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The New International, March 1939


Paul Luttinger, M.D.

The 3-Cents a Day Plan


From The New International, Vol.5 No.3, March 1939, pp.90-92.
Transcribed & marked up by Einde O’Callaghan for ETOL.


FOR THE LAST few months there has been an intensification of the campaign to enroll industrial and white-collar workers under the so-called three-cents-a-day plan for hospital care. The expense seems to be so small and the promised benefits appear so great that quite a number of people belonging to the lowest income group have succumbed to the ballyhoo and high pressure salesmanship exercised by the press and through the circularization of shops and offices; handing over hard-earned cash for something they should get free in any municipal or county hospital. One circular, for instance, from the largest of the fifty plans in the United States, asserts that it has a million subscribers. Numerous inquiries have reached us from more cautious workers regarding the advisability of subscribing to this “plan”, and we now submit the following observations.

A “non-profit” Community Service

ALL THE HOSPITAL plans in this country insist that they are non-profit organizations doing their work for love, as a “community service”. Politically developed workers do not have to be told to look with suspicion on any claims of the ruling class alleging altruistic motives for any of its enterprises. The old Romans had a word for it: timeo Danaos et dona ferentes. (I fear the Greeks, even when they bring gifts). Too often have the “philanthropic” plans of the bourgeoisie turned out to be catch-penny schemes, devised to squeeze additional tribute out of long-suffering workers to insure their more complete economic enslavement.

As a matter of fact, the hospitalization plan, notwithstanding the hypocritical claims of its sponsors, was devised for the sole benefit of the private hospitals. It was a direct result of the depression which cut off these institutions from the endowment and contributions of the middle classes, the lucrative petty-bourgeois clientele and the labor aristocracy. When profits started to dwindle and salaries were mercilessly cut, large sections of the population were unable to meet the exorbitant private medical fees and hospital bills, and began to flock to the free municipal clinics and hospitals.

Something had to be done to keep the beds – particularly the ones in semi-private rooms – in the private hospitals occupied, and the physicians catering to the lower income groups busy. Various schemes were evolved to that effect, but the only ones which have met with any degree of success have been the “cooperative” medical groups and the sundry hospitalization plans. Like everything else under capitalism, these plans are based on the profit system. The profit may be less, but it is there just the same, and the larger turnover makes up in group quantity what was lost in larger individual accounts of the pre-depression period. In other words, the hospital financiers succeeded in loading the backs of the lower middle classes with the burden of their deficits – they socialized their losses.

The slogan of “three-cents-a-day” is calculated to give the impression of a small sum being involved; but a deeper study of this rate and of its benefits shows that for one who works for the present low standard of wages, the rates are relatively high and the returns few in comparison.

The standard rates quoted by most hospitalization services are ten dollars for single individuals, nineteen dollars for married couples and twenty-six dollars for married people and their unmarried children, under nineteen years of age. These sums are to be paid annually. For quarterly payments, the rates are $2.60, $4.85 and $6.60 respectively, or forty cents higher. If the children are a day over nineteen, or if they are married, they must each pay the regular rate per individual or couple, even if they, depend on their parents for support. As a matter of fact, an unemployed individual cannot subscribe to the plan, no matter how anxious somebody else is to pay for him. On the other hand, if the worker allows his employer to deduct the amount from his pay-envelope, the plan will generously deduct from forty cents to $2 from the annual rate.

As to the smallness of the rates charged, one can draw one’s own conclusions from the following three facts, without resorting to any complicated statistics or controversial figures: First, the various plans admit that only one family in five has a hospital case in any one year. Secondly, the Farm Security Administration has announced recently that farm health cooperatives are being set up in various rural areas of the United States where some seventy-seven thousand families will be able to get complete medical, dental and hospital care in return for a monthly payment of $2 per family. The Ross-Loose Medical Group, organized on a profit making basis in Los Angeles in 1929, is able to give complete medical and dental care, as well as hospitalization for $24 yearly to any family irrespective of its size. The same is true of the relatively small cooperative medical group of Elk City, Oklahoma (2,500 families), who pay $25 a year for complete medical and hospital care.

This means that for the same amount which the “non-profit” plans charge for hospital accomodations only, real non-profit and even some profit making organizations supply all the medical, dental and hospital services required by their subscribers.

Finally, some of the private insurance companies, who certainly make no pretense at being in business for the love of humanity, offer much better terms to their regular policyholders. Thus, I have before me a health insurance policy, the premium of which is $13 per year, guaranteeing $25 a week for fifty-two weeks in case of disability due to illness; another policy also issued by a company with an excellent business reputation for prompt payments, charges $12 a year for accident insurance and pays $25 a week for thirty-two weeks and in addition pays five thousand dollars insurance if the accident results in death, and corresponding amounts for loss of limb or eye. This means a cash indemnity amounting to as high as $1,300 a year with which you can pay your hospital and doctor’s bills anywhere you choose.

