact that compulsory health insurance is the only means by which the great mass of the poorer paid workingmen will re- ceive necessary medical care. Denmark with State subsidy by State registered mutual insurance companies has found that practically all of them are insolvent, from an actuarial point of view, with insufficient funds matured to meet their claims permanently. Belgium (1894) found the plan to encourage and establish friendly so- ciety insurance inadequate. France includes about one-half of its industrial workers in either approved or free societies which may undertake any form of insurance authorized by law. Swit- zerland (1912) has the latest and most comprehensive law of subsidized sickness insurance. It places emphasis on the for- mation of sick benefit societies and the improvement of the nature of their service. Switzerland learned that with the in- crease of subsidies there was a corresponding increase of mem- bership, as the workmen were more inclined to insure under the subsidy of the State than under the voluntary system. The Canton may vote for compulsory health insurance for all or only for certain classes of persons. After 25 years of experience in various voluntary forms of sickness insurance, subsidized or not, several nations in Europe have realized that the logical conclusion was compul- sory State insurance to which employees and employers alike contributed and the State assisted, with means sufficient to in- sure the payment of the management of the huge machine. Germany (1883), Austria (1888) and Hungary (1891) have been joined by Norway (1909), Great Britain (1911), Russia (1912), Holland (1918), France (1912) (for miners, seaman and railroad employees), and Italy (1911) (for railroad employees), in providing acts for compulsory insurance. The German re- 7 vised code of 1911 now includes practically all workers in the Empire and a supplementary act of the same year covers those receiving small fixed salaries. Both of these acts include the first 18 weeks of accident insurance. Great Britain changed from voluntary to compulsory insurance in 1911 and provides insurance against loss of health, for prevention and cure of sickness and for insurance against unempleyment. Vi. Need of Some Form of Relief Under Existing Conditions. The economic cost to every community of preventable or curable diseases and of deaths is especially great because of the unusual prevalence of sickness and death among the unskilled and low wage industrial workers. Health insurance is already established in the United States :— 1. By trade union or group method, which include trade unions, employees, establishment and mutual benefit organizations, national or local. 2. Fraternal societies, including members of a trade, in- dustrial or fraternal group, lodges, special sick benefit funds and general benefit societies. 3. Establishment societies or industrial funds, which in- clude co-operation of employers and employees in single or joint contributions and in the administration of medical, death and sick benefits and hospital service and in other measures for the betterment of working conditions. 4. Commercial companies operating for profit or on the mutual principle, as industrial insurance companies and casual- ty companies paying industrial health insurance. ‘ 5. State funds provided from taxation by the government for the benefit of employees—marine hospitals supported by capitation tax on merchant marine (1798) and later by tonnage tax (1884). Because of the inadequacy of all of these measures, the situation remains bad. There is much siekness which is not treated until it is far advanced and requires a more continuous treatment. The need for continuing work causes a large de- mand for quack doctors and medicines, The public does not understand proper means of preventing sickness and places a great burden upon hospitals and dispensaries. Doctors do not feel free to offer their services for preventive measures, and the workers are not in a position to pay for these services. The bills of the general practitioner very often remain unpaid. None of these plans take into consideration the important occupational factor of varying strength and kind in the causa- tion of disease. While on an average the worker loses about nine days per year through more or less disabling sickness, yet some workers lose a great deal more and everybody is called upon to shoulder a burden which it is difficult to carry. A recognition of the necessity of some form of health 8 a insurance is rapidly gaining ground and may soon be compared to the almost universal present-day acceptance of the princi- ples of life and fire insurance. Summary. A summary of the needs for some form of relief would in- clude the following points: 1. The United States Commission on Industrial Relations estimated after a limited investigation that thirty million wage- earners in the United States lose nine days each year on ac- count of sickness which, figuring a wage loss of $2.00 and a medical cost of $1.00, would amount to about $810,000,000 annually. 2. Economie factors which increase the health hazards and induce poverty and disease: (a) Occupational diseases. (b) Irregularity of employment. (c) Unhealthful conditions of living. (d) Employment of married women under modern conditions of work. (e) ‘Economic disadvantages of families as a result of low wages and insufficient annual income which deter marriage and prevent child-bearing. | 3. The employers, the public and the employees are in some degree responsible for sickness. The responsibility of the employers is limited to the places of employment. The public is responsible only for community conditions. 