Cornell Umvcrsuy Liorary
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Report of the Social insurance commissio
3 1924 002 336 661
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REPORT
Social Insurance Commission
State of California
PROPERTY OF UBR-^/
NEW YOBK STATE SCHOOL
INDUSTRIAL m LAOOR RELATIONS
CORNELL UrJlVERSITY
JANUARY 25, 1917
CALIFORNIA STATE PHINTING OFFICE
SACRAMENTO
19 17
t-i
MEMBERS OF SOCIAL INSURANCE COMMISSION.
KATHARINE C. FELTON.
DR. FLORA W. SMITH.
GEORGE H. DUNLOP.
MRS. FRANCES N. NOEL.
PAUL HERRIOTT, Chairman.
ADVISORY MEMBERS.
CHESTER H. ROWELL.
DANIEL C. MURPHY.
ANSLEY K. SALZ.
Baebaea Nachtrieb, Executive Secretary.
LETTER OF TRANSMITTAL.
To the Members of the Senate and Assembly of the
California Legislature, Forty-second Session.
Gentlemen : In accordance with Chapter 275 of the Statutes of 1915,
we present herewith the report of the findings and recommendations
of your commission appointed by his Excellency, Governor Hiram "W.
Johnson, to investigate social insurance.
Paul Heeriott, Chairman.
Katharine C. Felton.
Dr. Flora W. Smith.
Mrs. Prances N. Noel.
George H. Dunlop.
Sacramento, California,
January 25th, 1917.
CONTENTS.
Page.
HISTORY OF THE COMMISSION 7
FINDINGS AND RECOMMENDATIONS OF COMMISSION 11
In General — Conditions in the United States — Conditions in California — ■
Recommendations of Commission — Proposed Constitutional Amendment —
Possible Organization of Health Insurance in California.
CALIFORNIA SURVEY 25
Burden Illness Puts on Wage Earning Families — Burden Which Illness
Puts on Public — Efforts of Wage Earners to Protect Themselves — Efforts
of Employers to Protect Employees — Field Survey of South San Francisco
and an Industrial District of San Francisco — Hospital Facilities of the
State — Conclusions.
FIELD OF SOCIAL INSURANCE 125
Industrial Accident Insurance or Compensation — Health Insurance — ^Mater-
nity Insurance — Old Age and Invalidity Insurance — Unemployment Insur-
ance — Life Insurance — Principles of Distribution of Cost.
HEALTH INSURANCE IN FOURTEEN COUNTRIES 147
Part I, Compulsory Systems — Germany — Austria — Hungary — Luxemburg —
Great Britain — Russia — Roumania — Servia — Norway — Netherlands ; Part II,
Voluntary — Subsidized Systems — Denmark — Switzerland — Sweden — France.
SOCIAL RESULTS OF SOCIAL INSURANCE 209
EXISTING FACILITIES FOR INSURANCE OF WAGEWORKERS IN THE
UNITED STATES 223
In General — Trade Unions — Fraternal Orders — Establishment Funds —
Commercial Insurance Companies.
SOCIAL INSURANCE MOVEMENT IN THE UNITED STATES 245
In General — Public Life Insurance — Health Insurance — Old Age Insurance
and Pensions — Unemployment Insurance — Mothers' Pensions and Orphans'
Aid — Committees on Social Insurance — Attitude of American Students on
Social Insurance.
ESTIMATES OF COST 285
Estimate of Number Subject to Health Insurance — Computation of Pay
Roll Exposed — Probable Rate of Sickness — Cost of Medical Aid — Cost of
Hospital Care and Drugs — Computation of Cost.
CHAPTER I
HISTORY OF THE COMMISSION.
INTRODUCTORY.
In tlie spring of 1915, insistent problems of dependency and destitu-
tion were called to the attention of the California legislature. It was
pointed out that destitution was a growing social disease, that public
relief was at best an undemocratic palliative that demands for assist-
ance were increasing at such an alarming rate as to become an intoler-
able burden upon public funds.
The need of coping with this disease of destitution in a way calcu-
lated to prevent its future inception and growth was reiterated by social
workers and they testified to the beneficial effects of the Workmen's
Compensation Act, which insured the wage earner against the disastrous
results of industrial injuries. They pointed out that workmen's com-
pensation was but a part of a comprehensive protective system worked
out in European countries, under which system, if the worker fell ill,
he was entitled to medical attention and a substantial part of his wages ;
if he became an invalid or reached old age, he was entitled to a pension
for the rest of his life ; if he was out of employment, he was maintaned
until a job was available, while if he died leaving dependents, these
dependents were given a pension. This protective system, to wit : social
insurance, was designed to prevent and relieve destitution. It involved
the establishment or assistance by the government of insurance of work-
ing men against the loss of earning capacity from any or all causes.
The cost of this insurance was met partly by the working men, partly
by their employers and partly by the state.
In view of the fact that one phase of social insurance had been so
successfully transplanted to this country and was being effectively and
efSeiently administered by the Industrial Accident Commission of this
state, the possibilities of benefit from other branches of social insurance
suggested itself to persons interested in social progress. Accordingly,
a bill creating an unsalaried commission to investigate the whole
problem was introduced in the legislature and was passed by that body
as Chapter 275 of the Statutes of 1915. It became a law by the signature
of the governor on May 17th and went into effect the following August.
Pursuant to the terms of the act. Governor Hiram W. Johnson
appointed the five following members : Katharine C. Felton, San
Francisco; Mrs. Prances N. Noel, Los Angeles; Dr. Flora W. Smith,
Kingsburg; George H. Dunlop, Los Angeles; John Francis Neylan,
Sacramento.
These appointees meet for the organization meeting of the California
Social Insurance Commission on Monday, September 27, 1915, in
Sacramento. Mr. Paul Herriott, of Sacramento, was later appointed
10 REPORT OP SOCIAL INSURANCE COMMISSION.
to fill a vacancy created by the resign-atian of Mr, Neylan and was
elected chairman.
The commission was required to make a careful study of European
systems of social insurance, to determine whether California needed and
was ready for a further development of social insurance, to prepare
careful estimates of the cost of any legislative step it might advise and to
incorporate the results of its work in a report to the following legis-
lature.
The commission realized early in its studies of the European systems
that however great the need might be in California of a complete system
of social insurance, problems of cost and administration would prevent
the state from adapting the whole complex scheme to California con-
ditions at one time. It was decided, therefore, to include in the report
a general survey of the entire field of social insurance and to center
the California investigations upon one branch.
The importance of the problem of increasing cost which state aid to
orphans and half orphans was creating for the State Board of Control
was discussed by the commission. Since, however, the branch of social
insurance which attempts to meet this problem, to wit : life insurance
for the benefit of dependent children, was still in the first stages of its
development in Europe and since also it was the most technical and
difficult of administration of all the phases of the'subjeet, it was deemed
impracticable to think of it as a possibility at this stage of the develop-
ment of social insurance in the United States.
The choice of health insurance for concentrated study did not mean
that it was necessarily the most important phase of social insurance.
Health insurance was selected for several reasons — actuarially and in
point of administration it was the simplest branch of the complex social
insurance scheme; it was most closely allied to industrial accident and
could most easily be adapted to the mechanism worked out for the
existing state fund. Finally, the unanimous advice of the eastern men
and women who had carefully studied social insurance problems was
to center all efforts upon health insurance.
In order to have the benefit of expert advice in this pioneer work,
the commission secured the services of Dr. I. M. Eubinow, of New York
City, as consulting actuary for six months from July to January. In
January, 1916, Miss Barbara Nachtrieb was appointed executive secre-
tary to take charge of the active work. The secretary, who was in New
York at the time, was directed to spend a few weeks in the eastern cities
in consultation with the leading experts on social insurance and in
digesting the important works on social insurance. This plan was
carried out. The commission, at its February meeting, received a report
of the eastern work, and very soon thereafter the investigations were
commenced.
CHAPTER II
FINDINGS AND RECOMMENDATIONS
OF THE COMMISSION
R-;f:
REPORT OP SOCIAL INSURANCE COMMISSION. 13
SECTION I.
In accordance with the terms of the act, by virtue of which the Com-
mission was created, the investigations undertaken and reported upon
herewith, include :
(a) The various systems of social insurance now in operation in dif-
ferent foreign countries.
(6) A special study of compulsory and voluntary subsidized health
insurance systems in fourteen European countries.
(c) Evidence as to the general etfeet of social insurance upon the
economic status of wageworkers in Europe.
{d) Facilities available for insurance of workmen in the United
States.
(e) A general survey of conditions of employment in California, such
as average wages, unemployment and health conditions of several work-
ing communities.
(/) The cost of medical aid and hospital care in relation to the earn-
ing capacity of the average wageworker.
ig) Present facilities for public care of the indigent sick in Cali-
fornia, such as available free hospital space, and out-patient clinics.
{h) The problem of poverty and destitution in California, especially
in their connection with sickness.
(i) The present extent of voluntary health insurance in California
through fraternal orders, trade unions and commercial insurance com-
panies.
In addition the Commission has held public hearings to determine
the attitude of public opinion on the question of the advisability of com-
pulsory health insurance in the State of California.
On the basis of all the information collected the Commission finds, as
follows :
(1) Social insurance in its various branches represents a world-wide
movement which embraces not only all of Europe but a large portion of
the British Empire, and has made its beginnings in Asia and America.
It is at the present one of the most important movements in modern
social and labor legislation. All modern, civilized and industrial coun-
tries have some social insurance legislation in force. The most impor-
tant and progressive foreign countries also possess the most compre-
hensive social insurance systems.
(2) Social insurance methods represent a practical and effective
means of counteracting at least some of the harmful results of modern
industrial conditions upon the well-being of wage earners, and espe-
14 REPORT OF SOCIAL INSURANCE COMMISSION.
eially of preserving those persons who for some reason or other cease
being independent producers either temporarily or permanently.
(3) While no country in the world has as yet succeeded in abolishing
poverty or even destitution and the need for charitable relief, much has
been accomplished toward that goal in severar countries by means of
the existing social insurance systems.
(4) In addition to this relief of destitution, social insurance has
proved to be a powerful factor for the preservation of life and health,
through the "safety -first" movement, through improved care of the
sick and invalids and through regularization of employment. In several
countries the increased span of life and improved health conditions are
largely ascribed to the influence of social insurance institutions.
(5) The success of the social insurance institutions appears to be
largely dependent upon their compulsory character. Both in the num-
ber of the persons protected and in the quality of services rendered,
compulsory insurance systems appear to be vastly superior to the volun-
tary ones.
(6) Different racial and national conditions and different political
organization seem to have had little effect upon the existence and exten-
sion of social insurance institutions in various countries.
(7) Next to compensation for industrial accident compulsory health
insurance is the most highly developed form of social insurance in
Europe and it has followed accident compensation in several countries
as the next step in the extension of social insurance.
After investigation of conditions throughout the United States the
Commission further finds that :
(1) Millions of wageworkers recognize the advantages of the insur-
ance method in general for protection against the hazards of the wage-
worker 's existence. This is demonstrated by the numerous insurance
institutions which they have created and in which they participate as
for instance, trade unions, benefit funds, fraternal orders and other
benevolent societies.
(2) Nevertheless, in absence of legally established systems, the benefit
of voluntary insurance has as yet been extended to a comparatively
small part of the American wageworking population except for funeral
insurance. However, the benefits rendered by these voluntary institu-
tions are far from sufficient to meet the need.
(3) Since the industrial accident compensation movement has swept
the country there has been considerable discussion of aU. other branches
of social insurance by governmental commissions, voluntary committees
and labor organizations as well as public opinion at large.
(4) There has been a decided change in the attitude of American
students of economic and sociological problems towards social insurance
methods, so that instead of the general opposition of ten years ago the
REPORT OF SOCIAL INSURANCE COMMISSION. 15
Commission finds among them at present an almost unanimous support
of the compulsory social insurance method of coping with the problem
of destitution in this country.
Of the experts on economic and social problems consulted the majority
agreed that health insurance is the particular branch of social insurance
which can and should be developed next in this country.
Finally, on the basis of statistical information gathered in its Cali-
fornia investigation toward which the greatest part of the efforts of the
Commission were directed, the Commission finds that :
(1) While the rate of weekly wage is higher in California than in
Eastern states, the earning power of the majority of the wageworkers
is not sufficiently high to enable them to go through an attack of serious
illness without a very grave hazard to their economic well-being.
(2) The loss of earnings through unemployment is very large, thus
materially affecting the annual income.
(3) The expenses of treatment of the sick are heavy in California, as
they are throughout the Pacific coast, and considerably heavier than in
other parts of the country.
(4) The Commission has no intention of criticizing the charges made
by the medical profession for its services. Comparison of the standards
of payment for medical services with the incomes of the large propor-
tion of the wageworkers, leads to the conclusion that medical aid at the
ordinary rate of payment is not within the means of a large number of
wageworkers.
(5) The cost of private hospital service is beyond the reach of the
paying capacities of most wageworkers, and with the exception of a very
few county hospitals and a few private hospitals to which free patients
are admitted, the available beds in the ordinary county hospitals offer
facilities which are recognized by the proper authorities to be unsatis-
factory and are not acceptable to the large number of wageworkers.
As a result free hospital facilities are decidedly inadequate. In com-
parison with the standard of five hospital beds per thousand of popula-
tion, California has only one free hospital bed per thousand.
(6) As a result of these conditions, the Commission finds there is a
rapid increase in the use of free clinics, lodge practice of medicine,
mutual hospital associations and commercial hospital associations,
patronized largely by wageworkers.
(7) In investigating the relief work which charitable organizations,
public and private, are called upon to perform, sickness was found to
be the largest single cause of dependency.
(8) Despite the hardship which illness brings to the individual wage
earner, investigations disclosed the fact that California has a compara-
tively low sickness rate — an average of six days per person is lost each
year because of sickness.
16 REPORT OP SOCIAL INSURANCE COMMISSION.
(9) A full investigation of the existing insurance facilities shows con-
clusively that health insurance is an institution with which the people
of California, and especially its working men and working women are
familiar through fraternal orders, benefit societies, trade unions and to
some extent through commercial insurance companies.
Probably not more than one-third of California wageworkers have
voluntarily insured themselves against the hazard of sickness, and these
voluntary efforts reach only an extremely small proportion of the people
who need it most. In most cases the entire financial burden is placed
upon the wageworkers themselves and therefore the funds collected are
usually inadequate to provide support during illness and scientific
medical care. This is particularly true of medical and hospital services
furnished except in a very few large corporations.
As a result of these findings, the Commission has arrived at the
conclusion that legislative provision for a state-wide system of com-
pulsory health insurance for wageworkers and other persons of small
incomes would offer a very powerful remedy for the problem of sickness
and dependency in the State of California.
In selecting health insurance as the particular branch of social insur-
ance best adapted for earliest action, the Commission was guided by
the following conditions :
(a) Health insurance appears logically to be the next step in develop-
ment after accident compensation.
(6) It offers the least actuarial and organizational difficulties as com-
pared with other more complicated branches of social insurance wliich
require provision of substantial reserves.
(c) While the grave character of the problem of unemployment can
not be denied, no system of unemployment insurance in California
would appear practicable until further measures are taken to reduce the
amount of unemployment. Moreover, unemployment insurance is a
comparatively new institution with a very limited amount of experience
available at present.
(d) Old age insurance presents such serious actuarial and financial
problems that the Commission does not feel in a position to make any
recommendation concerning it at this time. Further study of the prob-
lem, especially as to the comparative merits of the methods of com-
pulsory insurance and straight old age pensions, would be required.
(e) It is claimed, and with some justice, that in both the field of old
age and unemployment insurance national action may be necessary;
while the problem of dependency due to sickness is largely a local prob-
lem amenable to state action.
In the opinion of the Commission the principle of health insurance
is familiar to the people of the State of California. Undoubtedly a
system of public compulsory insurance introduces certain elements of
RT5P0RT OF SOCIAL INSURANCE COMMISSION. 17
comparative novelty, but even during the existence of the Commission
growing understanding and approval of this novel principle could be
easily observed. This was brought out very clearly in the hearings held
in San Francisco, where the predominating majority of witnesses repre-
senting employers, organized labor, social workers, the medical profes-
sion and students of economics, went on record as approving the general
principle of compulsory health insurance.
There are essential provisions upon which the Commission has reached
an agreement. In order to meet the problems of destitution due to
sickness and in order to make health insurance a valuable adjunct to
the broad movement for the conservation of public health, any legisla-
tion on this subject should, in the opinion of the Commission, provide
(a) for a compulsory system for the conducting of the insurance by non-
profit making insurance carriers (&) for a thoroughly adequate pro-
vision for the care and treatment of the sick and (c) for contributions
from the insured, from industry and from the state.
In the opinion of learned attorneys, however, there appear to be cer-
tain constitutional obstacles in the way of legislative action. The Com-
mission recommends therefore a following amendment intended to
remove these difficulties. The two years ' delay incident to the introduc-
tion of such a constitutional amendment and its submission to a vote of
the people is of itself not an undesirable feature. Legislation of such
magnitude which must affect the interests of so many different social
groups should not be passed without giving the whole people an oppor-
tunity of thoroughly studying the underlying principle and for an
expression of their collective will. The constitutional amendment
requiring submission to the vote of the people will undoubtedly stimu-
late such study.
Further study of the problems of health insurance will not fail to
influence the numerous details of the system to be finally organized,
and therefore the Commission does not feel prepared to submit, at this
time, a draft of a bill as a part of its report.
PROPOSED CONSTITUTIONAL AMENDMENT.
It is hereby declared to be the policy of the State of California to
make special provision for the health and welfare of those classes of
persons, and their dependents, whose incomes, in the determination of
the legislature, are not sufficient to meet the hazards of sickness. The
legislature may establish a health insurance system, applicable to any
or all such persons, and for the financial support of such system may
provide for contributions, either voluntary or compulsory, from such
persons, from employers, and from the state by appropriations.
The legislature may confer tipon any commission or court, now or
hereafter created, such power and authority as the legislature may deem
requisite to carry out the provisions of this section.
a-27626
18 KEPORT OP SOCIAL INSURANCE COMMISSION.
The provisions of this section shall not be controlled or limited by any
other provision of this constitution, except the provisions of Article IV
thereof, relating to the passage and approval of acts by the legislature
and to the referendum thereof.
REPORT OF SOCIxVL INSURANCE COMMISSION. 19
SECTION II.
DISCUSSION OF POSSIBLE PROVISIONS OF A HEALTH
INSURANCE SYSTEM FOR CALIFORNIA.
To draft even a tentative bill for health insurance in California at
this time has seemed to the Commission premature. While the Com-
mission is not ready to discuss details of a system, it is convinced that
the form of organization contemplated by the well-known bill of the
American Association for Labor Legislation, will inevitably give rise
to certain difficulties which can be avoided through another plan of
organization, and which must be avoided in a system designed to meet
conditions in California.
I. The Commission believes that unions, fraternal societies and other
voluntary organizations now engaged in health insurance should be
given a place under a state system and should be encouraged to continue
and develop their activities; that the compulsory system should not
drive out the voluntary, nor substitute purely formal units of organiza-
tions for associations in which men are bound together by ties of friend-
ship, loyalty and mutual interest.
The plan suggested in the bill of the American Association for Labor
Legislation places voluntary societies at such a competitive disadvantage
as practically to bar them out from any participation in health insur-
ance ; for while insurance in these societies is permited in lieu of other
forms of compulsory insurance they do not receive the employers' con-
tribution, which amounts to from 33^ to 40 per cent of the entire insur-
ance premium. Thus these societies are placed at a competitive dis-
advantage so great as to be disastrous. Pew of their members will con-
tinue to insure with them when they can save one-third of the premium
by insuring elsewhere.
II. Knowing the many difficulties and complexities of its own with
which health insurance must grapple, the Commission favors a form of
organization which does not force employers and employed to join in
the administration of the system, and for this reason opposes the plan
proposed by the American Association for Labor Legislation which
places the immediate local control of health insurance in the hands of
district mutual associations governed jointly by the employers and
employed. Under such a system the Commission fears that with the
administration in the hands of representatives of these two groups, there
would be a likelihood of deadlocks on disputed issues.
III. The Commission believes that the success of health insurance
will depend largely upon the efficiency of its management and, there-
20 REPORT OP SOCIAL INSURANCE COMMISSION.
fore, upon the ability and integrity of those selected for executive and
administrative positions. The Commission is, therefore, opposed to the
plan of organization suggested in the bill under discussion because the
method which it provides for selecting those who are to administer the
health insurance system gives no assurance that persons of special fit-
ness or ability will he chosen. For while the plan under consideration
provides for a state insurance commission appointed by the governor,
the duties of this commission are largely supervisory and judicial. The
direct administration of health insurance is entrusted to local mutual
associations to which all the employed, subject to the system and not
otherwise insured, and their employers, belong.
Employed and employers meet separately and elect representatives
to a central committee. The representatives so chosen elect an equal
number of directors. These directors, chosen jointly by employers and
employed, constitute the governing body of the local fund.
Under this system a new electorate is created. So far at least as the
insured are concerned, it is made up of persons who are practically
strangers to each other. Union and nonunion, skilled and unskilled,
come together simply for the purpose of this single election. Political
experience suggests the result to be expected from such a system of
election.
While the Commission believes that the difficulties under consideration
are inherent in any system which make the district mutual association,
governed by employers and employed, the standard carrier, it is con-
vinced that these difficulties can be avoided under a different plan of
organization. In substantiation of its belief it offers, in brief outline,
the following plan of organization from which these difficulties seem
to be eliminated. This plan has been suggested by and conforms
closely to the present organization of industrial accident insurance in
California.
Its central features are the separation of cash and medical benefits
and the provision that the insured shall pay the entire cost of the cash
benefit. * Under such a system it obviously becomes a simple matter to
provide that the workman who pays the entire cost of his money benefit
may insure in any fraternal organization, union or voluntary society
which he may select provided that such organization has been approved
by the state as financially sound.
A state fund for carrying cash benefits will also be established as part
of the system so that, if the workman does not care to insure with a
voluntary organization, he may insure with the state. In either case
he pays the entire cost of the insurance secured. Under this arrange-
*For this suggestion the Commission is indebted to Theodore Johnson, attorney
for the San Francisco Labor Council.
REPORT OP SOCIAL INSURANCE COMMISSION. 21
ment the state fund carrying cash benefits receives no subsidy from
employers or from the state fraternal organizations and other voluntary
societies are therefore not placed in a position of competitive disad-
vantage in relation to it.
The state fund should set a rate fully covering all cost of administra-
tion but allowing for no profit. This would become the standard rate,
checking possible waste or inefficiency on the part of private societies.
While under this system the insured pay the entire cost of the
money benefit and select their own insurance carriers, the contributions
of employers and of the state are paid directly into the state fund and
are used primarily to meet the cost of the medical benefit. The admin-
istration of this fund and the organization for medical aid will be vested
in a state insurance commission which is also made responsible for the
administration of the entire health insurance system. This commission
is to be composed of full time salaried members appointed by the gov-
ernor. The employer, the insured, the medical profession and probably
the public should be represented on it. This plan of organization cor-
responds closely to the Industrial Accident Commission which admin-
isters the system as a whole and which also controls and administers an
insurance fund which is in competition with other funds.
Under the administration of industrial accident insurance the
employer pays the entire premium and therefore there is no necessity
for the separation of cash and medical benefits. Under health insur-
ance, where there may be necessity for such separation the administra-
tion of the medical benefit is centered in the state. The state health
insurance fund, under this system, therefore becomes (1) * the sole and
only carrier of medical benefits; (2) one but not the sole carrier of cash
benefits.
While under this system employers and employed are not arbitrarily
brought together in the administration of health insurance they should
be allowed to come together in establishment and trade funds when
both employers and employed desire to do so. In such cases the
employers' contributions should be paid to the fund and not to the
state. The fund should be allowed considerable freedom in the organi-
zation of medical aid. By allowing the voluntary organization of these
trade and establishment funds, all the benefits and none of the disad-
vantages of joint administration by employers and employed are secured
and the administration of the system is made more elastic and flexible.
In order to simplify the statement of the plan only two principal
benefits have been referred to, namely, the cash and the medical. There
are, of course, other subsidiary benefits the cost of which should be
apportioned by the insurance commission between the insured, the
employers and the state so that each bears the approximate proportion
♦Except as trade and establishment funds are allowed to carry their own medical
benefits.
22 REPORT OF SOCIAL INSURANCE COMMISSION.
of the entire cost assigned to it. If this plan is adopted the act should
specify approximately and not absolutely, the proportion of cost to be
borne by the three contributors.
According to the estimate of cost made by Dr. Rubinow and others
the cash benefit will probably range between 33^ and 37J per cent of the
entire cost of the prescribed benefit. Any of the various plans suggested
require the insured to pay, at least, 40 per cent of the entire cost of the
insurance. It is therefore reasonable to suppose that the insured can
always pay the entire cost of the cash benefit and in addition the cost
of some other subsidiary benefits.
According to Dr. Rubinow 's estimate the cost of medical care for the
insured and his family may be expected to range between 38^ and 39
per cent of the entire cost of the prescribed benefits. Under any of
the systems this will be less than the proportion of cost assigned to the
employers and the state, while under the bill prepared by the American
Association for Labor Legislation the employers alone are required to
pay 40 per cent of the entire cost. It seems reasonable there to expect
that the contributions of the employers and the state will always suffice
to meet, at least, the entire cost of medical aid.
ORGANIZATION OF MEDICAL AID.
Under this system the organization of medical aid will be in charge
of the commission itself which will, after conference with the physicians,
fix the rate of compensation for their services and which will appoint a
medical director who will be in charge of a corps of district medical
inspectors. These inspectors will be in charge of the work in the various
districts established for administrative purposes.
In each district a panel of physicians will be established and organ-
ized under the direction and supervision of the district medical
inspector. Under a system- of free choice, which will probably be the
one established in California, all licensed physicians, willing to accept
the compensation fixed by the commission and to abide by the commit-
tee's regulations, may register on the panel and the insured may choose
from any of the physicians so registered.
It can not be urged against the system here suggested that it fails to
protect the employers' interests — for the employers will have represen-
tation on the commission which will appoint the medical director and
determine the rate of compensation to be given to physicians. The cost
of medical care will depend upon the rate of compensation so fixed and
the efficiency of the supervision exercised by the medical inspectors.
Employers will also ]w represented on a central advisory committee
appointed to work with the commission and any district advisory com-
mittees working with the district medical officers. Again, the employ-
ers' interest is automatically protected by the insured themselves in
KEPORT OP SOCIAL INSURANCE COMMISSION. 23
their unions and fraternal organizations who control the administration
of the cash benefit ; for men do not malinger to get more attention from
the doctors but to secure the cash benefit. The insured, paying the
entire cost of the cash benefit, will have direct interest in preventing
malingering and in so doing will automatically hold down the cost of
medical service.
The plan of organization which is suggested here is supported by the
best political experience we have. In a democracy the greatest possible
efficiency of administration is secured by giving the governor a wide
appointive power and holding him strictly responsible for the result.
This policy has been followed in recent years in California and the
marked efficiency of the Industrial Accident Commission and the Rail-
road Commission stand out in confirmation of this theory. As health
insurance will directly affect some two million people in the state no
governor will risk inefficient administration of the system as it would
probably wreck his career as executive. Therefore we may reasonably
expect that great care will be exercised in the selection of the insurance
commission and the commission, in turn, will use the same care in the
selection of its executive officers.
It can not be fairly urged that in the interest of efficiency this plan
sacrifices local interest and tends to establish a bureaucratic and central-,
ized system — first, because in the medical administration it provides
for local advisory boards and the free choice of physicians, thus bring-
ing into the system the majority of the medical profession; secondly,
in the administration of the cash benefit it accepts as funds, lodges,
fraternals, unions, etc., and so brings into the administration of the
system many local organizations and forces the state fund to enter into
competition with them.
In conclusion the Commission does not wish its purpose misunder-
stood. It is not, at this time, prepared to offer a plan for the organiza-
tion of health insurance. It sees what it believes to be serious objections
to the plan of the American Association for Labor Legislation which
has been given the greatest publicity. It believes that these objections
can be obviated through other forms of organization. In briefest out-
line it sketches a plan of organization which it believes free from these
objections. This plan may, however, be open to objections still more
grave. It is submitted at this time simply for the purpose of study
f
Third Class..
Minor Operations
Such as : 1. Amputations of fingers and toes ; 2. Excisions of small cysts or
tumors, not involving important organs ; 3. Tenotomy ; 4. Reducing hernia
by taxis, where anaesthetics are administered, etc. ; 5. Strabismus opera-
tions ; 6. Operation for laceration of cervix uteri ; 7. For reducing fractures
or dislocations of fingers and toes ; 8. Excision of tonsils or nasal polypi ;
9. Suturing recent wounds; 10. Opening ordinary abscesses; 11. Tapping
for hydrocele, etc.; 12. Tapping for ascites; 13. Pterygium operations;
14. Reducing fractures of the nose ; 15. Paracentesis tympani ; 16. Removal
of foreign body from auditory meatus, etc. — not less than 1 50 00
The foregoing charges are for the performance of the operation only. For subse-
quent visits and office attendance, charges are to be made as in ordinary cases of
disease, the fee being always in proportion to the time occupied and the trouble and
responsibility incurred.
For operation and services not enumerated in the foregoing lists, charges will be
made according to their nature and importance, at rates as nearly corresponding to the
same as practicable.
While the medical profession recognizes the claims of charity upon its
members, yet, inasmuch as the above list of charges is founded upon a just
consideration of the services performed, it will be considered a duty on the
part of the profession to conform thereto whenever the circumstances of the
patient do not clearly forbid it.
All bills are considered due and payable immediately after the services are
rendered.
Physicians, surgeons and specialists shall have the right to ask a retaining fee from
their patients in extraordinary cases.
Los Angeles County Medical Association.
Adopted April 14, 1910.
Explanatory Note.
This fee bill is intended only as a basis of suggestion. Members of the Los
Angeles County Medical Association are free to follow their own judgment in all
individual cases, the items in this fee bill being merely intended to show in a general
way the charges for such professonal medical and surgical services; services having
a value, somewhat in proportion to the circumstances of the patient.
The following charges are for the performance of the operations only. For sub-
sequent visits and office attendance, charges are to be made as in ordinary cases of
36 REPORT OP SOCIAL INSUBANCE COMMISSION.
disease, the fee being always in proportion to tlie time occupied and tlie trouble and
responsibility incurred.
For operations and services not enumerated in the following lists, charges will
be made according to their nature and importance, at rates as nearly corresponding
to the same as practicable.
While the medical profession recognizes the claims of charity upon its
members, yet inasmuch as the following list of charges is founded upon a
just consideration of the services performed, it will be considered a duty
on the 'part of the profession to live up to the same whenever the circum-
stances of the patient do not clearly forbid it.
All bills are considered due and payable immediately after the services are
rendered.
. Physicians, surgeons and specialists shall have the right to ask a retaining fee
from their patients in extraordinary cases.
Oiflce Wees.
Advice and treatment in ordinary cases $2 00 $5 00
Special examination and treatment 5 00 25 00
Surgical dressings 3 00 10 00
Letters of advice or written opinion 5 00 25 00
Examination as an expert in medico-legal cases 50 00 100 00
Gastric lavage 3 00 10 00
Examination for life insurance 5 00 15 00
Examination for lodge membership 2 00 5 00
Vaccination 2 00
Telephone advice 2 00 5 00
All venereal diseases Maximum office fees in advance
Tisit Fees.
Ordinary visit 3 00 5 00
Night visit (10 p.m. to 7 a.m.) 5 00 10 00
Special examinations 5 00 25 00
Consultation (fee to be charged both by attending and consulting
physician) 10 00 25 00
Medical emergencies, as asphyxiation and poisoning 10 00 100 00
Attendance at court as an expert, per hour or part of an hour 20 00
Post-mortem examinations 50 00 250 00
General Surgery.
Administering a general anaesthetic 5 00 100 00
Assisting at a major operation, not less than 25 00
Minor operations, as repair of small wounds, Incision of small
abscesses, tapping hydrocele, paracentesis thoracis or abdo-
minis, removal of small foreign bodies or tumors, or any
similar minor operation requiring no general anaesthetic 15 00 100 00
Operations of secondary importance requiring general anaes-
thesia, as repair of larger wounds, incision of large abscesses,
removal of foreign bodies or tumors not Involving important
structures 1 50 00 500 00
JIajor operations, as ligation of vessels in continuity aneuris-
morrhaphy, removal of foreign bodies or tumors involving
important structures or any operation requiring unusual
skill or care 250 00 5,000 00
Fractures.
Reduction and first dressing:
Hand or foot 25 00 200 00
Forearm, arm or leg 100 00 500 00
Femur 250 00 1,000 00
Clavicle or scapula 100 00 500 00
Patella 100 00 1,000 00
Mandible or maxilla 100 00 500 00
Skull, spine or pelvis 250 00 2,500 00
Compound fractures or fractures requiring open operation Double fees
REPORT OF SOCIAL INSUBANCE COMMISSION. 37
Abdomen.
Any operation involving laparotomy, not less than 150 00
Any operation upon the gastro-intestinal canal 250 00 2,500 00
Resection of stomach or intestine 500 00 2,500 00
Operation for appendicitis or peritonitis 250 00 2,000 00
Any operation upon the liver, gall-bladder or ducts, spleen or
pancreas 250 00 2,500 00
Hernia — radical operation inguinal, femoral, umbilical or ventral 250 00 1,500 00
Hernia, — by taxis 10 00 100 00
Obstetrics.
Abortion or miscarriage 25 00 500 00
Uncomplicated labor 25 00 150 00
Twins Double fees
Abnormal presentation or position 50 00 500 00
Version 100 00 500 00
Instrumental delivery 50 00 250 00
Complicated labor, as eclampsia, manual removal of placenta,
placenta previa, post-partum hemorrhage 50 00 500 00
Delivery of placenta only 25 00 75 00
Immediate repair of perineum or ceryix 25 00 100 00
Csesarean section or hebotomy 250 00 2,500 00
All visits except those of the 24 hours of the delivery shall be charged according to
the rates given in this fee bill.
Ear, Nose and Throat.
Ordinary ofHce visits 2 00 5 00
Special office examination or treatment 5 00 25 00
Foreign bodies — removal from ear 5 00 25 00
Foreign bodies — removal from throat 5 00 150 00
Foreign bodies — removal from trachea or bronchus 50 00 500 00
Adenoids — removal of 35 00 100 00
Tonsils — removal of 50 00 250 00
All operations on septum and turbinated bones 25 00 250 00
Resection of nasal septum 50 00 250 00
Trachseotomy, or intubation of the larynx 50 00 500 00
Operations upon accessory sinuses of the nose 50 00 1,500 00
Paracentesis tympani 10 00 25 00
Mastoid operations 150 00 1,500 00
Removal of the ear bones 75 00 250 00
Fracture of the nose 25 00 250 00
In contrast to these two schedules is the schedule published by the
state compensation fund. These rates are the minimum fees paid
physicians doing industrial accident work for the state fund. The
schedule was constructed with the average income of one thousand
dollars in mind, the comijensation act affecting, for the most part,
persons whose earning capacity was that or less.
FEE SCHEDULE.
State Compensation Insurance Fund..
First visit, including report and first examination, in injury not
otherwise specified $2 00
Surgical dressings (materials) Specify costs
Mileage beyond city limits 1 50c day, 75c night, one
way, per mile
Assisting at operation —
Major $10 00
Minor 5 00
Administering general ansesthetic 5 00
Testimony as to fact of injury 10 00
38 REPOET OF SOCIAL INSUBANCE COMMISSION.
T7T„_„+.,„„„ Subsequent vlait-g
Fractures. Hospital
Reduction and first dressings — or
Oneratinn Home Office
Nasal bones $10 00 $1 50 $1 00
Hand or foot 5 00 1 50 1 00
Forearm — leg, 1 bone 10 00 1 50 1 00
2 bones 25 00 1 50 1 00
Femur or humerus 25 00 1 50 1 00
Clavicle or scapula 15 00 1 50 1 00
Patella 15 00 1 50 1 00
Mandible or maxilla 10 00 1 50 1 00
Pelvis 10 00 1 50 1 00
Ribs 5 00 1 50 1 00
For compound fractures or fractures involving joints Add 50% to operation
Dislocations.
Easy reductions without anaesthesia or assistants $5 00 $1 50 $1 00
Hip ■ 10 00
Large joints, first treatment 5 00 1 50 1 00
Small joints 2 00 1 50 1 00
Amputations.
Finger or toe 6 00 1 50 1 00
Two or more 10 00 1 50 1 00"
Hand, wrist, forearm or arm 25 00 1 50 1 00
Shoulder disarticulation 40 00 1 50 1 00
Foot, ankle or leg 25 00 1 50 1 00
Knee or thigh 40 00 1 50 1 ftO
Hip disarticulation 75 00 1 50 1 00
Special Operations.
Trephining or resection of skull 50 00 1 50 1 00
Laminectomy 75 00 1 50 1 00
Hernia, radical operations 30 00 1 50 1 00
Hernia — by taxis — reduction and applying truss 5 00 1 50 1 00
Paracentesis, thoracis or pericardii 5 00 1 50 1 00
Tendoplasty 25 00 1 50 1 00
Catherization of urethra 2 50
Foreign Bodies.
Removal from conjuctiva (one or more) 2 00
Removal from cornea 3 00
Enucleation of the eye 30 00 1 50 1 00
Mi7ior Operations.
Repair of small wounds (to 2 J inches) 2 50 1 50 1 00
Repair of large wounds (over 2 J inches) 5 00 1 50 1 00
Contusions, simple 2 00 1 50 1 00
Contusions, extensive (several in different parts of body) 4 00 1 50 1 00
Abrasions and burns —
Simple 2 00 1 50 1 00
Extensive, depending upon severity of case
Abscess — incision 2 50 1 50 1 00
Removal of small foreign bodies 2 50 1 50 1 00
Hospital Care.
Hospital care adds greatly to the expense pf serious illness. Service
is fairly uniformly rated, the customary charges being $15 to $17.50
per week for ward aeeoinmodation and from $25 to $35 per week for
pri\-ate room. This charge does not include laundry, which is usually
$5 per week, nor the cost of operating room, ordinarily $10, nor drugs
and surgical appliances.
REPORT OP SOCIAL INSUBANOE COMMISSION. 39
Nursing.
Nursing adds another item. General nursing is included in ward
service of hospitals but a special nurse means additional expense. The
following schedule of fees is published by the Nurses Central Directory.
SCHEDULE OF FEES (Not obligatory).
1. For ordinary cases: Women $25.00 per week, $4.00 per day for a fraction of a
week. Men $30.00 per week, $5.00 per day for a fraction of a week.
2. One-day, two-day or three-day cases, $5.00 per day.
3. For contagious and nervous cases, $30.00 per week, or $5.00 per day for fraction
of a week.
4. Insane, alcoholic and quarantine cases, $5.00 per day.
5. Assisting at operation, $5.00 to $10.00.
6. Obstetrical cases, $30.00 per week, payable from date of engagement.
7. When one nurse has two patients, $5.00 per week extra.
8. Visiting nurses, $1.50 for visit of one hour or less; $2.00 after 6 o'clock p.m.
9. Agreement for charges in special cases should be made before the nurse takes
charge of a case.
10. Board included in all oases except visiting nursing.
11. Male nurses: For ordinary cases, $5.00 per day for 12-hour duty; $6.00 for
24-hour duty.
Dental Care.
The following schedule is in use in the industrial town of South San
Francisco : Crown work, $8.00 ; silver filling, $2.00 to $1.50 ; extraction,
$1.00, with gas $1.50 and up; miscellaneous attention, about $2.00;
plate work averages $15.00. Investigations of the experience of indi-
vidual wage earners showed that many workers are paying according
to higher standards.
It is naturally impossible to knoAv the varying fees regularly charged
and collected in all instances by physicians in their practice among
persons of small income. A vast amount of charitable and semi-
charitable medical service is dispensed each year. The fee schedules
printed have no binding force as law. Conferences with representative
physicians disclosed the standard of 10 per cent of annual income as
the basis used by many of the profession in making charges for opera-
tions. Field studies in the poorer section of San Francisco showed
cases receiving medical care at from $1 to $2.50 a visit, corresponding
more nearly to the schedule of the state fund than those of the county
medical societies. That many men and women of small earning capacity
attempt to pay the cost of surgical and medical care according to the
standards of the county medical societies, was evidenced in investigations
discussed in other parts of this chapter.
Even assuming that a majority of the cases are charged according to
these lower rates, however, there can be no doubt that a five weeks ' illness
(the average duration of a case) would at least endanger the financial
situation of most families. Not the least result of the situation must
be a tendency to minimize the amount of medical attention secured,
thereby courting serious illness.
40 EEPOET OF SOCIAL INSUBANCE COMMISSION.
A discussion of the actual experience of some of the women workers
of the state naturally folloM's these generalizations.
Experience of 1,000 Women Wage Earners.
The records of one year's expenditures of 600 individual working
women in San Francisco and Los Angeles, collected by the Industrial
"Welfare Commission, were studied from the standpoint of the percent-
age of their income absorbed by the purchase of medical, surgical and
dental care. These records were made out by department store and
factory employees under the direction of special agents of the Industrial
Welfare Commission.
The records of these women were classified according to their earning
capacity and occupation and indicate the amount and percentage spent
for dental and medical care by the various groups.^" The percentage
of income expended by each of the three groups for medical and dental
care is about 4 per cent. A similar amount contributed by a group
of women in countries possessing health insurance systems guarantees
a money payment of at least half wages, medical, surgical and hospital
care, a special maternity benefit in case of childbirth and a cash benefit
to cover funeral expenses.
The fact of greatest significance to be gathered from a study of these
600 cases is not, however, the heavy burden which necessary medical
and dental care is imposing upon the group income of these wage
earning women. Important as that fact is, the fact of greatest sig-
nificance is the unequal way in which this burden is distributed. About
half (more than 50 per cent) of the total amount expended by the
entire group for doctor and medicine was paid out by 21 of their num-
ber, while 301, or over 50 per cent, suffered no expense whatever.
Of the four women incurring medical bills of more than $300 only
one had an earning capacity of more than $12 per week. The remain-
ing three were earning from $6 to $12 a week. Eight of the seventeen
who paid between $100 and $300 for medical assistance received less
than $12 a week.
As might be expected, the dental bills were more evenly distributed.
In the event of distress with the teeth there is not so available the alter-
native of home remedies as in the case of other illness. An unevenness
of distribution of the total cost is, nevertheless, still noticeable. Four
women incurred bills of over $100 and 18 paid amounts varying between
$50 and $100, while 398 escaped altogether.
This study of the Industrial Welfare Commission data was supple-
mented by a first hand investigation conducted by agents of the Social
Insurance Commission among over 500 organized trade A^-omen in San
Francisco. Through the courtesy and cooperation of the Waitresses'
Union and Laundry workers ' Union, the commission was enabled to
obtain from their members accurate and reliable records of their 1915
'•Table XVII found at end of section.
REPORT OF SOCIAL INSUBANCE COMMISSION. 41
experience. The experience of the laundresses and waitresses was
analyzed in the same way. Since the waitresses employed through their
union a physician who was under contract to attend members in all cases
except those involving serious illness or hospital care, it was thought
best to separate the records according to trade.
The 251 laundresses as a group^^ paid out 5.1 per cent of their aggre-
gate earnings for medical (including drugs and hospital treatment)
and dental care. This 5 per cent amounted to $5,738. Almost half
this sum, $2,291,^^ was expended by eleven women, only one of whom
had an earning capacity of over $12 per week.
It should be noted that the bulk of cases under observation had an
actual income of from $350 to $500 a year. Over 80 per cent of the
total amount of dental and medical bills had to be met by persons earn-
ing less than $500 a year. Only seven were members of organizations
giving protection during illness by providing either money or medical
benefits. On being questioned, their invariable explanation for non-
membership was that "it was expensive, they couldn't afford it and
they probably would not get sick if they did belong. ' '
To ascertain whether the expenses incurred by these women could be
passed on to supporting relatives, questions on this subject were
included in the investigation blanks. The following facts resulted :
(1) 192 of the women (76.5 per cent) were either absolutely depend-
ent, or helping to support or completely supporting dependents.
(2) 54 (21.5 per cent) were living at home in what they termed
an "interdependent position." By this is meant that all the working
members of the family placed their earnings into a common fund upon
which they drew when necessary.
(3) Only six (2.4 per cent) of the total number were receiving aid
from their families and contributing nothing.
As these 251 cases were selected at random, they may be safely con-
sidered fairly typical of the trade. There can Tje no doubt that except
for a negligible percentage, the women working in the laundry industry,
at least, do so either because it is necessary for their own support, or
because their earnings are needed to eke out the family income. The
question of "pin money," so frequently raised at the discussion of the
wages and expenses of working women, can have no place in the con-
sideration of the economic problem of these wage earners.
The records of the 264 waitresses'^ differ in several particulars. Only
3.9 per cent of their aggregate earnings were absorbed by medical and
dental bills in contrast to the 5.1 per cent paid out by the group of
laundry workers. The difference is mainly due to a reduced
expenditure for physicians' services, normally to be expected in view of
"Table XVIII.
"See Table XX at end of Section I.
"See Table XIX at end of Section I.
42 REPORT OP SOCIAL INSUBANCE COMMISSION.
the contract doctor employed by the Waitresses' Union. The extremely
large amount paid for dental services was attributed by the members
of the trade who were questioned in this regard to the peculiar demands
of their occupation. As one tersely put it "A waitress simply can not
afford to let her teeth go to pieces." Personal appearance is part of
the stock in trade of the waitress and neglect of the teeth reduces the
likelihood of obtaining a good position.
Barring these variances which are explained by the actually different
situations of the women in the two trades, the records of the waitresses
repeat the story already told. Seven women paid over one-third of the
aggregate bills. Twenty-five were responsible for practically two-thirds.
One hundred forty escaped all expense on this score.
Only eight of the twenty -five who paid more than $50, had an earning
capacity of over $12 a Aveek. One woman who could not in a whole year
earn more than $550 had to face a bill of $430 because of one serious
illness. Eight women found it necessarj- to go as charity patients to the
county hospital.
All these women were medically insured to the extent that they were
entitled to the services of the union doctor. Seven, only, carried other
protection, four being members of a lodge giving a $5 a week sick bene-
fit and three being members of hospital associations which entitled them
to limited hospital care and free drugs as well as medical attendance for
specified diseases.
Almost half (48 per cent) of the waitresses proved to be either self
supporting or totally or partially supporting dependents in addition.
Almost half (49 per cent) reported themselves as interdependents, a
large percentage of whom were found to be married women, at work
because the husband's wages proved insufficient to maintain the family
with a decent standard. Only five (3 per cent) were receiving assistance
from relatives and contributing nothing.
The "pin money" explanation of wage working women seems as inap-
plicable in the trade of the waitresses as it proved to be in the laundry
industry. For the uiost part at least their expenses had to be met out
of their own earnings and in the event of loss of income and increased
bills during illness, the question of meeting the cost of living assumed
serious proportions, and the danger of becoming a dependent upon
private or public charity was not far in the background.
Summing up, then, the facts tliat come to light in the study of one
year's actual experience of a thousand wage earning women of this state
are as follows : They spent in the aggregate approximately 4 per cent
of their combined earnings for medical and dental care. This percent-
age has proved more than sufficient in the countries providing health
insurance for its workers, to guarantee a substantial part of wages and
KEPORT OP SOCIAL INSUBANCE COMMISSION. 43
ther special benefits in addition to all necessary medical, surgical and
lospital care to wage earners incapacitated because of illness.
This average of i per cent which -was the group loss was spread most
mevenly throughout their number. A substantial number of the group
;scaped expense altogether. A very small number incurred the bulk of
he bills, the burden mounting as high as 50 per cent or 60 per cent of
he individual annual income in some cases. Less than 2 per cent were
nsured in any way against the losses of illness by membership in lodges
)r hospital associations, the reasons being the low earning capacity of the
ffomen (the bulk of them receiving less than $500 a year), the compara-
tive high cost x>i even meager protection, the fact that illness is always
unforeseen and uncertain, and the average individual, to whom a small
imount of money means a great deal, is inclined to "take a chance."
The number of these women who worked for any reason other than
lecessity was negligible. Lapses of income and expenses incurred by
:hem had to be accounted for out of their own earnings, and in many
3ases persons dependent upon them shared their misfortunes.
Clinic Study.
As the free clinic represents the- only alternative to purchase by
private contract in the field of medical service, at least in so far as
specialist treatment is concerned, it was deemed worth while to investi-
gate the economic status of the persons applying for attention at the five
leading clinics located in San Francisco and Los Angeles.
The University of California clinics in San Francisco and Los Angeles,
the Stanford Medical School clinic and the Polyclinic in San Francisco,
and the University of Southern California clinic in Los Angeles were
selected for study. During the months of June and July over 5,000
patients were interviewed by agents of the commission and their "social
histories" recorded. As 300 or more of the cards were so lacking in
essential - information as not to be of any use, the study made was
made of a total of 4,738 cases.
The "free clinic" or dispensary in California has developed within
the last two years in two general directions — toward greater specializa-
tion of work and toward increased equipment for a greater number of
patients. The applications for treatment are growing at a rate with
which the clinics have found it impossible to keep pace. A detailed
description of the equipment, cost of maintenance and work of the
clinics will be found in Chapter II.
Looking at the records from the standpoint of family income, it is
found that among 2,587 patients applying at San Francisco clinics, only
53 were dependent upon charity, public or private, for their support.
44 REPORT OF SOCIAL INSUBANCE COMMISSION.
In 29 instances the wage earner had been out of employment for more
than a year and so there was a state of practical dependency on some
outside source, while in 31 more cases the wage earner had not been
employed for periods varying between six months and a year. Sixty-
five were temporarily out of a position and 12 reported very unsteady
employment. In the remaining cases there were employed wage earners
with a fairly steady income. Thus, in only 190 cases, or about 7 per
cent of the total number considered could the application for free
treatment be attributed to the fact of dependency or unemployment. A
classification of the other 93 per cent was made according to income and
divided into males, females and children to show the number of each
class of patients imder observation.
In over half of the total San Francisco cases the income of the family
was less than $16 per week.^° Disregarding the charity and unem-
ployment cases, about 80 per cent of the families had an income of less
than $25 a week.
Comparing these figures with the Los Angeles records, it is found
that 40 were dependent on public and private charity ; in 50 cases there
had been unemployment for more than a year ; in 26 for periods varying
between six months and a year. One hundred thirty-two were tempo-
rarily out of a position and 31 reported very unsteady employment.
Thus 12 per cent of the Los Angeles cases could be attributed to depen-
dency or difficulty with employment.
In 61 per cent of the Los Angeles cases^^ the family income was less
than $16 a week and disregarding charity and unemployment cases
over 80 per cent of the families had an income of less than $25 a week,
practically repeating the story of the San Francisco histories.
Grouping these same eases according to the wage of the principal wage
earners, the resulting picture is but slightly different. In view of the
fact that 435 of the total families have more than one breadwinner,--
it would be expected that classifying according to wages of main bread-
winner would throw fewer persons into higher money level groups than
the grouping according to family income. On examination of the card
records the fact that this does not so prove is explained thus: The
effect of contributions of other earners in the family on the family
income is neutralized by the lowering effect which irregularity of
employment has upon the earnings of the principal wage earner. It is
found that in half of the families the wage of the principal earner is
less than $16 a week and in over 67 per cent the chief breadwinner had
an earning capacity of less than $25.
=°TabIe XXI being based on family income rather than wage of principal bread-
winner.
2»Table XXI, Section I.
=2Table XXII, at end of Section I.
REPORT OF SOCIAL INSUBANCE COMMISSION. 45
In by far th6 greatest number of families (almost 84 per cent of those
about whom this data was recorded) there is but one wage earner,* and
in the majority of eases there are from one to four dependents. In
more than 1,100 families (including miscellaneous cases) the applicant
for medical aid had no one dependent upon him for support.
Thus it can be seen that the applicants to the free clinics are not from
the abnormally large or unusual family in any sense, but from the nor-
mal familj' of average size as indicated by our general population sta-
tistics. Nor are the applicants from the family with an unemployed
breadwinner, but from the family with a normally steady and compara-
tively small income.
A classification of the combined Los Angeles and San Francisco eases
into 15 occupational groups^^ shows that the two largest groups are the
"common laborer" and "domestic and personal service," two of the
most poorly paid occupations. "Skilled trades, mechanical," follows
next, and then with approximately the same membership the groups of
"building trades," "garment manufacturers," "clerical employees"
and "petty commerce."
Further refinements of this clinic data may be easily gleaned from the
tables by those interested in pursuing the subject further. It suffices
to call attention to these more important facts and to comment upon
them.
This clinic investigation throws light on the specific problem which
is the subject of this chapter — ^the ' ' burden that illness places upon the
wage earner." The fact that an ever increasing number of self-
supporting wage earners of small income not otherwise dependent in
any sense are seeking medical assistance at the free clinics despite the
instinctive dislike felt by self-respecting working people for dispensa-
tion of any sort which spells charity, despite the fact that they are made
plainly to feel that such medical facilities are only for those who can not
afford to buy, is alarmingly significant. It would be futile to ascribe
such seeking to a total lack of self-respect and an endeavor to get some-
thing for nothing on the' part of these individuals. The number of them
alone would be sufficient to refute such a conclusion. Aside from this
point, however, the interviewing and observation of 1,000 cases would
convince any one that there is a far more reaching and direct cause
responsible. The growing attendance at the free clinics is accounted
for by the fact that they can there get from physicians and surgeons,
whom they know to be men and women of reputation, specialist care
which they can not possibly afford to purchase. There is no reason
to suppose that if there were a way by which they might buy this
same attention for a small price within their means we should stiU
*See Table XXIII at end of section.
2=Table XXrV at end of Section I.
46 REPORT OF SOCIAL INSUBANCE COMMISSION.
find the bulk of them frequenting the "free clinic." Defensible as
their application to the free clinic under present circumstances is, how-
ever, the fact remains that a large and increasing group of persons not
in any sense destitute are each year the recipients of medical charity.
This situation is not a healthy one in a democratic community, nor does
it bespeak a sensible organization of medical aid that physicians should
give medical attention to a large group of independent self-supporting
individuals for no remuneration.
Analysis of Charity Cases.
To get an exact picture of the part played by iUness in the dependency
problem of California, the records of over 5,000 families recently
assisted by the charitable organizations of San Francisco and Los
Angeles were analyzed from the standpoint of the causes for asking
relief.
The innumerable reasons driving persons to seek charitable assistance
were first classified under five broad headings — illness, other disability,
absence of male breadwinner, unemployment and low earning capacity
and miscellaneous causes. A more detailed analysis of the causes into
sixteen classes was also made, but for the purposes of this discussion
the broader classification is sufficiently illustrative and far less con-
fusing to the average reader.
Often two difficulties equally contributed to the destitution of the
family. To be exact, in 1,422 families, two of the five causes^* in
various combinations apparently were equally to blame for the distress,
while in 3,874 cases a single cause only forced the persons concerned to
become recipients of charity. The following diagram shows the relative
frequency of these causes in as concise a form as possible :
■'See Table XXV at end of Section I.
REPORT OF SOCIAL INSUBANCE COMMISSION.
47
o
a
CA
4)
CA
S i»
• 53 .-a
■ ^
I 09
4> JS
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01
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!—
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48 REPORT OF SOCIAL INSUBANCB COMMISSION.
It will be seen by observation of the diagram that illness combined
with one of the other factors is a moving cause in 2,652 cases, or 52
per cent of all the cases. Low earning capacity and unemployment is
the next most frequent reason for the appeal to charity. Other phys-
ical and mental disability ranks third, absence of the wage earner
fourth, while miscellaneous difficulties, impossible of other classification,
are responsible factors in but 2 per cent of the total. Evidently then,
considering all the cases under observation, illness is the most frequently
occurring cause for seeking charitable relief.
Of the 3,874 "single cause" cases, illness is again found to be the
most frequent faetor.^^
It is worth while calling attention to the number of cases in which
illness of dependents helped to render the family destitute. The state-
ment is often heard that illness does not really create serious difficulty in
California so long as the wage earner himself is well and able to work.
As we find illness of members of the family solely responsible for destitu-
tion in 234 of these families, it is evident that this statement is untrue.
To be sure, we should expect circumstances to be worse in the event of
the wage earner 's illness than when the dependents are the sufferers, as
the calamity is then a double one, and the statistics of these cases bear
out this expectation. Illness of the wage earner is the direct and sole
cause of 911 eases, while illness of dependents is solely responsible
for 234.
The recurrence of pregnancy as a cause for seeking public aid was
a striking revelation. In almost one-fifth of the eases in which illness is
found, pregnancy of the woman was the chief reason for the application
for help. Medical attention and financial assistance were both needed
as the woman was unable, because of her temporary physical handicap,
to do her part of the family work.
Nothing could more clearly bring out the absolute necessity of special
provision for women of wage-earning families at the time of childbirth.
Lack of medical attention and overstrain at such a time endangers the
health of the next generation, and at the same time creates additional
problems through the impairment of the physical well-being of the
mother.
The part played by tuberculosis in producing destitution is commonly
recognized as tremendous. It is a malady apt to strike the young even
more than the old and its cure is so costly as to be prohibited to the
average worker. The tubercular case is the most hopeless of all those
presenting themselves to charitable organizations. Expensive sanita-
rium care of long duration is frequently necessary, if the case is to be
saved, and the limitations of the resources of "charity" make such
'"See Table XXVI at end of Section I.
REPORT OF SOCIAL INSURANCE COMMISSION. 49
treatment, as a general thing, impossible. In over 11 per cent of all the
sickness cases applying for help tuberculosis was the specific disease.
Anything contemplated as a solution of sickness problems in Cali-
fornia would be inadequate unless it involved some special provision for
tuberculosis sufferers.
In view of the common impression that tuberculosis in California is,
to a great extent, an "imported problem" and not a "home problem,"
the commission thought it best to make a careful study of this aspect of
the California tuberculosis situation. As Los Angeles County probably
receives more tubercular immigrants than any other county of the state,
it was chosen for investigation. The reported cases involving wage
earners and their families for 1913-, 1914 and 1915 were analyzed from
the standpoint of length of residence in California.^" This analysis is
shown in the following -diagram:
'^See Table XXVII, at end oi Section I.
50
REPORT OF SOCIAIi INSURANCE COMMISSION.
o
hm
s
6
4)
U
C8
s
b
S
** 60
«
e
^
h
V
1
e
REPORT OF SOCIAL INSURANCE COMMISSION. 51
It is safe, to say that if more than 56 per cent of the Los Angeles
tuberculosis wage earners have been residents of the state for a period
of five years or more, the proportion of tubercular persons for the whole
state having such a length of residence is much greater.
The very close margin of safety that the present increased cost of
living leaves the families of poorer paid wage earners is emphasized by
an analysis of the destitute families according to the number of bread-
winners and dependents. "^ There was a time when the majority of
applicants for charity were either from the very large families of at
least eight or ten, or families whose breadwinner was lacking. Evi-
dently this time has passed, for of these destitute families applying for
help, 75 per cent had three children of less, and only 8 per cent more
than six. In over 80 per cent of the families there were two parents.
Clearly the growing destitution in California can not be ascribed to
abnormal family conditions.
The experience of about five hundred of the families aided by public
charity was further investigated. A statistical record of the expenses
they incurred in securing medical and dental aid in the year just
preceding their application for help is shown as follows:
Charity Cases.
Cost of Medical, Hospital and Dental Service in Year 1915.
Five hundred and thirteen families were questioned.
Seventy-seven families received no medical, hospital or dental treatment.
Four hundred and thirty-six families received some medical, hospital or dental
treatment.
Of this 436—
91 (or 25 per cent) received vpholly free treatment.
345 (or 75 per cent) paid for treatment.
Of this 845—
180 families paid bills under $50 00
33 families paid bills between 50 00^ $75 00
17 families paid bills between 75 OO— 100 00
25 families paid bills between 100 00— 200 00, totaling $3,148 25
13 families paid bills between 20O 00— 300 00, totaling 3,069 75
9 families paid bills between 300 00— 400 00, totaling 3,000 00
3 families paid bills between 400 00— 500 00, totaling 1,270 00
8 families paid bills over ^ 500 00 totaling 8,465 70
51 families, cost of treatment unknown.
Of the 345 who paid for treatment, 123 families, or 36 per cent, received free
treatment in addition.
Notes on aiove tables:.
47 families were still in debt for services.
Of these, 37 were in debt to the amount of $3,956.20.
20 families were helped by friends or relatives.
For 15 of these, bills amounting to $899.25 were paid.
4 families were helped by lodge benefits.
*See Table XXVIII at end of section.
C)2 REPORT OP SOCIAL INSURANCE COMMISSION.
Considering cases of tuberculosis only, in the above table, the follow-
ing facts are shown:
44 families received tuberculosis treatment.
Of these —
25 families (or 57 pev cent) received all free treatment.
18 families (or 41 per cent) paid a total of $1,908.00.
Of these 18 families —
8 also received free treatment.
1 family, cost of treatment unknown.
Similarly isolating the maternity and confinement cases, it is found:
73 families received maternity benefit.
Of these —
21 families (or 28.8 per cent) received all free treatment.
48 families (or 66 per cent) paid a total of $1,389.00.
Of these 48 families —
3 also received free treatment.
4 families, cost of treatment unknown.
These destitute families were by no means all from the "small
income" group who live on the edge of economic dependency. In
quite a number of cases, the breadwinner had been earning well above
the average wage and the family had accumulated savings. These sav-
ings were eaten up during periods of illness, by general living expenses
and by extra expenses entailed in medical and hospital bills.
Of the eight families who received bills amounting to more than $500
in 1915, only one family incurred a debt. The other seven met this
expense out of savings. After spending everything they had accumu-
lated, they were forced to ask for public assistance.
One woman of forty-eight years, who had been for twenty-five years
a teacher, spent in 1915 for a series of operations all that she had laid
by in her years of work — over $3,000. It so happened that the opera-
tions proved unsuccessful and she found herself in October, 1916,
penniless, incapacitated for work and dependent upon charity for
the means of mere subsistence.
A man of sixty-seven, no longer able to hold a job, spent his $900
savings to pay his physician. As a consequence, his wife entered domes-
tie service. She was unable to earn sufficient to support them and
public aid was necessary.
