REPORT OF THE INSURANCE TASK FORCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-01826R000600140004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: November 17, 2016
• Document Release Date: July 7, 2000
• Sequence Number: 4
• Content Type: REPORT

Approved For Rele
0-
RP-PORT OF T
I34SURMP TA SIC FOR
0182 8000600140004-1
The Task Force recognizes the length and complexity of this final
Part II of its reports but it has diUgently attempted to compress the
data and its findings into the smallest possible co passa These data
and fixdixgs at present affect CIA em 1 t as and their families.
The Task Force believes ie a Rc vone~es c rae~s plan p
with appropriate internal publicity, cause this number to be egdedily
augmtede
The Task Force recommends that the members of t Board read,
partidularq pages I through 12 and 17 through 25.
UNTENTs
(The Foreword and Part is to a ham boon previoualy presented,)
DAMP 11 as to d;L sab t
FACTS as to disability
a. Statistics excerpted 2ro TAB C
b. I de issg available protective measures as to
disability m exerptrad trm TAB D
DISCUSSION'
Cc 'GDJSICNS
RFCCi' 1DA TION
FS
Co risen of Present Oda Contract) Each with respect 2
Present C Contract to Oerene and fo i.
The Now Uta PIma to Washington tables
TAB C m Sunary Analysis of Omaha and Hospital
and Surgical Clams
TAB D Existing available protective masasure3 as to
disability
G.9 L'h- [5N Cie C.3 C?
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Ui it i a
3e FACTS as to disability*
go Statistics.
Ideally an Agency review of what has happened to our people in
injury and illness should contemplate incidence in performance of
duty, in line of duty, and outside duty ? inclusive of fa.Rd ly
involvements. Such all inclusive information is not available
because:
The Chief, Medical Staff maintains no statistics,
The records under F CA are case tiles, lately in Personnel
and formerly inOGC, (Personnel is about to set up an effective
ledger). At any event, these are only performance, of duty
accidents or illnesses.
The re-imbursement program under Pt 110, approved in May 1953,
still. waits a regulation to disseminate the information and to
govern it, hence it is estimated that there are hundreds of
cases which have not come to our attention unless under an
Agency hospitalization or surgical plan.
Therefore excerpted from TAB C are the most important available
STATISTICS under the two hospitalization and surgical plans offered
to our employees (Mutual Benefit Health and rccident Association of
Omaha? Neb., and Group Hospitalization, Inc.' - hereinafter desig-
nated as OMAHA and GHI respectively). GHI will not give us more
information than shown, ? from our own records.
OMAHA
(1) Summary of Omaha Hospitalization and Surgical claims since
inception in August 1$t;8 thru 1953.
25X9
(a) Total no* of claims 1129 (679 incurred in U.S., L50
overseas); total days in hospital, 6665; ratio of claims
(b) All Claims Bey itl.f
Actual cost paid
yep .oy ee
Benefit
Total $115A05 $172078 676
Hosp. Rm & Bd.. b9A710t 55,580 89.
Surgo 29, OU4 70-.4683 hl.
Extras 36,617 16,615 780
(c) Total Benefit and total actual cost to employee by
Geographic location:
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All figured at Omaha'0 s increased rate as of 1 September 1953ar
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Actual cost paid
Benefit y~ HenefJt
In U, So 77,06h 4129,91.2- 60%
Overseas 38,0$1 !2,966 86%
(d) The total actual costs paid by the employee in respect
to type of service:
to total
Hosp o Rm &. Bd ? 55, 580 320
Surgical 70,683 111.0
Extras 46s,61.5 26.8
Total $172,878
(e)
Omaha Surgical Benefits and Actual Cost
(Based on Claims Submitted Through 1953)
Surgical Benefits -- Total
Operations in Ue Be;
Operations Outside Uo So
Ratio of Benefits
Amount to Actual Cost
829044
21938
7106
Actual Surgical Costs -- Total L7068;,
Operations in Uo So 55533
Operations Outside U c So 15150
1+10
39.5
!L6.9
Of the above,, Omaha Surgical Benefits and
Actual Cost or Pregnancy Convlicationae
Surgical Benefits dv . Total
Maternity in U. S00
Maternity Outside Uo So
Ratio of Benefits
Amount to Actual Cost
41296 768
91,35 311.0
3530 51j.2
Actual Surgical Costs ?m Total $3t289
Maternity in U. So 277"!!
