REPORT 
 
 of 
 
 Investigation into the Operation 
 
 of the 
 
 British Health Insurance Act 
 
 By 
 
 William T. Ramsey 
 
 Chairman of the Health Insurance 
 Commission of Pennsylvania 
 
 in company with 
 
 Ordway Tead 
 
 Expert Investigator 
 
 FOR THE 
 
 PENNSYLVANIA HEALTH INSURANCE COMMISSION 
 
 OF 1920 
 
Digitized by the Internet Archive 
 in 2018 with funding from 
 
 University of Illinois Urbana-Champaign Alternates 
 
 https ://arch ive.org/detai Is/reportofi nvestigOOpen n_2 
 
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 Preface 
 
 T N submitting* this report, the undersigned desire to call attention 
 to two facts: (1) the field inquiry consumed only one month, 
 July, 1920; (2) the method of inquiry was therefore necessarily 
 confined to reading all available documents and to the interviewing 
 of over fifty representative persons in London, Manchester and 
 elsewhere, including government officials, employers, union officials, 
 friendly society officers, commercial insurance company officials, 
 insured workers and doctors. 
 
 The Chairman of your Commission was accompanied to England 
 by Mr. Ordway Tead, a professional consultant in labor problems, 
 who was retained to do the specialized work involved in such an 
 investigation, and to formulate the findings. Since at practically 
 every interview both of us were present, not only did we have 
 the advantage which comes when two people are seeking the facts 
 instead of one, but the observations and conclusions here set forth 
 are those of both the Chairman and the investigator. It was the 
 easier for this agreement to be reached because the outstanding- 
 facts about the English situation soon become apparent to any 
 honest and unbiased observer. 
 
 The study in England was prefaced by as full a reading knowl¬ 
 edge as possible of the details of the health insurance legislation, 
 although this had resulted in no settled conviction as to the working 
 of the act. The inquiry was conducted with thoroughly open minds, 
 without preconceptions, with a sincere desire to get the whole truth. 
 
 Moreover, special pains were taken before leaving this country 
 
 r 
 
 to communicate with prominent individuals known to be deeply 
 interested in health insurance either because of their advocacy or 
 _ their opposition. Letters of introduction were obtained equally 
 j from both groups and the special effort throughout our visit was 
 < to search out and interview those in England who were opposed 
 to the act. It may be said in passing that the active opponents to 
 it are very few, and many, if not most, of the persons whom it was 
 suggested that we see by those on this side of the water known to 
 
 
be most critical of health insurance, turned out to be in general 
 favorable to health insurance and only critical of the present act in 
 some of its details. 
 
 In short, no step was omitted that would assure our hearing 
 all the adverse things that could possibly be said by well-informed 
 English subjects about the working of the act. 
 
 The result may be unsatisfactory to those who desire unqualified 
 statements of approval or disapproval. For the conclusions reached 
 in this inquiry are not unqualified. They indicate a degree of suc¬ 
 cess and a degree of what is less failure than confusion of purpose, 
 which has necessarily resulted in gradual but important changes 
 in the insurance act and in the other public health legislation as 
 well. 
 
 This kind of a qualified conclusion will be seen to be inevitable 
 by all who realize that social institutions develop experimentally. 
 The value of this investigation for America is thus the greater 
 because England’s experiments need not be repeated in every par¬ 
 ticular. They can and should be used as the basis for wiser meas¬ 
 ures designed specifically to meet American conditions and needs. 
 
 September 15, 1920. 
 
 William T. Ramsey, 
 
 Chairman of the Commission. 
 
 Ordway Tead, 
 
 Expert Investigator. 
 
I. Introduction 
 
 1. Summarized Conclusions 
 
 HE investigation into the operation of Health Insurance in 
 
 A Great Britain which was undertaken at the request of your 
 Commission, was designed to find the degree of success attending 
 the operation of the present act, to discover the attitude of the 
 various affected groups toward it, and to consider as far as possible 
 the extent to which it might be applicable to American conditions. 
 
 It may be said at once that in the main and considering the 
 handicaps and obstructions suffered during five years of war the 
 act is in reasonably successful operation and is beginning to produce 
 some of the benefits that were initially urged in its behalf. 
 
 In the second place the affected groups in the community 
 are now working the act with a remarkable degree of co-opera¬ 
 tion and with an all but universal recognition of the value of 
 the legislation. Few in the community would seriously advocate or 
 even contemplate its repeal or withdrawal. The tendency and 
 common desire is in quite the opposite directions to make the 
 act in fact as well as in name a national act which will really 
 assure good health throughout the country. 
 
 In the third place, as this report will presently develop, it is 
 highly probable that much may be learned from the failures and 
 the shortcomings of the present operation; and any rigid copying 
 of the British act would certainly be quite unwarranted when the 
 peculiar conditions under which it has developed are understood. 
 
 Points at which the British experience can most certainly provide 
 a useful warning are the following: 
 
 1. The cash benefits should not be paid through approved so¬ 
 cieties but through local bodies publicly constituted. 
 
 2. The cash benefit should be at least 50 per cent of wages. 
 
 3. The medical benefits should not be limited to the insured 
 workers, but should extend to their families. 
 
 4. Hospital care, consultant services and specialized diagnostic 
 facilities in the form of clinics and laboratories should not be left out 
 of the plan, but should be incorporated as part of the medical benefit. 
 
 This report will amplify and explain the above statements. It 
 will be exceedingly difficult to offer anything like statistical proof 
 
6 
 
 of them because to a considerable extent that does not exist. At j| 
 every turn and in respect to every problem we were repeatedly told ] 
 “ You know, during the war it was impossible to do that, etc.,” or, 
 
 “ The experience of the war years would really vitiate any figures| 
 we might offer.” Hence, while we have sought figures wherever 1 
 possible, we have even more sought the considered opinions of rep¬ 
 resentative and typical spokesmen of the government’s administra¬ 
 tive staff, employers, trade unions, approved societies, panel and 
 general doctors and insured workers. 
 
 2. Purpose of the Act 
 
 It is first necessary to consider what the act was intended to do. 
 
 It was advanced by Mr. Lloyd George in 1911 to some extent for 
 political reasons, and also to meet the conditions revealed in the 
 reports of 1909 Poor Law Commission. It was originally intended 
 to carry insurance against sickness and death to workers and their 
 dependents through state organized funds. But because of the 
 strength of the commercial life insurance companies and of the 
 “ friendly societies ” (working-class mutual benefit societies) the 
 death feature was omitted and these organizations were allowed to 
 become the agents for administering the cash benefits. And because 
 of the work and expense involved the dependents were excluded 
 (except in the case of the maternity benefit for the wife of the 
 insured man). 
 
 The act was designed to be a preventive of ill health and a 
 means of alleviating the destitution which it brought. If “ pre¬ 
 vention ” is taken to mean discovering from the records of 
 sickness its incidence in particular trades and local areas, with 
 special study and treatment to reduce that incidence where it 
 is excessive, little has been done. But if prevention means also 
 making it easy for all working people between 16 and 70 to 
 consult a doctor as soon as they begin to feel ill or whenever 
 they are too ill to go to work and therefore want to be certificated 
 for cash benefits by their doctors who must consequently ex¬ 
 amine them, then the amount of preventive work has been 
 tremendous. Hundreds of thousands of persons, it is universally 
 agreed, seek medical advice now who would not have afforded 
 it before; and they seek it promptly. They seek it, as the' 
 doctors told us, at a stage when the length and seriousness of 
 the illness can usually be reduced. The fact that there are 
 roughly twice as many visits paid by doctors now as there were 
 
7 
 
 before the act was in force may be taken to prove not that there is 
 twice as much illness or unnecessary visitation, but that people 
 see the doctors as soon as they feel indisposed, and that many people 
 now secure medical attention who never got it prior to the act. As 
 a doctor put it to us, “If three men come to me two of whom have 
 little or nothing the matter with them, and the third is in the early 
 stages of some serious disease, all three visitations are justified.” 
 
 As to the other purpose of the act, the relieving by cash bene¬ 
 fits of destitution due to sickness of the wage-earner—the situation 
 has been so profoundly changed by the war that accurate statements 
 are difficult. The cash benefit, even as increased by recent legisla¬ 
 tion, is so small as compared with wages that in cases of prolonged 
 sickness the need of some larger degree of outside assistance is still 
 necessary. The act does not provide a large enough cash benefit to 
 remove the possibility of destitution resulting from the wage- 
 earner’s sickness. Due to a combination of causes, however, the 
 amount of actual destitution is less in England (July, 1920) than 
 before in recent years. It is, for example, generally admitted that 
 wages have in most cases risen to a degree that has made provision 
 out of wages for more food and for illness more likely than in pre¬ 
 war days. Especially have the unskilled workers improved their 
 status in this respect. 
 
 II. Brief Description of the Act 
 
 T HE original act of 1911 was amended at various points in 
 1913, 1918 and 1920. Since the report of the previous Health 
 Insurance Commission of Pennsylvania 1 contains an admirable out¬ 
 line and summary of the provisions of the basic legislation, it is only 
 necessary to mention below the essential features of the present law 
 and regulations. Many minor provisions have intentionally been 
 omitted in the interest of clarifying the main points. 
 
 1. Contributions 
 
 Men pay 10 pence (20 cents) a week, of which the employer 
 pays 5 pence and the worker 5 pence. To the amounts thus col¬ 
 lected the state adds an amount equal to 2/9 (two-ninths) of the 
 total. 
 
 1 Report of the Health Insurance Commission of Pennsylvania, January, 
 1919. 
 
8 
 
 Women pay 9 pence (18 cents) a week of which employer pays 
 5 pence and the worker 4 pence. To the amount thus collected the 
 state adds an amount equal to % (one-fourth) of it. 
 
 These contributions are payable in respect to practically all 
 manual workers, and all non-manual workers whose income falls 
 below £250 per year ($1,250). 
 
 Other citizens may join as “ voluntary contributors,” but since 
 no medical benefits are available for them they pay a reduced con¬ 
 tribution. 
 
 The contributions are made through the employer who buys 
 special stamps at the post office. These he is required to affix 
 weekly to the card of each employee as in evidence of payment. 
 
 If the employer has more than 100 employees he may stamp the 
 worker’s card half yearly with one lump sum, high-value stamp 
 representing the total amount of the combined contributions. These 
 cards are at each six months’ interval given to the individual work¬ 
 ers who send them to their respective “ approved societies ” (pres¬ 
 ently defined) which in turn use them as evidence of payment to 
 get the proper funds credited to them by the Government. The 
 approved societies then distribute fresh cards to the employers with 
 whom their members are at work. 
 
 2. Cash Benefits 
 
 The man who is certificated by the doctor as “ incapable of 
 work” because of some specific illness is entitled to 15 shillings 
 ($3.75) a week after a three-day waiting period, which payment 
 may continue for twenty-six weeks. And for continued disability 
 thereafter he gets 7 shillings 6 pence ($1.88) a week so long as he 
 is incapable of work. 
 
 The benefit for a woman worker is 12 shillings ($3.00) with 
 the same disability benefit as the man’s. 
 
 To be eligible for these benefits the worker must have paid con¬ 
 tributions for 26 weeks; and he is deemed to be in arrears in his 
 contributions if they are not made for at least 48 weeks in the 
 insurance year. When in arrears the worker is notified and has 
 three months’ grace in which to become fully eligible by the payment 
 of a fixed sum depending)upon the length of the arrears period; and 
 if that is not paid he is eligible for benefits at a lowered rate. 
 
 A married woman worker is entitled to 40 shillings ($10) at 
 confinement. The wife of an insured man is entitled in her own 
 right to the same amount when confined; and if both husband and 
 wife are working, two maternity benefits are paid. 
 
9 
 
 The cash benefits are usually paid through the local officer of 
 an approved society upon presentation to the society of the medical 
 certificate from the worker’s doctor and also in many cases after a 
 visit from the society’s sick visitor. 
 
 3. Medical Benefits 
 
 Every insured person is entitled to medical attendance through¬ 
 out his illness provided it is service that can be rendered by a general 
 practitioner of ordinary skill and capacity. This service does not, 
 however, include the services of a doctor at times of confinement of 
 an insured woman or of the wife of an insured. 
 