An investigation of the "sickness experience" of these families in
previous years merely emphasized the same facts. Most of the persons
who are temporarily or permanently dependent upon charity are, to
begin with, completely self-supporting people. They secure a private
physician and go to a private hospital when ill. But if a long continued
illness strikes either the wage earner or a member of his family, it is
merely a question of time before they are reduced to the necessity of
asking charitable aid. For the better paid wage earner, the period of
REPORT OF SOCIAL INSURANCE COMMISSION. 53
grace is longer, as there are often considerable savings. For the poorer
paid wage earner, the period is decidedly short. The first step is often
a request for medical charity, but when the wage earner i.s the sick indi-
vidual, general assistance for buying food and shelter is soon necessary.
Thus among the families under observation, there was found an
instance of a laborer earning $15 a week, who paid $900 in a period
of about four years for medical attention for his Avife. The following
year she was in need of an operation and, her lesson learned, she went
to the county hospital, no further charity being necessary. When,
however, a little later the man himself fell ill, he was in a short time
forced to ask help from public charity in order to purchase food and
pay the cost of shelter.
Again, a blacksmith earning $12 a week, with which to support a
wife and two children, paid in 1915 over $100 for medical treatment
for his wife. Hospital treatment becoming necessary, she went to the
county hospital to save further expense. At this juncture, the man
himself suffered an accident and after a protracted illness lie found
himself with a medical bill of $200 and absolutely no funds. The
result was an application to the free clinic for further medical aid
and an appeal to public charity for financial assistance to tide him
over until he could return to work.
Cases of this sort could be cited in any number and would serve
but to repeat the story. In over one hundred instances, several thou-
sand dollars had been actually paid for the purchase of medical aid
and hospital care by families, who were at least reduced to the
necessity of asking for public assistance.
Summary.
From the investigations so far discussed, the following facts
stand out:
The majority of wage earners, having the average family of three or
four dependents, find their earnings consumed in meeting ever increas-
ing cost of the necessities of existence. The cost of medical attention
and hospital care in California is particularly heavy because of high
medical standards and because most of the hospitals are run on a com-
mercial basis, rather than on a nonprofit basis as in eastern states.
The majority of these wage earners can not save a sufficient amount
from their earnings to provide for the extra expenses made necessary
by either their own illness or the illness of their dependents. Even
those of better incomes who can and do accumulate substantial savings
are often unable to meet the heavy bills of protracted illness. While
a comparatively low (average) rate of sickness is indicated by Cali-
fornia investigations, this low average is accounted for by the fact that
many escape illness altogether. The individual whom serious illness
54
RBPOET OF SOCIAL INSURANCE COMMISSION.
strikes is as badly off as in communities having a higher sickness rate.
Cases lasting fifteen and twenty-five weeks are not uncommon.
The burden of serious illness is sending married women with children
to work. It is causing many honest and conscientious wage workers
to go without sufficient food and clothing. It is forcing an increasing
number of families to become recipients of medical and general charity.
In short, the burden that protracted illness places upon the
individual wage earner is intolerable. It threatens his economic inde-
pendence and too often for social weal, it makes good the threat.
TABLE I. Annual Fluctuation of the Number of Employees in California Industries.
No. of es-
tablish-
ments
B.
a
S
B
s
1
1
3
c
1
It
§3.
Average
employed —
II
as?
Bin
re " H
. -1
! o
1. By industry as a
whole^
68,838
83,327
15,893
47,156
47,667
7,854
21,682
35,660
8,039
31.5
42.8
50.6
57,956
66,132
10,685
10,882
17,195
5,208
158
2. By separate estab-
lishments"^
206
3. Separate establish-
ments'' (other in-
dustries)
32.8
'Manufacturing establishments.
^No data obtainable for these industries as a whole.
Note. — ^Under the category "industry as a whole" the monthly fluctuations and
number of employees were taken as a total for each industry from the sixteenth
biennial report of the Bureau of Labor Statistics of California. Under "separate
establishments" the monthly fluctuations in the individual establishments in each
industry were considered and the total of the individual maxima and minima taken.
This was done under the principle that there is a very small movement of men from
one establishment to another even within the same industry. Thus the two average
per cents in numbers 1 and 2 represent the minimum and maximum per cents of
loss of time, the true average being some place between them.
EEPOET OF SOCIAL INSURANCE COMMISSION. 55
TABLE II.— Summary of Unemployment Investigation in San Francisco
Building Trades.
689 men gave information.
643 men lost time during 1915.
11,663 weeks lost by these 643 men.
18.14 weeks average time lost for 643 men.
16.93 weeks average time lost for 689 men.
Mechanical Trades.
541 men gave information.
413 men lost time during 1915.
6,670 weeks lost by the 413 men.
16.15 weeks average time lost by 413 men.
12.51 weeks average time lost by 541 men.
Laiorers.
277 men gave information.
258 men lost time during 1915.
4,757 weeks lost by the 258 men.
18.44 weeks average time lost by 258 men.
17.17 weeks average time lost by 277 men.
Manufacturers.
41 men gave information.
35 lost time during 1915.
393 weeks lost by 35 men.
11.23 weeks average time lost by 35 men.
9.59 weeks average time lost by 41 men.
Transportation.
100 men gave information.
74 men lost time during 1915.
1131 weeks lost by the 74 men.
15.28 week.s average time lost by 74 men.
11.31 weeks average time lost by 100 men.
Personal Service.
279 men gave information. .
211 men lost time during 1915.
3,688 weeks lost by 211 men.
17.48 weeks average time lost by 211 men.
13.22 weeks average time lost by 279 men.
All Other Occupations.
61 men gave information.
48 men lost time during 1915.
718 weeks lost by the 48 men.
14.96 weeks average time lost by 48 men.
11.77 weeks average time lost by 61 men.
Total.
Total of 1,988 men gave information.
1,682 men lost time during 1915.
29,020 weeks lost by 1,682 men.
17.25 weeks average time lost by 1,682 men.
14.60 weeks average time lost by 1,988 men.
56
EBPOET OP SOCIAL INSURANCE COMMISSION.
TABLE 111.— Wages in Manufacturing.
(Sixteenth Biennial Report of the Bureau of Labor Statistics of the State of
California. 1913-1914.)
Males.
18 years ol" age ana over
Under 18 years of age
Total
Weekly wage rate
No.
Per
cent
Cumu-
lative
per
cent
No.
Per
cent
Cumu-
lative
per
cent
No.
Per
cent
Cumu-
lative
per
cent
Under $4
17
35
99
294
440
540
1,089
2,251
1,362
5,746
5,198
3,008
12,671
7,897
9,078
6,644
.03
.06
.17
.52
.78
.96
1.93
3.99
2.43
10.19
9.23
5.34
22.48
14.00
16.1
11.79
.03
.08
.26
.88
1.66
2.62
4.55
8.54
10.79
21.16
30.39
36.73
59.21
73.21
89.31
100.00
13
62
136
276
242
126
174
100
34
65
27
9
12
2
1
1.01
4.86
10.64
21.58
18.92
9.85
13.6
7.8
2.67
5.08
2.11
.70
.94
.16
.08
1.01
5.87
16.51
38.09
57.01
66.86
80.46
88.26
90.93
96.01
98.12
98.82
99.76
99.92
100.00
30
97
235
570
682
666
1,263
2,351
1,396
5,811
5,225
3,017
12,683
7,899
9,079
6,644
.05
.17
.41
.99
1.18
1.15
2.19
4.08
2.42
10.06
9.06
5.23
22.02
13.70
15.75
11.52
.05
$4 to $4.99
.22
$5 to $5.99 .
.63
$6 to $6.99
$7 to $7.99
1.62
2.80
$8 to $8.99
3.95
$9 to $9.99
6.14
$10 to $10.99 ■
10.22
$11 to $11.99 .
12.64
$12 to $12.99
22.72
$13 to $13.99
31.78
$14 to $14.99
37.01
$15 to $17.99
59.03
$18 to $20.99
72.73
$21 to $24.99
88.48
$25 and over
lOO.OO
Totals
56,369
lOO.OO
1,279
100.00
57,648
100.00
EEPOKT OP SOCIAL INSURANCE COMMISSION.
57
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■<*CD^COCOOCOO
1-H tJi U5 |>. OO CO Cp
5g
m
6"
«i M
S
Oi-H'^C^COCOOOO-rH'^
= S
a
V 'S
a
S
o
op
? bo
t
1
s
TH CM tH T-H iH
T-I
wM-'iiCDi-HOiOcOiftcO
T-H
01
(M
"|5
12;
<
S
i iBSSfeag^s
1-
^
^s
■ i "Sss^g
g
gs
^
o
i iSigfe^Stigg
^
rj
S
R
U
!i1
1
Pi
h
1 Ii-(OOCO^.irDT— ICO-fHCO-^O
s
s
»-* 1— 1 1— 1 1-H 1-1 Cas'^TH
o
c
^
fM
o
O
S
■ iHCOlO"^cOUtiCOi-lCO
-J
(0
s
-*
o
S
3
fifi
E2g8-H:)i>.iO'^cs:it~-'*Caoo
c
S
c3
s
cD-i-Has"ascNi>-tpcocjio
t>
E
a
T-H T-H r-T e?
00-
5
><
g S 5! §3 S S S S JS
LJ
T-it>i>--^dOcay.g
24,543
31,456
25,070
Average
per
member
1912-1913
1,242
1,307
1,236
24,543
31,456
25,070
52,782
52,583
48,000
.46
1913-1914 ._ ..._ .. ..
60
1914-1915
.52
Totals
3,785
81,069
21.4
153,365
81,069
.529
TABLE XIII. Distribution of Soutinern Pacific Hospital Cases Over Three Weeks
Duration.
Number of weelis in hospital
3 to 4 weeks
4 to 5 weeks
5 to 6 weeks
6 to 7 weeks
7 to 8 weeks
8 to 9 weeks
9 to 10 weeks
10 to 15 weeks
15 to 20 weeks
20 to 25 weeks
25 to 30 weeks.
Over 30 weeks
Totals ..-
66
30
36
32
15
9
42
6
4
2
3
334
115
81
60
44
26
18
15
43
25
6
448
99
59
55
23
25
17
14
21
12
2
4
5
336
303
206
145
103
83
50
38
106
43
12
14
15
1,118
TABLE XIV. Santa Fe Hospital Association — Hospital Experience.
Year
Number
of cases
HospUnl Average
days ''"ys
■" per case
Number
of
members
Hospital
days
Average
days per
member
1913 ..
1,260
1,077
1,167
21,042
18,431
18,012
16.7
17.1
15.4
13,527
13,527
13,527
21,042
ia431
18,012
1.55
1.36
1.33
1914
1915
Totals
3,504
57,485
16.4
40,581
57,485
1.42
REPORT OF SOCIAL INSURANOB COMMISSION. 63
TABLE XV. Distribution of Hospital Cases of tlie Santa Fe Fund for Year 1915.
Number of weeks in hospital
Cases
, Number of weeks in hospital
Cases
Under 1 week
1 to 2 weeks-
2 to 3 weeks-
3 to 4 weeks-
4 to 5 weeks,
5 to 6 weekS-
6 to 7 weeks-
7 to 8 weoks-
455
298
163
82
55
36
15
21
8 to 9 weeks
9 to 10 weeks,
10 to 15 weeks,
15. to 20 weeks,
20 to 25 weeks,
25 to 30 weeks
Total
15
9
23
11
2
1
1,186
TABLE XVI. Records of 1,262 IVIale Employees in Establishments of the Bay Cities.
Working Days Lost Through Sickness in 1915 in Relation to Wages.
Wage per week
Number
in group,
total
Cases
Days
lost
Average
days per
case
Number
of cases
lasting
20 days
or over
Out of
days lost,
number in
which sick-
ness lasted
20 days
or over
Under $12
78
186
347
186
113
112
101
71
68
12
20
70
30
24
16
19
9
8
74
461
1,209
534
627
220
195
186
102
6.2
23.1
17.3
17.8
26.1
13.8
10.3
20.7
12.8
$12 to $14
5
6
5
3
1
1
1
358
$14 to $16
851
$16 to $18 . .
373
$18 to $20 - —
487
$20 to $24
116
$24 to $28
60
$28 and over
150
Unknown
50
Totals
1,262
208
3,608
17.3
40
2.415
Total number of records 1,262
Average number of days lost per employee 2.9
Percentage of employees losing time 16.5
Note. — 25 days, 1 month; 6 days, 1 week.
64
KEPORT OP SOCIAL TNSUKANCE COMMISSION.
o I-
>
X
I
HI
_l
in
<
1°
.E ffl
UJ
<
1-
^1
■3
© m Tn 1^ !•-
Ift CO' CO ^* -.J
^1
11 -fl W 1-- CO
<>J r^ r-i rH rH
o
I "3
CO OS Oi o I-;
M iH rH CO CO
CD
h
o
H
$13 32
11 90
16 66
25 38
32 12
iH
1-
SI
$6 44
5 00
6 86
9 29
11 02
8
$6 88
6 90
8 80
16 09
21 10
S
CO
m
o
$319 60
1,284 06
2,882 40
3,400 70
4,818 16
o
00
1
$164 60
539 00
1,263 00
1,244 25
1,653 60
9-
1"
$165 00
745 06
1,619 40
2,166 45
3.164 65
$6,436 00
38,«17 36
83,906 20
72,169 20
100,970 40
£
$8,043 49
40,801 76
84,210 29
68,674 49
85,578 97
i"
Number
of women-
SiggSS
g
CO
I
1
i
Under $6.00 - ..
$6.00 to $8.00
$10.00 to $12.00-
i
1
f
1
(pia
5g
m
s'S
I
§s
^ o
■3°=
+^B
B'O
s*."
fi'O
Md
+J-H
rt in
O C)
^6
REPORT OP SOCIAL INSURANCE COMMISSION.
65
SSSSig
in
m 8 o c5 113
S
§8^813
S
p
SSSgg
*^ iH Oj CO
-n Oi-CO ■<* CO
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s
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5
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^-
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si
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*
1 ^c- m <^
1
1 1 CO M 00
i-i
1 1 rH r-i 0^
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1 i-H O -i^ N
CO
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$
18888
g
o K m cE m
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s
§
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ffi
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cq
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93- N in ro ■*
r
"SSSS
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o
pend
Itures
■CO
y
£
1 1 1 1 1
i M 1 i
3 i i i 1
1 III
1 i IJs^^
AfedicaZ Aid o?id
Dentistry.
Under $6.00
$6.00 to $8.00-
$8.00 to $10.00-
$10.00 to $12.00
$12.00 and over
s
Medico
Under $6.00
$6.00 to $8.
$8.00 to $10
$10.00 to $1
$12.00 and o
■s J s 2 a °
o
Sasatsa
5—2/7626
66
REPORT OP SOCIAL INSURANCE COMMISSION.
>
X
m
<
(N ep -* CO
l-H
CO in «3 CO
>n
H
lU
^£?
3
Q-B
s
o ci T-( n
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d
s
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fc
SH
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r- o i-< -M
o
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m
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SSSS
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g§seg
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in w CO CO w (M
o lO o o
:igg3'
o «- ^- ^. fe
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■M ■" w -u « a
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REPORT OP SOCIAL INSURANCE COMMISSION.
67
fl
o ©0 S m
13
000
Q d
m S
gsgg
s
1
$130
1,837
1,160
466
CO
g p ^
%%
s
00 r-l 10 CO
CO
1
o
i
$31
3,04
1,63
74
CO
H
£- CO I> -*
^
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1-i t~
r- CO t- .*
.
1
« CO U5 CO
s
CO in CO
g5«
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s
i1
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iss i
s
i88 i
8
£
loo 1
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loo !
(->
o
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ii-^ i
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s
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s
C4
1 tH rH 1
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1 rH rH 1
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(M
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in
1 in
m
10
in
3
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lO O p ifi
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in 1ft m 00
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in
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3
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l-i tr- r-t CO
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CO r-i CO rH
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r~
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1 (N
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1 1 1 i
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re
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r eft-
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(M 03 S5 U3 ^
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s
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O ■* «S 00 o>
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CQ 00 «; DJ CJ
«
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ssssg
8
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in
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Per cent of
income-—
«s CO as <© N
<>i TJH r-i rH N
M
N
O
h
gssgg
S
o
1
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^
t-
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Per cent of
N -^JJ O -* M
T*
(A
Income
'"'
"o
£
OS
M
ggggg
8
IL
1
s
■* 00 o « o
^
g
^"^sSs
s
01
^
A
^
(0
a
H
-
Per cent of
"-i ^ '1
(N
ss
income
'"'
(0
(0
o
ggg
o
1.
rH
•M
S
C^l
re
p.
£9 M •*
&
5
fi
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Per cent of
W !>; O 00 M
rH
CO
Income
' fi4 CO
*"•
P
^
o
ggggs
g
«»-
■"s
O ■* lO O i>
1
o
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d
£-
3
Number. __
'SS3S
1
0)
X
111
><
1 1 ! 1 1
X
1 III
lU
J
ta
I
<
^
1-
MM
^
M ! U
: 1 ' ' >
' 1 (d o .3
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1
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^
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1
&
a
rH O iH OS I
O tr -^ ir- <
00 O CO C4 r
iH t- J> i-H lA eg
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■rP CO -^t^
CO iH
fli
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sg
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a "5
Number __
sssss^
a
o
u
a
REPORT OF SOCIAL INSURANCE COMMISSION.
69
SS8SS
o
88
s
88
8
88
c
85
s
1
^i
i
isigi
3
s i s § s
1
tN pH OS 03 ■»(
IS
1
^
^
» rHrt-r-
^
H
°
'sssa
"
o
I-
0)
(0
6
G4
e
00
0)
(0
CO
£
•«
I-H
E3
g
sssss
o
ssss
o
in
88388
g
«
s
t|gS5
CO
itiSg
^
»
s
£i
d
i-# CO fig rH I-
00
rH -* 03 -*
S
iH tJI © rH IT
s
2
Q.
1
888
8
SS88
s
S88S
8
(0
ee- iH CO r-
O in t- C
r-l
c
w
s
s
£
f?
3
o
■§
F
s
<
o
(M CO Tt
03
-"SS?
s
M i-H ■* r-
iH CO r-
s
•^
;?;
o
■
X
X
111
J
m
<
a
1
1
o
□
O
Total
tocqt^Tt.ov2
2 parents --
■«* t- GO l>- ira -* CM
^
1 parent —
OOOCOCOCDlOQOtDCOO 1
i
No parents.
,-( W CO I 1 I I 1 I 1 I
i-H 1 1 1 1 1 1 1 1
T-i
T3 o
?^
.3
Total
CO CD 00 O OO 1 1 I r 1 r
s
2 parents --
l>- Oi 03 Ci 00 1 1 1 1 1 I
CM
1 parent
Cs CD Oi ^ r I ! I 1 ! 1
¥5
No parents.
I T-i 1 1 r 1 I 1 1 1 I
1-t
1^
Total
OOOOOi01i-ICDi-ti-Hl>.10CSl
1
2 parents . .
CDOO-^lftt>.COlO"=3'CSl-coOcot^-.-Hr^co i-(-^
CO CD 00 l>- ■* '^ CM
s
1 parent —
Oi o 00 o o CO Q c=> irt r^ i
w
^
No parents.
tH -"^ 1 1 1 1 1 1 t I 1
Irt
1
s
co-^oscDt^cDcoOOOS^a>H
1-H >-(
r
I
1
-p
o
Eh
REPORT OF SOCIAL INSURANCE COMMISSION.
77
O-iiiCCDiCCOi-H-^
(M
O
OS
lO
00
r-i
Total
■rp
1
COC^l^OiiHlJ^Ji-HCD
S
o
CO
J3
IQ
■^
u
2 parents „
(N
■s
CO
fci
s
-Q
iH'^cMi-l'.JiO'SCUOOOO
tH
W
Ol (M CO t^ CSl OO L-^
(M
4>
1 parent-
iH (N T-l ■r-l
Oi
V
c
1
<
t<
i-i CO «o 1 1 1 1 1
ITi
i-t 1 1 1 1 1
M
«
o
J
No parents-
O O CO ■* 1 (M I 1
(3:.
1— 1 iH 1 II
o
V
z
OOCCt^CDi?5:DCO(M
(M
3
Total
lO
C
o
4->
o
O)
i-tO-lOOQlOTHOS-^
^10-
C~- C~- C3i CO CO h- lO 1
CO
!>■
£
■<* (M (M C^ (M T-l tH I
00
X
sS
1 parent —
X
■a
<
K
Ui
1 lO 1 1 1 1 1 1
irt
-I
«
m
n
No paients-
<
cs
h
^
ni
•^iScOCOCMCMOSCa
c!j»ooo«r>io-^T-H'.-H
£g
CO
o
^
"^
s:
O
Total
CO
CO'
o
5
Is
O^tNOOiMCD-^iH
CO
CO
o
-«:t<
t^H
Oi
2 parents--
CN'^CD-^'^COi-tr-l
oo
cm"
>t
^1
a
Q.
g§g^g=gig«>
lO
1—1
CO
<
(0
1-
1 parent—
(M tH rH
t>-
! CO CO ! ! I 1 1
CJ3
i
CO
! i-l 1 1 1 I 1
T-H
No parents-
11.
•1-
O
c
aa
o
u
Ot^iOior^cococoooio
oO
■^seviGo-^'-':icoc>.oo
<3b
^
"S
T-i
-P
o
o
a
X]
s
1
i
a
s
s
&
Total
ss
2 parents _ -
t-^ to
t-- OO
(0
1 parent _—
(0
fO
O
No parents-
CO CO
re
O
(I)
l!
i
Total
CTJ 00
CD CO
* tA
0)
C
<
2 parents —
CO oq
(0
o
J
•a
c
1 parent —
l>- -,-1
O ira
re
o
o
at
o
No parents-
•^ CO
CM O
T-H 1— t
■6 «
St
1
2
Total
i<2
1 0)
2 parents --
S3S
t^ CO
^1
1 parent —
to lO
^ CO
(U
"♦-
iZ
>
O
No parents-
(M OO
1-1 T-H
g
■Sfi
■S.S
1"'
Total
^§8
2 parents _.
00 00
CO c^
c
1 parent _—
"^ "as
o
o
c
o
No parents-
lO
3
.■5
(0
1 t
I 1
1 1
1 1
1 1
T 1
1
I o
0) a
50 S
^£
78 REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION 11.
BURDEN WHICH ILLNESS OF WAGE EARNING FAMILIES
PUTS UPON THE PUBLIC.
Having seen what illne.ss is meaning in the families of the individual
wage workers, the next question is "What burden is this illness putting
apon the public?" The public loss interpreted as the social loss, is
absolutely impossible of measurement, for the economic loss to the com-
munity resulting from the great number of working days wasted
through sickness can merely be guessed at. The financial burden, how-
sver, can be estimated in part, and the commission made every effort
Lo get an accurate statement of such public expenditures.
The biggest item in the bill creditable to illness is the cost of main-
taining the county (free) hospitals of the state. Since all but three
af the county hospitals are in reality a combination of almshouse and
hospital it would not be fair to credit all the expense of the institu-
tions to care of the ill. The State Board of Charities and Corrections
(the body having official supervision of these hospitals) consider it
safe to count one-third of the beds as hospital beds proper and to
allocate one-third of the total expense to care of the sick (two-thirds
being attributed to support of aged indigents).
The "outdoor relief" or public charity dispensed by the counties to
persons made destitute by illness, ranks second. On the basis of its
analysis of over 5000 public charity cases (previously discussed in this
report) the commission felt it to be quite fair to estimate that in one-
lialf of the outdoor relief cases, illness was a responsible factor of
destitution. One-half of the funds spent for outdoor relief was, there-
fore, charged to illness. Since the Associated Charities of San
Francisco does the county relief work for San Francisco County its
Jisbursements were also recorded and one-half allocated to illness.
Medical outrelief or free medical, dental and nursing care furnished
by the cities of the state is the third largest item. Communications
sent to the largest cities of the state brought direct statements of the
municipal expenditures for care of illness.
On the basis of these adjusted statistics the following figures were
3ompiled for the year 1915 : \ y
County hospital maintenance $1,210,176 75
Outdoor relief of counties 680233 9>2
Medical outrelief of cities 92 642 68
Associated Charities of San Francisco 83,653 62
$2,066,706 97
REPORT OF SOCIAL INSURANCE COMMISSION.
79
The alarming total of more than $2,000,000 means a direct burden
on public funds. It was impossible to secure from the innumerable
private charitable organizations, statistics of expenditures for the relief
of illness.
The following figures indicate that the expenditures for county
outrelief have increased more than 100 per cent in the last four years :
1912-1913 $303,689 28
1913-1914 266,813 78
1914-1915 441,000 00
1915-1916 680,233 02
The cost of supporting county hospitals shows a like marked
increase :
1912-1913 $581,315 20
1913-1914 603,095 33
1914-1915 ,_ 692,100 33
1915-1916 1,210,176 15
In addition to these county and municipal expenditures for the relief
of illness, the cost of maintaining the free clinics which dispense
medical charity to many wage earners and their dependents, should
be considered in recording the financial burden sustained by the
public.
The following table shows the items of expense connected with the
free clinics. In twelve of these charitable institutions the medical
services are unpaid for.
Number
of clinica
Value of
druirs
Cost of
nursing
Cost of
medical and
surgical care
Total
San Francisco and Oakland
Los Angeles
11
10
$25,331 88
6,046 31
$28,758 07
17,110 OO
$54,483 46
11,500 00
$108,573 41
34,656 31
Totals
21
$31,378 19
$45,868 07
$65,983 46
$143,229 72
In 5 cases value of drugs not known. In 1 case no drugs were dispensed.
In 2 cases value of nursing not known.
In 6 cases nursing was voluntary.
In 1 case city nurses cared for clinic patients.
In 2 cases cost of medical and surgical care not known.
In 12 cases medical and surgical care were voluntary.
*For details see Tables XXIX and XXX at end of section.
It is evident from these figures that siclmess among wage earning
families is already putting a tremendous financial burden on public
funds. It is equally evident that this burden has been growing steadily
larger. For the safety of the public funds, if for no other reason,
it would seem imperative that some more fruitful method of dealing
with this problem than the present arrangement of inadequate "relief
work" be devised. An expenditure of a like amount for the preven-
80
REPORT OF SOCIAL INSURANCE COMMISSION.
tion of destitution would stand out as a splendid investment in contrast
to this disbursement of over two million dollars a year for merely
remedial purposes.
TABLE XXIX. Detailed Information Concerning Free Clinics, San Francisco and
Oakland.
Clinics
Nurolier Number
of cases of visits
Value of
dmgs
Cost of
nursing
Cost of
medical ar.d
surgical cate
337
16,809
780
3,001
22,529
1,212
21,290
1,500
13,646
731
3,551
1,121
89,327
4,744
8,044
1
4,892
1
6,896
69,890
4,736
15,110
$45 85
14,490 OO
,1
3,200 00
1
434 09
200 00
743 72
3,818 22
900 00
1,500 00
$720 00
13,140 00
2
2
I
Cooper's Institute
$39,005 OC
Hahnemann Hospital _ _.
1,490 00
Mary's Help Clinic
2
Mount Zion Hospital Clinic
San Francisco Tuberculosis
2
4,098 07
316 fifi
San Francisco Polyclinic
Telegraph Hill Clinic
3,300 00 i
2,040 00 1 2
University of California Clinic
Alameda County Society for
Prevention of TuberculosiS--
Oakland College of Medicine-
4.560 00 =13,671 74
i. 2
900 OO "
Totals
85,386
204,760
$25,331 88
$28,758 07
$54,483 46
'No record.
^Voluntary.
'Both hospital and dispensary (University of California Hospital).
'City nurses.
TABLE XXX. Detailed Information Concerning Free Clinics, Los Angeles.
Clinics
Numlier
of cases
Number
of visits
Value of
dn^s
Cost of
nursing
Cost of
medical and
surgical care
East First Street Dispensary_-
Public School Dispensary
Childrens Hospital _. _
3,519
2,718
538
112
5,280
688
1
2,729
10,169
12,713
13,340
12,845
705
1,262
1
1
1
1
29,458
a
1
$1,151 51
3,509 97
30 91
4
44 00
1
109 92
1
1,200 00
1
$1,600 00
12,000 00
2
nsooo
3,000 00
2
1
360 00
1
=$6,300 00
1,200 00
Brownson House __ - _
2
Dental Clinic ._.
2
Ann Street School"
2
Osteopathic Clinic
4,000 00
Pasadena Hospital Clinic'
Selwyn Emmett Graves
2
2
East Washington
2
Totals „ . .
38,466
57,610
$6,046 31
$17,110 00
$11,500 00
'Not known.
^Voluntary.
'Cost of dentists (dental clinic).
*None dispensed.
'City nurse — cost approximated according to amount of time spent in clinic work.
"Figures given for six months only — approximate figures for one year used in table.
'Figures given for nine months only — approximate figures for one year used in
table.
REPORT OF SOCIAL INSURANCE COMMISSION. 81
SECTION III.
EFFORTS OF WAGE EARNERS TO PROTECT THEMSELVES.
In view of the hardship that illness brings to the individual wage
earner, it was to be expected that there would be attempts at a coopera-
tive shouldering of the burden. A painstaking investigation conducted
by the commission disclosed the ways in which wage earners of Cali-
fornia have organized to protect themselves against the losses due to
illness.
In all instances some form of health insurance was the method of
protection employed.
FRATERNAL ORDERS.
By far the greatest number of persons thus protected are members
of fraternal orders, whose rules prescribe that a certain cash amount
shall be paid for a given number of weeks to members disabled on
account of sickness. Some fraternal orders of California do not have
this sick benefit feature. Some orders have the ruling that all the
branch lodges must make such provision. In others, the giving of such
protection is optional with the local lodge, while in still others the
carrying of sick benefits is optional within the branch lodge with the
individual member.
To secure this data, the commission had to get in first-hand communi-
cation with the various local branches of more than twenty orders. Not
only is the maintaining of a sick benefit feature optional in some organi-
zations, with the local, but in many orders there is no duty to report
this feature to the central office. Thus the grand officers of the organi-
zations were, themselves, unable to state how many of the branch lodges
gave sick benefits. The courteous cooperation of these officials, how-
ever, enabled the commission to secure directly from the locals a
satisfactory statistical record. Complete responses could not be
obtained in the case of a few organizations, but the commission is. satis-
fied that it obtained a fairly accurate statement of the case. Data
gathered show that almost 300,000 members are listed as entitled to
sick benefits in fraternal organizations. This represents 35 per cent of
the membership in all the fraternal organizations of the state.* There
is of course a considerable amount of duplication in this membership
list due to individuals joining several orders. The extent of such
"doubling up" was impossible of computation. Officials of the various
lodges guess it to be as great as 40 per cent or 50 per cent of the total
enrollment. "Whatever the duplication, however, the^ membership is
*See Table XXXI at end of Section III.
&-27e28
8'-i KlirOTiT OF SOCIAL INSURANCE COMMISSION.
substantial and the work of these protective organizations merits
description and comment.
The fraternal orders, organized and maintained for both social and
protective purposes, are in most respects built along the same lines.
They are all mutual benefit societies — democratically managed by their
members. Excepting the very old and children, practically all persons
in good health are eligible. The dues are about $1 a month, the bene-
fits from $7 to $10 a week for about thirteen weeks (in some few
instances twenty-six and fifty-two weeks, and in one, a small benefit,
for life). The member is ineligible to benefits until a prescribed time
after initiation, as a rule six months.*
A small minority of the lodges give a medical benefit as well as a
cash benefit and some few give doctor's services to the immediate family
of the members. Major operations are usually excluded from the serv-
ice guaranteed and only one lodge in the state, a lodge having several
thousand members, was found giving hospital treatment. The officials
of the various orders stated that the lodges are anxious to give special-
ist care and hospital treatment and realize the need, but find it
financially impossible to do so.
The financial responsibility for such benefits is primarily with the
local lodge. Some of the orders, however, safeguard the local societies
by providing that the grand lodge shall assume the responsibility in
the event of the failure of the local. Some lodges definitely state "that
they assume no such responsibility." One lodge having almost 40,000
members protects, through the grand lodge, members of defunct branch
lodges only in case they have been members for twenty-five years or
more. This order at the same time requires the locals to give such
benefits.
The membership rolls of several of the larger orders were examined
for the occupations of the members. The great majority proved to be
the better paid wage earners. Except in the case of the organizations
composed of foreigners of one nationality, few of the lower paid wage
groups belong to these protective societies.
Since the local lodge is always the primary and in some cases the
final financial unit, the size of the lodge is important. The following
*See Table XXXII.
EEPORT OF SOCIAL INSUKANCE COMMISSION.
83
table compiled from the statistics of ten of the larger orders is illus-
trative :
Table XXXIII. Summary of Totals.*
Distribution of Membership of Ten of the Larger Fraternal Orders of California.
Number
of lodges
Number
of mem-
beis
Per cent
Cumulative
Cumulative per cent
Average number
of members s
Lodges
Members
Number
of lodges
Number
of mem-
bers
Lodges
Mem-
bers
Under 50 — ,
50-99
327
471
306
111
46
18
19
10,944
33,456
42,358
26,808
15,765
7.850
17,615
25.19
36.29
23.68
8.55
3.54
1.39
1.46
7.07
21.62
27.36
17.32
10.18
5.07
11.38
327
798
1,104
1,215
1,261
1,279
1,298
10,944
44,400
86,758
113,566
129,331
137,181
154,796
25.19.
61.48
85.06
93.61
97.15
98.54
100.00
7.07
28.69
100-199
200-299
300-399
400-499
500 and ovor_
56.05
73.37
S3.55
88.62
lOO.OO
Totals -_-
1,298
154,796
100.00
100.00
Average membership per lodge is 119.
*Detailed data shown In Table XXXIV, at end of Section III.
The minimum of membership permitted is so small in most cases as
to be of no importance, ten and thirteen being permitted.
The method of decentralization of financial responsibility for sick
benefits, unsound from an insurance standpoint, is not unalterable.
According to actuarial experts a membership of 250 is the minimum
for actual safety and only a small minority of the lodges exceed that
limit. That so few of the lodges get into difficulty because of their
sick benefit feature, is attributed by experienced fraternal officials to
the fact that many of the members never apply for benefits to which
they are entitled and to the fact that members through their loyalty
to the order, pay assessments when deficiencies arise. Standardization
by law of societies giving sick benefits, to the end that financial respon-
sibility should be sufficiently centralized to rest upon groups of a safe
size would be an easy process.
Ten orders with a membership in 1915 of over 146,000 had accessible
records of their receipts and disbursements which indicated that they
spent more than $944,000 in sick benefit and other relief measures.*
These fraternal orders have taught the lesson of health insurance to
large groups of wage earners. They practiced it for years before social
insurance was' heard of in America. The amount of destitution and
suffering which they have prevented and alleviated is of real
proportions.
Yet from the standpoint of the needs which health insurance should
fill, the fraternals find it impossible to meet all demands. Specialist
attention, major surgical work, as well as general medical aid and hos-
pital care for the wage earner and his dependents, in addition to a
•See Table XXXV at end of Section III.
8-J- REPORT OP SOCIAL INSURANCE COMMISSION.
substantial part of wages during disability are essential for full protec-
tion. For the money which the fraternals can collect in dues, it is
impossible to furnish all these things. The inadequateness of the
protection they afford is due, however, not to defects of the fraternal
orders, but to the fact that the burden which health insurance should
carry and which they are attempting to sustain, is too heavy for the
wage earning group alone, even when the insurance method is employed.
TRADE UNIONS.
The next largest medium for protection against the losses of illness,
is the labor union. None of the central organizations of labor keep a
record of whether or not the various unions have a sick benefit feature
and therefore direct communication with all the unions of the state
was necessary. Complete records of San Francisco and Los Angeles
were secured and about 70 per cent of the unions throughout the state
filed statements.
The sick benefit of many unions, though administered by the local,
is paid by the international union and there is no financial responsibility
on the local organization. In others, the local union adds to the inter-
national benefit, and to the exfent of the additional sum, has financial
responsibility. Few of the unions have made provision for medical
service in addition to the cash benefits. Reference to table XXXVI will
show the number reporting such service to members. Aside from
the unions entitled by law to the Marine Hospital, a negligible number
give surgical treatment, and only one union reported hospital service as
a benefit. No union reported medical service to the family of the
member.
The fact that trade unions, with the many other interests which take
their attention, organize and maintain a sick benefit feature, is a real
testimonial of the need of health insurance. Forty-one* per cent of the
membership of organized labor in California is protected during iUness
through union action. The protection afforded is less adequate to meet
the needs of the situation than in the case of the fraternals. The com-
ment previously made in regard to the protection offered by fraternal
orders is equally true of the unions' sick benefit feature. The burden
which health insurance should carry is too heavy for the wage earning
group alone to sustain.
BENEVOLENT SOCIETIES.
Benevolent societies giving systematic protection of health insurance
character are, in point of benefits, of two types. The French and Ger-
man societies with a membership of 14,646 in the two cities of Los
*See Table XXXVI at end of Section III.
REPORT OF SOCIAL INSURANCE COMMISSION. 85
Angeles and San Francisco, own and maintain a hospital and clinic and
have a staff of visiting physicians as well. Members pay from $1 to
$1.25 dues and they are entitled to medical, surgical and hospital care
for as long a period as necessary. Paying patients not members of
the societies are admitted to the hospital and the cost of maintaining
the hospital is partially met in this way.
The Swiss Benevolent Society, the Ligue of Henry IV and several
small societies put the emphasis upon cash benefits rather than medical
care. No hospital is maintained by these organizations.
The management of all these societies is in the hands of a board of
directors, elected each year by the members themselves. The average
duration of the membership of these societies is long and testifies to their
usefulness. But from the standpoint of the needs of the wage earner,
neither type offers anything like adequate protection.
COMMERCIAL HOSPITAL ASSOCIATIONS.
Similar to the French and German Benevolent Societies in some
respects are the commercial hospital associations. These so-called
"associations" are a form of insurance organization selling a certain
type of health insurance. They are not mutual benefit societies as the
name association would suggest, but are business ventures run for the
profit of their owners and managed by their owners and not by the
members. Most of them are stock corporations.
Eighty of the hospital associations were found and studied. Their
rules pertaining to membership and treatment are similar.* Members
pay about $1 a month in return for which they are entitled to medical
and hospital service in the case of diseases not excluded in the contract.
Benefits begin immediately on the payment of dues.
The following quotations from the contract of the North Americaji
Hospital Association of San Francisco (one of the more liberal associa-
tions) illustrates the things to which the member is not entitled :
"That under this agreement, hospital service will not be pro-
vided for more than three months when occasioned by any one
illness or accident * * *,
That under this agreement, no medical treatment, surgical oper-
ations, hospital service, medicines, surgical dressings or ambulance
service will be provided in cases of cancer, locomotor ataxia, tuber-
culosis, confinement, or attending complications, abortion, miscar-
riages, or diseases from which the member is suffering at date
hereof, or has had previously, and not stated in his written medical
examination. Change of life will be treated at offices of our asso-
ciation, and at homes of members. No hospital service will be given
*See Table XXXVII at end of Section III.
86 REPORT OF SOCIAL INSURANCE COMMISSION.
for same. Treatment will not be given for venereal diseases during
the first thirty days of membership, nor will hospital service be
given for any venereal disease. No service will be rendered in any
case of syphilis, insanity or attempted suicide.
That under this agreement, this association does not furnish
atomizers, syringes, suspensories, elastic stockings, crutches, trusses,
ej'eglasses or other appliances.
That under this agreement, members will not receive treatment
for chronic conditions, relapses, complications or weaknesses arising
from sicknesses which occurred previous to membership.
This agreement hereby releases this association from all service
for alcoholism and attending complications.
Similar quotations from the contract of the Grace Darling Associa-
tion (a branch of an association with more than 6,000 members) show
even greater limitations:
I understand that the association does not * * * furnish
atomizers, syringes, suspensories, trusses, elastic stockings, or other
appliances or accessories. * * *
I also agree that my membership in said association shall not be
construed to apply to any ease of miscarriage, confinement, or the
results thereof, chronic female trouble, cancer, change of life, or
for insanity, mental disease or epilepsy, or to require the association
to furnish any medical or surgical treatment or hospital services at
any time made necessary by use of intoxicating liquors or nar-
cotics, nor from any disease or injury or chronic ailment from
which I may have been suffering previous to the date thereof. No
hospital service, special medicines, serums or "Wassermann tests
for any venereal or genito-urinary diseases.
Nor will the association treat members or provide hospital service
for erysipelas, attempted suicide, scarlet fever, measles, rupture,
paralysis, pregnancy, smallpox, tubercular or venereal diseases,
bubonic plage, or any other diseases requiring isolation by law.
Change of life will be treated at offices of medical staff or at homes
of members only. Children 15 years or under receive home and
office treatment only.
The California Hospital Association of Sacramento excludes all dis-
eases which might need specialist attention.
Questions as to the members' rights in the field of medical attention
are decided always by the company physician. A lawsuit is the mem-
ber's only alternative to accepting his verdict.
New members are in every case secured by solicitation. The agents,
who also do collecting, are paid in some cases, salaries, and in most cases,
fees according to the number of risks written. The cost of collection
amounts to from 20 to 30 per cent of the gross receipts. Investigations
proved that at least 20 per cent goes as profit to the owners. Thus only
about $0.50 of every dollar paid by the members goes for the purchase
of medical and hospital care.
REPORT OF SOCIAL INSURANCE COMMISSION.
87
In no case do the doctors give all of their time to the association. In
some instances the association is owned by a physician. In others, reg-
ular doctors are paid salaries and emergency doctors are paid fees. The
dentists and optometrists give their services for examination free.
The diseases which these associations treat are so limited that the
protection which they furnish the member is most inadequate. The
short average duration of their membership is evidence of their failure
to meet the members needs.
COMMERCIAL INSURANCE COMPANIES.
A few wage earners purchase insurance from private insurance com-
panies. The annual report of the Insurance Commissioner of Cali-
fornia does not separate accident and health insurance. It is impossible
to make this separation because both accident and health coverage is
sold on policies at one rate of premium.
For the three years, 1913, 1914 and 1915, the total volume of business
of accident and health insurance in California was as follows :
Tears
Premiums
received
Losses paid
Loss ratio
per cent
1913 . -
$1,967,629 00
2,028,851 00
1,973,000 00
$907,397 00
918,443 00
912,888 00
46.1
1914 . . . _
452
1915 -. - . .
46.2
The volume of business is somewhat modest and it does not show any
tendency to increase. The gross cost is more than twice the net benefits.
Since the commission was interested primarily in health insurance an
effort was made to ascertain through direct inquiry from all the cas-
ualty insurance companies how much of this volume was properly
health insurance. Of course, this insurance is not limited to wage-
workers. Accident and health insurance are classified as "commercial"
and "industrial" insurance. Commercial insurance is written for the
most part among persons outside of wage-earning groups at an annual
or at least a quarterly premium. Industrial accident and health insur-
ance is written mostly among wage-earning groups, or persons in similar
economic conditions, at a monthly premium rate. In addition, there has
recently developed a new form, designated as intermediate, with mod-
erate benefits ,at a quarterly rate of premium.
Various significant conclusions may be derived from data sent in by
the insurance companies which covered from 85 to 95 per cent of the
total volume of health insurance written in California. While the loss
ratio fluctuates between 44.5 per cent and 47 per cent for the entire
volume of business, it is substantially higher for accident than for
health insurance, being approximately one-half for accident and less
than 40 per cent for health. So far as the volume of business is eon-
88 REPORT OP SOCIAL INSURANCE COMMISSION. '
cerned, a little more than $300,000, or 20 per cent, can be claimed for
health insurance. Even if we credit the health insurance business with
20 per cent of that part of the business which is not separated ' into
accident and health, the total amount will still not exceed $375,000.
Since the minimum annual premium is about $12, and it rises from that
to possibly $35, it is evident that commercial health insurance busi-
ness throughout the state does not cover more than about 20,000 people,
very few of whom are wageworkers, or, in other words, it is of very
little significance so far as the problem of sickness is concerned.
Table XXXVIII at end of section 3 is illustrative of these facts.
SUMMARY.
It is then apparent that many of the wage earners of California have
made efforts to protect themselves against the financial losses of iUness.
They are providing certain types of health insurance for themselves in
mutual benefit organizations such as the fraternals, unions and benevo-
lent societies. They are purchasing certain types of health insurance
from casualty companies and commercial hospital associations.
Even assuming that there be no duplication among members of these
mutual benefit societies and policyholders of the commercial companies,
statistics show that little more than one-third of the wage earners of
the state are protected through their voluntary efforts. The great
majority of this one-third are the better paid wageworkers and not
those of smallest earning capacity, who are even more in need of pro-
tection.
The protection secured in these various ways, while preferable to no
protection at all is, from the standpoint of the wage earners' needs,
inadequate. A guarantee of medical care (including specialist attention,
hospital accommodation) for the wage earner and his dependent
family, as well as a substantial cash benefit for the wage earner
during disability, is the need which health insurance should fill. No
such complete protection is afforded through existing insurance facil-
ities for wage earners nor could it be for the price which the wage
earners can and do pay for health insurance. The most extensive bene-
fits are furnished by some of the fraternal orders and the most limited by
the commercial hospital associations. The burden of illness, too heavy
for the individual wage earner, is also too great for the wage earning
group, even when the insurance method is employed.
Contribution from other economic groups, responsible in part for
the illness of wage earning families, toward the health insurance of
the wage earners, would permit wage earners to secure really adequate
protection without a burdensome tax on their earnings.
REPORT OF SOCIAL INSURANCE COMMISSION.
Table XXXI. Fraternal Orders in California.
89
Class
Number
orders
Per cent
Total mem-
bership
Per cent
Mombersblp
In sick
benefit de-
partment
Orders in which all lodges maintain
21
6
10
8
35.59
10.17
16.95
13.56
^223,175
6a445
^95,719
103,756
35.40
9.58
15.18
16.46
223,175
Orders in which sick benefit is op-
tional with lodge. (Accurate data)
Orders in which sick benefit is op-
tional with lodge. (Approximate
data)
46,653
n4,548
Orders in which sick benefit is op-
tional with members _ - - _
=6,844
Totals . -
45
14
76.27
23.73
483,095
147,372
76.62
23.38
291,220
Orders which do not maintain sick
Totals
59
lOO
630,467
100
291,220
'Membership of two not known.
^Membership of one not known.
"Impossible to determine membership of five orders.
90
RBPOET OF SOCIAL INSURANCE COMMISSION.
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(N '^r tj
tr CO 00
S w 00
cq (N el
in CO (M
in 55 5
in CO :
O CO c
S& Srr 'S'
CS O CO
CO ■* o
CO in fiJ
D- t> 5-
cq c^ A
oq cN in
CO ift" a
■qi -r« ea
in ITS in
o I> t-
co r- CO
la t- T-i
CD CO 00
i-l Oi i-H
"^ "^ "^
ift" in -^
r- m U5
(M (M 64
oj 10 (M
t- CM Cl
t> t- t-
-zj" ?>" of
1 n 00 Ci
CO CO CO
O '^ c
r- S c
oBSS
iH IH W
O O CO
of CO CO
ScS-*lft p,CO"*ift
r-l i-H r
I
1
1
i
i
Jeo-^ift -Qeo-^ift
iSbiS oa '^SoiCO
REPORT OP SOCIAL INSURANCE COMMISSION.
95
25,651
35,480
81,390
312,663
256,199
287,198
$530,809
607,603
525,516
$2,106,740
2,067,449
2,090,955
14,398
23,908
20,381
240,294
170,085
200,396
$350,035
311,328
320,219
$1,176,611
1,118,149
1,146,377
11,253
11,572
11,000
72,369
86,114
86,802
$180,774
196,275
205,296
$930,129
939,300
944,578
^ & in
rt H H
H H rH
2 s a
oJefcJ -^ " '^
H H i-t
?■"»-■ "'"'
rt rt rH
36,260
32,023
41,748
306,316
296,381
303,066
$588,183
681,879
612,045
rt W H W H rt
1^ r^ H
H H H T^ H H
H H H
H rH tH
H rl T^ rl H H
rH H H
H H H
rK H H rt H H
H H ,^
2,347
2,325
2,275
20,748
20,541
20,448
40,190
40,429
40,357
148,455
148,641
146,308
?H M K ^ ^ S
CO lO t-
t- «5 «o
pa M CQ
1,358
1,355
1,343
Independent Order ol B'Nai B'Eith—
1913
1914
Native Sons ol the Golden West—
1914
Totals (4 orders)— 1913 -
1914
1915
Grand totals— 1913
1914
1915
I •°5
rf £ CJ g
96
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE XXXVl. Unions Giving Sick Benefits.
Mem-
bership
Month-
ly dues
Weehly benefits
San Francisco —
Amalgamated Carpenters, Nos.
25B4, 2555, 2558
Bakers No. 2i 800
Bakery Salesmen No. 106=. 100
Barbers No. 148 I 77B
Bartenders No. 41= ' 1,300
Bay and Kiver Steamboatmen^" ofO
Boilermakers No. 6 ^__ J] 4
Boot and Shoe Workers No. 216-
Brass and Chandelier Workers
No. 158
Cigarmakers No. 228
Cloth Cap Makers No. 9
Cook's Helpers No. 110
Drug Clerks Association
Electrical Workers No. 151
Electrical Workers No. 537
Elevator Constructors No. 8-.
Garment Cutters
Garment Workers No. 131
Grocery Clerks No. 648
Ice Wagon Drivers No. 519__..__
Leather Workers on Horse Goods
Machinists No. 68
Marine Piremen^"*
Marine GasoUne Engineers No.
471
Moving Picture Operators*
Metal Polishers
Milkers No. 8861
Milk Wagon Drivers No. 226
Millmen No. 42
Holders No. 164 :
Painters No. 19=
Patternmakers
Plasterers No. 66
Plumbers No. 442
Post Office Clerks No. 2
Retail Clerks No. 432
Retail Shoe Clerks No. 410
Sailors Union of the Paciflci".
Sprinkler Fitters No. 663
I
60
310
40
768
1,546
490
60
135
46
500
275
116
33
1,400
400
229
420
295
1,000
854
186
619
40O
340
107
180
4,000
22
$2 00
1 50
1 25
*14 00
1 00
1 75
=80
1 25
=30
=25
1 00
1 00
2 00
1 50
1 25
1 10
55
1 25
1 25
=30
1 00
75
1 00
1 60
1 50
1 60
^14 OO
1 00
=40
*1 CO
=65
150
1 30
1 00
1 00
1 00
75
1 30
•Fifty cents a quarter for sick fund.
'Not stated.
^Dues per day.
■■'Dues per week.
- CO CO (N 1 !
iH CO
t--
1—1 1 1
CO
CO
^
lO
^
■Q
o
"^ "^ O 1 Irt Cv5 (M CM
O CO
CO
s
1
•n
tH 1— 1 1 iH
«
lO
I
i
><
^
~
C3
00 7-1 cq 1 (M i-( ^ 1
u^ C^
CM
E
OJ
T— 1 j I
(M
CO
(d
M
IL
<^
O
CO -^ ii^ T-i C^ CO C^ 1
O --^
■^
0)
cq
CM
E
m
o
o
CO CO ^ lo CO eg OQ 1^
CO l>-
O
o
3
o
CO ■* i-H CO CO "* 1^3
Oi "i-H
CO
c
o
53
1 • CO t>-
CO 1-1
■*
>.
CO
CO
h
w
1
^
cS
s
Ll
T-lC^CMcMinOC^-*
QO (M
o
c
o
in
1-1 T-H
^
lO
:-
0)
E
3
y
1!
i-ic3soococoooaiOi
eg CO
CO
CO
z
c
03
3
"■H
^
1
1 D* 00 1^5 Tt^ CO O UD
lo -^
oa
li
m
1 tH T— 1 tH 1-1
1>
l-^
X
M
111
-I
m
C0C001(?ClC0C^05rH
O CO
CO
tH
in
lO
<
Ol
h
1 » 1
1 ho 1
1 a 'V
\^^
1 2 a
^
^a
tn
^
1,5a
1— 1
c3
1
I 1 I 1 1 I r ^I
' 1 '. ! ! 1 ! QJ
I ! I ! ! ! ^
'^S
4J
o
M'^COOOOlCQ O
OQ '*-< O
-O
^ 1-1 W -rH (M -iJ) -1^ Sia» Francisco District.
Medical benefits
Cash benefits
Wages of family head
Males
Females
ChU-
dreu
Number
with no
medical
benefit
Total
Males
Females
Number
with no
benefits
Total
Under $12
4
42
25
1
11
15
15
24,
85
220
124
10
125
120
101
118
89
262
149
11
136
135
117
143
89
261
149
10
136
1S4
117
142
89
$12 to $14 ..
262
$14 to $16
149
$16 to $18
11
136
$20 to $25
135
$25 to $30
1
1
117
143
137
2
903
1,042
1,038
1,042
TABLE XLIV.— Continued.
Number of Family Heals Insured.
San Francisco
South San Francisco
Family
heads
insured
Famili-
heads not
insured
Totals
Familj'
heads
insured
Family
beads not
insured
Totals.
Medical benefits
Cash benefits _, ._ ._
88
4
130
214
218
218
247
1
77 324
119 • 391
REPORT OP SOCIAL INSURANCE COMMISSION.
115
TABLE XLV. Amount of Duplication of Insurance for Cash and Medical Benefits
In Relation to Wages of Head of Family In South San Francisco.
Income of family head
TJuder
$12
$12
to
$14
$14
to
$16
$16
to
$18
$18
to
$2a
$20
to
$25
$25
to
$30
$30
and
ovei-
Total
Persona insured for cash
benefits—
Singly _
10
28
3
S4
6
2
7
6
1
21
5
2
46
14
2
25
8
S
51
19
2
221
Doubly __
61
Trobly
12
Totals —
10
14
31
58
9
42
77
14
14
3S
3
28
45
8
61
107
4
36
78
6
72
134
15
1
291
Persons insured lor med-
ical benefits—
Singly — - — -—
546
59
1
Totals
14
67
91
36
53
111
84
150
606
NOTE In the San Francisco District there were no persons insured In more than
one fund or lodge.
TABLE XLVI. Number in Family in Relation to Number of Rooms.
San Francisco
district
South
San Francisco
Number
Per
cent
Number
Per
cent
Number of families having less than one room
per person - _ _ - -
126
46
58
54.8
20.0
25.2
109
68
155
32.8
Number ol families having one room per person.
Number of families having more than one room
per person ._. _._
20.5
46.7
Totals . . - -
230
100.0
332
100.0
TABLE XLVII. Number of Women Working In Relation to Wages of Head of
Family.
South San
Francisco
San Fran-
cisco
distllct
Under $12
$12 to $14
$14 to $16
$16 to $18
$18 to $20
$?0 .to $25 —
$25 to $30 -,- -
$30 and over -
Totals
Head of family not wage earner or unemployed.
Grand totals
46
52
14
5
2
4
2
31
9
40
116 REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION VI.
HOSPITAL SPACE AVAILABLE IN THE STATE.
Since the cost of hospital care at the commercial rates in California
puts private hospital service beyond the reach of many wage earners,
it is important to know what free hospital facilities are available.
With the exception of a very few endowed institutions that maintain
free wards and wards at reduced rates for needy patients, all the free
hospital beds are found in the county (free) hospitals of the state.
As previously stated,* only three counties of the state have institutions
that are strictly hospitals, Los Angeles, San Francisco and Santa Clara.
In the remaining counties the "hospital" is a combination of hospital
proper and almshouse. In many of these institutions, equipment and
general housing conditions are so deficient as to make the hospitals, in
the estimation of the State Board of Charities and Corrections, abso-
lutely unfit for the care of the sick.
In the map I constructed to show the number of free hospital
beds per thousand of population in the different parts of the state, the
number per thousand of population of free hospital beds, irrespective
of their fitness, is indicated by the letter (a), and the number per
thousand of population of beds rated as "satisfactory" is indicated by
the letter (b).
This map divides the state into the districts suggested for health
districts bj' the State Board of Health.
The basis of rating by the State Board of Charities and Corrections
was equipment onlj^ In several of the institutions counted as "satis-
factory" in making this map, the nursing and medical service was so
bad as to make the institutions rank as "poor."
INSERT MAP TWO.
With the standard of five beds per thousand in mind the absolute
inadequacy of this hospital accommodation is apparent.
Turning to the hospital equipment of the private hospitals a deter-
mined effort was made by the Commission to record the number of
ward and private beds in all the private institutions of the state. Two
hundred and fourteen of these hospitals were listed and statements
were obtained from 186. (A detailed statement of this data, allocated
to the various counties, will be found tabulated at the end of this
section.) Adding to these beds of private hospitals, the free beds
classed as satisfactory, a fair picture of the total hospital equipment of
this state is obtained. The number of these beds per thousand of
•Chapter III. Section 2.
KEPORT OF SOCIAL INSURANCE COMMISSION.
117
A' I. Id
0' 6.4-3
T
A 0.90
vA-I.Ok
&-0.Q0
-QM
in:
A-Q.Si
A- 1.08
B-0.di
118 REPORT OF SOCIAL INSURANCE COMMISSION.
population in the various districts of the state is indicated by the letter
(a) in the map II. The letter (b) indicates the number of commercial
beds.*
For the two million persons who represent the wage earners and
their dependents in the State of California, ten thousand beds should
be available to conform to standards. The total hospital equipment
which must serve the needs of the entire population is only 11,066 beds.
The great majority of these beds, 8,621 in number,* are found in
private hospitals and are available only at a price which most wage
earners can not afford to pay.
It is obvious from this statement of the hospital situation that many
persons of small income who need hospital care must fail to receive it.
The Commission made every effort to discover the percentage of the
beds of private hospitals occupied each month so as to find out to what
extent these hospitals were running close to capacity. Responses
received were very unsatisfactory. The method of management and
record keeping in the California hospitals is such that few institutions
could furnish definite information. Not even a useful estimate of the
percentage of beds in constant use could be made.
Summary.
The comparatively small number of hospital beds that are really
available to the wage earners under present conditions, points to the
imperative need from the public health standpoint of bringing more
decent hospital service within the reach of persons of small income.
The fact that the cost of hospital care is prohibitive to many persons
who have no alternative except a request for charitable service points to
the imperative need from the standpoint of social democracy, of pro-
viding a way by which good hospital care can be paid for by persons of
small income.
*The total number of beds for the hospitals responding, as listed above, is 7,725. To
allow for the 28 hospitals not responding, 896 beds were added, making a total of
8,621 commercial hospital beds in the state. This adjustment was made on the
assumption that the average of 32 hospital beds, found for those hospitals outside
of Alameda, Los Angeles and San Francisco counties, was a fair estimate of the
average size of the 28 hospitals not responding.
REPORT OF SOCIAL INSURANCE COMMISSION.
119
?
IL
A' 4.33
isr
H
A- 5.76
A- 2.66
B-2.se
120 REPORT OP SOCIAL INSURANCE COMMISSION.
Hospital Beds in Private Hospitals Shown by Counties.
County
Population
1910
Population
1917 (ad-
justed 25%)
Actual
number
of beds
Number
of beds
per 1,000
popult'n
Alameda
Alpine
Amador
Butte
Calaveras
Colusa --
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino --'.
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Kumas
Riverside
Sacramento
San Benito
San Bernardino __
San Diego
San Francisco _-_
San Joaquin
San Luis Obispo.
San Mateo
Santa Barbara ._
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Tolo
Yuba -
246,131
309
9,086
27,301
9,171
7,732
31,674
2,417
7,492
75,657
7,172
33,857
13,591
6,974
37,715
16,230
5,526
4,802
504,131
8,368
25,114
g,956
23,929
15,148
6,191
2,042
24,146
19,800
14,955
34,436
18,237
5,259
34,696
67,806
8,041
56,706
61,665
416,912
50,731
19,386
26,585
27,738
83,539
26,140
18,920
4,098
18,801
27,559
48,394
22,522
6,328
11,401
3,301
35,440
9,979
18,347
13,926
10,042
307,664
386
11,358
34,126
11,464
9,665
39,593
s,oa
9,365
94,571
8,965
42,321
16,989
8,718
47,144
20,288
6,908
6,003
630,164
10,460
31,393
4,946
29,9U
18,935
7,739
2,553
30,183
24,750
18,694
43,045
22,796
6,574
43,370
84,758
10,051
70,883
77,081
621,140
63,414
24,325
33,231
34,673
104,424
32,675
23,660
5,123
23,501
34,449
60,498
28,153
7,910
14,251
4,126
44,300
12,474
22,931
17,408
12,553
178
35
114
30
54
1,414
"eo"
61
16
lOT
16
40
618
16
136
375
121
139
278
37
40
106
96
2.05
"T79
2.24
4.20
4.01
2.42
1.48
9.00
2.24
- l.M
10.31
1.06
1.03
.67
1.71
1.46
9.12
2.43
.92
7.29
1.59
1.92
4.87
3.38
3.64
4.01
2.66
1.13
1.69
1.57
1.75
3.43
35
4.57
3.31
2.79
REPORT OF SOCIAL INSURANCE COMMISSION. 121
SECTION VII.
CONCLUSIONS.
Having examined the burden which illness brings to the individual
wage earners and the burden which this illness spells to the public
funds, having investigated the ways by which wage earners are seek-
ing to protect themselves against the results of illness, as well as the
efforts of employers to provide such protection for their men, with
the facts of the field surveys analyzed and with the equipment of the
hospitals and clinics of the state in mind — what are the conclusions
that inevitably form themselves?
The cost of scientific medical attention and hospital service, beyond
the means of most wage earners, is forcing an increasing number of
persons to seek medical charity and financial assistance when ill.
Loss of earnings due to illness reduces more wage earning families
to destitution than any other cause. Individual responsibility for
illness threatens hardship and economic dependency to wage workers.
The annual loss which the individual will suffer because of illness
can not be foreseen. It may be nothing. It may be disastrously
heavy. Yet the annual loss to the community consequent upon illness
is a steady computable loss. The comparatively low sickness rate in
California, an average of six days in contrast to nine days found by
the Federal Public Health Service in other communities, would be a
decided asset under a system of group responsibility. It means that
the annual loss to the community due to illness is comparatively low
and the pro rata cost of health insurance would be correspondingly low
in California as compared with other communities. Group responsi-
bility for illness through health insurance is the practical way to
meet the problems created by illness in California.