4. The greatest burden falls on the wage-earner who can seldom meet the cost of sickness. 5. The medical profession is handicapped in the relief and prevention of disease because of the low wage of employees. 6. Cooperation in meeting health problems is a necessity. 7. It is feasible to distribute the cost and to find a better basis for the prevention of sickness. VII. Arguments for Health Insurance 1. It has been provided in practically all Huropean coun- tries, and should receive serious consideration in the United States as a measure for the relief and prevention of sickness. 2. In Germany where sickness insurance has existed for a third of a century it is certain that the medical care of the workingman has been greatly improved, and the health of the population increased. 3. It would enable the organization of the forces for the cure and prevention of sickness. 4. Under a voluntary system those most needing insur- ance do not avail themselves of its benefits. 5. This form of insurance is feasible because :—Losses af- fect the employer, employee and the community; lessens the cost, diminishes the frequency and seriousness of losses, and becomes a preventive measure. It is no longer experimental. 9 The cost is no greater than under the present system and is probably less. Would Prevent Taint of Charity. 6. The cooperation in administration by employers, em- ployees and the state, would prevent any taint of charity or paternalism, afford a basis on which capital and labor could work together for a common end, and stimulate a spirit of cooperation in the majority for improving the welfare of the wage-working population in every industrial community. 7. Under joint expense of employers, employees and the State, there might be aroused a financial incentive to lessen the cost by the prevention of disease. 8. It would more equitably distribute the cost of sickness. 9. The employee will be stimulated to welcome and to utilize the factory hygiene and improve his own domestic and individual hygiene. 10. It would provide facilities for competent diagnosis of disease, and would stimulate the installation of health sav- ing devices and factory hygiene. 11. It would relieve the worker of the need of making payment for specific medical service—often a very large pay- ment. Prompt Medical Aid. 12. It would give prompt medical aid. 13. It would improve the quality of medical service. 14. By providing medical service, with some income dur- ing sickness, the wage-earner’s family would not be rendered destitute when he ceased work on account of sickness. 15. It should educate and give prcper training and prep- aration for keeping in physical condition to properly earn a livelihood. 16. Sickness is the direct result of poverty, insufficient diet, bad housing, inadequate clothing. Unemployment is due to sickness and sickness in turn follows unemployment. 17. Maternity benefits will conserve the health of the mothers and lower the infant mortality rate. 18. A governmental system is best :—because, it is more democratic, its compulsory features are not objectionable, it reduces the overhead and duplication and produces higher “ efficiency in the administration at a less cost, it affords coopera- tion with other pubile agencies which is impracticable other- wise. The European system has proved the superiority of government systems to private insurance. 19. Coordination of effort may be possible if properly adopted by the national and state governments. 20. The real problem is one of constructive organization— no new ideas or practices but an organization of existing plang and principles with more effective accomplishment. 10 VIII. Arguments Against Health Insurance 1. It does not follow that because social insurance has been in existence in Europe for some years past, that it should necessarily be adopted for this country. 2. From the point of view of the European citizen there is nothing inconsistent in a governmental measure such as social insurance. He has from the earliest times and tradi- tions become used to the theory that the lord should protect the vassal, and that the upper and more influential classes of society should have solicitude for the ecmmon class. Our gov- ernment was constructed on a foundation that stood for in- dividual freedom and equal rights under the law to all; any- thing tending toward feudalistic, paternalistic or aristocratical control has been frowned upon. 3. There is a tendency to start for the first time a distine- tion between the successful and the unsuccessful, the worker and the indolent, the aspiring and the slothful; which permits and requires the laboring man to be somewhat dependent upon his employer, the servant upon his master; which tends to diminish the workingman’s self-respect and pride, to discour- age, at least in some degree, thrift and foresight for his own comfort. Should be Thoroughly Studied. 4. The consequences of adopting such legislation should be thoroughly studied. 5. The payment of cash benefits from public or quasi- public funds is demoralizing and will create many ills, politi- eal and social. 6. The proponents cannot justify their bill on the ground merely that some class in the community needs the money, and therefore another class must pay it. 7. Sickness is and always has been one of the incidents of living and presumably is and always has been as common to those employing others as to those employed. 8. The need of this particular form of relief has not been shown. 9. It is more remedial than preventive and so is not in harmony with the best social thought. 