Maternity Outside U. So 65
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(f) Total benefit and total actual cost experience by type
of illness:
Actual cost paid %
Benefit, by employee Benefit
Pregnancy and $10, ,222 $ 72, 710 55%
complications
therefrom
Oastro. $20v783 $ 26,Tho 79%
Intestinal
160 cases of $13,125
misc. small
illnesses
$ 159754 84%
Eyes ear, nose $ 9,511 $ 14,953 63%
and throat
Geni.to-urinary $ 8,664 $ 13,076 66%
Total of 1argeat$92,305 $142,633 65%
5 categories
Total of remain$23,100
Ing 8 cate-
gories
(g) Days hospitalizeds
t 3092)15 71%
Less than 5 days 47%
Less than 10 days $5%
Less than 1$ days 95%
(h) Type of claims
By policy holder only 43%
By spouse only 43~
}3y daughters and sorts only lh%
13 categories of illness groupings were specified by our consulting
actuari.eea The first five largest categories are those shown,,
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(i) Surgi cal. Cisime only: .D~stribution Range of Actuel
Cost to Policy Holder
(Based on 683 Incidences)
Groups
Tote
Number
Per Cent
Cumulative
ratio
Less than $25
91
1303
1303
$25 thru 5l9
101
31t.8
2801
050 thru $74
99
111.5
tt2.6
$75 thru $99
72
3005
5301
$100 thru $124
81
11.9
65.9
$125 thru 814x9
33
P.8
6908
$150 thxu $1741
82
1200
8108
X175 thru199
29
62
86.1
X200 thru $2211
!?5
6.6
92.7
$225 thru $2b9
6
0.9
93.6
$250 thru $274
20
209
9605
$275 thru $299
5
008
9702
$300 and over
19W
208
10090
$300 Ii
335 ~. 1
349 - 1
350 d 5
375 _ 1
1,00 3
500 2
550 m 1
650 1
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(3) 'Extras Claims only: Distribution Range of Actual
Cost to Policy Iloldero
Extras Incidence
(Based on 871 Claims)
Grow s
Number
Per Cent
Cumulative
Ratio
T-otal
971
-IM
$25 and less
283
32.5
32.5
$26 thru $50
.220
25.3
57.8
`51 thru $75
162
18.6
76.11
$76 thru 5100
96
11.0
87.14
$101 thru $125
55
6.3
93.7
$126.thru $150
21
2$i
96.1
:' 151 a over
3
3.9
10000
$151 thru $175
13
$176 thru $200
5
$201 thru $?.25
5
$226 thru $250
2
1,251 thru $275
3
$276 thru $300
2
$301 thru $325
2
$326 thru $350
1
$668
1
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(k)
Comparison of Claims paid and Premiums paid:
(On 1 Sept 53, when approached by the Agency, Omaha
raised its benefits as follows:
Hoap. $9000 per day from a'6a00.
ISctras r135e00 unallocated, from $30.00 allocated
in only It fixed cete :oriea 0
Extras in maternity only, to $Zi50oo from t300000
All previous claims back thru 1948 are figured on
basis of the new (1 Sept 53) rates in order to
evaluate properly the existing Omaha plane Figures
are therefore calculated not actual.)
Year
Claims
Prendums
% of Premiums
Returned
191i8$50 $l8,5hl.67
$h0,344.59
h6%
$1 18,917.29
33,716.60
56%
-52 24,506.61
51,197035
48%
-53 27,903.27
!,9,787.60
56%
Total $89,898.84
$175,046.14
51%
(2)
(3HI .
Summary of OH! hospitalization and surgical claims accepted
from OHI at inception (in March 1953) for previous claims
and thru 19530 GHI pays directly to the hospital and
withholds dollar costs not shown.