Illness is a possibility, not a certainty, in the life of any individual,
and most persons to whom every dollar counts, are inclined to rely
on the chance of escaping. Though many wage earners, recognizing
the advantages of health insurance, organize in various ways to
protect themselves, the great majority of poorer paid wage earners,
most in need of protection, will not voluntarily seek it. Even among
persons of better earning capacity who are still in the group who
can not afford a long illness, there are many who do not see the
advantages of the insurance method. Health insurance to be effective
must be made compulsory upon the individual worker.
An adequate protective system would guarantee the wage earner
medical attention, including specialist care, surgical, hospital and
]22 REPOET OF SOCIAL INSUKAlSTCE COMMISSION.
dental care for himself and his family in time of illness as well as a
substantial part of wages for the maintenance of himself and family
during his disability due to illness. The protection afforded by exist-
ing health insurance facilities, useful though it is, is not and can not
be made adequate for what the wage earners can and do pay. Some
contribution from other sources than the wage earners themselves is
necessary to secure adequate health insurance for wage earners.
The greater part of the day is spent by the wage earner at his job.
The conditions under which he works and which vitally affect his
susceptibility to illness, are to a great extent under the control of his
employer. The contribution by employers to the health insurance of
their employees would give employers a financial incentive to make
conditions at the job, as far as possible, conducive to good health.
Thus prevention of disease, one of the desired ends of health insur-
ance, would be stimulated.
Investigations made of the sickness rate in various industries by
the Federal Public Health Service have convinced that body that
the strain of modern industrial life contributes toward the general
illness of the workers, so from the standpoint of partial responsi-
bility, contribution from industry would be justified.
Furthermore (as, indeed, California employers who have experi-
mented with health insurance funds at their own establishments,
testify) health insurance of Avage earners would react to the decided
benefit of industry through increased efficiency and a steadying
influence on the average duration of employment. And as indirect
beneficiaries, the employing group rightfully should contribute.
Contribution from industry to the health insurance of wage earners
is just and desirable.
Since the community can control general conditions which affect
the health of the wage earning group, it would be well for the com-
munity to have a direct financial interest in the bettering of condi-
tions in place of the general interest it now has in public health;
second, contribution of the state would give the state the right to
regulate and to control, and cooperation between health insurance
and other official bodies interested in public health could be then
worked out to advantage; third, the contribution to a scheme calcu-
lated to prevent destitution, would be an admirable substitute for
the present expenditure of large sums of public funds for the relief
of distitution. Contribution from the state to the health insurance of
wage earners is desirable.
The present ladssez fadre method of ignoring the great problem of
illness among wage, earning families until actual destitution demands
public attention, is socially wasteful in the extreme. It means a
REPORT OF SOCIAL INSURANCE COMMISSION. 123
heavy financial burden on public funds for relief, which at best is a
most unsatisfactory palliative of the disease of destitution.
Health insurance offers a sensible, practical method of eliminating
ia part the most distressing features of the present social system,
economic dependency and charitable relief. Health insurance would
distribute a burden which now means hardship, suffering and lavish
public expenditure, in such a way that it would be a burden no longer.
Through its beneficial effect upon two-thirds of the population,
health insurance would mean a tremendous gain in public health.
Health insurance of wage earners would mean a tremendous step for-
ward in social progress.
CHAPTER IV.
THE FIELD OF SOCIAL INSUR-
ANCE—A GENERAL REVIEW.
REPOBT OF SOCIAL INSURANCE COMMISSION. .127
SECTION I.
INDUSTRIAL ACCIDENT INSURANCE OR COMPENSATION.
The Commission does not think it necessary at this time to go into an
exhaustive discussion of the problem of compensation for industrial
accidents. The problem is a familiar one to the people of the United
States, and especially of the state of California. Already thirty-four
jurisdictions within the United States have legislated on the subject
more or less satisfactorily.
California, in 1911, was one of the first to enact an elective compensa-
tion act and again one of the first to adopt a special constitutional
amendment in order to make a compulsory act possible. "With the sole
exception of the act of New York, and possibly Ohio, the benefits granted
by the California Compensation Act are the most generous in the
country. In the aggregate they are perhaps some 65 per cent greater
than the corresponding benefit of many eastern states, as for instance
New Jersey and Pennsylvania. The administration of the act is in
the hands of an efficient commission, whose fairness is recognized by
all parties concerned. The state has provided facilities for insurance
through a state insurance fund, administered on principles of mu-
tuality, to which every employer has recourse, if the price of insurance
sold on commercial lines appears too high.
Compensation is an essential part of social insurance, with a wider
spread and larger history than all the other branches, and has been in
many countries the precursor of these other branches.
For a clearer and more comprehensive insight into the whole social
insurance movement at least a general bird's-eye review of insurance
against industrial accidents appears necessary. A plain chronological
list of all the countries in which compensation laws have been enacted
up to the present, will perhaps better than words demonstrate the
almost universal adoption of this principle. In each case the first act
is given. Subsequent enactments for purposes of revision, amend-
ment, recodification, etc., are entirely too numerous to be listed here.
As far as information is available, 42 foreign countries and 34 states
and territories in the United States have passed such acts.
128
REPORT OF SOCIAL INSURANCE COMMISSION.
Chronological List of Accident Compensation Acts.
Foreign.
1884 Germany
1902 Luxemburg
1910 Lichtenstein
1887 Austria
1903 New Brunswick
1910 Servia
18&4 Norway
1903 Russia
1911 Tasmania
1895 Finland
1903 Belgium
1911 Peru
1897 Great Britain
1905 Cape of Good Hope
1911 Japan
1898 Denmark
1905 Queensland
1911 Switzerland
1898 Italy
1906 Nuevo Leon (Mex.)
1911 Saskatchewan
1898 France
1906 Venezuela
1911 Labrador
1900 Spain
1907 Hungary
1912 Roumania
1900 New Zealand
1907 Transvaal
1912 West Australia
1900 South Australia
1908 Alberta
1913 Portugal
1900 New South Wales
1908 Newfoundland
1914 Victoria
1901 Greece
1909 Bulgaria
1916 Ontario
1901 Netherlands
1909 Quebec
1916 Cuba
1901 Sweden
1910 Manitoba
1902 British Columbia
1910 Nova Scotia
United States.
1902 Maryland
1912 Michigan
1914 Maryland
1908 U. S. Gov. Employees
1912 Rhode Island
1914 Louisiana
1909 Montana
1912 Arizona
1915 Wyoming
1910 New York
1912 Canal Zone
1915 Indiana
1911 Kansas
1913 West Virginia
1915 Montana
1911 Washington
1913 Oregon
1915 Oklahoma
1911 New Jersey
1913 Nevada
1915 Maine
1911 California
1913 Texas
1915 Vermont
1911 New Hampshire
1913 Iowa
1915 Colorado
1911 Wisconsin
1913 Nebraska
1915 Hawaii
1911 Illinois
1913 Minnesota
1915 Pennsylvania
1911 Ohio
1913 Connecticut
1916 Kentucky
1911 Massachusetts
1913 New York
1916 Porto Rico
Of the 42 foreign acts only two passed before 1890, six in the decade
1890-1899, 21 in 1900-1909, and 13 in 1910-1916. Naturally the
number is falling off, because there are few, if any, civilized countries
in which the problem of compensation has not been met in some way or
other.
In comparison the beginning of legislation in the United States has
been very much delayed, but on the other hand the rapidity with
which the movement has extended throughout the country is almost
amazing. Not even counting the acts declared unconstitutional, the
34 acts have almost all been passed in five years, 1911-1916. One
state legislated experimentally in 1909, and another 1910, eight fol-
lowed in 1911, four in 1912, when few legislatures met, nine in 1913,
two in 1914, ten in 1915, and one in 1916. Literally the compensation
movement, once the need was recognized, swept the country.
REPORT OP SOCIAL INSURANCE COMMISSION. 129
CLASSIFICATION OF COMPENSATION AND INSURANCE
SYSTEMS.
In American legislation on the subject a distinction is usually drawn
between compensation and compensation insurance, the latter being
considered as only one aspect of the compensation legislation. Under
this distinction compensation describes the changed relations between
employer and employee, while compensation insurance establishes a
new relationship between the employer and the insurance company.
(1) The placing of the obligation to pay indemnity upon the indi-
vidual employer is compensation.
(2) The obligatory insurance of the employer against industrial
accidents is accident insurance.
This distinction recognizes the fact that when insurance is compul-
sory, the duty to pay the benefits established by the law falls directly
upon the insurance carrier, and the liability of the employer is a
contingency only.
Nevertheless in practice employers seldom retain their legal liability.
The usual procedure is for them to reinsure it with a duly organized
insurance carrier of some form, even if this is not required by the law.
Compensation is thus transferred into insurance. Moreover, the very
essence of the compensation legislation, making certain benefits payable
upon the occurrence of certain events, is that of an insurance system,
and this was clearly recognized in American legal discussions of com-
pensation legislation, when the constitutional difficulty was raised that
such acts made the employer an insurer of his employee.
From a theoretical point of view all compensation legislation must
be classified as a branch of social insurance, the insurer being sometimes
the industrial employer, sometimes a cooperative organization of em-
ployers, sometimes a mutual, and sometimes a stock insurance company,
or as another alternative, the state.
It is in compensation, therefore, more than in any other branch of
social insurance, that the competitive struggle of various forms of
insurance organizations has had its play. European experience has
created a broad division of all the acts into two groups — ^those with and
without compulsory insurance.
In the United States the principle of compulsory insurance has
evidently made much larger gains than is usually appreciated. In some
form this principle of compulsory insurance is found in 22 states,
though in 15 of these compensation itself is, in form at least, elective.
In most of these states the pressure for election, or at least against
nonelection, is so strong that they are substantially compulsory acts.
It is true that in 16 out of the 22 states, there is an alternative to
insurance, described as "self insurance," which consists in the fur-
nishing of evidence of financial solvency or stability, prerequisite to
130
REPORT OF SOCIAL INSURANCE COMMISSION.
exemption from insurance. This is almost altogether an American
method of compensation. Netherlands is the only country in Europe
which may show a precedent for this method.
A significant feature is the development of state insurance, not only
in Europe but in this country.
Monopolistic state compensation insurance is found —
In Europe: Norway, Switzerland.
In United States: Ohio, "Washington, Wyoming, Nevada, Oregon,
"West Virginia.
Competitive state compensation insurance is found —
In Europe : Italy, Netherlands, France, Sweden, Portugal.
In United States: Maryland, New York, California, Michigan,
Colorado, Pennsylvania, Montana.
Altogether state compensation insurance is found in seven European
countries and thirteen states in the Union.
The type of insurance carrier very popular in Europe but not known
at all in this country, is the compulsory mutual association, found as
the exclusive form in eight countries, and limited to certain industries
only in three other states. In several of the countries these organ-
izations when organized on territorial lines, very closely approach state
insurance.
It is interesting to compare the development of state, mutual and
private insurance in this field of compensation in the United States.
In the Spectator for April, 1916, a table is given for 1913 and 1914:
1913
1914
Premiums
wiitteu
Per cent
Premiums
written
Per cent
Casualty companies
$13,436,199
1,849,735
2,549,539
75.3
10.4
14.3
$30,865,136
3,974,279
7,533,516
72.8
Mutual companies
9.4
State funds _ _
17.8
Totals . _ . -. _ — _
$17,835,473
100.0
$42,372,931
100.0
REPORT OF SOCIAL INSURANCE COMMISSION. 131
SECTION II.
HEALTH INSURANCE.
While all eompensation legislation may be considered as a form of
social insurance because it results from definite state action, the various
forms of health insurance can not all be classed as social insur-
ance. The substitution of the new term "social insurance" for the
older one "Workingman's insurance" meant a broadening of the con-
cept from one point of view. From another point of view it involved
additional limitations. The insurance of workingmen against sickness
may and does occur irrespective of any governmental action.
The presence of either financial governmental subsidy or the element
of compulsion is essential, however, to social health insurance. Under
this definition only two important countries in Europe, Italy and Spain,
have made no provision for social health insurance. In the case of Italy
the statement should be qualified with the comment that compulsory
insurance has existed for railroad employees.
The following table will indicate the dates at which the European
countries acquired health insurance systems, and the nature of the
insurance :
Voluntary Subsidissed
1891 Sweden If » France
1892 Denmark 1^11 Switzerland
1894 Belgium
Compulsory. 1910 Servia
1883 Germany l&H Great Britain
1884 Austria I&IS Russia
1891 Hungary 1912 Roumania
1901 Luxemburg 1913 Netherlands
1909 Norway
Also for Special Industries.
1894 France (Mining Industry)
1895 Italy (Railroads)
1898 France (Seamen)
Most of the health insurance acts do not prescribe the institution in
which the insured workman must insure. A limited choice is as a rule
permitted. In most countries a lower standard form of organization
is recognized in which the workman must be insured if he has not
selected some other alternative, and the selection between the various
insurance institutions is often left, not to a single individual, but to a
group of which he is a member.
132 REPORT OP SOCIAL INSURANCE COMMISSION.
In general the following forms of organization for insurance of work-
ingmen against sickness have developed :
(1) The association of persons of a certain trade (in the old guild
and the modern trade union), limited to a certain locality.
(2) A similar trade association not limited to a certain locality,
as for instance a large trade union with branches, or the special
organizations for miners or railroad employees.
(3) The association of persons irrespective of trade, in a certain
locality — as a local friendly or mutual aid society.
(4) The association of persons irrespective of trade or locality —
the larger mutual aid society.
(5) The establishment funds or factory funds consisting of em-
ployees of one factory or other industrial establishments.
The above types of insurance institutions are all of the cooperative
or mutual type, organized and operated for mutual aid and not for
profit. In addition to that there are or may be :
(6) Insurance against sickness through commercial (stock) in-
surance companies, and
(7) Direct state or commercial insurance organizations.
In studying the organization of sickness insurance in the various
countries, two facts stand out with prominence :
(1) Under no health insurance systems are private and com-
mercial companies permitted to compete with the nonprofit making
carriers.
(2) Direct state insurance against sickness is almost equally rare.
On superficial examination it may appear that the British health
insurance act is an exception since the commercial life insurance com-
panies were permitted to organize nonprofit making "Societies" to
operate under the law. Though obviously this line of activity was
undertaken by the insurance companies to further their own business
of life insurance among wageworkers, it should be noted that the
"Society" has an independent corporate existence and that its accounts
must be kept entirely separate from those of the parent concern. This
seeming exception is explained at greater length in the description of
the British health insurance system.
The nearest approach to a system of state insurance was the com-
mercial insurance originally provided for by Germany for persons not
insured in any other organization. This type of insurance was abol-
ished, however, by the act of 1911.
The insurance institutions of Himgary and Roumania appear at
first glance to be national insurance institutions, but closer examina-
tion shows them to be merely an agglomeration of many mutual units
from the point of view both of organization and finances.
It should be emphasized that from the point of view of insurance
organization health insurance differs radically from compensation. In
BEPORT OF SOCIAL INSURANCE COMMISSION. 133
the latter, competition between the principles of state insurance, mutual
insurance and private stock insurance appears to be the vital issue. In
health insurance on the other hand, practically all the insurance is in
the hands of mutual organizations, whether voluntary or compulsory,
and any competition that exists lies in the comparative ratio of growth
or decline of the various types of mutual organizations.
134 KEPORT OF SOCLU. INSURANCE COMMISSION.
SECTION III.
MATERNITY INSURANCE.
Theoretically, maternity (or specifically the act of childbirth) need
not necessarily be considered a condition of sickness unless it be accom-
panied by complications. Practically, however, it approaches sickness
in that it always requires the attention of a physician (or at least a
midwife, who renders what is a form of medical aid), as well as drugs
and various surgical supplies, and also because it results in temporary
incapacity or disability to perform remunerative labor. As a matter
of fact, therefore, the ten compulsory sickness insurance systems of
Europe contain provisions for maternity. A proper system of mater-
nity insurance means, however, more than simply benefits required by
childbirth. It means, also, a minimum cash benefit to cover the costs of
the period of recuperation. The presence of the mother during the
first weeks of life is a matter of vital importance.
In addition to the ten compulsory insurance acts with their specific
maternity provisions, there is the special Italian system of compulsory
insurance for maternity, established in the absence of any compulsory
sickness insurance; and finally, state sudsidies in all maternity cases
to women in need are given in accordance with recent acts in France
and in Australia.
Compulsory — In conjunction icith sickness insurance.
1883 Germany 1910 Servia
1888 Australia 1911 Great Britain
1891 Hungary 1912 Russia
1901 Luxemburg 1912 Roumania
1909 Norway
Compulsory — Independent systems.
1910 Italy
Voluntary suhsidized.
1911 Switzerland'
State pensions.
1910 Australia
1912 France
REPORT OF SOCIAL INSURANCE COMMISSION. 135"
SECTION IV.
OLD AGE AND INVALIDITY INSURANCE.
National eompukory systems of old age insurance are more recent
and less niimerous than in other branches of social insurance. This,
however, is not due to the lighter importance or disregard of the prob-
lem of old age, but to much greater difficulties of a technical character,
especially when the condition of invalidity or permanent disability
complicates the situation.
In a haphazard way mutual benefit societies in many countries, by
gradual extension of the sickness benefit, drifted into invalidity insur-
ance and even old age pensions, and not infrequently this practice
created serious financial difficulties for the societies. To prevent such
results, most sickness insurance laws (both compulsory and voluntary)
prohibit the mutual insurance societies giving invalidity or old age
annuities. As far as state activity is concerned, efforts to provide old
age insurance, either through voluntary systems, or through compulsion
for special industries only, antedate even the entire official history of
social insurance which began in the early eighties.
In Germany the old age insurance was enacted several years later
than the other two branches, and for many years the German system
was popularly assumed to be the only one of its kind. The last five
years, however, have seen a very remarkable development throughout
Europe in that direction.
Evidently old age or invalidity insurance offers certain financial
difficulties because it deals with cases of long duration requiring sub-
stantial payments, and therefore, long accumulation of funds. In view
of these difficulties, at least three different methods have been evolved
in dealing with the problem: compulsory insurance, voluntary subsi-
dized insurance and old age pensions. If, then, all the three systems
are included, the list becomes quite an imposing one.
Moreover, the list is far from complete as far as the funds of special
industries are concerned, because information concerning them is diffi-
cult to obtain, and the few industries listed must be considered as
136
REPORT OF SOCIAL INSURANCE COMMISSION.
illustrations only of the familiarity with the compulsory method even
outside of the countries with national acts of this character.
Compulsory old age and invalidity insurance
1889 Germany
1906 Austria (salaried employees only)
1910 France
1911 Luxemburg
1912 Roumania
1912 Sweden
1913 Netherlands
Also in special industries.
1884 Austria (Mining)
1885 Italy (Railroad)
1888 Russia (Railroad)
1894 France (Mining)
1898 France (Seafaring)
1909 France (Railroad)
Voluntary subsidized.
1850 France
1851 Belgium
1898 Italy
1908 Spain
1910 Servia
Old age pensions.
1891 Denmark
1898 New Zealand
1900 New South Wales
1901 Victoria
1907 France (includes invalidity)
1908 Australia (includes invalidity)
1908 Great Britain
Voluntary state insurance (without
1864 Great Britain
1908 Canada
EEPORT OF SOCIAL INSURANCE COMMISSION. 137
SECTION V.
UNEMPLOYMENT INSURANCE.
Comparatively little has as yet been accomplished in the field of unem-
ployment insurance. In fact, for many years it was assumed that
unemployment, because of its very indefinite character, was not, in
technical language, an "insurable proposition"; that voluntary insur-
ance must necessarily fail because of the adverse selection of risks,
while compulsory insurance was unworkable because of the great danger
of malingering. These impressions were strengthened by the failure
of a very insignifiant experiment in compulsory insurance made in the
small town of St. Gall, in Switzerland, in 1894.
But the obvious fact that numerous labor organizations were con-
ducting out-of-work benefits (which is simply another term for unem-
ployment insurance), successfully, forced the reconsideration of the
accepted point of view. An experiment in the Belgium city of Ghent,
for which Mr. Louis Varlez is largely responsible, in municipal sub-
sidies to trade union unemployment funds, achieved a certain success
and led to the extension of the Ghent system throughout many cities in
several European countries. Out of these municipal experiments grew
national acts, shaped more or less on the Ghent plan, until finally the
British government made the bold experiment of establishing unemploy-
ment insurance on national lines, though for a few trades only.
Notwithstanding the recent character of the movement for unemploy-
ment insurance, the list of measures passed, or at least experiments
being tried out, is not an insignificant one.
Compulsory insurance.
1911 Great Britain
Voluntary suisidimed.
1905 France
1905 Norway
1907 Denmark
1907 Belgium
Unemployment insurance has also been established in numerous
municipalities and communes at various dates, but notably during the
last ten years, in :
Belgium (over 40 communes)
Germany (about 12 cities)
Holland (about 25 Cities and communes)
Italy (5 or 6 cities)
Switzerland (3 or 4 cities)
138 REPORT OF SOCIAL INSURANCE COMMISSION.
Here, again, we find one distinct type of insurance organization pre-
dominating. Sid« by side with the employers mutual in compensation,
the local mutual aid society in sickness, the state institution in old age
insurance, the trade union out-of-work fund in unemployment has
become the dominating type. There are, however, some exceptions.
The British system is one of state insurance, but to a large extent the
trade unions serve under it as agencies with which the insured persons
deal. Again, in a few German and one or two Italian and French cities,
direct municipal insurance systems exist to a very limited extent. In
so far as the last form of unemployment insurance is still on trial, the
choice lies between straight state insurance and trade union organ-
izations.
REPORT OF SOCIAL INSURANCE COMMISSION. 139
SECTION VI.
LIFE INSURANCE.
Life insurance — by which is meant an insurance against the economic
effects of death of the breadwinner — has been the last to develop in
any scheme of social insurance, and as yet very little has been accom-
plished. But efforts to meet the problem are many.
The economic consequences of death may be analyzed as those
immediately connected with the cost of the last illness and the funeral,
and the more remote consequences to survivors who have been dependent
upon the deceased for support. The immediate needs may appear
more pressing, but in the final analysis the problem of the dependent
survivors, largely of the widow and orphans, is vastly more serious.
Life insurance as sold by private insurance companies, whether stock
or mutual, is almost universal among persons whose incomes are higher
than the average. Cooperative, so-called fraternal insurance, usually
on an assessment plan, is also fairly extensively used among wage-
workers, but is far from universal, and being often without a sound
actuarial basis is not alwa.ys altogether secure. In many industrial
countries special forms of commercial life insurance are very popular
among the wageworkers. In some localities practically all wageworkers
carry some insurance of this kind. It helps effectively to meet the
immediate problems of death, but accomplishes almost nothing towards
the solution of the more remote but graver difficulties. Efforts at life
insurance in the general program of social insurance, are directed, as
they should be at relieving the distress of widows and orphans. To some
extent other branches of social insurance are already doing this.
The problem of funeral expenses is met partly by accident compen-
sation and partly by sickness insurance. Death usually occurs as a
result of sickness or accidental injury. "With few exceptions European
and American compensation laws provide for funeral expenses. All
compulsory sickness insurance acts (except that of England) require
funeral benefits as an essential part of the minimum benefits of the
funds.
If death occurs as a result of an industrial accident, the more remote
effects on the dependents are met more or less satisfactorily under a few
laws, by lump sums; and under most by continuing cash benefits to
widows, children, and sometimes other dependents, either for a limited
time or during the entire time of dependency.
It is natural that the attention of social insurance theory should be
140
REPORT OP SOCIAL INSURANCE COMMISSION.
directed towards the problem of death when not due to industrial acci-
dent. The prevalence of life insurance among persons of better incomes
points to the developing of a similar system, but at lower cost, for
wageworkers. The much more satisfactory results under the compen-
sation system of continuing payments to survivors, argues for such a
system rather than a lump sum payment at death. Early experiments
were directed on the line of lump sum insurance, and more modern
legislation endeavors to meet the need of dependents by survivors'
pensions. The lump sum insurance method offers the dangers that
large sums in the hands of inexperienced beneficiaries always present.
Following is the list of the more important measures dealing with life
insurance directly or by the modified way of widows and orphans
pensions :
Voluntary state life insurance.
1864 Great Britain
1850 France
Compulsory widows' and orplmns' pensions.
1910 France (for a brief period of 6 montlis only)
1911 G€rmany
Children's pensions and orphans' aid.
1911 Missouri 1913 Minnesota
1911 Illinois 1913 Nebraska
1912 Colorado 1913 Nevada
1913 California 1913 New Hampshire
1913 Idaho 1918 New Jersey
1913 Iowa 1913 Ohio
1913 Massachusetts 1913 Oklahoma
1913 Michigan
1913 Oregon
1913 Pennsylvania
1913 South Dakota
1913 Utah
1913 Washington
1913 Wisconsin
1911 New Zealand
1913 Denmark
While the two foreign mothers' pension acts of Denmark and New
Zealand are definitely granted to widows only, in each case on account
of their children, many of the American acts include children whose
father may be alive but disabled, or whose fathers may have abandoned
them. Nevertheless, the bulk of relief under this act falls to widows
and their inclusion under this caption is justifiable.
REPORT OF SOCIAL INSURANCE COMMISSION. 141
SECTION VII.
PRINCIPLES OF DISTRIBUTION OF COST.
The four main forms of governmental activity in whieli the policy
of social insurance usually expresses itself are ;
1. The creation of governmental insurance institutions.
2. Financial subsidy.
3. Shifting of financial burden.
4. Compulsion.
And while seldom all these four forms of activity are exercised
together, participation of the government is .essential to "social insur-
ance. ' '
In the foregoing discussion emphasis was laid on the form of insur-
ance and the principle of compulsion. It seems worth while to review
the entire field primarily from the point of view of the shifting of the
cost.
Compensation for Industrial Accidents and Diseases.
In regard to compensation the problem is a simple one. Practically
without exception the compensation is entirely at the expense of the
employers, or the industry.
The important exception is the custom of several European acts of
placing the burden of compensation during a certain preliminary period
upon the sickness insurance system to which the workmen contribute a
very substantial and sometimes a greater part of the cost, though in all
such cases employers contribute to the cost of sickness insurance, and
the cost of earing for the accidents is considerably lower than the
amount of the employers' contribution to the sickness fund. This
period equals 13 weeks in Germany, Russia and Denmark (in the latter
there is no compulsory sickness insurance and the situation approaches
that of a long waiting period), ten weeks in Hungary, 60 days in
Sweden (no compulsory sickness insurance), and four weeks in Austria
and Norway. In some of the countries this period is not very much
longer than is, for instance, the waiting period, for which no compensa-
tion at all is paid (as, for instance, Colorado, three weeks). Of course,
in so far as the amount of compensation in no case equals the total
amount of loss, it may be said that in all countries the workingmen
share in the cost of industrial accidents.
142
REPORT OF SOCIAL INSURANCE COMMISSION.
Health or Sickness Insurance.
The data may best be presented separately for compulsory and
voluntary systems.
Contributions by tlie —
Employee
Compulsory systems.
Germany
Austria
Hungary
Luxemburg
Norway
Servia
Roumania
Russia
Great Britain
Netherlands
^'oluntal^l| subsidized.
Denmark
Sweden
Prance
Belgium
Switzerland
No
No
No
No
Yes^
Yes
No
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
'Also the commune.
The state subsidy is a feature of the voluntary systems, and the
employers' contribution a feature of the compulsory systems. To the
latter rule the law of Roumania is the only exception, and on the other
hand many recent acts show a tendency to combine contributions from
employers and state in the compulsory system (Norway 1909, Servia
1910, Great Britain 1911).
Maternity Insurance.
Since practically all the sickness insurance systems, especially the
compulsory ones, and also those of Denmark and Switzerland contain
the maternity insurance as a branch of its activity, the table given above
will largely apply to maternity insurance. To this may be added the
following acts :
Contributions by the —
State
Employer
Employee
Italy (special compulsory act)
Yes
Yes^
Yes
Yes
No
No
Yes
Prance (gratuitous pensions)
No
Australia (gratuitous pensions) .. .
No
^Also the commune.
REPORT OP SOCIAL INSURANCE COMMISSION.
Old Age and Invalidity Insurance.
143
Compulsory systems.
Germany
Australia
]?rance
Sweden
Roumania
Luxemburg
Netherlands
Voluntary subsidized.
France
Italy
Belgium -
Spain - .
Servia
Pensions.
Denmark^
France^
Great Britain
Australia
New Zealand
Contrlbutiong by the-
Employer
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
Yes
No
No
No
No
No
Employee
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
^Communes bear part of the cost.
The three types are very well defined. All compulsory old age and
invalidity schemes divide the cost some way among the three parties
concerned. In the case of Roumania it is worth while noticing that
this principle of division of cost has been adopted even though in com-
pulsory sickness insurance the entire cost is placed upon the wage-
workers themselves.
In the voluntary subsidized schemes the state assumes part of the
cost, but the employers can not be taxed. The only exception to this
rule is the case of Servia. Just how the employer is to be reached in
the case of voluntary scheme does not quite appear from the law, except
that as the workingmen's insurance associations are authorized to carry
this form of insurance, and as employers are represented in the manage-
ment of those associations, the old age and invalidity insurance would
only be affected when both employers and employees would agree to
share the cost. In this case we are dealing with insurance that would
be voluntary as far as a certain group of wageworkers is concerned,
but compulsory for individuals within that group.
144
REPORT OP SOCIAL INSURANCE COMMISSION.
Unemployment.
In general, the same principle governs as in sickness insurance. In
the only compulsory unemployment insurance system — the English —
contributions from both employers and the state are required, while
the voluntary systems carry with them a public subsidy.
Contributions by the —
^ermnSr Employer Employee
Compulsory
Great Britain
system.
Vohintary systems.
Belgium
Prance
IJenmark
Norway
German cities
Dutch cities
Italian cities
Swiss cities
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
Yes
No
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No 1
Yes
No
Yes
Life Insurance and Widows and Orphans Pensions.
Contributions by the —
Irfical goT-
enimeut
Employer
Compulsory systems.
Germany
Prance ._
Netherlands
Voluntary systems.
Prance ■
Great Britain
Canada
Massachusetts
Wisconsin
Pension systems.
Denmark
New Zealand ...
California
Massachusetts
Pennsylvania
Wisconsin
All other states of the Union
Yes
Yes
No
Yes
No
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
Employee
No
Yes
No
Yes
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
No
No
In voluntary life insurance the cost is supposedly chargeable entirely
to the insured. There is, however, a hidden subsidy in some cases
through the state assuming part of all the cost of administrations. In
REPORT OP SOCIAL INSURANCE COMMISSION. 145
the various sy^stems of pensions to widows on account of surviving
children, the line of demarcation is between those comparatively few
acts which mal^e the central government assume the entire cost and
those which place the entire burden upon the purse of the localitj^
(city, county or commune) and finally those acts which endeavor to
force both jurisdictions to participate in the cost.
10—27626
CHAPTER V.
HEALTH INSURANCE IN
EUROPE.
PART I. COMPULSORY SYSTEMS.
PART II. VOLUNTARY SUBSIDIZED SYSTEMS.
./»
REPORT OF SOCIAL INSURANCE COMMISSION. 149
PART I.
COMPULSORY SYSTEMS.
SECTION I.
GERMANY.
It is definitely recognized that the modern social insurance movement
began with German legislation in the early '80s. It is more difficult
to assign the origin of the German insurance legislation to any definite
period. The political development of social insurance may be traced
back in Germany to the early '70s. The first laws in the field of
social insurance, the early bill of 1881 and the sickness insurance and
accident insurance acts of 1883 and 1884, were themselves but an
adaptation of existing institutions in the states composing the empire.
Back of this political development there was a more fundamental
growth of workingmen's insurance. Mutual insurance among wage-
workers within the present boundaries of the German empire is prac-
tically as old as is the system of wage labor itself.
The form of organization of the original mutual societies was varied.
There were guilds which provided sick benefits for master workmen.
Sick benefit funds were gradually organized in connection with many
larger indiistrial establishments, and in the second half of the century
many voluntary benefit societies were formed more or less on the
model of the English friendly societies. The continued activity of all
the various benefit societies was not inconsiderable. In 1876, when
an imperial act for the registration and control of these societies was
passed, the number of organizations was estimated at some 12,000 and
their membership at 2,000,000.
Still more significant is the gradual development, not only of volun-
tary mutual insurance, but also of those elements which go to make up a
system of social insurance. In a general way they are: compulsion;
enforcement of contribution from the employers; and state subsidy,
though all the three principles are not necessarily present in every
social insurance plan. Every one of these three principles has been in
force in the legislation of various German states for decades before the
so-called first social insurance law was enacted in 1883. One of the
earliest general laws relating to compulsory insurance against sickness
was adopted in Prussia in 1845, authorizing communes to require
apprentices to join sick benefit organizations. Later laws of a similar
character were enacted in several other German states. Brunswick,
Saxony, Bavaria, Baden, Wurtemburg and Hanover had such com-
pulsory legislation in some form or other.
150 REPORT OF SOCIAL INSURANCE COMMISSION.
The principle of a compulsory contribution from employers was
recognized by a Prussian law in 1849, which authorized communes to
require employers to create sick benefit funds for their employees and
to assume part of the cost. A further extension of the principle of
compulsory sickness insurance was contained in the German industrial
code of 1869. Even direct insurance of wageworkers by the communal
authorities with subsidies from public funds was established in several
states in the '70s.
Perhaps the main difference between these earlier enactments and
the system of health insurance inaugurated in 1883 was that the exer-
cise of the powers of compulsion in the former was left to local
authorities.
The national system of sickness insurance was established by the act
of June 15, 1883, with many limitations, on somewhat experimental
lines. It developed through much additional legislation, -extending the
application of the act to new groups, or modifying and broadening its
provisions, until in 1911 a final recodification of all the existing legis-
lation was promulgated. The most important acts are those of May
28, 1885, covering certain groups of wageworkers ; the act of April 10,
1892, making further extensions and also certain other modifications;
the act of June 30, 1900, permitting the inclusion of home- working ,(or
sweated) industries through governmental decree; and the act of May
25, 1903, which among other changes, broadening the service of the
sickness insurance, increased the minimum duration of benefits from
13 to 26 weeks. The general insurance code of July 19, 1911, at present
in force, brought together all existing social insurance legislation and
made various further extensions in the application of the sickness
insurance system.
Extent of Compulsory Insurance.
The extent of application of the compulsory system of sickness
insurance was a gradual growth. The original act of 1883 applied to
all workingmen and technical employees in mines, quarries, factories
and other industrial concerns. The act of 1885 extended it to inland
transportation, and made special provision for emplpyees of govern-
ment railways, post and telegraph service. The act of 1892 added
employees of commercial establishments, in offices of attorneys and
notaries, and officials of the various social insurance institutions, also
the office force of the postal and telegraph administration.
The largest extension was accomplished by the code of 1911, which
substituted for the weighty enumerations of the earlier acts, a briefer
but much broader classification. The main groups for the first time
included in the national compulsory sickness insurance system in 1911
were the laborers in agriculture and forestry, about 3,000,000 ; domestic
servants, 1,100,000; casual laborers, 400,000; out-workers, 300,000;
REPORT OF SOCIAL INSURANCE COMMISSION. , 151
and various other minor groups of professional and semiprofessional
employees, such as druggists, teachers, members of theatrical companies,
etc., 250,000; giving a total of over 5,000,000 persons covered by the
new law.
The system as in force at present covers : -
1. Workmen, assistants, journeymen, apprentices, and servants.
2. Establishment officials, foremen and other employees in similar
positions.
3. Clerks and apprentices in commercial establishments and
pharmacies.
4. Members of theatrical companies and orchestras.
5. Teachers and tutors.
6. Out- workers (or home workers).
7. Crews of sea-going vessels, not otherwise provided for; and
crews of vessels in inland transportation.
For the groups 2 to 5 in the above list, which cover commercial and
professional pursuits, a further limitation exists exempting from the
compulsory insurance persons earning over 2,500 marks ($595) per
annum.
The intent of the law is evidently to include all wageworkers at
manual labor and small-salaried employees in so far as they can be
conveniently reached for the enforcement of compulsion through their
employers. A few minor groups are specifically excepted from the
compulsory system. It does not seem necessary to enumerate them in
detail. In general these are groups either provided for in another
manner, such as government employees in military service temporarily
engaged in civil employment, or persons teaching without remunera-
tion, while learning their occupation.
The importance of these exceptions is further neutralized by the
system of voluntary insurance which is connected with the compulsory
system. The privilege of voluntary insurance is extended to :
1. All employees receiving not over 2,500 marks ($595), who
are not under compulsion to insure.
2. Members of the' family of the employer employed in his
establishment without any remuneration.
3. Small employers with not over two employees subject to
insurance.
The provisions for voluntary insurance are not all a dead letter.
While complete statistics on this point are lacking, data for several
large city funds seem to indicate that voluntary members constitute
some 8 per cent of the total insured membership, or about nine volun-
tary members for each 100 compulsory members. With a total of some
14,000,000 or 15,000,000 insured, this would indicate about 1,200,000
voluntary members.
152
REPORT OF SOCIAL INSURANCE COMMISSION.
The gradual extension of voluntary insurance is best shown by the
following statement of the number of persons insured since 1885:
Year
Male
Female
Total
1885
3,515,275
5,266,319
5,838,195
7,313,855
8,349,779
10,291,532
Not av
Not av
Not av
778,898
1,313,220
1,690,326
2,206,908
2,834,697
3,663,441
ailable
ailable
ailable
4,294,173
1890 - -
6,579,539
1895
7,525,524
1900 . - -
9,520,763
]905
11,184,476
1910 . . - -
13,954,973
1911 -_ . . . . . .
14,518,760
1912 . __ . . . __ _. _
U4,150,582
1913 -. „ — . -. — — - —
^14,555,669
^Exclusive of members of mutual aid society, about 1,000,000.
The membership constituted in 1910 about 21.5 per cent of the total
population of the empire, and 49.7 per cent of the population gainfully
employed. It is impossible from the data at hand to determine the
actual increase because of the extensions of 1911 ; moreover the dis-
turbances of the population due to the war, make any statistical esti-
mates at present exceedingly unreliable. If the increase had actually
amounted to the full five million, the proportion to the population would
be some 30 per cent and to the gainfully employed population over 67
per cent.
Organization of Insurance.
The German system of sickness insurance for workmen has often
been referred to in American publications as "State Insurance."
Except in a very general way this description is altogether inaccurate.
The machinery for carrying on sickness insurance is altogether of a
mutual character. Even the one type of insurance through the
medium of local governmental authority (to be referred to presently)
has been abolished by the code of 1911. As the comparative advan-
tages of state, commercial and industrial insurance form a subject of
much discussion in this country, it will be necessary to describe the
organization of insurance carriers in some detail.
German theory of compulsory social insurance recognizes two types
known as "Zwangsversicherung" and "Versicherungszwang" — "com-
pulsory insurance ' ' and ' ' compulsion to insure. ' ' The distinction is not
only a verbal one. The former implies compulsion to insure in a pre-
scribed institution, and the latter compulsion to insure with freedom of
selection of the carrier.
The organization of sickness insurance in Germany presents a process
of gradual transition from "Versicherungszwang" to "Zwangsversich-
erung," the freedom of selection of the insurance carrier having been
narrowed down considerably.
"When the first law was passed, the government endeavored to utilize
REPORT OF SOCIAL INSURANCE COMMISSION.
153
existing institutions as far as possible, only requiring the adoption of
the legal minimum scale of benefits. These were :
1. The miners' funds (Knappschaftskassen).
2. Factory funds, or establishment funds (Betriebskrankenkassen).
3. Guild fund (Innungskrankenkassen) existing for the organized
handicrafts under the industrial code.
4-5. Two groups of free mutual aid or friendly societies (Hilfs-
kassen) registered either under the imperial act of 1876 (Ein-
gesehriebene Hilfskassen) , or established under various state
laws (Landesrechtliche Hilfskassen).
6. Communal (or parochial) sickness insurance (Gemeinde Krank-
enversicherung) operated strictly through the local govern-
mental authorities.
The multiplicity of these organizations may appear somewhat
confusing at first glance, until it is remembered that, with the exception
of the last form of communal insurance, all these forms of organization
of workmen's insurance exist in this country as well — in establishment
funds, trade funds, usually administered by unions, and fraternal
societies of local or national character.
To these existing organizations were added by the law, two new types :
Builders' funds (Bannkrankenkassen) which are practically
temporary establishment funds, made necessary by the temporary
character of building operations and the high hazard of the
industry, and finally
Local funds (Ortskrankenkassen) local organizations either on
trade lines or without any trade distinction, but in either case
including employees of many employers.
These were organized to offer an insurance medium for groups or
individuals heretofore unprovided for, but in course of time local funds
became the most important of all other forms as the following table will
indicate :
[n 10
OO Mem
3ers.
1885
1893
1898
1903
Members
Per ceut
Members
Per cent
Member?
Per cent
Members
Per cent
Oommunal
587
1,585
1,261
12
25
V31
lU
13.7
S5.7
29.4
.3
.6
17.0
3.3
1,237
3,240
1,783
31
91
662
63
17.1
iU
26.1
.3
1.1
9.8
.9
1,410
4,079
2,280
18
159
'766
57
15.6
46.9
27.0
.1
i.e
9.1
.7
1,499
4,975
2,574
« 16
231
887
42
14 3
Local
48 6
Factory
26.0
Building
.1
Guild —
2.2
Mutual aid
8.4
State mutual aid
.4
Totals
Mining
4,295
377
100.0
7,107
468
lOO.O
8,770
556
100.0
10,224
685
ICO.O
4,672
7,675
9,326
10,909
154
REPORT OF SOCIAL INSURANCE COMMISSION.
In 1000 Members.
1908
1910
1913
Members
Per cent
Members
Per cent
Members
Per cent
Communal __ _ __ __ __
1,688
6,320
3,174
12.7
61.1
26.0
1,672
6,846
3,274
17
296
9S8
36
12.8
52.4
25.0
.1
2.3
7.1
.3
1,738
7,739
3,711
10
368
12.9
Local .
B7.0
27.3
Building _ .
24 ' -T
1
Guild
269
913
36
2.1
7.7
27
Mutual aid
State mutual aid - -
Totals — _
12,324
865
lOO.O
13,069
886
lOO.O
18,566
989
100.0
Mining —
Grand totals
13,189
13,955
14,555
This development took place through the comparative number of
organizations and has remained about the same during the entire 30
years. The various funds in 1885, 1910 and 1913 were as follows :
In 1000 Members.
1885
1010
1913
Members
Per cent
Members
Per cent
Members
Per cent
Communal 7,125
Local '' 3,700
Factory | 6,500
Building .' lOJ
Guild 1 224
Mutual aid . IRIR
87.2
19.3
28.8
.5
1.2
9.3
2.5
1.0
8,217
4,752
7,957
46
818
1,262
136
166
35.1
20.4
34.0
.2
3.6
54
8,033
4,678
7,699
26
906
*
37.4
21.8
35.9
.1
4.1
474
.6
.8 150
195
.7
19,137
lOO.O
23,354
100.0 [ 21,492
lOO.O
*Not included in statistics.
The local funds have grown in the average number of their member-
ship from 415 in 1885 to 1,440 in 1910. A similar growth in the average
membership of other funds has taken place, though not to sueh a degree,
the average membership of all funds increasing from some 240 to 600.
The organizational changes introduced by the code of 1911 are sub-
stantial. The local and factorj^ funds are recognized as the standard,
because they are the most efficient types of compulsory sick insurance.
The mutual aid funds have not been abolished, but the organization of
new funds of this character has been discontinued. A minimum mem-
bership requirement of 1,000 is destined to further discourage insurance
in these funds under the law. They are known as substitute funds, and
their function under the present system i.s of secondary importance.
Another even more radical change has been the elimination of direct
communal insurance and the creation in its stead of a new type of local
REPORT OF SOCIAL INSURANCE COMMISSION. 155
funds for agricultural laborers, domestic servants, persons in casual labor
or in home industry, that is, certain groups, largely of an agricultural
class, the evident purpose being to protect the old ' ' local funds ' ' against
the difficulty of insuring these groups of low paid labor.
Benefits Given.
In accordance with the underlj'ing principle of local autonomy under
careful central supervision, the law requires that certain minimum bene-
fits be granted, and allows considerable latitude in the extension of these
benefits within limits prescribed.
The four essential benefits provided are :
1. Medical aid.
2. A money benefit.
3. Maternity benefit.
4. Funeral benefit.
The medical aid must include at least the services of an attending
physician, drugs and ordinary surgical supplies ; appliances, trusses and
glasses are specifically included. Medical aid is given without any
restriction from the beginning of sickness, during all the period of
insurance, and during 26 weeks of continuous disability.
The standard money benefit is 50 per cent of the wages, though not the
actual wage, but a standard wage is meant. The insured are classified
into different wage groups but the basic wage in any group can not
exceed five marks ($1.19) per diem. The maximum normal sick benefit
is therefore 60 cents per day. This benefit is granted from the fourth
day of disability up to 26 weeks.
The required maternity benefit is given to insured women and equals
the amount of the sick benefit for eight weeks, si.x of which must be after
the confinement. This is in lieu of and not in addition to the medical aid
and money benefit for sickness.
The funeral benefit in case of death of the insured equals 20 times
the basic wage.
But while these four forms of benefits constitute the legal minimum
required by the sickness insurance funds, they give a very inadequate
conception of the entire service rendered. In various ways the insur-
ance may and does extend the minimum amounts, and within the pre-
scribed limits of the acts establishes even other benefits dealing with
sickness.
These so-called optional benefits may be classified as follows :
1. Increase of compulsory benefits.
{a) Increase of sick benefits up to 75 per cent of wages.
(&) Grant for Sundays and holidays.
(c) Extension of sick benefits up to 52 weeks.
156 REPORT OP SOCIAL INSURANCE COMMISSION.
(J) Reduction or abolition of waiting period in all cases, _ or
only in eases of industrial accidents, or in cases lasting
over one week,
(e) Increase of benefit payable to family when insured receives
hospital treatment, from one-half to the full amount of
the sick benefit.
(/) Increase of funeral benefit, up to 40 times the daily wage.
(g) Increase of minimum for funeral benefits to 50 marks
($11.90).
2. New benefits.
(a) Hospital treatment.
(&) Nurses' attendance.
(c) Appliances to prevent disfigurement or deformity.
(d) Grant of special diets.
(c) Grant of other therapeutic means.
(/) Sick benefits (up to one-half of the regular sick benefit) to
insured persons under treatment in hospitals.
(g) Pregnancy benefits up to six weeks.
(/(.) Medical treatment for ailments due to pregnancy.
(i) Nursing benefits (or motherhood benefits) up to 12 weeks
after confinement,
(i) Convalescent care up to one year after illness.
3. Extension of benefits to dependents.
(a) Medical treatment to dependent family.
(b) Maternity benefit to wife of insured.
(c) Funeral benefits for death of consort or child.
Many of the funds, and especially the larger ones in the large cities,
have embodied some of these permitted extensions, of which the most
important are the increase of the money benefit above the legal minimum
of 50 per cent, the extension of both the medical and money benefit
beyond the minimum of 26 weeks, the establishment of a compulsory
hospital benefit, which is not specifically required by the law, increase
of the duration of the maternity benefits, convalescent care and exten-
sion of the medical, maternity and funeral benefits to the immediate
family of the insured. This very wide utilization of the possibilities
of democratic management of the fund (to be explained more fully
presently) is a ver_y significant feature of the development of health
insurance in Germany. Concerning one or two of these features accu-
rate information is available. The minimum duration of benefits under
the original law was 13 weete. By the act of 1903 this was increased
to 26 weeks. In point of the number of weeks for which cash benefits
are given, the great majority' of the funds have not exceeded the mini-
mum requirements.
Increase of the weekly benefit over the minimum amount is much
EEPOET OF SOCIAL INSURANCE COMMISSION.
157
more frequent. The following table shows the per cent of the number
of funds which have gone beyond the minimum per cent of wages :
1888
1910
so %
60 % to
66 2/3 %
66 2/3 %
to Tj %
50 %
50 % to
66 2/3 %
66 2/3 %
to 75 %
Communal
10O.0
92.1
89.8
96.3
86.0
99.8
83.0
79.8
95.6
79.2
.1
14.6
16.2
2.2
17.0
1
Local ,
5.7
7.5
.7
10.0
2.2
2.7
3.0
4.0
2.4
Pactory
4.0
Building -
2.2
Guild
3.8
All funds
94.7
90.7
3.9
6.8
1.4
2.5
88.1
80.9
9.8
15.7
2.1
All funds without communal
3.4
Detailed information concerning some of the extensions by large funds
is given in I. G-. Gibbon's Study of Medical Benefits in Germany and
Denmark (page 278), for 28 large local funds, with a combined mem-
bership of 1,100,000. Eighteen of these funds paid sick benefits of
50 per cent, one 55 per cent, one 58-^ per cent, sis 60 per cent, and one
62^ per cent. In two funds the waiting period was reduced to two days,
and in five funds to one day. One fund extended the period of money
benefits to 34 weeks, two to 39 weeks, and three to 52 weeks. Ten funds
provided' convalescent homes, and eight had day convalescent resorts.
Twenty-one out of these 28 funds granted medical aid to the members of
the family, and 12 gave drugs as well. Seventeen funds have provided
funeral benefits in case of death of the wife, and of these, 15 also paid
the funeral expenses in case of death of children.
The financial basis of the German sickness insurance system has not
-been changed throughout the 30 years of its existence. The cost is
distributed between the employers and the employees, the former pay-
ing one-third, and the latter two-thirds. Ostensibly no direct financial
subsidy is granted by the public purse. Indirectly the imperial, state
or communal authorities assume a certain part of the cost of the system.
The central authorities pay for the supervision of the system. A large
amount of treatment is given to insured persons in public hospitals for
charges greatly below cost. Under the direct communal insurance,
abolished by the act of 1911, deficits frequently developed Avhich were
assumed by the public authorities.
There had been considerable agitation for increasing the employers'
contribution to equal that of the insured employees, or one-half of the
whole cost, when the codification of the insurance acts was discussed,
but this change did not materialize. It is said that the insured em-
ployees preferred to pay two-thirds of the cost and retain two-thirds
of the voting power in the management of the funds.
As far as the mutual aid funds are concerned, which are entirely
under the control of their membership, no subsidy is granted by the
158
REPORT OP SOCIAL INSURANCE COMMISSION.
employer, and the workmen who prefer them to any of the regular
carriers must bear the entire cost. This, of course, holds true of the
voluntary insured members in any of the funds.
The actual amounts are not, however, specified in the law, and con-
siderable latitude is allowed to the individual funds. It is recognized
that the amount of contributions must vary as the cost varies, and that
the latter is affected not only by the extent to which the funds go into
the optional benefits, but also by local variations of climatic and sani-
tary character, and differences in age, sex and occupational distribu-
tion of membership.
The contributions by employer and employee must be fixed as a per-
centage of the basic wages, and the normal maximum established is
4^ per cent. Beyond this amount, an increase requires the concurrent
decisions of both the employers and the employees separately voting on
the administration board of the carrier unless such an increase is neces-
sary for the purpose of providing the regular (or minimum) benefits.
Even in the latter case such a concurrent agreement is necessary to in-
crease the total contribution above 6 per cent, this emergency arising
but seldom. In fact, no funds charging above 6 per cent are found in
the statistical reports, over 60 per cent of the funds charging from
2 to 4^ per cent.
There has been some increase in the cost because of the material in-
crease in the minimu.ni benefits in 1903, the groAving cost of medical aid
and the larger exercise of the power to grant additional benefits :
Funds charging —
1888,
per cent,
1912.
per cent.
1 to li per cent of wages 49.7
IJ to 2 per cent of wages 20.1
2 to 3 per cent Of wages. 1 28.3
3 to H per cent of wages 1.9
4i to 6 per cent of wages
21.5
16.2
40.8
19.8
1.7
The most frequently used ratio of contribution is therefore from
2 to 3 per cent. The contributions are highest in the local funds, which
as a rule give the largest service, and lowest in the communal insurance,
now replaced by the rural funds which deal with the lowest paid
employees :
Rate of Dues in 1912.
Communal insurance
Local sick funds
Establishment funds
Miners' funds
All funds
Per cent of wages
ItoU
48.9
1.3
6.8
5.8
21.5
24.5
26.6
50.6
8.4
37.0
2.7
11.7
49.1
29.5
2.9
21.1
46.6
25.1
1.4
16.2
40.8
19.8
1.7
REPORT OP SOCIAL INSURANCE COMMISSION.
159
The right to increase the dues whenever this appears necessary, and
in general to adjust the dues to the level of expenditures, in view of the
compulsory character of the insurance, permits the whole system to run
on an admittedly assessment basis. No requirement is placed upon the
funds to accumulate actuarily correct reserves, and thus a great many
complications of an actuarial character are avoided. The building up
of a small reserve fund not to exceed the average budget of one year
is required.
The administration of the sickness system is simple and democratic.
Each fund has a general committee and administrative board. On the
general committee one-third of the members is elected by the em-
ployers and two-thirds by the insured employees, and the members of
the administrative committee are elected by the two groups of the
general committee separately and in the same proportion. The funds
prepare and adopt their own constitutions and by-laws subject to ap-
proval by the central authorities. The control of sickness insurance,
as well as of other branches of social insurance, is vested in a compre-
hensive administrative machinery consisting of an imperial insurance
office and state insurance offices for the various states, superior insur-
ance offices, and finally local insurance offices, as branches separate for
the minor administrative authority or groups of such units.
A few data concerning the business operations will indicate the extent
to which the German sickness insurance system must influence the life
of the wageworkers.
Receipts of all Funds (Except Miners' Funds).
1886
1890
1895
1900
1905
1911
1912
1913
Dues from
employers)
and em-
ployees
$13,072,852
21,383,039
27,571,087
39,020,649
58,961,265
102,204,654
110,331,040
115,909,260
Entrance
fees
^Included with "dues."
^Included with all other.
$287,297
332,222
315,566
394,528
447,137
Interest on
investment
$195,226
553,852
750,453
1,218,499
1,545,476
Loans
paid In
$40,834
252,594
301,262
795,622
1,113,328
All other
receipts
$694,139
1,055,165
1,546,432
2,259,151
3,136,606
4,417,066
5,246,044
5,349,979
$14,290,337
23,576,872
30,484,800
43,688,449
65,203,812
106,621,620
115,577,084
121,259,239
160
REPORT OP SOCIAL INSURANCE COMMISSION.
Expenditures, Investments Excluded.
Year
Benefits
Adminls-
ti'ation
All other
Total
Per cent of
adminis-
tration
expense
Per cent of
admlniB-
tration to
beneats
paid
1885
$11,281,229
20,001,523
24,947,723
37,571,917
55,274,045
70,551,947
74,496,997
85,617,675
98,983,399
$805,520
1,283,676
1,769,980
2,563,207
3,723,835
4,863,338
5,281,066
5,140,414
6,167,^4
$443,196
779,939
1,100,717
1,873,672
2,982,880
8,014,466
13,642,827
3,260,792
8,859,323
$12,529,945
22,065,038
27,818,420
42,008,796
61,980,760
83,429,761
93,420,889
94,018,781
103,000,076
6.6
6.0
6.6
7.1
1890 -.
6.4
1895 -_ ..
7.1
1900
6.4 ' 6.8
1905
6.3 6.7
1910 _.
6.4 6.9
1911 _
6.6 7.1
1912
fi.7 6.0
1913
6.2
6.6
Expenditures for
Benefits.
Tear
Medical
Medical
and drug
supplies
Money
benefits
Maternity
benefits
Funeral
benefits
Hospital
carei
Total
1885 - —
$2,156,604
3,994,462
5,507,682
8,176,865
12,640,927
18,192,838
19,933,505
20,380,724
22,358,051
$1,683,139
3,376,563
4,315,963
6,186,960
8,242,947
11,475,470
12,654,754
13,020,038
14,355,602
$5,702,225
9,492,319
10.794,783
16,649,419
24,470,440
32,356,773
36,552,748
35,794,829
38,446,842
$136,855
241,358
433,641
607,967
1,089,777
1,530,871
1,618,199
1,715,038
1,803,748
$520,851
780,642
883,844
1,262,026
1,511,453
1,776,023
2,029,064
1,888,035
1,911,602
$1,061,655
2,116,179
3,011,908
4,694,680
7,318,501
10,832,982
12,289,207
12,818,912
14,107,554
$11,281,229
1890
1895
1900
20,001,523
24,947,723
37,577,917
55,274,045
76,164,957
85,077,477
K,617,576
92,983,399
1905
1910 ..
1911 _
1912
1913 -
^Including- small amounts for care of convalescents.
The financial data given illustrate the "current cost" system of
sickness insurance in Germany. Contributions from employers and
employees practically constitute the entire income. Income from the
interest accounts hardly reaches 2 per cent of the total, and "all other
receipts" are largely accounts of sums in transit.
The economy of administration is striking. Eliminating "all other"
expenditures, which are also largely transit accounts, the expense of
administration is only -about 6.5 per cent; for every dollar spent in
benefits the administration costs less than 7 cents.
The assets accumulated are comparatively small. On the whole, they
have not reached the amount of the year's income prescribed by the
law, constituting about two-thirds of such income.
Money benefits and medical aid constitute the two main services of
the system. Adding medical aid, supplies and hospital treatment
together, the cost is even higher than the money benefits, but equals the
combiued amount of the ordinary money benefit, the maternity benefit
and funeral benefit. The cost of the latter two is not high.
It amounts to about 5 per cent of the total budget. Proportionately
the cost of medical aid, supplies and hospital has increased faster than
that of the money benefits, partially because of the increase in the price
REPOKT OF SOCIAL INSURANCE COMMISSION.
161
paid for these seryices, but also because of the substantial extension of
these services. On a per capita basis the cost of the system has grown
as follows :
Cost of Relief Per Member.
Average cost
Tear
etc.
Money
benefit
aid
Supplies
Hospital
expense
Total
istration
Per case
of
sickness
Per day
ot
sickness
1890
$3 80
$1 44
$0 61
$0 51
+
$0 48
$3 04
$0 20
$8 31
$0 50
1896
3 71
1 44
73
57
$0 40
18
3 32
21
9 23
54
1900
4 15
1 75
86
66
49
20
3 95
24
10 21
68
1995 -
5 33
2 19
1 13
74
65
23
4 94
30
12 42
63
1911
1 08
*
*
*
*
*
6 42
39
15 18
SI
1912
7 79
«
•
•k
*
*
7 01
44
16 47
84
1913 -•
7 97
, .
#
*
*
*
7 36
50
17 60
S7
•Figures not available,
tincluded in all other.
For a due appreciation of these figures it is necessary to remember
that under the German system of compensation, all industrial injuries
during the first 13 weeks are taken care of by the system of sickness
insurance. The amount of medical aid and money benefits which the
sickness funds are called upon to render naturally ranks with the indus-
trial hazard of the trade, but on the whole, estimates seem to indicate
that some eight per cent of the total cost of the sickness insurance system
is chargeable to industrial accidents. Statistical information in regard
to sickness experience collected under this comprehensive system is very
voluminous. Elsewhere use is made of this information for the purpose
of throwing some light upon conditions in this country. It may be
advantageous in this place, however, to quote a few figures which indi-
cate the extent of the work done in terms of sickness rather than in
figures of financial cost.
Cases of sickness
Per 100
members
Days of sickness
Per
member
1885
1890
1895
1900
1905
1911
1912
1913
1,804,829
42.0
2.422,350
36.8
2,703,632
36.9
3,679,285
38.6
4,451,448
39.8
6,308,009
43.3
6,525,858
46.1
6,630,840
45.1
25,301,178
39.176,689
46,470,023
64,916,827
88.082.296
124,372,461
128,381,213
133,685.017
5.9
6.0
6.2
6.8
7.9
8.6
9.1
9.0
11—27626
162 EEPOKT OP SOCIAL INSURANCE COMMISSION.
SECTION II.
AUSTRIA.
The adoption of compulsory sickness insurance in Austria by the
law of March 30, 1888, was a direct result of the influence of Germany 's
earlier action of 1883. The conditions in Austria previous to the
legislation were almost an exact counterpart of those in Germany
described above. Alreadj' a variety of mutual or establishment funds
for insurance against sickness existed. By an act of 1854 such funds
were created for miners. An ordinance of 1859 created factory and
guild sickness funds and even made employers contributions com-
pulsory, though membership in these funds was not always compulsory
for the employees. Voluntary benefit societies on local or other lines
grew up. In 1879 there were some 860 organizations with a member-
ship of over 300,000, and a budget of some 2,000,000 florins, or about
$800,000. After several efforts to remedy the situation by partial meas-
ures, a bill for compulsory sickness insurance after the German pattern
was introduced in 1885, and after three years of parliamentary discus-
sion, became a law in 1888. This followed almost immediately after
the adoption of the accident compensation law in 1887. The system
remained without any great modifications.
Sickness insurance is compulsory for all manual laborers regardless
of their earnings, and for office employees earning less than 2,400
crowns ($487) per annum in:
1. Factories, smelting plants, mines, shipyards, quarries, estab-
lishments using or manufacturing explosives, and all establishments
using mechanical power.
2. Building trades and all operations in connection therewith.
3. All establishments subject to the industrial code and other
business undertakings.
4. Railway and other land transportation, and inland navigation.
Sickness insurance does not cover outworkers, domestic service, agri-
culture, forestry, navigation, nor fishing on high seas.
As the evolution, so the organization of the sickness insurance sys-
tem in Austria has followed closely that of Germany. In fact, in almost
all respects the Austrian sickness in.surance system is virtually identical
with Germany.
The increase in the number of persons insured in Austria has been
gradual because there has been practically no substantial extension of
the act by subsequent amendments.
KEPOKT OF SOCIAL INSURANCE COMMISSION.
Total Number Insured.
163
Male
Female
Total
1,209,930
1,607,943
1,958,967
2,203,322
2,821,361
338,895
458,492
540,963
640,923
872,753
1,548,825
2,066,435
2,499,930
2,844,245
3,694,114
1890
1895
1900
1905
1912
In general the tendency in Austria, as in Germany, has been for the
increase in the membership of the local district funds at a faster rate
than that of the other funds, but the tendency has not been as strongly
marked, while as far as the number of funds is concerned, the miscel-
laneous funds have actually increased in proportion, only the establish-
ment funds declining.