Compare the benefits under the cash indemnity plans with the “philanthropic” hospitalization plan, under which the maximum guarantee is $6.75 a day for only thirty days, amounting to only $202.50 in any one year, and you can readily see that the latter is much costlier and inferior in every respect to ordinary health or accident insurance. It is probably such a comparison which impelled the New York Commission of the State Health Program, in its report (NY Times, January 12, 1939) to urge, among other things, “the further study of the need and advisability of cash benefits for wage-earners temporarily incapacitated due to illness.”

Of course, cash indemnity plans have many drawbacks, and insurance companies are not beyond haggling and chiselling when it comes to payments; but they at least do not claim to do us any favors and to make no profits.

From the above figures, it is easily seen that the hospitalization plans are nothing but a form of camouflage insurance with relatively high premium, and meagre benefits. That they are nothing but insurance schemes may be readily gathered from the fact that they are (in New York) under the jurisdiction of the State Superintendent of Insurance, as well as under the Department of Social Welfare, which supervises hospital finances. The sponsors of the scheme, realizing that there is a discrepancy between the rates charged and the actual cost of the subscribers’ hospital bills, claim that the surplus goes into a reserve fund against unforeseen demands; but this is an obligatory feature of all insurance companies who make no humanitarian or non-profit claims.

What You Get

WHEN WE ANALYZE the actual benefits a subscriber to a three-cents-a-day hospitalization plan is supposed to get, we find that to a worker in the lower income brackets they are more apparent than real.

Duration of Benefits: First of all, you get only thirty days of hospitalization and no more. If your sickness lasts more than thirty days, you have to pay extra for each additional day in the hospital. It is true that most cases, especially among young adults, do not require more than thirty days, whether surgical or medical, but in older people a certain percentage will take more than a month. This is particularly true in fractures, when the bones take a longer time to knit and in operations on gallstones, tumors, etc., where there might be delayed healing; also in certain diseases like pneumonia, complicated with pleurisy, diabetic gangrene, kidney stones, and others too numerous to list.

Nursing: The accomodations are supposed to be semi-private, but the nursing allowed is only the “usual” kind. This is a joker which means that you do not get a private nurse, but must share her with the other three or four patients in the room.

Everybody knows that, following operations and in all serious illness, a private nurse is not merely a luxury, but is an actual necessity, particularly for a patient who has a weak heart, or is delirious, as his life is in danger unless there is a nurse in constant attendance. For such a nurse you have to pay extra.

Operating Room: The use of the operating room is included in the service, except after thirty days when you have to pay extra for it.

Confinements: Confinement cases are entitled to hospitalization, but not before at least ten months’ enrollment. This means that if your wife has reason to believe that she is going to have a baby, she cannot enroll and be delivered at the end of eight or nine months, but has to pay for the hospital herself.

New-born Children: After paying at least two year’s premium a woman’s maternity hospital bill will be paid, but the new-born baby will get no hospital care, except nursery service, unless you pay extra for it. Nor can you enroll the baby before thirty days after birth.

Laboratory Tests and X-rays: X-ray and laboratory examinations are supposed to be furnished free, but (there is always a “but”) only those necessary to institute treatment of the condition for which the patient is admitted. Any X-ray or laboratory examination in the course of the treatment, such as “typing” of sputum or blood, or for another condition that may arise, has to be paid extra.

Anaesthesia: The administration of ether or chloroform is free, but only when given by a salaried employee of the hospital. In most hospitals the anaesthetist is not a salaried employee of the hospital, but a private physician who is paid by the surgeon (indirectly by the patient) in each case. Therefore, patients under the hospitalization plan either have to pay extra for anaesthesia or have the interne, who is not an expert, administer it. In most private hospitals, the interns get no salary from the hospital, hence these are technically entitled to extra compensation from a subscriber to the plan.

Medications and Dressings: The subscriber is entitled to ordinary drugs and dressings. This again means that the subscriber has to pay for any drugs or dressings that may be somewhat out of the ordinary. Thus, oxygen or serum in pneumonia, or any other serum or vaccine or any medication administered intravenously, transfusions, and a host of other medications or dressings which are absolutely vital, are not included under the ordinary terms and have to be paid for extra. Special orthopœdic and fracture casts, dressings and apparatus are also extra.

Discounts: The subscriber gets a discount of one-third off the semi-private hospital charges, if he or she should have to stay more than thirty days. In view of the fact that the hospitalization plans were started to fill the beds which remained empty at the high semi-private rates prevailing before the depression, this discount represents no concession at all. It is similar to the “special” sales where we see tickets in the shop windows which have the original pre-depression price struck off and another substituted, giving a false impression of reduction; the new price being often higher than regular prices of similar goods in normal sales. We have all had experience with articles advertised at wholesale prices or at fifty per cent discount, which can be gotten for less at the neighborhood store.