(a) Total no. of claims )2 865, total days in hospital 8651
(8350 days allowed):) ratio of claims to total no. of
When CIA took on GH!, that association turned over to us all previous
records of our employees m whether inside or outside the Agency at the
time of claim. Claims accounted here therefore include those before
!"arch 1953.
The difference accounted for bye Overstaying on discharge hour, over-
staying on child tonallectamy (one day allowed) adult (2 days allowed)
or maternity (8 days allowed o
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(b) All Claims Benefit
(c)
Actual cost paid %
_-thy employes Benefit
Total m,._..~ M-aCDao ,...~
Hosp. 7,999 days 35.1 days over 96%
Surg. Sb9, 779 not known ?.~
Extras $15,665 not known
Total benefit and total actual cost to employee by
geographic location:
Unobtainable.
(d) Total actual costs paid by the employee in respect to
type of services
Unobtainable.
(e) Total benefit and total actual cost experienced by
type of illness. (Information limited to hos eita7 days
only.)
Benefit
Da
Actual
Daz_
%
Benefit
Pregnancy and complim
cations therefrom
2,920
3,015
94%
Other (many small misc.
claims)
997
l,02
96%
Gastro-
intestinal
910
982
93%
Accidents
769
779
99%
(f';)
Genitomurinary
Days hoogtalized:
676
697
96%
Less than 5 days
58%
Less than 10 days
91%
Less than 15 days
96%
W7m
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(g)
Type of claim:
By policy holder only 27%
By spouse only 43%
By daughters and, sons only 30%
(h) Surgical claims only: Distribution Range of Actual
(i)
(J)
Cost to policy holder:
Unobtainable.
Extras claims only: Distribution Range of Actual
Cost to policy holder:
Unobtainable.
OHI choice of coverage by the individual as of 31 March
1954 shows the following :
M Hospitalizatic a.,.
Nos.
Single
Husband and wife
Family
GHI Hospitalization and Surgical
Single
Husband and wife
Family
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Fina iat status of G II as shown in their last two annual reports to the D.C. Insurace Dept.
(GUI operates under an Act of Congress, is not supervised by the District Insurance Dept. or
District Co issioners, but makes one annual, report to these offices at "any time" during the year
following annual audit . )
25X1A
was asked to try to get the last report and got a "runaround" from MI. Accord-
ingly,, representatives of the Task Force visited the District offices, viewed the audited statements
25X1A for '52 and-153 Made by - CPA's.
25X1A
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ba Existing; available protective measures as to disability - excerpted from
TABD
(1) Against permanent and total disability there are these four measures;
(a)
Individual's own commercial Ordinary Life policy in which
disability coverage may be secured for small additional
premium, or a straight commercial disability policy*
la Commonly these disability features cost in the neighbor-
hood of $100.00 annually for a benefit of $200000 per
month, have "white collar" risk restriction,, exclusion
for military service in time of war and air flight in
non-scheduled service*
(b) National Servi ce Life Insurance to which a veteran may add some
disability coverage for an additional premd.um. (Example: $50000
per month benefit for a yearly prerd,um of $14o4O on a $10,9000
life policy)o
(c) Federal Employees Compensation Act.
1?
This Act provides compensation for disability (and full
medicel care) resulting from injuries suffered in per-
forrrance of duty or from diseases proximately caused by
employment for as long as the disability continueso
esccrmm.w
The maximum monthly benefit provides two-thirdrf of the
employee's salary up to and including GS-13, 58% of a
GS'I1,a, and 53% , for a G,9-15*
(d) The Civil Service Retirement Act
la This Act provides disability benefits for life without
regard to performance of duty, provided the employee has
a minimum of years civilian service and is total]
di sabl ed o
20 The benefits and based on salary and length of service? A
GS-9 with 8 years service (including military) would receive
$5Oo0O per montho A GS-13 with lb years service,would re-
ceive $it6.00 per montho
(2) Against temporary disability, there are these four measures:
(a) Federal Tihployees Compensation Act
(see b(l)(c) above)
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(b) Publi c Law 110
to This Act provides benefits to employees (only) assigned
to. permanent duty.stations outside the Continental Uo Soa
its territories, and possessions for illness or injury
requiring hospitalization and which occur in line of duty*
2a The benefits are payment of travel expenses to and from
an appropriate hospi tel or clinic and payment of cost of
treatment.
