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ADDITIONAL EMPLOYEE HEAII'H

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HEARING

BEFORE THE 0-

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0- COMMITTEE ON

OFFICE AND CIVIL SERVICE

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JSE OF REPRESENTATIVES

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EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.R. 1819 and similar bills

BILLS TO AMEND THE FEDERAL EMPLOYEES HEALTH

BENEFITS ACT OF 1959 TO PROVIDE ADDITIONAL CHOICE

OF HEALTH BENEFITS PLANS, AND FOR OTHER PURPOSES

MARCH 28, 1963

Printed for the use of the

Committee on Post Office and Civil Service

APR L1963

477AN,

U.S. GOVERNMENT PRINTING OFFICE

'V6633 WASHINGTON : 1963
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4

COMMITTEE ON POST OFFICE AND CIVIL SERVICE

TOM MURRAY, Tennessee, Chairman

JAMES H. MORRISON, Louisiana

THADDEUS J. DULSKI, New York

DAVID N. HENDERSON, North Carolina

ARNOLD OLSEN, Montana

MORRIS K. UDALL, Arizona

DOMINICK V. DANIELS, New Jersey

LINDLEY BECKWORTH, Texas

HARLEY 0. STAGGERS, West Virginia

ROBERT N. C. NIX, Pennsylvania

EVERETT G. BURKHALTER, California

DON EDWARDS, California

JOE R. POOL, Texas

ALBERT W. WATSON, South Carolina

ROBERT J. CORBETT, Pennsylvania

H. R. GROSS, Iowa

JOEL T. l3ROYHILL, Virginia

AUGUST E. JOHANSEN, Michigan

GLENN CUNNINGHAM, Nebraska

GEORGE M. WALLHAUSER, New Jersey

ROBERT R. BARRY, New York

KATHARINE ST. GEORGE, New York

EDWARD J. DERWINSKI, Illinois

ROBERT F. ELLSWORTH, Kansas

HOMER E. ABELE, Ohio

SUBCOMMITTEE APPOINTED TO CONSIDER H.R. 1819 AND SIMILAR BILLS

DAVID N. HENDERSON, North Carolina, Chairman

DOMINICK V. DANIELS, New Jersey GEORGE M. WALLHAUSER, New Jersey

JOE R. POOL, Texas EDWARD J. DERWINSKI, Illinois
4

CONTENTS

Statement of— Page

Cunningham, Hon. Glenn, a Representative in Congress from the State

of Nebraska 3

Jaspan, Dan, legislative representative, National Association of Postal

Supervisors; accompanied by Fred J. O'Dwyer, national president 22

Macy, Hon. John W., Jr., Chairman, U.S. Civil Service Commission;

accompanied by Andrew E. Ruddock, Director, Bureau of Retirement and Insurance 4

McAvoy, Harold, national president, Post Office Mail Handlers,

Watchmen, Messengers & Group Leaders 13,18

McCart, John, operations director, Government Employes' Council_ 17

Olsen, Hon. Arnold, a Representative in Congress from the State of

Montana 2

Riley, George, legislative representative, International Association of

Bridge, Structural & Ornamental Iron Workers 20

Ruddock, Andrew E., Director, Bureau of Retirement and Insurance,

U.S. Civil Service Commission 18

ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

THURSDAY, MARCH 28, 1963

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C.

The subcommittee met, pursuant to notice at 10 a.m., in room 215,

House Office Building, Hon. David N. Henderson (chairman of the

subcommittee) presiding.

Mr. HENDERSON. The subcommittee will COIlle to order.

This subcommittee, consisting of Mr. Daniels, Mr. Pool, Mr. Wallhauser, Mr. Derwinski, and myself as chairman, was appointed to

consider identical bills, H.R. 1819, introduced by Mr. Olsen of

Montana, and H.R. 4342 and H.R. 1058, introduced by our colleagues,

Mr. Staggers and Mr. Cunningham, respectively.

These bills are similar to H.R. 10539 which was unanimously reported from our full committee on August 29 of last year and which

passed the House by unanimous consent motion on October 13, the

last day of the session. The bill was not taken up in the Senate.

When Congress enacted the Federal Employees Health Benefits

Act in 1959, it made specific provision in the act for participation in

the program by employee organizations that had earlier arranged

group health insurance plans for their members in the absence of a

Federal program. This was done principally to avoid the hardships

and inequities that might arise if membership in these various employee organizations might be diverted into a separate Federal program. Among the requirements that had to be met by organizations'

plans was that they had been in operation on July 1, 1959, and that

they apply for approval as carriers before December 31, 1959.

The legislation we are considering here this morning provides, in

effect, that the health benefits program be "opened up" for a short

period of time—to the end of this year—to any employee organization

who may, for any reason, now wish to apply for approval as a carrier.

The bills would eliminate the requirement in the original act that

employee organization plans must have been in operation on July 1,

1959, and they further amend the act to permit any organization to

apply for approval up to December 31, 1963.

(The bill H.R. 1819 follows:)

[H.R. 1819, 88th Cong., 1st sess.]

A BILL To amend the Federal Employees Health Benefits Act 01 1959 to provide additional choice of health

benefits plans, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That (a) section 2(i) of the Federal Employees

Health Benefits Act of 1959 (73 Stat. 710; 5 U.S.C. 3001(i)) is amended by striking

out "1959" and inserting in lieu thereof "1963".

1
2 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

(b) Section 4(3) of such Act (73 Stat. 711; 5 -U.S.C. 3003(3)) is amended by

striking out ", and which on July 1, 1959, provided health benefits to members of

the organization".

Mr. HENDERSON. Our first witness this morning is our esteemed

colleague on the committee, Mr. Olsen of Montana, author of H.R.

1819.

It is good to have you before us this morning, Mr. Olsen.

STATEMENT OF HON. ARNOLD OLSEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MONTANA

Mr. OLSEN. Thank you, Mr. Chairman.

It is certainly a pleasure to be here, and I thank you and my colleagues for this early hearing on H.R. 1819.

I introduced the bill H.R. 1819, and my colleagues, Mr. Staggers

and Mr. who are on the full committee, introduced

H.R. 4342 and H.R. 

Cunningham,

058. These bills are identical to H.R. 10539

which was unanimously reported out of this committee last August

and was passed in the House of Representatives by unanimous consent

on October 13, the last day of the session.

Unfortunately, because of the time limitation, the bill was not

considered in the Senate.

In brief, these measures seek to correct an inequitable situation that

has developed since enactment of the Federal Employees Health

Benefits Act in 1959 with regard to participation by employee organizations in the program established by this act.

During the hearings which the subcommittee held last year, testimony was received from the head of a large national employee organization that his group is losing members in appreciable numbers

because of the fact that they do not have a health benefits plan. And

organizations that do have such plans are using the health plans as

membership recruitment aids.

Now, I must say that I was on the subcommittee that heard this

legislation last year, H.R. 10539 having been sponsored by our former

colleague, James Davis of Georgia. I was not in sympathy with the

legislation at the outset of the hearings. But because I came to believe, on the subcommittee last year, that Congress, in enacting the

original law, had no intention of placing any employee organization

in an unfavorable position in relation to any other organization, as

has come to be the case now, I gave my support to this legislation

last year.

Enactment of this legislation will correct this unfair situation by

opening up the program for the remainder of this year to any employee

organization that may now wish to apply for approval as a carrier of

a health benefits plan.

Mr. Chairman and colleagues, the executive reports on this legislation last year were unfavorable, and I anticipate that they will again

be unfavorable this year. Nevertheless, I firmly feel that the unanimous action of this committee and of the House in passing the

legislation last year, and the further fact that identical bills have also

been introduced this year by the chairman and by the ranking minority

member of the Senate Post Office and Civil Service Committee, indicate an overwhelming sentiment in the Congress that this legislation

is necessary and desirable.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 3

I want to state this further fact, that other employee organizations

have, in effect, been given a corporation charter to operate a health

benefits program. At least one employee organization is, in effect,

frozen out of this item of competition between these labor organizations for membership.

Mr. DANIELS. What is the name of that organization?

Mr. OLSEN. I cannot give you the whole name of it, because it is

so long, but we call it the Mail Handlers' Organization. But they

have a long title.

