From the CQ Researcher Archives: "Sickness Insurance", July 9 1934

Below are excerpts from the July 9, 1934 issue of CQ Researcher on "Sickness Insurance and Group Hospitalization"
New Plans for Meeting the Burdens of Sickness

Appointment by President Roosevelt on June 29. 1934, of a committee to formulate plans for a comprehensive system of social insurance, including insurance against sickness, has enhanced the likelihood that such protection will be made available to the people of the United States at the next regular sessions of Congress and the state legislatures, scheduled to meet in January, 1935.

The problem of providing against sickness and accident, always a difficult one for persons of small means, has been rendered more acute by the long-continued depression. Wide interest in group hospitalization plans and advance provision for medical services through fixed periodic payments has been stimulated meanwhile by the reports of the Committee on the Costs of Medical Care.

Present tendencies in the direction of group hospitalization and sickness or health insurance have disclosed sharp differences of opinion on these subjects in the ranks of the medical profession. The American Medical Association, the most representative body of American physicians, maintains its traditional attitude of hostility to group practice and health insurance, insisting that the present relationship between doctor and patient must not be disturbed. The American College of Surgeons, on the other hand, has recently assumed leadership in the movement for health insurance, recognizing that there are important groups in the population for whom adequate medical services are not now available.

Roosevelt on Need for Comprehensive Social Insurance

The importance of the problems raised by the high costs of medical care and the maldistribution of medical facilities were recognized by President Roosevelt while serving as governor of New York. “Because large groups of the population seem unable to provide themselves with adequate medical services,” he wrote in 1932, “the problem was of major importance five years ago.” Its importance had been vastly increased, he said, by the change in the economic situation since 1929.

In a special message to Congress. June 8, 1934, the President announced his conviction that a comprehensive system of social insurance was needed to provide security for the people of the United States. Fear and worry based on unknown danger contributed, he said, to social unrest and economic demoralization. It was the plain duty of the federal government under the Constitution to promote the general welfare by providing for that security upon which welfare depends. The great task of furthering the security of the citizen and his family through social insurance might well be undertaken next winter. This was not an untried experiment, for lessons of experience were available from states, from industries, and from many nations of the civilized world.

I believe there should be a maximum of cooperation between states and the federal government [Roosevelt continued]. I believe that the funds necessary to provide this insurance should be raised by contribution rather than by an increase in general taxation, Above all, I am convinced that social insurance should be national in scope, although the several states should meet at least a large portion of the cost of management, leaving to the federal government the responsibility of investing, maintaining and safeguarding the funds constituting the necessary insurance reserves.
In a radio speech on June 28, the President again asserted that the agencies of government should help provide “sound and adequate protection against the vicissitudes of modern life—in other words, social insurance.” He took the initial step the following day by creating the President's Committee on Economic Security to collect and coordinate information and formulate a program under which state and local governments might cooperate under federal leadership in solving the problem of insecurity.

The White House statement announcing appointment of the committee said that facts would he gathered and analyzed with regard to unemployment compensation, old age pensions, workman's compensation, health insurance, mothers' pensions, maternity benefits, and insurance against the special hazards of self-employment in small business and agriculture. Hearings will be held to obtain the views of labor, business, agricultural, social welfare, governmental, and other interests. “It is expected,” the White House statement concluded, “that the compilation of existing information, supplemented by newly-gathered facts, buttressed by national opinion revealed by the hearings, and summed under a final analysis, will constitute the most comprehensive treatment of the problem of economic and social well-being ever presented to the people.”

Opposition of American Medical Association to Insurance

A report submitted to the house of delegates by the Association's Bureau of Medical Economics asserted that “existing systems of insurance have failed to solve the problem of medical care for the people and have brought a great many evils along with some benefits.” Evidence was cited to indicate that the huge sums necessary for insurance might be expended in other forms of health care with much greater effect.
It is shown by documented evidence [the report declared] that insurance has nowhere reduced morbidity, that no actuarial basis has ever been set up that has not been proved defective, and that the vast sums required for insurance and the dominance of such systems in the political and social life of a country tends to focus attention on insurance to the exclusion of other forms of effort and therefore indicates that it is not the most effective method of meeting the problems of medical care for the mass of the people.
The Bureau cited a large number of recent writers to show that there was a widespread movement in insurance countries to substitute for sickness insurance some form of compulsory saving with payment of an immediate sum for medical services and the return of a portion of the unused savings for insurance needs. Fishbein has asserted that, after carefully scanning examples of socialized medicine in 23 European countries, he has found that “not one of them had been established as a success.”

In his recent volume on social insurance, I. M. Rubiuow expresses amazement that the medical profession is “so ignorant of the nature of health insurance.” Physicians could easily ascertain, Rub now asserts, that

1. Compulsory health insurance is not tied up with any specific plan for organization of medical aid.

2. That among all the various plans for providing medical aid under a compulsory health insurance system, the method of salaried full-time service—so hateful to the American tradition—is the least popular.

3. That medical organization under health insurance is almost the direct opposite to “state medicine,” and

4. That a system of free “state medical service” is an alternative that will eventually be forced upon the United States, if the working masses are not given the opportunity to pay for their medical needs collectively through the insurance method.

The only present alternatives for low-income groups, Rub now declares, are to go without necessary medical aid, or to receive it as an act of charity from a benevolent, profession. Both of these he believes to be unacceptable to the American people.

To view the entire report, login to CQ Researcher Online [subscription required]