 The sanitarium benefit heretofore providing hospital care for 
 tuberculous insured persons, is to be withdrawn after 1920 for 
 reasons which will be presently considered. 
 
 Medical benefit also includes the free provision of the familiar 
 drugs and medicines and of a stated number of medical and surgical 
 appliances such as bandages, etc. 
 
 There is no statutory provision for hospital treatment, 
 nurses, dental treatment, medical attendance upon the dependents 
 of the insured, specialists’ advice or medical care at confinement. 
 
 4. Administration of Cash Benefits 
 
 There are the following general types of carrying funds which 
 the insured person may join: 
 
 An approved commercial insurance company. 
 
 An approved friendly society. 
 
 An approved trade union. 
 
 An approved establishment fund. 
 
 In addition, there is a class called deposit contributors, who 
 belong to no society, but hold their own cards and buy stamps for 
 themselves at the post office. Their contributions are only avail¬ 
 able in benefits to the amount of their own and their employers’ 
 payments; there is no sharing of the risk with the members of any 
 group. 
 
 The worker has the option of choosing his approved society; and 
 he may not transfer except at stated intervals and on payment of 
 two shillings. 
 
 The approved societies are not profit-making bodies and they 
 do not pool their funds. Each fund is supposed to carry its own 
 burden of sickness and the idea has been that if any society accu¬ 
 mulated a surplus, that value would be available for larger benefits 
 
10 
 
 to the members of that society. A valuation was to be made every 
 five years to determine the condition of the funds; but owing to 
 the war the first valuation is only now being brought to completion. 
 The results of it will not be published until early in 1921; but they 
 will probably show a considerable variation in surpluses. 2 
 
 5. Administration of Medical Benefits 
 
 The local doctors who desire to practice under the act—that 
 is, do the medical work for the insured—are contracted with by 
 a local insurance committee, which is the representative administra¬ 
 tive and supervisory body of each local area in respect to the 
 medical side of the act. Doctors are now paid at the rate of 11 
 shillings per year per person on their “ panel.” However, in Man¬ 
 chester and Salford, although the total sum of money available to 
 be used in payment of the local doctors is allotted at this rate, the 
 individual doctor is paid on a visitation basis on a scale locally 
 agreed upon. 
 
 Complaints of inadequate or unsatisfactory medical service are 
 supposed to be brought to this insurance committee; and if there 
 is a real case against a doctor there is an investigation and final 
 decision by a body of inquiry composed of three doctors and a 
 barrister. 
 
 Up until now if there has been doubt about the certification by 
 a doctor of an insured person, the approved society has usually 
 employed its own medical referee to give an opinion. Under the 
 latest amendment thirty state referees have now been appointed 
 to look into doubtful cases. 
 
 In order to assure a reasonable division of work and proper 
 service to each individual, the size of the panels is now to be 
 limited to a maximum of 3,000 persons, with authority in the local 
 insurance committee to restrict the number further where they so 
 desire. In the London area, for example, the panel of any indi¬ 
 vidual doctor may now be only 2,000. In Manchester, on the other 
 hand, it may be 3,000. As a matter of fact the great majority of 
 panels are less than 2,000 in number. 
 
 2 Interim Report by the Government Actuary upon the Valuation of the 
 Assets and Liabilities of Approved Societies as of December, 1918. 
 
11 
 
 6. Financial Arrangements 
 
 The explicitly recognized expenses under the act are the follow¬ 
 ing: 
 
 1. The cash benefits. 
 
 2. Payment to doctors at the rate of 11 shillings per person per year. 
 
 3. Administration expenses of approved societies at rate of 4 shillings 
 5 pence per person per year. 
 
 4. Administrative expenses of insurance committees. 
 
 5. Payment for drugs on basis of an agreed schedule of prices. 
 
 6. Administrative expenses of Ministry of Health including indoor and 
 outdoor staff. 
 
 7. Reserve Fund. 
 
 8. The contingencies fund. 
 
 9. Women’s Equalization Fund. 
 
 10. Central Fund. 
 
 (The last four funds are explained later.) 
 
 To meet these expenses there are available the three-fold con¬ 
 tributions, and sundry parliamentary grants which have been called 
 for as special problems have arisen. 
 
 7. National Administration 
 
 The central administration which includes allocation and 
 handling of accounts, inspection of operation of the act by em¬ 
 ployers, insurance committees and approved societies, issuance of 
 regulations, stamps, cards, etc., is vested in a department of the 
 Ministry of Health. 
 
 The actual arrangements with local doctors and the actual pay¬ 
 ment of cash benefits is, however, left to the several local agencies 
 above described. 
 
 III. Other Public Health Legislation 
 
 N O adequate picture of the working of the act is possible 
 without mention of the public health measures which are 
 simultaneously provided. 
 
 In 1919 the Ministry of Health was organized “ for the pur¬ 
 pose of promoting the health of the people ” of Great Britain. 
 Under it are now grouped for purposes of co-ordination the 
 following administrative duties: 
 
 1- Those of Local Government Boards pertaining to Public Health. 
 
 2. The administration of the National Health Insurance. 
 
12 
 
 3. Supervision of work of Board of Education for expectant and nursing 
 mothers and of children up to five. 
 
 4. Supervision of work of same body in respect to medical inspection and 
 treatment of school children. 
 
 5. Supervision of midwives. 
 
 Under other recent enactments, provision is already made by 
 most local authorities with the aid of special grants from Parlia¬ 
 ment for treatment of tuberculosis, venereal diseases, medical and 
 dental work for school children, maternity and infant welfare 
 centers. 
 
 The situation is well summarized in the following paragraph: 
 
 “ (1) Before birth the expectant mother may be dealt with by the local 
 Health Authority ( i.e ., the Town or County Council, or District Committee), 
 under the Notification of Births (Extension) Act (Child Welfare). 
 
 “ (2) At birth there may be in attendance either a midwife provided by 
 the Local Authority or a panel, or private medical practitioner. 
 
 “ (3) From birth till five years of age is reached, the child again comes 
 under the Child Welfare Scheme of the Local Authority. 
 
 “(4) Between five and fourteen years, the child comes under the medical 
 inspection scheme of the Education Authority, but if treatment is required 
 that may be obtained from the family doctor or through a voluntary or 
 charitable agency, or through clinics provided by the Education Authority. 
 
 “(5) From fourteen to sixteen years there is no public provision of any 
 kind for medical treatment, but the young person, if seeking employment in 
 a factory, will be examined by a certifying Surgeon appointed by the Home 
 Office. 
 
 “ (6) From sixteen years of age till the end of life, the man or woman, 
 if employed, comes under the Insurance Acts, and receives Medical Benefit 
 through the Insurance Committee.” 3 
 
 The doctors engaged on full or part time under one or another 
 of these provisions probably total several thousand, and are thus 
 in fact the members of an embryonic national medical service. 
 
 In addition to the above provisions it should be explained that 
 the Local Poor Law Guardians also have their own medical and 
 hospital provisions for destitute persons of any age. But it is now 
 proposed and contemplated that all of this work shall be taken over 
 and done under the local authorities, which will mean the final 
 abolition of the Poor Law administration in so far as it constitutes 
 a distinct branch of the medical service. 
 
 It is significant to point out in connection with all of this 
 legislation that the tendency is definitely toward separating 
 from the insurance act all special medical treatment and toward 
 
 3 A Public Medical Service, by McKail & Jones, 1919. 
 
13 
 
 providing on a universal public health basis those medical 
 services which are not' readily available through a general 
 practitioner. This is the meaning of the removal of tuberculosis 
 and venereal disease treatment from under the act; and of the 
 institution of maternity centers and care for all mothers under 
 an act of 1918. And it is not unlikely that in the next few months 
 the Government will bring in a bill on the hospital question which 
 will at least provide state payment for insured persons in hospitals 
 and possibly for all regardless of whether they are or are not in¬ 
 sured. 
 
 In short, the insurance act has been one of the potent in¬ 
 fluences in rallying public attention and support to a consistent 
 and complete program of public health administration. And the 
 
 Ministry of Health will undoubtedly in the next few years extend 
 the scope and improve the quality of the medical services available 
 for all the people. To this extent the insurance act has unques¬ 
 tionably been an aid in the direction of fundamental preventive 
 medicine. 
 
 Having given this brief sketch of the framework of health in¬ 
 surance legislation and administration, it is necessary next to con¬ 
 sider its actual operation. 
 
 IV. The Act in Operation 
 
 1. Contributions 
 
 T present there is little if any objection to be found to the 
 
 ii. compulsory collection of contributions, except from those 
 who believe that the contributory principle is less sound or less 
 economical than the non-contributory—believe, namely, that cash 
 subventions as well as medical service should be provided directly 
 out of taxes. 
 
 It appears to be widely understood that in whatever way im¬ 
 mediate expenses are met, it is ultimately industry itself from which 
 the cost is met. Whether the contributions are direct by assessment 
 or indirect from taxation, the income out of which payment comes 
 results from the productivity of industry and agriculture. And it 
 is not generally felt to be a matter of primary moment to argue 
 
14 
 
 whether the contributions at least for the medical service should 
 be secured in one way or another. 4 
 
 On the other hand, it is true that the present contributory 
 method of collecting the funds out of which the cash benefits 
 and the medical benefits are paid, lightens the burden of direct 
 taxation and is not felt to be an onerous burden by any indi¬ 
 vidual employer or worker. From the point of view of adjusting 
 the Government’s public health budget to its available income 
 resources, this consideration becomes, of course, of almost de¬ 
 termining importance. It should be clear, however, that if we 
 in the United States elect to proceed by the contributory plan or 
 by public grants, there is some substantial expense involved. 
 Good health can be bought only and as soon as we are willing 
 to pay the price. 
 
 As to the administration for collecting the benefits, the work 
 and confusion are now reduced to a minimum. Yet it is useful to 
 consider further (1) the method of collection and (2) the cost of 
 collection. 
 
 If the contributory idea is to prevail, there must of course be 
 some definite evidence of payment which is readily available for 
 the employer, the insured, the approved society and the govern¬ 
 ment. The stamped card was only adopted after the most pro¬ 
 longed consideration; it is admitted to be a clumsy method, but 
 no satisfactory substitute has yet been found which will apply to 
 all cases. It is still conceivable, nevertheless, that a simpler method 
 might be used for all but the most irregular and shifting types of 
 work where, because the worker is constantly moving about, it is 
 hard for him to have at all times evidence of his standing as to 
 payment. 
 
 The method of lump-sum stamping at the end of each six 
 months obviates much clerical work. The machinery of collection 
 may thus be said to be running as smoothly as could be expected 
 in a huge system comprehending 15,000,000 people and ranging 
 from scrubwomen who come in by the day to highly skilled artisans 
 and clerks whose income is regular. 
 
 4 A valid criticism may be made, however, against the restriction of the 
 benefits to a limited number. Sir Arthur Newsholme, Medical Officer of the 
 Local Government Board, says, for example, in a recent volume (Public 
 Health and Insurance , Johns Hopkins Press, 1920) : “ On the point of equity 
 it must be admitted that any system of so-called insurance which, like that of 
 the English act, excludes a large proportion of the population who, while 
 paying in taxes in aid of the insured, require but do not receive their benefits, 
 is contrary to the principle that any expenditure of Government funds should 
 ensure to the whole commmunity in need of the provision in question.” 
 
15 
 
 Nevertheless, thoughtful administrators of the act, including 
 such persons as approved society secretaries, government inspectors, 
 the best doctors, etc., call the whole stamp machinery into question 
 —at least so far as the contributions are made to affect eligibility 
 for medical attention. They point to the difficulties created by 
 loss of cards by workers, agents or approved societies, by failure 
 to stamp cards, failure to pay arrears. They point to the large 
 amount of time and money required to hunt down (1) the loss or 
 error in one card, (2) to be sure that employers are regularly 
 stamping the cards, (3) to be sure that workers are technically 
 eligible for benefits to which they are entitled or which they mani¬ 
 festly should have. In the Government’s own inspecting staff an 
 enormous amount of time is certainly spent straightening out irregu¬ 
 larities in regard to contributions. 
 