Mr. DANIELS. Does that organization's name appear in the record

of testimony taken last year?

Mr. OLSEN. It does, and they testified, and they will testify again

this year.

By the way, I must say that these people do not have any employees

in my State, let alone my district. Honestly, they won me over to the

justice of the cause that nobody, no organization, by reason of a

Federal charter, should be placed in any worse position than another

in attempting to represent employees of the Federal Government.

And I think that this one at least is placed in this very difficult position

when they cannot offer this extra service to their members.

I thank you, gentlemen, for this opportunity.

Mr. HENDERSON. Thank you, Mr. Olsen.

The Chair recognizes the fine service that you rendered. I believe

that you and I were both on the subcommittee last year, and I remember the deliberations at that time. I certainly remember your

service on the subcommittee.

I have no questions.

I wonder if there are other questions.

Mr. DANIELS. No further questions.

Mr. HENDERSON. Mr. Pool?

Mr. Pool,.

I have no questions at this time.

Mr. HENDERSON. Mr. Wallhauser?

Mr. WALLHAUSER. I have no questions, but I would like to compliment Mr. Olsen on a very good presentation.

Mr. OLSEN. Thank you very much.

Mr. HENDERSON. Thank you.

Our next witness is our colleague on the committee, Hon. Glenn

Cunningham, author of H.R. 1058.

Mr. Cunningham; it is a distinct pleasure for us to have you before

the subcommittee this morning.

STATEMENT OF HON, GLENN CUNNINGHAM, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. CUNNINGHAM. Thank you, Mr. Chairman.

Mr. Chairman, and members of the subcommittee, we had hearings

on this last year, and those members of the committee who were here

last year are quite familiar with this proposal.

I am not going to take much of your time. My statement will be

in the record.

I do think that it is a fair bill. I do think that it is going to be of

benefit to certain members of the Federal service. It is going to help

the morale of certain segments of our Federal service. And I am
4 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

hopeful that the committee in their wisdom can go along with this

legislation, whether it is my bill or any of the others that have.been

introduced.

Now, this health benefits plan certainly has been well received, and

it is a good plan. I remember when we had the testimony setting up the

plan. When was it? I believe in 1959. And it was a tremendous

chore that we finally gave to the Civil Service Commission.

I want to say in the presence of Mr. Macy and other members of the

Commission that they have done an extraordinary job of implementing

this, and it is working smoothly.

I personally have not had occasion to take advantage of it, although

a member of my family did. And I was really amazed at the plan

and the benefits that are available.

Although Mr. Macy I believe said that it is one of the best, I personally think there is no other better or none certainly that can compare with it.

I wanted to say that to Mr. Macy and his staff, because they just

did an excellent job in implementing this program.

So, Mr. Chairman, unless there are some questions, I simply appear

in favor of the legislation and hope that the committee will approve it

and it can be sent on its way for final approval by the Congress.

Mr. HENDERSON. Thank you, Mr. Cunningham.

We have with us this morning Hon. John Macy, Chairman of the

U.S. Civil Service Commission, who is accompanied by Mr. Andrew

Ruddock, Director of the Bureau of Retirement and Insurance.

It is a pleasure to have you gentlemen with us and anyone else who

may be accompanying you, Mr. Macy.

STATEMENT OF HON. JOHN W. MACY, JR., CHAIRMAN, U.S. CIVIL

SERVICE COMMISSION, ACCOMPANIED BY ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF RETIREMENT AND INSURANCE,

U.S. CIVIL SERVICE COMMISSION

Mr. MACY. Thank you very much, Mr. Chairman.

Mr. HENDERSON. You may proceed with your statement.

Of course, I think it would be in order to say that all of us on the

Post Office and Civil Service Committee have been greatly impressed

in these months with the fine job that you have been doing for us.

We are most appreciative of your time this morning and of what

we know will be a very fair presentation, sir.

Mr. MACY. You are very gracious, Mr. Chairman.

I must confess some temerity at this point in view of the overwhelming action of the committee last year with respect to this

legislation, that action being contrary to the testimony I presented

last June.

I would like, if I may, to read a statement, and then Mr. Ruddock

and I will be available to you for questions with respect to our position.

Each of the bills under consideration would amend the health

benefits law to eliminate the requirement that participating employee

organization health insurance plans have been in operation on July

1, 1959, and to permit additional employee organizations to apply

for approval as carriers during 1963.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 5

The Commission's report to the chairman of the full committee on

these bills, dated March 18, 1963, sets forth our official position on

this legislative proposal.

Perhaps, Mr. Chairman, to complete the record, it would be helpful

to incorporate at this point that official report.

Mr. HENDERSON. Without objection, it is so ordered.

(The report referred to follows:)

Hon. Tom MURRAY,

Chairman, Committee on Post Office and Civil Service,

House of Representatives.

DEAR MR. CHAIRMAN: This is in further reply to your requests for Commission

report on H.R. 1058, H.R. 1819, and H.R. 4342, identical bills (except for printing

error in line 3 of H.R. 1058; "8" should be "2"), "To amend the Federal Employees

Health Benefits Act of 1959 to provide additional choice of health benefits plans,

and for other purposes."

These bills would amend the act to eliminate the requirement that employee

organization plans have been in operation on July 1, 1959, and would permit employee organizations to apply for approval as carriers during 1963.

The apparent purposes of the provisions proposed to be amended were three:

(1) To recognize the real contribution made by employee organizations in

arranging group health insurance for their members in the absence of a Federal

program, and to prevent the hardship to the organizations and their members,

particularly insured former Federal employees and retired employees which would

result if the greater part of the membership were drained off into a separate

Federal program.

(2) To require at least a minimum of 1 year's experience in operating a health

benefits plan.

(3) To restrict the number of employee organization plans to a number which

would not unreasonably complicate administration of the program.

The proposed amendment would not advance the first item mentioned above

and would defeat the other two.

The Commission has not observed any need for additional employee organization plans. At present each Federal employee is eligible to join at least four

employee organizations having health benefits plans. When the service benefit

plan, the indemnity benefit plan and any comprehensive medical plan for which

the employee is eligible are added,the choice is presently bewildering. Additional

choices only serve to confuse, especially since all existing employee organization

plans are variations on the indemnity benefit theme. Terms and rates differ,

but the indemnity principle is the same. We would expect new employee organization plans to be similar in -nature. There appears no reason, now that the

Federal program is well underway, why an employee organization should feel a

need for a new program for its present members.

It is apparent from the legislative history that Congress contemplated an

indemnity benefit plan, a service benefit plan, half a dozen employee organization

plans and a similar number of comprehensive plans, perhaps 15 in all. Under the

original legislation we have approved twice that number, 12 of the existing 37

being employee organization plans. Under the proposed amendment any nationwide or agencywide employee organization could sponsor a health benefits plan

if it applied by December 31, 1963, and could find an underwriter. In view of the

successful operation of the Federal employees health benefits program since July 1,

1960, we would expect that underwriters can readily be found. Each carrier

added to the group adds to the duties of the Commission, and of employing

agencies, which also have functions under the program, inexorably followed by

increases in staff and expense of administration generally. Since we do not have

any information on the number of employee organizations which might qualify,

we can only speculate as to the amount of the increase.

The costs of the Commission's administration of the Federal program go into

the enrollment charge by virtue of the act's provision for accrual to reserves for

administrative expenses of not more than 1 percent. Thus every additional

administrative expense goes to raise the cost of administration for each employee

as well as for the Government. The Commission prefers to see the Government's

money and the employees' money used for health benefits, rather than for admin966433-63-2

-U.S. CIVIL SERVICE COMMISSION,

Washington, D.C., March 18, 1963.
6 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

istration. Consequently we are compelled to object to a proposal which increases

administrative costs with no real benefit to employees.

The elimination of the requirement of experience appears particularly undesirable. We have found that operation of any plan improves with experience. The

first year of operation, particularly, is a learning prwess. Even if an experienred

underwriter is selected, there are many problems which must necessarily be worked

out during the first year of actual operation. This further complicates the operation of the Federal program, and if not successful, can result in employee

dissatisfaction.