25X9A2
25X9A2
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(c) A group hospitalization and surgical benefit plan administered
under Government Employees Health Association (CIA), underwritten
by Mutual Benefit Health and Accident Association of Omaha,
Nebraskan
(d) A group, hospitalization and surgical benefit plan administered
under Government Employees Health Association (CIA), under-
written by Group Hospi tali zati on, Inca
(e) These general observations are pertinent here in respect to
these two planao
10 Omaha was offered to Agency employees in August 194;8; GHI
was offered in March 1953* Omaha a s maximum membership was
_i n March 1952; it is M as of 1 June 19548 ? predom- 25X9A2
inantly overseas residence, (The effect of Omaha's raise
in benefits to $9,00 per day from 06 ,O0, and $135000 in
hospital extras instead of $30,00, is too recent to be
assessed*) 0RI has grown to= members in about 15 months
from a M nucleus of old G and Blue Cross transferso
20 Both plans confine eligibility to Staff Employees and Staff
Agents- .
Omaha is superior on the whole as it stands, for the over-
seas employee who has his dependents with him-
GHI is superior on the whole for the employee resident in
the U. S. but, because of the nature of the GHI hospitali-
zation plan, a dollar value is impossible to obtain, in
the domestic cases0
Omaha is cheaper than GHI even if the surgical benefits
were matched0 (per Omaha's firm offer to match ? see
page 16)
6? Neither plan pays off if FECA doeso
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7? Neither plan meets the criterion set by Dro George Raehr,
Medical J rector of the Health and Insurance Plan of
Greater New York a HIP. (See TAB Ea Appendix TI for his
Congressional testimony and Appendix XE1 for description
of HIP*) ioeo benefits are almost entirely confined to
hospital and surgical costso 'Dr. Baehr holds that 90%
o the costs of i nesses arise outside a hospital - in
the doctor's office and in the homed This view suggests
remedying our unsatisfactory situation as to a hospitali-
zation and surgical plan as such and then dealing with
outside hospital costs separatelyo
Neither plan offers catastrophe insurance which.-written
on a "deductible" basis (the same principle as. in auto-
mobilte collision insurance), is a relatively cheap addition.
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(f) Detailed comparison of Omaha and =I
1.
OVERSEPB
Hospitalisation
1.
Hosp. Board & Room: $9 per day for 31 days
with no limit on frequency, plus
$135 for hospital extras.
1.
2.
Plus surgical as shown below.
2.
3.
Plus out-patient emergency up to..........
within 24 hours of accident
$ 135
3.
4.
Effective date. lot of the next nmth.
4.
5.
Waiting period. Maternity only. 9 months
5?
but coverage extends 9 months beyond
termination of contract.
Maternity. $9 per day for 14 days
plus up to $45 total for Hoop. extras.
7. T.B., mental and nervous disorders and
quarantinable diseases - seam as No. 1.
above.
0VERSM
Hospitalisation
Hosp. Board & Rosa: $10 per day for
21 days with 90 day interval on
frequency.. plus
$& for hospiteal extras.
Plus surgical as shown below.
Plus out-patient emer y up to... $ 10
within 2 hours of accident
Effective date. 1st of the next month.
Waiting riod?. None if participation is
7 of C HA and no extension beyond termina-
tion of contract for pregnancy.
6. Maternity. $9 per day for 8 days
except Caesarean, termination of ectopic
pregnancy and miscarriage, for which
hospitalisation benefits are 1. above
7. T.B., mental and nervous disorders and
quarantinable diseases - 10 day limit In
any 12 month period for No. 1. above.
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2.
NASH33GTON
OI+4M nose vitalization
WASH33GTW
(*HI Hospitalization
Hoop. Complete Service for 21 days semi private.
partic. hospital) with 90 day interval on
frequency $10 per day if in private rocs n.
Plus $5 per day for additional 180 days
1.