 The cost of contributions and collection is negligible as far 
 as the individual employer is concerned. The administrative 
 expense of bookkeeping entries and stamping is surprisingly small; 
 and the employer’s share of the contributions is usually not over 
 one per cent of the payroll. For example, in one store with over 
 7,000 employees not more than the equivalent of the full time of two 
 clerks is devoted to the health insurance details. In one factory 
 with about 800 workers about half the time of one clerk was used. 
 In general this cost would come to not over one-tenth of one per 
 cent of the payroll. The testimony of employers was therefore 
 unanimous that the expense of the act to them was not a factor 
 of any importance. 
 
 From the public point of view, however, the total expense of 
 securing the contributions is undoubtedly great when all items in 
 the account are considered—inspection, printing, postage, handling 
 of stamps and cards by employers, approved societies and govern¬ 
 ment officers. And that irregularities regarding contributions and 
 stamping should ever deprive the insured of medical treatment is 
 surely a denial of the whole idea of assuring good health among 
 the workers. It frequently happens, moreover, that the worker 
 whose contributions are not in good order, will be the very one 
 who needs most not only the medical but the cash benefit as well. 
 
 In short, the conditions determining the eligibility for cash 
 benefits may also disqualify the worker from benefits on the 
 medical side. This inter-relation seems to have little to com¬ 
 mend it from the public health point of view. There should, it 
 would seem, be no question from the public health point of view 
 
16 
 
 of eligibility for medical benefit. Any person needing medical 
 attention should be able to have it. 
 
 2. Cash Benefits 
 
 The cash benefits, even as now increased, is in most cases such 
 a small fraction of the possible wages that it is decidedly inadequate 
 to protect the income and living standard of the insured during 
 illness. It is generally conceded that the benefit should be less than 
 wages, but a cash benefit which is 50 c /o of wages is the very least 
 that should be considered if a real subsidy is intended. Yet with 
 a wage level for men workers today of between three and a half 
 and five pounds a week (from $17.50 to $25.00), the weekly cash 
 benefit of $3.75 is less than 25 per cent of wages. 
 
 The small size of the present cash benefit not only auto¬ 
 matically brings malingering to a minimum, but, as several 
 doctors said, the sick worker often returns to work before he 
 should. Even unskilled workers are in many cases able to earn 
 as much in one or two days' work per week as they could get from 
 the whole week's benefit. The problem from the point of view of 
 malingering only becomes difficult in cases of irregular work, 
 where the worker may not have regular weekly employment and 
 thus may normally get wages which do not exceed the usual benefit. 
 
 The promptness with which cash benefits are paid appears to 
 vary greatly with the efficiency of the approved society. The best 
 organized societies unquestionably pay claims promptly upon their 
 receipt. Delay may be due to many causes, principal among which 
 are the question in the mind of the society as to the validity of the 
 medical certification, and (in the case of commercial companies) 
 transfer of agents with whom the insured thus gets out of touch 
 and therefore does not know where to submit his claim. 
 
 The cash maternity benefit is undoubtedly the most popular 
 and the most valued. The money is now paid directly to the 
 woman beneficiary and the testimony is general that in ninety-five 
 cases out of a hundred, the money is used to help in defraying the 
 expenses of confinement. It assures that the mother takes care 
 to have a qualified midwife in attendance at the confinement. And 
 the latter is sure to be on hand since she knows that the money for 
 her fees is available. Moreover, the midwife is now f required in 
 case of any complication to call in a doctor whose attendance fees 
 are paid by the local authorities under the maternity provisions legis¬ 
 lation of 1918. Indeed, now' that there is in most local areas some 
 
17 
 
 follow-up work with expectant mothers (as a Public Health Pro¬ 
 vision), the likelihood is even greater that the maternity benefit will 
 be wisely expended. 
 
 The maternity benefit is not, however, adequate to cover all 
 the charges incident to confinement. The nurse’s or doctor’s fees 
 usually take all or nearly all of the benefit, which leaves the other 
 expense to be otherwise met. There is therefore a demand, espec¬ 
 ially in labor circles, for the payment of a larger amount which 
 will be more in the nature of a maternity endowment paid to all 
 mothers. 
 
 There is also on the part of organized labor a definite sentiment 
 favoring the addition of a funeral benefit for the deceased worker. 
 The demand for this will undoubtedly be strengthened by the recent 
 governmental inquiry into the operation of commercial insurance 
 companies, which found that in one large company over 40 per 
 cent of the insurance policies lapsed with consequent advantage to 
 the companies and no return whatsoever to the insured; and found 
 also that “ though practically every person in the wage-earning class 
 is insured at some point of his life, at) least 30 per cent of the deaths 
 among that class are uninsured at death.” 5 
 
 Indeed the departmental committee of inquiry intimated that “ it 
 might be practicable to propose a funeral benefit to be administered 
 under the National Health Insurance System.” 
 
 3. Medical Benefits 
 
 As already suggested, the existence of free medical service for 
 all insured persons means that many now go to doctors who did not 
 do so before and go at the earliest signs of illness. Everyone agrees 
 that this is an incalculable benefit, the good results of which in a 
 better level of health cannot fail to materialize. 
 
 It should be pointed out, however, that the medical service 
 which is available is neither thorough nor exhaustive; nor is it 
 expected to be under the terms of the act. If a doctor finds 
 that a case requires an operation, or he is uncertain of the proper 
 diagnosis, he must now have recourse to hospital and consult¬ 
 ants whose services are not required to be available to him or 
 to the insured under the act. It has happened fortunately up 
 until now that the voluntary hospitals (supported by private 
 subscription and by the free work of their medical staffs) have 
 stood ready to supplement the work of the general practitioner 
 
 6 Industrial Insurance Companies and Collecting Societies, Cd. 614, 1920. 
 
18 
 
 to the extent of their facilities. In this way, hospital service has 
 been usually available, although it has never been guaranteed, 
 never been completely adequate in the urban districts, always 
 been dependent on private charity and subject in no way to any 
 control by the patients or by the public health authorities. It is 
 one of the anomalies of the act that its success on the medical 
 side depends upon access to hospital and consulting facilities 
 which have asi yet no organic relation to the rest of the scheme. 
 
 Now that the hospitals are on the verge of insolvency, the Gov¬ 
 ernment is being obliged to consider relating them to the insurance 
 provisions more formally. 
 
 Much attention was given in our investigation to the quality 
 of medical service given. While accurate general statements 
 are difficult to make, it is probably fair to say that the workers 
 of England are on the whole now getting more and better medical 
 service than they ever did before the act. It has to be remem¬ 
 bered, however, (1) that under the act every registered general 
 practitioner has always been eligible to become an insurance 
 doctor, simply by making application; (2) during the war a 
 great many of the best practitioners were in army or navy service; 
 (3) the act only requires such treatment as “ can consistently with 
 the best interests of the patient, be properly undertaken by a prac¬ 
 titioner of ordinary professional competence and skill.” (Medical 
 Regulations.) 
 
 These three facts alone go far to account for much of the 
 criticism which has been leveled at the quality of medical work 
 given under the act. Moreover, the doctors were at first hostile to 
 or suspicious of the act. Today this is not true. Out of between 
 20,000 and 23,000 doctors (how many of these are only consultants 
 and not supposed to do insurance work is difficult to find out) who 
 are in active practice, over 14,000 are on the panels. 
 
 Criticism of the medical service has fastened on the danger of 
 “ lightning diagnosison the distinction made in attention given to 
 panel as against non-panel patients; on the difficulty of lodging 
 complaint against a doctor; and on the fact that the best doctors do 
 not become insurance practitioners. There is undoubtedly con¬ 
 siderable basis for some of these criticisms or they would not be 
 repeated so often. But the testimony is on the other hand con¬ 
 vincing that medical service is better now, barring the handicaps of 
 war just noted, than it ever could have been before for thousands 
 of persons. Now that the number of patients per insurance doctor 
 is to be limited and the doctors are finding their panel practice in 
 
19 
 
 most cases so remunerative, the reasons for inferior service will 
 be reduced. The doctors are and will be increasingly anxious to 
 keep the good will of the insured and of the insurance committee 
 as well. 
 
 The Scotch Health Insurance Commission which until July, 
 1919, administered the act for Scotland says in its latest report 
 that “ very little reliable evidence has emerged of neglect of duty 
 on the part of insurance practitioners or of any real ground for 
 loose general charges of inefficiency. Dissatisfaction with a 
 limited service and agitation for an extended and complete 
 medical and institutional service must not be founded on as a 
 condemnation of the present insurance scheme but rather as an 
 indication that it has resulted in increased appreciation of the 
 importance of a great development of medical services in the 
 interests of the national welfare.” (Boldface ours.) 
 
 Invidious distinction between panel and non-panel patients 
 is undoubtedly still made; but it is generally considered to be 
 decreasing. The feeling of inadequacy in the attention received 
 appears to be a social as much as a medical matter. In those 
 cases where the insured person does not use his panel doctor, but 
 goes to another physician and pays a private fee, the person is 
 usually in the ranks of the clerical workers who still feel a certain 
 class superiority to manual workers and therefore to panel doctors 
 who treat manual workers. 
 
 The real reason for inadequacy of treatment is affirmed by 
 the best doctors in England to be due rather to inadequate medical 
 education and insufficient opportunity for special diagnostic assist¬ 
 ance from which insured and non-insured suffer alike. Opportun¬ 
 ities for study after the doctor leaves medical school are meager; 
 his opportunities for consultation with other practitioners and 
 specialists are not well organized; access to laboratories is not as¬ 
 sured. 
 
 An offset to this as well as to other shortcomings of general 
 practitioners’ service, is increasingly being resorted to in the form 
 of partnerships of insurance doctors. These partnerships are of 
 from two to six men, each of whom has his assigned hours at the 
 offices and also naturally has some diseases on which he is more 
 of a specialist than his colleagues. Under this arrangement the 
 insured are certain of a doctor being at hand all the time, yet each 
 individual doctor has free time for study and recreation. The terms 
 under which these partnerships work are governed by regulations 
 of the Ministry of Health, so that the danger of any abuse of the 
 
20 
 
 plan is slight. Indeed, such arrangements appear to be officially 
 encouraged. Similar results are to a certain extent obtainable where 
 an insurance doctor hires an assistant to help him. 
 
 The medical services under the act are, it should be emphasized, 
 specifically planned on the theory that only general practitioners’ 
 services can at this stage be given. Tuberculosis care, for example, 
 except for domiciliary treatment, is now removed from the act and 
 entrusted to the local authorities. The insurance doctor is not sup¬ 
 posed to have to treat venereal cases, which also go to a local clinic. 
 Nor is the insurance doctor expected to take maternity cases unless 
 he so elects. But he is supposed to be able to diagnose and treat 
 the usual complaints and to act as a clearing house for sending 
 special case& to the necessary agency. It is in his home contacts and 
 constant knowledge of the family that his value lies. The policy 
 thus exemplified seems to argue for more adequate statutory pro¬ 
 visions to correlate general and specialist advice. 
 
 The question of determining eligibility for medical benefit 
 reveals the anomaly of trying to adhere strictly to the insurance 
 principle in the provision of medical treatment while at the 
 same time trying to make the physicians’ services as fully available 
 to all as possible. Loss of one’s medical card, failure to pay a 
 sufficient number of weeks’ contribution or failure to “ sign on ” 
 to a doctor’s list, may temporarily make it difficult if not im¬ 
 possible for one to be eligible for medical attention. Testimony 
 is general, however, that a person needing treatment is likely 
 to get it regardless of his legal status under the act. And this 
 seems natural. The only real evidence which it should be neces¬ 
 sary to give as to eligibility for treatment is increasingly seen 
 to be the need of treatment. 
 
 This principle does not apply as yet, however, in the case of 
 attention needed by the dependents of the insured. They must pay 
 for their service; and, as would be expected, the workers of a 
 family go to the doctor on the slightest provocation, while the non¬ 
 insured persons will wait until illness becomes serious and therefore 
 doubly difficult to cure. Yet even here the tendency is for the 
 insurance doctor in his home visits to consider the troubles of other 
 members of the family in which situation the fee, while important, 
 is not the primary consideration. And without a great deal of 
 bother the visiting insurance doctor can often direct a non-insured 
 sick person to the service of local doctors available under special 
 provisions for the tubercular, for maternity cases, school children’s 
 cases, etc. 
 