Number of Funds.
1S90
1900
1913
Funds
Number
Per
cent
Number
Per
cent
Number
Per
cent
District ...
545
1,427
3
632
53
20.5
53.7
.1
23.8
1.9
568
1,336
2
866
141
19.5
45.9
.1
29.7
4.8
582
1,204
52
1,307
263
17.2
35.3
Building
1.5
Guild
38.3
Priendly societies
7.7
Totals . — —
2,660
lOO.O
2.913
100.0
3.408
100.0
Number of Insured.
1890
1900
1912
Fxmds
Number
Per
cent
Number
Per
cent
Number
Per
cent
District
550,606
565,642
663
230,578
261,336
35.6
32.6
"l4"9
16.9
1,038,785
664,677
339
367,427
428,702
41.5
26.6
"lil
17.2
1,592,768
797,529
6,542
630,510
666,765
43.1
Establishment . _. .
21.5
Building . ._
.2
Guild ..
17.1
Friendly societies ..
18.1
Totals
1,548,825
lOO.O
2,499,930
100.0
3,694,114
lOO.O
The financial basis of the Austrian fund resembles that of the German
fund, but the sickness insura.nce system is responsible for the care of
industrial accidents only during the first four weeks of disability as
against 13 weeks in Germany.
The normal maximum of premium payments is 3 per cent of wages,
and an increase above that amount is surrounded by many restrictions.
The funds are required to put into the reserve 20 per cent of their
annual contributions, until a reserve equal to twice the amount of
164
KEPOET OF SOCIAL INSURANCE COMMISSION.
average annual contributions is accumulated. An important financial
provision is that requiring the formation of federations of district funds
within the larger territorial areas. The main purposes of the federations
are : to provide an additional reserve fund in the nature of a reinsurance
fund ; to make investments for funds ; to employ supervising inspectors
for funds ; and to compile statistics.
The receipts and expenditures of all the sick benefit funds, converted
into American denominations, are as follows :
Keceipts
Expenditures
Conti-ibu-
tions
All other
Total
Insurance
benefits
AdminlS'
tration
All
other
Total
SuiTJlUS
1890
1895
1900
1905 -
1910
1913
$4,664,940
6,677,482
8,973,412
11,447,576
16.259,219
17,496,796
$363,017
445,382
609,609
799,008
1,233,805
1,342,361
$6,017,957
7,122,864
9,683,021
12,246,684
17,493,024
■ 18,839,167
$4,099,382
6,784,485
8,129,338
10,368,022
13,894,369
15,787,706
$364,588
516,838
727,349
976,836
1,525,763
1,655,951
$140,273
267,960
400,113
491,666
764,128
771,802
$4,604,243
6,569,283
9,266,800
11,836,524
16,184,240
18,215,459
$413,714
553,581
326,221
410,060
1,308,783
623,697
The cost of administration appears somewhat higher than in Germany,
running on the level of about 9 per cent to the actual expenditures for
insurance benefits.
The average receipts and expenditures per member for the same year
were as follows :
Heceipts per member
Expenditures per member
Tear
Contri-
butions
at
member
Contri-
butions .,, ^,
of em- •"' °">er
ployer
Total
For in-
surance
beueflts
Admin-
istration
AU
other
Total
1890 _ .
$2 10
2 26
2 48
2 76
3 16
3 46
$0 91
97
1 11
1 27
1 52
1 71
$0 23
22
24
28
36
40
$3 24
3 45
383
4 31
604
5 67
.$2 65
280
325
365
4 01
4 67
$0 23
25
29
34
44
49
$0 09
13
16
17
22
23
$2 97
3 ]8
1896 —
19C0 .. ..
1905
1910
4 16
4 67
1913 -
5 39
The distribution of the expenditures for insurance benefits according
to the main division of benefits was as follows :
Tear
Sloli
beueflts
Physicians'
compensa-
tion
Medicine,
Supplies,
etc.
Hospital
treatment
. Funeral
benefit
Total
1890
1895 __
$2,494,464
3,460,594
4,833,430
6,097,714
7,855.705
8,679,047
$730,800
1,044,638
1,443,127
1,862,781
2,791,964
3,278,223
$668,047
748,268
1,088,892
1,370,250
1,778,055
2,000,652
$180,467
357,077
626,176
765,310
1,141,3U
1,450,631
$135,604
183,918
237,713
281,967
327,324
379,153
$4,099,382
6,784,4K
8,129,338
10,368,022
13,894,359
15,797,796
1900 ..
1905
1910 . ..
1913
REPORT OF SOCIAL INSURANCE COMMISSION.
165
The per capita cost of the benefits has somewhat increased, though
the proportion between the various services has not changed materially,
except that the amount spent on hospital services has shown a propor-
tionately faster rate of increase.
Tear
Sick
benefits
Physicians'
compeusa-
tlon
Medicines,
supplies,
etc.
Hospital
treatment
Funeral
benefits
Total
1890 -
1895
$161
167
19S
2 15
2 27
2 67
$0 47
51
58
65
81
97
$0 36
36
44
48
51
59
$0 12
17
21
27
33
43
$0 09
09
09
10
09
11
$2 63
1900
2 80
1905
1910
1913 ..
4 01
The large amount of work done as well as the rapid increase is
suflftciently demonstrated by the following brief tables :
♦Cases of
sickness
1890 -
1895 .
1900 -
1905 .
1910 .
1913 .
770,903
971,753
1,262,095
1,476,961
1,721,316
1,751,123
•Per
100
mem-
bers
*Numbep
of sick
members
49.8
47.0
50.6
51.9
49.6
51.8
626,809
783,883
1,002,466
1,165,414
t
t
•Per
100
mem-
bers
Num-
ber
cases
sick
per 100
Child-
biith
40.5
123
37.9
124
40.1
126
41.0
128
t
t
+
t
1
26,780
41,846
61,053
60,696
66,198
62,288
Per
100
female
mem-
bers
7.90
9.18
9.44
7.91
7.03
6.35
Number
of deaths
Per
1.000
mem-
bers
15,925
20,094
23,846
27,080
27,731
27,370
10.3
9.7
9.5
9.5
8.0
8.1
•Exclusive oi confinement.
tData not available.
It is significant that there has been practically no increase in the
proportion of members calling for financial aid; though the number of
cases has increased. This is entirely due to the rising proportion of
eases to the number of sick members; even this proportion has not
increased alarmingly. A more eloquent measure of the extent of the
work done is furnished by the proportionate number of sick days paid
for. It is also preferable to give these data separately by sex.
Cases of sickness
Average duration of
case in days
Average number of days of
-sickness per member
Deaths per 1,000
members
Tear
Male
Female
Male
Female^
Male
Female
Male
Without
confine-
ment
With
confine-
ment
Female
1890 „
49.9
47.9
62.3
54.1
49.5
44.0
44.1
44.5
14.7
16.3
16.3
16.7
17.1
18.7
19.3
19.6
7.32
7.85
8.06
9.05
8.44
8.23
8.50
8.74
10.48
10.68
11.10
10.98
10.0
9.8
9.2
9.6
11.2
1895 —
9.6
1900
1905
8.8
9.3
'Exclusive of conflnement.
166 report' op social insurance commission.
The average niimber of sick days has increased materially for the male
membership, but not for women. It is usually recognized that men,
especially of the working class, are less likely to take care of their health,
and an explanation suggests itself that they were slower in acquiring
the habit of demanding medical care for ailments not acute.
REPORT OF SOCIAL INSURANCE COMMISSION. 167
SECTION III.
HUNGARY.
The system of sickness insurance in Hungary, introduced by the act
of 1891, was strongly influenced by the experience of both Germany and
Austria, and presents cojnparativel.y few novel principles. In 1907 the
sickness insurance law was codified, together with the new accident insur-
ance or compensation law, into one enactment.
The original act included industrial establishments, mines, quarries
and metallurgical establishments, larger construction undertakings and
transportation (except High sea navigation) and commercial establish-
ments. The list covered fairly completely manufacturers, mining, con-
struction and commerce. The revision of the act in 1907 added no new
important group, but specifically included governmental monopolies,
state and municipal undertakings and a few others.
An important change of the newer act was that of bringing out-
workers under the compulsory system. Deep sea navigation and
domestic service, however, still remain outside the compulsory law.
Within the establishments covered by the law all persons are sub.ject
to the compulsory insurance unless their earnings exceed 2,400 kronen
($487) per annum, or eight kronen ($1,624) per diem.
Voluntary insurance is open to various groups exempted from the
compulsory system. These include domestic servants, outworkers,
artisans, ordinary day laborers (casual workers), members of the family
of insured persons, students in educational laboratories, and agricul-
tural laborers.
The most important change introduced by the act of 1907 was in the
organization of insurance. In a sense this law presents the first experi-
ment of a state sickness insurance fvmd on national lines. The law of
1907 consolidated all the local funds into two national insurance funds.
In scope of activity the Hungarian system follows closely the Austrian
system requiring virtually the same minimum benefits. It is significant,
hrwever, that the grant of free medical and obstetrical aid to the
members of the family is required. Hungary was the first to do this.
The rate of dues, determined in percentage of the assumed average
wage, can not be less than two per cent or more "than four per cent, and
is shared equally by employer and employee instead of the German
division of one-third and two-thirds. Of course the vokintary insured
members pay the entire premitim.
168
REPORT OP SOCIAL INSURANCE COMMISSION.
Statistics of the sickness insurance system in Hungary are shown in
the following table :
No. ot
funds
Membership
Total
Average
per fund
Tear
MalB
Female
1895 — — —
425
458
440
500,202
555,512
637,277
69,273
79,838
101,845
569,475
635,350
739,122
1,340
1900 -.
1,387
1905
1,680
INCOME AND EXPENDITURES.
Income.
Tear
Dues
Other
Total
Per
capita
1895
1900 - -
$1,463,971
1,818,070
2,383,341
$261,824
262,007
362,386
$1,725,795
2,080,077
2,746,727
$3.03
3.27
1905
3.71
Expenditures.
Tear
Money
benetit
Adminis-
tration
Other
Total
Per
capita
1895 - -
$1,197,687
1,696,280
2,105,234
$212,736
257,110
3J4,406
$205,266
145,301
201,807
$1,615,689
1,998,691
2,651,446
$2.81
1900 - -
3.15
1905 -- - -
3.59
There has been some increase in the per capita cost of the system, but
not an alarming one. The average expenditures have increased from
$2.84 in 1895 to $3.59 in 1905. The cost of administration in Hungary
is higher than in Germany, perhaps because the dimensions of the sys-
tem are very much smaller. It represents usually about 12 or 12.5 per
cent of the total income.
The essential data as to statistics of sickness may be added for pur-
poses of comparison with those of other coimtries.
Tear
Number
ot sicit
persons
Cases of
slcltness
Sick days
paid for
Hospital
Total
days
Siclt
per 100
Cases
per 100
Sick
days
per
mem-
ber
Sicli
days
per
case
1895 .- ..
112,022
198,504
233,170
141,042
228,133
295,940
1,249,875
2,479,858
3,389,383
288,790
509,137
590,497
1,538,665
2,988,995
4,081,892
19.67
30.46
31.55
24.77
35.91
40.04
2.7
4.7
5.3
13.7
15.4
17.1
1900 — _
1905
Similar data for the cases of maternity are interesting ;
Tear
Number of
parturients
Days com-
pensated
Average
number of
days per
case
Number of
cases per
100 female
members
Average
number of
days per
female
member
1895 _
2,033
6,132
7,557
37,049
150,539
168,764
18.22
24.55
22.33
2.93
7.68
7.42
.53
1.89
1.66
1900
1905 ..
REPORT OF SOCIAL INSURANCE COMMISSION. 169
SECTION IV.
LUXEMBURG.
With a population of some 360,000 and a close economic dependence
upon Germany by virtue of its membership in the German Customs
Union, the little duchy of Luxemburg followed closely the German ideas
of legislation, in this as in many other branches. It deserves separate
mention because some of its problems, for the very reason of its small
size, somewhat approach the problems of many smaller states of our
Union.
The compulsory health insurance law of Luxemburg was enacted
July, 1901. Fourteen years of parliamentary discussion preceded final
legislative action. The earlier act of 1891 was not stringent, and applied
to "approved" societies, that is, such organizations as were willing to
subject themselves to the requirements of the law for the sake of the
standing and the reputation of soundness which governmental control
gave.
The compulsory sickness insurance law of 1901 covers all employees
working for wages or salaries (in the labor cases when salary does not
exceed 10 francs per diem or 3,000 francs per annum) in the following
establishments :
(1) Steam railways, street railways, transportation by land, inland
navigation.
(2) Mines, quarries, etc.
(3) Postal, telegraph and telephone service.
(4) Factories and metallurgical establishments.
(5) Building and construction.
(6) Commercial establishments.
(7) Establishments utilizing mechanical power.
Agriculture, domestic service and office work not connected with the
other types of establishments enumerated are not covered. In 1906 the
number of insured equaled 36,915 persons, or 14.62 per cent of the
population.
The organization of insurance carriers is much smaller than in Ger-
many. Only three types of such carriers are recognized by the law :
(1) Mutual aid societies.
(2) Establishment funds.
(3) District or local funds.
Of 66 insurance carriers, 35 were district funds, 48 establishment
Innds iind only tlirue mutual aid societies; but the few district funds
170
REPORT OF SOCIAL INSURANCE COMMISSION.
claimed a membership of some 13,895, the 48 factory funds some 21,677
members and the aid societies 125.
The benefits guaranteed by these institutions quite closely follow those
of the German system before the revision of 1903. The minimum bene-
fits are :
(1)
(2)
(3)
(4)
Free medical aid and supplies.
A sick benefit of 50 per cent of the wages for 13 weeks, be-
ginning on the third day, though the waiting period is only
two days.
As a substitute for these two, hospital care and half the benefit.
A maternity benefit of four weeks.
A funeral benefit of 20 times the daily wages.
Various optional benefits are also permitted, as the increase of the
duration of benefits to one year, of the amount up to three-fourths of
the wages ; the furnishing of other curative measures beside medical
care, a small money benefit to hospital patients without dependents, an
increase of the maternity benefit to six weeks ; the supply of medical aids,
drugs, etc., to the family of the member, the increase of the funeral
benefit, the grant of the funeral benefit in case of death of the wife or
child of the insured person, or the elimination of the waiting period.
The application of these optional benefits is not extensive.
A detailed study of the experience of the results of this insurance
has been published, of which the data for 1900 are :
Cases of sickness and accident per 100 members per annum :
Male
Female
Total
VFith disability „
89.3
42.7
46.7
63.1
86.7
Without disability
43.9
Totals . . . - . .
132.0
10.7-
2.2
109.8
6.1
1.5
130.6
Number of sick days per member-
With disability .
10.4
Without disability .._-_.
2.2
Totals
12.9
7.6
12.6
As in Germany, one-third is contributed by the employer and two-
thirds by the employee.
EEPORT OF SOCIAL INSURANCE COMMISSION. . 171
SECTION V.
GREAT BRITAIN.
The proposals for compulsory social insurance were made to Great
Britain many years ago, during the discussions preceding the introduc-
tion of the old age pension system, but at the time compulsory insur-
ance was rejected as contrary to British traditions. The simultaneous
introduction of compulsory health insurance and compulsory unemploy-
ment insurance in Great Britain in 1911, therefore, was regarded in
Europe as an important victory of the compulsory principle of social
insurance.
The statement has been frequently made that Great Britain adopted
its compulsory insurance system from Germany. As there were prac-
tically no precedents for successful compulsory unemployment insurance
Great Britain had to accomplish pioneer work organizing its unemploy-
ment insurance system. Even in the sphere of health insurance the
British system resembles the German only in a few underlying prin-
ciples. In the details of organization the British system differs so
essentially from the German that it becomes necessary to distinguish
between the two well-defined types — the British and the German.
Extent of the Compulsory System.
While the German system extended but gradually by inclusion of new
additional groups through amendatory acts, the British act, from the
first, announced the principle of almost universal extension.
Obligation to insure applies to all persons employed at manual labor
mider any form of contract provided they receive remuneration, and
to persons between 16 and 70 years of age, and to other employed
persons not engaged in manual labor but with an annual income of
less than £160 (or $778.64). Of course, notwithstanding the breadth
of the general principle, special exceptions have become necessary.
Within the group of insured occupations certificates of exemption are
given to persons not dependent upon their wages for a livelihood,
to persons in receipt of a pension or other annual income (not earned)
of £26 or over, and the like. These exceptions are unimportant, as
less than 100,000 persons are so exempted. More important are the
exemptions of certain classes of occupations on the ground that the
terms of employment already provide benefits of equal value, this
applying largely to certain government employees (approximately
300,000 persons). Other groups excluded are persons employed on agri-
cultural holdings and receiving no money wages or pensions, casual
employees working at other than the employer's business.
In addition the administrative authorities are given the power to
172 . KEPORT OF SOCIAL INSURANCE COMMISSION.
exclude other subsidiary employments, which do not constitute the usual
means of livelihood. Some fifty minor occupations have been thus
excluded.
In point of number, all these exceptions and exemptions are com-
paratively unimportant. The number of persons insured for the first
year is shown in the following figures :
England 10,862,000
Scotland 1,455,000
Wales 688,000
Ireland 699,000
13,704,000
These figures for the first year are largely in the nature of estimates.
Unfortunately even for the following year, 1912-1913, the information
is still more incomplete. Since the beginning of the war great changes
must have taken place, but no statistics are available. Little care seems
to have been taken to provide a statistical service in connection with
this important social institution. In round figures some 14,000,000
persons came under the operation of the law in 1911, of whom men con-
stituted some 10,000,000 and women 4,000,000.
Voluntary insurance is open to persons not covered by the compulsory
system, whose earned income is less than £160 per annum. Persons
who have been compulsory members for five years may continue as
voluntary members under the act, irrespective of their incomes.
Of course voluntary insurance operating independent of government
action is open to any one in England, under existing facilities, such as
friendly societies, but voluntary insurance under the law offers the
advantage of a state subsidy. Exact information as to the number of
persons in the entire Kingdom who have taken advantage of the public
voluntary system is not available. This voluntary insurance has not
yet developed to any considerable extent.
Benefits Granted by the Act.
In the matter of benefits the English act shows substantial deviations
from the continental systems. The essential services rendered by health
insurance systems in general are a cash benefit for disability, medical
aid, a maternity benefit, both in money and in obstetrical aid, and a
funeral benefit. A funeral benefit is not included in the British system,
due, it is asserted, to the influence of private industrial life insurance
companies. "^ The other three forms of benefit are granted by the
British system.
In practically all the continental health insurance systems the stand-
ards of benefits and services established by the law represent only the
'New Statesman Special Supplement, March 13, 1915, p. 30.
REPORT OF SOCIAL INSTTRANCE COMMISSION. " 173
mmimum requirements which the insurance carriers must meet. As a
matter of fact, a considerable variety exists as to actual services
rendered. The British act, on the contrary, establishes a uniform system
of services, and though the act contains provisions for their possible
extension through optional benefits, these provisions are of limited impor-
tance. The legal standards more nearly represent the maximum of
service from which various deductions are made in actual practice.
Cash Sick Benefit.
The sickness benefit is payable for 26 weeks, beginning with the fourth
day of disability.
The uniform sick benefit of ten shillings is for all male insured
persons ; seven and a half shillings for all insured female persons,
ilinors are entitled to smaller benefits, namely, six shillings (five shil-
lings for females) for the first 13 weeks, and five shillings (four shilliag.s
for females) for the second 13 weeks. The amount is the same, irre-
spective of the earnings of the insured. This is a very essential devia-
tion from the continental systems, which almost uniformlj^ base the cash
benefit upon the average earnings of the insured.
It is true that the act contains a clause permitting the reduction of the
cash benefits when it would exceed two-thirds the usual earnings. But
the clause is not mandatory and its application presents such complica-
tions that the clause has become a dead letter.
The principle of absolutely uniform benefits has the administrative
advantage of simplicity, but it evidently is at fault from the social point
of view because of its inelasticity. At one end it is inadequate and
makes additional voluntary provision necessary, at the other it is exces-
sive as it nearly equals the earnings, or perhaps even exceeds them,
and thus offers a temptation for malingering.
As already stated, the duration of the cash sick benefit is 26 weeks,
and the benefits begin on the fourth day of incapacity. If the disability
extends beyond the 26 weeks the cash benefits are not altogether dis-
continued but reduced. This is called disablement benefit, and repre-
sents the invalidity insurance feature of the British national insurance
act, which in Germany is attached to the old age system. The disable-
ment benefit is payable until the age of 70, when the right to an old age
pension accrues.
The medical benefit is very loosely described in the British act, and
even the inclusion of ordinary surgical treatment does not follow from a
careful intei'pretation of the language. In actual practice the medical
attendance simply guarantees attendance by an " ordinary practitioner ' '
and the services that he can be expected to render. It does not include
obstetrical aid, operations, hospital care or nursing, so that in case of
174 • REPORT OF SOCIAL INSURANCE COMMISSION.
need of medical or surgical aid beyond the resources of the general prac-
titioner, or the need of hospital aid, the insured person is in the same
position as before and is forced to pay personally for the needed care or
to seek gratuitous treatment in charitable institutions.
Maternity Benefits.
The maternity benefit of the British act is very wide in its application,
extending both to the insured women and wives of insured men. In
line with the general tendency of the British act for specific amounts,
the maternity benefit is a lump sum of 30 Kshillings. Since the medical
benefit does not include obstetrical aid, the maternity benefit really rep-
resents a compensation for the expenses connected with childbirth.
If the mother comes under both descriptions, as an insured person and
the wife of an insured person, she secures a double benefit, or 60 shill-
ings (£3), and thus receives some compensation for time lost. The
insured woman receives her maternity benefit under the condition of
refraining from Avork for four weeks after childbirth. This makes the
benefit equal to seven and one-half shillings per week, or the normal
amount of sick benefit payable to insured women. There is a discrim-
ination against unmarried mothers involved, because an unmarried
insured woman on giving birth to a child receives only 30 shillings, most
of which is required to meet the cost of medical aid, and she receives no
compensation for time lost.
Sanatorium Benefit.
In addition to the standard benefits enumerated above (cash benefits,
medical benefit and maternity benefit), the British law introduced a
special ' ' Sanatorium Benefit. ' ' This benefit offers treatment to persons
suffering from tuberculosis or other diseases to be designated by the
government authority. Since no such diseases have as yet been desig-
nated, the sanatorium benefit is limited to a tuberculosis benefit. It
represents a very important step in the national struggle against tuber-
culosis in Great Britain. It is somewhat inaccurate to speak of this as a
new or distinct benefit, since the treatment of tuberculosis is properly a
part of the medical benefit. It is only because the extent of the medical
benefit is so limited in England that the necessity for a special tuber-
culosis benefit remains. Notwithstanding the designation, ' ' sanatorium
benefit," sanatorium treatment is not guaranteed.. The treatment may
be given through clinics, or, even through the panel physicians, the
patient remaining in his own home.
The above is a brief description of the benefits given. Because of the
numerous exceptions and qualifications, which it is impossible to state
except through a bulky interpretation of the entire act, a complete
description is not included. In general, the money benefits are reduced
REPORT OF SOCIAL INSURANCE COMMISSION.
175
for persons who enter the insurance at an advanced age; they are
reduced for aliens; they are reduced for members who are in arrears
for more than three weeks in any one year, and for all members of any
society, accounts of which show a deficit.
The Cost.
Prom the German and other continental systems the British act has
adopted the principle of contributions by employers; from the Nor-
wegian and Danish laws the principle of a subsidy from a state. Thus
the insured employee, employer and the state all contribute to the cost.
Dues, like benefits, are uniform for practically all insured, with some
minor exceptions. The standard cost of insurance is determined at
ninepence per week for each male insured, and eightpenee for each
female insured, irrespective of age or occupation. These amounts are
distributed as follows :
lnsure(3 pays ._
Employer pays
State pays
Totals
An exception is made, however, in the case of low-paid wageworkers.
It is recognized that even the partial burden of insurance may be too
heavy for persons of small earning capacity, and that it is proper to
relieve them of that burden to a greater extent than in the ease of
insured persons with a normal earning capacity. In this the British act
has made a substantial contribution to the theory of social health insur-
ance.
For all male persons earning not over two and one-half shillings per
diem, and all female persons earning not over two shillings per diem,
the following apportionment of the dues is provided for in the law :
Employee
Employer
state
Males earning—
Over 2s, but not over 2s 6d ._
3d
Id
Id
4d
5d
6d
4d
5d
2(3
Over Is 6d, but not over 2s _.
3d
Not over Is 6d ._
3d
Females earning—
Over Is 6d, but not over 2s
3d
Not over Is 6d
3d
Thus it appears that persons with an earning capacity of not over
one and one-half shillings are entirely relieved of the payment of any
dues, and in their case the entire cost is borne by the employer and the
state. In voluntary insurance the dues paid by the insured are equal
176
BEPORT OF SOCIAL INSURANCE COMMISSION.
to the combined dues of employer and the employee. The voluntary
contributor receives the state subsidy to which the compulsorily insured
person is entitled.
An exception of questionable value is made in the case of aliens.
They were made subject to compulsory insurance mainly for the pur-
pose of not creating an inducement in favor of employing aliens by
relieving the employers from payment of their share. But the benefit
of the state subsidy is denied to the aliens.
Organization of Insurance.
While benefit societies are admitted to participate in the administra-
tion of the insurance system in most European countries they were not
encouraged. In England, on the contrary, these societies were prac-
tically made the main carriers of health insuran.ee. Technically the
British system imposes the compulsion to insure, but leaves the choice
of carrier to the individual insured person, under certain conditions.
Participation in the system is open to all societies approved for this
purpose, and known as "approved societies," whether existing at the
time of the act or later organized for the purpose. These include the
ordinary friendly societies, trade union benefit funds, establishment aid
societies and similar organizations. The main requirements are that
they do not operate for profit and are managed by their membership.
This latter requirement has been practically made a dead letter clause
by the organization, on the part of the industrial life insurance com-
panies, of "approved societies" with very little real democratic control.
In England, for which fairly accurate data were available, the dis-
tribution of the insured persons into various organizations was as
follows :
Male
Per
cent
. Female
Per
cent
Total
Per
cent
Friendly societies into branches
1,844,000
1,809,000
950,009
50,000
2,516,000
26.7
26.2
13.2
.7
35.2
460,000
505,000
240,000
12,000
1,939,000
14.6
16.0
7.6
.4
61.4
2,304,000
2,314,000
1,190,000
62,000
4,455,000
22.3
Friendly societies ___
22.4
11.5
.6
Independent association companies
43.2
Totals - — ^
r,169,000
lOO.O
3,156,000
100.0
10,325,000
100.0
It thus appears that the industrial assurance companies organized
some 43 per cent of the insured, and perhaps 80 per cent of those who
previously carried no membership in fraternal societies. Of the insured
women as many as 60 per cent belong to the societies organized by the
industrial life insurance companies.
The system of optional choice of insurance carrier under a com-
pulsory control was admittedly forced upon the British system by the
popularity and strength of the existing friendly societies. The criticism
REPORT OF SOCIAL INSURAXCB rOMMISSION. 177
has, however, been made in England, that while it was perfectly proper
to take measures to preserve the existing mutual aid societies, the insur-
ance of those persons hitherto uninsured should have been provided for
by creation of special institutions either local or national.
Various difficulties were created by the English system. One was the
inability of some to gain admission into any society. Evidently the
person of poor health is a less desirable risk than the healthy individual.
The approved societies retained the right to reject undesirable risks.
The approved societies are not permitted, however, to discriminate
against an applicant on account of age alone. It was foreseen, there-
fore, that a residuum of insured persons who were not members of any
approved society would remain. These persons have been provided for,
as so-called "deposit contribirtors. " This means practically that the
persons instead of carrying an insurance, deposit their contributions
through the post office into their own industrial accounts, out of which
they may draw only up to the amount of their individual balances, for
the benefit of sickness. This of course is not insurance at all but some
sort of compulsory saving with subsidies from employer and state.
The number of such deposit contributions is not very large, however,
and declining. Under the original act the arrangement for deposit con-
tributions were to be temporary only, to be changed by the beginning
of 1915. The war, however, made necessary an extension of this
temporary arrangement.
In one respect the British form of organization seems to offer an
advantage. It assumes a permanent relationship between the insured
and the approved society, and offers a certain protection in periods of
unemployment. If the insured person is in arrears for less than three
weeks full benefits continue. When the insured person is in arrears
for over three weeks per year of past insurance the benefits are gradu-
ally reduced until the arrears equal one-half the insured time, when
benefits stop altogether. This extension of three weeks for each 52 of
insurance is cumulative, whereas the German system provides for a
maximum of three weeks extension in any one year.
Financial Organization.
The financial organization of the British system is extremely complex
and especially so when compared with the simplicity of the continental
health insurance systems. The latter are frankly based upon an assess-
ment system. Within certain limits the insurance carriers in all the
continental systems are permitted to collect as much money as is neces-
sary to comply with the requirements of the law as to benefits, and even
for the purpose of granting additional benefits.
The British system is the only one in which the premium as well as
the benefits are defined in the law. If, notwithstanding careful actu-
12—27626
178 EEPOKT OP SOCIAL INSURANCE COMMISSION.
arial work, the premium should prove inadequate, the remedy left is the
reduction of the benefits. Additional benefits over and above those
reqiiired by law may only be granted if the legal premium provides a
margin for the purpose.
The basis of the premiums or contributions is somewhat like that
generally used in life insurance on the so-called level premium, or old
plan. It is recognized that the rate of sickness increases with age, like
the death rate. Instead of varying the rate of contributions with age,
one level premium rate has been computed which is too high for the
lower age groups, and too low for the higher age groups, and thus
provides for the accumulation of reserves in the earlier years to be used
up in the later years. The premiums in the British system are calcu-
lated with 16 as the assumed age of entry. Theoretically, therefore, for
every insured person over 16 there should be some reserve. This, how-
ever, would have created a great many difficulties, which the act meets
in a different way, keeping the rate of conti;ibutions uniform and
establishing reduced rates of benefits for all persons entering insurance
at age of 17 and upwards. Of course this reduction of benefits can
only apply to the money benefit, since no gradation can be established
in the medical benefit.
An application of this rule from the beginning of the act going into
effect would have played havoc with the entire system, for naturally it
found persons of all ages from 16 to 70, and the amount of insurance
that could be given on this basis to persons of advanced age groups
would have been very small indeed.
The act therefore extended the privilege of full benefits to persons
of all ages entering insurance at the beginning and even for a consider-
able period (65 weeks) after the act went into operation (up to Octo-
ber 13, 1913).
With the existing freedom of choice of insurance carrier this would
have created a serious discrimination against older persons. Approved
societies would have all gone out to capture the younger men and would
have rejected the older men. The actuarial method of meeting it is to
credit the approved societies Avith the proper reserve which would have
been accumulated up to the age of the insured person if he had begun
his insurance at 16, which places insured persons of all ages on a par.
When such reserve values were calculated with reference to age and
sex, they were found to aggregate the enormous amount of naarly
£90,000,000, or some $437,000,000. Of course no such sums were
available. It was decided, however, to deduct two-ninths of the con-
tributions in case of men and two-eighths of the contributions in case
of women for the purpose of gradually building up this enormous
reserve, and it has been calculated that it would take 20 years to build
it up completely.
REPORT OF SOCIAL INSURANCE COMMISSION. 179
Since the governmental subsidy is exactly equal to these proportions
twopence out of ninepenee is two-ninths for males, twopence out of
eightpenee is two-eighths for females, the net result is that the govern-
mental subsidy for 20 years is given merely to build up reserves for
persons who have entered at the age of 17 or over, while during these
20 years persons beginning at 16 do not receive any governmental
subsidy. IMeanwhile this reserve exists only on paper as a credit to the
approved societies due from the insurance fund of the English govern-
ment. If it had not been for the freedom of choice of the insurance
carrier there would have been no necessity for this enormous reserve.
The German system had been in existence for 30 years without any
actuarial reserve, but the necessity to provide for equal standing for the
societies, and for the opportunity to transfer from one society to another
at will, had made this complex provision necessary.
Another reason for the reserve is the inclusion of the disablement or
invalidity benefit, the cost of which rises with age even faster than that
of sickness. It would be impossible to provide for invalidity insurance
under a system of independent societies without making provision for
reserves.
Financial Operation.
In view of the fragmentary character of the statistical information
for the three minor divisions of the United Kingdom, it is sufficient to
give the data for England.
The total receipts of the National Health Insurance Fund for
England up to May 31, 1913, were :
From sale of stamps £13,008,632
Exchequer grants 2,687,777
Miscellaneous - 75,210
£15,771,628
Expenditures —
To societies for benefits and administration £3,9'34,042
Insurance committees for medical aid and administration 1,371,175
Miscellaneous 36,522
£5,341 739
Balance 10,429,889
£15,771,628
The large accumulations are explained largely by the fact that while
contributions were collected from July 25, 1912, the payment of benefits
did not begin until January 15, 1913, so that a sufficient working
reserve was built up. The combined balance sheet for the first 18
180 REPORT OF SOCIAL INSURANCE COMMISSION.
months of the operatioii, July 15, 1912, to January 11, 1914, of the
National Health Insurance Fund for England appears as follows :
Receipts,.
Sale of stamps £18,012,840
Exchequer grants 4,533,777
Admiralty contributions on behalf of sailors and marines 100,000
All other 15,001
£26,661,618
Disbursements.
Issued to —
Approved' societies for sickness and maternity benefits and
administration £8,774,908
Insurance committees for sanatorium and medical benefit 4,623,287
Deposit contributors 15,720
Navy and army fund 2,567
£13,416,488
Miscellaneous disbursements 38,884
£13,455,372
Issued to approved societies for investment 870,519
Investments purchased on behalf of approved' societies 34,856
Balance on hand 12,300,871
Total £26,661,618
The balance sheet above clearly illustrates the financial methods of
the system. The contributions are gathered through sale of stamps
through the post office, the proceeds of which go into the hands of the
insurance commission. The employer is responsible for the combined
dues of employer and employee, and he is empowered to hold, out of
the wages paid, the employee's share. The stamps are pasted on the
cards of the contributors, who deposit these every quarter with their
societies, and the societies collect their pro-rata from the insurance
commission. Payments are made to the societies both for the purpose
of paying benefits, and to cover the cost of administration. The com-
mission also supplies the money to the insurance committees to cover
the cost of medical aid and administrative expenses. The balance avail-
able in the commission's hands is in reality credited to the approved
societies, and the commission serves, as it were, as a cooperative account-
ing department for all societies.
Administration.
The existence of over 20,000 independent approved societies makes
the problems of administration no less complex than those of finance.
To begin with, it was found necessary to separate entirely the adminis-
tration of money benefits (through the approved societies) from the
administration of medical benefits, because the organization of medical
aid is essentially a local problem and the approved societies do not
REPORT OP SOCIAL INSURANCE COMMISSION. 181
Operate within specified geographical limits. The entire administration
of the medical benefit is entrusted to insurance committees. Both
organizations are subject to the control of four national health insurance
commissions whose authority is somewhat coordinated by a joint com-
mittee for the United Kingdom.
The details of operation of the approved societies are entirely too
complex to be gone into here at any length. Conditions of approval are
established by the act and by rules and regulations of the commission.
No one uniform basis of organization is prescribed, and as a matter of
fact considerable variety exists in the conditions under which the sick-
ness, maternity and disablement benefits are payable to insured persons
in the same locality.
Insurance Committees.
The necessity of some local uniformity in the administration of the
medical benefit has created the so-called insurance committee. These
committees are organized in every county and county borough of the
United Kingdom, 238 in all. They consist of representatives of the
insured, of the physicians, and also of the local council and general
administration, with a total membership of from 40 to 80 on each
committee, all serving without remuneration. The absence of any
representative of the employers is significant.
These committees control the medical service of the act, that is,
arrangements with doctors, drug benefits, treatments of tuberculosis
and sanatorium benefits, and in addition to this are entrusted with a
few functions of minor importance.
In general then, it may be said that health insurance in Great
Britain is provided through two distinct sets of organizations, the
approved societies which pay cash benefits and the insurance com-
mittees which dispense medical aid. Each is largely independent of
the other and each person must deal with both organizations. -
The insurance commissions, one for each of the constituent parts of
the United Kingdom, exercise a wide control over the insurance com-
mittees. For purposes of uniformity in their operations the joint
committee exists, on which the English commission has a predominating
influence.
Medical Organization.
While the administrative details are too complex to be gone into, the
organization of medical aid is a matter of grave importance and must at
least be briefly covered.
Due to the influence of the medical profession the act guaranteed the
right of every duly licensed physician to practice under the law. A
sum in the amount of eight shillings and sixpence for each in.sured per-
son was also secured by the medical profession for the fund out of which
physicians practicing under the law were to be paid. Drugs adminis-
182 REPORT OF SOCIAL INSURANCE COMMISSION.
tered under the law were to be paid for out of this same fund. An
additional sixpence per insured person was allowed for treatment of
tuberculosis. Another additional sixpence, known as the "floating six-
pence, "was permitted for the fund ayailable for physicians if not
needed for drugs.
"While the actual arrangements for paying physicians were left to the
insurance committee, all of them with the exception of those for Man-
chester and Salf ord have adopted one system of the panel with charges
at so much per person. Under this system the insured person is
limited to the services of the physician he has selected. The physician
receives the seven shillings (or seven shillings sixpence) per each person
who is on his panel. In the two cities a system of payment by visit
still persists.
Cost of the System to the Government Treasury.
The cost of the whole system, though not definitely known, approaches
some £20,000,000 to £25,000,000, or some $100,000,000 to $125,000,000
a year. The total estimated cost to the public treasury for 1914-1915
was £8,505,242 and for 1915-1916 £7,940,165. Of these appropriations
the amount voted for central administration was about £1,000,000, the
normal grants of the state subsidy amounted to over £5,500,000, and
various special additional grants amounted to about £1,500,000. These
additional grants were necessitated partly by the fact that the cost of
medical aid, the amount of sickness among women and the loss from
arrears had been underestimated and partly by the fact that benefits not
contemplated in advance were provided.
Summary.
The complex British act may perhaps be better understood by a brief
summary of the essential differences between it and the standard type
of continental health insurance systems. These differing features are :
1. The combination of disablement (or invalidity) benefits with
the sickness benefit.
2. The substantial grants from the public treasury.
3. The freedom of selection of carrier under a compulsory system.
4. The system of uniform dues irrespective of wages or locality.
5. Uniform benefits irrespective of wages or locality.
6. Separate administration of medical benefits.
7. Absence of hospital benefit except for tuberculosis.
8. Absence of funeral benefit.
9. Effort to build up a system of adequate reserve.
10. Absence of public funds even for contributors left outside of
the voluntary insurance carriers.
Since the law went into effect, certain difficulties developed within
the administration of the national health insurance system. The diffi-
culty that caused most concern was the evidence of greater sickness in
REPOHT OP SOCIAL INSURANCE COMMISSION. 183
some societies than had been estimated. The immediate assumption
was that improper and too liberal administration of the benefits by the
approved societies was the cause. A special "Sickness Benefit Claim
Committee" was appointed by the chairman of the National Health
Insurance Joint Committee on August 22, 1913. This committee con-
cluded that the sickness rate among women was greater than estimated.
Under an assessment system this would merely require a small increase
of dues. Similarly, while the average estimates for men proved ade-
quate for the total number of men insured in all the societies, the rate
of sickness in the different societies varied greatly above and below this
estimated average according as their membership was selected from
unusually healthy or unhealthy groups.
An investigation on broader lines embracing all the social and
economic effects of the act was undertaken by a special committee of
the Fabian Society under the guidance of the well-known economist,
Mr. Sidney Webb. This report was published in March, 1914. The
criticisms made by the committee were mostly directed against the
inadequacy of the measure provided by the law for the treatment and
prevention of disease. It was the opinion of the committee that how-
ever faulty the scheme might appear to be, as a whole "the machine
was working."
The main defects of the present health insurance system of Great
Britain appear to be the exclusion of all hospital treatment in ordinary
eases, the exclusion of operations, the lack of expert diagnoses and
the opinion of a consultant, the inadequate provision of drugs and
more expensive appliances, and the failure to increase hospital facilities
which were at the date of the passage of the act most inadequate.
184 REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION VI.
RUSSIA.
While compensation legislation was enacted in Russia as early as
1903, or some eight years before compensation legislation was introduced
in any of the American commonwealths, the beginnings of the broad
social insurance movement are directly traceable to the political
upheaval of 1904 and 1905. An imperial ukase of December 12, 1904,
announced the governmental program of social insurance legislation.
As an immediate result of the radical political activity of October, 1905,
this program was made very broad indeed, and generous insurance
proposals both for sickness and old age were published by governmental
authority. Delays ensued, and by 1908 only the bills for reorganiza-
tion of compensation insurance, and for compulsory health insurance
remained. The bills, after a prolonged course through the duma and
imperial council, finally became laws in June, 1912.
The extent of application of the Russian insurance act is extremely
limited, and perhaps less than in most other countries is the term
"social insurance" applicable to it. It is more accurately described as
"workmen's insui-ance," or even factory workers' insurance, since it
covers only factories, mines, metallurgical establishments, inland navi-
gations, street railways and steam railroads of local importance (but
not the general railroad system), with the further limitation that they
employ at least 20 hands, and utilize some form of mechanical power,
or that they employ at least 30 hands when no mechanical power is
used. The act is further limited by exclusion of casual work which
does not last over one week. Within the establishments covered,
salaried employees as well as wageworkers are brought under the
system. Under these many limitations, out of some 13,000,000 wage-
workers, artisans, ofBce employees and others, not over 2,500,000 arc
insured against sickness.
When sickness insurance Avas introduced in Russia there was no
considerable development of mutual sickness aid, such as existed prior
to compulsory insurance in most countries of western Europe. There
was less necessity, therefore, to take into account existing sick benefit
institutions and a new uniform organization could be created. The
limitation of insurance to employees of factories, or other large
establishments, suggested to the Russian government the creation of
establishment or factory funds as the exclusive type. In the case of
establishments employing less than 200, cooperation of several estab-
lishments in one fund is obligatory. Such consolidation is permitted
REPORT OF SOCIAL INSURANCE COMMISSION. 185
to even larger establishments. The criticism is frequently made in
Russia that this type of organization puts the administration of the
funds too much under the influence of the employer, especially in case
of a fund organized in connection with one establishment.
Whatever the force of the argument, the predominance of the
employers' influence is guaranteed in the Russian system by the system
of administration, which is claimed to be an adaptation of the German
system and provides for a so-called general meeting of representative
delegates and a board of directors elected by the former. In the general
meeting, however, the employer or employers elect two-thirds and the
insured workmen only one-third, so the employer is practically in
control.
In the kind of benefits given the Russian system differs in one respect
from the other European systems. The obligatory functions of the
factory funds do not include medical aid because by virtue of legisla-
tion enacted in 1866 the employer of a factory or mine was required to
furnish free medical aid to employees. A strong demand was made
both by workmen and physicians to transfer this function from the
employer to the factory fund, but it was rejected. It was quite
customary among large employers of labor not only to employ factory
physicians, but to support a dispensary, and even ■ (in view of the
common employment of married women in the textile industry) an
obstetrical ward. The smaller employers made less comprehensive pro-
vision, but usually entered into agreenjient with city and county
hospitals. The act of 1912 left this state of affairs practically
undisturbed.
Outside of these peculiarities, the benefits are shaped after the
European standards. The money sick benefit must equal, in case of
married employees, at least one-half of the wages, but may be volun-
tarily increased by the fund up to two-thirds. In case of single per-
sons the amount may vary between one-fourth and one-half. These
benefits begin at the fourth day, unless the fund decides to reduce or
abolish the waiting period, but in any case do not exceed 26 weeks.
The maternity benefit in normal cases is determined at six weeks, of
which two weeks must fall before confinement. The minimum amount
is one-half of the wages, which may be increased up to the full amount.
The funeral benefit is put at from 20 to 30 times the daily wage.
In addition to the indicated optional extension of benefits the funds
may also establish medical aid for sickness, childbirth, or death of the
members of the family, provided the total cost of these optional benefits
does not exceed one-third of the entire budget of the fund.
The cost of the sickness insurance is borne jointly by employers and
employees, in the proportion of 40 per cent and 60 per cent. The
deductions from the wages of the employees for this purpose must not
186 REPORT OF SOCIAL INSURANCE COMMISSION.
be less than 1 per cent and may not exceed 2 per cent in case of funds
with a membership of 400 or over, or 3 per cent if the membership is
below 400. In computing this deduction as well as the three money
bensfits, earnings of over 1,500 rubles ($772.50 at the standard rate of
exchange of $0,515) are not taken into consideration, nor can the basis
for computing the benefits exceed a daily wage of 5 rubles ($2.58).
For the governmental supervision of these funds and their activity
committees are organized in each province and one general council for
the empire. No statistical data concerning the operation of this com-
parativelj' recent system are at present available.
REPORT OF SOCIAL INSURANCE COMMISSION. 187
SECTION VII.
ROUMANIA.
The tendency of countries which have been rather late in reaching a
policy of social insurance is to introduce all branches at once, as against
the slow and hesitating course of most legislation of 30 years ago.
This is illustrated in the case of Roumania, which by the act of January
25, 1912, established a compulsory system of insurance against sickness,
industrial accidents, old age and invalidity.
While largely influenced by German experience, the Roumanian
system of social insurance is constructed on somewhat different lines,
since most of the branches are practically administered in a direct
form of state insurance through the Central Office for Handicrafts,
minor credit institutions and workmen's insurance, though the sickness
insurance is administered through the guild organizations. Provision
is made for taking into the system benevolent societies of all kinds,
whether organized in connection with factories or other establishments,
districts or communities, provided their rules have been approved by
the Central Office. Even if these rules have been approved, the decision
to retain membership in them rests with the workingman himself. It
is unlawful for the employer to coerce him into it.
The Roumanian system includes all workers in manufacturing
industry, construction and mining. The beneiits provided foT under
the head of sickness insurance are : 1, medical aid and drugs ; 2, a sick
benetit, and, 3, funeral expenses. The sick benefit is given after the
first three days of illness and not beyond 16 weeks. A distinctive
feature of the Roumanian act is the adjustment of the money benefit to
the family conditions of the sick workman. The person with a
dependent family receives 50 per cent of his wage, and the person
without dependents only 35 per cent. In cases where hospital treat-
ment is given the benefit is 25 per cent of the wages, and 10 per cent
when there are no dependents. This right to money benefits begins
only after six weeks of insurance. Wage groups have been established
in the law, the mean wage in each group being assumed as the repre-
188
EEPORT OF SOCIAL INSURANCE COMMISSION.
sentative wage upon which both contributions and benefits are based.
The basis of division is shown in the following table :
Wage
group
Wage units
Average
wage
Funeral
benefit
Weekly con-
tributions
I.
1 lei - —
.50 lei
1.50 lei
2.50 lei
3.50 lei
4.50 lei
60
70
80
90
100
.05 lei
II.
Over 1 to 2 lei
.20 lei
III.
IV.
Over 2 to 3 lei
Over 3 to 4 lei - .
.30 lei
.45 lei
V.
Over 4 lei _ - -
.60 lei
XOTE.— One lei is equivalent to
).195.
A maternity benefit is included which provides for the insured
woman, in addition to medical attendance, six weeks sick benefit after
confinement, provided the woman had been insured for at least 2G
weeks. Furthermore this provision may be prolonged to three months
if the woman nurses the child. The provision of maternity aid to wives
of insured is optional with the guild and includes treatment by mid-
wife and physician only.
The actual rates of contributions are specifically determined in the
law. The proportion of the wages represented by the premium con-
tributions is : For the first group 0.83 per cent, for the second group
2.22 per cent, for the third group 2 per cent, for the fourth group 2.14
per cent, and for the fifth group 2.22 per cent. What particular
actuarial basis there is for these peculiar values it is impossible to
ascertain. The desire to relieve the lowest paid groups of part of the
cost is obvious for the cost of medical aid, which constitutes approxi-
mately one-half the cost of the sickness insurance, does not fluctuate
in accordance with wages, but represents a flat per capita charge.
Thus the upper wage groups are largely carrying the cost of insurance
for the lower wage groups. The guilds are permitted to increase the
benefits if after five years considerable surplus should have been
accumulated.
Contrary to the uniform practice of all other European acts, the
Roumanian law places the entire cost of insurance upon the wage-
workers. As in other countries, the employer is required to purchase
and place the stamps which serve as evidence of payments, but he is
permitted to deduct their entire cost from the wages of his employees.
Data as to the results of the operation of this plan are unavailable,
but the government published an estimate indicating that 140,657
REPORT OF SOCIAL INSURANCE COMMISSION.
189
persons would come under it, with the probable distribution into five
wage groups.
Class
Persons Injured
Weekly
contributions
Total weekly
income
Annual ineomei
1 „...
10,542
32,001
29,351
38,418
30,345
.05 lei
.20 lei
.30 lei
.45 lei
.60 lei
527.10 lei
6,400.20 lei
8,805.30 lei
17,288.10 lei
18,207.00 lei
23,719.50 lei
2
3
4
5 _
288,008.00 lei
396,238.50 lei
777,964.50 lei
819,315.00 lei
Totals
140,657
51,227.70 lei
2,305,246.50 lei
^On an assumption ol 270 working days or 46 working weeks per annum.
Assuming that the mean group wage fairly accurately represents the
actual average wage, the average rate of contribution amounts to about
2.12 per cent.
The probable cost of the benefit was computed on a basis of six days
of sickness per annum, a cost of medical aid, bearing the same propor-
tion to the money benefits as in Germany, and similar assumptions.
The total cost thus computed amounted to 2,241,038 lei, or within 2.12
per cent of the total income as above estimated.
190 REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION VIII.
SERVIA.
Little can be learned from the experience of a small country with
as slight development of industrial activity as Servia. Only for the
purposes of obtaining a complete statement of European legislation on
the subject is the Servian act included.
The social insurance law of Servia was passed as a part of the general
industrial act in 1910. Only workmen employed by establishments
subject to the industrial act (which includes industry, mining, trans-
portation and trade) are covered by the compulsory sickness insurance.
Voluntary members may be admitted to the insurance if the insurance
associations so provide in their regulations. The administration of the
insurance is entrusted to local workmen's insurance associations, which
form together a national union of workmen's insurance associations,
both of which are self-governing organizations, with employers and
employees represented. These associations also administer insurance
of compensation.
As in the case of most other countries, other funds, such as miners'
funds or factory funds, may be admitted to operate under the law,
provided an understanding is reached with the national union to that
effect.
The benefits stipulated in the act include: (1) Medical attendance,
medicines and similar supplies, and hospital or convalescent care for the
employees and also for their families; (2) a daily sick benefit of not
less than one-half of the daily wages when the workman is compelled on
medical advice to remain in bed; (3) a funeral benefit.
The cost of this insurance is divided evenly between employer and
employee, while the state, under the law, obligates itself to make an
annual contribution of at least 100,000 dinars ($19,300) to the work-
men's insurance associations.
REPORT OF SOCIAL INSURANCE COMMISSION. 191
SECTION IX.
NORWAY.
The little kingdom of Norway, with its population one-fifth smaller
than that of the state of California, joined the list of countries witli
compulsory insurance systems in 1909, or 25 years later than Germany.
The question of a governmental attitude towards facilities for health
insurance open to wageworkers was under consideration from 1885,
when the first commission for the study of social insurance was
appointed, until 1909, when after the report of the third commission
the law establishing compulsory health insurance was passed. The
necessity of a definite social policy concerning sickness insurance was
agreed upon from the first, but the comparative merits of compulsory
insurance- and subsidized voluntary sickness insurance, regulated b,y
the government, were disputed. The compulsory principle won, in this,
as in many other countries of Europe.
In the general outlines this Norwegian act is not unlike the older acts.
Nevertheless there are some very substantial modifications.
The Norwegian act was the first to assert the principle that the com-
pulsory system should include all industrial activity without restriction
as to trade or occupation.
Again, a very distinct feature is the exemption of persons suffering
from chronic disease. It may be surmised that the purposes of this
exemption are to relieve the semi-invalid from discrimination in obtain-
ing employment, and also to relieve the insurance organization from
the burden of caring for the invalid. The wisdom of this exemption,
which leaves comparatively few individuals badly in need of medical
treatment out of the system, may be doubted.
In addition to the compulsory insurance, voluntary insurance is
available to persons not in the compulsory group, between 15 and 40,
if their income is not over 800 kronen, in the country, or 1,000 kronen
in towns, nor the property of the insured together with that of the wife
or husband exceed 7,000 kronen in the country, or 10,000 kronen in
town.
The standard type of insurance carrier is the District Sickness Fund,
one for each political district, or a combination of district funds are to
be established by the communal authorities, and are subject to the
central control of the state insurance institution, which has had for
some time the monopoly of compensation insurance for the entire
kingdom. These district funds on closer examination prove to be
fairly autonomous and independent mutual funds, not essentially
1!):2
REPORT OF SOCIAL INSURANCE COMMISSION.
different from the local funds of Germany or Austria, the distinctive
feature being a direct representative of the communal government in
the board.
Establishment funds and other mutual aid societies are admitted to
operate under the law if they furnish equivalent benefits and have a
membership of at least 200. The benefits are also of the standard
kinds, with a few minor modifications.
Norway has followed the precedent of Hungary in making medical
aid and even drugs and ordinary surgical supplies (but not such
appliances as glasses, etc.) to the members of the immediate family,
an organic part of the compulsory benefit scheme.
The Norwegian law provides a definite classification of wage groups
in which all eligible persons must be insured. The following table
illustrates the grouping:
Class
Annual wage
Daily wage
Average
daily wage
1
to 300 kronen'
Over 300 to 600 kronen
Over 600 to 900 kronen
Over 900 to 1,400 kronen
0.00 to 1.00 kronen 1.00 kronen
2
Over l.OO to 2.00 kronen
Over 2.00 to 3.00 kronen
Over 3.00 to 4.67 kronen
1.50 kronen
3
2.50 kronen
4
3.50 kronen
'One krone is equivalent to $0,268.
The designation of the last column is not quite accurate. What is
presented is not a true average, but an assumed standard group wage,
upon which both the benefits and dues are computed.
In its financial basis also the Norwegian act essentially differs from
most systems of continental Europe. The Norwegian act was the first
to introduce a definite money subsidy both from the state and com-
munal treasury into a compulsory system. The cost of insurance as in
most laws is measured in a percentage of wages. But the amount
decided upon is distributed as follows : 60 per cent is paid by the
insured, 10 per cent by the employer, 10 per cent by the commune, and
20 per cent by the state.
Statistics as to the application of the Norwegian compulsory sickness
insurance system were not available.
REPORT OF SOCIAL INSURANCE COMMISSION. 193
SECTION X.
NETHERLANDS.
Netherlands is the latest country to establish a compulsory sickness
insurance system for the wageworkers, by two acts of June 5, 1913.
Very little information therefore can be given except a brief analysis
of the law.
The situation before the establishment of the compulsory system did
not differ very much from that found in other European countries
during the similar stage. The concern of the government in the situa-
tion did not extend beyond some mild regulations and occasional
commissions for the study of the subject and gathering of statistics.
There were various types of sickness insurance funds from one national
in its scope, with a membership of over 100,000, down to small local
clubs. About one-half of these funds gave only money benefits, and
one-sixth both forms of service together. The societies for medical
benefits frequently were organizations for profit established by the local
physician or druggist.
A movement for adequate provision for all workers began in Holland
nearly fifteen years ago. As early as 1904 the government introduced
the first bill for a compulsory system more or less on the lines of the
German system, but for years there was comparatively little interest in
the proposal. The rapid extension of the compulsory principle of
sickness insurance in Europe since 1909 (five countries establishing
such systems within the three years 1909-1912) finally proved a stim-
ulus to action in Holland.
Some of the bills introduced and discussed during these years of
preparation followed very closely on standard lines of European legis-
lation. But the system actually adopted differs in several important
features from these standards. The most important differences are :
1. The elimination of medical aid and funeral aid.
2. A method of organization perhaps more closely approaching
state insurance than any other system.
Only experience will show how far the Dutch system was improved or
handicapped by these differences. The reason for eliminating medical
aid probably was the existence of the mutual aid societies already pro-
viding this form of insurance and the rather liberal grant for medical
aid by municipalities to its indigent citizens. And yet it is doubtful
whether the facilities already available are sufficient, and the absence of
13—27626
1!J4 EEPOET OP SOCIAL IXSURANCE COMMISSION.
medical aid from the sickness insurance system forced into the law some
very rigid provisions.
Like most recent laws, the Dutch act does not undertake to enumerate
the groups of wageworkers included. Rather is the act made applicable
to all employees with comparatively few specified exceptions. These
are mainly:
(a) Persons whose contract of service does not extend over four
days (casual laborers).
(6) Those whose remuneration consists solely in instruction.
(c) Those whose daily wages exceed a certain amount, to be
fixed in each district (the maximum must not be less than 2.50
florins nor more than 5 florins per day (or $1 to $2).
(d) Those who pay either a property tax or an income tax, or
M'hose wives pay either tax.
(e) Members of crews of sea-going ships.
(/) Public employees.
(g) Persons in active military service, and a few groups of minor
importance.
The option of voluntary insurance is open to most of these groups
(except the groups excluded because of property or income restrictions)
or to those who had been subject to compulsory insiirance previously.
Those so insured pa.\' their own premiums.
The money benefit equals 70 per cent of the average daily wage.
Thus the act of Netherlands would have established the highest scale of
sickness benefits under compulsory laws if it had not been for the
absence of any provision for medical aid. For those wageworkers,
however, who receive gratuitous medical aid from the municipalities,
and those who carry medical aid insurance in some voluntary fund, a
scale of benefits is established which is higher than under any other
European law. The benefit begins on the third day of disability and
is limited to 26 weeks. Benefits equal to full wages in ease of mis-
carriage are granted. This forms a rather striking contrast to the
intense discussions in Great Britain whether pregnancy should be con-
sidered a sickness at all.
From these general standards local variations in benefits are, how-
ever, permitted, thus leaving the value of the high legal level of benefits
somewhat doubtful. The sick benefits may be raised from 50 per cent
to 90 per cent of the wages, the waiting period may be reduced,
abolished altogether, or prolonged to five days, and the duration of
benefits may be extended up to one year. AU these modifications, even
if applicable to separate districts only, in harmony with the general
system of state insvirance, must be- ordered by the government.
While average wages were referred to above, the Dutch act, like
most other European acts, aims to avoid the complications arising out of
the effort to determine the average wages of each individual insured by
REPORT OP SOCIAL INSURANCE COMMISSION. 195
establishing a system of wage groups -with an assured average wage for
each group.
The cost of the insurance is divided equally between the employer
and insured, the employer paying the entire amount, but is permitted
to deduct the employee's share from his wages. In this the general
practice of European systems is followed, but a distinct departure is
the provision by which in the beginning at least the contributions for
each wage group must be uniform, irrespective of hazards, and only
after statistical evidence has been accumulated of differences of sickness
rates in various trades, may differences in rate of contribution be estab-
lished. The general rate may be increased for such reason by not more
than one-half, either for trades or for separate establishments. It is
noteworthy that in the latter case the employer is required to pay the
additional contribution. Such variations in either direction must be
ordered by the government even though they are to apply to individual
funds only. The actual rates of contribution are to be established by
the government for each district, and the law required that they be
revised at least once every five years. The government again may
enforce the increase of contributions or the reduction of benefits (pre-
sumably within the limits established by the law) if the income within
any district is insufficient. Perhaps the most important feature is that
by a formal declaration the state is liable for the payment of the sick-
ness benefits.
In the district form of organization of the Dutch, special institutions
are established within administrative districts, determined by govern-
mental order, which have a population of not under 25,000. These
institutions are known as labor councils, though their activity is limited
to sickness insurance only. It is intended that through them other
branches of social insurance shall be administered when established,
and their authority in the law is defined as extended over workmen's
insurance in general. These labor councils consist of an equal number
of representatives of employers and employees, and a president
appointed by the government. The employers elect their representa-
tives by a graduated vote according to the number of persons employed
(1 vote for 20 employees or less, 1 for the 21 to 100 workers, and 1
additional vote for each 100 persons employed) . The insured employees
over 25 years old vote. For larger areas consisting of a certain number
of labor councils, insurance councils are established, with five paid
members appointed by the government, and an equal number of repre-
sentatives of employers and employees elected by the labor councils.
The supervision of the central government over the local councils and
their funds is very complete. In addition to these funds, practically
constituting a system of state insurance, special funds may be recog-
196 REPORT OF SOCIAL INSURANCE COMMISSION.
nized subject to a requirement of democratic administration and
freedom from profits, and under strict control of the labor councils.
Medical aid insurance on a voluntary basis may be fostered by the
labor councils through organization of better "sick funds" as a part of
the activity with respect to the prevention of sickness, which by the
act is made a part of the activity of the labor councils and insurance
councils.
REPORT OF SOCIAL INSURANCE COMMISSION. 197
PART II-VOLUNTARY SUBSIDIZED SYSTEMS.
SECTION I.
DENMAEK.
•
The system of sickness insurance in Denmark is perhaps the most
important and extensive of the subsidized voluntary sickness insurance
systems in Europe. Differing from the German and most European
systems, it depends upon the indirect method of substantial subsidies
from the state treasury to achieve the same results which elsewhere have
been achieved through the direct method of compulsion.
The system of governmental subsidies originated with the act of
April 12, 1892, but the subject of sickness insurance had been discussed
for 30 years. Mutual insurance against sickness originated with giiilds.
Their activity was not uniformly successful. Kepeatedly in 1861, 1866,
1876 and in 1885 governmental commissions were instituted to study
the situation and suggest legislation for the control and strengthening
of the sick benefit societies. The last investigation showed the existence
of some 1,000 societies with a combined membership not exceeding eight
per cent of the population. Less than one-third of the societies fur-
nished both money benefits and medical aid, the rest furnishing either
one or the other. The amount of the benefit was usually very meager,
falling in the rural districts as low as one-quarter krone (less than
7 cents) a day. As a result of this investigation a bill was intro-
duced for compulsory sickness insurance in accordance with German
standards.