In addition, we may expect that any deadline set for application for approval

will eliminate some existing or to be formed employee organization from consideration. We can logically expect, therefore, that if either bill is enacted, there will

later be requests for further extension of the time to apply, since the sponsorship

of a health benefits plan seems to be a desirable adjunct to a membership drive.

For the reasons stated, the Commission opposes the enactment of H.R. 1058,

H.R. 1819, or H.R. 4342.

The Bureau of the Budget advises that from the standpoint of the administration's program there is no objection to the submission of this report.

By direction of the Commission:

Sincerely yours,

JOHN W. MACY, Jr., Chairman.

Mr. MACY. In considering this proposal, I have found it helpful to

review some background concerning the original legislation and its

purpose. I hope that a review of this background, although it may

take a few moments of your time, will provide an understanding of the

Commission's adverse position on the proposed amendment.

When the health benefits law was enacted in September 1959 to be

effective July 1960, experienced people m the prepaid health benefit

field were practically unanimous in expressing doubt as to the ability

of the Federal Government to launch such a complex program in so

short a time.

Through hard work and through the cooperation of many people

mside the Government and out, group health insurance for Federal

employees has become a reality. In my judgment, this program,

although complex

'

is now functioning smoothly and fulfilling the

purposes intended by Congress.

Some 2 million employees, plus 4 million family members, have

voluntarily elected to come under the program and are finding that

their health insurance plans are among the best in the country. Our

program is a model for others, and many of our approaches have been

copied almost in toto by two State governments, California and

Hawaii.

This committee—your committee, Mr. Chairman—which held

comprehensive hearings in 1959 and made extensive changes in the

original proposal offered by the executive branch, can take a large

measure of credit for the law currently in effect. This statute as

administered by the Commission has now reached a desirable degree

of stability.

One of the main reasons why everyone who was looking over our

shoulder in 1959 said it would be impossible to implement the law

was that it permitted such a multiplicity of different plans and

options from among which employees could choose. And these people

had a pertinent point. Frankly, after almost 3 years of operation,

many employees are still confused by a bewildering array of 37 plans

with 55 options. This is a far broader choice than is offered under

any other program in this field of benefits.

Enactment of the proposal being considered today would permit

the introduction of still more plans and options into the program.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 7

While the increased confusion among employees and the increased

complexity and cost in administration would create serious problems,

I would not consider them overriding if some constructive health

benefits purpose would be served by the additional choices or if the

interests of employees or the Government could be advanced by

permitting such additional plans to enter the program. But this is

definitely not the case.

Employees already have a choice of every kind of health insurance

plan. The benefits offered by existing plans are among the best, if

not the best, available. There is a Government-wide indemnity benefit

plan with two options which every Federal employee may join. There

is also a Government-wide service benefit plan which is open to every

employee. There are 23 comprehensive medical plans which operate

in specific geographic areas in the country.

In addition, 12 employee organization plans with 21 options, all of

the indemnity type, are already participating in the program. Membership in employee organizations sponsoring 4 of these 12 plans—

and each of the 4 plans has 2 options—is open to all Federal employees.

Together with the two Government-wide plans, each employee has

a choice of at least 12 different options, among which he can most

surely- find one that best suits his personal needs and pocketbook.

Adding more plans and options would not, in any way that I can see,

promote the employees' or the Government's interest. On the contrary, it would further confuse employees and complicate administration, as well as make the program more costly to the Government and

to employees.

If we now permit new plans to enter the program 

Mr. Pool,. Pardon me a second, May I interrupt there?

Mr. MACY. Yes, Mr. Pool.

Mn. PooL. Why does it make it more costly?

Mr. MACY. It would make it more costly, Mr. Pool, because if a

new plan were authorized it would necessitate that the Commission

meet with the newly authorized carrier to develop the details and

specifics of the plan, to join with the new organization in developing a

brochure and the materials that are involved in giving full and

complete description of the characteristics of the plan, and it would

mean on a continuing basis an additional carrier for the Government's

representative, the Civil Service Commission, to deal with.

If we now permit new plans to enter the program, it is our judgment

that at best they could expect to produce a very small enrollment, on

the order of 1,000 to 5,000 employees or perhaps even less. Experience in the Federal program parallels that of the insurance industry

and demonstrates that the percentage of premium which must be

used for administrative expenses is larger for a smaller group.

Any new plan of small size would entail a disproportionate amount

of administrative expense, leaving less in premiums available for the

payment of benefits and hence resulting in benefits which are not as

good as those offered by competing plans.

In 1959, in redrafting the bill which became the health benefits

law, the committee realized the wisdom of limiting the number of

employee organization-sponsored plans and, in fact, it very carefully

did so.

At that time there were valid reasons for permitting a small number

of employee organization plans to participate in the Federal program.

•
8 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

These plans had been in existence for a long time and had been filling

a need for their Federal employee members. Employees who belonged

to these organization plans were generally well satisfied with them,

especially when they improved their benefits with the advent of the

health benefits law.

These existing plans had experience in operating a health insurance

program and a nucleus of satisfied plan members they could rely on to

continue in the plan after the Federal program went into effect. Any

new plan would not have this advantage, nor could it justify its formation and participation in the Federal program on the basis of offering its members better benefits or lower cost than they can find m

other available plans.

All things considered, I would say that a plan without experience in

the Federal employees health benefits program would have difficulty

overcoming the very strong competition of the existing plans and

could attract only a very small enrollment. The combinations of

small enrollment and high administrative expense could well result in

quick failure unless the premiums were set so high as to make them

prohibitive or at least not competitive with those of existing plans.

With the new health benefits program operating smoothly, through

its numerous and diverse types of plans, health insurance needs of

Federal employees are being met in a fine fashion. Additional plans

would not help employees in any discernible way and cannot be

justified in view of anticipated cost to the Government and to

employees.

It is, therefore, the judgment of the Commission, in its role as

administrator of the program, that enactment of the amendment

proposed is not warranted. We strongly urge that this proposal be

not favorably considered.

Thank you, Mr. Chairman.

We would be happy to answer any questions that you have.

MT. HENDERSON. Thank you, Mr. Macy.

Are there questions?

Mr. Daniels.

Mr. DANIELS. Mr. Macy, what would be the additional cost to the

Government if it sanctioned approval of these bills before the committee?

Mr. MACY. The costs are difficult to specify in dollars and cents.

I believe last year in our testimomy we estimated that the initial

cost of putting a plan into operation would be about $20,000. That

would be the initial cost involved.

There would be some continuing cost because we are obligated

under this program to have occasional open seasons at which time the

employees are permitted an opportunity to review the various plans

and either to renew their choice or to select an alternate plan.

Adding another plan to such open seasons would also increase the

magnitude of our administrative operation.

Mr. DANIELS. What is the cost of administration at the present

time?

Mr. RUDDOCK. The administrative expenses of the Civil Service

Commission are running just a little over $1 million a year. This

includes personal services as well as other costs such as printing

and distribution of materials.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 9

Mr. DANIELS. If we opened up the law to permit new organizations

to come in, you estimate it might cost about an additional $20,000?

Mr. MACY. That would be the initial cost.

Mr. RUDDOCK. For each new plan that chose to participate.

Mr. DANIELS. For each new plan?

Mr. RUDDOCK. Yes.

Mr. DANIELS. What would that expense be incurred for? For

printing?

Mr. RUDDOCK. As the chairman has indicated, it would be personal

service cost for developing the details of a plan, for getting a contract

into shape for approval by the Commission and the carrier, for developing the brochure which explains the benefits of the plan, for the

printing of that brochure and for its distribution to all of the Government offices throughout the country that would need it for handing

to the employees.

Mr. DANIELS. Now, assuming that all of that was done, could you

explain this statement to me where you say:

Adding more plans and options would not, in any way that I can see, promote

the employees' or the Government's interests. On the contrary, it would further

confuse employees and complicate administration, as well as make the program

more costly to the Government and to employees.

Can you explain that statement?

Mr. MACY. Yes. I indicated earlier in my statement that the

multiplicity of programs and the number of options have made it

difficult for the employees to form judgments as to which plans are

in their best interest in meeting their needs. The addition of further

options and plans would only further complicate and confuse that

situation.