21 
 
 Decision as to the eligibility of the insured for benefits in doubt¬ 
 ful cases is now in an unsatisfactory state, since the standards of 
 different approved societies vary so greatly and their method of 
 iocal follow-up are so different. As it is, if the approved society 
 doubts the validity of a claim it usually sends its own doctor or 
 referee to see the patient, advising the local doctor of the step and 
 asking for his help. This intervention is usually welcomed and the 
 necessity for a second diagnosis is so far recognized by all that 
 thirty referees are now included as salaried doctors under the act. 
 Indeed, it is not inconceivable that the time may come when there 
 will be one doctor to give medical advice and a wholly different one 
 to authorize the certification for cash benefits. It is felt by many 
 that there is much to commend such a separation of two quite 
 different functions. 
 
 It is in fact difficult to tell in many cases whether incapacity 
 for work really exists. The border line cases are many, especially 
 where there is a tendency to diagnose illness as “ general debility ” 
 and “ anemia.” In such cases it will be seen that there are two 
 points of view at work and they perhaps form a wholesome cor¬ 
 rective to each other. There is the point of view of the approved 
 society anxious to suspend payments as soon as that can be justi¬ 
 fied; and there is the point of view of the insurance doctor who 
 usually sees the need, especially with “ run down ” persons, of a 
 prolonged rest without worry and under wholesome conditions. It 
 is admittedly hard to reconcile these points of view where the sur¬ 
 rounding conditions, economic and otherwise, are constantly work¬ 
 ing to negative the efforts of the doctor. Truly preventive work 
 in many cases requires more than cash or medical benefits. It 
 requires more food and better-cooked food, more fresh air, more 
 quiet, no worry, etc. Failing these, cash benefits and bottles of 
 medicine or tonic may be poured out unceasingly without apprecia¬ 
 ble results. 
 
 It should be noted, in short, that under any act it will be difficult 
 in certain cases to define when the person is sick; and it will be 
 necessary while giving medical service without stint to use care 
 in paying cash benefits for these border-line instances of incapacity 
 or valetudinarianism. 
 
 This is, of course, an aspect of the problems of malingering. 
 There is undoubtedly some of this kind of unconscious malinger¬ 
 ing which has to be guarded against; and the use of referees 
 under the act is essential to keep this at a minimum. It is also 
 necessary to this end to have the administration of cash benefits 
 
22 
 
 in the hands of a local agency which can really be in intimate 
 touch with the beneficiaries. 
 
 At present there is the further safeguard of weekly certification 
 for cash benefits by the doctors (except in chronic cases where the 
 approved society agrees to accept a bi-weekly or monthly certifica¬ 
 tion). 
 
 Apart from these comparatively exceptional border-line cases, 
 the amount of deliberate malingering is agreed by all to be 
 negligible. Indeed, as a problem of practical administration, it has 
 hardly to be reckoned with. 
 
 4. Extension of Medical Benefits 
 
 The Government health insurance budget of 1914 contained 
 estimates for the services under the act of referees, consultants 
 and nurses. It is therefore fair to say that, although the war 
 prevented the addition of any of these services, they were con¬ 
 templated as parts of an adequate plan. It is probable that within 
 the next year the Government will again introduce plans to aid 
 in the provision of hospital beds, consultants’ services and perhaps 
 nurses 5 services. Already one of the approved societies with a 
 membership of over 300,000 gives dental treatment free to the 
 insured. 
 
 There is considerable demand in labor circles for the extension 
 of medical benefits to the families of the insured. It is recognized 
 that this would entail a larger contribution, but it would be pro¬ 
 portionately less than the amount necessary to protect the men 
 alone. 
 
 This demand reaches its logical culmination in the stand of the 
 Labor Party for a national medical service under which medical 
 attendance would be available—much as education now is—for 
 anyone who wanted it. The distinction should be noted, however, 
 between a “ state medical service ” and a “ national medical service.” 
 Under the former all doctors would be full time salaried servants 
 of the state. The advocates of such a plan are naturally few. 
 Under the latter the state would rather aim to build up and provide 
 such medical service as was needed to assure the public health; 
 leaving to private, individual and voluntary attention the doctors 
 and patients who did not choose to receive the benefits of the public 
 service, just as now public education is available for all unless the 
 individual chooses to substitute a competent private school. 
 
23 
 
 The Association of Approved Societies, including some of the 
 largest friendly society and trade union approved societies to 
 which belong some six million insured, has also recently come 
 out for nationalizing the medical service in the sense used above 
 as the most satisfactory way of getting medical attention for all 
 with as little red tape as possible. 
 
 The doctors as represented by the British Medical Association 
 are opposed to the idea of a national medical service, although 
 they recognize and approve the tendency of the state to provide 
 certain consulting and specialist services in the hospitals on a salary 
 basis as well as for the local authorities to make the medical provi¬ 
 sions which they do. 8 
 
 It is, indeed, a fact which no one in England ignores that wholly 
 apart from the insurance, there are today several thousand whole 
 or part time doctors in the salaried employ of one or another gov¬ 
 ernmental body; and the number is constantly increasing. If the 
 insurance doctors are included in this number it would total close 
 to 18,000 doctors. * 1 2 3 4 * * 7 When applications were sought for the thirty 
 referees posts to be filled this summer there were over 1,300 ap¬ 
 plicants; which certainly indicates no great reluctance on the part 
 of doctors to accept a salaried position with the government. 
 
 6 The following quotation from an article on “ The Future of the Medical 
 Profession ” in the British Medical Journal for October 19, 1918, indicates 
 quite typically a prevailing view among many thinking doctors as to the types 
 of medical service which they would like to see available: 
 
 “What, then, should be the profession’s constructive policy? In formu¬ 
 lating this it were well shortly to consider the basis, or bases, on which the 
 profession renders service to the community at present, and these services 
 can be classified under four heads, according as they are rendered, under con¬ 
 ditions of: 
 
 1. Salaried service, whole time or part time—for example, public health 
 appointments, tuberculosis appointments, school medical appointments, etc. 
 (military medical services are not under consideration). These are conditions 
 of “ State Medical Service.” 
 
 2. Part time contract service—for example, national health insurance 
 work. 
 
 3. Voluntary service—for example, work done at charitable hospitals. 
 
 4. Individual service—for example, private practice. This can be divided 
 into two heads, according as it deals with (a) general work, (b) consultant 
 and specialist work.” 
 
 7 “ The majority of the medical profession in Great Britain is engaged in 
 either whole-time or part-time service for the state or for local authorities. 
 Of the 24,000 medical practitioners in England and Wales, some 5,000 are 
 engaged as poor-law doctors, some 4,000 or 5,000 in the public health service, 
 possibly 500 in the lunacy service, some 1,300 in the school medical service, 
 and smaller numbers in various other forms of medical service for the state. 
 This is exclusive of the general practitioners who undertake contract work 
 under the National Insurance Act, and who cannot fall far short of three- 
 
 fourths of the total membership of the profession. It should be noted that 
 many doctors held several appointments.”— Public Health and Insurance, by 
 
 Sir Arthur Newsholme, page 83. 
 
 / 
 
24 
 
 There is also an association of about 500 doctors actively in 
 favor of a national medical service. 
 
 These facts are dwelt upon at length because this particular 
 problem is significant for America as illustrating how a situation 
 was not fully faced at the outset. Whether Great Britain was 
 to have an insurance plan for dealing with health or a public 
 health program supplemented by cash benefits, does not appear 
 to have been candidly considered by the initiators of the legisla¬ 
 tion. As a result, the experiments have conclusively shown the 
 need for making whatever medical provisions are offered uni¬ 
 versally available without regard to the industrial status of the 
 citizen, his income limit, or his standing in a scheme of cash 
 subventions. 
 
 In solving this problem serious consideration has to be given 
 to the attitude of the medical profession itself. Its co-operation 
 is manifestly essential to any plan the community decides to 
 undertake. But that co-operation can so easily extend over into 
 dictation that the experience of England is a useful warning. 
 The outstanding features of any plan to be adopted should be 
 offered to the medical profession for an opinion and for sug¬ 
 gestion as to ways and means. But it will be a serious mistake 
 to allow those who are accustomed to think that they “ have a 
 vested interest in ill health,” to dictate how much or how little 
 medical service the community shall provide for itself on a public 
 and universal basis. On that matter of fundamental policy which 
 is really the first problem to be faced in working out a plan for 
 health insurance or other public health provisions, the doctors’ 
 advice should not be final, as they are likely to have a too 
 ex parte view. It is true of the doctor’s relation to the state, 
 as of the relation of other professional experts, that when basic 
 policies are being determined “ the expert should be on tap 
 but not on top.” 
 
 Contrary to the usual impression in America, however, the 
 doctors are not today opposed to the British act. Quite the 
 opposite is the fact. They realize and state freely that “ the 
 doctors are better off under the act than they were before. They 
 have an assured regular income and no bother with collections.” 
 As one doctor in a peculiarly influential position said: “ The 
 doctors could not be pried loose from the act with a crowbar.” 
 Such remarks should not be taken to mean that doctors feel that 
 they have a sinecure under the act. But it has brought a degree 
 of economic independence in the profession, which is unprece- 
 
25 
 
 dented, and has served as a spur to better workmanship and to 
 the enlistment in the profession of more young men and women 
 than the medical schools have ever before had. The fact that 
 the doctors have a small organization which is actually a trade 
 union, and another large and powerful body which is to all 
 intents and purposes a professional union, and that both of these 
 organizations represent the doctors in collective bargaining with 
 the government, should not lead to the conclusion that there 
 is an absence of co-operation in these official relations. This 
 fact does, however, point strikingly to the importance of having 
 groups of officials both in the actual governmental administra¬ 
 tion and in the local areas strong enough to carry on the inevita¬ 
 ble bargaining process in a way calculated to assure that the 
 rights of the tax payer (that is, everyone) and of the patient are 
 protected. 
 
 In saying that the doctors are today favorable to the act we do 
 not, however, ignore the opposition which exists especially to cer¬ 
 tain details of the present administration. The greater part of the 
 practitioner’s contact with the Government comes through his rela¬ 
 tions with the local insurance committee (upon which the doctors 
 have of course at least three representatives). And it is inevitably 
 true that varying standards and regulations should be set by these 
 committees. This may give rise to legitimate annoyance as may 
 also the regulations which may be imposed from the office of the 
 central administration in the Ministry of Health. But it would be 
 wrong to think that such regulations are imposed without oppor¬ 
 tunity for conference. There is a National Advisory Committee 
 upon which the doctors are represented which considers just such 
 matters as these . 
 
 Moreover, when all is said, two facts have to be remembered: 
 Some degree of oversight of the work of the individual doctor 
 is surely in the public interest; it is only important to be sure 
 that it is an oversight exercised reasonably and tactfully. And, 
 secondly, the English doctor does not have to become an in¬ 
 surance doctor unless he so elects. And even when he does, his 
 private practice is still open to him to any extent which his strength 
 enables him to carry it. His panel practice, however, need be as 
 large and no larger than he desires, since he does not have to take 
 an insured person upon his list unless he wishes to. Over 14,000 
 doctors did not willingly “ subjugate themselves to the state ” or to 
 the insurance patients, nor would they if the relationship was irk¬ 
 some, continue so to do for eight years. The fact is that once the 
 
 I 
 
26 
 
 arrangement was entered into the doctors did not on the whole find 
 it onerous, unduly inquisitorial or destructive of their freedom. As 
 pointed out in the footnote on page 23, they recognize the need for 
 a variety of types of medical service, all of which should be avail¬ 
 able both to the public and to the individual doctor who is choosing 
 a congenial type of professional activity. 
 