Hosp. Board & Room: $9 per day
for 31 days with no limit on frequency
Plus $135 max. for hospital extras
1.
2.
Plus surgical as shun: below
2.
3.
Plus out-patient emergence up to $135
within 24 hours of accident
4.
Examples (Hospitalization only :
Bd. & Roam
Normal
4.
$27
126 Plus a mxirazm of $135
90 to cover all hospital.
1216 extras
90
27
appendectc y
comp. fracture
bilat._ hernia
un lat. hernia,
hysterectc
hemorrhoidectampr
tonsillectc y
Plus surgical as shown below ---
plus out-patient emergency up to $10
within 2 hours of accident
Exw plea (Hospitalization only :
Bd. & Road tdiff .
10 days
$ 135
145 )
(
30 "
405
/135)
14
189
/ 63}
10
135
/45
14
189
/.63
10 "
135
/45,
3 "
40
/ 13
Plus the hospital extras,
(16 listed) which range
fraa $50 for the simplest,
unco?plicated apperadectoaay
to very substantial
amounts for the serious
or ccMlicated case.
Net = 5O greater on Board & Room than OMAHA
*1 - Basic costs of Board & Roam 0 $13:50 per day
(typical Presently) is absorbed by CSI ocepletely.
5.
Same as overseas
Same as overseas
6.
Same as overseas
6.
Sawa as overseas
7.
Same as overseas
7.
Same as overseas
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Overseas and. Domestic
OI#AfA gEsical
~~ 77
This is 60% of MI
(Exa e)
$ 50.... Hernia Ing. util....... $ 100
~7/5....Hernia Ing. bilat...... 14/0
100....Appeadectcapy........... 100
100.... Radical Itectcaoy..... 175
50....Fracture of spine......
35....Hip dislcc
:i~:d.~...s
60
150.... Prostatectcooy... , ... , .
50...-formal d~elivery.........
100....CarVsle een.............
150....Reomoval of Kidney..... .
/50....Remoual of Cataract....
100....Gestrectcay........,...
25....Tonsi1lectaay..........
25.... Adenoidectc ..........
25.... rrhoideetamy......?
150. ... Hys ,/irec temty.......... ?
GRI Surgical
$128
N.B. The surgical fees scheduled
are accepted by the surgeon
as full payment for a single
participant if his income
does not exceed $3000.00
ant, for a family partici-
pant, if the family income
does not exceed $5500.00.
$1235 $2055
(The above, of course, disregards frequency of
occurrence is set forth as a quick look.)
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!+.
OMAW Premiums (m?snthd
Gal Premiums .(monthly)
Ho m. Surgic
Total
Hos.
Surgical
Total Diff.
$1.60
Individual contract..........
$1.70
$1.00
$2.70 /
1.10
4.75
Individual So spouse contract.
3.70
3.20
6.90 /
2.15
6.00
Indiv. & spouse & children..
3.70
3.20
6.90 /
.90
should match GHI on
If DIANA
Total
,
surgical, monthly total premiums
would be:
Total Diff.
$1.6o / .16 m $1.76 $2.70 / .94
4.75 / .89 = 5.64 6.90 ? 1.26
6.00 / .8o s 6.80 6.90 f .10
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(g) Summary comparison of these two plans:
1. Overseas eneral hos ;talization
AHA is far superior to GHI.
20 Overseas maternity ho italization
OMAHA is substantially superior to GHI in normal pregnancy.
In the cases involving Caesarean, termination of ectopic
pregnancy and miscarriage (avo 10%1, per Dr Tietjen), GH1
is substantially superior.
Overseas surgical,
Ot4AH as i o y as good as GHI
L.. Domestic general hospitalization
0 AHA s su stant a y INFERIOR to GHI in either a normal
or abnormal case.
Domestic maternity hospitalization
MAHA s substantially superior to GHI in normal pregnancyo
In 10% of the cases involving Caesarean, tee ion of
ectopic pregnancy and miscarriage, GHI is substantially
superior.
6. Domestic su ical
All is only as good as GHI e
?o Fees are the same in each plan as between overseas and
gomestico. However, OMAHA's fees are all lower than GHI.