After a prolonged discussion, the compulsory principle was rejected
and the principle of state subsidies, combined with regulation, was
substituted in the act of 1892. This legislation remained practically
unchanged for nearly 25 years and Denmark therefore offers, perhaps,
the best material for the appraisal of the efficiency of this method.
The law offers certain advantages to those benefit societies which are
willing to register under the law as ' ' recognized societies ' ' and subject
themselves to the government control. Registration began January 1,
1893, and while a large number registered at once, a great many others,
and some of the strongest, did not register for many years. The total
number registered in 1893 was 457 ; by the end of 1895, 629 ; by 1900,
1,020; by 1905, 1,391, and in 1914, according to the latest statistics
available, 1,547.
Recognition under the law is given only to societies whose membership
198 REPORT OP SOCIAL INSURANCE COMMISSION.
consists of workmen, artisans, employees receiving small salaries and
other persons in similar economic condition. Only for the first six
months after the law went into effect were societies admitted whose
membership consisted partly of persons of higher economic groups,
with the proviso that no subsidies were to be paid on account of such
persons.
Under the influence of the law of 1892 the membership of sickness
benefit societies increased materially as the following figures show :
Number of
societies
1893 ! 457
1895 ' 628
1900 ' 1,104
1905 I 1,379
1910 I 1,507
1914 I 1,547
116,763
154,882
302,198
474,029
666,679
843,244
With a population of 2,757,000 the insured at present constitute 30
jjer cent. It is noteworthy that women constitute, as they have for
many years, the majority of the insured, some 442,000 against 401,000
male members. It is quite customary for both husband and wife to
carry separate insurance in the fund.
In order to entitle a society to recognition and subsidy under the
act, certain minimum benefits must be given, though further extensions
are permitted within the limits prescribed by the law. In this respect
the methods of the compulsory acts are generally followed. These
required benefits are:
1. Free medical aid and hospital care for members as well as
their children under 15 living with parent.
2. A "sick benefit" which may be determined in proportion to
the sick person's average wage, or on an assumed average wage for
the entire membership, but in any case must not exceed two-thirds
of the earnings of the sick person nor fall below 40 ore (9^ cents)
per day. No benefit is paid for illness lasting less than three days.
No benefits are required for normal confinement or pregnancy,
though they may be included by the society voluntarily. The
payment of funeral benefits is not allowed. The furnishing of
drugs and supplies is not obligatory. The waiting period may be
increased from three to seven days, the benefits to female members
or minors may be decreased, diseases resulting from drunkenness,
brawls, syphilis and the like may be excluded, but optional benefits
seldom rise above the minimum requirements.
Over 70 per cent of all societies do not grant more than 16 cents per
day to their male members, and 87.6 per cent of the societies do not
exceed this for women.
Nearly 60 per cent of them have preserved the minimum time limit
REPORT OP SOCIAL INSURANCE COMMISSION.
199
of 13 weeks, about 23 per cent have gone over 13 weeks, but not as far
as 26 weeks, and only 17 per cent have established a benefit period of 26
weeks. Only three funds have gone beyond this.
The cost of drugs and surgical supplies is not obligatory upon the
benefit societies. As many as 57 per cent of all societies do not furnish
any drugs at all, and only 18 per cent pay for the entire cost of ordinary
medicine.
The extent of the operations of the Danish system is shown by the
following figures :
Tear
Money
benefits
Physician
Drugs
Hospital
Adminis-
tration
Total
1893 ._
$117,736
157,047
314,946
480,240
621,763
782,818
$71,365
118,831
265,361
469,811
736,737
999,732
$32,739
44,278
94,894
155,115
212,452
275,432
$13,676
21,198
49,732
122,779
209,279
333,903
$22,663
26,339
58,799
93,601
157,882
212,515
$258,079
367,693
783,732
1,321,546
1,938,113
2,604,400
1895 _.
1900 ....
1905
1910 - .
1914 ..
The cost of the entire system has increased nearly sixfold, but the
membership of the recognized societies has increased almost fivefold
and the average cost has not increased materially, the largest increase
being in the cost of hospital and medical service, indicating a substantial
extension of these benefits.
Per Capita Cost.
Year
Money
benefits
Hospital
Medicine
Physician
Admin-
istration
Total
Per cent
admin-
istration ■
cost
1893 - —
$1 01
1 01
1 04
1 02
93
93
$0 12
14
18
27
31
39
$0 28
28
31
34
32
33
$0 62
77
88
99
111
1 18
$0 19
17
19
20
24
25
$2 22
2 37
260
2 82
2 91
3 08
86
1895
7.3
1900 ..
7.3
1905
7.1
1910 ..
8.2
1914
S.l
Next to the absence of compulsory principle the most distinctive
feature of the Danish system is the very substantial demand it makes
upon the state treasury. The original grant, as stipulated in the act of
1892, was to equal 500,000 kroner, and much larger amounts have been
given since then. This subsidy is apportioned among the sick benefit
societies in two different ways ; one-half is distributed according to the
membership and one-half according to the amount of dues contributed
by members; in this Avay the levying of higher dues is encouraged.
The limitations placed by the law on the first form of subsidy shall not
exceed 2 kroner per member, and the second, one-fifth of the members '
contributions. Together these two methods of state subsidy constitute
a substantial part of the budget of the sick insurance societies.
200
REPOET OF SOCIAL INSURANCE COMMISSION.
Income of Sick Benefit Societies.
Tear
Merattprship
dues
State grant
Communal
grant
All others
Total
1896
$969,083
1,957,967
876,899
1,226,910
1,745,020
$410,641
833,745
382,064
634,407
741,017
$34,707
64,290
23,121
36,866
64,952
$114,078
240,747
64,498
96,066
139,631
$1,528,509
igco
3,096,739
1905
1,346,582
1910 —
1,894,239
1914 .. -
2,680,620
In addition to the state grant, several communal governments vote
small subsidies to the sick insurance societies within their districts.
The state subsidy is evidently substantial. In 1895 it represented 42.3
per cent of the membership dues and 27.8 per cent of the total income;
in 1914, 43.1 per cent and 28 per cent. Taking the state grant and the
communal subsidies together, the assistance granted to the sick benefit
societies represents about 50 per cent of the membership contribution,
or about equals the share of the burden placed by several compulsory
acts upon the employers.
In addition to these direct financial subsidies there are also very
important indirect ones. The law makes it mandatory for the com-
munes to admit members of the recognized sick benefit societies to
hospitals at half the regular rates, and in rural districts to provide free
transportation for the physician or midwife to the home of the sick
member who does not possess a horse and carriage.
This contribution from the public purse largely explained the rapid
•increase of the membership. The experience of Denmark with subsi-
dized sickness insurance, especially as compared with that of other
countries with voluntary subsidized systems, seems to indicate that to
produce the desirable results the subsidy offered must be very sub-
stantial.
In matter of administration considerable freedom is allowed to the
fund in adopting by-laws and regulating the composition of elective
bodies and officers. A government office exercises central supervision.
REPORT OF SOCIAL INSURANCE COMMISSION. 201
SECTION II.
SWITZERLAND.
In the field of social insurance Switzerland has the unique distinction
of being the only country in which a system of social insurance was
rejected by a popular referendum after having passed the legislative
chamber successfully. Though this occurred in 1900, it served for
many years as an argument against social insurance legislation.
The referendum applied to the act of October 2, 1899, by which
systems of compulsory sickness insurance and also accident insurance
(compensation) were to be inaugurated. Though dissatisfaction was
directed mainly against certain features of the compulsory sickness
insurance the compensation provisions went down with it, and for over
a decade after that Switzerland remained the only important country
in Europe without a compensation act. The situation was finally
remedied by the act of June 13, 1911, which established a compulsory
accident insurance system and also a heavily subsidized voluntary
sickness insurance system.
Efforts to introduce comprehensive movements in insurance in
Switzerland date back for over 30 years. As early as 1881, when Ger-
man insurance legislation was only in the making, and a new employers '
liability act was under discussion in the federal legislation, the com-
mission in charge of the act drew attention to the German plans and
stated its conviction that though similar proposals were premature in
Switzerland, it was inevitable for Switzerland to follow, as soon as the
success of the proposed German systems was established.
In 1885 the council passed a resolution to inquire into the entire
subject of workingmen's insurance. After several careful studies
were made by various groups, a constitutional amendment authorizing
the federal government to enact compulsory insurance acts passed the
council early in 1890, and was approved at a referendum on October 26,
1890, by 283,228 votes against 92,000.
Nearly a decade passed before the plans shaped themselves into a bill
known as "Lex Forrer" (Ferrer's Act), which passed the national
council October 2, 1899. The act established systems of compulsory
insurance both against sickness and accident. The sickness insurance
scheme which called forth most opposition was very comprehensive.
It included all persons over 14 years working for wages, unless their
employment was restricted to less than one week. Even day laborers
and home workers could be subjected to compulsory insurance by legis-
lation of the canton. The upper wage limit beyond which compulsion
202 REPORT OF SOCIAL INSURANCE COMMISSION.
did not apply was placed very high, at 5,000 francs. Insurance was
to be effected through district sickness insurance funds, though other
funds and mutual societies could come in and become an integral part
of the system.
The benefits were to consist of medical aid, a sick benefit of 60 per
cent of wages, and a small funeral benefit. The contributions were to
be divided equally between employer and employees, while the state
treasury was to add at least 1 centime (0.19 cent) for each day of
membership.
The restriction of the system to wageworkers was decreed as class
legislation, and the creation of public district funds was objected to as
a factor detrimental to the voluntary funds and societies, which had
been growing Jn favor with the people. A petition signed by 117,461
citizens demanded a referendum, and the act was rejected by 341,914
votes against 148,035.
But the movement for social insurance in Switzerland was not
destroyed by this change in popular opinion. After a few years of
investigation a bill was again introduced in 1906. This bill accepted
the popular verdict in regard to compulsory sickness insurance, and
proposed an insurance system that was compulsory for industrial acci-
dents, but voluntary for sickness.
Notwithstanding this concession when the act finally passed the
council on June 13, 1911, by a substantial majority of 136 to 12, demand
for a referendum was again made by 76,000 citizens. It was held on
February 4, 1912, but this time the act was sustained by 287,565 votes
against 241,416.
The entire controversy thus appears as a victory of the voluntary
principle against the compulsory one. Nevertheless the view is subject
to some qualifications. For the act frankly aims to prepare the way
for compulsory legislation in the near future. Not only cantons, but
even separate communes, under the law are authorized to introduce
compulsory sickness insurance, either generally or for certain groups
of the population ; and furthermore, in every such case the cantons or
communes so doing were to be granted special subsidies by the Swiss
Confederation, up to one-third of the premium.
The voluntary system as established by the act of 1911 is shaped on
the same lines as the other subsidized voluntary systems, notably that
of Denmark, in that it offers assistance to "recognized" funds, recogni-
tion being open to existing mutual aid organizations dependent upon
certain conditions. These funds must operate on the principle of
mutuality and not for profit; they must have their headquarters in
Switzerland, and not treat Swiss citizens less favorably than other
members. (It is significant that the subsidy is not denied to members
of other nationalities residing in the country.) Membership must not
EEPOET OF SOCIAL INSURANCE COMMISSION. 203
depend upon affiliation with any religious faith or a political party,
and women must be admitted on equal terms with men, except in the
case of trade union or establishment funds where only men are
employed.
The recognized funds must raise their standard of service to come ujj
to the minimum requirements of the law. These include either medical
aid and drugs from the first day of sickness, or a money benefit of at
least 1 franc per day from the third day. In either ease benefits must
be offered for at least 26 weeks.
About one-half of the voluntary funds granted only money benefits,
and a few (about 4 per cent) were organized for the purpose of medical
aid only, and there was an evident desire to ad.just the law not to
exclude any of the types of voluntary funds. The wisdom of this
decision as against the Danish system of requiring both medical aid
and sick benefits from recognized funds is subject to serious doubts.
Maternity care is covered by the provision requiring the recognized
funds to treat childbirth as sickness, both in the administration of
medical aid and the money benefit. The minimum sick benefit in
maternity cases is six weeks, and an additional four weeks must be
granted if the mother nurses the child. Funds, recognized after com-
pliance with the requirements, receive the following subsidies :
1. For every insured child up to 14, an annual subsidy of 3.50
francs (66.5 cents).
2. If the fund grants either medical aid or sickness benefit, 3.50
francs (66.5 cents) for each adult male person, and 4 francs (77.2
cents) for each female person insured.
3. If the fund grants both medical aid and sickness benefit, 5
francs per member of either sex.
4. If the fund increases the duration of the benefit from 180
days to 360 days, and additional 0.50 franc (9.6 cents).
5. For every confinement a payment of 20 francs ($3.86) to
the fund.
6. For every nursing benefit paid, a payment to the fund of
20 francs ($3.86).
7. In thinly-populated, mountainous districts where transporta-
tion is difficult, a special mountain subsidy up to 7 francs.
The Swiss sickness insurance act went into effect on January 1, 1914,
and since no statistics are as yet available, it is impossible to estimate
the influence of these subsidies in stimulating voluntary sickness
insurance in Switzerland. These subsidies, however, appear sub-
stantial and should have an effect not unlike that in Denmark. The
material with which this voluntary subsidized system is to operate is
substantial. According to an investigation of mutual benefit societies
made over 10 years ago, of 2,006 organizations reporting for 1903,
1,812 were giving sick benefits ; of these 815, or 75 per cent, were giving
204 REPORT OF SOCIAL INSURANCE COMMISSION.
money benefits only ; 74, or 4.1 per cent, medical aid only ; and 923, or
one-half (50.9 per cent), both medical aid and money benefits. The
total membership amounted to 422,209 in a population of less than
3,500,000, or some 14 per cent.
REPORT OF SOCIAL INSURANCE COMMISSION.
205
SECTION III.
SWEDEN.
Though Sweden has not as yet adopted the compulsory principle in
the field of sickness insurance, the law of 1913 establishing universal
compulsory old age insurance, shaped very much on the German pat-
tern, indicates that the compulsory principle as such has been recognized
in the field of social insurance. Voluntary sickness insurance through
such organizations as guilds, factory funds, or ordinary mutual aid
societies has developed in Sweden since the middle of the nineteentli
century. As early as 1884, very soon after the German system was
established, a workmen's insurance committee was organized by the
government to investigate.
The committee did not recommend compulsory insurance, but instead
urged regulation and subsidies. These ideas found final expression in
the act of October 30, 1891, concerning registered societies. Under this
act societies for sickness relief may obtain official registration if they
comply with the requirements of having at least 25 members, not being
conducted for profit, and subjecting themselves to audit, were given
a subsidy.
The effect of this subsidy was not at all startling, and in 1898 the
government increased the rate of subsidy materially. According to
the act of May 27, 1898, and subsequent amendments the contributions
per member are now as follows:
Up to 100 members 1.50 kronen (40.2 cents)
Over 100 members to 30O members 1.00 kronen (26.8 cents)
Over 300 members to 2,600 members .50 kronen (13.4 cents)
Over 2,600 members .25 kronen ( 6.7 cents)
The somewhat more substantial subsidies of 1898 prove a better
stimulus to registration of the societies and organization of new ones,
as the following data indicate:
Registered funds
Hembershlp
1892
1895
1897
1898
1900
1905
1907
24,735
77,573
149,195
184,119
260,163
437,288
543*919
L'OU
REPORT OP SOCIAL INSURANCE COMMISSION.
The membership is concentrated in cities. In 1907 it constituted
some 21 per cent of the population and in rural districts only 5 per
cent, the percentage for the entire country being only 10. This, how-
ever, was slightly increased by duplications, and eliminating these the
net percentage is only 8.5.
The nature of the services rendered is far from satisfactory. A
general classification of the disbursements is as follows:
Sick beneflt
Year and medical
; aid
Funeral aid
Adminis-
tration
Other
Total
Per cent
of admin-
istration
expense
1896 _
158,771kr.
21,874kr.
83,692kr.
170,355kr.
211,187kr.
16,989kr.
57,136kr.
127,660kr.
162,430kr.
14,474kr.
42,092kr.
63,242kr.
71,968kr.
212,108kr.
637,184kr.
l,208,731kr. ,
l,673,996kr.
8.0
1900
]905
454,264kr.
760,975kr.
l,068,411kr.
9.0
10.6
1907 ._
10.7
The very substantial proportion of funeral benefits to the total
expense is largely explained by the low level of sick benefits. Only a
small proportion of the funds grant medical aid — less than 4 per cent
of the total expenditures going for payment of physicians and druggists.
The amount of sick benefits is small. Out of 1,885 funds, over 800
gave benefits of less than 7 kronen per week (or 1 kronen [26.8 centsl
per day) ; 575 of these 1,885 funds granted benefits for 10. weeks or
less; 734 funds from 11 to 13 weeks, and 462 funds from 13 to 26
weeks; only 28 funds exceeded 26 weeks.
The much more limited success of the subsidized voluntary system in
Sweden as compared with Denmark is at least partly to be explained
by the much lower subsidy, which amounted from 5 per cent to 7
per cent, as against 30 per cent or more in Denmark.
REPORT OP SOCIAL INSURANCE COMMISSION. 207
SECTION IV.
PRANCE.
The sickness insurance system of Prance is just on the border-line
between social and ordinary mutual insurance. Mutual benefit societies
had appeared after the revolution at the end of the eighteenth century,
and were first formally recognized by the act of 1852. Since then they
have grown rather rapidly, so that there were over 4,500,000 members
in 1910. They are regulated at present largely by the act of April J,
1898, and by numerous subsequent amendments.
The claim of these societies for a place among social insurance institu-
tions rests upon the fact that a state subsidy is given. There is no
compulsion, nor any obligation upon employers to contribute, though
many employers voluntarily do so.
The state gives small subsidies to mutual benefit societies but only
one-half of the activity of these mutual aid societies is in the field of
sickness insurance. Out of an expenditure of over $9,170,000 in 1905,
only $4,557^000 went for sickness benefits. The other lines of activity
are funeral expenses, aid to widows, orphans, invalids, old persons,
and formal pensioners.
Out of 18,176 societies in 1905, 9,532 societies provided medical aid,
8,637 societies furnished drugs also, and 8,738 gave sick benefits as well.
It is impossible to tell exactly how many members of the mutual aid
societies are insured against sickness, but the number is, approximately,
5 per cent of the population of France. Furthermore, of those getting
sickness benefits in some form or other, about 30 per cent receive merely
medical aid.
The formal claim of the French system for a place in the list of social
health insurance systems is established, but side by side with the Danish
and Swiss voluntary subsidized systems, little of value can be learned
from French experience except that the effect of a slight subsidy is
largely dissipated.
CHAPTER VI.
SOCIAL RESULTS OF SOCIAL
INSURANCE.
14^27626
REPORT OP SOCIAL INSURANCE COMMISSION. 211
SOCIAL RESULTS OF SOCIAL INSURANCE.
What has been the efEect of this extensive and constantly growing
policy of social insurance upon the well-being of the working masses
as well as upon the whole population of the various European countries 1
A policy of social welfare is to be judged by its actual effects. Unfor-
tunately the present political situation in Europe made it impossible
for the commission to investigate these results by personal study and
observation. In general it may be said that tlie vast preponderance of
evidence is in favor of the social insurance institutions and the results
of their activity. The rapid spread of the social insurance method in
dealing with the problems of destitution and pauperism is an indication
of its success.
The literature emanating from foreign observers (as for instance
American observers of German conditions, since most American writers
have largely limited their study of social insurance to Germany, as the
best exponent of both the theory and practice) is most enthusiastic,
while in the indigenous literature of the countries affected some critical
notes may be observed.
This difference is but natural. The general principles of social
insurance are no longer discussed, and the attention of students is
directed mainly to the details of application and administration.
It would be a very large undertaking to compile combined statistics
of the application of social insurance throughout Europe, but as a
rough approximation there are at least 50,000,000 workmen enjoying
some social insurance protection in Europe, who with their dependents
constitute probably a population of one hundred millions to one hundred
fifty millions or about one-half of Europe's population. As far as
accident compensation is concerned, the number is probably still larger.
The annual flow of relief or compensation (^vhichever term be preferred)
in form of money and medical and other services probably amounts to
many hundreds of millions of dollars; only a portion (a good deal
less than one-half) of this cost is obtained by compulsory contributions
from the employees themselves. A volume of medical services, so large
as to be difficult to measure, is rendered, a goodly proportion of which
would not have been rendered without insurance.
It is sufficient to quote here the rather important illustration 'of the
work performed under the social insurance method. In the field of
health insurance, the Leipzig institution is justly famous for its size
as well as efficiency. Leipzig supplies a valuable picture of what can
be accomplished under compulsory health insurance. The city of
212 KEPORT OF SOCIAL INSURANCE COMMISSION.
Leipzig, before the war, had a population of 600,000 to 700,000. The
organization of the health insurance in this city differs from that of
many other cities in that it possesses one general local sick insurance
fund. This general fund for the cities of Leipzig and 42 surrounding
suburbs was formed in 1887 by consolidation of various trade funds
existing by virtue of the German sickness insurance law (see page 152
of this report). At the time of this consolidation the funds had a
membership of 20,833 members. In 1913, the last year for which the
statistical report is available, the consolidated fund had a membership
of 207,987 persons, practically the entire working population of the city.
Of the 207,987 members, this being the average for the year, 189,921
were insured in virtue of the compulsory law, and 18,066 were voluntary
members.
The fund grants the following benefits, many of which are over and
above the minimum requirements of the law :
(1) Medical treatment, from the beginning of sickness, drugs,
eyeglasses, trusses and other appliances up to the value of 75 marks.
(2) In case of disability due to sickness, a compensation equal
to 55 per cent of the wages beginning with the second day of sick-
ness and up to 34 weeks.
(3) Instead of the above two benefits, free treatment and care in
hospital or home for convalescents.
(4) In such cases, two-thirds of the full sick benefit to the
dependents of a married member, or one-fourth of the full sick
benefit to the unmarried member.
(5) A pregnancy benefit equal to the sick benefit during the last
two weeks before childbirth.
(6) A maternity benefit equal to the sick benefit to the working
mother for six weeks.
(7) A funeral benefit of 100 marks in case of death of member.
(8) Free medical treatment and drugs (but not appliances) to
the wives, children, parents and parents-in-law dependent upon the
member, up to 13 weeks.
(9) In case of death of wife or child, a funeral benefit of 40
marlcs (respectively 20 marks).
(10) Care in special institutions.
The following imposing figures indicate the extent of the activity of
this institution :
In the year 1913 it paid money compensation for 90,659 cases of sick-
ness of its members, accompanied with disability and loss of earnings,
compensating for 2,359,471 days of loss of time.
The amount of medical aid granted is measured by equally large
figures. The insured members themselves received the benefit of 1,084,-
940 consultations in the physicians' offices, 138,612 physicians' visits at
the patients' homes, and 100,542 major and minor operations, or alto-
gether 1,334,094 units of medical service.
In addition, the dependents of the insured members received 492,741
REPORT OF SOCIAL INSURANCE COMMISSION. 213
consultations, 285,569 home visits and 52,670 operations, or 830,980
units, making a grand total of 2,165,074 units of medical aid.
Hospital treatment was granted by the fund to the members onl\-.
In one year, 10,097 cases were sent to the hospitals with 295,564 hos-
pital days.
Maternity benefits, including medical aid, were given to 3,916 women.
Funeral benefits were paid for the deaths of 1,550 members, 498 wives of
members, and 2,432 children; 2,588 patients were treated in summer
resorts and medicinal baths, and 2,421 in homes for convalescents ; 41:^
persons were treated in a special institution for nervous diseases;
26,342 medicinal baths and 5,605 massage treatments were administered.
These are only the most important of the forms of aid given, all of
it to persons of very modest wage and salary income and without a
single appeal to charity, at the total cost of $2,286,885, biit with due
consideration of differences in costs and standards, probably equivalent
to a $5,000,000 budget in a California community. All this work was
done at the expense of 8 per cent for administration.
It is impossible to contemplate these figures without recognizing that
the activity of this institution could not help being productive of great
results for the community of Leipzig in relieving many eases of poten-
tial destitution, in alleviating suffering and conserving the health of the
community.
Critics of the German system have pointed out that the Leipzig
figures show an increase in disability due to sickness from 8.6 per mem-
ber per annum in 1889-1893 to 10.5 in 1909-1913. But this is largely
due to the increase in the duration of benefits granted by the fund and
better care taken of its members. As against this the mortality has
decreased within the same 20 years from 8.98 per 1,000 in 1889-1893, to
7.66 in 1909-1913, a decrease of some 1.5 per cent in 20 years.
Opinions of observers corroborate the impression which these illustra-
tive figures convey. During a hearing before the Committee on Labor
of the United States House of Representatives on April 6, 1916, the
well-known actuary, Mr. M. M. Dawson, testified as follows :
"I wish to premise what I say by two statements, which I think
will be of service to the committee in that respect. Both of these
statements are from Dr. George Zacher, the greatest authority upon
the subject of social insurance in the world. * * * One of them is
that from the actual statistics collected by the government of
Germany there was an increase in the average longevity of the
German males, the men of Germany, from the year 1870 to the
year 1900, during which social insurance had been introduced and
made effective in Germany, equivalent to 12 years added to the
life of every man in Germany.
' ' The reputation of Germany in regard to mortality has changed
from that of one of the worst in Europe during that period, and
214 REPORT OF SOCIAL INSURANCE COMMISSION.
has been improving steadily up to the present time, at least up
to the time that the war commenced, from that position to one of
the very best. * * *
"The other statement made was this: That the experience of
the government in connection with this investigation was that not
only the health, but also the height, the weight, physical strength,
and ability of those who were called into the service of the German
army had been one of steady improvement, showing a very marked
difference lietween 1870 and 1900, and also, even between 1900 and
1910.
"Those are two facts which might be contrasted with the con-
ditions which exist in other countries. * * * During that same
period there was not only no such improvement in Great Britain,
but in addition, there was a very considerable diminution in the
average condition of those who offered themselves for service in
the British army — so marked a loss that public attention was
repeatedly called to it.
^ ^ ^ ^ "Jp «■ "ST
"There is a third consideration that I believe should be brought
especially to your attention. Dr. Frankel and I found, that the
remarkable improvement in the efficiency of the people in connec-
tion with the industries of these countries, an increase in effi-
ciency, which, as you know, has attracted world-wide attention,
which changed the reputation of German workmen from that of a
rather thorough but exceeding slow and plodding type of workman,
which was their reputation when I was a boy, to that of easily the
most efficient workmen of all Europe, and made the Austrians, in
spite of the fact that they were so badly broken apart in regard
to race conditions, only second to the Germans in that regard — that
this increase in efficiency, while imdoubtedly partly due to the
introduction of special schools in Germany and Austria, meaning
vocational education, and also partly due to the introduction of
compulsory military service, and the creation thereby of a special
form of discipline, was chiefly due to social insurance.
"Now, this was not the testimony merely of those concerned,
like my friend. Dr. Zacher, in social insurance. It was their
testimony without a single exception; but yet more was it the
testimony of the leading employers of Germany, many of whom
were consulted by us, and many others consulted by others, and
what they stated about it made public; and it was the testimony
of the officers of the German government generally ; and moreover,
it was also the testimony of the leaders of the social democratic
party, which represents virtually all of the workmen of Germany,
and of all the representatives of the workmen of Germany in the
sickness insurance associations. All but universal is the expresr
sion of opinion among those who have been consulted upon the
subject, by, for instance, Lloyd George, representing the British
government; and you will find it made public in the documents
published giving the results of his interviews, and by those who
were consulted by Dr. Frankel and myself, and those who have
been consulted by innumerable others who have gone there from
our own country, as well as from other countries, that the prin-
cipal thing operating to make a wonderfully efficient, healthy,
REPORT OF SOCIAL INSURANCE COMMISSION. 215
long-lived people, Mas the thing which we are here to talk concern-
ing today. ' '
The above statements refer almost exclusively to Germany; but
in other countries similar results, though to a lesser degree, are begin-
ning to manifest themselves.
It is generally recognized that the British national health insurance
system is less efficient than the German. Medical service is furnished
scantily only, there are no hospital benefits, and there are many other
serious limitations. The well known English writers on labor prob-
lems, Sidney and Beatrice "Webb, criticized the health insurance pro-
posals severely at the time of their introduction, and have often been
quoted since then as opposed to the whole compulsory health insurance
method. It is recognized that the criticism of the Webbs was made
from an entirely different angle than that of the usual opposition,
namely, that the health insurance la-w did not go far enough in the
socialized care of the sick workmen. Early in March, 1914, a special
investigating committee, with Mr. Webb as chairman, published a
very careful report of the results of investigation of the British health
insurance system, then very new and still in the midst of the formative
stage. In the report many shortcomings of the system are disclosed
with complete frankness. The more significant is the following intro-
ductory statement:
"We can not pretend to measure the advantage, to individuals
or to the community, of the really gigantic provision thus made
for the periods of incapacity — however far short of completeness
or perfection the provision may be deemed."
And, again, in conclusion :
"We do not pretend in this survey, to give any vision of the
social results of the National Insurance Act — ^to gauge the relief
afforded in sickness and poverty, or the advance in health and
productive power that its truly gigantic operations can not fail
to be bringing about."
In the opinion of the Webbs, and many others quoted, the preventive
effect has already been indicated. The activity of the Leipzig sickness
insurance fund was quoted above to indicate the possibilities of pre-
ventive work which arise in connection with social insurance institutions.
The great importance of this work of prevention is well stated in the
following words of Mr. H. W. Dawson in the preface to his study of
' ' Social Insurance in Germany ' ' :
"No one who has followed the development of the German social
insurance systems and who knows the immense educative influence
which they have exerted upon the working classes can doubt or
wonder that it is the preventive work of the insurance organiza-
tions — as applied alike to disease and accident — which most appeals
216 REPORT OP SOCIAL INSURANCE COMMISSION.
to the imagination, sympathy, and confidence of those in whose
interest these laws have been passed. For, after all, in Germany, as
here and everywhere, what the self-reliant workman values more
highly than distress benefits is a fair and full use of his faculties.
What he wants is not sickness pay, but a healthy life ; not accident
compensation, but sound limbs and unimpaired energies; not
infirmity pensions, but the opportunity and the power to follow as
long as possible the employment of his choice. Hence in their
aggressive campaign against disease and their constant endeavor to
lessen the risks to limb and life in industrial occupations the insur-
ance authorities have from the first been conscious of the good will
of the working classes, and have from no quarter received greater
encouragement and . praise than from the recognized leaders of
organized labor. It is not too much to say that the many-sided
preventive work which is being done by these authorities constitutes
so far the peculiar distinction of the German system of social insur-
ance."
A recent work by Dr. Paul Kaufmann, president of the Imperial
insurance ofSee, is devoted to the preventive efforts of the German
workmen's insurance system. The study takes up the following aspects
of the preventive work :
General medical aid, accident prevention under compensation, organi-
zation of first aid for industrial accidents, specialized medical and
surgical treatment for accident cases for the purposes of reducing dis-
ability, placing of injured workmen in industry, general institutional
care for chronic invalids, special measures for treatment of tuberculosis,
and the indirect effect upon housing ref orm_ and other methods of social
welfare through investment of insurance funds. "It may be pointed
out," says Dr. Kaufmann, "that preventive work lies outside of the
field of insurance, the purpose of which is to equalize and distribute
and not to prevent the loss.
"In fact, indemnity as the insurance purpose occupied the first place
in the practice of German workmen's insurance in its early stages.
Only after some years, when the initial difficulties were overcome, did
the principle gain recognition that the highest objects of insurance are
not reached through distribution of the losses sustained; that protection
aijainst loss of earning capacity was more important than the care of
the incapacitated and that every preserved productive life represented
an important national asset."
On the other hand very different estimates of the general social
results of the German social insurance system have appeared, which
can not be disregarded. These consist mostly of medical literature
calling attention to the problems of malingering, traumatic neuroses
and even pension liysteria. In addition, there is a much more limited
amount of economic and sociological writing concerning the general
effects of the German social insurance legislation upon the working
REPORT OF SOCLVL INSURANCE COMMISSION. 217
class and the general economic conditions of the German empire. In
the latter writings the medical literature referred to has been very
freely drawn upon, so Professor L. Bernhard in his study "Undesirable
Results of German Social Legislation" lists 78 such medical publica-
tions between 1889 and 1912, that is during a period of 24 years, which
of itself does not appear to be an indication of very alarming conditions.
Of the economic literature, two pamphlets have attracted particular
attention : that by Professor L. Bernhard, referred to above, and a study
by Dr. Ferdinand Priedensburg, entitled "Die Praxis der Deutschen
Arbeiterversicherung. " Both have been translated into English and
published for wide distribution by the Workmen's Compensation Pub-
licity Bureau, an organization of private easvialty insurance companies.^
Professor Bernhard 's study is directed not only against the German
social insurance system but other branches of social legislation, as for
instance government control of private enterprises and government
extension into industry, party rule, etc. The part of the study devoted
to social insurance contains some 30 to 35 pages of evidence of simu-
lation, pension mania, traumatic neuroses and exaggeration of disability.
Almost the entire evidence is taken from the field of accident compen-
sation. The only charge against the practice of sickness insurance is
that "unemployment, which is so prevalent in the building trades in
winter, leads to an increased indication on the part of those insured to
report themselves as disabled on account of slight ailments," and that
in general, sickness insurance is frequently made use of as a way of
insurance against unemployment.
This is a well recognized by-product of sickness insurance even in
American fraternal orders and trade union funds, but a slight exag-
geration of total sickness volume resulting from absence of unemploy-
ment insurance does not appear as a very serious offset to the tremendous
work of prevention and the life and health preservation accomplished
by the German sickness and invalidity insurance systems.
The evidence of malingering and the like under the compensation
law presented by Professor Bernhard is more voluminous. But he him-
self admits that it is not a destructive feature of the German workmen 's
insurance ; that long before its development, ' ' railroads and insurance
companies had to carry on a constant warfare against unjustifiable
demands, that members of the 'upper classes' also were distinguished for
exaggerating their injuries until attainment of an indemnity cured them
with extraordinary rapidity, and that the desire to derive a profit from
'It may be worth while pointing out that the title of Dr. Frledensburg's pamphlet
was translated somewhat inaccurately into English as "Practical Results of Working-
men's Insurance in Germany." The German term "Praxis" means the "practices,"
the "mechanism," or "the methods of application." Dr. Friedensburg really
endeavored to criticize certain methods, in his opinion harmful, rather than the
results of the system in its entirety, or the principles of social insurance.
218 EEPOET OP SOCIAL INSUKANCE COMMISSION.
an accident is an entirely normal occurrence even with the best of our
people."
To place a definite valuation upon such "undesirable results" it would
be necessary to measure their frec[uency, but no such measurement,
beyond a recital of various experiences by individual physicians is given.
One may readily agree with Professor Bernhard that the system of small,
inconvertible life pensions for comparatively unimportant injuries is
undesirable and that lump sum payments in such cases are less likely to
keep the claimant either in a state of worry about his pension or in a
mood to simulate and malinger. However, an impartial reading of his
evidence does not lead to the conclusion "that workingmen's insurance
legislation is showing undesirable moral and hygienic results, which were
originally regarded as a necessary evil but which are gradually making
the blessings of workingmen 's insurance appear very questionable. ' '
Such a sweeping condemnation of a system which had developed for
30 years, which had been more or less imitated by the entire civilized
world, and costs thousands of millions of dollars, would appear to be a
very serious matter indeed if justified.
The criticisms of Dr. Friedensburg have been even more frequently
quoted. They cover a wider range of topics embracing all the branches
of social insurance. The main criticism may be summarized as follows :
"According to the author: (1) workingmen's insurance has
imposed upon German industry an enormous financial burden,
interfering with Germany's position in the international market;
(2) the methods of administration are cumbrous and the cost is
excessive; (3) "social sympathy, humanitarianism or whatever
other feelings these unhallowed catchwords cover" have been sub-
stituted for legal justice, both in courts and administrative bodies,
thus demoralizing the German nation; (4) an enormous amount
of malingering exaggeration, wilful aggravation and even self-
infliction of injuries has developed; (5) the workmen have been
taught the love of litigation; (6) they have been pampered by
excessive generosity in grants of pensions and by excessive luxury
in hospitals, in food, drink, medical care and nursing; (7) the
original aim of social insurance, reconciliation of classes, has failed,
and the general unrest has only been aggravated; (8) the Social
Democrats have had a very bad influence, especially in the manage-
ment of the sick-benefit funds, often conducting anti-governmental
agitation in the committees; (9) the tendency of many employers
to pay the workmen's share of old age pension dues is declared to
be a vicious one; and (10) alarm is expressed concerning future
extensions of the system."
Again since Dr. Friedensburg does not deny the essential justice of
the social insurance provisions, but only the supposed inefficiency,
extravagance and excessive liberality of the administration, a careful
BEPOKT OF SOCIAL INSURANCE COMMISSION. 219
measurement of the evil results would be necessary before a final
estimate is possible.
The important question arises, how far are the views of Bernhard
and Friedensburg accepted by most students of the German social
insurance system. Dr. B. Zahn, a recognized authority, states that Dr.
Friedensburg 's "conclusions have been rejected by most authorities and
impartial critics of the German workmen's insurance because of their
evident one-sidedness and gross exaggeration." Among such authori-
ties may be mentioned Dr. Paul Kaufmann, the president of the Impe-
rial Insurance Office. A well-known German surgeon, Dr. Otto Hintze,
refers to such charges of the weakening of the German workman's
sense of responsibility and productive energy as a "monstrous
exaggeration. ' '
The entire structure of social insurance is also attacked on its
economic and financial grounds as being an unwarranted burden upon
the wages, upon industry and upon the state treasury.
It is obviously illogical to speak of the burden of social insurance
upon the budget of the wageworkers, since the benefits all accrue back
to them. The only additional burden would be the cost of administra-
tion, but since this is only a small proportion of the whole cost, and very
much smaller than contribution from employers and the state, the
wageworkers are evidently gainers thereby. Only then could the cost
of social insurance be charged as a burden to the wageworkers, if it
came as a substitute for some other method of supplying the same
indemnities and services without cost to the wageworkers.
The combined cost of sickness, invalidity, old age insurance (accident
compensation being paid for entirely by the employers) , says Mr. H. W.
Dawson, varies greatly, but it is probable that the predominate ratio
is rather over than under 3 per cent of wages, while 4 per cent is not
uncommon.
The cost upon the employer is approximately the same.
220
REPORT OF SOCIAL INSURANCE COMMISSION.
Mr. Dawson quotes the following tAventy-one examples of combined
charges upon industry :
Kind of establishment
Combined ratio
ill per cent of
wages
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Steel
Iron and steel
Locomotives and ears
Locomotives
Machine tools
Machinery
Machinery
Machinery
Electrical engineering
Electrical engineering
Automobiles
Shipbuilding
Coal mining
Coal mining
Chemicals
Chemicals
Chemicals
Glass
Paper
Cotton spinning and weaving
Cotton spinning
3.4
3.7
4.2
3.7
4.0
3.7
3.1
3.5
2.6
2.4
2.6
4.0
5.4
8.2
2.9
3.0
4.0
5.1
4.0
4.0
2.2
The average cost of the 21 forms was 3.8 per cent of the payroll and
this burden did not appear to injure the standing of German industry
in the world's competitive market.
It is reasonable to assume that the cost of health insurance was
returned to the employer in increased efficiency, and in like manner the
cost of invalidity and old age insurance was returned to the employer
in increased efficiency, while the cost of invalidity and old age insur-
ance was offering a practical remedy against the evils of superannuation.
The burden which the German social insurance system has placed
upon the state treasury is not very great ; amounting to only $10,000,000
or $12,000,000 it hardly raises any serious fiscal problem.
The total financial burden of the German social insurance system is,
of course, substantial, if the term burden is the proper one to apply.
Evidently from the viewpoint of social results, the substantial volume of
financial aid falling to the benefit of the wageworkers is an indication
of the efficiency rather than the burden character.
The following total will indicate the total volume of contributions
made toward the support of the German social insurance system for the
29 years 1885 to 1913, inclusive. The grand total amounts to the very
substantial figure of $3,195,488,336, to which must be added an income
REPORT OF SOCIAL INSURANCE COMMISSION.
221
from interest and other sources of $353,214,134, making the total income
of the system $3,548,702,470.
Accident,
1885-1913
Siclme3s,
1885-1313
Invalidity
and old age,
1885-1913
Total
Contributions by employers-
Contributions by insured
persons -_--- _.
$709,059,663
$460,471,761
997,922,005
$418,026,865
418,026,865
191,981,177
$1,587,558,289
1,415,948,870
191,981,177
Subsidy by empire
Totals
$709,059,663
$1,458,393,766
$1,028,034,907
$3,195,488,336
Note. — For an exact showing the share of the Empire should include the adminis-
trative expenses which are largely borne by it, but in what proportions can not be
stated.
The assets at the end of 1913 were as follows: Accident insurance,
$142,291,870; sickness insurance, $88,974,872; and old age and
invalidity, $501,107,001; total, $732,373,743. It follows that during
these 29 years over $2,816,000,000 were spent for purposes of relief
of need and suffering. These figures, however, include the combined
operations of nearly three decades.
It is interesting to quote the corresponding figures for the year 1913
alone.
Accident
Siclcne»3
Invalidity
and old age
Total
Contributions by employers.
Contributions of insured
persons
$46,333,983
$38,246,695
77,662,565
$32,536,813
32,536,813
13,106,494
$117,117,491
110,199,378
Subsidy by empire
13,106,494
Interest, etc. __
$46,333,983
8,231,920
$115,909,260
5,349,979
$78,180,120
17,005,148
$240,423,363
30,587,047
Totals
$54,565,903
$121,259,239
$95,185,268
$271,010,410
In referring to these combined figures of cost an American writer,
H. G. Villard, speaks of the astonishing growth of economic burden
that Germany is called upon to carry. According to the figures quoted
by him the total cost increased as follows :
1891 $ 33,000,000
1901 93,000,000
1911 182,000,000
and he says, therefore, "unless a halt is called in time the load of this
social legislation, heretofore successfully carried, may become a crush-
ing one for German trade and industry. ' ' It may be noticed, however,
that the figures of increased insurance operations are usually taken as
evidence of financial strength rather than financial burden.
In Great Britain, the fiscal aspects of social insurance are more
222 REPORT OF SOCIAL INSURANCE COMMISSION.
important because the active cost of old age pensions, a substantial
part of the cost of health insurance and also of unemployment insur-
ance, is borne hy the state treasury.
The total appropriations for old age pensions, labor exchanges,
insurance, etc., in the appropriation act of 1914 amounted to
£22,129,750 ($107,694,428), and the estimates for 1915-1916 were
almost equally large, £21,787,158 ($106,027,204).
Roughly this expenditure of over $100,000,000 was distributed as
follows: Old age pensions, about $65,000,000; unemployment insur-
ance, including expenses for labor exchanges, some $5,000,000, and the
remaining $30,000,000 is the state's contribution to the health insurance
system. (See this report, page 169.) This is not an inconsiderable
sum. But in view of the social good it has accomplished, in view of
the enormous expenditures which the British nation with all other
nations of Europe is at present spending on work of destitution, how
can anyone argue that the expenditure of $100,000,000 annually, or
$2.50 per capita, for the care and cure of the sick, the support of the
aged and the unemployed, for hospitals, sanatoria and labor offices is a
burden upon the finances of the country?
CHAPTER VII.
EXISTING FACILITIES FOR INSURANCE
OF WAGEWORKERS IN THE
UNITED STATES.
REPORT OF SOCIAL INSURANCE COMMISSION. 22ri
SECTION I.
IN GENERAL.
Even though the movement for social insurance as a governmental
or social policy is very recent, and only gathering strength, a great
variety of methods of providing insurance or pensions for wageworkers
and other employees has grown up during the last half century, and
it can not be said that the problem of the worker's insurance has
been altogether neglected in this country. In fact, when the German
expert on social insurance, Dr. George Zacher, requested Professor
Charles R. Henderson of Chicago University to prepare a study of con-
ditions in the United States for his very comprehensive five volume
series "Die Arbeiter Versicherung im Auslande" (Workmen's insur-
ance in Foreign Countries, Berlin 1891-1908), the result of Dr.
Henderson's work was a very large volume.
The efforts have come from so many directions and are of so many
different kinds, that perhaps a detailed classification will help the
general view of the situation.
The following classification has been adopted from Dr. I. M. Rubinow's
"Social Insurance:"
I. Institutions conducted by workers exclusivel.v for the benefit of workers —
(a) Trade unions, national.
(6) Trade unions, local.
II. Institutions, conducted exclusively for workers, but either entirely by employ-
ers or with their participation or under their influence —
(a) Factory funds.
(&) Railroad funds.
(c) Store funds.
(d) Miners' funds.
(e) Employers' pension system.
III. Institutions of a mutual nature, not limited to wageworkers, but drawing a
substantial part of their membership from the —
(a) Fraternal orders.
(6) Local lodges.
(c) General mutual benefit societies.
(d) Special sick benefit societies.
IV. Insurance companies operating among all classes of the community, but draw-
ing its clientele primarily from the working class —
Mutual industrial life insurance companies.
V. Same as above — but stock companies, operating for profit —
Industrial life insurance companies.
Casualty companies.
15—27626
226 REPORT OF SOCIAL INSURANCE COMMISSION.
VI. Governmental agencies limited to government emplojees —
(a) Municipal pension funds:
Teachers.
Policemen.
Firemen.
Other employees.
(6). State pension schemes,
(c) National army and navy pension systems.
VII. Governmental agencies not limited to government employees —
(a) The national military pension system.
(6) The Massachusetts savings bank plan,
(c) The Wisconsin state insurance plan.
It may be questioned in how far the military pension system should
be properly classified with general measures, or with those provided for
government employees. It is true that thej' are given in return for
some government service, and yet the enormous sums for war pensions
are paid largely to civilians and their widows, and the number of
pensioners is sufficiently large to constitute it a peculiar selective old
age and widowhood pension system.
Even outside of these the variety of -the existing systems is very large.
Unemployment benefits are given by trade unions only, but other forms
of insurance are practiced by institutions of almost all other types, so
that it is rather diiificult to state definitelj' which of the forms of work-
men's insurance is the most familiar to the American wageworker,
except that of life insurance for small amounts, more accurately desig-
nated as funeral insurance, which has been developed to a very large
extent by the large industrial life insurance companies. Trade unions
give sickness and disability benefits; some grant them to invalids and
the aged and many have provisions for small death benefits.
Establishment funds of various kinds go in largely for disability
benefits, and with the extension of the compensation legislation, they
concentrate largely at present upon sickness benefits or health insurance.
And yet in case of large employers, these societies and funds provide
more and more for old age pensions, in a few cases through mutual con-
tributions, but more frequently within recent years, at the exclusive
expense of the employer. Some large employing corporations have
a certain amount of life insurance either directly or through group
insurance with ordinary life insurance companies.
Mutual benefit organizations, organized either in the form of large
national fraternal orders, or in local lodges, or in some other form and
name, have a very wide patronage. The insurance activity of fraternal
lodges has been mainly in the line of inexpensive assessment life insur-
ance, but a good many of them practice health insurance as well. A
number of smaller mutual benefit organizations have also grown up,
which usually furnish health insurance.
REPORT OF SOCIAL INSURANCE COMMISSION. 227
Large life insurance companies, either mutual or stock, write pri-
marily ' ' life insurance, ' ' which, in view of the small amount of insurance
carried, is more frequently only funeral insurance. But it is usually
overlooked that the popular endowment policy is really a combination
of life insurance and old age insurance. And though endowment
insurance (on account of its higher cost) is less popular with the
wageworker than others, some is being written among them. At least
one large life insurance company has tried the experiment of writing
health insurance for groups of wageworkers, but it has not been adopted
to any large extent.
Other stock insurance companies, commonly known as casualty insur-
ance companies, write health insurance to a considerable extent, and
some of them specialize in the so-called "Industrial Accident and
Health Insurance," on a plan of small monthly payments. This is
intended primarily for the wageworker, or any person of small income.
Finally, there are a large number of governmental systems and funds
for payment of old age or disability pensions to public employees. In
these efforts, municipal have done more than state governments, and the
federal government has not as yet established any system of pensions
for its civilian employees, notwithstanding an agitation of many decades.
The existence of all these numerous plans and systems indicates that
American wageworkers appreciate the necessity of protection against
various hazards, and shows the value of insurance as a method of
furnishing this protection. It also proves that a growing number of
employers have learned the value of such insurance provision, both to
the workers and to their own enterprises. It is unfortunately impossi-
ble to state definitely how large a part of the need these numerous forms
of organization meet. Statistical data are very scant.
228 REPORT OP SOCIAL INSURANCE COMMISSION.
SECTION II.
TRADE UNIONS.
The benefit features of the American labor organizations are as old
as the American trade union movement, but only since 1880 has there
been any considerable increase in such activity. The development since
then has been substantial. There is still a difference of opinion as to
how far these beneficiary features were helpful to the trade union move-
ment. Arguments are made that since the expense of maintaining
benefits makes the dues of membership higher, persons who might
otherwise join the unions are prevented from doing so; also that this
benefit feature detracts the attention of the labor organizations from
their main purpose of improving conditions of employment.
It is maintained, however, that the establishment of benefit features
is a direct aid to a union in carrying through its trade policies; that
systems of benefits, if they do not attract them, are successful in retain-
ing members, and that sharp and sudden declinations in membership
during industrial disturbances are thus prevented, and that it is a vital
aim of the trade union policy to retain in hard times what has been
gained in good times. This seems to have been proved in the fluctua-
tion of membership of various unions in the depression of 1893-97. In
any case during the 25-yea.r period, 1880-1905, a very large number of
fraternal trade unions had established benefit funds, as is shown by the
government report. The Amalgamated Society of Carpenters and
Joiners, the Cigar Makers International union, the United Brotherhood
of Carpenters and Joiners, the National Association of Letter Carriers,
the Brotherhood of Painters, Decorators and Paperhangers, and the
several brotherhoods of railway employees, namely the Grand Interna-
tional Brotherhood of Locomotive Engineers, the Brotherhood of Loco-
motive Firemen and Enginemen, the Brotherhood of Locomotive Train-
men, and the Order of Railway Conductors, all showed the largest
development of benefit features. Of the total amount of $7,829,121
paid out by the national labor organizations, the four railroad brother-
hoods paid over 60 per cent. Professor Charles R. Henderson states
that for 1905 the national unions of the American Federation of Labor
paid out in benefits as follows :
Death benefits $742,421
Death benefits, widows 24,800
Sick benefits 582,874
Out-of-work benefits 85,051
Other benefits 68,170
$1,503,316
EEPORT OF SOCIAL INSURANCE COMMISSION.
229
It is doubtful if there are as many as half a million men insured
for any benefit through these national unions, outside of the railway
brotherhoods.
It is difficult to say how far these activities have increased during the
ten years which have elapsed since the preparation of the government
report. The commission is informed that the United States Bureau of
Labor Statistics has recently undertaken a new study of trade union
benefit funds, which will indicate the degree of the recent developments.
It is obvious, however, that this development has not been proportion-
ally great when the needs of the masses of wageworkers are considered.
1. The brief list of unions with a substantial development of benefits
indicates that only the best paid trades are represented, as the railway
brotherhoods, carpenters, painters, cigarmakers, etc.
2. The death benefits remain the main line of activity, and whatever
the influence of the death benefit in increasing the cohesiveness of the
labor organizations, the economic importance of these benefits as a meas-
ure of poverty prevention is not very great. The average amount of the
death benefit is small.
.
Number of
deaths paid foi
Total
amount paid
Average
amouut
2,352
7,686
$3,776,599
1,387,786
$1,605
182
Totals
10,038
$5,164,385
$515
In other words the railway brotherhood men were the only ones which
granted death benefits that represented a substantial amount of life
insurance. As far as the other unions are concerned their death ben-
efits are comparable to the funeral insurance of the industrial life
insurance companies and have very little economic significance.
Counting in both the national and local unions, the memberships
protected by sick benefits through labor organizations listed in the gov-
ernment report of 1908 probably did not exceed 400,000, of which
300,000 were insured through the national union and 100,000 through
local unions. Since the list of the latter was manifestly incomplete, it
is possible that the actual number of workmen insured against sickness
through labor organizations may have been 500,000 or 600,000. But it
represents an insignificant proportion of the wageworkers of the United
States.
Moreover, the quality of the insurance service as well as the quantita-
tive extent are also subject to very material limitations. The data for
eleven national unions, with a membership of some 140,000 seem to
indicate an average sickness rate of five days per capita. This unusually
low sick rate (in comparison with any European data) is explained by
230
REPORT OF SOCIAL INSURANCE COMMISSION.
several limitations. There is usually a waiting period of at least 7
days, the duration of benefits is seldom over 13 weeks, and often drops
to 10. A full year's membership is required before any benefits are
paid. The amount of weekly benefits is small.
The same conditions characterized the local union benefits for tem-
porary disability in 1906 and undoubtedly still characterizes them at
present, for there has been very little tendency to enlarge the benefits.
The rate of weekly benefits was subject to many fluctuations and varied
from $2 to $10.
Weekly benefits
Less than $5.00,
$5.00
$6.00
$7.00
$8.00
$10.00
$12.00
Total
Nujulser of
unions paying
90
166
17
41
7
24
1
346
Only 82 unions, or less than 25 per cent, gave benefits over 13 weeks,
and over one-third limited them to ten weeks or less.
The requirement of a certain period of membership to establish the
right to temporary disability was enforced in 275 out of 346 funds.
This period amounted to :
Length of membership reQulred
Number of
unions
Less than 3 months.
3 months
' 4 months
6 months
9 months
12 months
Total
31
60
1
158
1
24
275
When all these restrictions are considered with the small amount of
weekly benefit and the absence of medical benefits, the role of unions
as a factor in the health insurance of the twenty -five or thirty million
wageworkers of the United States becomes a modest one.
REPORT OF SOCIAL INSURANCE COMMISSION.
231
SECTION III.
FRATERNAL ORDERS.
The fraternal orders are the greatest effort in cooperative noncom-
mercial insurance in this country. "While there are some fraternal
orders which are exclusively social in their purpose, most of them are
engaged in some form of mutual insurance, mainly life insurance, and
next in importance, in health insurance. Notwithstanding their
importance in the social and economic life of the American people and
the large amoimt of literature on the subject, accurate statistical infor-
mation is incomplete. The following table taken from the Insurance
Year Book for 1915 indicates the truly gigantic dimensions of their
activity in the field of life insurance :
Life Insurance by Fraternal Orders.
Paid for
Paid to agents
Insurance
Certifl-
panics
in dues
claims
and for
management
written
in force at
end of year
catea in
force
1901
489
$72,242,667
$64,128,047
$8,850,097
$799,626,678
$5,656,453,465
4518955
1905
570
91,354,819
72,551,897
11,349,269
1,026,308,429
8,150,350,736
6118938
1909
645
82,572,326
89,899,541
15,579,139
1,203,403,691
8,920,716,227
7909626
1913
509
129,520,444
101,006,344
19,262,702
1,065,071,108
9,622,276,590
8058317
1914
498
125,981,863
98,585,384
17,454,401
1,079,569,596
9,171,284.227
7868554
1915
492
122,291,820
98,719,683
16,132,911
922,890,579
8,694,449,483
In volume this activity compares well with that written by the ordi-
nary old line life insurance companies :
Numljer
of policies
in force
Amouut
of insurance
in force
Ordinary life
Fraternal orders
8,284,281
7,695,944
$15,609,722,445
8,694,449,483
Though the table appears to indicate a very large shrinkage in the
number of certificates outstanding, the accuracy of this is rather doubt-
ful, since the compilation of the Insurance Year Book is far from
complete, as the fluctuations of the number of orders indicate. Though
the apparent decrease may be exaggerated, there is little doubt that the
rapid increase in membership evidenced some years ago has ceased.
Fraternal orders are a very important manifestation of the need of
cheap cooperative insurance, and of the many efforts, more or less suc-
cessful, to achieve it. The dangers which often accompany the efforts
to obtain insurance too cheaply, or below cost, are well known. The
232 REPORT OF SOCIAi INSURANCE COMMISSION.
actuarial problems of fraternal life insarance are well understood by-
professional actuaries and by many managers of fraternal orders.
While many orders and other assessment life insurance schemes have
failed in the past, and many others are struggling against severe odds,
a healthy movement for sufficient reserves has been growing up among
better fraternals for nearly twenty years, since the organization of the
American Fraternal Congress.
It is well known that millions of men have been buying insurance in
fairly substantial amounts through these channels who otherwise could
not or would not have purchased it. That a solid actuarial basis is
necessary to safeguard these orders is quite evident to anyone who has
given careful thought to the matter. But the substantial advantages
which these orders possess are: (1) Combining life insurance with
desirable social intercourse, without which it would not be effected;
(2) Selling insurance on low monthly premiums.
In view of the inevitably high cost of collection of premiums by
house-to-house visitations, necessary under the methods of industrial life
insurance companies, the fraternal orders undoubtedly deserve all the
help and encouragement that only scientific government supervision
can offer.
It is impossible to ascertain how far these fraternal orders meet the
needs of wageworkers. The fact that there are some 30,000,000 indus-
trial life insurance policies in force, seems to indicate that the masses
of wageworkers prefer this form to the fraternal insurance. It would
appear extremely unwise for a wageworker who carries a substantial
amount of fraternal insurance (from $1,000 up) to go on paying the
weekly premiums for small industrial policies as well, though as a matter
of fact, a good many do so. But how many of the eight million fraternal
insurance certificates in force belong to wageworkers it is impossible to
tell. An investigation made by the Connecticut Bureau of Labor Sta-
tistics, very limited in scope and referring to conditions 25 years ago,
is quoted by Professor Charles R. Henderson. From this it appears
that some 25 per cent belong to the professional business classes, some
40 per cent are well paid mechanics, 11 per cent clerks and only 20 per
cent are low paid mechanics. It is doubtful if there is any substantial
representation of unskilled labor among the fraternal membership.
Even if, in absence of better data, it should be assumed that one-haLE
of the people insured against death by fraternal orders are wageworkers,
then 4,000,000 certificates or policies evidently cover only a small pro-
portion of the American wageworkers.
Health Insurance Through Fraternal Orders.
Still less information is available on sick benefits, or health insurance,
of fraternal orders, second in importance only to the life insurance. No
investigation of this sub.iect on a national scope has been made. Even
REPORT OF SOCIAL INSURANCE COMMISSION. 233
the list of fraternals giving such benefits is not available. Such benefits
are usually paid by the local lodges entirely on their own responsibility,
while the payment of death benefits is controlled by the central adminis-
tration. Several fraternal orders which have not gone in for life insur-
ance have developed sick benefits. In some orders the option whether
to go into the field of health insurance or not is left entirely to the choice
of the local lodges. "While in case of some orders, this is forbidden to
lodges, or in any ease not practiced.
The strong movement within the fraternal orders to expand their
health insurance activity at the expense of life insurance is very signifi-
cant indeed. It is a recognition on one hand that the problem of sick-
ness as a cause of poverty is as important as that of death, and on the
other hand that there is a greater dearth of acceptable health insurance
facilities as compared with life insurance.
The specific problems of fraternal health insurance, in so far as they
have been ascertained in the investigations in California, are discussed
in detail elsewhere. Primarily they are :
Absence of medical aid.
Changeable membership.
Insecurity in the soundness of the small local lodges.
How far these difficulties exist throughout the country it is impossible
to say. While all these shortcomings may be corrected, the crucial test
of this form of health insurance among wageworkers is the number of
persons insured. On the basis of the California data a guess might be
ventured that there are some five or six million persons insured for
health in various fraternal orders in the United States, though how far
this number should be reduced for duplications and how many of them
are wageworkers no one can tell.
234 REPORT OP SOCIAL INSURANCE COMMISSION,
SECTION IV.
ESTABLISHMENT FUNDS.
Under this term are included all kinds of insurance aid organizations
existing in connection with industrial establishments, and limited in
membership to employees of that establishment. This is a type of
insurance organization or fund that existed in every European country
before the advent of compulsory insurance and was accepted into the
system of compulsory insurance.
There are several distinct types of such funds in this country.
(a) An organization springing up voluntarily among employees
and administered by them without assistance from the. employer.
(&) An organization receiving either occasional subsidies or
definite contributions from the employer, which may or may not
carry with them the employer's participation in the administration
of the fund.
(c) An organization, the management of which is absolutely
centralized in the hands of the employer who makes membership a
condition of employment.
(d) An organization or a system of benefits maintained and
financed by the employer, without any contributions from the
employees.
In the case of some small establishments, the benefits are provided by
means of the purchase of group insurance policies from private insur-
ance companies. Group policies can be purchased which grant protec-
tion against death, industrial accidents, nonindustrial accidents and
sickness.
Establishment funds are more frequent among large employers of
labor. They require for their successful administration, permanency
of employees. They are found most frequently in —
Railroad companies.
Other public service corporations, ■"
Department stores.
Insurance companies,
Banks,
Large factories and mills.
They are much less frequent in building or construction enterprises
in which many millions of unskilled laborers are employed. Thus low
paid labor is seldom protected through the medium of establishment
funds.
REPORT OP SOCIAL INSURANCE COMMISSION. 235
Available statistics indicate that in nearly 75 per cent of the funds,
the administration is entirely in the hands of the employees. In less
than 20 per cent of the funds membership is compulsory. The rates of
weekly contributions vary from 25 cents to $1 a week. Weekly benefits
of $5 and $6 are the rule in more than one-half of the funds, and the
predominating duration of benefits is 10, 12, 13 or 26 weeks. Over
one-quarter of the funds are giving compensation for less than 13 weeks,
and only one-eighth for over 26 weeks.
Superannuation and pension benefits are given by very few funds,
and when given are usually in the form of service pensions.
The voluntary method of making necessar.y provisions has, of course,
limitations. Depending as it does iipon the initiative either of
employees or the employer, the practice is far from universal. Volun-
tary efforts, however, usually precede legal enactment and are valuable
in indicating what is feasible and wise. The number of establishment
funds has been growing rapidly in the last few years, and this fact is
an argument that conditions have become ripe for some comprehensive
system of protection, brought about by legislative enactment.
236
REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION V.
COMMERCIAL INSURANCE COMPANIES.
A — Industrial Life Insurance.
Like any other member of the community, a wageworker may purchase
life insurance of the so-called "ordinary kind," and there are some
wageworkers among polieyholder.s of ordinary life insurance companies.