 Medical opposition to the health insurance idea in our own 
 country fastens to some extent on the idea that the “ contract ” with 
 the Government involves an ignominious, subordinate and undignified 
 relationship of the doctor to the rest of the community. Nothing is 
 further from the truth if the British experience can be taken as 
 proof. It is, of course, true that when this contractual relation¬ 
 ship is established many points have to be made explicit which as 
 between the doctor and the private patient have been largely implicit. 
 But to this no conscientious physician can have or in England does 
 have objection. For example, the contract requires that the physi¬ 
 cian’s services shall be available under the following terms: 
 
 “ A practitioner is required to attend and treat at the places, on the 
 days and at the hours to be arranged to the satisfaction of the Committee, 
 any patient who attends there for that purpose, but he may with the consent 
 of the Committee, which shall not be unreasonably withheld, alter the places, 
 days, or hours of his attendance, or any of them, and shall in that event 
 take such steps as the Committee considers necessary to bring the alteration 
 to the notice of his patients.” s 
 
 In this as in its other provisions it is fair to say that the 
 contract is only laying down for all practitioners a standard of 
 professional obligation which all good doctors already adhere to. 
 Indeed, to that extent and in this respect the act has unquestionably 
 leveled up the standard of medical service which is given in Eng¬ 
 land; and to this there can certainly be no honest objection. 
 
 In short, the contract is a necessary device for defining the extent 
 to which the Government and the insured patient may call upon the 
 doctor in return for a prescribed sum. That this should lower the 
 dignity of the doctor’s status is no more thought of today in Eng¬ 
 land than it would be thought of in any way compromising to pro¬ 
 fessional integrity to take the oaths of allegiance, etc., necessary to 
 becoming an army doctor. 
 
 5. Administration of Cash Benefits 
 
 The cash benefit is administered through the approved societies, 
 except in the case of the 300,000 “ post office contributors,” who 
 
 8 Manchester Insurance Committee—Terms of Service for Insurance Prac¬ 
 titioners, January 31, 1920. 
 
27 
 
 may collect through the local post offices benefits to the amount of 
 their contributions. 
 
 A brief explanation of the machinery will serve to show the part 
 played by these societies. They are the official carriers. A worker 
 must join one of them (or become a deposit contributor at the post 
 office). He then receives from his society a stamp card, which he 
 gives to his employer to stamp as evidence of payment by him of 
 contributions for himself and his employees. These stamp cards, 
 one for each six months, are returned to the worker at the end 
 of the half yearly period; who in turn sends his card to his approved 
 society, which credits him with the payment and presents the cards 
 to the Government as evidence of the collection. 
 
 When the worker wants cash benefits he gets his medical certifi¬ 
 cate of illness from his doctor, and sends it along to the approved 
 society, usually by presenting it locally to an agent, who forwards 
 the claims. 
 
 Since the approved societies are organized in different ways— 
 some in local lodges, some in central organizations with merely local 
 agents— the promptness with which claims are settled, the standard 
 of eligibility for benefit, and the thoroughness with which a local 
 visitor investigates each case, in addition to forwarding the doctor’s 
 certificates to the central office, vary greatly. 
 
 Moreover, since each worker may join any approved society he 
 wishes, it is not unusual to find in one shop workers who belong to 
 from twenty-five to fifty different approved societies. It is the mul¬ 
 tiplicity of societies which makes it necessary and convenient to use 
 the stamped cards as evidence of payment. And when it comes to 
 payment of benefits, this multiplicity may make it necessary for the 
 agents and sick visitors of a great number of approved societies to be 
 visiting in the course of one day in the same street or even in the 
 same house. 
 
 The frightful waste to which this overlapping leads is at once 
 apparent. So important a feature of the act are these approved 
 societies, however, that further discussion of them is postponed to 
 a separate section. 
 
 As already intimated, the diversity of standards set up by the 
 approved societies means that some societies are making every effort 
 to curtail payments while others are giving benefits almost without 
 question. The element of control which is counted on by the central 
 governmental authority to keep the payment of benefits within rea¬ 
 sonable limits is provided by considering each society’s finances 
 
28 
 
 autonomously. The act provides that the surplus of any society 
 (as determined by the government valuation taken every five years) 
 shall be available for increased benefits for the members of that 
 society. These increased benefits may be in the form of either cash 
 or medical benefits. Whether or not this provision has acted as 
 an effectual check upon liberality of payments, is doubtful. For 
 the government, although careful in its inspection, has on the other 
 hand made special and additional financial provisions for societies 
 which become insolvent. 
 
 Another provision relating to the control of approved societies’ 
 administrative expenses says that if they go above 5 shillings per 
 person per year there shall be an assessment upon the members of 
 that fund or their benefits may be correspondingly reduced. 
 
 There has been some criticism on the score of delay in payment 
 of cash benefits. There is undoubtedly some ground for this com¬ 
 plaint, although here again much of the criticism can be explained 
 in terms of the disorganized clerical staffs of the approved societies 
 during the war (e. g., one large society lost 100 men clerks the day 
 war was declared). Or, in the second place, delay in settlement is 
 frequently to be explained because of some irregularity in the pre¬ 
 sentation of the claim for which the approved society is not respon¬ 
 sible. Here again the machinery of the stamp cards causes con¬ 
 fusion, as for example, when the worker unwittingly gives his card 
 to the agent of a society to which he does not belong and the card 
 is put aside by the agent or lost in the offices of his company. 
 
 In general, however, the largest carriers, especially the 
 friendly and big trade union societies, pride themselves upon the 
 efficiency of their office organization and the promptness with 
 which claims are paid. It was the usual thing in a number of the 
 societies visited, to have all the claims received in a morning’s 
 mail handled and dispatched the same day. Testimony is gen¬ 
 eral, however, that the commercial companies which are acting 
 as approved societies are the least satisfactory carriers from the 
 point of view of prompt payment—due perhaps less to intention 
 than to the fact that the health insurance is only incidental to 
 their profit-making business. 
 
 It may be said, in short, that most of the administrative difficulties 
 surrounding the present method of paying cash benefits are not 
 inherent parts of a soundly-organized insurance plan, but they are 
 inherent parts of a method of paying through approved societies 
 
29 
 
 such as England felt compelled to resort to because of the strength 
 of the commercial insurance companies and friendly societies. 
 
 6. Administration of Medical Benefits 
 
 Because it seemed expedient to work the cash payments through 
 approved societies and because they had available no adequate 
 administrative machinery for the provision of medical treatment, it 
 was necessary for England to set up separate machinery for the 
 administration of medical benefits. The country was therefore 
 divided into about 150 local areas, in each of which an insurance 
 committee was created, the membership of which is representative 
 of the different interested groups. This insurance committee makes 
 the contracts with the local doctors who are to serve in that area. 
 It also decides how many insured persons may be on the list of any 
 one insurance doctor, although a maximum of 3,000 persons has 
 now been set by the Government. This committee, moreover, 
 handles the transfers of insured persons from the list of one doctor 
 to another; receives and deals with complaints against the insurance 
 doctors; makes the payments to the doctors; and makes arrange¬ 
 ment with local druggists for the provision of drugs. 
 
 The means at the disposal of these committees for dealing with 
 inferior or inadequate medical service are by no means completely 
 satisfactory, but are being constantly improved. The limitations 
 of the size of the panels is universally felt to be desirable, as is also 
 the use of official referees, who will now necessarily work in close 
 conjunction with insurance committees. 
 
 Actual formal complaints against insurance doctors by insured 
 persons are remarkably rare, due perhaps rather to the cumbersome¬ 
 ness of the machinery and the difficulty of proving a case, than to the 
 absence of criticism. And it frequently works out in practice that 
 the insured persons complain to the approved society with which 
 they feel on better terms than to the insurance committee; and the 
 approved society then handles the complaint if it is serious. If the 
 insurance committee finds that there are grounds for the complaints 
 which it receives, it may discipline the doctor in any one of several 
 ways, the most drastic of which is to cancel his contract. 
 
 In such a case, however, the doctor has the right to appeal to a 
 disinterested local body composed of three medical men and a bar¬ 
 rister as chairman. 
 
 To safeguard the interests of the insured person who would 
 assure himself of satisfactory medical service, the following 
 methods are provided: He has free choice of doctors; the 
 
30 
 
 chance periodically to change his doctor; and the right to com¬ 
 plain to an authority,—the local insurance committee. 
 
 In practice, the first provision—free choice of doctors—means 
 today as much, if not more, actual freedom in selection than 
 obtained before the act was passed. For in the great majority of 
 cases those doctors who were already practicing in industrial or 
 agricultural centers became insurance doctors. And in some dis¬ 
 tricts the assurance of a fixed income from insurance practice has 
 meant that additional doctors have been attracted there to practice. 
 
 The clamor for “ free choice of doctors ” was not one, however, 
 which was or is raised by the patients, although it goes without 
 saying that the most successful medical work depends upon a condi¬ 
 tion of personal confidence between doctor anVl patient. But there is 
 very much less interest on the part of the insured persons in exercis¬ 
 ing a free choice than was anticipated. The great problem has, 
 indeed, been to get workers to indicate a preference for some doctor, 
 in order that they may be assigned to a place on that doctor’s list. 
 It is a further consideration that the free choice may take place on 
 a capricious basis. Mention was frequently made of cases where a 
 popular doctor on a convenient corner had larger panels than he 
 could handle properly, while better doctors, who were less genial or 
 lived on a side street, had less to do than they could take care of. 
 
 Once the insured person is on a given doctor’s list and finds the 
 medical service unsatisfactory (even though there may not be suffi¬ 
 cient ground for official complaint), he may apply for transfer to the 
 list of another doctor. Such transfer may take place at th.fend of 
 any six months’ period; or, if the original insurance doctor also 
 signs the application, the insured may transfer at once. Manifestly, 
 however, the latter condition is difficult to fulfill; and the former is 
 resorted to in surprisingly few cases. 
 
 7. Payment of Doctors 
 
 The basis for the payment of doctors is 11 shillings ($2.75) 
 per insured person per year to which in the rural areas are 
 added mileage fees for distances of over two miles to the 
 patients’ homes. A doctor with a thousand persons on his list 
 would thus have an assured income of about $2,750. (This 
 would mean over $3,000 if considered from the point of view of 
 the comparative purchasing power of money in England and 
 in America) to which would be added his fees for private prac¬ 
 tice. It is admitted by doctors and affirmed by all observers 
 that the doctors are thus better off under the act than they ever 
 
31 
 
 were before. They do not have to worry about collecting fees 
 from panel patients; they get their insurance income at regular 
 intervals of three months; they are virtually guaranteed an income 
 dependent upon the size of the panel. Now that the practice of 
 doctors working in partnership with several colleagues is being 
 extended, the time on duty is being divided up in a way to make 
 the amount of work necessary to earn a comfortable living exceed¬ 
 ingly reasonable, leaving time for study and recreation. 
 
 Some trouble still arises about the number and identity of 
 insured persons on a doctor’s list but difficulties on that score 
 are being reduced. The doctor is paid on the basis of a list 
 made up in advance, and if there are transfers or movement of 
 persons an adjustment is effected at the end of the period. Here 
 again it seems true that doctors are on the whole less particular 
 than they used to be about being sure that the patients whom they 
 treat are on their own panel. If the visitor to a doctor’s office 
 needs attention he is likely to get it; or he is sent where he can 
 get it. 
 
 The present so-called capitation basis of payment has the effect 
 of making it an object for the doctor to keep his insured patients 
 well and of getting them well as quickly as possible. Of course, 
 there is also possible the view that since the fee is assured the 
 service will not be so good. Undoubtedly, instances to illustrate 
 both tendencies could be cited. But on the whole it is agreed that 
 the capitation basis is the most satisfactory. 
 