It is not possible to provide any plans that provide improved or

more extensive coverage than the Government-wide plans that exist

at the present time, particularly with a plan that would have to be

based on a relatively small number of employees.

Mr. DANIELS. Of course, that is a matter of opinion. In your

opinion you say the present plans provide a wide variety of options

and give many benefits, perhaps the best benefits of any plans presently available, and that any new plans may not give such wide

benefits. But is that not a matter for election of the employees?

Mr. MACY. Well, I think it is a matter of election. But in looking

at the prospect of additional plans, the test we were endeavoring to

apply in making this statement was whether the plan would provide

a health benefit feature that is not presently offered to the employee

in other existing plans.

Our conclusion from our knowledge of the health insurance industry

is that it would not be possible within the dollars that would be

available to provide benefits that are not now available.

Mr. DANIELS. On the other hand, Mr. Macy, it was not the intention of this Congress when this law was initially adopted to injure

any presently existing employee organizations in their membership.

Mr. MACY. Yes.

Mr. DANIELS. And it has been already testified to by our colleague,

Mr. Olsen, that one organization to his knowledge has been losing

membership by reason of the fact that it is not participating in this

plan at present.
10 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

Mr. MACY. Well, organizations lose membership for a variety of

reasons, and it seems to me that to attribute it solely to this would

raise some question.

Mr. DANIELS. If the testimony should indicate that that is the

principal reason why it is losing its membership, would your opinion

be different from that that you have already uttered?

Mr. MACY. No.

Mr. DANIELS. No further questions, Mr. Chairman.

Mr. HENDERSON. Mr. Wallhau.ser?

Mr. WALLHAUSER. Mr. Macy, are there any other organizations

or plans being proposed at the moment other than the one that has

been testified to

Mr. MACY. No. The principal advocate of this legislation is the

mail handlers' organization. I understand that another postal

organization, the National Association of Postal Supervisors, has at

its convention approved a resolution directing its officers to support

legislation of this kind with the idea that they might ask for approval

of a plan.

There is always the possibility that if it is opened up there will be

several other organizations that do not at the present time possess

these plans who would come forward with an application.

Mr. WALLHAUSER. How many other organizations are there that

do not have 

Mr. MACY. Oh, there are many organizations-12 organizations—.

that have them at the present time. There are two specific examples

where there is competition. In the white-collar field, the AFGE does

have a plan; the NFFE does not have a plan. We have not had any

advice from the NFFE that they will press for a plan of their own.

But, because they are naturally in competition for membership, this

is a possibility.

The two organizations of postmasters also. One, the League of

Postmasters, has a plan; the National Association of Postmasters

does not.

Now, the question there is: Would the association under the terms

of this amendment also wish to have a special plan of its own?

I think it is very- clear that since the enactment of the law and

since the plans have been approved and in operation they have become

a decided feature of competition among organizations seeking membership. Mr. Ruddock and I are very much aware of this at the times

when we are reviewing new proposals for those who already have

plans. Because there is a great deal of competition to see who can

have just a little bit higher in the way of benefits, a little improved

approach for the membership, because it has become a recruiting

device.

I am aware of that. But I do not feel that the existence of that

condition warrants a further extension of an already complicated set

of options that are available to Federal employees.

Mr. WALLHAUSER. In your statement you said that you would not

consider the previous objections overriding if some constructive health

benefits purpose would be served by the additional choices, and so

forth.

Mr. MACY. Yes.

Mr. WALLHAUSER. I was wondering what constructive benefits had

ever been proposed by those who were already in prior. There were
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 11

no constructive benefits given or offered by the employee plans that

we accepted originally.

The Government-wide program would have taken care of everyone

if they elected to take it.

Mr. MACY. But the judgment of the committee and of the Congress

was that there were certain plans in being at that particular time and

it did not wish to disadvantage those programs by, in effect, producing

their elimination by having just two plans.

And, generally, three criteria were set up in 1959. One was to

recognize the fact that there had been a contribution to health insurance in a period when the Government was not providing it by these

employee groups. These were groups that took this on, on their own,

without any benefit or assistance from the Government.

Second, it was the judgment of the committee that there ought to be

a minimum of 1 year of experience on the part of such an organization

plan before it became a feature in the Government's total plan.

The third factor was that they restrict the number of employees

to the number that would not unreasonably complicate administration.

Those were the three basic reasons for including this as a part of the

program even though the two Government-wide plans authorized

would provide the total range in the judgment of the sponsors of the

bill of the necessary health benefits.

Mr. WALLHAUSER. Who certifies to the effectiveness or stability of

the plans? The Civil Service Commission?

Mr. MACY. The Civil Service Commission, yes.

Mr. WALLHAUSER. Similar to the department of insurance in a

State certifying to the soundness of their ability to pay?

Mr. MACY. That is correct. They submit a plan to the Commission, and there is negotiation on that plan to assure that it will operate

effectively and protect employees from getting involved in a plan that

may not be able to operate.

Mr. WALLHAUSER. That is what I mean. Then it really becomes

your problem and the problem of the carrier to satisfy you as to their

ability to perform in accordance with the premium it is going to

charge? Is that not so?

Mr. MACY. Yes. That is right.

Mr. WALLHAUSER. So I hardly agree with your statement where

you talk about quick failure unless the premium were set so high. I

mean this will have to be determined at a later date, if this bill should

happen to become law, as to whether or not their premium charge and

their assets are sufficient to take care of their liabilities and their

ability to pay?

Mr. MACY. That is correct. But we felt that in fairness to the

committee that we ought to give our best judgment to what was

likely to happen if an organization with relatively limited membership

were to go into this plan where they have to seek participation in the

plan and where a limited membership means higher administrative

cost.

We know this based on experience.

Mr. WALLHAUSER. I must say, Mr. Chairman, I have the greatest

respect for you and for the Commission, and you have always been

very cooperative. And I have served on another committee before

which you have testified, and you were most cooperative. I am con-
12 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

vinced that your presentation this morning is done with entire sincerity, and I congratulate you for that.

Mr. MACY. Thank you, sir.

Mr. HENDERSON. Mr. Macy, in the committee's report of last

year on H.R. 10539, the committee, after setting forth its reasons for

reporting the legislation, adopted this language:

The committee further emphasizes that this action is not a precedent for similar

action in the future. The so-called open season will exist for only this one period

of time specified in the bill, and organizations desiring to apply for approval as

carriers will have only this one opportunity to do so.

As I recall the situation, as we saw it last year, I think we were as

concerned on the committee as we think you are here with what could

be the effect if we did not have the limitation, the so-called short open

season.

I do not know whether it is fair to you to answer the question since

you are opposed to the legislation, but assuming that the subcommittee and the full committee again thought that the inequities of the

enactment of the law in 1959 should be remedied by the enactment of

the bill or bills before us, would you comment on the helpfulness or the

desirability of this type of language in the committee report showing

the clear legislative intent of the Congress?

Mr. MACY. Yes. I believe the intent evidenced in the report and

the language in the three bills that limits the period for submission of

new plans to 1963 is desirable.

Mr. HENDERSON. Right at that point, would you suggest any other

dates or periods of time than we have proposed before us in the

legislation?

Mr. MACY. The bill, as I recall it, limits the period of application

to 1963. Of course, that produces somewhat of an uncertain period

of time because 

Mr. HENDERSON. If you knew when we were going to enact it, it

would be more specific I am sure.

Mr. MACY. I think if you were to enact this legislation it would be

my view, as the administrator of the bill that you enact, that you

would probably want to have a period certain for this rather than

just to have it run for the balance of the year.

Now, it may be that Congress will be in session until Christmas

and that this would be enacted the day before. This would be an

unreasonable period of time for the organizations to submit a plan

and for the Commission to meet.

I would say that a 6-month period is desirable.

Mr. HENDERSON. Six months after the date of the enactment?

Mr. MACY. I would say 6 months subsequent to the enactment of

the law.

Mr. HENDERSON. Do you think this would be a sufficient time to

enable you to give fair opportunity to the organizations that we

specifically have in mind but would be sufficiently short not to open

it up to cover the concern that certainly I have and you have so well

expressed in your presentation this morning?