Thus it is seen that the benefits one gets under the hospitalization plans are so thoroughly hedged in by “buts” and “extras” and exceptions that the subscriber actually gets very little. Let us now see what he does not get.

What You Do Not Get

Tuberculosis Care: First of all the subscriber does not get any hospitalization for pulmonary tuberculosis, a typical proletarian disease which accounts for such a large number of hospital cases among the lower income groups of our population.

Contagious Diseases: Secondly, if he or his child suffers from quarantinable disease, such as scarlet fever, measles, diphtheria, cerebro-spinal meningitis, infantile paralysis and a number of other contagious or infectious diseases, he is not entitled to hospitalization.

Hospitalization for illness following childbirth: Likewise, if a woman, who has been a subscriber less than ten months, should develop any disease or condition requiring hospital service which can be traced to, or is a result of pregnancy, she is not entitled to “free” hospitalization.

Diagnosis and observation: Nor can the subscriber expect X-ray and laboratory examinations if his doctor does not know the exact illness or cannot make a positive diagnosis without such X-rays or laboratory examinations. In other words, he is not entitled to these services if he is sent in for “observation”. He has to pay extra for tests when he is admitted for diagnostic purposes.

Nurses: We already know that special nurses have to be paid extra.

Services of doctor: Your physician, or surgeon, or dentist has to be paid by you. If any physician connected with the hospital is called in consultation or in an emergency, he has to be paid extra, of course!

Clinic: Should you have occasion to consult the clinic or dispensary of any hospital affiliated with the plan, you again have to pay extra.

Special Hospitals: Also, if you live in a district of a member-hospital which does not regularly accept certain cases for treatment, you are out of luck if you happen to have that particular disease or injury. You either have to go to another member-hospital which does treat such illnesses or injuries; or you have to go to a non-member hospital where, of course, you have to pay full rates, as if you were not a subscriber.

Residence: In order to join the hospitalization plan you must be a resident of the area served by the member-hospitals; otherwise you are out of luck. If there is no such hospital in your neighborhood, especially out of town – or if the hospital is not a member of the hospitalization plan – or if your doctor is not on the regular or courtesy staff of the hospital to which you are admitted, it’s too bad! And there are quite a number of hospitals where physicians with chiefly proletarian patients particularly are not “privileged” to practice, even if they have a state license to practice medicine and surgery.

If, however, the subscriber is away from home and is admitted to a non-member hospital, the hospitalization plan will guarantee his bill up to $6.75 a day, which is below the costs of hospitalization, doctor’s fees, special nurses and special services, often the price of the semi-private room alone being higher than this sum.

Age: If an applicant for enrollment happens to be sixty-six years old he is out of luck, he cannot join. As the reader may have already surmised, no “community service” or “non-profit” plan will be foolish enough – from the capitalistic point of view – to insure a man at an age when he most needs it. It is at sixty-six, or after, that most of the chronic conditions develop and that the period of hospitalization is most likely to extend to the full thirty days or beyond.

Must not be sick: Nor will the applicant be accepted if he really needs hospital care at the time he applies for enrollment. They want workers to become members when they don’t need hospitalization.

Marriage and Idleness: The subscriber must also assure the plan, in his or her application, that he or she is either employed or self-supporting, giving the name and address of the employing firm. Subscribers can only enroll in a group of at least from five to ten people, at certain intervals. Finally, a married woman cannot enroll by herself. She must enroll with her husband or under a family subscription.

From the preceding, any intelligent worker can easily see that the three-cents-a-day hospitalization plan, like all capitalistic “philanthropies” is a snare and a delusion. It may lower somewhat the unbearable hospital burden of the middle classes, but a proletarian has nothing to gain from it. It is a waste of money which he can use to better advantage in the purchase of indispensable food and clothes. At the present low scale of wages and uncertainty of employment, the rates of subscription are too high for the average worker and the corresponding benefits far too low.

When in need of hospitalization, the average worker will be wiser to enter a municipal or county hospital where the hospital bill, as well as all medical services, are free and for which he or she will have paid by piling up profits for capitalist employers, and more indirectly by paying exorbitant prices for consumer goods, not counting the host of direct and indirect taxes.

It is true that the medical and other services at oar public hospitals leave much to be desired. Nor are all parts of the country provided with even this minimum of medical treatment and hospitalization ; but whenever they are available, the wage-earner should take advantage of these facilities.

In another article, we’ll consider various other proposals and experiments which have been made for the more scientific medical care of the population within the lower income groups, and their application to possible organizations of our own. At the same time, we intend to discuss the attitude of the industrial and white-collar worker towards these proposals in particular and their relation to the socialization of medicine in general. In other words, we propose to survey the entire field of disease-prevention and medical care, for which the American people spend haphazardly almost four billion dollars, in the light of our transitional demands and the ultimate aims of the Socialist Workers Party.

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