For individual contract OMAHA charges 60% of GHI; for
individual and spouse OMAHA charges 70% of GHI; for in-.
dividual, spouse and, children OMAHA charges 88% of GHI,
but GHI doesn?t offer just an individual and spouse con-
tract at a lower rate than one inclusive of-childreno
8. Net on the above m if OMIAHA's surgical could meet GHI, .it
is a better plan than'GHI for overseas if the dependents
are with the en.ployee. Even if OMAHA's surgical meets GHI;
it is not as good a buy for domestic assigrnnento
9o As to hospitalization, the two plans are strictly comparable
in respect to an overseas location of the individual with
family, but impossible of comparison in the domestic situ-
ation. This is because the GHY hospitalization benefit is
buried under the complete]y untr#nsl.-table "full service
benefits" with participating hosnitalso While the non-
complicated case calls fora minimal few hospital extras,
the complicated case urger GHI gets 16 of them free and as
many times as necessary, These variables cannot be assessed
dollar-wise for purpose of comparison with OMAHA.
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Ji -IVFl~~'~iTI n
Lven though it is true that the seriously complicated
case is statistically in the low frequency category, the
great dollar benefits under GHI are nevertheless there
for the Individual who wants to insure against precisely
such a risk,
It may be held that benefits in a serious case ride on
the backs of the non-complicated majority in respect to
fees, and also that throwing in "the works" for every
member is misleading persuasion, However, the minority
who do pat caught in heavy extras can?t pay with statisticsa
The simplest and blandest appendectomy calls for about
$50000 in hospitalization extras. From there it could go
anywhere in cost while the patient still lives*
no
Pregnancy hospitalization contains the same problem
but not as seriously so, In 90% of pregnancy cases
the normal ones m OMAHA is a better buy, but not so
if one wishes to insure against costs arising out of
the minority of cases (1.oe, Caesarean section, terminate
tion of ectopic pregnancy or miscarrir-ge)0 Here GHI
is superior,
b, Again in the domestic hospitalization field 0111 adds
a fillip for the unusual case and offers 65,00 per day
for 180 days on top of the 21 'full." service benefit
days, (Room and board plus 16 named ext_raeO Strictly
from the point of view of frequency statistics, this
might be labeled a "come-on",
Co
Also, in the GHI brochure is seen the same hand as
immediately above, i,e., the illustrated cases are
not the usual ones, They are i n the relativel
infrequent category,, but because there are but three
of them,.the coloration seems to be present, These
cases are cancer (fil49,15benefits), fractured
vertebrae 0337005 benefits) and gall atones ($518,90
benefits),
do GHI requires a.90 days interval between discharge and
reentry to a hospital o OMAIIA requires one day, Here
OHI is inconsistent with the preceding tactics as to
minority occurrences,
e, OMAHA?.e,fee schedule is superior both in dollars,
f o OHI, being so firmly-enmeshed in l egielction and so
integrated with the large and necessarily unwieldy
Blue Gross, presents practically no possibility of
modification in plan to suit us, whereas OTIAHA is
completely flexible - even to a tailored plan,
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OMAHA?S service to .us in the settlement of claims
(per is "vastly batter" than OHIO , Mr,
characterizes GHI as a . "bickering, negotiating
outfit" Q
ho "Fine Print".
Comparison of these-two plans in-some small items is
important also because of the effect in irritation and
dollars o
Ambulanceo
GHI won't pay to and from a hospital,- Omaha willo
X-Rays.
GHI won?t pay unless the X-Ray is in connection with
surgery performed within three days" time. Omaha will
pay with no surgery nor time restriction if the X-Ray
is taken in a hospital or clinic.
Hospital Extras,
GH1 will pay on sixteen specific hospital extras
without limito Omaha pays on all extras up to
their established maxim of $1350000
Type of Hospitals
GHI?s reimbursement is dependent upon type of
hospital, as followas
Participating hospital - full benefit; member
hospital of another hospital service plan gets the
prevailing service of that plan; non-participating
hospital gets. only up to $10*00 er day for 21 days,
plus $64.O0 for hospital. extras (the same as the
GH1 overa-eas rate). Omaha on the other hand reim-
burses the same all over the world in any hospital
of the individuals own choice0
Room and Boardo
The "full service benefit days" under Gill pertains
to a semi-private room, but if the individual chooses
or really needs a private room, GHI allocates only
$10900 per day. Omaha on the other hand pays the
contract guarantee for any accommodation.