However, the cost of life insurance under this plan appears to be too
expensive for the mass of workingmen and persons of small salaries.
This, on the one hand, has led to the development of fraternal insur-
ance in the effort to obtain insurance at cost ; and, on the other hand,
it has given enormous popularity to industrial life insurance, which
is life insurance of very small amounts, paid for in small weekly
premiums.
The amount of industrial life insurance written and the increase in
the number of policies in the last 40 years is shown in the following
table :
Year
Insurance
written
during year
Insurance
in force
Policies
in force
Average
amount
1876 . __
$727,168
34,768,035
93,736,727
242,250,959
380,832,362
566,037,936
661,097,015
749,717,264
825,682,808
$443,072
19,590,780
144,101,632
428,087,245
819,521,373
1,468,474,534
2,309,886,554
3,179,489,541
4,170,971,777
4,816
228,357
1,360,376
3,875,102
6,943,769
11,215,531
16,869,758
23,044,162
31,134,303
$92
86
1880 .- -
1885 _ -
106
1890
110
1895 . .
118
1900 -■-
131
1905 __ __ __
136
1910
137
1914
134
The average annual premium per policy in force is about $7.50, or
some 15 cents per week. An enormous expense of administration is
made necessary by the system of maintaining a large army of collectors
making weekly visits to the homes of the insured to gather the nickels
and dimes. Notwithstanding the recent efforts to reduce the expenses,
their ratio to the total premiums for the largest industrial insurance
companies fluctuates between 30 and 35 per cent, and if their industrial
business alone should be taken, would be higher — between 34 and 38
per cent. Moreover, the premium volume, as stated, is exaggerated by
the inclusion of dividends. If this element were excluded, the propor-
tion of the expenses to the net cost would be higher.
A very large lapse ratio is another shortcoming of industrial life
insurance. In the past, some 65 to 70 per cent of all the policies issued
REPORT OF SOCIAL INSURANCE COMMISSION.
237
have lapsed for nonpayment of dues. The larger companies are now
making earnest efforts to reduce this lapse ratio. But even in 1914 the
data for the two largest companies are as follows :
Policies ceased
First company
Second company
Bj' death
By maturity
By expiring
By surrender
By lapse
Totals
Total issued and renewed
163,339
11.5
13,756
1.0
19,806
1.4
44,138
3.1
1,180,854
83.0
1,421,893
100
2,189,276
132,900
358
14,167
101,967
1,311,317
8.5
.9
6.6
84.0
1,560,709
2,356,034
100
The resemblance of the figures for the two companies in the lapse
ratio is rather striking. Of all terminated policies 83 to Si per cent
have lapsed. Even if the proportion to the policies issued is taken
(which really makes the showing too favorable because with the rapid
expansion of business an increasingly large number of policies is written
each year, and therefore an increasing number of policies is lapsed), the
proportion of policies lapsed or surrendered is 56 per cent for one
company and 60 per cent for the other. Thus a very large amount of
energy spent in obtaining this voluntary insurance and a very large
amount of money paid by millions of wageworkers is a total social loss.
The average amount of insurance is so small that the insurance
received by the family at the death of the insured is, in the majority of
cases, spent entirely upon the funeral.
These remarks are not meant as an attack upon the industrial life
insurance business maintained by the large commercial companies. The
valuable work recently developed by some of the larger companies in
social service to the policyholders in furnishing them with nursing aid,
in their educational work in public health and personal hygiene, in
their important scientific work in vital and social statistics and finally
in their mutualization, is not to be disregarded. But the conclusion
is inevitable that collecti^'ely American wageworkers pay a very large
amount for industrial life insurance which meets only one of their
many needs for protection. The expense of industrial life insurance
companies also demonstrates the impossibility of inexpensive admin-
istration in voluntary insurance based upon a system of solicitation.
B — Insurance In Casualty Companies.
Though very much less imposing in its totals, insurance in casualty
companies offers an additional medium for the protection of wage-
workers at present. The term "casualty insurance" is not a very
238
EEPOET OF SOCIAL INSURANCE COMMISSION.
definite one. The insurance carriers which write any line of insurance
outside of life, fire and marine insurance, are designated as casualty or
miscellaneous insurance companies. The latter term is perhaps some-
what more comprehensive in that it includes surety or bonding com-
panies, though as a matter of fact many casualty companies also write
surety business, while several of the large bonding companies have
recently established casualty departments.
The casualty insurance business may be divided into two broad
branches: personal insurance (accident and health, and also compensa-
tion, which is only group accident insurance) ; and property insurance,
such as boiler, plate glass, burglary and similar forms. Liability
insurance, a very substantial part of the casualty business, is often
looked upon as personal insurance, but, as a matter of fact, is a contract
for protection of property rights of the insured person. Disregarding
compensation insurance, already discussed elsewhere, only the remain-
ing forms of personal accident and health insurance interest us here.
The volume of this form of insurance is very substantial, though of
comparatively recent growth. In fact until the recent development of
workmen's compensation insurance, personal accident and health insur-
ance was, next to liability, the most important branch of casualty
business, the amount of annual premium reaching over $40,000,000.
Accident and Health Insurance by Casualty Companies.
Year
Premium
Los.5es
Per cent
1908 . . . _ - . . - - .
$23,078,288
24,609,374
31,176,464
33,097,540
37,990,589
40,671,835
41,830,753
41.091,739
$9,621,357
9,484,121
12,372,256
14,537,883
16,745,835
18,203,285
18,361,764
18,535.646
41.6
1909
38.5
1910 -_ — — - — — — — — — — -
39.7
1911
43.3
1912 . . . —
44.1
1913 . . .
44.8
1914
43.9
1915
45.1
While these figures indicate substantial growth, the total amount does
not compare very impressively with the total loss due to accident or
disease, since insurance for both accident and health is very much
smaller in amount than for compensation (or individual accident) alone.
Again we are confronted here with lack of statistical information.
Even the distribution into accident and health sepai'aleiy is impossible
because some states do not require such distribution and the figures are
given together.
REPORT OP SOCIAL INSURANCE COMMISSION.
239
The Insurance Year Book for 1911 gives these figures separately, and
though admittedly not altogether accurate, they are fairly characteristic :
Tear
Accident
Health
Per cent
health
Premiums
received
Losses paid
Per cent
Premiums
received
Losses paid
Per cent
premiums
received
1901-1905
1906-1910
1896-1910
$65,572,736 $27,985,457
99,549,393 41,206,707
201,566,143 85,348,206
42.6
41.3
42.3
$7,157,396
23,848,719
31,006,115
$2,903,787
9,607,381
12,511,168
40.5
40.2
40.0
9.8
19.3
15.8
The division between accident and health given for sixteen large
casualty companies for the decade 1906-1915 indicates that only 21.3
per cent of the total was for health insurance.
The tabulation of the data for various states as given in the Specta-
tor's Insurance Year Book for 1916-1917 (pages A-228 to A-363) yields
the following results :
Premiums
written
Losses paid
Per cent
Thirty-eight states reporting accident and health
separately—
Accident , - _ _ -- - -
$29,021,194
6,351,672
$13,105,202
2,875,930
45.2
Health — — 1
45.3
Ten states reporting accident and health together
$35,372,866
5,718,873
$15,981,132
2,554,514
45.2
44.7
Total accident and health
$41,091,739
$18,535,646
45.1
Apportioning the undistributed amounts in the ten states in the
same ratio in which accident and health business is represented in
the other thirty-eight states, results as follows:
Premiums
written
Losses paid
Per cent
Accident - -- --
$4,691,763
1,027,110
$2,094,702
459,812
44.6
Health . , .
44.8
Total
$5,718,873
$2,554,514
44.7
The total amount of business therefore is distributed approximately
as follows :
Premiums
written
Losses paid
Per cent
$33,712,957
7,378,782
$15,199,904
3,335,742
45.1
Health .
45.1
Total . -
$41,091,739
$18,535,646
45.1
240 REPORT OP SOCIAL INSURANCE COMMISSION.
The number of persons represented can not be ascertained, but
various estimates place the average cost of policy at from $15 to $20.
On this assumption there may be about two millions or less persons
carrying personal accident insurance policies, and scarcely half a
million persons insured through casualty insurance against sickness.
The business of so-called personal accident and health insurance is
written in many different forms, some of which are entirely outside of
the means of wageworkers. Included in these totals is an unknown
amount for insurance against accidents which the traveling public
purchases at 25 cents a day when buying a railroad ticket. The largest
part of the forty odd millions is so-called commercial accident insurance,
written at a substantial annual premium, or, less frequently, for
premiums paid every three or six months. Such insurance is perhaps
most frequent among professional and business classes, and the amount
of insurance is sometimes very high, reaching occasionally to $100,000
or more in case of death or serious dismemberment from accidental
injury. Most of these policies include weekly benefits in case of dis-
ability, from $25 to $250, the amount of insurance being limited only
by the willingness of the insured to pay the premium and of the com-
pany to insure the risk. Competition between the companies has forced
into the contracts many fanciful benefits, designated as "frills, or
talking points," intended to facilitate the sale of the policies without
risking very heavy losses. Double indemnity for travel accidents is,
for instance, a common feature.
The health insurance contracts are much simpler, providing little
beyond a specified weekly benefit during disability for a limited number
of weeks. In the earlier years such health insurance contracts were
issued for a limited, enumerated list of diseases. This was not popular.
The standard casualty companies at present grant full coverage against
all diseases in their health insurance contracts.
There are undoubtedly some wage earners and low-salaried employees
who carry insurance of this kind, but their number is necessarily very
limited, and is mainly found among the better paid mechanics. Not
only is there difficulty in meeting the annual, semiannual and quar-
terly premium, but the cost of this insurance is not low. The loading
imposed upon the actual cost of insurance is at least equal to the latter,
or even exceeds it. Considerable persuasion and advertising appears
necessary in this as in many other comparatively new forms of insur-
ance. This causes a very high rate of commission. When all the other
expenses are added, the total cost of administration often exceeds 50
per cent. The data of premiums and losses for various yenrs and various
companies, indicate a general "loss ratio" of some 45 per cent, and in
fact the companies feel that the business results in a loss when the
REPORT OF SOCIAL INSURANCE COMMISSION. 241 '
"loss ratio," or, the ratio of losses paid to premiums received, exceeds
48 per cent.
These remarks apply to the entire business of accident and health
insurance, whether written for the middle classes or wageworkers.
Special forms of this insurance have, however, developed for the needs
of the industrial population. These are mainly industrial accident and
health insurance on a monthly or weekly premium basis, and factory or
collective insurance, when employees of one establishment are insured
in a group, the employer sometimes only collecting the premiums from
the insured wageworkers, sometimes contributing part of the premiums,
and occasionally paying the entire premium out of his own pocket.
The amount of this accident and health insurance business written
by casualty companies on any of these plans among wageworkers, can
not be determined accurately. In a hearing before the congressional
committee,^ Mr. Charles F. Nesbit, superintendent of insurance for the
District of Columbia, testified concerning the results of this form of
insurance :
We have here about 90,000 — sometimes over 90,000 — wage-
earning negroes in Washington. They form most of the casual
labor — servants, day laborers, drivers and such workers as those.
Among these people there has grown up a system of insurance
against sickness. This has grown up largely in this section, and
south of here in Maryland, Virginia and the Carolinas, and some-
what in Tennessee. The greatest problem with these people is that
when they become sick their pay stops.
To show you how thoroughly they try to insure against sickness
in the District of Columbia, I will state that in this city they pay
$500,000 in premiums. And out of that all they get back is $200,-
000 — approximate figures.
I find that all the other work connected with the insurance depart-
ment is not so troublesome as taking care of these sick claims.
These people come in and claim for one, two or three weeks sickness.
It is impossible to go to court on a claim like that. It would not
pay ; and besides, these people could not afford it. It does not pay
to spend $30 to get $6. It has given me more work, more trouble
in taking care of these claims than has all the other work connected
with the insurance department combined, largely because, I will
admit, I permit it, for I feel that they are entitled to some con-
sideration.
I have figured this matter out for ten years, and I find that the
sum paid in in ten years amounts to $40,000,000 all told, in sick
and accident companies doing business in the district.
*********
In Washington alone it has been less than $4,000,000. I take
these figures from their own statement, and do not differentiate
between the district and other places. * * *
'Hearings before Committee on Labor, U. S. House of Representatives, by Congress,
First Session, on H. J. Res. 159, April 6, 1916, p. 105.
16—27626
1242 REPORT OP SOCIAL INSURANCE COMMISSION.
Every time you collect $100,000 from the poorest citizens of this
territory, it costs you $60,000 to collect it, and $40,000 is all that is
paid back. They say that it can not be done for less ; it costs that
much money. That much money is tal?;en away from our people
here who are on the verge of going over the brink in the direst
poverty. What is the net result ? That they get 40 cents back out
of a dollar of the hardest kind of earned money they give up.
*********
The expenses are high, because the premiums are collected in
small amounts of 10, 15 and 25 cents a week. Agents collect it by
going around from house to house. We, of course, can not exactly
tell these people how they should run their business. You can
readily see, however, that it costs a great amount of money to
collect money in small amounts like that, when you have to run
around through the alleys of the city, sometimes calling three or
four times in order to collect ten cents. That is going to cost
money.
But that does not alter the fact that these people have to give up
one dollar for every 40 cents they get back. It is a pathetic thing,
and I can not tell you how pathetic some of these cases are. I
remember a ease that came before me the other day, of a colored
woman who came here from out of town, from somewhere in Vir-
ginia. Not all these people are in the district, you understand;
some of them are in the country. She came in and claimed $67
death benefits. The company offered to pay $30. There was
nothing I could do about it ; it was a matter of lawsuit or accepting
this compromise. It was a matter which I could not settle. After
I had told her what the facts in the case were, this colored woman,
who sat there with a flannel cloth about her head, said : ' ' That is
about all we ever get out of anything. I guess we better take it."
It is not good for the people of the community to have to struggle
this way and guard against the misfortunes of sickness and death
in so inadequate a manner.
I have no charges to make against these people who run these
companies. They do not reject one claim out of 16. Sixteen claims
will be paid out of every 17 put up to the companj^. I call that a
very clear record, and I find very few cases that come down to me
that have merit in them; that is, I find very few meritorious cases
that are rejected by the companies. It must be remembered, too,
that these companies are dealing witli people whom it is very hard
to make understand cases of this kind.
However, this is an absolutely inadequate method. It seems to
me that some inqiiiry should be included in this inquiry looking to
taking care of this particular problem. That it is a serious problem
is indicated by the figures that I have given for the city. When you
consider the amount of money that is paid in by a limited part of'
our population — $450,000 a year — which is paid in in amounts of
10, 15 and 25 cents a week, you will realize how hard these people
are struggling to provide against sickness. All kinds of people
come to these companies. There are servants in houses, men work-
ing on the roads and streets, and all that class of people. When
they get sick everything stops, as their pay stops. That is the terror
REPORT OF SOCIAL INSURANCE COMMISSION. 24'3
of life to them. There should be some better way to provide against
sickness, or loss on aeeount of sickness, among these people, than a
system which exacts 60 cents out of every $1 that is paid in.
CONCLUSION.
The above brief review of the various forms of insurance for wage-
workers developed in this country during the last half a century, and
perhaps largely during the last 25 years, both through cooperative effort
and through business enterprise, seems to indicate clearly the great
difficulties which are in the way of all such efforts to meet the problem
of need satisfactorily. The very variety of these efforts establishes the
fact that the need of all such forms of insurance is keenly felt. But the
results in most cases are far from satisfactory, either qualitatively or
quantitatively, or both. Either the insurance is limited to compara-
tively few, or is subject to very great expense in the conduct of its busi-
ness, or the social results are such as to offer little justification for the
effort and cost. A good deal has been written about the energy and
enterprise of American insurance companies in carrying insurance to a
very high degree of development, and for this development in some lines
of insurance, high credit is due to insurance enterprise. But as far as
insurance among wageworkers is concerned the field of accident and dis-
ease has hardly been scratched.
CHAPTER VIll.
THE SOCIAL INSURANCE MOVEMENT
IN THE UNITED STATES.
REPORT OF SOCIAL INSURANCE COMMISSION. 247
SECTION I.
IN GENERAL.
Of all the modern industrial countries, or at least those of a Caucasian
population, the United States has seen the least development of social
insurance. Less than a decade ago the term was practically unknown
in this country. For this reason the marked interest in the whole pro-
gram of social insurance displayed throughout the country within recent
years is the more significant. A brief historical review of the growth
of this suddenly aroused interest is of some importance, because outside
the field of compensation and mothers' pensions little has been accom-
plished in actual legislation.
The striking and novel legislation which began in Germany did not
attract very much attention among American students of economic
problems at first, although a translation of the German invalidity and
old age insurance act appeared as early as 1889. It was not until
nearly a decade had elapsed that detailed studies of European legisla-
tion in this field began to appear in the United States. Most of these
were made by economists in employ of government institutions rather
than by university teachers.
In 1893 the United States Bureau of Labor published a comprehensive
study of workingmen's insurance in Germany, by Dr. John Graham
Brooks. The study failed to attract very much attention from the pub-
lic at large, or even from students of economics. In 1898 the first general
study of workingmen's insurance was made by Dr. W. P. "Willoughby
of the Bureau of Labor. Notwithstanding its very elementary nature,
it long remained the only authoritative work on the subject in English.
In 1899 the New York State Bureau of Labor published a more com-
prehensive study, devoted to the problem of accident compensation and
insurance in Europe. Gradually the problem of possible adaptation
of these European institutions to American conditions began to force
its way to the foreground, and soon the rather limited stream of scien-
tific literature was overtaken by a very strong current of popular propa-
ganda literature in which the popular magazines participated.
The problem of compensation, or insurance for industrial accidents,
was first approached. In this the United States only followed most
European precedents, since in all countries, except Germany, accident
insurance laws were the first passed.
The American system of dealing with industrial injuries was becom-
ing more complex, more expensive and more wasteful. It clogged the
courts, stirred antagonism between employer and employee without
248 REPORT OP SOCIAL INSURANCE COMMISSION.
meeting to any extent the problem of destitution caused by industrial
accidents. The adoption by Great Britain of a very weak compensation
act in 1897 directed the attention of American legislators to the
European methods of meeting the problem.
An effort was made in 1899 in the New York legislature to introduce
a compensation law similar to the British act of 1897. But the repre-
sentatives of labor rejected it, preferring to work for a more stringent
liability law. This attitude of the labor organizations was quite char-
acteristic for the time.
The first successful effort was made in Maryland, where, by the act of
1902, an employers' and employees' cooperative insurance fund was
created for workingmen employed in mines, quarries and steam and
electric roads, with equal contributions from both employer and
employee, to be administered by a state official. It granted the sum of
$1,000 in each fatal accident. Thus, with one bold stroke, a system of
state accident insurance was introduced. But it was a very poor substi-
tute, even for a system of liability, for in depriving workmen of all
rights under liability laws, it granted the right of compensation only
for fatal accidents, established an inadequate amount of compensation
at a considerable cost to the workmen, who were charged one-half of
the contributions.
The law was declared unconstitutional in 1904 on the ground that it
deprived both parties of the right of trial by jury, and conferred on an
executive officer judicial functions, for the law was administered in all
its details by the state insurance commissioner.
Outside of this experiment, the first state to take a decisive step was
Massachusetts. In 1903 a committee of five was appointed to study the
relations between emploj^er and employee, and the question of liability
for industrial injuries was speedily recommended to its consideration.
The committee recommended a fairly comprehensive bill on the lines
of the British act of 1897, but the bill was rejected by the legislature on
the ground that such a law would place an exceptional burden on the
manufacturers of the state, and would cripple them in competition — an
argument which, for many years, exercised a powerful influence in
retarding compensation legislation.
In 1907 another joint committee was appointed by the Massachusetts
legislature. The committee this time did not go as far as its predecessor,
deciding by a small majority that the step was premature. They did,
however, recommend an act which was passed by the legislature in 1908,
authorizing employers to establish, of their free will, compensation
schemes, which, if approved by the State Board of Conciliation and
Arbitration, might serve as substitutes for the existing employer's
liability. The law remained practically a dead letter, thus indicating
REPORT OF SOCIAL INSURANCE COMMISSION. 249
the futility of counting upon the good will of employers as a force to
accomplish the necessary reform.
A similar movement commenced about the same time in Illinois. A
commission containing representatives of capital, labor, law and econom-
ics was appointed in May, 1905, to study the entire matter of working-
men's insurance and old age pensions. The commission presented a
draft of an accident insurance bill, the shortcomings of which it frankly
recognized, but thought them justified by considerations of timeliness.
The plan provided for a voluntary compensation scheme, through a
mutual insurance institution, with equal contributions from both employ-
ers and employees, and a very limited compensation scale. The bill met
with the unanimous disapproval of organized labor, which destroyed
all its chances for success. Manufacturers also resisted its extension
of their liability.
In 1907 Connecticut also appointed a committee to investigate employ-
ers' liability, though it was not specifically ordered to recommend com-
pensation legislation. The committee made a brief though fairly clear
study of some compensation laws, admitted willingly ?]1 the virtues of
the system, but could not agree to recommend a bill to that effect, mainly
because of fear of. interstate competition.
The modern compensation movement may be said to date from 1908.
At least, during that year, it received a considerable impetus from the
federal government. A compensation law for the employees of the
federal government (who were in a peculiarly unfortunate condition
in that they were not even protected by any liability law) became the
earnest effort of the Eoosevelt administration. Many references to it
were made in the presidential messages, and in reports of cabinet
officers. Finally congress passed a compensation act for the protection
of some government employees, the act of May 30, 1908, very limited in
its application, but famous as the first real compensation act in the
United States.
Under the influence of these first steps, a large interest in the problem
grew up. By the appointment of legislative commissions in Minnesota,
New York and Wisconsin in 1909, the stage of commissions and investi-
gations was inaugurated.
After the appointment of these three commissions the movement grew
by leaps and bounds. Other states followed. In 1910 commissions
were appointed in Illinois, Massachusetts, New Jersey, Ohio and by the
United States government, and, in 1911, in Colorado, Connecticut, Dela-
ware, Iowa, Michigan, North Dakota, Pennsylvania, Texas and West
Virginia. In some states, as California and Washington, commissions
were appointed by the governors without legislative authority.
While constitutional difficulties and many other local differences have
produced a great variety of legislative results, the general principle of
250 REPORT OF SOCIAL INSURANCE COMMISSION.
compensation for industrial accidents has been adopted by the United
States. Only 15 states had failed to adopt such acts at the end of 1916.
Of these, only three states, Utah and both Dakotas, largely agricultural
and with a very small industrial development, lie outside of the South,
where social legislation has always been backward.
The enumeration of these official efforts and steps does not, however,
give a complete historical statement of the development of the compen-
sation legislation in the United States. The voluntary efforts of various
organized social groups resulted in the enlightenment of public opinion.
The American Association for Labor Legislation, organized primarily
for the study of labor legislation, rapidly developed into an active body
for promotion of compensation legislation. In many states local
branches were very active in drafting bills and conducting popular
agitation in their favor. It organized a workmen's compensation com-
mittee which published model standards of compensation legislation,
and also prepared the draft of a new compensation act for federal
employees.
Other organizations of economic students also woke up to the import-
ance of the problem. The Philadelphia American Academy of Political
and Social Science called together a conference in April, 1911, and the
New York Academy of Political Science in November, 1911.
The National Civic Federation, in which both employees and employ-
ers are represented, appointed a special department on compensation
for industrial accidents and prepared a model draft of a uniform com-
pensation law. The National Association of Manufacturers also
appointed a special committee for the study of accident compensation,
which went to Europe to investigate the subject and wrote a comprehen-
sive report.
American labor organizations have changed their early attitude of
opposition which appeared in New York in 1899, and in Illinois in 1905.
The president of the American Federation of Labor has repeatedly
appeared in defense of compensation legislation, and in many states,
notably in New York, the local federations took an active part in the
drafting of the bills. The legal profession, through the American Bar
Association, has had for some years a special committee planning
uniform compensation legislation.
The National Progressive Service published a detailed study of com-
pensation standards. These are only isolated cases illustrating the
public interest in the matter and the efforts of private organizations.
They were duplicated on a smaller scale in most of the states.
The practical application of compensation laAvs soon raised the ques-
tion as to a proper line of demarcation between an industrial accident
and an occupational disease. The importance of extending the compen-
sation system to occupational diseases was early recognized by advocates
REPORT OP SOCIAL INSURANCE COMMISSION. 251
of compensation. While this extension was accomplished by judicial
interpretation of the law in a few states, the state of California has the
distinction of being the only state to have included the occupational
diseases by a special amendment, substituting the word "injury" for
"happening of an accident." In this respect, as in many others in
compensation legislation, California has taken a most advanced posi-
tion, and will very likely be followed by a number of other states in
the near future, because agitation for siich amendments is very active.
252 REPORT OF SOCIAL INSURANCE COMMISSION.
SECTION II.
PUBLIC LIFE INSURANCE.
The two experiments in life insurance undertaken in Massachusetts
and Wisconsin must here be briefly referred to, since they are evidence
of the growing readiness to deal with these problems in a way that would
have been unthought of in the United States some 20 years ago. Neither
experiment has had any substantial influence upon problems of desti-
tution.
Massachusetts.
The Massachusetts savings banks insurance system is not compulsory,
and it is not in any sense a state insurance system, but it owes its exist-
ence to a legislative act (June 26, 1907), and by that act a general
reinsurance fund under state supervision is created. The creation of
this fund antedates the entire compensation legislation, and it has been
designated "The first significant step towards social insurance in the
United States." The purposes of the act are to give wage-earners of
Massachusetts, through the sale by banks of insurance at cost, an oppor-
tunity to obtain safe life insurance at the lowest possible cost, as a sub-
stitute for the more expensive so-called "industrial life insurance."
This low cost is sought by eliminating entirely the paid solicitor of insur-
ance and the house-to-house collector of weekly payments and by elimin-
ating profit. The state actuary furnishes the actuarial service, and the
state medical director supervises the medical work without charge to
the banks.
The premiums are only loaded to provide for the necessary expenses
and provision is made for a safetj^ reserve fund. The rates, fees and
other charges, the reserve and loan values, etc., are uniform for all
savings and insurance banks operating under the system.
The entire system is that of insurance at cost, or even somewhat below
cost, because of the state subsidy for salaries of actuarial and medical
departments.
The question is : How have the people of Massachusetts responded tc
this measure of voluntary social insurance? Of nearly 200 savings
banks only four up to date, with 278 agencies in other localities, have
organized insurance departments. The decade which has elapsed since
REPORT OP SOCIAL INSURANCE COMMISSION.
253
the enactment of the law has seen some healthy growth of the system,
as is shown by the following statement:
Year ending October 31 —
Total
premium
Inpome
Number of
policies in
force Oct. 31
1909 . .
$25,377 29
76,348 92
124205 08
164,058 95
2 521
1911
5,063
8,054
1913 .. _
1915 —
10,892
The office of the state actuary states that on August 1, 1916, the num-
ber of policies outstanding reached some 14,000, and the amount of out-
standing insurance some $6,000,000. But notwithstanding the substan-
tial difference in the cost of insurance, especially when compared with
that of industrial life insurance on a weekly payment plan, the total
volume of transactions is almost insignificant. The industrial business
in force with the five industrial life insurance companies in ]\Iassachu-
setts was 216 times as great as that of the savings bank insurance system.
The number of policies issued was 147 times as great. After seven
years of endeavor the savings bank system secured only about 1 per
cent of the business in competition with the system which it was ' ' organ-
ized" to overcome. The law was passed with the belief that the average
man was wise enough to see the advantages of savings bank life insurance
and that he would of his own initiative apply for insurance, whereas
the "average man" did not do anything of the kind. Ninety-nine out
of a hundred continued to take out industrial insurance policies at the
solicitation of agents, and only one out of a hundred applied to the
savings bank system.
The lesson to be derived from this experience is but a simple repetition
of European experience, namely, that cheap state insurance, when purely
voluntary, is a failure. The experience of the JMassachusetts plan is
additional evidence that a true social remedy must be sought in some
application of the compulsory principle.
Wisconsin.
Notwithstanding the slight degree of success of the Massachusetts plan
similar experiments are being advocated in many other states, and the
principle of state life insurance is being strongly advanced as a method
of bringing cheaper insurance within the reach of people of moderate
means. Wisconsin is as yet the only state that has legislated m this
direction, establishing a state life fund in 1911.
The Wisconsin plan differs from that of Massachusetts m that no
intermediary similar to the savings banks is made use of. The insur-
ance system may be classified as straight state msurance, because the
254
REPORT OF SOCIAL INSURANCE COMMISSION.
state not only creates but administers the fund. The state does not
assume any liability beyond the amount of the fund.
The benefits are open to all citizens of the state. Policies of life
insurance may be issued to persons between the ages of 20 and 50 in
amounts of $500 and multiples thereof not to exceed $3,000. Annuities
may be sold to begin at the age of 60 in sums of $100 or multiples thereof,
not to exceed $300. It was provided that at least 200 applications for
insurance amounting to not less than $100,000 of insurance should be
received and approved before any policies could be issued, in order to
prevent possible financial disaster at the beginning.
It took fully two years before the necessary number of applications
was received and approved, and the first policies were issued October
27, 1913. Since then the development of the fund has been extremely
slow as shown in the following tables :
Income
Disbursements
Tear
Premiums
Interest
and other
Total
Deaths
Other
policy
benefits
Return
pre-
miums
Man-
age-
ment
Total
1913
$5,735
8.239
10.811
$331
S6.nfi6
$235 $256
196 300
93 1 979
$491
1914 . .
177 ' 8.416
1,034 1 11.845
$450
540
946
1915 _
$2,000
4,712
Policies issued
Policies in force
Assets
Liabilities
Tear
Number
Amount
Number
Amount
Sui-plus
1913
237
85
71
$146,400
82.800
70.500
237
315
381
$146,400
224,100
289,600
$5,601
13,268
20,458
$3,444
11.827
18.729
$2,157
1914 . . -_
1,441
1915
1,729
It should be noted that the facilities for publicity were practically
negligible.
From the standpoint of social insurance history there is nothing sur-
prising in this experience. When volimtary methods of social insurance
have had a comparative degree of success, there has always been the
stimulus of substantial subsidies from the public treasury. When state
insurance without subsidies, relying entirely upon the cheapening of
insurance through elimination of profits and reduction in the cost of
soliciting business, has succeeded, there has always been elimination of
the private competitor. Nowhere in the history of insurance has the
competitive state insurance plan succeeded by a direct appeal to the
people without the aid of a subsidy, in the face of an active agency force
agitating for private insurance companies.
REPORT OF SOCIAL INSURANCE COMMISSION. 255
SECTION III.
HEALTH INSURANCE.
An active movement for propaganda of the health insurance idea is
the most recent of all social insurance movements in this country. It
may be dated from the First American Conference on Social Insur-
MHce held in Chicago in June, 191:3. Otlier organizations of similar
character, as the American Public Health Association, the American
Academy of Medicine, also imdertook the study of the subject. The
health preserving aspects of the health insurance plans attracted the
attention of the American Medical Association, which organized a stand-
ing committee on social insurance, largely devoted to health insurance.
The study and agitation for health insurance is not limited to private
organizations. The Federal Commission on Industrial Eelations under-
took the study of health insurance and the majority report endorses the
idea in the following words :
Much attention is now given to accident prevention, yet accidents cause only one-
seventh as much destitution as does sickness, and one-fifteenth as much as does
unemployment. A great deal of unemployment is directly due to sickness, and sick-
ness, in turn, follows unemployment. * * * Other investigations show that 30
to 40 per cent of cases requiring charitable relief are immediately due to sickness.
Sickness among wage-earners is primarily the direct result of poverty, which
manifests itself in insuflBcient diet, bad housing, inadequate clothing, and generally
unfavorable surroundings in the home. The surroundings at the place of work and
the personal habits of the worker are important but secondary factors.
There are three general groups of disease-causing conditions : (1) Those for which
the employer and character of the industry and occupation are responsible; (2)
those for which the public, through regulatory and relief agencies, is responsible ; and
(3) those for which the individual worker and his family are responsible.
The employers' responsibility includes, besides conditions causing so-called occupa-
tional diseases, low wages, excessive hours, methods causing nervous strain, and
general insanitary conditions.
Many employers already partly recognize their responsibility ; aside from "welfare
work," many contribute liberally to employees' sick benefit funds or provide for the
entire amount.
The public has in part recognized its responsibility in such matters as housing,
water supply, foods, drugs, and sanitation. But the recognition of responsibility has
not been thoroughgoing, and in the case of local health ofiicers the tendency has been
too frequently to provide for the better residential sections and neglect the slums.
The greatest share of responsibility rests upon the individual, and under present
conditions he is unable to meet it.
This inability exists by reason of the fact that the majority of wageearners do not
receive sufficient wages to provide for proper living conditions, and because the present
method of disease prevention and cure are expensive and sickness is most prevalent
among those who are least able to purchase health. The worker is expected to provide
for almost certain contingencies in the future whefl he lacks means of existing
adequately in the present. - „ , t „„,.v
If we might reasonably expect a rapid increase m the wages of all classes of work-
ers to a standard which would permit proper living conditions and adequate medical
256 REPORT OP SOCIAL INSURANCE COMMISSION.
attention, it would perliaps be inadvisable to recommend any governmental action.
But we fee! assured that no such condition is to be expected in the near future, and
believe that new methods of dealing with the existing evils must be adopted.
The remedial measures for existing conditions must be based on the cooperative
action of those responsible for conditions ; must be democratic in maintenance, control
and administration ; must distribute costs practicably and justly ; and must provide
a powerful incentive for sickness prevention.
A system of sickness insurance is the most feasible single measure. This con-
clusion is based on the following :
(b) The losses occasioned by the wage-earner's sickness affect employee, employer,
and community, all of whom share in the responsibility. Insurance is the recognized
method of distributing loss so as to reduce individual risk to a minimum.
(6) The strongest incentives — that of lessening cost — is given to efforts to diminish
frequency and seriousness of losses ; sickness insurance in this respect is a preventive
measure of a positive and direct kind. The lower the morbidity and mortality rates,
the less the amount necessary for benefits and the lower the insurance rate.
(e) Sickness insurance is no longer experimental, but is rapidly becoming univer-
sal. It is not a novelty even in the United States. Although not provided for nor
subsidized by government here, it is most widely used, there being several million
workers so insured.
{d) The cost would be no greater than at present. The conclusion appears sound
that medical benefits and minimum cash benefits of $7 per week for a period of not
exceeding 26 weeks in one year, and death benefits of $200, can be provided at a total
cost of 50 cents per week per insured person. Budgetary studies of large numbers of
workingmen's families show that under present conditions from 25 and 50 cents a
week, up to TO cents and even $1.86, is spent for little more than burial insurance.
Workers would thus receive immeasurably greater benefits for much less than they
now pay.
A governmental system of sickness insurance is preferable because —
(a) More democratic; the benefits would be regarded as rights, not charity.
(6) Compulsory features, obnoxious under private insurance, would be no longer
objectionable.
(e) On account of the reduction in overhead charges and duplication, higher
efficiency in administration would be secured at less cost.
(d) Cooperation with other public agencies is impracticable otherwise.
(e) European experience has proved the superiority of government systems to
private insurance.
if) Taxation of industry by federal government in sickness insurance system is
thoroughly established by the Marine Hospital Service. A law taxing vessels for
such funds was passed in 1798, and its constitutionality has never been questioned.
The conclusion seems warranted that a sickness insurance system for the United
States or the several states, similar in general principles and methods to the best
European systems, will be less difficult and radical than has been foreboded. It will
not so much introduce new ideas and practices as it will organize existing plans and
principles into more effective accomplishment. Existing agencies, in trade unions,
mutual benefit societies, and establishment funds, can be utilized just as they have
been in Europe. The real problem becomes one of constructive organization.
Several valuable studies have been published by the United States
Public Health Service in vv'hich primarily the relation between health
insurance and public health was emphasized. Literature on the subject
contributed liy various public officials, large organizations and private
students is rapidly growing, as a glance at the bibliography will indicate.
General advocacy of. the health insurance idea soon developed into
definite legislative proposals. The first study of standards of health
insurance legislation was published by the committee on social and indus-
REPORT OP SOCIAL INStTRANCE COilMISSION. 257
trial justice of the Progressive National Service in New York early in
1915. In the fall of 1915 the first tentative draft of a health insurance
bill was published by the social insurance committee of the American
Association for Labor Legislation, and two later editions with further
amplification of the detailed provisions have since appeared.
In the spring of 1916 bills for health insurance were introduced in the
legislatures of Massachusetts, New Jersey and New York. The text of
the bills was practically identical and was based upon the tentative draft
of the American Association for Labor Legislation.
Little but the introduction of the bill was accomplished in New Jersey.
But both in Massachusetts and New York hearings on the bill were
granted. As a result of these hearings a general demand for further
investigation became apparent. A state commission was appointed in
Massachusetts, and a bill for a state commission passed the senate in
New York, but failed of passage through the assembly because of the
adjournment of the legislature."
In the spring of 1913 a commission to investigate old age insurance
and pensions and mothers' pensions was created in California by legis-
lative enactment. This commission was handicapped by an insufficient
appropriation, and in 1915 a similar law was enacted providing for a
Social Insurance Commission. This second commission was given an
adequate appropriation, and was required to make a thorough study
of the need and practicability of extending social insurance activities in
the state of California. This commission has concentrated its efforts
upon a study of health insurance.
It is impossible to review all the facts concerning the growth of the
social insurance movement in this country without arriving at the con-
clusions that in the verj' near future the movement is bound to result
in some constructive legislation.
The history of workmen's compensation, in fact the history of any
other movement for social legislation, has established the definite stages
through- which the demand for a social reform must go to become suc-
cessful.
Academic study of the problem, collection of evidence as to the need
of popular propaganda, governmental commissions, preparation of legis-
lative proposals, and finally legislation— these are the normal steps, and
in many branches of social insurance several of these steps have already
been made. And while the agitation for health insurance is perhaps the
most recent of all, the progress made within the short time is also
greatest. Outside of California, the states of IMassachusetts, New York
and Wisconsin show, perhaps, the greatest advance. In these and in
many others, bills for health insurance are expected to be introduced
during the next legislative session.
17—27626
258 REPOET OP SOCIAL INSURANCE COMMISSION.
SECTION IV.
ENDORSEMENTS OF HEALTH INSURANCE BY
LABOR ORGANIZATIONS.
Though the movement for health insurance is very recent, a large
number of labor organizations have already gone on record as endorsing
it. This is especially noteworthy since the early attitude of many labor
organizations was that of mistrust, if not antagonism, largely because
of fear of the compulsory principle.
Labor organizations endorsing health insurance.
A. State Federations —
New Jersey State Federation of Labor.
"Wisconsin State Federation of Labor.
Massachusetts State Federation of Labor.
Missouri State Federation of Labor.
Ohio State Federation of Labor.
B. International Unions —
International Typographical Union.
International Glove "Workers of America.
International Union of Steam and Operating Engineers.
International Spinners' Union.
International Brotherhood of Pulp, Sulphite and Paper
Mills "Workers.
International Ladies' Garment "Workers' Union.
Amalgamated Clothing "V^^orkers of America. (General
Executive Board.)
United Textile "Workers of America.
The following are illustrations of the general type of resolution passed
by these numerous labor organizations :
RESOLUTION.
Passed by International Union of Steam and Operating Engineers.
Whebeas, Careful estimates by the United States Public Health Service shows
that $180,000,000 is the annual cost of medical treatment to the American wage
earners and their annual wage loss due to sickness is over $500,000,000 more, and
Whebeas, The findings of the Department of Labor, the Public Health Service,
the Federal Commission on Industrial Relations indicate that the best method of
protecting the workers against their suffering and losses due to sickness is a govern-
mental system of universal health insurance, and
Whebeas, European experience, as well as our own experience in workingmen's
compensation laws, has demonstrated that workingmen's insurance tends to prevent
sickness and accidents, be it therefore
Resolved, By the International Union of Steam and Operating Engineers in con-
vention assembled, that the convention favors a universal system of health insurance.
REPORT OF SOCIAL INSURANCE COMMISSION. 259
with contributions by employers and tlie state as well as by the workers, in order
that efficient and economic medical service may be furnished to employees and proper
emphasis may be placed upon the prevention of industrial disease.
RESOLUTION.
As Passed by the International Brotherhood of Pulp, Sulphite and Paper Mill
Workers. (Membership between 15,000 and 20,000.)
Whereas, The introduction of workmen's compensation laws has greatly amelior-
ated the economic loss and suffering previously endured by wage earners because of
accidents, and
Wheeeas, The findings of the United States Public Health Service and the Federal
Commission on Industrial Relations indicate that the sufiEering and economic loss
endured by wage earners on account of sickness is seven times that endured on account
of accidents, and
Whereas, European experience proves that workmen's health insurance is the
best method of protecting the workers against the contingencies of sickness and indus-
trial disease and of prolonging their lives ; therefore be it
Resolved, By the International Brotherhood of Pulp, Sulphite and Paper Mill
Workers of the United States and Canada in convention assembled that the conven-
tion favors a universal contributory health insurance law which would exclude profit-
seeking insurance companies and which would insure to all sick wage earners prompt
and efficient medical aid, as well as financial assistance.
RESOLUTION.
Adopted October 12, 1916, by the Ohio State Federation of Labor.
Whereas, Investigations recently conducted by the Ohio State Board of Health,
the United States Public Health Service, the Department of Labor, and the Federal
Commission _on Industrial Relations show that the American wage earners endure
annually enormous suffering and economic loss on account of sickness, and
Whereas, The amount of suffering and economic loss endured by workingmen and
women because of sickness is seven times that endured by them because of accidents,
and
Whereas, European experience demonstrates that workmgmen s msurance results
in the prevention of sickness and in the lengthening of the lives of the workers, there-
fore be it .J.
Resolved, By the Ohio State Federation of Labor, that the lederatiou favors a
universal system of health insurance, without opportunity for insurance company
profits, and in order that prompt and efficient medical service may be furnished to
sick wage earners and due emphasis placed upon the prevention of sickness and mdus-
trial disease.
260 REPORT OF SOCIAL INSURANCE COMMISSION
SECTION V.
OLD AGE INSURANCE AND PENSIONS.
It is impossible to point to any legislative step in this country com-
parable to European and Australian legislation dealing with the problem
of old age destitution, unless it be the system of war pensions which has
existed in this country for many years and has achieved its highest
development since the Civil war. It is true that these pensions are
given in consideration of past services in military operations. As is
stated by one writer :
"It is childish to consider the system of war pensions as a senti-
mental problem only, and to speak of the millions spent for war
pensions as the cost of the Civil war. We are clearly dealing here
with an economic measure which aims to solve the problem of
dependent old age and widowhood. ' '*
The same writer points out that because of the rapid dying out of the
veterans "a large appropriation will automatically become available,
which will permit of the establishment of a national old age pension
scheme without national fiscal disturbance — something which no impor-
tant European coimtry has been able to accomplish."
One of the most disputed problems in the field of social insurance in
Europe has been the problem of comparative advantages of compulsory
insurance versus old age pensions in dealing with the problem of old age.
It is argued in favor of the pension method that it has the advantage
of simplicity in avoiding the numerous complications of a system of
compulsory insurance, that it offers an immediate solution of the
problem, while the advantages of compulsory insurance can be realized
only after a considerable period of time, since insurance for purposes
of acquiring an annuity is very expensive unless begun at an early age ;
that the pension system avoids the method of compulsory contributions ;
that it prevents the unnecessary accumulation of enormous reserves,
thus unnecessarily withdrawing capital from productive enterprises.
On the other hand, objections raised against the pension method are :
that it is a modified or disguised form of charitable relief; that since it
requires evidence of destitution, it encourages improvidency ; that it
results in discrimination against those who endeavor to make some pro-
vision against old age ; that it places a heavy financial burden upon the
public treasury; and finally, that as it must offer one uniform amount
to all aged persons, the amount must be a very small one.
The controversy has already been raised in this country, and probably
*I. M. Eubinow, Social Insurance, p. 404.
REPORT OP SOCIAL INSURANCE COMMISSION. 261
will be an additional obstacle to constructive legislation. But it is
significant that proposals in both directions are already being made and
that the question of old age dependency, and of the necessity of some
definite social policy in dealing with this condition have been placed
before American public opinion.
Several states have had legislative investigations. In Massachusetts
more than in any state has this problem received consideration. As far
back as June 26, 1907, the first Commission on Old Age Pensions,
Annuities and Insurance was established which rendered a comprehen-
sive report in January, 1910, and though the commission rendered a
report adverse to the immediate establishment of an old age pension
system, the importance of the social problem of old age was clearly
recognized.
The general conclusions of the commission may be summarized in the
f oUovi^ing quotations :
"Serious practical difficulties stand in the way of the establish-
ment of any general system of old age pensions by this common-
^vealth or any single state.
"The commission holds that it would be inexpedient for Massa-
chusetts or any state to adopt a general system of old age pensions,
either at the present or at any time in the future.
"It seems desirable that the problem of sickness and accident
insurance should be dealt with before enacting any additional meas-
ures of general legislation concerning old age pensions or insurance.
Logically, the problem of sickness and accident insurance takes
precedence over the question of old age insurance.
' ' There is no considerable demand in this state for the establish-
ment of a general scheme of old age pensions and insurance."
"We also commend to the consideration of corporations of a per-
manent character with a large staff of employees, especially public
service corporations in the cities, the schemes of old age insurance
and pensions which have been instituted by various large concerns.
' ' We would furthermore direct attention to the new opportunities
for old age insurance offered by industrial insurance companies.
This insurance has been greatly cheapened and improved during the
last year.
"We suggest that in due time the laws governing the operation
of fraternal beneficiary corporations be amended so as to enable
these societies to pay old age benefits under supervision by the State
Insurance Commissioner as regards rates of assessment and method
of administration.
"We recommend the enactment of measures providing for the
establishment of retirement systems for public employees.
"We advise the general court to pass an act providing for the
establishment of a permanent unpaid commission on old age pen-
sions and insurance. We believe this subject to be of sufficient
importance to justify the creation of a special department, to deal
with it in comprehensive and systematic fashion. The function of
such a commission definitely stated would be to act as a bureau of
262 REPORT OF SOCIAL INSURANCE COMMISSION.
information and assistance for employers and employees, munici-
palities and counties, with a view to aiding and advising them
regarding the establishment of retirement systems; to study the
operation of schemes of old age insurance, annuities and pensions in
other states and countries, and the proposals for new legislation on
this subject, and to keep the legislature and the public informed
concerning these matters. ' '
The first ]\Iassachusetts report admittedly left the question open.
Early in 1913 a bill for the systems of old age pensions was introduced
in the lower house, and a hearing was held. Partly as a result of this
hearing a second commission on pensions was created by a resolution
approved by the Governor on January 4, 1913. Its official designation
was: "Commission to advise a just and comprehensive system of state,
county and municipal pensions." But broader powers were conferred
upon it in the following sentence of the resolution :
"The commission shall also consider the case of persons now
receiving pensions who are engaged in other employment and shall
also report upon the advisability of a general pension system for
old age or other disability, and may report a plan or plans for such
a system. ' '
But even the second report has not disposed of the matter in Massa-
chusetts where several social insurance bills were introduced in the legis-
lative session of 1916. A third commission was appointed to consider
old age pensions or insurance as well as other branches of social
insurance.
New Jersey.
A resolution was passed by the legislature of the state of New Jersey
and approved by the Governor on March 23, 1910, for a commission to
thoroughly investigate and report to the Governor the draft of a bill
providing for industrial old age pensions, for consideration and action
by the members of the One Hundred and Thirty-fifth General Assembly.
Wisconsin.
A resolution was passed by the legislature and approved May 7, 1913,
directing the Industrial Commission of the state to investigate the sub-
ject of old age pensions, to make a thorough and complete investigation
of the number, conditions and welfare of aged infirm, with a view of
establishing a system of old age pensions.
In compliance with this resolution a brief report was submitted by the
Industrial Commission of Wisconsin in 1915, which declared:
"That "Wisconsin will have sooner or later to face the question
of old age relief can scarcely be doubted by anyone who is familiar
with the trend of events in modern industrial communities. That
the question is easier of solution now tlian it will be a generation
hence is still less open to doubt. But the need is not so urgent as
to justify hasty legislation. A new system of old age relief ought
REPORT OF SOCIAL INSURANCE COMMISSION. 263
not to be adopted without mature consideration and the full support
of public opinion. The commission does not wish, therefore, to
recommend any specific measure at this time. ' '
United States.
The movement for old age pensions has already resulted in some agita-
tion before the United States Congress. As early as December 14, 1909,
Congressman "Wilson of Pennsylvania (now Secretary of Labor) intro-
duced an act to organize an Army Corps, prescribe qualifications for
enlistment therein, define the duties and fix the compensation and term
of enlistment of privates, which was, notwithstanding its official title,
really a plan for an old age pension system. The bill did not pass.
264 REPORT OP SOCIAL INSURANCE COMMISSION.
SECTION VI.
UNEMPLOYMENT INSURANCE.
Discussion of measures to prevent or minimize unemployment, or at
least mitigate the distress caused by it, has followed every acute economic
crisis and every period of prolonged industrial depression, but only very
recently has unemployment insurance been put forth as one of the possi-
ble remedies. The reasons for this are not difficult to understand.
Though ways and means for unemployment insurance have been dis-
cussed in Europe for 15 or 20 years, the results accomplished prior to
1911 were rather limited. In so far as experiments were successful they
took the form of substantial subsidies to trade union funds, or other
funds organized by wageworkers. Compulsory unemployment insur-
ance was even thought an economic impossibility until the British
National Insurance act supplied evidence to the contrary. But the
admitted prerequisite to such a system — an efficient system of public
employment exchanges — was also lacking.
The first important official investigation of conditions of unemploy-
ment, irrespective of crises and depressions, was that of the "New York
State Commission on Employers' Liability and Other Matters,"
appointed in 1909, which largely devoted its labor to questions of employ-
ers' liability, compensations and prevention of industrial accidents, but
appointed a subcommittee on unemployment, which brought in a very
exhaustive report. The investigations of the committee in Europe were
limited to Great Britain and Germany, while the most successful experi-
ments in unemployment insurance had been accomplished in Belgium,
Denmark and Norway. The conclusion of the commission as to unem-
ployment insurance in Germany was therefore not enthusiastic. It was':
"Two important experiments have been made in Germany with
public insurance against unemployment. Neither of them can be
said to have proven successful, but they have pointed out what
might be done for certain classes of unemployed. ' '
No reference to the insurance method was made in the recommenda-
tions of the commission. On December 29, 1911, the first general meet-
ing of the American Association for Labor Legislation devoted to the
problem of unemployment took place, and the American section of the
International Unemployment Association (L 'Association Internationale
pour la Lutte Centre Le Chomage, organized in 1910, with headquarters
in Paris) was organized. Even at this meeting. Prof. C. R. Henderson
stated that "it is to the trade unions that we must first look for the most
REPORT OP SOCIAL INSURANCE COMMISSION. 265
promising developments in the direction of insurance against unemploy-
ment, later we may hope for legislation. ' '
The intelligent study of the problem of unemployment in this country
dates from the organization of this association. In 1912 municipal
committees on unemployment were organized in Chicago and Milwaukee.
On June 6-7 the First American Conference on Social Insurance was
held in Chicago and a paper on "Insurance Against Unemployment"
was presented by the late Prof. Charles R. Henderson, who said :
' ' The conclusions are that for a people which profess to be civilr
ized, unemployment insurance has become a necessity. It is not a
physical but a moiral necessity. "We can not retain our ethical
standards and refuse to face our task. ' '
With the English precedent already available at the time. Prof. Hen-
derson asked : ' ' Would it not be more fair, more full of promise of
results within a reasonable time for all those who realize the monstrous
injustice of our present neglect to unite on a policy resembling in the
main principle the British system?"
The very serious industrial depression of the winter 1913-14 which
continued during the first winter after the beginning of the war, focused
the attention of the American people upon the problem of unemploy-
ment as never before. In many states and municipalities unemployment
commissions were appointed. A National Conference on Unemployment
with representatives from 59 cities and 25 states was held under the
auspices of the American Association for Labor Legislation in New York
City on February 27-28, 1914, and a second conference in Philadelphia
December 28-29, 1914.
The significant fact is the increasing frequency with which unemploy-
ment insurance was suggested at least as one of the possible remedies in
the effort to retrieve the effects of unemployment. In the following
extracts from some of the reports is shown an illustration of this
tendency.
California.
The permanent Commission of Immigration and Housing of the state
of California was asked by C4overnor Hiram W. Johnson on January 28,
1914, to direct its attention to the problem of unemployment, with the
object of suggesting what remedy might be applied by the state. The
report rendered to the Governor on December 9, 1914, contained the
following recommendations with regard to unemployment insurance :
"For the Avorker in seasonal trades, and in fact for all who labor
for a wage, we suggest unemployment insurance, though we are not
prepared to recommend any particular form. The success of this
state in handling industrial accident insurance is one argument that
warrants our looking more deeply into the whole field of social insur-
ance We urge that Your Excellency designate some existing board
266 EEPOET OF SOCIAL INSURANCE COMMISSION.
or commission to investigate this subject thoroughly, to report, say
in two years. Data supplied by the proposed bureau of labor
exchanges would be of inestimable value in any such investigation.
We recommend to your attention the experience of England and
certain continental countries, particularly Denmark and Belgium,
which has invented the Ghent system of subsidizing labor unions to
conduct the, machinery for unemployment insurance. ' '
The mayor of the city of Chicago, under authorization of the city
council on January 22, 1912, appointed a committee headed by Charles
B. Crane to inquire into and report concerning the cause or causes of
the nonemployment of so many wage earners, the extent and effect of the
prevailing conditions upon the community, and what can and should be
done more effectually to relieve the suffering of the poor and unemployed
and provide employment.
In the first preliminary report of the commission few recommendations
were made by the commission as a whole, but the subcommittee on relief
recommended :
"1. The establishment of a state insurance against unemployment
based on the Ghent system.
2. That the Governor and legislature be requested at the next
session of the legislature to pass laws providing for such a system. ' '
On August 24, 1914, or a few weeks after the beginning of the
European war, when the unemployment situation became seriously
aggravated, the city council of Chicago passed a resolution ordering the
Chicago Municipal Market Commission to "prepare as soon as possible
a practical plan for relieving destitution and unemployment resulting
from war conditions." In its report rendered on December 28, 1914, a
very decisive stand in favor of unemployment insurance was taken in
the following language :
"While the establishment of a municipal employment bureau for
part-time work, and public works for the unemployed, will do much
towards solving the problem of unemployment, there are, however,
periods of severe business depression and cyclical fluctuation in
industry where these methods of combating unemployment are to
a certain extent practically ineffective. There will still remain an
excess of wage earners for whom no part or short-time work is avail-
able, and the municipal employment bureau will bring no relief,
inasmuch as jobs and work are scarce and at a premium. In order
to reach this excess group of wage earners and protect it against the
distress and misery incident to prolonged unemployment, it is advis-
able that the community establish some form of public insurance
against unemployment. * * '-'
"It should, however, be urged that the prime requisite to the
establishment of insurance for the unemployed is a municipal
employment bureau. This has been called a point of fundamental
importance, inasmuch as no scheme for the insurance of the unem-
ployed can be a success unless founded upon the adequate and
EEPORT OF SOCIAL INSURANCE COMMISSION. 267
efficient control of the labor market by a complete registration of all
the unemployed existing in the eommxinity.
' ' The municipal employment bureau should be the guardian and
watchdog over the fund providing for public insurance of the unem-
ployed. No wage eartier should be eligible to unemployment insur-
ance unless he is registered at the employment bureau, nor be able
to, as is the case in German cities, draw a penny from such fund
one moment after the municipal employment bureau is assured that
there is work available for him to do.
"Insurance against unemployment has well been termed the
second line of action on the problem of unemployment after the
establishment of a municipal employment bureau. The municipal
employment bureau, which is the first line of action, flanked by a
system of part or short-time work and public works for the unem-
ployed, should receive the undivided attention of our public officials
before any schemes for the establishment of public employment
insurance are elaborated. The first line of action, it should be said,
will require years of steady efEort and perseverance before any con-
siderable inroads can be said to have been made upon the problem
of the unemployed. ' '
Massachusetts.
Massachusetts is the only state in which the movement for unemploy-
ment insurance has reached the stage of legislative proposals. The
economic depression of the winter of 1913 caused the creation of the
Massachusetts Committee on Unemployment.
The committee soon arrived at the conclusion that until very substan-
tial changes were introduced in the organization of the labor market,
unemployment would remain a feature of industrial life; and that as
preference to methods of charitable relief a system of unemployment
insurance should be elaborated. A bill was introduced in the legislative
session of 1916, and a hearing was held on this as well as other social
insurance bills, as a result of which the present Massachusetts com-
mission was appointed.
The Massachusetts bill was drawn on lines similar to the British sys-
tem, providing for compulsory insurance within specified trades, the
scope, however, being wider, and included the following industries:
building and construction, textiles, leather, rubber, tobacco, clothing,
paper, printing and publishing, quarries, machinery and metal prod-
ucts, vehicles, teaming and trucking. The system provided a state
insurance fund, with contributions equally divided between employer,
employees and the state. Benefits were provided for in three groups,
$3 50 ' $5.25 and $7.00 a week, according to whether the workmen's
ordinary earnings were $8.00 or less, over $8.00 but under $12.00,
and $12.00 or over. There was to be no benefit for the first week, and
the maximum duration of benefits was placed at ten weeks during any
one year. ;
268 REPORT OP SOCIAL INSURANCE COMMISSION.
New York.
In the fall of 1914, when the city of New York was entering the second
year of serious unemployment conditions a committee on unemployment
and relief was appointed by the mayor, w;th Judge E. H. Gary as
chairman. It recommended earnest consideration of the subject.
United States.
During 1916 the question of unemployment insurance received con-
siderable attention from the United States Congress. On February 19,
1916, a joint resolution was introduced in the House of Representatives
by Congressman London of New York, for the appointment of a commis-
sion to prepare and recommend a plan for the establishment of a national
insurance fund and for the mitigation of the evil of unemployment.
Though, as appears from the text of the resolution, the purposes of the
commission are broader than the specific problem of unemployment, and
cover "A national sj^stem of social insurance which is to secure to the
worker adequate means of subsistence while involuntarily unemployed,
whether the unemployment be caused by lack of work, by sickness or old
age," the problem of lack of unemployment was emphasized. Two
hearings were granted by the Committee on Labor on this resolution,*
and the resolution was reported favorably to the house, though no further
action had been taken by the end of 1916.
It is impossible to overlook the significance of the fact that in various
parts of the country the investigations of the unemployment problem
called forth by the industrial depression of 1913-14 have led to the
recognition of unemployment insurance as a possible measure for miti-
gating the results of unemployment. Public discussion of methods for
prevention and relief of unemployment invariably arose during past
industrial depressions, but never before was unemployment insurance
even suggested, and more significant is the fact that agitation for unem-
ployment insurance has not subsided with the sudden change in the labor
market in the spring of 1915. Public opinion seems to have learned the
lesson that the time to prepare for the ravages of unemployment is
during the time of normal conditions.
Present indications are that the agitation for some form of unemploy-
ment insurance will continue to grow until a practical plan to suit Amer-
ican conditions is achieved. There are, however, serious practical diffi-
culties which must be overcome. First is the lack of familiarity with
the methods of social insurance in general, and second the absence in
most states of an efficient system of public employment offices. It
appears doubtful whether unemployment insurance will be successfully
realized until simpler forms of social insurance, primarily health insur-
ance, have been enacted.
*U. S. House of Representatives, 64th Congress, 1st Session Committee of Lator.
Hearings on H. J. Res. 159, April 6 and 11, 1916.
REPORT OF SOCIAL INSURANCE COMMISSION. 269
SECTION VII.
MOTHERS' PENSIONS AND ORPHANS' AID.
While differences may persist as to the comparative advantages of the
contributory insurance method and the gratuitous pension method in
dealing with the. problem of orphanage, a place to the mothers' pension
laws m the field of social insurance legislation can not be denied.
Outside of compensation for industrial accidents and occupational
diseases, mothers' pensions are the only branch of social insurance legis-
lation in which substantial progress has been made in this country.
Protection for mothers and orphans is the least developed branch of
social insurance in Europe. Germany is practically the only country
which has provided a system of general contributory insurance for this
purpose, while Denmark has followed the American method of non-
contributing pensions.
It is customary in almost all writings on mothers' pensions to point
to the so-called White House Conference in the ease of dependent chil-
dren, called together in January, 1909, by President Taft, as the begin-
ning of the movement for granting pensions to widows with children,
or mothers of children dependent for other reasons than death of the
father. As a matter of historical fact, precedents for such a public
policy antedate the conference of 1909 by several years.
It is interesting to observe that California was the first state to
inaugurate such a system. The constitution of the state and also the
statutes of 1880 and 1883 (codified in 1907) authorized the granting
of payments by the state to the counties for dependent children com-
mitted to private institutions. After the San Francisco earthquake the
policy of recommitting children in the care of the dependent but other-
wise competent mothers was tried. The general practice of leaving
dependent children in the custody of their mothers instead of committing
them to institutions, and paying to the mothers an amount approxi-
mating what the support of the children would cost was inaugurated
after amendatory legislation in 1913.
The rapid success of this agitation is one of the amazing things in
the history of social legislation. Comparisons with the spread of work-
men 's compensation suggest themselves, because both movements pro-
ceeded almost simultaneously. While the speed of the growth of com-
pensation was great, mothers' pensions spread very much faster. The
first state to legislate was Missouri, by a special act limited to Kansas
City, approved April 7, 1911. A statQ-wide act was passed in Illinois
on June 5, 1911. The year 1912 being one in which comparatively few
270 REPORT OP SOCIAL INSURANCE COMMISSION.
legislators met, only one or tw o states were added. But in 1913, of the
42 state legislatures in session, 27 had before them bills providing for
the support of dependent children in their own homes, out of public
funds, and 17 of these passed such acts.
In contrast with compensation, only a few states considered the neces-
sity of appointing commissions for the careful study of the problems.
Massachusetts appointed such a commission in 1912, New York and
California in 1913.
There were 22 state mothei-s' pensions laws in force in 1914, and in
1916 probably 25.