 In Manchester and Salford, the doctors originally objected to 
 the capitation plan and a basis of payment for services rendered 
 was adopted. A similar plan started in four other localities has 
 been dropped. The plan provides a scale of fees for different types 
 of visit and a full record by the insurance doctor of services ren¬ 
 dered by him. The records pass through the hands of a committee 
 of doctors to see that there has not been excessive visitation and 
 the payments are then made. The total fund from which payment 
 comes, however, is determined on the capitation basis; that is, it is 
 as many times 11 shillings as there are insured persons in the 
 entire district; so that no doctor gets more in the long run than 
 he would in any other district—unless he happens to be working 
 in an area where the rate of sickness is constantly excessive. Since 
 the total resources are thus limited, it has thus far under the visita¬ 
 tion basis been necessary at every settlement to discount the doc¬ 
 tors’ claims for remuneration. The result naturally is that the good 
 doctors who find their bills discounted because their colleagues have 
 
32 
 
 been doing too much visiting and are thus making large claims, 
 inquire into the type of medical service being rendered. Whether 
 the reason for this discounting of claims is that the scale of fees 
 for the several services is high or that the doctors do too much 
 visiting, it is impossible to say. The doctors themselves, however, 
 and others in the Manchester district, believe in the system and 
 say that it works to satisfaction. It has the good result, they con¬ 
 tend, of paying for work done and thus encouraging good work 
 where it is needed. Not the size of the panel, but the rate of sick¬ 
 ness should in this view determine the payment. 
 
 The capitation basis, however, is clearly the simpler of the 
 two; requiring less check and oversight, and giving the benefit of 
 a guaranteed amount of income and of freedom to give all the 
 medical attention necessary without thought of seeming to “ over- 
 visit.” And in the last analysis the kind of medical attendance 
 given is determined more by the education and morale of the pro¬ 
 fession than by the method of compensation. 
 
 The English experience in administering medical benefits 
 thus confirms the case for (1) local administration of the medical 
 service; (2) for a uniform basis for contracts with the local 
 doctors in all districts; (3) for a uniform basis for certification 
 as to physical condition justifying cash benefits; (4) for medical 
 referees; (5) for co-operative use of local diagnostic clinics. 
 
 8. Drugs 
 
 A prescribed number of drugs and medical appliances are avail¬ 
 able free on prescription from the insurance doctor. These pre¬ 
 scriptions when filled are forwarded to the insurance committees 
 who make the payments to the local chemists whom they have ap¬ 
 pointed to fill the insurance prescriptions, on the basis of charges 
 which have been agreed to between the Government and the national 
 pharmaceutical organization. 
 
 In the event that a doctor is found to be giving too many pre¬ 
 scriptions or those calling for too expensive drugs for which equally 
 good but cheaper substitutes are available, he may be brought before 
 a committee of doctors to explain his conduct. 
 
 In practice, however, the administration of the drug provisions 
 of the act gives rise to little difficulty and is considered to be run¬ 
 ning smoothly. Criticism under this head—as with the other fea¬ 
 tures of the act—fastens rather upon the small number of items 
 and appliances made freely available to the insured as their 
 statutory right. 
 
33 
 
 9. Approved Societies 
 
 The use of the approved societies as carriers of the cash 
 benefits has been an expedient but in many ways unfortunate 
 procedure. Certainly no other country seeing the extra expense, 
 duplication and over-lapping caused by the present system should 
 think of resorting to this method of handling the cash benefits. 
 
 There are now over 900 approved societies and there were at 
 one time over 2,000, many of which have been consolidated with 
 other funds. 
 
 Each society, of course, has its own central office, its own local 
 agents and sick visitors. Accounts must be kept for it separately 
 in the Government offices and there must be individual supervision 
 of their activities. Some societies select their risks; others admit 
 every applicant. There is comparatively little segregation of risks 
 by occupation and no segregation by residence. The statistics 
 which would show the incidence of sickness by occupation and 
 locality are thus especially difficult to get. 
 
 In short, the whole approved society machinery is a fine example 
 of what to avoid. 
 
 Indeed, there are not lacking signs that the English themselves 
 would be glad to be rid of them and to administer the insurance 
 through one national fund. The valuation of approved societies 
 which is now nearing completion will undoubtedly reveal wide dif¬ 
 ferences in the amount of surplus which will be available for in¬ 
 creased benefits in the several societies. If it comes about that some 
 of the strongest commercial companies and friendly societies are 
 in a position to offer larger benefits than many of the other societies, 
 there will undoubtedly be considerable objection from the trade 
 unions. And it is openly hinted even in official quarters that in the 
 event of such a wide discrepancy being revealed, the agitation for 
 one national fund as the carrier would be very active. 
 
 Certainly the warning was again and again repeated to us: “If 
 you go in for health insurance, don’t have anything to do with 
 approved societies.” 
 
 10. Hospitals 
 
 As already stated, no hospital treatment is given under the act. 
 The doctor who wants his patient to have institutional care must 
 get him into a voluntary hospital. Of late years this has been in¬ 
 creasingly difficult because of a shortage of beds and now also 
 because the hospitals are financially embarrassed. Costs have more 
 
34 
 
 than doubled, former contributors are now taxed so heavily that 
 they do not give; contributors from among the “ new rich ” have 
 not yet materialized. As one advocate of privately supported hos¬ 
 pitals naively remarked to us: “ We expect that in another ten 
 
 or twelve years the new rich will get the habit of giving and then 
 the hospitals will be all right/’ 
 
 But meanwhile frantic efforts are being made to keep the hospital 
 doors open at all; and those who are planning the public health pro¬ 
 gram of the country, see that a wholly new way of meeting the 
 problem is essential. It is possible that the Government will in the 
 near future abolish the poor law hospitals and make their beds 
 available for use by the local authorities. It is also possible that 
 the Government will subsidize the hospitals on the basis of the num¬ 
 ber of beds used by insured patients. If some such arrangements 
 as this are made, it will be then necessary to take steps to pay the 
 hospital doctors who now give their services; as it is clear and right 
 that if the hospitals are to be paid for their work for the insured, 
 the consultants should be paid also. 
 
 This is an admittedly transitional time in respect to hospital pro¬ 
 visions, and those who are anxious to see adequate provision made 
 as soon as possible with no suggestion of charity about it, are advo¬ 
 cating that the hospitals be operated as public institutions. This will 
 undoubtedly come in time, although the Minister of Health has 
 officially stated that this is not the present Government program. 
 Nevertheless the trend is already toward wholly publicly supported 
 institutions for tuberculosis and maternity; and a good number of 
 municipalities have their own general hospitals. 
 
 At the end of August of this year (1920), the Minister of Health 
 introduced a bill which is likely to become a law, which aims to 
 make a beginning at public support and control of the hospitals. 
 The proposed legislation gives power to county authorities to supply 
 and maintain hospitals, to contribute to hospitals, to undertake the 
 maintenance of any poor law hospitals in their areas, to provide 
 ambulance service. It also gives these authorities power to raise 
 the necessary funds. 
 
 The element of national control begins to enter, for contributions 
 out of county funds to voluntary agencies are only allowed “ on 
 such terms and conditions as may be approved by the Minister.” 
 
 This legislation is obviously a temporary and temporizing manner 
 of dealing with the shortage of hospitals, since it puts the whole 
 financial burden on the counties while making possible a beginning 
 of national oversight. Still further legislation from the national 
 
35 
 
 point of view is thus needed, and is probably contemplated in con¬ 
 nection with a bill to transform the poor law institutions into general 
 municipal agencies. 
 
 11. Tuberculosis 
 
 At present provision is made under the act for the sanatorium 
 treatment of insured persons having tuberculosis. This arrange¬ 
 ment will be discontinued after the year 1920, not because it is no 
 longer needed, but because it is felt that the local authorities can 
 handle this disease better and more adequately. For then the whole 
 population will be considered at once from the point of view of 
 institutional care of tuberculosis, rather than be treated in two 
 groups—the insured and the non-insured. Domiciliary treatment 
 for this disease remains, however, the duty of the insurance doctor. 
 
 Admittedly the present provisions are too few; almost every in¬ 
 surance committe has a waiting list for sanatorium treatment. To 
 pass on to the local authorities the work of maintaining all the sana¬ 
 torium beds necessary for tuberculosis will, therefore, not solve the 
 problem. As was said above with relation to general hospitals, it 
 will be necessary in the immediate future for the Ministry of Health 
 in conjunction with the local authorities, to adopt a policy which 
 will really promise to cope with this enormous problem. 
 
 Interesting experiments are being made in the organizing of self- 
 supporting farm colonies for tuberculosis patients who have had 
 sanatorium treatment but who will be much safer and healthier if 
 they do not immediately return to the cities. One of these colonies 
 just out of Cambridge in Cambridgeshire may be mentioned as 
 deserving additional study at the hands of those in this country 
 who are carrying on the community’s attack on this scourge. 
 
 12. Nursing 
 
 No nursing services are provided under the act although as 
 already pointed out they were contemplated in 1914; and will in all 
 probability sooner or later be added. The nursing situation, like 
 that of the hospitals, is admittedly unsatisfactory and in a transi¬ 
 tional state. 
 
 Nursing services are now provided by “ local authorities in con¬ 
 nection with Tuberculosis and Infant Welfare, by Parish Councils 
 for the supervision of children under the Children Act, by Educa¬ 
 tion Authorities in following up the recommendations as to treat¬ 
 ment made by School Medical Officers, and by various voluntary 
 agencies. With such a plethora of authorities it is to be expected 
 
36 
 
 that it will frequently occur that two or more nurses will at one and 
 the same time be visiting the same family/’ 9 
 
 It will thus be seen that some districts are adequately staffed 
 while others are not; and that there is needed a proper coordination 
 of national and local policies which will make universally available 
 in a public way the services needed. 
 
 13. Prevention and Research 
 
 The claim that health insurance means a new awareness of the 
 value of preventive medicine has on the whole been substantiated 
 in the experience of Great Britain, although the developments have 
 perhaps been in unforeseen directions. 
 
 It may be fairly said that the Ministry of Health which was 
 created in 1919 grew not only out of a knowledge of the need for 
 co-ordination of medical efforts, but also out of the fact that a 
 unified national health program and administration was shown 
 to be necessary to national vitality by the health insurance and 
 by the army draft. 
 
 It is also true that since the insurance act was passed, 
 measures have been adopted for providing separately for 
 venereal disease, for tuberculosis, for maternity and child welfare. 
 How much of a causal relation exists between the needs revealed 
 by the insurance act and the inception of these services, it is 
 impossible to say. But it is certain that, now health insurance 
 is a fact, there is a new impetus and eagerness to attack the 
 hospital, nursing, dental and sanatorium problems on a public 
 and fundamental basis. It is also true that the demand for a 
 constructive policy worked out under a national medical service is 
 greater than it would have been today had there been no insurance 
 act. And the doctors have certainly come a long way toward their 
 new attitude regarding preventive medicine, toward clinical co¬ 
 operation and toward regarding themselves as custodians of the 
 health of the community as well as the curers of its ills. This 
 change of outlook, this invaluable educational process, can be 
 ascribed almost wholly to the experience they have gained in work¬ 
 ing the insurance act. 
 
 It is, moreover, now widely realized that the tuberculosis as well 
 as other sickness cannot be greatly reduced until the housing prob¬ 
 lem of the country is seriously faced on a large scale. 
 
 It was to have been expected, however, that the records of 
 sickness would reveal local problems and occupational exposures 
 which needed special attention. Medical records were required of 
 
 *A Public Medical Service, by David McKail and William Jones. 
 
37 
 
 the insurance doctors until the war when they were abandoned, 
 and only at the present time is attention being given to devising a 
 record card that will be of value. For it is admitted by all that the 
 pre-war records were practically valueless as disclosing the in¬ 
 cidence and nature of the country's sickness. 
 
 In short, after eight years of the insurance act, there is not a 
 definite body of knowledge as to which localities, trades or age 
 groups experience which particular kinds of illness. But here again, 
 extraordinary as this omission seems, it must be remembered that 
 through five war years the doctors who remained in civil life hardly 
 had time to see all the patients who needed attendance to say 
 nothing of trying to keep individual records. 
 
 On the side of research the results, although only indirectly 
 attributable to the health insurance, have been most valuable. A 
 Medical Research Committee was organized at an early date after 
 the act was passed; and during the war that committee became 
 the official research body of the Government under which worked 
 the Health of Munitions Workers’ Committee and others. Its find¬ 
 ings, reported in full in special monographs and in its very inter¬ 
 esting annual reports, have been of great medical value; and the 
 chief problem, as was pointed out by the secretary of the Committee, 
 is to get the information obtained by research quickly into the 
 hands of all the general practitioners of the land. 
 