Dependent Children.
Under GHT, they are added when 90 days old, and
carried to the 18th birthday. Under Omaha, they are
added when lit days old and carried to the 19th
birthday. This may well be important In connection
with congenital anomalies.
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Fib IMEEMAIROMITUI ~d
-- T+aberculosis and Mental or Nervous Disorders.
Under CHI, these are covered for only 10 days during
any 12-month period. Under Omaha, they are covered
for the saga number of days and same frequency (one
day break only) as all other accidents or illnesses.
-- Congenital Anomalies. (viz: cleft palate' congenital
hernia)
Under CAS, not covered at all. Under Omaha, Pull.
coverage at any age, after 14 days from birth.
-- Outpatient Emergency First Aid.
NJ requires reporting within two hours of accident,
else they won't pay. Omaha allows 24 hours.
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PART II
DISCUSSION.
-a. Noting: that there exists in 'the commercial market beneficial
coverage for permanent and total disability, as well as various
and sundry pla for individual purchase in temporary disability;
that FICA is excellent coverage for either permanent or temporary
disability Occurring in performance of duty; that C 1. is poor
coverage for an agency the personnel of which is young, outside
Of performFxnce of duty; - the Agency is properly concerned to offer
its3 employees the benefit of ou rates for temporary disability that
includes family protection. This coverage is found in a hospitalizaa-
tion and surgical plan.
b. It is possible to buy practically anything in this field - at a
price. The prob.leem is - what coverage features should we offer and
how far should they go.
(1) The latter brings to mind the importance of the principle of
co-insurance, as to catastrophic or low-incidence excessive
costs where.-in given features are covered up to a normal or
average-oixcua sta a3ces extent and from that point on the
insurer carries the larger burden with the individual sharing
a part Of it. The philosophy is roughly that of automobile
collision insurance with a $50.00 or $100.00 deductible clause.
c. The Agency's offer of two largely non-comparable hospital and
surgical, plans to its employees is failure to meet its proper
person l responsibility. It is roiling with whatever an outsider
has to offer. It fails to utilize Agency strength to get a one
best plan which defers to operational and security circumet e,,
and. to the facts' of illnesses.
Omaha's originl grievously inadequate plan - in effect until
l Sept. .'; 3 - and. improved s what then, is a sad reflection on
us. Their jmproved plan is some better, but not nearly enough so.
(1)
Then to offer DTI, - by and large poorer than Omaha overseas -
in this heavily overseas business is to cce cued. our error.
This is particularly so in light of taa's flexibility i.e.
complete willingness to tailor a plan, and its 100% security.
(i . eha will accept Agency certification of circumstance a
pay to anyone to whom and hour we designate.) The agency also
forgot that this rigid association - I prevents us from
gaining the advantage of our own experience (presumably
banter ; hence in our premium rates we carry poorer risks
than we, and deprive ourselves of downward adjustment as
deserved.
Mfisawwfi~
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e. It is suggested that the Omaha experience is statistically suffi-
cient to provide a critical basis for assessing our coverage needs.
Accordingly these general conditions seem indicative.
(1) The incidence of actual cost hits heaviest in the surgical
field (41%), Hospital board and room is next (32%) and hospi-
tal extras are seem not to occupy as great importance as often
thought (27%) .
(2) Pregnaucy and complications therefrom, stand out with heavy
incidence. 42% of the employees' total actual costs are in
this one field.
(3) Hospitalization coverage beyond 15 days is for the last 5% of
incidence, but the insurance compar~.v knows its premium rate
carries no real burden when coverage extends from 15 to 31 days.
(Experience identical under GHI).
(4) The we observation, - as in (3) above obtains in respect to
surgery. Totsl actual costs are almost entirely below $300. -
(97%). One can cover the unusual, even beyond actual incidence
for no real premium burden.