10. Legislation of this sort is in the minds of many people socialistic and along the lines which they deplore. 11. It discourages thrift. 12. It is unconstitutional. 13. An employer cannot possibly realize the equivalent of a 50% benefit to equal his 50% contribution in common with the employee. In this there is no comparison with liability insurance. The only justification for an employer contributing equally with the employee is that he may share equally with the employees in the administration of the fund. 14. Insurance does not reach the results of idleness, drunkenness, vice and other improvident or evil conduct of the individual himself when not employed at some work. 11 Charged to the Industry. 15. It is apparent that the legislature of this and other states, or the various courts by interpretation, intend that oc- cupational disease shall be charged to the industry and be included under the benefits of the various compensation acts. 16. Hach legislature since the adoption of the compensa- tion act, has in some manner enlarged the benefit to the em- ployee so that he now receives 66 2-3% of his wages and the waiting period is reduced to ten days, and the medical at- tendance may be for such length of time as the Industrial Accident Board may order. 17. The suggestion that it might be feasible for the state to adopt the principle of the proposed legislation, and as an experiment limit the benefits to a smaller degree than are now set out in the various bills, would, judging by the past, be in- creased yearly until the scheme becomes non-contributory on the part. of the employees and the benefits paid for sickness increased to the full amount of wages for any time lost by the employee from his work on account of sickness. 18. The employee spends only one-third of his time at his occupation and the remaining two-thirds are spent according to his own choice. The strictest sanitary precautions may be taken by the employer and no precaution may be taken by the employee when away from his work. 19. German experience shows that the number of days of sickness per insured person is increasing. Feigned Sickness. 20. Malingering and feigned sickness are always present. 21. The bill already introduced would greatly increase the tax rate in Massachusetts, perhaps almost double this tax at once. The people should know much more than they now ean know regarding the ways in which the new money will be spent, and the people should be persuaded that it will be wisely spent. 22. The provisions for medical supervision are very weak and there is no settled opinion among the medical profession on the best methods of administration of the benefits or means of sickness prevention. 23. It lowers the standard of the medical profession. 24. The number of insurance carriers and administrative boards with which any one employer will have to deal brings a heavy burden of accounting upon industry. 25. There would be great difficulty in applying the pro. visions to sparsely settled communities where wages and in- comes are usually low. 26. No European country pays 66 2-3% to beneficiaries ag provided in the bill proposed in Massachusetts. 27. The premiums are based on uniform costs and not upon occupational hazards. 12 By Strong Central Government. 28. Such a scheme of administration is better adminis- tered by a strong, central government, the members of which have high notions of civic responsibility, and where the length of service is counted in long terms of years. The danger of creating opportunities for reward of party fealty is a danger to be well weighed by the citizens and taxpayers of Massa- chusetts. 29. The amount of money necessary for insurance if paid by the Commonwealth under an able and efficient board toward the prevention of sickness and the treatment and cure of di- sease, which is perfectly legal under the powers of the state, would be a much better expedient than the means suggested by the various health insurance bills. At the present day the average individual has not been able to avail himself of the best of medical advice and treat- ment, and such a plan of prevention would be educational to the masses; would prevent the beginning and spread of sick- ness and disease; would result in a better type of individual citizen; would preserve the self-respect of the individual; would treat all classes of society alike, would be entirely con- sistent with Americanism and comprehends that all contribute to the health and welfare of all. IX. Provisions of the Legislative Bill. The provisions of the bill before the Legislature (House No. 1074) follow the German and British systems in certain features. It provides for compulsory insurance of every person employed in the Commonwealth except those receiving regular salaries in excess of $100 a month, and exempts employees of the United States ; employees of the Commonwealth or of muni- cipalities for whom provision for sickness is made; inmates of charitable or reformatory institutions; casual employees and members of the family of the employer who are not paid wages. The benefits to be provided cover sickness or accident or death or disability resulting therefrom except when covered by the Workmen’s Compensation Law; medical, surgical, dental and nursing attendance and treatment; medicines and medical and surgical supplies; sickness benefits to insured person or the dependent members of their families; a maternity benefit; funeral benefit; and medical, surgical and nursing attendance and medicines, medical and surgical supplies for dependent members of their families. This benefit, equal to two-thirds of the weekly earnings of the insured member, shall be paid after the third day of