 So important has become the work of this Committee that it 
 has now become the Medical Research Council, removed from 
 under the jurisdiction of the Ministry of Health (for reasons which 
 seem to the outsider hardly sufficient), and placed directly under 
 the Privy Council. 
 
 On the whole, considering the intervening problems, the work 
 of fostering preventive measures and research has gone well;; 
 although it is a matter of great regret that the original form of 
 medical record keeping was not well enough designed to be of per¬ 
 manent use, and that the body of existent records is so meager. 
 
 Not the least significant of the preventive influences which have 
 been set in motion are two reports, one by Sir George Newman, 
 Chief Medical Officer of the Ministry of Health, on “ An Outline 
 of the Practice of Preventive Medicine;” 10 the other the Interim 
 Report of the Consultative Council on Medical and Allied Services 
 on the “ Future Provisions of Medical and Allied Services.” 11 
 
 10 Cmd., 363. 
 
 n Cmd., 693. This, and the report referred to in footnote 10, may be 
 ordered by the code numbers given at a nominal cost from H. M. Stationery 
 Office, Imperial House, Kingsway, London, W. C. 2. 
 
38 
 
 These reports have had a wide reading and are in harmony 
 on their major recommendation, although the latter carries its con¬ 
 structive proposals into greater detail. They emphasize the strategic 
 place in a national public health program of: 
 
 1. The general practitioner as the first and major point of contact with 
 the people; 
 
 2. The primary (or local) health center as the unit of local medical 
 work especially on its diagnostic and specialist side although the members of 
 the clinic would be largely local general practitioners; 
 
 3. The secondary (or district) health center with salaried specialists 
 and consultants having necessary hospitals and laboratories; 
 
 4. A number of supplementary services and special hospitals; 
 
 5. A better integration of medical education with the day-by-day work 
 of the general practitioner. 
 
 Their conclusions as to general principles and as to methods of 
 carrying them into practical effect seem to your investigators to be 
 sound and to warrant the further study of your Commission. Two 
 copies of each accompany this report. 
 
 14. Insurance Finances 
 
 The sources of income for the insurance expenses are the 
 following: 
 
 1. Contributions of employers and employed. 
 
 2. Contributions of the State under the act. 
 
 3. Supplementary Grants of Parliament for Women’s Equalization Fund; 
 
 and for the Central Fund. 
 
 4. Parliamentary Grants as follows: 
 
 a. Medical Grants in Aid (under Act of 1913). 
 
 b. Special Grants in Ministry of Health Budget for Central 
 
 Administration. 
 
 c. Special Grants for Expenses of Insurance Committee. 
 
 The sources of expenses under the insurance act are as 
 follows: 
 
 1. Cash Benefits. 
 
 2. Doctors’ Fees. 
 
 3. Administration Expenses of 
 
 a. Approved Societies. 
 
 b. Insurance Committees. 
 
 c. Central Administration. 
 
 4. Drug Fund 
 
 5. The Reserve Fund 
 
 6. The Contingencies Fund. 
 
 7. Women’s Equalization Fund. 
 
 8. Central Fund. 
 
39 
 
 In explanation of the above two paragraphs it will be useful 
 to describe those funds not already explained. 
 
 The Reserve Fund is set up to enable the insurance fund to 
 pay for the sickness of the older members. The statutory contrib¬ 
 utions are based on the sickness rate of 16 years of age and until 
 there has been one complete generation contributing under the 
 act it is necessary to create a reserve to meet the increased incidence 
 of sickness of the older members admitted at the start. The fund 
 is based on a complete payment by 1950. 
 
 The Contingencies Fund is created for every approved society 
 to meet any extraordinary demands that might arise. 
 
 The Women’s Equalization Fund is to pay for the high incidence 
 of sickness of married women workers, which the societies have 
 found it necessary to provide for. 
 
 The Central Fund is to provide for those cases where an ap¬ 
 proved society shows a heavy and extraordinary deficit. 
 
 The moneys available from each contribution are divided as 
 follows for men: 
 
 Pence 
 
 Sickness Benefit . 3.02 (per cap. per week) 
 
 Disablement Benefit . 1.11 
 
 Maternity Benefit .68 
 
 Medical Benefit . 1.92 
 
 Expenses of Administration .94 
 
 Total . 7.67—7 2/3 pence. 
 
 To Benefit Fund (including administration) .7-2/3 
 
 To Contingencies Fund and Central Fund . 2/3 
 
 To Redemption of Reserve Fund Value .1-2/3 
 
 lOd.—total of 
 employer and employees’ 
 contribution. 
 
 But the expenses under the act, in addition to requiring 2/9 of 
 the expense of benefits to be borne by the state, necessitate other 
 appropriations. 
 
 The increased doctors’ fee now makes necessary a special Ex¬ 
 chequer grant. The amount of this grant in 1919 was £3,000,000; 
 but the 1920 figure will be considerably higher. 
 
 The Women’s Equalization Fund comes from an Exchequer 
 grant of £280,000. 
 
 The expenses of administration in the Ministry of Health come 
 (as far as can be roughly estimated from the 1920-21 budgets) to 
 something over £400,000. 
 
40 
 
 The statement given below will indicate in an approximate 
 way only the aggregate sums involved in the insurance plan for 
 the year 1920. 
 
 Approximate Balance Sheet of Receipts and Expenditures for the Opera¬ 
 tion of the Act (1920) 12 
 
 Receipts 
 
 
 Expenses 
 
 
 Contributions of Em¬ 
 
 
 Benefits (cash and medi¬ 
 
 
 ployers and Employees 
 
 £29,800,000 
 
 cal) . 
 
 £28,700,000 
 
 State Grant including 
 
 
 Supplementary Medical 
 
 
 Supplementary Grants 
 
 
 (1919 basis) . 
 
 3,100,000 
 
 on Women’s Equaliza¬ 
 
 
 Central Administration.. 
 
 400,000 
 
 tion . 
 
 6,900,000 
 
 Contingencies Fund. 
 
 1,800,000 
 
 Supplementary Grant for 
 
 
 Reserve Values . 
 
 1,500,000 
 
 Medical Services 
 (1919 basis) . „. 
 
 3,100,000 
 
 Reserve Surplus . 
 
 6,000,000 
 
 Interest on Cash Re¬ 
 
 
 
 
 serves . 
 
 2,000,000 
 
 
 
 
 £41,800,000 
 
 
 £41,500,000 
 
 A rough check of this balance sheet is obtained by making a com¬ 
 parative study of the Estimates of 1920. These show that the expense of the 
 act to the Government and payable out of the exchequer is between eleven 
 and twelve million pounds for the year. Such an amount added to the 
 receipts of the act from the contributors roughly balances the total expense 
 of the act. 
 
 I 
 
 Another sidelight on the cost of the act was supplied by the 
 figures of Dr. Addison, the Minister of Health, in reply to a ques¬ 
 tion in Parliament on July 19, 1920. He said that since the incep¬ 
 tion of the act the total cost was in round numbers 190 million 
 pounds. Of this amount 99 million pounds had gone in benefits; 
 expenses and administration had taken 25 millions; and there was 
 a balance in reserve of 60 millions. 
 
 About 12 per cent, he said, of the receipts from contributions 
 went to the approved societies for their expenses of adminis¬ 
 tration. 
 
 As far as it is safe to draw any conclusions from the above 
 figures, they indicate that to provide medical service for about 
 15 million people and cash benefits to the amount of something 
 over 15 million pounds, the yearly Government expenditures 
 is about 12 million pounds and the cash contributions of employer 
 
 “This statement aims to give only the most general approximation of 
 receipts and expenses. It includes a figure for the supplementary medical 
 grant which is probably much too low owing to the fact that the 1920 medical 
 oayment is at the new rate of $2.75 per insured. 
 
41 
 
 and the workers are something over 29 million pounds. And it 
 has so far cost one pound for administration for every four pounds 
 expended on benefits. 
 
 It would seem to be fair to draw the conclusion that for the 
 benefit of 15 million peoples’ health, about 205 million dollars (in 
 terms of American currency) per year is being spent; or between 
 $13 and $14 per insured person per year. If these figures are at 
 all accurate, the total outlay appears large for the benefits received. 
 
 In a careful study of “A Public Medical Service” (Allen & 
 Unwin), 1919, made by a Glasgow doctor and the Clerk of the 
 Glasgow Insurance Committee, the case is set forth with a con¬ 
 vincing show of accurate statistics for a truly public medical service 
 (cash benefits excepted), which would cost between 12 and 13 
 shillings per person per year—or a little over $3. The additional 
 cost necessary to pay cash insurance claims would certainly not 
 amount to over $5 (probably $4 would be much more nearly a 
 correct figure on the basis of the amount of the English benefits) ; 
 making a total cost of less than $10 per capita for medical and 
 institutional treatment available for the entire population with 
 the addition of cash benefits of the amount specified in the British 
 act. 
 
 These figures are introduced as being in no sense exact or con¬ 
 clusive. But they are believed to indicate that the present methods 
 of an insurance scheme with duplicating approved societies, 
 elaborate doctors’ panels, government inspecting agencies and small- 
 scale private druggists, create a variety of channels for small wastes 
 and leakages, which in the aggregate amount to an unwarrantedly 
 high expense for the value received. 
 
 Moreover, it is obvious that the method of financing the 
 measure has now departed (if indeed it ever was so financed) 
 from an insurance basis. Special funds are created and new 
 costs are added with no regard to the amounts originally made 
 available. This is not said in objection to the present method 
 of financing by supplementary grants. But it is a further point 
 in the evidence that the tendency is increasingly away from an 
 insurance and toward a public health basis of finance, so that the 
 funds are made available on a basis of public need rather than 
 solely on a basis of joint contribution and a pooled risk. 
 
42 
 
 V. Conclusions 
 
 T HE general conclusions reached by your investigators were 
 somewhat summarily stated at the outset. But it may not 
 be out of place to consider finally some of the more specific results 
 of the British experience from which America might especially 
 profit. 
 
 A. The application of the insurance method to the provisions 
 of medical, hospital and nursing facilities is a clumsy and indirect 
 way of making sure that the public health is being fostered and 
 conserved. 
 
 The tendency is a wise one which brings a separation between 
 the medical services which should be universally available and the 
 cash benefits which might remain on an insurance basis. 
 
 On the other hand, it is undoubtedly true that the immediate 
 expense to the public treasury can be kept considerably reduced 
 by securing payment for the medical services out of the fund 
 created by the joint contributions. 
 
 And it is further true, not only in England but wherever 
 health insurance has been instituted, that the working of the 
 insurance has supplied the great education to all groups in the 
 community but especially to the doctors, as to the necessity for 
 . a more extensive public health program. 
 
 Hence, as a practical matter, the incorporation of the medical 
 benefits into the insurance act is probably a wise step coupled 
 with which should be the extension of these benefits under the 
 act to all dependents. 
 
 B. The public health provisions of the community should as 
 soon as possible include the following: 
 
 Medical attendance for all sick members of the community who 
 desire it (including general practitioner and consultant services) : 
 
 Institutional treatment including hospitals, sanataria and con¬ 
 valescent homes; 
 
 Medicine and medical appliances; 
 
 Dental treatment, nursing; and 
 
 All medical services incident to maternity. 
 
 These provisions should be available on a basis of joint state 
 and local support with the actual administration of the work as 
 the responsibility of the local health authorities, who would be so 
 organized or reorganized as to be able to include the above services 
 under their care. 
 
 Plans for the relation of local to district medical facilities have 
 ' been admirably worked out in one or two English counties and their 
 method of organization suggests a model for careful consideration. 
 
43 
 
 As illustrative of the method there in use, the plan given below 13 
 is valuable: 
 
 1. The authority for carrying out the scheme will be a Board 
 consisting of representatives of the County Council and of the 
 General Hospitals. 
 
 2. The General Hospital areas shall be those shown on the 
 sketch plan, subject to such modifications as experience shall show 
 to be necessary. 
 
 3. In each Hospital area an Advisory Committee shall be 
 formed of members of the Hospital Staff and Medical Officers in 
 charge of the out-stations, whose duties will embrace— 
 
 a. Ensuring that all treatment given at the out-stations is 
 
 effective, and 
 
 b. Advising the Board of Representatives on all medical 
 
 matters, including all difficulties arising in connection 
 
 therewith. 
 