Mr. MACY. Yes, sir. I think that if we were to permit a 6-month

period for the submission of applications that this would be far better

than the open-end proposal that came before you last year.

Mr. HENDERSON. And you do feel that similar language or the

language that we had last year would be most helpful in the administration of the legislation?
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 13

Mr. MACY. In the report. Yes. The evidence of intent on the

part of the committee would be very helpful.

Mr. HENDERSON. Mr. Pool, any questions?

Mr. PooL. I have no questions.

Mr. HENDERSON. Mr. Macy and Mr. Ruddock, we appreciate'

your presentation and your appearance this morning. You have

been very helpful to the subcommittee.

Mr. MACY. Thank you very much, sir.

Mr. HENDERSON. I would like to direct a few comments to Mr_

Cunningham, who I note is still here. The Chair recognizes that you

were on the committee last year, Mr. Cunningham, when this matter

was considered, and I am sure that your interest and motivation came

from your study of last year.

You have heard the questions posed to Mr. Macy. Would you

have any objections specifically, let's say, that your bill be amended.

to provide for a 6-month period after enactment?

Mr. CUNNINGHAM. NO. I do object to Mr. Macy indicating

there is a possibility that we will be here until Christmas.

Mr. HENDERSON. He may be more realistic than we.

Mr. CUNNINGHAM. But, seriously, I can see the problem that

would be presented if this was enacted late in a late session. So,

of course, that amendment should be considered in view of that fact.

Mr. HENDERSON. You certainty made a very fair presentation

this morning, as we know you always contribute to our committee

deliberations, and I want to congratulate you on taking time from

your busy schedule to be with us and be so helpful.

Any questions, Mr. Wallhauser?

Mr. WALLHAUSER. I have no questions other than to congratulate

Congressman Cunningham, who I am certain has the best interests

of groups such as the mail handlers and other groups of employees at

heart, and thank you very much for coming.

MT. HENDERSON. Mr. Daniels?

Mr. DANIELS. No questions. Thank you.

Mr. HENDERSON. Mr. Pool?

Mr. Pool, No questions.

Mr. HENDERSON. Thank you, sir.

Mr. CUNNINGHAM. Thank you very much.

Mr. HENDERSON. Our next witness will be Mr. Harold McAvoy,

president of the National Association of Post Office Mail Handlers,

Watchmen & Messengers. I can only read the title. I think Mr.

Olsen referred to it as the Mail Handlers.

Mr. McAvoy, we are very happy to welcome you before the subcommittee this morning, and any associates that you have that you

would like to have at the table feel free to bring up and introduce.

them.

STATEMENT OF HAROLD McAVOY, NATIONAL PRESIDENT, POST

OFFICE MAIL HANDLERS, WATCHMEN, MESSENGERS & GROUP

LEADERS

Mr. McAvoy. I was going to ask them to come along, but I notice

on the list that Mr. McCart and Mr. Riley have asked to testify on

their own.

Mr. HENDERSON. They will be given that opportunity.
14 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

Mr. McAvoy. Mr. Chairman and members of the subcommittee,

for the record my name is Harold McAvoy. I am national president

of the Post Office Mail Handlers, Watchmen, Messengers & Group

Leaders, and our membership in our mail equipment units.

We are members of the American Federation of Labor and Congress

of Industrial Organizations, and the Government Employes' Council.

Our national office is located at 900 F Street NW., Washington, D.C.

Mr. Chairman, the three bills before you and the committee—H.R.

1058, introduced by Representative Glenn Cunningham, of Nebraska;

H.R. 1819, introduced by Representative Arnold Olsen of Montana;

and H.R. 4342, introduced by Representative Harley 0. Staggers, of

West Virginia, are fully endorsed by our national organization.

These bills will amend the Federal Employees Health Benefits Act

of 1959 and provide additional choice of health benefit plans for our

people. Under the original law of 1959, employee unions could not

participate as carriers unless they at that time already had a health

insurance program of their own.

The Civil Service Commission, I understand, points out that our

people in this case are eligible to join at least four employees' organizations who have health benefit plans.

With your permission, when I say "four employees' organizations,"

I am talking about the postal service. The motor vehicle group has

its own plan; the special delivery employees have their own plan;

The Federation of Clerks has their own plan; and the letter carriers.

The only people who do not have it are our people.

I understand that this is one of the Civil Service Commission's big

reasons for not approving the bills now under consideration by this

committee. If the above is correct, I would like to point out that

before any of our people can join said organizations' hospital plan he

must join said organization as a member.

The majority of our members are now in pay level No. 3, which is

the bottom rung in postal pay, and are therefore in no financial position to stay as members in our mail handlers' national organization,

after joining, for instance, the letter carriers or any other organization

who are in pay level No. 4. Reason for joining as a member: their

hospital plan.

Much to my amazement, although we are all part of the AFL—CIO

and have signed the "no raiding pact," our people are accepted as

members. Since the law was enacted in 1959, our national organization has lost over 7,000 members. I firmly believe that Congress, in

enacting the original law in 1959, had no intention of placing any

employee organization in an unfavorable position in relation to any

other organization as has come to be the case.

If you will take time to check the testimony presented to the committee by the postal labor union leaders when public hearings were

opened, July and August 1959, you will find that we presented our

testimony jointly with the letter carriers, clerks, and so forth. This

came about through the Government Employees' Council. We all

agreed in the best interest of all Federal employees, plus faced with a

time element, that we present a joint statement. Little did I realize

that in a few years we would lose membership through the enactment

of said legislation into law.

Our national organization has been in existence for 50 years, and I

do not believe it was the intention of Congress to destroy a national

labor union.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 15

The Civil Service Commission, I understand, would prefer to use the

employees' money, plus the Government's money, for health benefits.

They say that the bills before you for consideration would increase

administrative costs with no real benefit to our people. This thinking

is hard to understand when one considers that over 32,000 mail

handlers are involved.

On December 10, 1960, the Civil Service Commission had 3,605

employees on the payroll according to Senator Byrd's report. In 1962,

the 3,605 increased to 4,146 employees, an increase of 541 employees,

at a cost of $301,000.

am 'afirm believer in charity should start at home. I suggest that

if you pick up any evening paper you will read about the billions of

dollars being appropriated for this and that, and now, as was pointed

out by the Civil Service Commission when they testified last year on

similar bills, a cost would be involved. Again this is difficult to

understand as the law has been in effect since 1959. I can hardly

believe that if our people are included in the Health Benefits Act that

more than several clerks will be needed.

If this small cost is more important than the welfare of 32,000 mail

handlers, who at the present time have no hospital plan, I repeat, it is

difficult for your writer to understand. I urge you to give speedy and

favorable consideration to the bills now before you for consideration.

In conclusion, Mr. Chairman and members of your subcommittee,

I am indeed grateful to Representative Olsen, Representative Cunningham, and Representative Staggers for introducing the bills, and to add

I deeply appreciate the chance of appearing before you and the subcommittee to express the thinking of our national organization.

Mr. HENDERSON. Thank you, Mr. McAvoy.

Do you feel that if we were to amend these bills to provide for a

6-month open season period after enactment that that would give

your organization sufficient time to negotiate with the Civil Service

Commission and work out your problem?

Mr. McAvoy. I listened very closely to you discussing the question

with Mr. Macy and Congressman Cunningham. The only doubt

that would enter my mind is we have been faced with this problem

since 1959, and I understand this coming October they are going to

open the books.

Now, when they will open again I do not know. And it was the

thought of all the people around our setup that we should be in the

position with the help of Congress and friends to be able to present

a plan. We have a plan ready right now. We have definitely an

insurance firm which is fourth in the country with assets of over a

billion dollars willing to take it on immediately.

So the only problem that would confront us or any doubt would be

that if we are not ready in October when would we have the opportunity? I understand the books are going to be opened for all employees in Government in October.

Mr. HENDERSON. This is a problem that belongs to Congress, I

think.

Mr. McAvoy. Yes.

Mr. HENDERSON. But do you feel that the 6-month period after

the enactment would be a sufficient time for you?