(5) Equally so - as in (3) and (4) above, the picture of total
hospital Extras cost conforms. 96% are covered in a plan
embracing up to $150.
(6) :ndeminification return of premiums paid at 50% under the pre-
sent Coahs plan is woefully insufficient. Omaha admits it.
(7)
Indeminification return of actual costs to the employee at 67%
is not enough.
(8) Omaha admits that its surgical coverage with 41% indemnifi-
cation on actual costs is poor.
f. GHI's attitude is that of doing us a favor. When
(Task Force member and Chief, Insurance and Claims Branch' Em-
ployee Services Division, Office of Personnel), approached them
for sow modest statistics concerning our own experience the
response was: "If you require this kind of information, it might
be better for you to take your business elsewhere." Also they
25X1 A refused us and.-a balance sheet.
g. GHI's-b lance sheet and Operating Statement reveal a reserve ac-
cumulation that might be warrantable in a catastrophic-coverage
situation - which they don't have. Liabilities under their plan
are predictable, by and large; the premium rates, producing a 12%
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gross profit in 1952, and a ratio of assets to liabilities of
nearly 2 to 1 seem out-of-line with true risk assumed.
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h. Under the GHI plan, if an employee cannot reveal Agency affiliation,
indemnification is at the poor overseas rate - poorer than the
existing Omaha inadequate rate. The employee cannot get the "full-
service benefit" day as in an overt domestic situation.
i. GHI's plan means that we will never know where we stand - experience
versus premiums and never get the benefit of our experience if it
proves better than others. Omaha offers to do this.
J. GHI's inter-plan feature (wide-spread Blue-Cross tie-in) is countered
by ms's willingness to continue coverage for the terminated
individual at a non-group rate without medical examination or
statement of health, - as long as he wishes - or until he acquires
membership in a new group plan. (The non-group premium is 20%
higher.)
k. With the differing benefits of Omaha and CHI, overseas versus
domestic, the employee is pulled about in his attempt to secure
adequate coverage. This is highly unsatisfactory.
I. The 3 types of contract offered by Omaha show these premium dif-
ferentials -- m
(1) Individual contract premium $1.60 (monthly)
(2) Individual and spouse contract
premium $4?75 (monthly)
(3) Individual, spouse and children
contract premium $6.00 (monthly)
GHI combines the 2nd and 3rd groups above into a single premium
rate which means that M #2s are carrying part of the cost for
#3s. Perhaps the #1 rate contains a cut of this burden also.
The youth of our Agency (2/3 under 35 years of age) suggests that
the single individual plus individual and spouse help carry, in
premium rates, some of the family contract burden.
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Disabillk
CON=3 aION
a. Both the Omaha and GHI plans are entirely unsatisfactory.
(l)
(3)
Neither plan offers enough.
Neither plan offers opportunity to relate premiums to our
experience.
Neither plan takes advantage of actual previous experience in
its coverage features.
(4) Neither plan takes advantage of the co-insurance philosophy
to base premium rates in the higher incidence circumstances
and still protect the minority substantially.
(5)
Security wise only Omaha offers - or can offer a completely
satisfactory situation for the employee who cannot admit
Agency affiliation.
(6) The Agency must offer one best plan.
(7) Adding the tangibles and intangibles in the forgoing comparisons,
Omaha offers excellent and the only potential for improvement.
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P.R' II
MOOMMMATIO37
a- The Agency accept and offer to its staff employees and staff
agents, the new C ,ha plan (next hereto) proposed by the Task
Force and worked out with the local Omaha office together with
Mr. A. W. Randal, head of the tubaa. Company's Group Iiasu v once
Department, and Mr. Gale Davis, O ha's No. 1 vice-president.
b. That the M/A and General Counsel proceed from here on to embody
this p3 an in a contract.
o. That AD Personnel take over responsibility for appropriate Agency
publicity on the plan and continue the study of any possible emnd-
n nt for coverage of home and doctor's office costs.
d. That the Task Force go out of business in respect to disability
insurance.
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