 4. The situation of the out-stations shall be as shown on the plan 
 and where practicable shall be established in connection with the 
 Cottage Hospitals. They will be opened in the order decided by the 
 amount of work likely to be done at each and will be arranged to 
 meet the circumstances of each particular area, being larger and more 
 completely equipped in the denser localities than in the more scattered 
 areas. 
 
 5. The out-stations will be provided and equipped by the 
 County Council. 
 
 6. The uses of the out-stations are primarily for examination 
 and out-patient treatment in connection with— 
 
 a. Venereal Diseases, 
 
 b. Tuberculosis, 
 
 c. Ex-service Men, 
 
 d. School Children, 
 
 e. Maternity and Child Welfare, 
 
 for which provision has been made at the public expense. They 
 will also be available for other conditions for which provision 
 may be made in the future, and may be used by the Medical Officers 
 for insured persons and general hospital cases, by arrangements 
 with the County Council. 
 
 7. The Staff will be— 
 
 a. Medical 
 
 (1) A regular staff consisting of local practitioners 
 appointed as medical officers by the Board of Repre¬ 
 sentatives. 
 
 (2) A consultant staff consisting of— 
 
 (a) Visiting Staff of the General Hospital. 
 
 (b) The Tuberculosis and Venereal Disease 
 
 Officer of the County Council. 
 
 b. Nursing 
 
 (1) District Nurse 
 
 J * Report of County Medical Officer on Health to Gloucestershire County 
 
 Council, June 4, 1919. 
 
44 
 
 (2) Masseur and Masseuse ) 
 
 (3) V. D. Orderly and Nurse ( peripatetic 
 
 8. The Out-stations will be opened— 
 
 a. Weekly at a convenient hour, on a fixed day, for atten¬ 
 dance by the medical officer, or oftener if necessary for 
 the work of the County Council. 
 
 b. Periodically, for attention by members of the Visiting 
 Staff, and by the Tuberculosis and Venereal Disease Officer, 
 by arrangement. 
 
 c. As often as may be necessary for intermediate treat¬ 
 ment by the Nursing Staff. 
 
 d. At such other times for the convenience of the 
 Medical Officer in seeing his own patients and hospital cases, 
 by arrangement with the County Council. 
 
 9. A register shall be kept of all attendance in a book provided 
 for the purpose, and a case file kept for each case containing such 
 simple notes as may be necessary for the medical history of the 
 patient. 
 
 It should be pointed out that such proposals as these do not 
 involve the idea of a universally state-employed medical service. 
 Your investigators believe that the idea of such a service is repug¬ 
 nant to the great majority of physicians and patients, and that the 
 best results, at least for some time to come, are obtainable in other 
 ways. For example, the general practitioner who is to be available 
 to give public medical service to any comer, would (as now) go upon 
 the Government’s list and have assigned to his care those families 
 who elected to have him as their physician. He would then be paid 
 on a capitation basis. If any individual feels that he would get 
 better service by going to a doctor who is not on the public list, 
 or by paying a public practitioner in his other capacity as a private 
 doctor for the service he gets, he is at liberty to elect either of 
 these alternatives. And the doctor meanwhile has whatever spur 
 is provided both by the opportunity of getting on in the public 
 service or of making good in private practice. 
 
 In short, there would be necessary the employment on full 
 or part time (as at present with the insurance doctors) by the 
 public health authorities of a constantly increasing number of 
 general practitioners and specialists, thus accelerating an exist¬ 
 ent tendency. But there would still be the widest possible lati¬ 
 tude for those persons who chose to secure their own medical 
 and institutional care, and for those doctors who preferred on 
 whole or part time, to carry on private practice. 
 
 Moreover, the existence side by side of a considerable amount 
 of both public and private practice would undoubtedly react whole¬ 
 somely on each, keeping initiative, energy, professional ambition and 
 a spirit of public service alive and growing. 
 
45 
 
 In short, the medical benefits under an act should be as 
 liberal as possible, including the maximum of institutional pro¬ 
 visions as well as general practitioners' care, and all treatment 
 should be carefully co-ordinated to bring into effective use for 
 the insured and his dependents all local and all state facilities. 
 
 C. Having made medical provision available for all insured and 
 their dependents, it would still be necessary to make provision on a 
 compulsory insurance basis for payment of cash benefits to workers 
 when they are unable to work and secure wages. 
 
 All employed persons should be required to insure in a state 
 fund out of which cash benefits would be paid during incapacity 
 due to illness. 
 
 D. Cash benefits should be at least 50 per cent of wages. 
 
 E. The administration of cash benefits should be decentralized 
 on the disbursement side on a geographical basis, but centralized on 
 the collection side, so that the Fund would be pooled and the risk 
 distributed over an entire state. Benefits should be paid through a 
 local agency, which would be in the control of representatives of the 
 affected groups. 
 
 F. The cash maternity benefit should not be administered on 
 an insurance basis, but should be universally available and should be 
 of an amount to cover fully the expenses of confinement. There is 
 much to be said for a policy which makes of this benefit a maternity 
 endowment of an even more substantial amount. 
 
 Medical service should be freely available for all maternity cases. 
 
 O 
 
 It is recognized that these conclusions may seem to your Com¬ 
 mission to extend into a larger field than that of the immediate 
 inquiry. They are, however, the conclusions to which your investi¬ 
 gators were led in an honest and wholly unprejudiced effort to 
 discover the good and the bad in the English act, from the point of 
 view of its furtherance of the public health and from the point of 
 view of its availability for American uses. 
 
 It may, of course, be necessary for each separate community 
 to make the same social experiments and learn by the same 
 mistakes. It is to be hoped, however, that this is not true; that 
 it is possible for one community to build upon the experience of 
 another. And the experience proves, as your investigators read 
 the evidence, that the acute necessity for greatly developing the 
 public medical facilities of the state should be recognized, and 
 set apart from and in addition to any insurance provisions. The 
 two are not mutually exclusive. They are supplementary. But 
 
46 
 
 the proper and wise development of the public health services will 
 and should modify the kind of insurance plan which is adopted. 
 
 Your investigators recognize fully the painful fact that those 
 forces which have for various reasons been in opposition to the 
 introduction of health insurance into America, have taken the 
 line that “ prevention ” rather than insurance is the method to 
 pursue. Where this position was simply taken to delay matters 
 and “ preventive ” was simply a plausible cant phrase with 
 which to oppose any governmental action, the opposition has of 
 course been sinister to a degree. 
 
 But this fact should, nevertheless, not be allowed to lead to a 
 slighting of the immediate value and need of aggressively preventive 
 work. Hence, if we are to meet that opposition most effectively 
 we might well take up the slogan: 
 
 Medical and institutional service freely available for 
 all employed persons and for their families, with cash 
 benefits for physically incapacitated workers out of a 
 fund created by joint contributions, and with the 
 strengthening and co-ordinating of the federal, state 
 and local public health activities on behalf of children, 
 mothers, the subnormal and abnormal, the aged and 
 those suffering from all infectious diseases. 
 
 It is not a question of prevention or insurance. It is—when all 
 elements in the problem are faced at once—a question of assuring 
 simultaneously adequate medical service, prevention and cash sub¬ 
 vention. And there is no good reason why these three aspects of 
 a public program should not be developed together. Certainly to 
 allow the advocacy of one to be used as a basis for opposition to 
 another is unscientific and short-sighted. 
 
 This report will certainly be construed wrongly if it is taken to 
 be unfavorable to health insurance in general or to the British act in 
 particular. It aims rather to give a discriminating statement of the 
 extent to which insurance has been able to carry out the original 
 promises and purposes of its proponents. 
 
 The British Health Insurance Act has been a distinctly for¬ 
 ward step in social legislation. It is, however, to be hoped that 
 your Commission will see its way clear to favoring a program 
 at once more thorough-going, far-reaching, economical and 
 scientific, which will, however, include an application of the 
 insurance idea in its legitimate sphere. 
 
47 
 
 Appendix 
 
 Persons Interviewed in Course of Inquiry into 
 British Health Insurance 
 
 Mr. W. A. Appleton, secretary, General Federation of Trades Unions; Mr. John 
 Baker, secretary, Iron & Steel Trades Confederation; Mr. Barlow, assistant secretary, 
 Workers’ Union; Dr. Ethel Bentham, panel doctor, London, Member Labour Party 
 Committee on Public Health; Mr. George P. Blizard, insurance expert (former secretary, 
 Labour Party Committee on Public Health); Miss Margaret G. Bondfxeld, secretary. 
 National Federation of Women Workers; Mr. G. A. Stuart-Bunning, secretary, National 
 Federation of Sub-Post Masters; Mr. G. W. Cantor, insurance executive of Union of 
 Post Office Workers; Mr. A. S. Cole, Peek, Frean & Co., Ltd., London; Dr. Alfred Cox, 
 secretary, British Medical Association; Mr. Wm. Cramp, assistant secretary, National 
 Union of Raihvaymen; Mr. G. W. P. Epps, Government Actuary’s Office; Dr. Letitia 
 D. Fairfield, medical officer of London County Council; Sir Walter M. Fletcher, 
 secretary, Medical Research Council; Mr. Thomas Foster, building trades employer, 
 Bromley, Lancashire; Mr. I. G. Gibbon, administrative official in Ministry of Health; 
 Mr. E. Hackforth, administrative official in Ministry of Health; Mr. R. W. Harris, 
 administrative official in Ministry of Health; Mr. Frank Hodges, secretary. Miners’ 
 Federation of Great Britain; Mr. D. J. Jenkins, insurance executive, Iron & Steel Work¬ 
 ers, Approved Society; secretary, Association of Approved Societies; Miss Eleanor T. 
 Kelly, employment manager, Debenham & Co.; Dr. Wm. Kerr, medical officer of' London 
 County Council; Mr. F. Kershaw, insurance executive, National Federation of Women 
 Workers; Mr. James P. Lewis, executive officer. Hearts of Oak Benefit Society; Mr. E. 
 J. Lidbetter, Bethnal Green Poor Law Union; Mr. Thomas Lilly, clerk, Manchester 
 Insurance Committee; Mr. McFarlane, divisional inspector. National Health Insurance, 
 Manchester District; Sir Charles Macara, cotton manufacturer, Manchester; Mr. A. B. 
 Maclachlan, administrative official in Ministry of Health; Mr. J. S. Middleton, assistant 
 secretary, British Labour Party; Mr. Miller, insurance executive, Workers’ Union; 
 Miss Murby, inspecting staff, National Health Insurance; Sir Thomas Neill, president. 
 National Amalgamated Approved Society; Dr. Charles A. Parker, consulting physician; 
 Dr. Marian Phillips, women’s organizer of Labour Party; Mr. Charles G. Renold, 
 firm of Hans Renold & Co., Manchester; Dr. Harry Roberts, panel doctor, London; Dr. 
 Meredith Roberts, administrative official in Ministry of Health; Mr. D. A. Rushton, 
 editor, National Insurance Gazette; Mr. Samuel Sanderson, secretary, Insurance Section, 
 Amalgamated Association Card, Blowing and Ring Room Operatives; Mr. Sharp, Harrods’ 
 Department Store, London; Mr. Robert Smith, insurance executive, Cooperative Whole¬ 
 sale Society Approved Society; Mr. H. O. Stutchbury, administrative official in Ministry 
 of Health; Mr. Fred Thomas, Amalgamated Weavers’ Association; Mr. John Turner, 
 secretary, National Amalgamated Union of Shop Assistants; Miss Ward, inspecting staff. 
 National Health Insurance Dept.; Mr. Warren, insurance executive, National Amalga¬ 
 mated Union of Shop Assistants; Sir Alfred W. Watson, government actuary; Mr. & 
 Mrs. Sidney Webb, economists, members 1909 Poor Law Commission; Dr. A. Welpley, 
 secretary, Medico-Political Union; Dr. J. S. Whitaker, administrative official in Ministry 
 of Health; Mr. H. L. Woolcombe, secretary, London Charity Organization Society.