Mr. McAvoy. Oh, more than ample time, Congressman,.

Mr. HENDERSON. Any further questions?
16 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

Mr. Daniels?

Mr. DANIELS. I want to ask a question. How many members are

there in your national organization?

Mr. McAvoY. Right now I would say about 22,000. Close to it.

Mr. DANIELS. In your testimony you made mention of 32,000.

Mr. McAvoy. That is right.

Mr. DANIELS. Do you mean to infer then that you have lost 10,0007

Mr. McAvoy. I would say right now close to it. Now, this was a

research job when the national secretary and national treasurer came

up. We went by and included even the national election that the

post office definitely went through last year on exclusive rights, and

so forth. And we found that, for instance, the clerks had close to

2,000 members. The letter carriers had about 1,800. The NPU had

over 3,000. And we adjusted all these figures to arrive at this figure

of 7,000. And all our people have gone over.

We just came back from Texas, and all our people said, "Mac,,

talking off the record, we have got to get a hospital plan. But the

fact remains I have joined the NPU or Letter Carriers or Federation

of Clerks for one reason—that I have a family and I have got to have

protection. We have no plan."

Mr. DANIELS. In other words, the loss of 10,000 in your membership over the past year you attribute directly to the fact you do not

have a health plan?

Mr. McAvoy. That is true.

Mr. DANIELS. Thank you.

Mr. HENDERSON. MT. Pool.

Mr. Pool, On the 6-month period, why could it not be 12 months?

I cannot understand why a 12-month period would not give you more

time and you would be sure to get your plan.

Mr. McAvoy. I do not think time is as much of a problem, Congressman. The fact remains, as I said to the chairman, they are

going to open the books, which would give every man in Government

the chance to change plans or to reconsider the plan they have at

this time.

Now. this will be this coming October. Now, will we be in a position if the Congress passes this bill to definitely present a plan at that

time? Because they send brochures out which covers every plan in

Government. If the bill was enacted into law, we would have our

plan included in this brochure.

Mr. PooL. In other words, 6 months is agreeable with you?

Mr. McAvoy. Oh, yes.

Mr. POOL. You are sure that is all right?

Mr. McAvoy. I have no objection to that.

Mr. HENDERSON. You can understand Mr. Macy's position that he

would want a limited period?

Mr. McAvoy. I agree.

Mr. HENDERSON. One that is sufficient for you to get in but one

that is short enough that it does not open it up for all time?

Mr. McAvoy. Mr. Chairman, I think I have said this before. We

are in existence for 50 years. We are part of the AFL—CIO. We are

part of the Government Employees' Council. We feel we are a true

labor organization, and we have proved it over our existence.

The fact remains if we do not have a plan soon we are going to go

out of existence.

1
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 17

Mr. HENDERSON. Certainly if we enact the proposed legislation, We

want to be sure that you had a sufficient period of time to get your

plan into operation.

Mr. McAvoy. Yes.

Mr. HENDERSON. On the other hand, I think that we have recog- nized the position of the Civil Service Commission that an open end

could bring on many problems that are not necessary by the situation

that you and your organization find you are in.

Mr. McAvoy. I fully concur.

Mr. HENDERSON. Mr. Wallhauser.

Mr. WALLHAUSER. Mr. McAvoy, you mentioned that you are

ready with a plan.

Mr. McAvoy. That is right.

Mr. WALLHAUSER. And a very substantial company. So that you

do not agree with the statement of Chairman Macy in which he raises

the danger signal of possible failure on the part 

Mr. McAvoy. Oh, the assets of the company who would be the

carrier if enacted into law are over a billion dollars. They are the

fourth largest in the country.

Mr. WALLHAUSER. You are ready, willing and able to step up and

give them a company that you in your mind would be sure to be

approved immediately?

Mr. McAvoy. Yes.

Mr. WALLHAUSER. And you cannot agree that there would be a

great deal of additional cost as the Commission 

Mr. McAvoy. It's a well-established insurance company.

Mr. WALLHAUSER. Thank you.

Mr. HENDERSON. Other questions?

Thank you, Mr. McAvoy.

Mr. McAvoy. Thank you, Mr. Chairman and members of the subcommittee.

Mr. HENDERSON. The next witness is John McCart, operations

director of the Government Employes' Council.

Mr. McCart, we will be glad to hear from you at this time. And

may I say it is a pleasure to have you before the subcommittee again.

STATEMENT OF JOHN McCART, OPERATIONS DIRECTOR,

GOVERNMENT EMPLOYES' COUNCIL

Mr. MCCART. Good morning, Mr. Chairman. I am John A. McCart, operations director of the Government Employes' Council,

AFL-CIO. Twenty-four unions representing Federal Government

employees comprise the council, Mr. Chairman.

This legislation was discussed at a recent meeting of the council,

and it was endorsed.

I therefore present our endorsement to you and urge that the subcommittee take early favorable action on the bill.

Mr. HENDERSON. Mr. McCart, I do not believe that the council

took this action at the time of the consideration of the legislation

last year. This is new action on the part of the council?

Mr. MCCART. That is correct, Mr. Chairman.

Mr, HENDERSON. It is very heartening to know. We appreciate

you coming and advising us of this position.

Any questions?
18 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

Mr. DANIELS. No questions.

Mr. Pool,. No questions.

Mr. HENDERSON. Mr. Wallhauser?

Mr. WALLHAUSER. I have none.

Mr. McCART. Thank you, Mr. Chairman.

Mr. HENDERSON. Thank you, Mr. McCart.

Mr. WALLHAUSER. Mr. Chairman, may I ask Mr. McAvoy one

more question I would like to establish on the record?

Mr. HENDERSON. Mr. McAvoy, you may come back.

STATEMENT OF HAROLD McAVOY, NATIONAL PRESIDENT, POST

OFFICE MAIL HANDLERS, WATCHMEN, MESSENGERS, AND

GROUP LEADERS—Resumed

Mr. WALLHAUSER. Do you know of any other benefits that an

employee of your organization would receive by joining another union

other than the health benefits plan?

Mr. McAvoy. Well, to answer your question, I would like to give

a small illustration of the competition pertaining to hospital plans

within the postal service. I will confine it, of course, to post offices.

I had lunch over on the Senate side 2 weeks ago, and the chairman

of the Senate Post Office Committee and I were kidding each other

as people do after lunch.

And Olin said, "I want you to remember I am part of the labor

movement too. I am an A.F. of L. man."

And I just looked at him and sort of smiled, and I said, "May I

ask how come?"

And he said, "Well, I belong to the Letter Carriers' hospital plan."

That is your answer.

Mr. WALLHAUSER. There are no other benefits that you know

Of 

Mr. McAvoY. No.

Mr. WALLHAUSER (continuing). By an employee leaving your

organization and joining another?

Mr. McAvoy. Just that plan.

Mr. WALLHAUSER. Except the plan?

Mr. McAvoy. That is right.

As Mr. McCart said, we represent 24 or 25 unions in the Government Employes' Council. I am part of the legislative committee

with Jerry Keating, Everett Gibson, John O'Connor, and George

Warfel. And the only difference in recruitment used by other organizations, which amazes our people, is the hospital plan.

All we ask for is fairplay. We want the same privilege that they

have.

Mr. WALLHAUSER. Thank you.

Mr. HENDERSON. It might be well if I called Mr. Ruddock back.

STATEMENT OF ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF

RETIREMENT AND INSURANCE, U.S. CIVIL SEFVICE COMMISSION—Resumed

Mr. HENDERSON. Mr. Ruddock, I think it would be helpful to the

subcommittee if you could tell us about your plan for opening up in

October.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 19

Do you now have plans to open in October for the employees to take

another look at their benefits?

Mr. RUDDOCK. Yes, we definitely do.

The original enrollment period was during the month of June in.

1960. The plans went into effect July 1. At that time the regulations of the Commission provided that there would be an open season

in October of 1961 and that there would be an additional open season

at least once every 3 years thereafter.

We had just a limited open period in October of 1962. This was

an opportunity for people who were not enrolled in any plan to come

in to a plan. It was an opportunity for anyone, for example, who

was signed up for self only to enlarge his coverage to include his

family. It did not include an opportunity in 1962 to change plans

or options.