In a few states where legislation was preceded by investigating com-
missions, a certain amount of opposition to mothers' pensions developed
among students who advanced social insurance as the alternative.
Historically, the situation is that Denmark is the only European
country in which systematic provision is made for orphans by means
of mothers ' pensions, and Denmark does not stand in the advance guard
of the social insurance movement. On the other hand, Germany is the
only country in which systematic provision is made for very small
pensions for widows and orphans, partially paid for by contributions
from the wage earners during their working lives. Even with Ger-
many's 20 to 30 years' experience with social insurance, the problem of
the surviving children is still largely unsolved.
It is undoubtedly true that the pension system offers a quicker way
of meeting an existing problem. It is, however, unnecessary to assume
that the method of the gratuitous pensions once adopted must be accepted
as the final solution of the problem. While it may remain the only
solution in certain cases of destitution, the possibilities of systematic
life insurance through a compulsory contributory method at least for
persons of the wage and salary earning group is still open and is being
advocated by many.
REPORT OP SOCIAL INSURANCE COMMISSION. 271
SECTION VIII.
COMMITTEES ON SOCIAL INSURANCE.
A significant feature of the present social insurance movement in the
United States is the organization of a large number of voluntary com-
mittees, some national, others local, for the study of social insurance.
Most of these committees are centering their attention on compulsory
health insurance.
The commission has endeavored to get in touch with all such
committees and to obtain some information concerning their plans and
activities. A very large number of local committees have been estab-
lished by county medical societies in California, by state and county
medical societies in other states, and by numerous local organizations
of social workers. The list, though incomplete, gives an indication of
the interest at present displayed by intelligent public opinion through-
out the country in social insurance.
Actuarial Society of America.
An informal committee on social insurance, with Mr. Arthur Hunter,
actuary of the New York Life Insurance Company and president of
the society, as chairman.
The presidential address of Mr. Hunter at the October, 1916, meeting
of the society, was devoted to the subject of social insurance, and con-
cluded as follows :
' ' Since the founding of our society we have seen two phases of
business, the competitive and the cooperative, and have been individ-
ually influenced by them. The former was an era of individualism,
and the latter will develop, we hope, into one of mutual helpfubiess.
Let us then be true to our social selves and heartily aid with our
trained knowledge all efforts by legislatures and other bodies to
raise the standard of universal welfare. The opportunity to help
in one phase, the preparation of a health insurance bill, is now upon
us and it is the duty of American actuaries, whether connected
with this or sister societies, to offer their services freely for the
public benefit ; otherwise, men who have not had the requisite train-
ing will be consulted and doubtful advice may be followed.
American Academy of Medicine.
F. Van Sickle, M.D., Olyphant, Pennsylvania, chairman.
This committee is preparing a report to be presented to the annual
meeting of the Academy, in June, 1917, with special reference to health
insurance.
Dr G A Hare of Fresno, California, president of the Academy,
in his presidential address at the forty-first annual meeting of the
272 REPORT OF SOCIAL INSURANCE COMMISSIOls.
American Academy of Medicine, held in Detroit, Michigan, on June 9,
1916, said:
"There is no greater service the Academy can render to both
the medical profession and to society than a constructive solution
of the present question of social insurance. The rapid develop-
ment of these questions constitutes one of those great tidal waA'cs
of society against which opposition is futile."
American Association of Industrial Physicians and Surgeons.
Committee on social insurance (Dr. li. C. Moch, Chicago, Illinois,
secretary), organized at the first annual meeting of the association held
in Detroit, Michigan, in June, 1916, for the study of social insurance.
American Association for Labor Legislation.
Professor Edward T. Divine, Columbia University, New York City,
chairman.
Miles M. Dawson, consulting actuary. New York City.
Professor Carroll W. Doten, Massachusetts Institute of Technology,
Boston, Mass.
Dr. S. S. Goldwater, formerly health commissioner, New York City.
Dr. Henry J. Harris, chief division of documents, Library of Con-
gress, Washington, D. C.
Professor Alexander Lambert, Cornell University, Medical School,
New York City.
Dr. I. M. Kubinow, secretary social insurance committee, American
Medical Association, New York City.
Professor Henry R. Seager, Columbia University, New York City,
economist.
Miss Lillian V. Wald, head resident, Henry Street Settlement, New
York City.
Dr. John B. Andrews, secretary of Association and of the committee.
New York City.
This is perhaps the most important committee on social insurance.
It was organized in December, 1912, and has devoted most of its time to
the study of health insurance. It held the First National Conference on
Social Insurance in Chicago, in May, 1913 ; it published in November,
1915, "Standards and Tentative Draft of a Health Insurance Act";
it produced health insurance bills in the legislatures of Massachusetts,
New Jersey and New York, in 1916, and is at present in touch with a
health insurance movement in some 20 states.
American Institute of Homeopathy.
Committee on social insurance. Dr. H. Cole, New York City, chairman.
Under date of October 17th, Dr. Cole writes the committee as follows :
"The American Institute of Homeopathy went on record at its
last annual meeting in favor of health insurance. The purpose of
REPORT OP SOCIAL INSURANCE COMMISSION. 273
our committee is to cooperate with the American Assoeiatiou for
Labor Legislation in procuring the enactment of health insurance
laws, such laws to be framed to reasonably conserve the interests
of physicians in general and the members of our organization in
particular. ' '
American Medical Association.
Social insiirance committee, Dr. A. Lambert, New York City,
chairman.
The purposes of the committee are stated in the following quotations
from the report made to the annual meeting of the Association in
June, 1916.
"At a meeting on February 9, 1916, the board of trustees con-
firmed the appointment of this committee by the adoption of the
following resolution :
" 'That the committee appointed jointly by the council on health
and public instruction and the judicial council, consisting of Drs.
Alexander Lambert, Frederick J. Cotton and H. B. Favill, be
approved, and that the purpose and duties of this committee be
understood to be the careful compilation of information, in re social
or health insurance and the relations of physicians thereto; and
to do everything in their power to secure such constructions of
the proposed laws as will work the most harmonious adjustment
of the new sociological relations between physicians and laymen
which will necessarily result therefrom, and that this committee
be authorized to carry on its work wherever seems most desirable. ' ' '
' ' In the near future it is the intention of the committee to under-
take the following duties:
First. To educate the American medical profession in the gen-
eral principles of social insurance, particularly health insurance,
the economic and social significance of the movement to obtain such
insurance throughout the United States, and the absolutely essen-
tial part which the medical profession must play in a successful
adaptation of this new legislation to American conditions.
Second. The bureau will consider it as part of its work to
answer all questions which any physician may desire to write to it,
asking for information, facts or figures bearing on social insurance
in any of its phases, and to be in reality a bureau of information for
the medical profession in regard to the details of organization of
medical aid in various forms of social insurance, both in European
countries and the United States.
Third. The committee considers it its duty to appear when
advisable before the legislative bodies in this country with a view
to bring about friendly understanding between all parties concerned
and to protect the legitimate economic interests of the profession in
the laws coming up for discussion concerning social insurance.
The work of this committee should be directed in such channels
as to avoid the conflict which has arisen in England at the beginning
of a similar movement and which has resulted in a very large
amount of bitterness between the profession and the public that
might easily have been prevented by appropriate timely action.
18—27626
274 REPORT OF SOCIAL INSURANCE COMMISSION.
It is further the intention of the committee to undertake the
following lines of work without assuming the obligation of com-
pleting them within any specified time :
First. To collect a bibliography on social insurance with special
reference to medical questions involved.
Second. To undertake, by correspondence, to get in touch with
the various sickness insurance organizations in Europe, so as to
obtain first-hand information as to their experience.
Third. To undertake a statistical study of hospital and dispen-
sary facilities in this country in view of the possibility of these
institutions assuming a broader function under health insurance.
Fourth. To study the conditions of lodge practice both from
the point of view of the physician and the patient.
Fifth. To gather all available information regarding the status,
earnings, etc., of the medical profession in regard to which problem
the wildest statements are current without any basis of fact under-
lying them."
This committee began a series of publications, of which five have
appeared up to date, and may be obtained from the Association, 535
North Dearborn street, Chicago, Illinois, or from the Social Insurance
Committee, 131 East Twenty-third street. New York City.
1. Workmen's Compensation Laws, Report of 1915.
2. Social Insurance, Repoi-t of 1916.
3. Health Insurance in Relation to Public Dispensaries.
4. Health Insurance in Relation to Public Health.
5. Social Insurance (two lectures).
Further issues will be devoted to statistics of the medical profession
in the United States, public dispensaries in New York City, etc.
American Nurses' Association.
Committee on health insurance. Miss Martha il. Russell, New York
City, chairman.
]\[iss Russell writes the commission as follows:
"The committee of the American Nurses' Association was
appointed with the idea of cooperating with any legislation for
health insurance in such a way that the nurses would be able to work
for a class of people for whom they have been able to do very little,
and that the people insured should receive the best nursing care
possible. ' '
Brooklyn Civic Club.
Committee on social welfare, Theodore P. Monench, secretary.
This is a standing committee which recently has been devoting a great
deal of its time to social insurance.
Under date of October 25, 1916, Mr. Monench wrote this commission
as follows :
"Last year the committee on social welfare made a very careful
investigation of the question of health insurance legislation. * * *
The committee went on record as favoring in principle the question
REPORT OF SOCIAL INSURANCE COMMISSION. 2?')
of health insurance. The committee also favored the passage of
the various workmen's compensation bills before the New York
state legislature."
California Commonwealth Club of San Francisco.
Section of social insurance, Mr. A. Salz, chairman.
This committee has been making a very careful study of the theory
and practice of health insurance since the creation of the Social Insur-
ance Commission of California.
California State Medical Society.
Committee on social insurance, Dr. Eene Bine, San Francisco,
chairman.
This committee has been appointed to study health insurance from
the point of view of the medical profession and to cooperate with the
State Social Insurance Commission. Similar committees were appointed
in the various county medical societies of the state.
International Association of Industrial Accident Boards and Commissions
Committee on social insurance, Honorable Royal Meeker, United
States commissioner of labor statistics, Washington, D. C, chairman.
This is a semi-official organization in which are represented industrial
accident boards and commissions of various states, created to administer
compensation laws.
This association held a national conference on social insurance under
the auspices of the United States Department of Labor, in "Washington,
December 5 to 9, 1916.
National Convention of Insurance Commissioners.
Committee on social insurance. Honorable Rufus N. Potts, insurance
superintendent, Springfield, Illinois, chairman.
This committee was created in 1915, and has prepared a very compre-
hensive report on social insurance, parts of which have been printed as
an appendix to hearings on social insurance before the Committee on
Labor of the United States House of Representatives.
The report of this committee has not been acted upon. At the
national convention held September 28, 1916, Mr. Potts read a paper
on "Welfare (Social) Insurance."
Mr. Potts has been advocating a change of the term "Social Insur-
ance" to "Welfare Insurance," because:
"It is for the general public's erroneous association with the
name of a political party called Socialists.. The effect of the name
'Social Insurance' tending to produce a hostile attitude m the mmds
of members of other political parties, the same as if it were called
Republican, Progressive, Democratic or Prohibition insurance.
In this paper Mr. Potts states as follows :
"A universal system of compulsory welfare insurance carried
on by the people themselves through their government would fur-
nish an equable and financially practical system which would at
276 REPORT OF SOCIAL INSURANCE COMMISSION.
the same time prevent suffering from unavoidable misfortune and
preserve the inestimable benefits of our present industrial and social
system.
"Compulsion is now used to enforce education, sanitation, fire
prevention, food supervision, traffic regulation, and in fact, obedi-
ence to all laws. Sentimental objections to the absolutely neces-
sary compulsory feature should not be allowed to prevent the inesti-
mable benefits of universal welfare insurance."
Associated Out-Patient Clinics of the City of New York.
Committee on health insurance^ Dr. E. H. Lewinski-Corwin, secretary.
"The health insurance committee is endeavoring to cooperate
with similar committees of the American Medical Association in
gathering facts concerning the prevalence of sickness in this city,
to formulate plans of medical and dispensary organization under
a system of state health insurance, and to standardize certain con-
ditions bearing on the situation." (Letter from Dr. Corwin dated
November 20, 1916.)
American Electric Railway Association.
Committee on public relations, James D. Mortimer, chairman.
This committee presented to the annual convention held at Atlanta,
Ga., October 9 to 13, 1916, a comprehensive report of 112 pages on social
relations. Of this report over one-half is devoted to the matter of
social insurance, specifically, life insurance, health insurance and work-
men's compensation.
In discussing health insurance it arrived at the following conclusions :
"The benefits of health insurance can only be made widespread
by making insurance compulsory. While quite generally appreci-
ated by workingmen having dependents and more generally sought
after than life or funeral insurance, there yet remain a substantial
number who hesitate to enter into a health insurance contract on
account of its cost. Many feel that a modest policy, paying benefits
such as $1.00 per day, accompanied by medical benefits, is sufficient
for their ends. This is partly true where the workingman has
enjoyed fair wages and through the practice of thrift has accumu-
lated a reserve fund of his own. It is in the stratum of working-
men where the wage is low that the financial benefits of health
insurance find their greatest use. Medical benefits are required by
all classes.
' ' Compulsory insurance can be best introduced by the employer
making a substantial contribution toward the cost of insurance,
considering such contribution as a part of the wage payment and
an element in the cost of production.
"Just as the compensation of the machine which has outworn
its usefulness is chargeable to the productive process, so it is now
considered that the cost of industrial accidents to employees is
properly borne by the industry. A somewhat similar philosophy
underlies the demand for health insurance legislation now being
concurrently urged in several states of the Union.
REPORT OF SOCIAL INSURANCE COMMISSION. 277
"A middle course theory reconciles this recent tendency as not
out of accord with the ideals of individualism. It recognizes acci-
dents, sickness and death as capital hazards confronting each
individual. Adequate provision for them by the individual is
frequently impossible, even with great sacrifice and foresight.
Until such provision is made, there exists a lack of security which
interferes with the best productive effort and the greatest happiness
of the individual. Yet, by cooperative action, the cost of such
capital hazards may be shared and borne with slight difficulty.
This assists rather than interferes with the maximum individual
progress. ' '
National Conference on Charities and Corrections.
Committee on social insurance, Mr. Max Senior, Cincinnati, Ohio,
chairman.
This committee was first created at the conference of 1916. The
committee on social insurance is preparing a comprehensive program on
social insurance in general and particularly on health insurance for the
meeting to be held in May, 1917, at Pittsburg, Pennsylvania.
Wisconsin Anti-Tuberculosis Association.
Committee on health insurance, Mr. Geo. G. Goetz, Milwaukee, Wis-
consin, chairman.
"We have taken up the study of this subject very recently.
During this time we have endeavored to cooperate with the com-
mittee on health insurance of the Wisconsin State Medical Associa-
tion, and to assist them in the compilation of their report which
was read at the meeting of the State Medical Society on October
3d. The committee on health insurance of the State Medical
Society has been reappointed and the State Medical Society has
gone on record as favoring the principle of health insurance. We
shall continue to cooperate with them in endeavoring to work out
the medical features of the proposed bill. We intend to obtain all
the information possible as to what is being done in the line of
voluntary social insurance in this state at the present time, both
by employees and employers, and plan to further cooperate with
the various organizations, notably labor and civic associations, but
more especially with the Industrial Commission of Wisconsin,
which, we were informed, is to be asked to report to the coming
session of the legislature concerning various phases of this legis-
lation. We thus hope to be of assistance in helping arrive at a
workable bill for Wisconsin." (Letter from Mr. Goetz dated
October 16, 1916.)
International Association of Casualty and Surety Underwriters.
Committee on social insurance, Mr. Wm. Brosmith, counsel, Travel-
ers' Insurance Company, Hartford, Connecticut, chairman.
"The committee of the International Association of Casualty and
Surety Underwriters, of which I happen to be chairman, has been
studying the various proposals for social or welfare insurance, and
278 REPORT OF SOCIAL INSURANCE COMMISSION.
particularly the tentative measures for compulsory sickness
insurance.
' ' The plans of our committee depend largely upon the proposal
which may be presented for legislation. It can hardly be expected
that the representatives of insurance companies will propose legis-
lation intended to vest either in the state or national government
the conducting of any kind of insurance as a governmental function.
Whether or not the companies will oppose legislation intended to
provide for compulsory sickness insurance will depend largely on
the form in which such legislation is offered." (Letter from
Mr. Brosmith, dated October 10, 1916.)
National Association of Manufacturers.
Industrial betterment committee, Mr. A. Parker Nevin, New York
City, secretary.
This committee has presented a report to the twenty-first annual
meeting held in New York, ]\Iay, 1916, largely devoted to the problem of
health insurance, and the conclusions of the committee are summarized
as follows :
"We are of the opinion at the present time that sickness insur-
ance should be made to cover workers independent of whether the
cause of the sickness arose out of or in the course of employment.
We do not deny that strong arguments are offered against the
policy which we have preferred to favor, but our investigation to
date inclines us to favor the broader policy and principle.
"At the March meeting of your committee we discussed the
fundamental principle and basis of sickness insurance, and we
adopted, as an expression of our attitude, this resolution :
"1. The plan must be made inclusive of all employments and
occupations without discriminations and with only such exemptions
as are necessary to secure the practical administration of the act.
"2. The plan must contain the elements of compulsion, direct or
indirect, as a matter of expediency in securing the acceptance of
the act.
"3. The carrying agency must provide for free competition as
between state, commercial and mutual methods of insurance.
"4. Distribution of the cost must be in relation to the responsi-
bility for the sickness.
"5. The protection of the funds demands that the insurance be
predicated upon physical examination."
New York State Medical Society.
Committee on social insurance. Dr. S. F. Koptezky, New York City,
chairman.
"Our activities this year will be directed towards holding hear-
ings to get the views of the various interests concerned in industrial
or social insurance. Last year we strongly ob.jected to the bill as
presented to our legislature for the reasons which >'ou will find
published in my report in the March issue of the Journal of the
New York State Medical Society.
REPORT OF SOCIAL INSURANCE COMMISSION. 279
' ' We have had numerous conferences with the American Associa-
tion of Labor Legislation, with the result that the bill has been
redrafted, and as it will be introduced this year I think will meet
with our approval." (Letter from Dr. Kopetzky, dated October
5, 1916.)
New York State Chamber of Commerce.
Committee on social insurance, Dr. John Franklin Crowell, executive
officer.
"The plan of inquiry is to get answers to the questions which a
business viewpoint might call for on the subject of social insurance,
the inquiry thus resulting being conducted on scientific lines as
nearly as practicable. This in general shows the purpose and plan.
"The scope is intended to be comprehensive and will depend
somewhat on circumstances." (Letter from Dr. Crowell, dated
October 7, 1916.)
280 REPORT OP SOCIAL INSURANCE COMMISSION.
SECTION IX.
ATTITUDE OF AMERICAN STUDENTS TOWARD
SOCIAL INSURANCE.
In order to ascertain the present attitude of American economists and
students of social problems to the subject of social insurance, the com-
mission sent out an inquiry blank to some 3,256 persons, members of
the American Economic Association and the National Conference of
Charities and Correction. The first list consists largely of teachers of
economics and like subjects in American universities with a certain
proportion of men in business activities familiar with economic
problems. The second list consists partly of professional social workers
and partly of persons in other walks of life who are interested in social
work and social problems. These lists are regarded as representative
of the particular group whose opinions were desired. Altogether 675
replies were received.
In answer to the question, "Are you in favor of a policy of social
insurance in the United States?" their replies were as follows:
1. In favor of social insurance ^ 587 or 86.96 per cent
2. Opposed to social insurance 27 or 4 per cent
3. Not sufficiently acquainted with the subject to give a
definite answer 61 or 9.04 per cent
Total replies 675 or 100 per cent
It is significant, therefore, that an overwhelming majority were in
favor of a social insurance policy, an attitude very much different from
that which would have been disclosed if a similar inquiry were made
ten years ago.
As the question of compulsory versus voluntary insurance is perhaps
one of the most controversial ones, replies to the question, "Are you
in favor of compulsory or voluntary insurance?" are significant.
Taking the 587 replies favoring some system of social insurance, they are
divided as follows :
1. In favor of compulsory insurance 450 or 76.66 per cent
2. In favor of voluntary insurance 108 or 18.40 per cent
3. Preference not stated 29 or 4.94 per cent
The correspondents were requested to indicate the order of importance
in which the various branches of social insurance called for immediate
action. Four branches of social insurance were specified: sickness or
liealth insurance; unemployment insurance; old age insurance; and
survivors' insurance, by which was meant insurance of pensions to
widows and orphans surviving after death of the wageworker,
REPORT OF SOCIAL INSURANCE COMMISSION. 281
In a fairly large proportion of cases the blanks failed to contain the
answers to this question or parts of the question, but taking the total
number, 587, who have gone on record as favoring social insurance in
general, sickness insurance was indicated as
First choice 270 cases or 46 per cent
Second choice 117 ,ases or 19.93 per cent
Third choice 57 .^.g, ^^ 9.71 per cent
Fourth choice 9 ,^,^3 „, 1 53 ^^^ cent
Choice not specified 133 gases or 22.66 per cent
Thus in two-thirds of the replies, sickness or health insurance, was
selected as the first or second choice.
Old age insurance, on the whole, was the second choice in the opinion
of the majority that indicated —
First choice 101 cases or 17.21 per cent
Second choice 1.58 cases or 26.92 per cent
Third choice 135 cases or 23 per cent
Fourth choice 39 cases or 6.64 per cent
Favoring, but choice not specified 143 cases or 24.36 per cent
Not favored H cases or 1.87 per cent
In case of unemployment, the results of the inquiry were as follows :
First choice _ 63 or 10.74 per cent
Second choice 145 or 24.07 per cent
Third choice 108 or 18.40 per cent
Fourth choice 92 or 15.67 per cent
Favored, but choice not specified 150 or 25.55 per cent
Not favored 29 or 4.94 per cent
Thus only a little over 35 per cent were in favor of unemployment
as the first or second choice.
Finally, the survivors' insurance, or insurance of widows and
orphans pensions on the whole, is considered to be the last branch of
social insurance to be undertaken. It is likely, however, that one
difficulty with this part of the question was the lack of familiarity of
many with a comparatively new term. The results of the inquiry were
as follows :
First choice ^ — 23 or 3.92 per cent
Second choice 38 or 6.47 per cent
Third choice 99 or 16.87 per cent
Fourth choice - 177 or 30.15 per cent
Favored, but choice not specified 23 1 or 39.86 per cent
Not favored 16 or 2.73 per cent
Taking the replies as a whole, the consensus of opinion appeared to
be that the proper order in which various branches of social insurance
should be undertaken is as follows :
1. Siclaioss or health insurance.
2. Old age insurance.
3. Unemployment insurance.
4. Survivors' insurance.
282 REPORT OF SOCIAL INSURANCE COMMISSION.
The decision of the commission to concentrate its efforts on health
insurance appears to be supported by an overwhelming opinion of the
American students of economic and social problems.
The blank contained a few additional questions to bring out the atti-
tude of these students on the few essential problems of social insurance.
As between the contributory insurance system and the straight gov-
ernment pension system the consensus of opinion was overwhelmingly
in favor of the insurance method.
In favor of the insurance system 476 cases or 81.09 per cent
In favor of the insurance system with qualifications
as to old age 19 cases or 3.24 per cent
In favor of straight pension system 42 cases or 7.16 per cent
In favor of straight pension system, with various
qualifications 7 cases or 1.19 per cent
Preference not specified 43 cases or 7.32 per cent
Total 587 cases or 100 per cent
Notwithstanding this rejection of the straight pension system, the
majority of the replies went in favor of the state bearing at le^st a part
of the costs.
In favor of state bearing part of costs 428 or 72.91 per cent
In favor of state bearing part of costs, with qualifications- 62 or 10.55 per cent
Opposed to state contributions 59 or 10.06 per cent
Preference not specified 38 or 6.48 per cent
Practicallj' five-sixths of all the replies, therefore, were in favor of
state contributions, and only a few of them with some qualifications.
Still more conclusive is the evidence concerning the desirability of plac-
ing part of the costs of social insurance upon the employers or industries.
In favor of employers contribution 497 or 84.67 per cent
With certain qualifications 38 or 6.47 per cent
Opposed to employers contributions 32 or 5.45 per cent
Preference not specified 20 or 3.41 per cent
The question has frequently been raised as to state action versus
federal action. On this subject, the division of opinion is less decisive.
In favor of state action . 262 or 44.64 per cent
In favor of state action, with qualifications 41 or 6.91 per cent
In favor of federal action 228 or 38.83 per cent
In favor of federal action, with qualifications 15 or 2.56 per cent
Preference not specified 41 or 6.98 per cent
From comments made on this question, it appears clearly that the
economic advantages of federal action are recognized by a very large
number of these students, but state action is usually preferred simply
for constitutional reasons.
The attitude of this particular group of people, who, because of their
study of social problems, are in a position to influence public opinion,
REPORT OF SOCIAL INSURANCE COMMISSION. 283
or at least to foresee the probable cause of legislative action, may be
summarized as follows :
(a) Nearly 87 per cent were in favor of social insurance.
(&) Of these over 76 per cent preferred a compulsory system to
voluntary insurance.
(c) The order in which social insurance should develop is indicated
as follows :
1. Health insurance.
2. Old age.
3. Unemployment insurance.
4. Widows and orphans pensions.
(d) Over 80 per cent of these students prefer a system of con-
tributory insurance to straight government pensions.
(e) Although opinions are about equally divided, on the whole
state action is preferred to federal action, this being largely
influenced by questions as to the constitutionality of the
latter.
(/) Some 83 per cent are in favor of the state bearing part of the
costs.
(g) Over 90 per cent are in favor of employers or industries bear-
ing part of the costs.
The general standards announced within the last year or two by such
institutions as the Commission on Industrial Relations, the United States
Public Health Service, and the American Association for Labor Legis-
lation, are, on the whole, accepted by American students.
CHAPTER IX.
ESTIMATES OF COST.
REPORT OF SOCIAL INSURANCE COMMISSION. 287
SECTION L
ESTIMATE OF NUMBER SUBJECT TO HEALTH INSURANCE.
In order to arrive at any reasonable estimate of the cost of any
proposed compulsory insurance scheme, it is obviously necessary to
begin with an estimate as to the probable number of persons who
might come under such a scheme. The problem is not a simple one.
The latest data on oecupational statistics are those collected by the
United States Census office for the Thirteenth Census of 1910. But
though a question was asked in the schedule to determine the status
of each person, as employer, salaried man, wageworker, or self
employed, such information was not compiled in sufficient detail, and
practically was entirely omitted in compiling figures from separate
states. It became necessary therefore to go through the entire classi-
fication of occupations in California, picking out such groups as are
palpably wageworking or salary earning, and to make more or less
arbitrary assumptions as to the proportion of wageworkers and
salaried employees in certain mixed groups, as, for instance, barbers,
blacksmiths, etc., where the employer, cinployees, and self-employed
persons were thrown together in one census class. The summary of
this work is shown in the tables on page 292. The assumptions
made had necessarily to be rather crude. In certain groups it was
assumed that about 50 per cent of the total class would be wageworkers
or salaried employees, and in a few others a smaller percentage was
taken. Because of the recognized tendency of statistical errors due
to assumption to balance each other, it is felt that the total errors
introduced by such necessary assumptions can not be very large.
The totals obtained from the census reports indicate that out of
932,752 males gainfully employed in 1910, 658,141:, or 70.6 per cent
were in the group of wageworkers, or persons of small salaries, and
out of 174-,916 females gainfully employed in 1910, there Avere 138,468,
or 79.2 per cent in these groups. In arriving at these figures not
only proprietors of industrial establishments were omitted, but also
such groups of presumably higher economic standing, as insurance
agents or officials of corporations, etc.
It was also thought advisable to exclude farm laborers working at
home, that is, on a farm owned by the family, as it is difficult to
establish any wage relationship in such cases.
These data refer to 1910, and the population of the state of Cali-
fornia has materially increased since then. The estimates of popula-
tion made by the United States Census office are based upon the rate
288 REPORT OP SOCIAL INSURANCE COMMISSION.
ol: growth between the preceding two eeiisuses of 1900 and 1910, and
indicates an annual increase - of al)ont 4 pei' e.ent. It is somewhat
doubtful whether such rate of increase has been kept up during the
current decade, and especially since the beginning of the European
war. In the absence of anything accurate a general loading of about
25 per cent to allow for the period, 1910 to 1917, therefore 'appears
reasonable. In round fij;ures the number of persons within this broad
group of wageworkers, or low-salaried employees for 1917, would
appear to be as follows :
Males 823,000
Females 172,000
Total 995,000 wage earners in California
Since the extent of any social insurance law must necessarily be
carefully defined, and may often be more or less limited for various
considerations, to certain occupational groups, it becomes necessary to
make estimates of the persons likely to be brought under various
assumptions as to the classes to be covered.
The census report for 1910 classifies the occupations into nine
.eroups, and the number of wageworkers and employees in each one of
these nine groups is indicated on page 292. This classification, how-
ever, differs materially from that of the preceding census of 1900, and
does not quite fall in line with the definitions of the various industrial
or occupational groups which are commonly found in acts of labor or
social legislation. Thus, for instance, several of the groups including
agriculture and forestry in the census report did not come under the
legal definition of manufactures, and again other groups classified by
the census as domestic and personal service would very properly be
classified either with manufacturers or with trade, as, for instance,
laundry or hotel and restaurant keepers.
For the purposes of social insurance the following broad classifica-
tions appear desirable :
1 — iVIanufactures.
2 — Building and Construction.
3— Mining.
4 — Transportati on .
5 — Commerce.
6 — Clerical Employees.
7 — Professional Services.
8 — Public Service.
9 — Agriculture.
10 — Domestic Service.
11 — Miscellaneous.
Estimates of the total number of employees and wage workers
which fell into each of these eleven groups in 1910, and also estimates
REPORT OF SOCLMj INSURANCE COMMISSION. 289
of corresponding numbers for 1917, on a general assumption of an
increase of 25 per cent during the seven years, are shown in the table
on page 292.
The maximum number of persons who might come under the act,
would then appear to be somewhat less than a million. The number
who would come under the act on the various limitations is also shown
on page 292. On the strictest limitation of the extent of the social
insurance law if made applicable only to manual workers in manu-
factures, construction and mining, the number would only be 366,000.
Such restrictions do not appear very equitable or desirable, but are
not unknown in the history of social insurance. If transportation
and trade should be added the number would increase to approxi-
mately 606,000, and the addition of clerical employees would raise it to
697,000. Of the remaining groups only two, namely, agriculture and
domestic service, are numerically of importance. With the two
groups of agriculture and domestic service eliminated, the total num-
ber would shrink to 750,000.
In actual practice much more minute subdivisions are found in
social insurance acts. For various reasons certain smaller groups may
be either specifically included or excluded from the general social
insurance act, and the number of persons covered correspondingly
increased or decreased.
The general conclusion that there are approximately about one
million wageworkers and low-salaried earners in California appears
somewhat startling at the first glance when compared with its popula-
tion of approximately 3,000,000.
When health insurance was introduced in the legislature of the state
of New York, estimates of the number of persons who would come
under the act were made at about two and a half millions, or about
25 per cent of the population. In explanation of the very much higher
ratio for the state of California it is necessary to point out some
peculiarities in the statistical make-up of the population of this state,
which differs substantially from that of the population of the east or
middle western states.
1. Difference in sex distribution. For each 100 females in the
United States, there were in 1910, 106 males, and in New England
only 99 males, but in California, 125.5 males. If, for instance,
the proportion of females to males in California in 1910 were the
same as in New York, the total population would have amounted
to 2,630,000 instead of 2,357,000.
2. An equally marked difference in age distribution. The pro-
portion of population under 10 years of age for the country at
large in 1910, was 42 per cent, while in California it was only 31
per cent. Thus if the proportion of children in California were
19—27626
290 REPORT OP SOCIAL INSURANCE COMMISSION.
equal to that in the country at large, its population in 1910 would
have been 2,828,000 instead of 2,357,000. If California had both
the number of women and children in proportion to its adult male
population that the entire country shows, then its population in
1910 would have been 3,121,000. An increase of 25 per cent
between 1910 and 1917 would have given California in 1917 nearly
4,000,000. In other words, as far as its working population is con-
cerned, California approaches that of a state with 4,000.000 rather
than 3,000,000 population.
3. Furthermore, even in the distribution of persons gainfully
employed, some differences no less significant, occur. Thus, for
instance, for the 5,865,000 farmers in the country as a whole, there
were in 1910, 5,975,000 farm laborers, and of these 3,310,000
worked on their own farms, and only 2,665,000 worked out.
In California there were 56,774 farms and 83,128 farm laborers,
and of these as many as 72,157 worked out. Thus again for every
100 farmers, there were
United •
states
California
Laborers working on their own farm
56.4
45.1
19.0
Laborers working out-- - - - - - _
125.2
Totals -
101.5
144.2
Sinc^ only the second group of farm laborers is to be considered
under & social insurance act, the difference between the California situa-
tion and that in other states is obvious. It is of course possible that
during the last seven years a change in the make-up of the population
of the stale of California would bring it nearer to that of the rest of
the country, but the information available does not point in that
direction.
It is significant, for instance, that the proportion of males to females
has actually increased from 123.5 per cent in 1900 to 125.5 per cent
in 1910.
The proportion of children under 5 to the total population has also
declined from 8.5 per cent in 1900 to 8.1 per cent in 1910.
Furthermore, while the number of farmers seems to have declined
from 61,753 to 59,633, the number of farm laborers, not members of
families, has increased from 51,280 to 85,199. In other words, as far
as comparison between 1900 and 1910 is concerned, the difference
between the make-up of the population in California and in the country
at large seems to be rather accentuated, than otherwise.
There are, of course, certain factors of exaggeration in the estimate
of 995,000. Various limitations are found in the social insurance acts
REPORT OF SOCIAL INSURANCE COMMISSION. 291
Avhich may reduce this number in other ways besides the elimination of
certain occupational groups. Thus there is an age qualification at
either end of the productive period. The number of children under
16 employed in California, according to the data of 1910, is compara-
tively slight, and possibly has been reduced since then. On the other
hand, however, occupational statistics will usually include persons of
advanced ages who have passed beyond the limit of their industrial
activity, but continue to designate themselves by certain occupations
which they had pursued in the past. Either through a definite limita-
tion at the age of 70, or some other period, or through the simple fact
of these individuals being unable to find employment, they would be
kept out of the insurance system. How large a reduction this consid-
eration would make in the total of 995,000 it is impossible to ascertain
with any degree of accuracy.
The census of 1910, in its report on occupations according to ages,
puts all persons of 45 and over into one group. The earlier census of
1900 indicates that some 6 per cent of the males reported in occupations
and 2 per cent of the females reported in occupations are over 65 years
of age. If these ratios are applicable at present a reduction might be
effected of some 50,000 in the number of persons under the act.
Another factor in reducing the number of persons insured is the
application of the rule limiting the system to persons under a certain
annual income of perhaps $1,200 or $1,500. It is extremely difficult,
however, to make an estimate as to the numerical effect of such a factor.
As far as wageworkers are concerned, the weekly wage level, which is
all that statistical records furnish, does not at all indicate the annual
income because of the frequency of loss of time by lack of employment.
It is for this reason that no exception is usually made in case of wage-
workers because of the earning capacity. The situation is somewhat
different in case of salaried employees receiving their remuneration on
a monthly basis, who do not suffer from unemployment to the same
extent. But classified data in regard to salaries are evidently difficult
to obtain. Eecognizing the importance of this factor, therefore, no
estimate of its effect is undertaken.
It gives additional assurance, however, that the estimates made here,
as to the number of persons employed, are sufficiently high and that
the actual number of persons that might be covered by the act would
probably fall below the estimate perhaps by some 5 or 6 per cent.
292
REPORT OP SOCIAL INSURANCE COMMISSION.
Statistics of Occupations in California in 1910 (U. S. Census), witli an Estimate of
Number of Wage Earners and Salaried Employees Wiio iVlay Come Under a
Health Insurance Act — Summary.
Occupations
Total
number
males
Number
estimated
subject to
health in-
surance
Total
number
females
Number
estimated
subject to
health in-
surance
1. Agriculture, forestry and animal hus-
bandry _
217,748
31,254
263,480
100,052
133,663
23,923
41,138
78,062
43,432
123,844
28,953
227,312
87,288
64,162
11,025
12,135
59,993
43,432
7,323
44
30,096
4,241
17,935
553
28,315
62,090
24,319
2,151
2. Extraction of minerals
3. Manufacturing and mechanical pur-
suits
17,528
4. Transportation . _ _ _
4,241
5. Trade . _._ .._
14,692
6. Public service _ —
196
7. Professional service _
21,356
8. Domestic and personal service
53,985
9. Clerical occupations
24,319
Totals
932,752
658,144
174,916
138,468
Estimate of Persons Wlio IVlay Be Subject to Insurance. Census Data Somewiiat
Rearranged to Fit with the Usual Designation of Industrial Groups, Rounded
Up in Thousands, and Adjusted to 1917, on a Basis of an Increase of 25 Per Cent
Over 1910.
Occupations
Census of 1910
Estimate for 1917
Manufactures, etc.
Building
Minings
Transportation
Commerce
Public service
Clerical
Professional
Domestic
Agriculture
Miscellaneous (fishing, etc.)-.
Totals
133,000
111,000
29,000
84,000
85,000
11,000
45,000
12,000
26,000
107,000
15,000
20,000
23,000
28,000
20,000
43,000
2,000
2,000
153,000
111,000
29,000
84,000
108,000
11,000
73,000
32,000
69,000
109,000
17,000
166,000
139,000
36,000
105,000
106,000
14,000
56,000
15,000
32,000
135,000
19,000
25,000
29,000
35,000
25,000
54,000
2,000
2,000
658,000
138,000
796,000
823,000
172,000
191,000
139,000
36,000
105,000
135,000
14,000
91,000
40,000
86,000
137,000
21,000
995,000
Insurance system extended to-
Persons covered (cumulative)
Manufacturing, construction, minin
Transportation and trade.
Clerical employees
Professional employees
Public service
Agriculture, fishing, etc
Domestic
Deduct interstate traffic
341,000
25,000
552,000
54,000
608,000
89,000
623,000
114,000
637,000
114,000
791,000
118,000
823,000
172,000
783,000
172,000
366,000
606,000
697,000
737,000
751,000
909,000
995,000
955,000
REPORT OF SOCIAL INSURANCE COMMISSION. 293
SECTION II.
COMPUTATION OF PAY ROLL EXPOSED.
Certain of the benefits under a system of health insurance, especially
those granting cash amounts, usually depend upon the wages of the
beneficiary. Only in one European act are the benefits given equal,
irrespective of the earning capacity. It becomes necessary, therefore,
for the purpose of making an estimate of cost to determine the prob-
able pay roll exposure, or the total amount of wages earned by per-
sons included within the act. Many difficulties are met in such an
effort.
One is the lack of sufficient information concerning the wages in many
of the occupational groups which might come under the law.
The second difficulty arises from the fact that wage statistics are only
given for weekly periods, and it does not at all follow that annual pay
roll exposure in eacli case would be equal to 52 times the weekly amount.
The computation made in the following table therefore is entirely on a
weekly basis and the various problems arising out of the necessity of
converting the weekly pay roll into an annual pay roll will be discussed
later on.
Finally, not a small percentage of workers' wages rise to a fairly high
level. It seems to be the consensus of opinion that a health insurance
system at present need not grant benefits over a certain amount. Such
a limitation appears useful to reduce the total cost, and also because it
only affects individuals of the highest wage groups who are able, if
willing, to obtain some additional insurance protection of their own free
will. Tentatively, a maximum of $15.00 a week as the weekly benefit,
was adopted, and a basis that a normal sick benefit in cash amounts to
two-thirds of the weekly wages. It follows therefrom that wages over
$22.50 need not be considered in computing the cost of the system of
health insurance. This pay roll exposure where any excess over $22.50
has been disregarded, is called in the table which follows "The adjusted
pay roll exposure. ' '
In order to obtain such an adjusted pay roll exposure it is not enough
to have the average wage of any occupational group, but also the wage
distribution is necessary. This, however, is impossible to obtain for
certain oocupational groups, and in such cases a small arbitrary discount
was assumed, approaching in amount the discounts obtained by com-
putation of available data in other groups.
294 REPORT OF SOCIAL INSURANCE COMMISSION.
Sources of Wage Statistics.
The sources of information from which various computations con-
cerning wages were made must be given here in brief :
1. Manufacturers. Male Groups.
Source: Report of California Bureau of Labor Statistics,
1914. Computation was made to show the average wage of
$17.58, and an adjusted wage of $16.87.
2. Building and construction trades.
Rate of union wages computed from the data obtained from
the California Bureau of Labor Statistics (see this report,
Chap. Ill, Sec. I), indicating average wage $26.25; adjusted
wage, $22.00.
3. Mining.
Classified wage data not available. The United States census
of 1910 shows a total wage expenditure of $19,049,442, an
average number of employees 23,358, which indicates an average
weekly wage of $15.62.
4. Transportation.
Data in regard to various groups are difficult to obtain. Two
sources have been utilized: First, railroad wages compiled for
this report from data, furnished by the California Railroad
Commission, and, second, data as to standard wage scales for
transportation unions, as shown in Chap. Ill, Sec. I, of this
report.
Occupation
Actual
average
wage
Adjusted
average
wage
Railroads -
$17.81
18.37
$16.84
17.41
Since railroad employees constitute about 40 per cent of all trans-
portation employees weighted, the average was obtained by using the
weight of four for the railroad employees and six for the others. The
result was an average wage of $18.15 and an adjusted wage of $17.18.
5 and 6. Commerce and Puhlic Service.
Wage statistics in regard to these groups are rather difficult to
obtain and somewhat arbitrary. An average of $20.00 a week
was assumed, with a reduction to $19.00 for .the effect of the
maximum limit.
7. Clerical.
The same absence of accurate data is found in this group, the
wages running somewhat below that in commercial positions.
An average of $18.00 assumed, with a reduction to $17.00 to
effect the maximum limit.
8. Professional services.
Teaching profession was taken as a fairly representative
sample of this occupational group. Reports of the United
States Bureau of Education indicate an average annual salary
REPORT OF SOCIAL INSURANCE COMMISSION. 295
of $1 153.00 for male public school teachers in California or a
weekly average of $22.20. Since the maximum effective wage
IS $22.50, the adjusted wage was assumed to be about $20.00.
9. Domestic service.
The general standard of wages in domestic service for male
employees seems to justify an average of $12.00 per week with-
out any reduction for the maximum.
10. Agriculture.
According to the "Crop Eeporters" issued by the United
btates Department of Agriculture, an average monthly wage
if agricultural labor, without board, in the State of California'
according to the last data, was $51.00 a month, or $11.77 per
week.
11. Miscellaneous groups.
For the small miscellaneous groups an arbitrary average of
$20.00, with discounts to $19.00 on account of the maximum
was accepted.
Female Groups.
1. Manufacturers.
Computation from the data of the report of the Industrial
Welfare jDommission of the state of California indicates an
average of $9.70.
2. Commerce.
Similar computations from the same report indicate an aver-
age of $10.36.
3. Clerical.
According to the same report the indicated average is $10.89.
4. Professional.
Salaries for female professional workers being only slightly
below those for male professional workers, an average of $20.00
was assumed, with a reduction to $19.00 for effect of the
maximum.
5. Domestic.
The average wage for female domestics, plus the value of
room and board, is about $10.00 a week.
6 and 7. Agriculture and miscellaneous.
The number of females in the groups of "agriculture"
and "miscellaneous" is very small. Wage levels, $10.00 for
agriculture and $12.00 for miscellaneous, are assumed somewhat
arbitrarily.
With this information and the assumptions made above as a basis,
the total weekly pay roll exposure in round figures was found to equal
$17,146,000, with a reduction to $16,100,000 for the effect of maximum
limits. As already explained, this total will depend upon what occu-
pational groups are included under the law, and the total for the
various probable combinations are gfiven in this table, fluctuating
from $9,277,000 to $17,146,000. No high percentage of scientific
accuracy must be claimed by these estimates, but they are probably
sufficiently dependable to serve as a basis for a rough estimate in
computations of cost.
296
REPORT OF SOCIAL INSURANCE COMMISSION.
COMPUTATION OF WEEKLY PAY ROLL OF WAGEWORKERS AND
EMPLOYEES.
Males.
Industries
Number of
persous
Average
wage
Total
weekly
pay roll
Adjusted
wage
Adjusted
weekly
pay roll
Manufactures - -
166,000
139,000
36,000
105,000
106,000
14,000
56,000
15,000
32,000
135,000
19,000
$17 58
26 25
15 62
18 15
20 00
20 00
18 00
22 20
12 00
11 77
20 00
$2,918,000
3,649,000
562,000
1,906,000
2,120,000
280,000
1,008,000
333,000
384,000
1,589,000
380,000
$16 87
22 00
15 62
17 18
19 00
19 00
17 00
21 20
12 00
11 77
19 00
$2,800,000
Building, etc. _
3,058,000
Mining ^
562,000
Transportation
1,804,000
Commerce
2,014,000
Public service —
266,000
Glerical
952,000
Professional
318,000
Domestic
384,000
Agriculture __
1,589,000
Miscellaneous — -
361,000
Totals -- --
823,000
$15,129,000
$14,108,000
Females.
25,000
29,000
35,000
25,000
54,000
2,000
2,000
$9 70
10 36
10 89
20 00
10 00
10 00
12 00
$242,000
310,000
381,000
500,000
540,000
20,000
24,000
$9 70
10 36
10 89
19 00
10 00
10 00
12 00
$242,000
Commerce -
310,000
Clerical —
381,000
475,000
540,000
Agriculture -- --
■ 20,000
24,000
Totals
172,000
$2,017,000
$1,992,000
Totals.
Manufactures —
Building
Mining
Transportation
Commerce
Public service -.
Clerical
Professional
Domestic
Agriculture
Miscellaneous --
Totals
191,000
139,000
36,000
105,000
135,000
14,000
91,000
40,000
86,000
137,000
21,000
995,000
$16 44
26 25
15 62
18 15
18 00
20 00
15 48
20 82
10 74
11 74
19 24
$17 23
$3,160,000
3,649,000
562,000
1,906,000
2,430,000
280,000
1,389,000
833,000
924,000
1,609,000
404,000
$17,146,000
$15 82
22 00
15 62
17 18
17 28
19 00
14 64
19 82
10 74
11 74
18 33
$3,042,000
3,058,000
.562,000
1,804,000
2,324,000
266,000
1,333,000
793,000
924,000
1,609,000
385,000
$16,100,000
Weekly payroll-
Manufactures, building, mining and transportation $9,277,000
Commerce and clerical 13,096,000
Public service and professional 14,209,000
Domestic and agriculture 17,146,000
REPORT OF SOCIAL INSURANCE COMMISSION. 297
PROBABLE RATE OF SICKNESS.
The next step, in an effort to estimate in advance the cost of any,
health insurance scheme, is the factor of rate of sickness, which is
evidently of paramount importance. It is extremely difficult to
establish a reliable sickness rate in advance of some system of health
insurance. Practically all the available statistics of sickness which
have any scientific value have been obtained from the study of results
of sickness insurance organizations. Not only must there be a sub-
stantial motive for accurate reporting of sickness, which nothing
except some system of compensation for sickness will create, but more
important is the fact that the general basis of sickness statistics must
be established not so much on a day of sick feeling, but a day of dis-
ability accompanying sickness. Being or feeling sick is purely a
subjective matter which can scarcely be recorded statistically. But
being unable to pursue the employment, and especially receiving
compensation for such disability is a definite fact which yields itself
to statistical observation. Thus the measurement of disability is
made possible only by the granting of benefits for loss of time. And
what we call sickness statistics deals not with sickness, perhaps not
even the disability, but with compensated sick days, and the sickness
rate will depend upon the particular provisions of the health insurance
system granting compensation.
The usual way to record sick rate, is by the number of days of com-
pensated disability per the insured person per annum. It is well
recognized that this sick rate fluctuates under the influence of a great
many conditions of which the essential ones are : sex, age and occupa-
tion. And it is customary in actual practice to compute sick rates
according to each one of these three conditions. The understood
assumption is equally true, however, of other conditions, which in a
final analysis may even be more important. Namely, climate, locality,
general sanitation and general economic status of the community.
It i.s recognized that it is somewhat dangerous to adopt, without
criticism, sickness rates derived from experience of other countries,
and therefore a very earnest effort was made by this commission to
obtain as much data as possible bearing upon this problem from various
sick benefit associations of this state. The difficulties were great
because the records of small lodges, and other similar societies, are
hot kept in a very systematic order, and but few organizations were
willing to furnish these data in detail even when they had it. Such
data as have been obtained are presented in the table on page 305.
It would have been altogether impossible to analyze those data with
regard to age or even occupation, and therefore a general average for
the organization is all that could be computed. The experience
presented in tliis table refers to lodges only, where all kinds of trades
298 REPOKT OF SOCIAL INSURANCE COMMISSION.
and occupations are represented, and wageworkers constitute only a
portion of the membership. The total volume of experience is very-
small as compared with some European sources. Nevertheless, 110,000
years of exposure are at least indicative of the general trend. The
fact that the results are fairly uniform of the various sources from
which information has been obtained is significant in establishing a
prima facie trustworthiness of the result.
The apparent average sick rate thus obtained equals .56 of one week,
or 3.92 days per member. The sick rate is evidently derivative of two
factors, the percentage of insured persons disabled by sickness through-
out the year and the average duration of disability in each case. On
a somewhat smaller exposure the first factor proved to be 10 per cent
and the latter 5.49 weeks, or 38.4 days. The average sick rate obtained
by multiplication of these two factors is 3.84 days, and the slight differ-
ence between this and the sick rate given above is due to the fact that
because of incomplete information the volume of exposure for each
factor is not exactly identical.
It would be unsafe of course to accept these figures without further
scrutiny, not only because of the limited exposure but also because
of the peculiar condition to which the result must at least partly be
due.
To begin with, this experience deals with lodges whose membership
on the whole is different from that which would be subject to compul-
sory health insurance. A small amount of experience was obtained
from trade union sickness funds, which would be more significant for
our purpose and would be expected to show a higher sick rate. These
results by trade are shown on Table No. 2, and somewhat unexpectedly
the average siclv rate for some 16,500 years of exposure is only .433
weeks, or 3 days per member, the percentage of cases being only 8.1,
f.nd the average duration of a case, 5.4 weeks, or practically the same
as in the case of lodges.
One of the obvious disturbing factors is the difference in benefit
provisions. The duration of benefits in various lodges and various
trade union funds vary very much, the limit being ten weeks in some
cases and running up as high as 52 weeks in others, while some lodges
do not have any limit at all, though reducing the amount of benefits
as the case extends. Naturally the lodges, or benefit fund, record
only the time for which they have paid compensation.
Again, other provisions, such as for instance in regard to a waiting
period in the beginning of each case for which no benefits are paid,
are different and vary from none at all to as much as 14 days, thus
effecting very substantially the total amount of sick days paid for.
Thus, of all the fratei'nal orders whose published reports were available
to the commission, the Independent Order of Odd Fellows was the
REPORT OF SOCIAL INSURANCE COMMISSION. 299
only one who kept a record of the weeks of sickness paid for by the
entire order in the state of California. This experience is shown
separately in Table 3, for the three years 1912, 1913 and 1914, and
for this one order presents a substantial exposure of over 137,000
years, for which the percentage of cases is not high, being 9.27 per cent.
The average duration of the case amounts to 9.27 weeks, or nearly
65 days, and the average sick rate of membership is .859 weeks, or a
little over 6 days. This, however, is due to the fact that most lodges
of this order carry their beneficiaries on the roll indefinitely, though
reducing the weekly benefit to $4.00, $3.00 and $1.00 a week, and
the effect of this ruling is seen in the very long duration of the indi-
vidual case, being nearly 65 days against 38 days for other lodges.
The experience of this particular order is mainly useful in indicating
the outside limit of the sick rate among the groups of persons usually
affiliated with lodges.
In order to arrive at some responsible estimate of the amount of
sickness that may be expected it becomes necessary therefore, to look
for other sources of information, both in the United States outside
of California, and in European countries as well. All such informa-
tion, however, is unfortunately very fragmentary because of the
absence of any systematic sickness statistics in this country, and the
difficulty of applying European experience to American conditions
without reservation.
The experience of many European countries, as far as available,
was brought together in Tables 4 to 6, showing —
1 — The number of cases of sickness per 100 insured members.
2 — The average duration per case of sickness, and
3 — Average number of days of disability per member.
The data was given for Germany, Austria, Prance, Belgium and
Hungary, wherever possible for male and female separately. It also
seemed worth while to give these data for as many years as information
was available.
The fairly wide range of fluctuation between one country and another
willbe observed at first glance. There were also some changes in the
sickness rate of the individual countries through the long period of
years, but these changes are not so wide. It is significant that the
variations in the reported sickness rate (days per insured), are largely
due to the percentage of insured taken sick, rather than to the average
duration of a case of sickness.
It is often assumed that the increase in the sick rate of some countries
is entirely due to the increase in the tendency to malingering or what
Mr. I. G. Gibbon called "valetudinarianism." But it must be remem-
bered that these data present days of compensated illness only. In all
the European systems, compulsory as well as voluntary, there has been
300 REPORT OF SOCIAL INSURANCE COMMISSION.
a continuous tendency to extend the periods of benefits, and that alone
must explain a large part of the increase of the average sick rate.
There are many other factors which must explain the variations of
sick rates in different countries.
1. Differences in sex distribution. The sick rates of the two sexes
frequently .shows large differences, and the proportion of women in
industries differs in different countries. This has been partly
eliminated in the table by giving the rate for each sex.
2. Differences in age distribution. The sick rate rises rapidly
with age. The famous Manchester Unity experience, for instance,
shows less than one week under 30; rises from one to two weeks
between the ages of 30 and 47, and continues rising very rapidly
after that, to 3.4 weeks at the age of 55, 5.2 at 60, and 14.6 weeks
at the age of 70, etc.
3. Differences in occupational distribution. The range of sick-
ness rates between the occupational groups at the extreme ends is
sometimes as high as 300 per cent.
4. Differences in general factors affecting health conditions, such
as climate, sanitation, personal habits of living, including alcohol- -
ism, personal, public and industrial hygiene, etc.
5. Differences in the duration of benefits, whether for 10, 13, 20,
26 weeks, or even 52 weeks, or perhaps the absence of a time limit
merging insurance into invalidity and old age insurance; also
differences in provisions as to the waiting period, which are very
important because they affect each case.
6. Finally, the differences in the psychology of the insured, as
shown by the readiness to claim benefits under the insurance
contract.
Comparing the sick rate of the California lodges with that developed
by most European countries, it is found that the California rate is
lower than almost any one of them, and especially lower than that shown
by the compulsory insurance systems. This naturally raises the query,
how far California data are reliable, even though it may be assumed
that the climatic and social conditions in California favor a lower
sick rate.
Valuable light is thrown upon this problem when the sick rate is
resolved into its two component factors —
(a) The proportion of cases to 100 insured persons.
(b) The average duration of a sickness case.
The first is found to be only 10 per cent as against 30, 40 or even 50
per cent under some compulsory systems, while the duration is found
to be 38 days, or twice as long as in most European countries. The
evident explanation suggests itself, that under a Ipose voluntary system
of sickness insurance, such as lodges or even trade union funds repre-
sent, numerous light cases are not reported at all, and not made subject
to claims. This is due to the fact that the insurance is combined with
many social and economic factors, and that a considerable proportion
REPORT OF SOCIAL INSURANCE COMMISSION. 301
of the membership of the lodges is of a higher economic level and not
particularly disturbed by a case of illness of a short duration.
To test this hypothesis a normal table of distribution of sickness eases,
according to duration, has been constructed on the basis of the experi-
ence of the Leipzig Sickness Insurance Fund for two years, including
some 180,000 cases, and also a similar table on the basis of some 6,700
cases in California, for which the necessary information has been ascer-
tained. (See tables VII and VIII, page 310.)
The total duration of the cases of each table has also been computed
on the assumption that the average duration for each group was equal
to the mean between the two limits of duration. And in view of the
narrow limits such an assumption is justified.
A comparison of these two tables, converted to a basis of 100,000 cases,
indicates the following results:
Average duration for a Leipzig ease, disregarding any disability
after the end of 26 weeks, was about 3.54 weeks, or some 25 days, and
the duration in the California cases 5.42 weeks, or nearly 38 days.
The greatest difference between the two tables is found in the number
of cases lasting over two weeks. In the Leipzig series over 46 per cent
fall below two weeks duration, and in the California series only 28
per cent.
The ratio between the average duration of a case in California as
compared with Leipzig, appears to be 1.54. A comparison was made
between the two series in excluding cases under one week, under two
weeks, under three weeks and under four weeks, and the ratio of the
average duration drops to 1.43 when all cases under one week are
excluded, to 1.27 when cases under two weeks are excluded and to 1.22
only after all cases under three weeks are excluded, and to 1.6 only
after all cases under four weeks are excluded. The average duration
of cases extending over four weeks then is 8.5 weeks in Leipzig and 9.8
weeks in California. (See table IX, page 311.)
This comparison makes it quite certain that one reason for the appar-
ently low sick rate of the California lodges is the failure to give sick
compensation for cases of shorter duration, and that this especially
affects cases under two weeks, and partly even cases from two to four
weeks.
On this basis a correction may be made to the report taking into
account this failure to ask for compensation in many cases of short
duration.
302
REPORT OF SOCIAL INSURANCE COMMISSION.
According to the two tables of experiences, every 1,000 eases are
distributed as follows :
Leipzig.
Dui-ation
Number
of cases
Total
duration
Per cent
Under 4 weeks
741
259
1,354
2,191
38.19
Over 4 weeks
61.81
Totals --
1,000
3,545
100.00
California.
Under 4 weeks
566
434
1,153
4,269
21,27
78.73
Totals
1,000
5,422
100.00
If then we assume for California the same proportion between cases
under and over four weeks duration, and the average duration of cases
under four weeks being about the same, the experience for California
would stand corrected about as follows:
Buration
Number
of cases
Afer.iffe
duration
Total
duration
Under 4 weeks _ __
1,242
434
1.85
9.84
2,298
Over 4 weeks ^_
4,269
Totals
676
6,567
This results in an increase of 67.6 per cent in the number of cases
and 21 per cent in the total duration. With these corrections the
proportion of cases of 100 members rises to 16.8, and the average sick
rate from 3.84 to 4.65 days.
This approaches very much more closely the sick rate of at least
some European countries, especially in the earlier days of compulsory
insurance.
As a further check upon this figure various information available
in regard to sick rates in the United States has been brought together.
The well known federal investigation of workmen's insurance in the
United States known as the twenty-third annual report of the United
States Commissioner of Labor, contains much of this information
which has been utilized as far as possible.
A few international labor organizations have been giving sickness
benefits for some years. On a basis of the data available in the report
above referred to, and various information as to membership of these
international unions, the sick rates for some of the unions have been
REPORT OF SOCIAL INSURANCE COMMISSION. 303
compiled in Table X. They are found to vary almost violently between
i.3 days and 6 days per member, the latter figure being the highest
shown by any of these international unions.
It is somewhat dangerous to assume the accuracy of these sick rates
as representing differences between various trades and occupations,
because of the uncertainty of information obtained.
The union that perhaps has the most extensive experience with sick
benefits is the International Cigar ilakers Union, for which a record
is available from 1881 to 1914, and this valuable experience is shown
m Table XI. The significant conclusion to be derived from this table
is the gradual increase in the average sick rate, and also that not-
withstanding this— the sick rate is even now considerably below one
week per member. In fact the highest sick rate is for 1914, amounting
to .877 weeks or 6.14 days, and that for many years it was substantiaUy
lower than six days, the cigar makers trade being on the whole not a
very healthy one.
It is also very significant that the sick rate has risen during the lean
years, as for instance from 1893 to 1898, and again in 1908 and in
1914, and showed a tendency to grow smaller during the years of
highest business activity, as for instance between 1899 and 1906.
A considerable amount of additional information referring to a
large number of so-called establishment funds has been compiled from
the same official source. The 415 establishment funds giving sick bene-
fits show a membership of 302, 584, thus giving a fairly large volume
of experience. These have been classified in Table XII, on page
313, according to the general line of industry. The average of
cases per 100 members was 23 per cent; the average duration of a
case was 20.5 days, which approaches rather closely European experi-
ence, and the average sick rate per member was 4.7 days. This again
shows approximately the same results as the adjusted California experi-
ences.
It will be noticed that Tables X and XII show an adjusted experience
as well as actual experience. One difficulty of compiling statistics
of different funds, as already explained, lies in the differences in
benefit provisions. It is estimated that the experience of any fund
could be modified if the benefit was extended, say from 13 to 26 weeks,
and the waiting period increased or reduced. Assuming that the dis-
tribution of cases according to duration, as shown in Table 7, may be
accepted as a normal one, an adjustment may be made both for the
waiting period and for the duration of the benefits, and such a table,
for the purpose of making such adjustments, was constructed.
(Table XIII.) By means of this table When the specific provisions of
any fund, as to the waiting period and as to the duration of benefit, are
304 REPORT OF SOCIAL INSURANCE COMMISSION.
given, the' actual experience may be adjusted to "no waiting period,
and 26 weeks duration."
It is found that for most of these establisliment funds, as well as
for the international union benefit systems, this adjustment results in
an increase of sick rate, and for the 415 estalslishment funds taken
together the average sick rate is increased from 4.7 to 5.8, which rep-
resents an increase of about 23^ per cent.
It is felt, therefore, on the basis of all this cumulative evidence that
a sick rate of 6 days may be assumed for the purpose of making ari
estimate of the cost, and that at least for some time such an estimate
should prove sufficient. Specific evidence should be required at the
present time for a higher estimate of sick rate. Evidently this esti-
mate does not take any occupational differences into consideration,
though there is no doubt that such occupational differences exist.
American data available at present offers no basis for determining
this difference ciuantitatively. Table No. 12 offers a variety of adjusted
sick rates from 3.9 and up to 10 day.s. The highest sick rate is found
in the iron and steel industries, and appears to be in harmony with
our general knowledge of health conditions. The brewers industry
and textile industry seem to indicate the next highest sick rates. The
lowest sick rates are found in the bra.ss industries, building, construc-
tion, mining, rubber and wood and furniture, and therefore may be
taken at present as being to some extent accidental and due to in-
sufficient exposure. Surely that would seem to apply both to the brass
and rubber industries. It \\ould be presumptions to undertake to
determine at present the general average sick rate for industries as a
whole. Nothing but extensive experience under health insurance would
offer material for determining the proper sick rates for the different
industries and occupations. In the computations which follow, a
sick rate of six days per member has been accepted as a basis.