disability and for not longer than 26 weeks in any consecutive 12 months. It may be paid to an insured woman when disabled by pregnancy but not when she is re- ceiving a maternity benefit. A benefit equal to one-half of the earnings of the insured shall be paid to the family or other dependents during the period of sickness. _Permission may be given to extend the benefits to a maximum of 52 weeks, to 13 extend the funeral benefits to members of the family, to m- crease the amount allowed for medicai and surgical supplies, to increase the period of extended insurance and to provide for additional amounts for dental work. Medical, surgical, dental and nursing attendance and treat- ment are furnished by the fund to insured persons, and the dependent members of their families, from the first day of sickness. This attendance is furnished from a panel of physi- cians, surgeons, hospitals and dispensaries, from among whom the patient shall have free choice. Provision is also made that the funds may employ a salaried physician, but the freedom of choice by the insured person must be maintained. . The cost of the insurance will come from contributions made on the proportion of employers two-fifths, employees two- fifths, and the Commonwealth one-fifth, except in certain cases of very low wage scales. It is estimated that this cost will lie between 3% and 5% of the wages and the maximum is fixed at 4% in this bill. Commission of Five Members. The administration of the funds will be supervised by a Health Insurance Commission of five members, to include one wage-earner, one employer and one physician, who shall divide the Commonwealth into districts of at least 5000 persons sub- ject to compulsory insurance. The contributions are made by the employer, after deducting the share of the employee from his wages, to district or trade funds and these funds are admin- istered by a committee consisting of both employers and em- ployees in equal proportion and by a board of directors chosen by this committee of an even number of employers and em- ployees. A iabor union, a benevolent or fraternal society, or an establishment society may be approved as a legal fund if it satisfies certain specified conditions. Other provisions for ad- ministration are the establishment of a Health Insurance Coun- ceil of 12 members for advisory purposes; a medical advisory board of 11 members; and a nurses’ advisory board of 7 mem- bers. It is provided that persons not covered by this act may apply for voluntary insurance by paying a contribution of 80% and being placed under some authorized fund. X. Costs The cost of health insurance is problematical, and available data are insufficient to furnish any reliable figures. Wherever in force it has been marked by constantly and rapidly rising costs. It has been thought that this cost might be about 4% of the wages and using this figure as a basis, an average wage of $640 per year and approximately 1,300,000 persons eighteen years and over gainfully employed at an annual compensation of $1200 or less, would give an annual cost to Massachusetts (employers, employees and State) of about $33,000,000 accord. ing to the classes of workers included and the extent to which 14 benefits are increased. In the 4% estimate, administration ex- pense, that is, the sum necessary to expend in order to collect, distribute and supervise the benefits, is considered to be 10% of the premium. This expense is one which does not now exist, but is necessary in any insurance scheme. The estimate of 10% seems fair, whether it be considered with reference to the administration expenditures abroad or with reference to the administration cost under our Workmen’s Compensation Act. A well-constructed system should introduce larger economies and eliminate much duplication and waste. Sickness insurance involves the handling of an enormous number of small claims and a great amount of clerical work. Statistical, actuarial and medical service and supervision, the detection of malingering and the settlement of disputes will be far more costly than under the compensation act; but even at the 10% estimate the annual expense will be at least $3,300,000 for administration, to say nothing of the very considerable sums which the em- ployer must himself pay for his accounting department. The cost to the State as an employer of about 7500 persons subject to the act, and its one-fifth share of the contributions ($6,600,- 000) makes a total of about $10,000,000 to be added to the pres- ent State tax. Some deduction may be made for savings of money now being spent by the State for its health functions and by the existing insurance groups for administrative ex- penses. Paid by Consumers at Large. While the cost is paid in the first instance by the State, by the employer and by the employee, it is paid eventually by the consumers at large. The State’s contribution and the payments of the municipality, the county and the State in their capacity of employers must be raised by general tax money. The employer’s contribution plus his share of increased taxes will by him be added to the price of his product and it will be several years before benefits accrue to reimburse the employer for the burden of competition with industries in other states which are not subject to this form of contribution. Respectfully submitted, SPECIAL COMMITTEE ON SOCIAL INSURANCE Everett Morss, Chairman Daniel F. Appel Robert F. Foerster Eldon B. Keith Nathan Matthews *J. W. Powell Russell A. Sears Edward A. Wilkie Robert A. Wood *Mr. Powell was not present at the meeting at which this report was adopted. % 15 Non-contributory old age pensions and he