In the fall of this year, 1963, and this will probably be in October,

there will be another opportunity where every eligible Federal employee may change his plan, his option, change from self to self and

family, or vice versa. In other words, make any change he wants to

make just as if we were starting over.

Mr. HENDERSON. Mr. Ruddock, if the proposed legislation were

enacted in sufficient time for you to consider and workout the additional plans that might be authorized and accepted by the Commission, would the open season in the fall of this year permit the employees

to take the additional plan that might be authorized under this

legislation?

Mr. RUDDOCK. It would if we could accomplish the necessary work

in time.

Let me say if, for example, this piece of legislation were enacted

this month—and I am assuming the nearly impossible—if there were

only one or perhaps two or three new plans coming in to participate,

I think we could easily handle this, have the contract ready, and have

the brochure prepared, printed, distributed, and ready to be handed

to the employees in October.

If, on the other hand, and again I am assuming an impossible, let's

say that 20 new plans came in and asked to participate, I think it

would be impossible to simultaneously make all of the arrangements

for 20 plans, 20 new ones, to participate for this particular open season

in October.

Now, we have sent a notice to each of the carriers asking them to

submit to the Commission not later than April 30 any proposed

amendments to their plan which they have. So we will have the

task of negotiating and refining these proposals, of accepting the

ones on which we mutually agree, writing them in the plan, and

amending the brochures. So there is a tremendous job to be done

between now and October without any new plans participating.

However, let me repeat that if we had just one, two or perhaps

three I am sure that we could handle it.

Mr. WALLHAUSER. May I ask a question, Mr. Chairman?

Mr. HENDERSON. Mr. Wallhau.ser.

Mr. WALLHAUSER. Is October a firm date? Does it have to be the

month of October?

Mr. RUDDOCK. That has been announced, sir.

Mr. WALLHAUSER. It has been announced?
•

20 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

Mr. RUDDOCK. Let me mention two other possibilities. If this

worked out so that new plans wanting to participate could not be put

in shape by that time—I guess there are several possibilities—the

Commission might consider a change in the time of the open season

or the Commission might declare a special open season which would

be an opportunity for any present employees to join one of the new

plans. This could come in January, April, June, whenever we are

ready for it.

Another possibility would be that for ones coming in too late to

participate for this fall, we could arrange for an open season a year

from now to accommodate them.

In other words, this is not something which cannot be overcome.

Mr. WALLHAUSER. That is right. This is at the discretion of the

Civil Service Commission?

Mr. RUDDOCK. That is right, sir.

MT. WALLHAUSER. Thank you.

MT. HENDERSON. Any further questions?

Mr. POOL. In view of that, then, is the 6-month time limitation

fatal to the operation of this bill in your opinion?

Mr. RUDDOCK. No, Mr. Pool. As I understand the amendment

which has been proposed and which has been discussed, it is merely

one of setting a deadline date by which any organization which wants

to participate must file an application.

Mr. Pool,. You can adjust your procedures to work with the law?

Is that right?

Mr. RUDDOCK. We would try to do that, sir. As I understand it,

all that would be necessary would be on the day before the deadline

date an organization could come in with a simple statement saying,

"I hereby apply for participation," that would meet the deadline. I

do not believe there has been any contemplation that we would have

to work out all of the details and have the plan in effect within that

6-month period.

May I also add, sir, that in its administration of this program the

Civil Service Commission is concerned primarily with the welfare of

the Federal employees, and we are not in any sense trying to run the

program in a way which is most convenient for us. That is not our

objective.

Mr. WALLHAUSER. I think that has been pretty well established.

Mr. RUDDOCK. Thank you, sir.

Mr. HENDERSON. Thank you, Mr. Ruddock. We appreciate your

coming back, sir.

Our next witness is Mr. George Riley of the International Association of Ironworkers.

Mr. Riley, it is a pleasure to have you before the subcommittee

this morning.

STATEMENT OF GEORGE RILEY, LEGISLATIVE REPRESENTATIVE,

INTERNATIONAL ASSOCIATION OF BRIDGE, STRUCTURAL &

ORNAMENTAL IRONWORKERS

Mr. RILEY. Thank you, Mr. Chairman.

My name is George D. Riley, legislative representative of the International Association of Bridge, Structural & Ornamental Ironworkers.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 21

We are also affiliated with the Government Employees' Council,

and we have a strong sense of justice in this regard.

We have no problem as such in our own union. We do not like

to see our brother unions have any problem either.

Before coming into this present tour I was legislative representative

for the American Federation of Labor and Congress of Industrial

Organizations. This particular type of legislation fell into the field

of my own activity, and I followed through with the assistance of our

technical staff at that time, and I came before your committee and

presented the case.

It was the feeling at that time that this legislation—as far reaching.

and farsighted as it was—would never be intended to be exclusive but

to be inclusive of all groups and all individuals.

I doubt that many caught this particular gimmick in here of shutting

the door on others who were not immediately prepared with instant

plans to come in to have them approved.

That was 1959. And here we are in 1963. And you still have some

who are literally outcasts under this system.

I am very happy to see the conciliatory attitude which has been

displayed by the Commission this morning. I think it is enlightened,

and it is actually advanced thinking. I hope they keep it up. And I

have full faith and confidence in this subcommittee and the full

committee that you will not allow any backward steps in this matter

but you will continue to go forward.

We know that there is only a technical shade of difference why, in

the expiring hours of the last Congress, this bill did not get enactment,

because you operated under suspension of the rules. You got it

through without murmur of difficulty. And as it was messaged into

the Senate Chamber they drew the curtain there, and that was the end

of the act for the 87th Congress.

So, having done this splendid work already, I hope you will give

yourselves full credit for the action you have taken previously.

Mr. HENDERSON. Thank you, Mr. Riley.

Any questions, Mr. Daniels?

Mr. DANIELS. Mr. Riley, you were at this hearing all morning?

Mr. RILEY. Yes.

Mr. DANIELS. And you heard the Chair announce that it is the

intention of the Congress, should this bill be enacted, that it will be

enacted just for this one time and thereafter the door will be closed.

Do you subscribe to that thought?

Mr. RILEY. Well, it certainly would be a useful device to open the

door for those who are waiting to get in or hoping to get in.

I would not ask you to pledge yourself to the unforeseeable future.

I think this will accommodate everything that is in sight. It is not a,

happy thought for one group, let us say if the Ladies' Garment Workers were told they had to get into the Chemical Workers in order to get

some beneficial results. That is about as weird as the situation that

we have here today where the members of one union or one labor

group are told, "Well, if you want anything out of this thing, no

matter how much you need it and how preventive it is and how

morale building it is for the Government itself, you have to do this."

The Commission made a point "if it is in the interest of Government." That, to me, is that intangible element that never gets

considered. Then you have got to get over here in left field and play.
22 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

ball in this side of the field with the sun in your eyes rather than over

here in the shade where you can be more effective.

Mr. DANIELS. Our colleague, Mr. Olsen, testified that this legislation is intended to correct an inequity.

Mr. RILEY. There is no question of that.

Mr. DANIELS. It is that inequity that presently exists that this

legislation proposes to cure.

Mr. RILEY. My information Is the Senate committee is ready to

take this up just the moment it is cleared on this side. You have got

the pattern set from last year where the House acted first. They did

not have time. I am sure they would like to repair the damage as

much as they can and take it up as soon as you gentlemen are ready

and able to do it.

Mr. HENDERSON. Mr. Riley, I am sure that you want the record

clear, and we do not want any misunderstanding. Now, as I understand it—I will speak specifically with regard to the mail handlers—

while they do not have the opportunity to participate in their own

plan, there is the testimony that they are going and joining other

unions in order to get into the welfare plan.

The record should show they have the opportunity to come into

the Government plan. They do have that much of a choice.

Mr. RILEY. Yes. I do not know what porportion are in under

that sort of plan.

Mr. HENDERSON. Yes, sir.

Mr. RILEY. I reciprocate your feeling, Mr. Chairman, and I feel

sure the committee would like for these groups to continue to maintain

their identity and their morale which is so important in any job in the

U.S. Government.