REPORT OF SOCIAL INSURANCE COMMISSION.
305
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306
REPORT OF SOCIAL INSURANCE COMMISSION.
:§
1
d
o
1
(M tH OS lA tH
lo iri CO -^ oi
1
925
203
384
1,171
th o ;i-HOt1HM00Q0«Dt-j0503P
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1 1 1
1 1 1
1 1 I
1 I 1
4.56
5.07
4.63
8.69
8.43
8.68
8.54
8.98
8.44
9.11
9.00
8.84
8.08
8.70
8.47
9.01
5.20
1902
5.15
1903
5.01
1904
5.40
1905
5.36
1906 . .
4.21
4.83
5.38
4.20
4.61
5.22
iQn7
iqoR
iQm
ipif>
1Q11
1912
1Q1^
310
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE VII.
Leipzig Fund Experience, 1912 and 1913,
Cases
Cases
pet
100.000
Average
weeks
DPI' case
Total
disa-
bility*
Cumulative totals
Cases
Disa-
WUty
111 weeks
1 to 3 days- _
2,289
33,270
48,571
29,917
20,539
13,345
7,699
5,554
3,863
2,918
2,338
1,749
1,429
1,322
1,025
799
626
542
439
387
351
277
250
207
187
190
335
1,273
1,257
18,313
26,736
16,468
11,304
7,345
4,237
3,057
2,126
1,606
1,287
963
786
728
564
440
345
298
242
213
198
152
138
114
103
105
179
701
.28
.78
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
11.5
12.5
13.5
14.5
15.5
16.5
17.5
18.5
19.5
20.5
21.5
22.5
23.5
24.5
25.5
26.0
352
14,284
40,104
41,170
39,564
33,053
23,303
19,921
15,945
13,651
12,226
10,113
9,139
9,100
7,614
6,380
5,347
4,917
4,235
3,941
3,765
3,116
2,967
2,565
2,422
2,572
i 4,565
1 18,226
354,555
1,257
19,570
46,306
62,774
74,078
81,423
85,660
88,717
90,843
92,449
93,736
94,699
95,485
96,213
96,777
97,217
97,562
97,860
98,102
98,315
98,508
98,660
98,798
98,912
99,015
99,120
99,299
100,000
^ 352
3 days and 1 week-
14,636
1 to 2 weeks - -
54,740
2 to 3 weeks
95,910
3 to 4 weeks _ —
135,474
4 to 5 weeks —
168,526
5 to 6 weeks
191,830
6 to 7 weeks
211,750
7 to 8 weeks - _ __ _
227,695
8 to 9 weeks --
241,346
9 to 10 weeks ....
253,573
10 to 11 weeks...
263,685
11 to 12 weeks .-.
272,824
12 to 13 weeks...
281,924
13 to 14 weeks
289,538
14 to 15 weeks. -. ..
295,918
15 to 16 weeks
301,266
16 to 17 weeks
306,183
17 to 18 weeks.- . -
310,418
18 to 19 weeks
314,358
19 to 20 weeks ^ -.. ...
318,122
20 to 21 weeks
321,238
21 to 22 weeks —
324,205
22 to 23 weeks.. .
326,770
23 to 24 weeks
329,191
24 to 25 weeks.. .. _ .
331,764
25 to 26 weeks, .. _ -
336,329
Over 26 weeks
354,555
Totals
181,691
100,000
•Disability extending beyond 26 weeks ivecks disregarded.
TABLE Vm.
Lodge and Union Experience.
Weeks
Cases
Distribu-
tion per
100.000
cases
Average
weeks
Cost in
weeks
Cumula-
tive
cases
Total
weeks
683
1,202
1,090
813
566
465
333
272
180
169
109
102
89
213
112
74
219
10,208
17,964
16,291
12,151
8,459
6,949
4,977
4,065
2,690
2,526
1,630
1,524
1,330
3,183
1,674
1,106
3,273
.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
lh5
12.5
15.0
19.0
23.5
26.0
5,104
26,946
40,728
42,528
38,066
38,219
32,350
30,487
22,875
23,997
17,115
17,526
16,625
47,745
30,806
25,991
85,098
10,208
28,272
44,463
56,614
65,073
72,022
76,999
81,064
83,754
86,280
87,910
89,434
90,764
93,947
95,621
96,727
100,000
5,104
32,050
1 to 2 weeks - --
72,778
115,306
153,372
191,591
3 to 4 weeks
4 to 5 weeks - --
223,941
254,428
277,303
301,300
318,415
335,941
352,566
400,311
431,117
457,108
8 to 9 weeks - --
12 to 13 weeks -
13 to 17 weeks
17 to 21 weeks
21 to 26 weeks - .
Over 26 weeks
542,206
Totals
6,691
100,000
542,206
REPOKT OF SOCIAL INSURANCE COMMISSION.
311
TABLE IX.
Leipzig
American
Average
weeliS
lumber of
per case
Cases
Weeks
Cases
Weelis
Leipzig
American
Complete figures
Taking out 1 week
Taking out 2 weeks.. .
Taking out 3 weeks...
Taking out 4 weeks...
100,000
80,430
53,694
37,226
25,922
354,555
339,919
299,815
258,645
219,081
100,000
89,792
71,828
55,537
43,386
542,206
537,102
510,156
469,428
426,900
3.545
4.226
5.586
6.948
8.452
5.422
5.982
7.102
8.452
9.839
1.54
1.43
1.27
1.22
1.16
TABLE X.
International Labor Unions iVlalntaining Sick Benefits.
Actual
sick days
per member
Adjusted
siclc days
5.0
5.2
2.1
3.6
6.0
8.9
5.2
7.7
2.6
3.1
2.3
3.1
1.9
2.5
1.3
1.7
2.3
4.0
5.9
5.8
Bakery and confectionery.
Barbers
Boots and shoes
Cigar makers
Leather workers
Marine firemen
Patternmakers
Piano and organ workers
Plumbers and gas fltters.
Printers
312
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE XI.
Disability Compensated for by the Cigar IV1al-SDOi-HTHC0&s0>t^Nl0t0i-H-^O06- CVS CO f-H tH O
to CM CO
00 -^ T-T ci
CM tH tH CO
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T — 1 i^J I."" \*J WJ T~1 lij UN I
(MCSiTHC5i-HCMCaMi
cqcDiq-^OOiTS^C^-^QOTHeDOOt-^CqiOtDC^lOOO^THCOOOOlC
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COlAOlCt3icOI>^C»OC^t>{>a(Ni-Hl>^i-HCOCOwOt--^OiOCOCftT-5
T-HCaCN|rHC^i-HTHr^-^CY-Ht^C0i-HC-Jl^aiT-IC0
T-H Cf T-H CD" as 05 T-T tH'
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314 EEPOET OF SOCIAL INSURANCE COMMISSION.
SECTION IV.
COST OF MEDICAL AID.
An effort to arrive at a sound estimate of the probable cost of
medical aid is even more difficult than in the case of the cost of cash
benefits. In the study of the cost of accident compensation pre-
liminary to adoption of the law, this was also found to be a problem of
greatest uncertainty. In the case of cash benefits only the quantity of
disability to be paid for has to be estimated. The rate of benefit pay-
ments is defined by the provisions of the proposed act.
When we turn to the problem of medical aid, both the amount of
service to be granted and the rate of remuneration are uncertain.
It is very difficult, almost impossible, to arrive at a reasonable esti-
mate of the amount of medical aid which will be required. Roughly,
it may perhaps be assumed that it will bear the same proportion to the
amount required under the various European systems, as does the
assumed sick rate to that found in these systems. Even that, however,
does not solve the problem, because statistics of the various health insur-
ance systems in Europe are usually limited to recording the cost of
medical service, and not the amount rendered. Only for one large
German sick insurance fund, namely, that of the city of Leipzig, were
some data available in regard to the amount of medical work to the
commission.
Even if these data be assumed to be applicable to California the
complex question of remuneration remains. The various methods by
which medical service may be compensated under a health insurance
act, are discussed at length elsewhere in this report. In a general way
all the existing systems may be divided into two groups according to
whether payments are made on a certain fee schedule per visit, or other
unit of work, or whether the payments are computed on capitation
basis, that is a specified amount per annum per each person insured.
As explained elsewhere more fully, the latter system does not necessarily
mean that the individual physician is paid on a capitation basis, but only
that the cost to the insurance carrier is computed on that basis. If the
visitation system should prevail, an estimate would be required in
advance to gauge how much the cost of the visits would amount to. If,
however, the latter system of capitation should prevail, what is wanted
is not so much an estimate, as a decision as to how much should be paid
per capita. Evidently the problem is considerably simplified under a
capitation method, the consensus of European opinion being against a
REPORT OF SOCIAL INSURANCE COMMISSION.
315
visitation system on a fee schedule. An effort must be made at this
time to determine what a proper capitation charge may be. Naturajly,
no such amount can or should be written into the law.
After all, a decision as to the rate at which the services of some 6,000
physicians in the state of California may be purchased should not be
arrived at without negotiations with the profession concerned. An
estimate made here can not have, therefore, any binding value, but
must be taken for what it is worth, as only an approximate computa-
tion, subject to various modifications, after the system has been legis-
lated for. Nevertheless, it is worth while presenting various data which
may throw some light upon the subject.
Great Britain. The experience of the British system with the ques-
tion of cost of medical aid is well known. The original estimates pro-
vided 4s 6d per capita for medical aid, and Is 6d for drugs. The
amount, in the opinion of the medical profession, was decided to be
insufficient, and the British Medical Association made a claim for a
minimum capitation fee of 8s 6d. After various negotiations, which at
the time reached a very acute stage, a total of 7s ($1.68) was deter-
mined upon with a possible additional 6d per head, or as much of it as
was not found necessary for additional expenditure on drugs. The
total fee for physicians, therefore, varies from $1.68 to $1.80 per capita.
Germany. The arrangements for remuneration of medical aid in
Germany are subject to numerous local variations. The average cost
per capita for variotis periods is shown in the following table for various
forms of insurance carriers. (A description of which is given in
Chapter V of this report.)
Com-
morclal
funds
Local
funds
Estab-
lish -
meiit
funds
Build-
ing
funds
O.uild
funds
llegu-
lar aid
funds
Slate
aid
funds
All
funds
1888 -
$0 47
56
58
67
92
$0 51
64
71
88
1 21
1 43
$0 89
1 04
1 12
1 31
1 76
$0 85
1 21
1 38
1 99
1 66
$0 41
55
67
84
1 14
$0 17
55
68
79
1 10
$0 20
52
61
75
95
$0 55
1893 .
72
1898 . .
79
1903
95
1908 _
1 31
1912
1 54
The average for all funds, as well as the average cost for almost every
form of organization is found to have been constantly increasing during
the last 25 years, the general average being increased from 55 cents
per capita in 1888 to 1.31 in 1908, and $1.54 in 1912.
316
EEPOET OP SOCIAL INSURANCE COMMISSION.
Austria. The same tendency towards the increase of the cost of
medical aid has been observed in Austria. Both the actual amount and
the rate of increase have been somewhat slower than in Germany, as the
following figures may indicate :
1890
$0 47
1905 :
$0 65
1895
51
1907
70
1900
58
1912
Leipzig. Since the data for Leipzig are available in greatest detail,
it is useful to examine those somewhat more carefully. The average
cost per capita for the Leipzig sick insurance fund increased as follows :
1888
$0 87
1903
1908
1912
$1 45
1893
1898
1 05
1 25
2 00
. 2 16
These averages include the general per capita as well as certain addi-
tional payments for extra services. The actual per capita charges as
determined by the rules of the fund since its organization on January
1, 1887, were as follows :
January 1, 1887 3.00 marks ($0 70)
January 1, 1888 3.30 marks ( 77)
October 1, 1888 3.60 marks ( 84)
July 1, 1896 3.90 marks ( 91)
October 1, 1897 4.20 marks ( 98)
October 1, 1898 4.50 marks ($1 05)
May 7, 1904 5.00 marks ( 1 17)
May 1, 1905 6.50 marks ( 1 52)
January 1, 1911 7.25 marks ( 1 70)
All these rates were per number, which included medical aid to
dependents — no difference being made in charge between single persons
and members having dependent families. The one exception to this
statement is the rate of 5 marks, or $1.17, which prevailed for a short
period of less than a year, from May 7, 1904, to May 1, 1905. The
method by which this increase in rates has been accomplished need not
be gone into at this place. The additional charge for medical aid for
such special services as obstetrical work, consultations, dental charges
and payments to physicians in localities outside of Leipzig for the
benefit of the members of the Leipzig fund, amounted, in 1910, to about
30 per cent over and above the regular charge.
REPORT OB'' SOCIAL INSURANCE COMMISSION.
317
As to the amount of medical aid rendered, the following information
is interesting:
Tear
Average
membership
•Units of
medical
service
rendered by
regular
physician
1906 - - . ...
158,702
162,489
165,659
172,617
182,898
1,062,677
1907 . ..... ....
1,517,196
1908
1,594,412
1909 .
1,669,689
1910 . — . . . _ . _.
1,806,257
Totals . .
842,365
7,650,231
*Tliis does 'not include any services for which special compensation was paid.
The average number of units of medical service per member per
annum, including the dependent family (which, under the rules of the
Leipzig fund included consorts, children, parents, grandchildren and
parents-in-law), equals nine. It has shown a slight tendency to
increase, and during 1910 was nearer ten per annum. Whereas, the
report quoted indicates that of the total number of cases treated, the
members of families claimed, during the three years, 1908 to 1910,
about 47 per cent. So that roughly, the medical work done is divided
equally between members and their families.
Furthermore, the fact must be noticed that of the total number of
units of service rendered to the members themselves, 82 per cent con-
sists of ordinary office visits, while of units of service rendered to the
members of the families only 60 per cent consisted of ordinary office
visits. So that on the whole it seems evident that more than one-half
of the medical aid rendered by the Leipzig fund was on account of
members of families, and the average number of units of medical ser-
vice rendered to members must fluctuate somewhere between four and
five per annum.
The average remuneration for a unit of medical service, exclusive
of special services already mentioned in 1910, was about .62 marks,
or 15 cents. In the light of these figures it seemed reasonable for a
preliminary estimate, for California, to use the figure $4.00 per annum
as per capita charge for medical aid only, exclusive of hospital or
drugs for service of individual persons. The cost to the insurance
carriers in case the medical aid is extended to families would be
$4.00 a week per each member of the family entitled to medical aid.
This amount is more than twice as large as the amount granted by the
British insurance system. It is practically four times as large as the
amount paid by the Leipzig insurance fund.
Additional support in favor of such a preliminary is found in various
sources of actual experience in California.
318 REPORT OF SOCIAL INSURANCE COMMISSION.
The Industrial Accident Commission reports that the average cost of
medical aid per case is about $20.00, and the average duration of the
ease is 20 days, making the total cost of medical aid, including hospital
and drugs, etc., about $1.00 per day of disability. An allowance of
$4.00 per annum for medical aid alone, with an additional allowance
as explained later, of about $2.00 for hospital care and $2.00 for drugs,
produce a total of $8.00 for six days of disability, which is larger than
that offered by the Industrial Accident Board under its recognized
schedule.
It is known that various cooperative hospital associations are able to
give all medical and hospital aid and drugs at a rate of $1.00 a month,
out of which a considerable amount is spent for charitable aid and for
general expenses. It is also known that commercial hospital associa-
tions offer to furnish medical and hospital aid and drugs at the rate of
$1.00 per month, of which the expenses and profits consume probably
more than one-half.
The Infirmary of the University of California is able to furnish both
medical and hospital aid at the rate of $6.00 per annum, or perhaps
more accurately, for nine months of the year. It is admitted that the
system on the whole is self-supporting, and it must be considered that
this infirmary is doing an enormous amount of work in routine examina-
tions, which an ordinary insurance system at least in the beginning will
not be called upon to perform.
It is easy to increase the estimate per capita cost to a higher figure,
say to $5.00 or $6.00 in arriving at final cost.
REPORT OP SOCIAL INSURANCE COMMISSION. 319
SECTION V.
COST OF HOSPITAL CARE AND DRUGS.
The necessity for assumptions indicated above in connection with
the payment of physicians' services, also applies to some extent to
other branches of medical aid.
It is usually assumed that sufficient hospital facilities for any com-
munity must provide from four to five beds for one thousand popula-
tion. A full utilization of such facilities would give about 1.5 to 1.8
hospital days per capita per annum. As a matter of fact, such an
absolute utilization of facilities provided is practically impossible.
Such statistics as are available seem to corroborate this conclusion.
Thus the experience of Hungary for about ten years, 1897 to 1906, indi-
cates a total exposure of 6,706,000 years with 5,350,000 hospital days,
or about eight-tenths of a day per insured. The experience of the
Leipzig Fund is here again perhaps more indicative. Taking the nine-
year period from 1902 to 1910 with an exposure of 1,407,000 years, the
number of hospital and institutional days granted to sick members
was 1,735,000, or 1.23 days per person. This ratio, however, has been
gradually increasing, and in 1902, after some fifteen years of experi-
ence, the average number of sick days was only one per person, and by
1910 it has risen to 1.38. This includes, in addition to hospitals proper,
various institutions for convalescents.
It is perhaps worth while to point out that the experience of the
University of California Infirmary with the admitted effort to get all
illness of even moderate severity into the infirmary, the average
number of hospital days per person is less than one-half. It would
seem safe, therefore, to assume provisionally, an average hospital rate
of one day per insured.
Though a health insurance system may undertake building its own
hospitals and institutions, it is nevertheless necessary, at least in the
beginning, to take into consideration existing commercial rates for hos-
pital services, especially in the state of California, where the free
hospital facilities are admittedly insufficient.
Hospital rates are subject to great variations, in accordance with
facilities and accommodations provided, but ordinary ward beds
may be obtained from about $15 to $17.50 a week, and it is reasonable
to assume that the health insurance carrier, with its large demand
for hospital space will be given the best rates obtainable, and in the
final computations the cost of each hospital day was assumed to
be $2.00.
320 REPORT OF SOCIAL INSURANCE COMMISSION.
Drugs and Supplies.
The retail price of drugs is so far above .the actual value that it is
difficult to arrive at any conclusions as to the proper cost of the drugs
and supplies benefit from present experiences. European data indicate
quite uniformly that the drug and supply benefit costs about the same
as the hospital benefit. In Germany the average cost of drugs and
supplies per member has increased from 44 cents in 1888 to 60 cents
in 1898, 83 cents in 1908.
The provisions of the Leipzig fund in regard to drugs are extremely
liberal, and the average cost has" increased from 55 cents in 1888 to
$1.09 in 1912.
Undoubtedly those' drugs and similar articles are cheaper in Ger-
many than they are in this country, but since we are dealing here vrith
material rather than services, the difference in cost could not be very
great, and it is felt that by doubling: the amount spent in Leipzig, or
assigning $2.00 per capita for drugs, sufficient provision is made.
Dental Aid.
So little has been accomplished in systematic dental provision that
scarcely any material exists for an estimate of the cost of the dental
benefit. It evidently would be impossible in the very beginning to
grade free dental aid of the expensive kind requiring expensive treat-
ment. An arbitrary assumption of $1.00 per capita has been made
which is thought sufficient to provide a fund out of which the hygienic
care of the teeth may be given to the insured, including such methods
of aid as extracting, cleaning, treatment and possibly inexpensive
fillings.
REPORT OP SOCIAL INSURANCE COMMISSION. 321
SECTION VI.
COMPUTATION OP COST.
In table I on pages 329-332 an effort was made to compute the prob-
able cost of the entire insurance system for the eighteen large occupa-
tional groups. Such a computation may be made, either in dollars and
cents, or in percentage of the wage exposure. The cash computation has
been selected because its results are more readily understood. In any
ease it is necessary to take the wage exposure into consideration, because,
while some benefits will be payable on a per capita basis, others must
be computed in relation to wages. Throughout the table the assump-
tion has been made, which is of course not in accordance with actual
facts, that there are 52 weeks of employment for every person. This
was done in order to compute the cost of 52 weeks of insurance. The
final proportion obtained between the total cost for a full year's insur-
ance and a full year's wage exposure will of course hold true for any
part of the year or for a single week. The methods of arriving at the
cost of various items must be stated here in detail :
1. Weekly cash lenefit.. Assuming rate of sickness six days per annum, cash
benefit is equal to 6/7 x 2/3 of week's wage, or .5714 of a week's wage
equals .5714 of annual wage — 1.009 per cent of annual wage.
This percentage must be applied, not to the actual but to the adjusted wage,
because the maximum benefit has been placed at .$15.00.
2. Maternity 'benefit to female wage workers. Birth rate in California is equal
to 16.4 per 1,000 population.
Since married women constitute 17.6 per cent of total population, therefore
the annual birthrate among married women equals
16.4 -^ .176 = 93 per 1,000 married women.
Married women constitute about 15 per cent of all employed women in Cali-
fornia ; therefore rate of issue for all employed women equals
93 X .15 = 14 per 1,000 employed women.
Assuming the benefits for maternity to equal 2/3 of the wages during eight
weeks, the benefit in cash per 1,000 women equals
.667 week's wages X 8 X 14 = 74.7 weeks' wages.
Full exposure for 1,000 employees being 52,000 weeks' wages at cost in pro-
portion to exposure is 74.7 -H 52,000 weeks = .144 per cent.
Medical aid, including nursing in maternity, may be estimated at an average
of about $25.00 per case.
Cost per female employee would be equal to $25.00 X 14 -^ 1,000 = 35 cents.
21—27626
322
EEPORT OF SOCIAL INSUEANCE COMMISSION.
3. Funeral benefit. Assuming value of benefit $50.00 per funeral, the following
computation of the mortality rate among employees is based upon the data
of the United States census for persons employed, and the California State
Board of Health for the number of deaths :
Number employed in 1910
Add 12 per cent for increase, 1910-1913-
Totals in 1913
Number of deaths in 1913 among occupied persons-
Death rate
932,752
111,930
174,916
20,990
1,044.682
17.l)4o
16.3
195,906
1,186
6.1
The considerable difference in the death rate between men and women is easily
explained by the great difference in age distribution, most women not remaining
permanently in their occupations.
Cost of funeral benefit per one male insured person —
$50.00 X 16.3 -^ 1,000 = $.815.
Cost of funeral for one female person —
$50.00 X 6.1 -H 1,000 = $.30ri.
4. Medioal service. Computations have been made under the assumption of
average cost of $4.00 and also $6.00 per capita.
5. Hospital 'benefit. Assumption of cost, $2.00 per capita as explained above
( see page 319 ) .
A substantial saving must be taken into consideration as against this cost.
In a case of a single person who is being taken care of in a hospital and
receives maintenance in addition to medical aid, there is need for little if
any financial assistance.
In a case of a married person the support needed by the family is reduced,
as the sick person is taken care of in the hospital.
In the following computation of expected saving on this account, the assump-
tion has been made that in case of a single person there will be no cash
benefit, and in the ease of persons with dependents one-half of the cash
benefit will be paid.
Statistics of occupations in California indicate the following distribution :
Mai-ital condition
Single -- --
476
524
655
Married or widowed— —
345
Totals
1,000
1,000
Saving for every single person, in percentage of adjusted wage —
1/7 X 2/3 X 1/52 = .183 per cent.
Saving for every married person —
1/7 X 2/3 X 1/52 X 1/2 = .092 per cent.
Saving for 1,000 male persons —
476 single 476 X .183 = 87,108 per cent
524 married 524 X .092 = 47.208 per cent
Saving for 1,000 persons 134.316 per cent
Saving for each male insured person .134 per cent
Saving for 1,000 female persons —
655 single 655 X .183 = 119.865 per cent
345 parried and widowed 345 X .092 — 31.740 per cent
Saving of 1,000 women
Saving per each insured woman.
151.605 per cent
.152 per cent
REPORT OP SOCIAL INSURANCE COMMISSION.
323
0. Diuy henefit. Assumed cost Jp2.00 pei' capita. (See page 319.)
7. Dental henefit. Assumed cost, $1.00 per capita.
8. Tuberculosis henefit. Additional 26 weeks after the expiration oi; the first
26 weeks. Basis of computation used, mortality from tuberculosis In
California during 1913 :
Male
Female
Total
Persons employed, 1910
932,752
111,930
174,916
20,990
1,107,668
132,920
Add 12 per cent for 1913
Totals
1,044,682
2,936
2.8
195,906
204
1.1
1,240,588
3,140
25
Tuberculosis deaths among employed persons
Death rate from tuberculosis
From the tuberculosis death rate an assumption of the tuberculosis sick rate
has to be made. The experience of Leipzig of some twenty years indicates .about
three cases of tuberculosis treated for every case of death from the disease. The
California Tuberculosis Commission has made an estimate of four cases for each
death, on an assumption that an average case lasts about four years. This higher
ratio of four was accepted to be on the safe side, producing the following rate of
tuberculosis per 1,000 population :
Males, 11.2 per cent ; females, 4.4 per cent ; both sexes, 10 per cent.
Considering that the maximum benefit for tuberculosis may extend to 52 weeks,
it does not follow that every case will demand the full time. The average dura-
tion of treatment per case under the Leipzig system was under 90 days. It
seems sufiicient, therefore, to allow the full 26 weeks for about one-half of the
cases, or 13 weeks of sanatorium treatment over and above the 26 weeks for each
case.
It is assumed this tuberculosis benefit is to be given in the form of sanatorium
treatment and the cost would be without any reference to the wages of the
insured. The cost is assumed to be $2.00 per day, $14.00 per week, or $182.00
per average case. The cost per 1,000 employees of either sex would therefore be
as follows :
Male $182.00 X 11.2 = $2,038 40
Female , 182.00 X 4.4= 800 80
The cost per insured member will then equal $2.04 for males and 80 cents for
females.
9. Medical henefit for family. The number of children per family may be
roughly estimated on the following basis :
Children under 17 in California in 1910 641,813
Married, widowed, or divorced men 552,745
Average number of children per family 1.2
Members of family who would be entitled to benefit (limiting this to wives and
children only ) , is shown in the following table, both for males and females :
For every
1,000 men
employed
Additional
persona per
famUy
Total
additional
persons
Married _ _ _ - _
476
476
48
2.2
1,047
Single
Widowed and divorced -
1.2
58
Totals
1,000
1,105
324
REPORT OP SOCIAL INSURANCE COMMISSION.
For every
1.000
women
employed
Additional
persons per
family
Total
additional
persona
Married -
139
654
207
1.2
167
Single
Widowed or divorced
1.2
248
Totals - —
1,000
415
At the rate of $4.00 i)er capita for medical aid the cost of this benefit would be :
For each male insured $4.00 X 1.105 = $4 42
For each female insured 4.00 X .415 = 1 66
At the rate of $6.00 for medical aid the cost would be :
For each male insured $6.00 X 1.105 - $6 63
For each female insured 6.00 X .415 = 2 49
10. Hospital benefit to dependents. At the rate of $2.00 per capita would be :
For males $2.00 X 1.105 = $2.21
Females 2.00 X .415 = 83
11. Funeral benefit to dependents. Cost per funeral, $50.00. General death rate
for California, 14.4.
Male
Female
Death rate for 1,000 dependents
Number of deaths among dependents per 1,000 insured
Number of dependents per 1,000 members
Funeral cost per 1,000
Funeral cost per one insured
14.4
6.0
415
$300
$0.30
12. Maternity benefit to dependents ;
Married men to 1,000 employed men, 476.
Assumed rate of issue for 1,000 married men, 93.
IN^umber of births per 1,000 insured men, 93 X .476 = 44.3.
Average cost i)er case, $25.00.
Cost per 1,000 insured men, $25.00 X 44.3 = $1107.50.
Cost per insured male mernber, $1.11.
13. Saving possible through establishment of one week waiting period;
A computation made on the basis of the Leipzig standard table given on
page 310, indicates that an establishment of one week waiting period would
reduce the cost of the money benefit by 25 per cent. The saving accomplished
will therefore be :
1.099 per cent X .25 = .275 per cent on a basis of adjusted wages.
In the following tables the various formulas worked out in the pre-
ceding pages are utilized for computation of the total cost as well as
per capita cost and proportion to pay roll :
Table I : Pages 329-332 present a computation of the net cost of all
the benefits for each of the eighteen occupational groups. This state-
ment contains no loading for expenses. On the other hand it assumes
that every one of the million persons who might be subject to compul-
sory insurance is fully covered throughout the entire fifty-two weeks
of the year. The cost of medical aid was assumed at $4.00 per capita
in this table, but a separate parallel computation was made on the
assumption of $6.00 for medical aid. Briefly, the final results of this
REPORT OF SOCIAL INSURANCE COMMISSION. 325
table show that taking in all the groups of wage workers, the net cost
including the benefits for the insured, as well as a fairly comprehensive
scheme of medical benefits for the family will amount to $24,836,000,
and without the benefit to the family, $17,332,000. On an assumption
of $6.00 per capita for medical aid the total would be $28,780,000
including the family, and $19,322,000 not including the family. These
figures must not be quoted without many qualifications. The total
amount will evidently vary substantially under the influence of the
following factors:
First — "Whether all the wageworkers are covered or for any reason
certain groups are excluded. Such exclusions are possible for agricul-
tural labor, domestic labor, labor engaged in interstate commerce, pro-
fessional occupations, etc.
Second — ^Whether all the benefits are included or any are left out in
the beginning. All together eight different benefits for the insured and
four for the members of the family are recognized.
Third — Whether the cost of the various benefits will vary from the
assumptions made in this computation.
Fourth — The effect of variations in cost of medical aid was taken
into consideration because it is the biggest factor, but there may be
others of similar character.
Fifth — How far all the wageworkers covered by the law will keep up
the insurance throughout the year.
With thesp five factors influencing the final figure of cost thousands
of different combinations might be made. It would be almost impossi-
ble to make in advance independent computations for all the various
combinations that might result, but a general idea as to the cost can be
obtained from these figures, and any further combinations may be
made from them without very much difficulty.
It will be observed that certain assumptions were made uniformily
for all the eighteen groups of wage earners, as for instance in regard to
mortality, marital conditions, etc. Undoubtedly the criticism would be
justified that there are substantial variations in these conditions
between one group and the other, but for the purpose of preliminary
estimate such refinement did not appear necessary. On the whole the
table presents a general idea as to the total cost of insuring each one
of these groups.
While it did not seem necessary to account for all possible variations
there seems to be a general agreement that, certain benefits are essential
and others somewhat less so. There may be some doubt about a dental
benefit, or the additional benefit for tuberculosis, and there is also a
general desire to ascertain the additional cost which insurance of the
326 REPORT OF SOCIAL INSURANCE COMMISSION.
family will necessitate. The various eompi-itations were made on the
following hypotheses:
{a) All benefits, including those of the family.
(6) All benefits, including those for the family, but no dental
benefit to the insured.
(c) All benefits, including those for the family, but no additional
tional tuberculosis benefit to the insured.
{d) All benefits, including those for the family, exclusive of
both the dental and tuberculosis benefit to the insured.
(e) All benefits to the insured but none to the family.
(/) All benefits to the insured except dental, and none to the
family.
{g) All benefits to the insured except additional tuberculosis
benefit, and none to the family.
{h) All benefits to the insured except tuberculosis and dental
benefits, and none to the family.
Computations were made for all these eight combinations, and both
the assumption of $4.00 and the assumption of $6.00 per capita for
medical aid, were used.
The various combinations present a variation from $14,651,000 to
$28,780,000. (Table II.)
In this table, as well as in all others, the figures are given separately
for the four large occupational groups.
Table III indicates the average net cost per member per annum.
Using as a basis both the $4.00 assumption and the $6.00 assumption,
there was a fluctuation between $14.72 and $28.92 per member for
the eight different combinations. These general averages are appli-
cable when all the wage groups together are taken. Because of wage
and other fluctuations the averages differ somewhat between one occu-
pational group and others. Great care should be taken in accepting
these averages as indications of actual rates to be quoted, for as
shown elsewhere, these rates should be made a factor of wages and
not a uniform amount for each wage earner.
Table IV gives the same data of net cost per week, obtained by
a simple arithmetical division of figures in Table III by 52. The
indicated variations are between 28 cents and 56 cents per week. It is
necessary to remember in connection with this table that it contains
no loading for expenses, and that in order to produce full coverage
for the year amounts would require fifty-two payments throughout
the year,
Table V presents the same data of net cost (without any loading)
in percentage of wages.. Taking all the occupational groups together
the fluctuation is between 1.64 per cent and 3.23 per cent, depending
upon the benefit included and the cost of the same. Limiting our-
selves to the figures, of an assumed medical cost of $4.00 per capita.
REPORT OF SOCIAL INSURANCE COMMISSION. 327
the fluctuation is between 1.64 and 2.79. Considerable fluctuation
may be observed in this percentage cost between different occupa-
tional groups. It is evident that since only the ease benefits are in
psroportion to wages and all the medical and other services are flat
charges, that the cost in percentage of wages will be higher if wages
are lower. It follows that the percentage cost for domestic labor
and agricultural labor will be higher than for manufacturing, etc.
It does not follow that similar differences must be observed when
the contributions are computed. The table is not a computation of
the probable charges, but only computations of the probable cost.
It is obvious that in order to keep the insurance carrier solvent
no insurance can be granted without the proper collection of necessary
funds. The average weekly cost will only give a week of insurance,
and it would be necessary to collect fifty-two weeks' premiums in
order to give complete coverage. Manifestly such a rigid rule might
play considerable havoc with the original system, as employees are
shifting from one employer to another, and as brief periods of unem-
ployment may arise even in the ease of the most fortunate wage-
workers. In addition to this the problem of insurance during the
period of more prolonged uinemployment is also a very serious one.
As explained somewhere else, it is necessary to grant some period
of extending insurance, for at least two reasons:
First — To prevent a lapse of insurance as a result of pure negli-
gence on the wageworker's part to meet the weekly cost out of his
own fund and on his own initiative as soon as he becomes separated
from his employment.
Second — To make some provision for those occupations in which
more or less prolonged periods of unemployment constitute a normal
feature of the occupation.
Both results can be achieved by granting the privilege of extended
insurance as a percentage relation to the length of paid up insur-
ance. While material on distribution of unemployment is very frag-
mentary, a study of such data as are available seems to indicate that
it is possible to grant an extension of 20 per cent, or one week of
insurance for every five weeks of paid up insurance within any one
year by a loading of 7^ per cent.
Table VI presents the average weekly cost with such f. loading of
7^ per cent for arrears.
Table VII shows the effect of the same loading in terms of per-
centage of wages.
All the computations up to this point have been on a net basis,
without any loading for cost of administration. Naturally at is
impossible to make a very close estimate of the probable cost of
administration. It has been assumed that since the Leipzig Fund
328
EEPOKT OF SOCIAL INSURANCE COMMISSION.
runs at a cost of about 8 per cent, that 10 per cent of the gross, repre-
senting about 11.1 per cent of the net (l-=-.9=ll.l per cent), will
be an ample loading for expenses.
The inclusion or exclusion of the family benefit will affect not only
the net cost of services rendered and benefits paid, but also the cost
of administration. On the other hand it seems safer to assume, in
view of the fact that the Leipzig average cost of administration is
based upon a very comprehensive service, that the exclusion of one
or two benefits, such as the dental and the tuberculosis benefits, will
not very, materially reduce the cost of administration. Therefore, the
same loading for expenses representing 11.1 per cent of the net cost
of all benefits applies, whether the dental or tuberculosis benefits or
both be omitted. Moreover if it should appear necessary to increase
the cost of medical aid beyond $4.00, that should not in any way affect
the cost of the administration. Therefore, the loadings obtained on
a basis of $4.00 for medical aid were also used in the computation
under the assumption of $6.00 for medical aid. In short, the loading
for expenses was assumed to be as follows:
Occupational group
Loading for expenses
Inclusive
of family
Manufacturing, mining, etc.
Oommerce and clerical occupations
Professional and public service .^
Domestic and agricultural
All occupations
$1,386,000
612,000
149,000
613,000
$2,760,000
Exclusive
of family
$956,000
438,000
113,000
418,000
$1,926,000
From these figures the following tables are derived showing the
average cost per annum per capita. (Table VII). The average cost
per week per capita (Table IX), and the cost expressed in percentage
of wages (Table X) inclusive of the 7^ per cent loading for arrears
and 10 per cent loading for administration, are shown in the following
pages.
Limiting ourselves to the estimate based upon an assumption of
$4.00 for medical aid, it appears that the cost for all benefits outlined
in this chapter with a loading for arrears covering the cost of an
additional week of free insurance for every five weeks of paid up
insurance, and with a very liberal estimate for administration, does
not exceed three and one-third per cent, and that the cost may be
reduced by eliminating some of the benefits. It is extremely significant
that all these complicated computaitons simply corroborate the experi-
ence of the most efficient funds in Germany for which the cost has
been recently running between 3 and 4 per cent.
REPORT OF SOCIAL INSURANCE COMMISSION.
329
TABLE I.
Computation of the Net Cost of All the Benefits for Each of the Occupational
Groups (No Loading for Expenses).
Manufacturing
Building
Mining and transportation
Kind of benefit
-Manufac-
turing,
male
Manufac-
turing,
female
llinine
Transpor-
tation
Totals
Insured persons—
1. Weekly cash
$1,600,000
$138,000
18,000
9,000
8,000
100,000
60,000
50,000
25,000
20,000
$1,748,000
$321,000
$1,031,000
2. Maternity:
Cash
18,000
9,000
Obstetrical
3. Funeral ______
135,000'
664,000
332,000
332,000
166,000
339,000
113,000
666,000
278,000
278,000
139,000
284,000
29,000
144,000
72,000
72,000
36,000
73,000
86,000
420,000
210,000
210,000
105,000
214,000
4. Medical __
5. Hospital
6. Drug ___
7. Dental .
8. Tuberculosis
Totals __
$3,568,000
$195,000
400,000
$418,000
$19,000
35,000
$3,396,000
$213,000
437,000
$747,000
$39,000
80,000
$2,276,000
$126,000
258,000
$10,405,000
$592,000
1,210,000
Deduct—
Cash lor hospital days
First week's cash__
Total deductions __.
$595,000
$2,973,000
$734,000
367,000
133,000
184,000
$64,000
$364,000
$42,000
21,000
8,0Cff
$650,000
$2,746,000
$614,000
307,000
111,000
154,000
$119,000
$628,000
$155,009
77,000
28,000
39,000
$384,000
$1,892,000
$464,000
232,000
84,000
117,000
$1,802,000
$8,603,000
$2,009,000
1,004,000
364,000
494,000
Family—
i. Medical
2. Hospital i__.
3. Funeral _
4. Maternity
Total family _ __
$1,418,000
$1,391,000
$5,089,000
3,306,000
$71,000
$435,000
$505,000
414,000
$1,186,000
$3,932,000
$4,518,000
8,024,000
$299,000
$927,000
$1,076,000
700,000
$897,000
$2,789,000
$3,231,000
2,102,000
$3,871,000
$12,474,000
$14,419,000
Total cost _ _..
Total cost, it medical $6—
With family __ ___
Without family
9,545,000
330
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE I — Continued.
Commercial and Clerical Employment.
Kind ot benefit
Commer-
cial.
msie
Commer-
cial,
female
Clerical,
male
Clerical,
female
Totals
Insured persons—
1. Weekly cash
$1,151,000
$174,000
23,000
10,000
9,003
116,000
58,000
58,000
29,003
23,000
$544,000
$218,000
28,000
12,000
11,000
140,000
70,000
70,000
35,000
28,000
$2,087,000
2. Maternity:
Cash
51,000
Obstetric
22,000
86,000
424,000
212,000
212,000
106,000
216,000
46,000
224,000
112,000
112,000
56,000
114,000
152,000
4. Medical
904,000
5. Hospital
452,000
6. Drugs, etc.
452,000
7. Dental
226,000
8. Tuberculosis
381,000
Totals
$2,407,000
$140,000
288,000
$500,000
$25,000'
44,000
$1,208,000
$66,000
136,000
$612,000
$30,000
54,000
$4,727,000
Deduct—
Cash for hospital days
$261,000
522,000
Total deductions
$428,000
irl,!>79,00O
$468,000
234,000
85,000
118,000
$69,000
$431,000
$48,000
24,000
9,000
$202,000
$1,006,000
$248,000
324,000
45,000
62,000
$84,000
• $628,000
$58,000
29,000
10,000
$788,000
Net cost (insured)
$3,944,000
Family —
1. Medical
2. Hospital
$822,000
411,000
149,000
180,000
Totals
$905,000
$81,000
$479,000
$97,000
$1,562,000
Total cost
Total cost of medical $6—
With family ._ -
$2,884,000
$3,330,000
2,191,000
$512,000
$594,000
489,000
$1,486,000
$1,721,000
1,118,000
$623,000
$724,000
598,000
$5,506,000
$6,369,000
4,396,000
REPORT OF SOCIAL INSURANCE COMMISSION.
331
TABLE I — Continued.
Professionar and Public Service.
Kind of benefit
Insured persons —
1. Weekly benefit
2. Maternity:
Cash
Obstetrics _-.
3. Funeral —
4. Medical
a. Hospital
6. Drugs
7. Dental
8. Tuberculosis __-
Totals
Deduct —
Cash lor hospital days.
First week's cash
Total deductions
Net cost (insured)
Family —
1. Medical
2. Hospital
3. Funeral
4. Maternity
Total family
Total cost __.
Total cost of medical S
With family
Without family
Protes-
sional,
male
. Profes-
sional,
female
$182,000 I $271,000
12,000
60,000
30,000
30,000
15,000
31,000
86,000
12,000
8,000
100,000
50,000
50,000
25.000
20,000
$360',000
$22,000
45,000
$67,000
$293,000
2,000
$36,000
68,000
$106,000
$463,000
$66,000 [ $42,000
33,000 1 21,000
12,000 I 8,000
17,000
$128,000 $71,000
$421,000
$494,000
323,000
$537,000
$608,000
516,000
Public
service
$152,000
11,000
56,000
28,000
28,000
14,000
29,000
$318,000
$19,000
38,000
$67,000
$251,000
$62,000
31,000
11,000
16,000
$120,000
$381,000
$440,000
289,000
$606,000
36,000
12,000
31,000
216,000
108,000
108,000
54,000
80,000
$1,250,000
.$79,000
151,000
$230,000
$1,020,000
$170,000
85,000
31,000
33,000
$319,000
$1,339,000
$1,632,000
1,128,000
332
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE I— Continued.
Domestic Service, Agriculture and Miscellaneous.
Kind of benefit
Domestic,
male
Domestic,
female
Agricul-
tural,
male
Agricul-
tural,
female
Miscel-
laneous,
male
Miscel-
laneous,
female
Totals
Insured persons—
1. Weekly benefit
2. Maternity:
Cash
$219,000
$309,000
40,000
19,000
16,000
216,000
108,000
108,000
54,000
43,000
$908,000
$11,000
1,000
1,000
1,000
8,000
4,000
4,000
2.000
4,000
$207,000
$14,000
2,000
1,000
1,000
8,000
4,000
4,000
2,000
4,000
$1,668,000
43,000
Obstetrics
21,000
26,000
128,000
64,000
64,000
32,000
66,000
110,000
540,000
270,000
270,000
1S5,000
140,000
15,000
76,000
38,000
38,000
19,000
89,000
169,000
4. Medical . _,_
976,000
488,000
6. Drugs —
488,000
7. Dental
244,000
8. Tuberculosis
295,000
Totals
$698,000
$27,000
55,000
$913,000
$43,000
77,000
$2,873,000
$111,000
227,000
$36,000
$2,000
3,000
$432,000
$25,000
52.000
$40,000
$2,000
3,000
$4,392,000
Deduct—
Cash lor hospital—
First week's cash
$210,000
417,000
Total deductions
Net cash (insured)
Family—
1. Medical .
$82,000
$616,000
$142,000
71,000
26,000
36,000
$120,000
$793,000
$SO,000
46,000
16,000
$338,000
$2,035,000
$596,000
298,000
108,000
150,000
$6,000
$31,000
$3,000
2,000
1,000
$77',000
$355,000
$84,000
42,000
15,000
21,000
$5,000
$35,000
$3,000
2,000
1,000
$627,000
$3,765,000
$918,000
460,000
3. Funeral
167,000
207,000
Total (lamily)..
$275,000
$161,000
$1,162,000
$6,000
$162,000
$6,000
$1,762,000
Total cost
Total cost (medical $8) :
With family
Without family
$791,000
$925,000
580.000
$044,000
$1,097,000
901,000
$3,187,000
$3,754,000
2,305.000
$37,000
S42,000
35,000
$517,000
$597,000
393,000
$41,000
$46,000
89,000
$5,517,000
$6,460,000
4,253,000
REPORT OP SOCIAL INSURANCE COMMISSION.
TABLE I— Continued.
3;«
Kind of benefit
Manufac-
turing,
building,
mining.
transpot-
tation
Com-
mercial,
clerical
Profes-
sional,
public
service
Domestic,
agricultural,
miscel-
laneous
Insured persons—
1. Weekly benefit
2. Maternity:
Oa«h
Obstetrics
3. Funeral
4. Medical
5. Hospital
6. Drugs
7. Dental
8. Tuberculosis —
Totals
Deduct—
Cost lor hospital.
First week's cash-
Total deduction
Net (insured)
Family —
1. Medical __.
2. Hospital .
3. Funeral __.
4. Maternity
Totals (iamily)
Total cost -
Cost (Medical $6)—
With Iamily
Without family .
$4,838,000
18,C00
9,000
371,000
1,886,000
942,000
942,000
471,000
93,000
$10,405,000
$.>i92,0CO
1,210,000
$1,802,000
$8,603,000
$2,009,000
1,004,000
364,000
494,000
$2,087,000
51,000
22,000
162,000
904,000
462,000
452,000
226,000
381,000
$4,727,000
$261,000
622,CC0
$3,871,000
$783,000
$3,944,000
$822,000
411,000
149,000
180,000
$605,000
36,000
12,000
31,000
216,000
108,000
108,000
54,000
80,000
$1,260,000
$79,000
151,000
$1,662,000
.$12,474,000 ' $.5,r,C6,0OO
$14,419,000 ' $6,369,000
9,647,000 1 4,396,000
$230,000
fl,020,000
$170,000
85,000
31,000
33,000
$1,668,000
43,000
21,000
169,000
976,000
488,000
488,000
244,000
295,000
$4,392,000
$210,000
417,000
$319,000
L,3S9,00O
$627,000
P3,765,000
$918,000
460,000
167,000
207,000
$9,198,000
148,000
61,000
723,000
3,980,000
1,990,000
1,990,000
995,000
1,686,000
$20,774,000
$1,142,000
2,300,000
$1,532,000
1,128,000
$1,762,000
$5,517,000
$6,460,000
4,253,000
$3,442,000
$17,332,000
$3,919,000
1,950,000
711,000
914,000
$7,504,000
$24,836,000
$28,780,000
19,322,000
334
REPORT OP SOCIAL INSURANCE COMMISSION.
TABLE II.
Net Cost of Insurance Under Various Assumptions.
Kind of benefit
Mahfe.,
mining,
building,
transp.
Commercial,
clerical
Professional
and public
seiTice
Domestic
and .
agricultural
AH
groups
Medical at $8—
Inclusive ol family:
All benefits
$14,419,000
13,948,000
13,489,000
13,018,000
9,545,000
9,074,000
8,615,000
8,144.000
$14,419 000
12,003,000
11,544,000
11,073,000
8,603,000
8,132,000
7,673,000
7,202,000
$6,369,000
6,143,000
5,988,000
5,762,000
4,396,000
4,170,000
4,015,000
3,789,000
$6,369,000
5,280,000
5,125,000
4,899,000
3,944,000
3,718,000
3,563,000
3,337,000
$1,632,000
1,478,000
1,452,000
1,398,000
1,128,000
1,074,000
1,048,000
994,000
$1,532,000
1,285,000
1,259,000
1,205,000
1,020,000
966,000
940,000
886,000
$6,460,000
6,216,000
6,185,000
5,941,000
4,253,000
4,009,000
3,968,000
3,714,000
$6,460,000
5,273,000
5,222,000
4,978,000
3,766,000
3,521,000
3,470,000
3,226,000
$28,780,000
No dental .
No tuberculosis
27,785,000
27,114,000
26,119,000
Exclusive ol family:
All benefits _ .---
19,322,000
No dental
18,327,000
No tuberculosis
17,636,000
No dental or tuberculosis ~
16,641,000
Medical at $4^
Inclusive of family:
All benefits — -
$28,780,000
23,841,000
No tuberculosis
23.150,000
22,155,000
Exclusive of family:
All benefits _
17,332,000
No dental _
No tuberculosis -
16,337,000
15,646,000
No dental or tuberculosis
14,651,000
TABLE \\\.
Net Cost Per Annum Per Member.
Kind of benefit
Manfg.,
mining,
building,
transp.
Commercial,
clerical
Professional
and public
service
Domestic
and agri-
cultural
All
groups
Medical aid at $6—
Inclusive of family:
$.30 61
29 61
28 64
27 64
20 23
•19 26
24 51
17 29
26 48
25 48
24 51
23 51
18 28
17 28
16 29
15 29
$28 18
27 18
26 50
25 50
]0 45
18 45
22 69
16 77
24 36
23 36
22 69
21 69
17 45
16 45
15 77
14 77
$28 37
27 37
26 89
25 89
20 89
19 89
23 28
18 41
24 80
23 80
23 28
22 28
18 89
17 89
17 41
16 41
$26 48
2.3 48
25 35
24 33
17 43
16 43
21 40
IB 22
22 61
21 61
21 40
20 40
15 43
14 43
14 22
13 22
$28 92
27 92
No tuberculosis
27 25
No dental or tuberculosis
26 25
Exclusive of family:
All benefits
19 42
No dental
18 42
23 27
16 72
Medical at $4—
Inclusive of family:
All benefits
24 96
No dental -_ -
23 96
22 27
Exclusive of family:
All benefits — — „ ..
17 42
No dental
16 42
REPORT OF SOCIAL INSURANCE COMMISSION.
335
TABLE IV.
Net Co st Per Week (No Loading for Arrears).
Kind of benefit
Medical aid $6—
Inclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
Medical at $1—
Inclusive of family:
AU benefits
No dental
No tuberculosis
No dental or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
TABLE V.
Net Cost of Insurance in Per Cent of Wages (No Loading).
Kind of benefit
Manf K. .
mining,
bull dins.
transD.
(per cent)
Medical cost at $6—
Inclusive of family:
All benefits
No dental -
No tuberculosis
No dental or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
Medical cost at $J —
Inclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
Exclusive of family:
All benefits -
No dental -
No tuberculosis
No dental or tuberculosis
2.99
2.89
2.80
2.70
1.98
1.88
1.79
1.69
2.59
2.49
2.40
2.30
1.79
1.69
1.59
1.49
Commercial,
clerical
(per cent)
3.02
2.90
2.21
2.10
2.02
1.91
2.VV
2.66
2.59
2.47
1.99
1.87
1.79
1.68
Professional
and public
service
{per cent)
2.65
2.56
2.51
2.42
1.95
1.86
1.81
1.72
Domestic
and afiri-
cultural
(per cent).
4.2:!
4.07
4.05
2.78
2.62
2.59
2.43
2.31
3.61
2.79
2.22
3.45
2.68
2.18
3.42
2.60
2.08
3.26
2.49
1.76
2.47
1.94
1.67
2.30
1.83
1.62
2.27
1.76
1.53
2.11
1.64
All
groups
3.12
3.04
2.93
2.17
2.06
1.99
1.87
336
REPORT OP SOCIAL INSURANCE COMMISSION.
TABLE VI.
Net Cost Per Week, With 7.5 Per Cent Loading for Arrears.
Kind of benefit
MantK.,
mlnlnfii
buildluR,
transp.
Commercial,
clerical
Professional
and public
service
Domestic
and agri-
cultural
AU
groups
Medical at $6—
Inelusive oj family:
All benefits . _. ._
$0,633
.613
.592
.572
.419
.398
.378
.360
.547
.527
.507
.486
.378
.357
.336
.316
$0,583
.562
.648
.527
.402
.382
.368
.347
.503
.483
.469
.448
.381
.340
.326
.305
$o.6sr
.565
.556
.539
.432
.412
.401
.381
.513
.492
.481
.460
.390
.370
.360
.340
$0,547
.627
.625
.503
.360
.340
.336
.315
.468
.447
.443
.421
.320
.239
.298
.273
$0,698
No dental
.577
No tuberculosis
.563
No dental or tuberculosis
Exclusive of family:
All benefits
.543
.401
No dental __ „
.381
No tuberculosis
No dental or tuberculosis
Medical at $4^
Inclusive of family:
All benefits
.367
.346
.616
No dental
.496
.481
No dental or tuberculosis
.464
Exclusive of family:
AU benefits —
.360
No dental
.340
.325
No dental or tuberculosis.
.304
TABLE VJI.
Net Cost of Insurance in Percentage of Wages With Loading of 7.5 Per Cent for a
20 Per Cent Arrear Provision.
Kind of benefit
Manfs..
mininiJ;.
building.
transp.
(per cent)
Commercial.
clerical
(per cent)
Professional
and public
service
(pec cent)
Domestic
and agri-
cultural
{per cent)
AU
groups
Medical cost at $6—
Inclusive of family:
All benefits
No dental .. ...
3.21
3.11
3.01
2.90
2.13
2.02
1.92
1.82
2.78
2.68
2.58
2.47
1.92
1.82
1.71
1.60
3.46
3.32
3.26
3.12
2.38
2.26
2.17
2.05
2.98
2.86
2.78
2.66
2.14
2.01
1.92
1.81
2.85
2.76
2.70
2.60
2.10
2.00
1.95
1.85
2.48
2.39
2.34
2.24
1.89
1.80
1.74
1.64
4.56
4.38
4.35
4.18
2.99
2.82
2.78
2.61
3.88
3.71
3.68
3.50
2.66
2.47
2.44
2.27
3:47
3.35
3.27
3.15
2.33
2.21
2.14
1.99
3.00
2.88
2.80
2.68
2.09
1.97
1.89
1.76
No tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis .
No dental or tuberculosis
Medical cost at $4—
Inclusive of family:
All benefits ..
No dental
No dental or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
REPORT OF SOCIAL INSURANCE COMMISSION.
337
TABLE VIII.
Total Cost With Loading for Administration.
Kind of benefit
MaiifK..
minluG,
buildiriK.
transD.
Commercial,
clerical
Professional
and public
sei-vice
Domestic
and aarl-
culturaJ
All
groups
Medical cost at $6—
Inclusive of family:
All benefits
No dental
No tuberculosis
$15,805,000
15,334,000
14,875,000
14,404,000
10,501,000
10,030,000
9,571,000
9,100,000
13,860,000
13,389,000
12,930,000
12,459,000
9,559,000
9,088,000
8,629,000
8,158,000
$6,981,000
6,755,000
6,600,000
6,374,000
4,834,000
4,608,000
4,453,000
4,227,000
6,118,000
5,892,000
5,737,000
5,511,000
4,382,000
4,156,000
4,001,000
3,776,000
$1,681,000
1,627,000
1,601,000
1,547,000
1,241,000
1,187,000
1,161,000
1,107,000
1,488,000
1,434,000
1,408,000
1,354,000
1,133,000
1,079,000
1,053,000
999,000
$7,073,000
6,829,000
6,798,000
6,554,000
4,671,000
4,427,000
4,376,000
4,132,000
6,130,000
5,886,000
5,835,000
6,591,000
4,183,000
3,939,000
3,888,000
3,644,000
$31,540,000
30,545,000
29,874,000
28,879,000
21,248,000
20,253,000
19,562,000
18,667,000
27,696,000
26,601,000
25,910,000
24,915,000
19,268,000
18,263,000
17,572,000
16,577,000
No dental' or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
Medical cost at $4—
Inclusive of family:
All benefits —
No dental
No tuberculosis
Exclusive of family:
All benefits ....
No dental - -~ «.^
No tuberculosis ..
TABLE IX.
Cost Per Annum With Loading for AdministratioR.
Kind of benefit
Manf (J. .
mlniofc,
bulldiuK,
transn.
Commercial,
clerical
Professional
and public
service
Domestic
and agri-
cultural
All
groups
Medical at $6—
Inclusive of family:
All benefits
No dental
No tuberculosis ...
No dental or tuberculosis
Exclusive of family:
Ail benefits
No dental
No tuberculosis
No dental or tuberculosis
Medical cost at $4—
Inclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
Exclusive of family:
All benefits
No dental
No tuberculosis
No dental or tuberculosis
$33 55
32 55
31 58
30 58
22 29
21 28
20 32
19 32
29 42
28 42
27 46
26 45
20 31
19 31
18 32
17 32
29 89
29 21
28 21
21 39
20 39
20 71
19 71
27 07
26 07
25 40
24 40
19 39
18 39
17 n
16 71
$31 13
30 13
29 65
29 65
22 99
21 99
21 51
20 51
27 66
26 56
26 04
25 04
20 99
19 99
19 61
18 51
27 99
27 86
19 14
18 14
17 93
16 93
25 12
24 12
23 91
22 91
17 14
16 14
15 93
15 93
$31 69
30 69
30 02
29 02
21 36
20 36
19 66
18 66
27 73
26 73
26 04
26 04
19 36
18 36
17 66
16 66
22—27626
338
REPORT OF SOCIAL INSURANCE COMMISSION.
TABLE X.
Cost Per Week, With 7.5 Per Cent Loading for Arrears and Loading
for Administration.
Kind of benefit
ManfK..
mininR.
buildinK.
transp.
Commercial,
clerical
Professional
and public
Domestic
and aKri-
cultural
•All
groups
Medical at $8—
Inclusive of family:
All benefits
$0,691
.674
.653
.633
.461
.440
.420
.402
.608
.588
.668
.547
.420
.399
.378
.358
$0,639
.618
.604
.583
.442
.422
.408
.387
.559
.539
.525
.604
.401
.380
.366
.345
$0,644
.622
.613
.592
.475
.466
.444
.424
.570
.649
.538
.517
.433
.413
.403
.383
$0,599
.579
.577
.555
.396
.376
.371
.351
.520
.499
.495
.473
.356
.335
.334
.319
$0,665
.634
No tuberculosis
.620
No tuberculosis or dental
Exclusive of family:
AU benefits
.600
.441
No dental
.421
.407
.386
Medical at $4—
Inclusive of family:
All benefits
.573
No dental
No tuberculosis
No dental or tuberculosis
.563
.638
.521
Exclusive of famUy:
All benefits
.400
No dental
.380
«366
No dental or tuberculosis
.344
Cost in Per Cent of Wages,
TABLE XI.
With 7.5 Per Cent Loading for Arrears, and 10 Per
Cent for Administration.
Kind of benefit
Manfff.,
minins.
buildinK.
transu.
(per cent)
Commercial,
clerical
(per cent)
Professional
and public
service
(per cent)
Domestic
and aKri-
cultural
(per cent)
All
groups
Medical at $6—
Inclusive of family:
AU benefits
No dental .
No tuberculosis
No dental or tuberculosis .. .
Exclusive of family:
All benefits
No dental .
3.52
3.42
3.32
g.21
2.84
2.23
2.13
2.03
3.09
2.99
2.89
2.78
2.13
2.03
1.92
1.81
3.78
3.65
3.58
3.45
2.62
2.50
2.41
2.29
3.31
2.19
2.11
1.99
2.38
2.25
2.16
2.05
3.13
3.03
2.98
2.88
2.31
2.21
2.16
2.06
2.76
2.67
2.62
2.62
2.10
2.01
1.95
1.85
4.98
4.81
4.78
4.61
3.29
3.12
3.08
2.91
4.31
4.14
4.11
4.93
2.96
2.77
2.74
2.57
3.80
3.68
3.60
3.48
2.56
2.44
2.37
2.22
3.33
3.21
3.13
3.01
2.32
2.20
2.12
1.99
No tuberculosis
No dental or tuberculosis
Medical at $4—
Inclusive of family:
AU benefits
No dental _
No tuberculosis .
No dental or tuberculosis -
Exclusive of family:
All benefits
No dental
No tuberculosis _
No dental or tuberculosis
REPOET OP SOCIAL INSURANCE COMMISSION.
339
Cost of Various Benefits.
Kind of benefit
Annual
cost per
capita
WeeUIy
cost
WeeMy
cost, with
7.5 load-
ing f or
extended
Insurance
Cost In
per cent
of wages
(no load-
InB)
Cost in
per cent
of wages.
with load-
ing 7.5
per cent
Weekly benefit .
Maternity:
Cash
Obstetrics
Funeral
Medical
Hospital
Drugs
Dental
Tuberculosis ..
Totals
Deduct—
Cost lor hospital-
First week's cash— .
Total deductions
Family-
Medical
Hospital
Funeral
Maternity
$9,198,000
148,000
64,000
723,000
3,980,000
1,990,000
1,990,000
995,000
1,686,000
$20,774,000
$1,142,000
2,300,000
$3,442,000
$3,919,000
1,960,000
711,000
914,000
Totals (lamily)
Grand totals
Administrative loading-
Insured
Family
Grand total cost-
$7,504,000
^4,836,000
$1,926,000
834,000
$27,596,000
$9,244
.149
.064
.727
4.000
2.000
2.000
l.flOO
1.695
$20,878
$1,148
2.311
$3,459
1.970
.715
.919
$0,178
.003
.001
.014
.077
.019
.033
$0,022
.044
$1,936
$27,736
$0,067
$0,076
.038
.014
.018
$0,191
.003
.001
.015
.063
.041
.041
$0,432
$0,024
.047
$0,145
$0,480
).087
.016
$0,533
$0,072
.041
.015
.019
$0,040
.017
$0,673
1.03
.02
.01
.08
.46
.22
.22
.11
.19
2.33
.39
.44
.OS
.10
2.79
.22
1.11
.02
.01
.24
.24
.12
.20
2.51
.14
.27
.48
.24
.11
.91
2.99
.10
Cornell University Library
HD 7123.C3
Report of the Social insurance commissio
3 1924 002 336 661
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