Mr. HENDERSON. I just thought that the record should show they

do have that somewhat limited choice.

Mr. RILEY. Yes, that is right.

Mr. HENDERSON. Mr. Wallhauser?

Mr. WALLHAUSER. I have no questions.

Mr. HENDERSON. Mr. Pool?

Mr. POOL. I just want to compliment you for appearing before the

committee and taking your time.

Mr. RILEY. Thank you, Mr. Pool. Very happy to see you on this

committee.

Mr. HENDERSON. Thank you, Mr. Riley.

The next witness is Dan Jaspan, legislative representative of the

National Association of Postal Supervisors.

Mr. Jaspan, it is always good to have you testify before one of our

subcommittees.

Mr. Jaspan, would you introduce the gentleman with you?

STATEMENT OF DAN JASPAN, LEGISLATIVE REPRESENTATIVE,

NATIONAL ASSOCIATION OF POSTAL SUPERVISORS; ACCOMPANIED BY FRED J. O'DWYER, NATIONAL PRESIDENT, NATIONAL ASSOCIATION OF POSTAL SUPERVISORS

Mr. JASPAN. Thank you, Mr. Chairman.

I am accompanied by our national president, Fred J. O'Dwyer,

who just left San Francisco, unwillingly I believe, to join our permanent office staff and to see that we are doing our job.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 23

Mr. HENDERSON. It is a pleasure to welcome you before the Congress and the committee, Mr. President. I do not know whether you

will find the change in climate and scenery so wonderful, but it is

good to have you before us.

Mr. O'DWYER. Thank you very much, Mr. Chairman. I found

today much more comparable to my weather back home.

Mr. HENDERSON. Mr. Jaspan, you may proceed.

Mr. JASPAN. Mr. Chairman and members of the subcommittee, my

name is Daniel Jaspan. I am the legislative representative of the

National Association of Postal Supervisors, composed of more than

26,000 members in all 50 States and Puerto Rico. Our membership

is comprised of supervisors in the post office, including those in the

maintenance and motor vehicle services.

During the time hearings were held on the health benefits plan we

did not have a plan of our own, and we do not have one now. At

that time we were anticipating that the law would be passed limiting

the selection to one or two nationwide choices. Our reasoning was

based on the very excellent Life Insurance Act previously passed, and

administered by the participation of nationwide insurance companies.

I may add, Mr. Chairman, that at that time there were quite a

few employee organizations that had their own life insurance plans,

and those were absorbed by the nationwide plan. That is the reason

we felt that the same would happen with the health insurance plan.

It is now appearent that the present recognized employee plans will

be continued. It is our belief, therefore, that the employee associations

which did not qualify at the time of the enactment of this act should

now be given the opportunity to qualify.

Most postal employees feel that they receive the greatest protection

by belonging to an employee association plan.

You brought out the fact, Mr. Chairman, that they could belong

to the others, but I believe the records show that the postal employees

generally join the postal employee plans.

Many of our members have continued their membership in the

•other employee organizations merely for the purpose of being eligible

to participate in their health insurance plans. This leads to an unnecessary additional payment to these associations for membership

rights so they can participate in their health plans.

A comparable health plan for our members can be provided. This

would relieve them from paying additional per capita tax to other

associations.

For this reason, we are very much interested in the passage of a

bill embodying principles of H.R. 1058, introduced by Mr. Cunningham; H.R. 1819, introduced by Mr. Olsen; and H.R. 4342, introduced

by Mr. Staggers. We believe that we can best serve our members by

having a health plan of our own so that our members will be eligible

to participate without having to pay any additional dues.

We believe that it is only just for employee associations which were

ineligible to participate at the time of the enactment of the Health

Benefits Act to be given at least one opportunity to qualify if they so

desire. The enactment of this type of legislation would give them

that opportunity.

If a bill providing additional sources of health plans is enacted into

law it should contain a provision that a special "open season" be pro-
24 ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS

vided for those employees who may desire to transfer to a new plan

that will be set up by the associations that qualify.

Along this line, Mr. Chairman, I understand this October open

season is not necessarily set by any act of Congress. It is subject to,

the Civil Service Commission. And if a bill were passed or enacted

into law, say in July or August of this year, that could be put back

until sometime next year, if you want the 6-month period.

And I would suggest also that if the bill is enacted there be an open

season as soon as possible for all plans rather than having an open

season in October and then opening another one 6 months later, because it would be to the benefit of all the employee organizations who

qualify under the new provisions to try to have these people become

members as soon as possible.

So we do suggest that that be taken into consideration.

We urge this subcommittee to report favorably one of the bills

permitting additional choice of health benefits plans. We hope that

the full committee and the Congress will act favorably so that all

employee associations will have an equal opportunity to participate

in the health benefits plans.

We thank you very much, Mr. Chairman, for your consideration.

Mr. HENDERSON. Thank you, Mr. Jaspan.

Do you know of any other organizations other than your organization and the Mail Handlers that definitely intend to come in to the

Commission with proposals for their own plans?

Mr. JASPAN. Well, among the postal associations I believe that the

only possibility is the National Association of Postmasters. They do

not have a plan of their own, and I know that they have been considering it. But whether they will have a definite plan is difficult to

answer.

I believe if they would have, they would have had somebody here.

today to testify.

I would also like to add, Mr. Chairman, that Mr. Macy in his

presentation mentioned about the difficulty of dealing with new

carriers for these plans. I am almost certain that we could make

arrangements with one of the present carriers of another plan to

underwrite our plan if we had one.

Mr. WALLHAUSER. Will the chairman yield at this point?'

Mr. HENDERSON. Yes.

Mr. WALLHAUSER. You say you do not have a plan now, but

would it be your intention to have a plan if this bill were enacted

into law?

Mr. JASPAN. That is what we are planning on now, Mr. Wallhauser..

Mr. HENDERSON. How many members do you have in your organization?

Mr. JASPAN. 26,000.

Mr. HENDERSON. Any other questions?

Mr. DANIELS. Off the record.

(Discussion off the record.)

Mr. HENDERSON. Back on the record.

Mr. Jaspan, do you think that 6-month limitation that has been.

discussed here this morning would give you sufficient time to work

that out?

Mr. JASPAN. Yes, sir. But I do hope that you will consider if the

bill is enacted anywhere nearer than 6 months to October that the

October date be pushed back by the Commission.
ADDITIONAL EMPLOYEE HEALTH BENEFIT PLANS 25

Mr. WALLHAUSER. Well, Mr. Chairman, I do not think we have

anything to say about that. I believe that would be up to the Civil

Service Commission.

Mr. JASPAN. I mean as a suggestion. I believe they would listen

to the committee.

Mr. WALLHAUSER. They are sitting there. Sometimes they do;

sometimes they do not.

Mr. HENDERSON. Mr. Pool, do you have any questions?

Mr. PooL. No.

Mr. HENDERSON. Thank you, Mr. Jaspan.

Before the subcommittee goes into executive session and as we close

the record, I would like to say—and afford the other members of the

subcommittee an opportunity to insert in the record any remarks they

would like—I would like to compliment Mr. ,Ruddock and certainly

ask him to convey to Chairman Macy, who has had to leave, the very

fine impression that you have made not only on the members of this

committee and the Members of Congress but certainly the fine compliments that the organizations have paid you not only on this occasion

but on others for the job you have done in putting this tremendous

health benefits program into effect.

You are to be complimented on it, and we know that if this legislation is enacted, you will make every effort to carry out the intent of

Congress even though you are officially opposing the legislation by

testimony of Mr. Macy.

Mr. RUDDOCK. Thank you, sir.

I might say that you referred to the fact that I am officially opposing

it. In my own personal judgment, none of these organizations will

be in a position to offer any Federal employee more health benefits

for his money than is currently available to him.

Mr. HENDERSON. Thank you, Mr. Ruddock.

Any other comments?

Mr. DANIELS. No.

Mr. WALLHAUSER. I have nothing further.

Mr. DANIELS. I move, Mr. Chairman, we go into executive session.

Mr. HENDERSON. The subcommittee will adjourn and will go into

executive session at this time.

(Thereupon, Thursday, March 28, 1963, the subcommittee adjourned.)

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