Evening star., 1952-01-10
Buck of CHI Rute Increases
Bock of CHI Rate Increases
Higher Hospital Costs, Lowered
Reserves Lead to Compromise

N6SGEV6S L6O0 I
In t,Do articles, The Star 1DiH
examine the recent rate in
creaSeS and benefit changes in
the Group disqualification, Inc,
plan. This is the first. The
second aDiH appear tomorrow.
Group disqualification, Inc, has
just passed through a period of
major adjustment, involving i'm
portant decisions in the volun-
tary prepayment plan which in
sures nearly 100000 Washington
residents against high hospital
bills.
There are two main results:
Some benefits for CHI subscrib-
ers in 1852 will be changed. Sub
scribers' rates will be increased,
starting March l, in order to meet
higher costs of hospital care.
Most important of the revisions,
for two reasons, is a drastic re-
duction in maternity benefits,
scheduled for next October 1.a
Flat So Daily.
Until that date, maternity pa
tients now enrolled in CHI will
continue to have virtually all of
their hospital expenses paid by
their CHI insurance. After Oc-
tober l, CHI will credit fiat SO
a day, up to a maximum of eight
days, against their hospital bills.
This means, it was indicated by
a check of hospital charges, that
the average CHI maternity patient
will have to pay more than half
the bill submitted to her for the
five to six days she will be in the
hospital.
The second reason the maternity
change is important is that it
represents the first instance in
which CHI has abandoned a pol
icy of paying hospital expenses. no
matter how high they are, and
substituting for it a cash allow
ance against the hospital charges.
Some hospital and medical lead
ers here view this change as a re-
trenchment from the basic prin-
ciples of the voluntary hospital
prepayment (Blue Cross move
ment. One of the major principles
is that a cash allowance is not
sufficient to meet the "cataStro-
phic" hospital costs which can re-
suit in some illnesses.
No Increase Protection.
In addition, advocates of the
service benefits" plans argue, a
cash allowance gives no protection
against rising hospital costs. For
example, an allowance of SO a day
against present bills obviously will
sink in value if hospital charges
go up 10 or 20 per cent.
Maternity cases, however, are
the only ones which will be
exempted from GHI's policy of
paying virtually all the costs of
hospital care. And, in at least
one other important instance,
this principle has been extended
to new benefit. Il
Joseph H. Hines, CHI presi-'
dent, said the maternity change
was distasteful action, and was
arrived at "as compromise only
after very mature study" by the
CHI board Of directors.
The only alternative to the re-
duction, he said, was to increase
rates to a point that might be too
high to justify the benefit and
which, the board feared. would
place too heavy a burden on low
Income subscribers.
The alternatives. he said, we're
brought about by the necessity
for CHI to increase it's income
Substantially. The higher income,
he said, is needed because:
l. CHI estimates that hospital
charges against it will be 20 per
cent higher in 1852 than the same
charges in 1850.
Reserve Below Standard.
2. The CHI reserve fund has
been reduced during the postwar
period of spiraling hospital costs
to a point where it is below mini
mum reserve requirements set by
the Blue Cross, Commission for
member plans.
During the 1946-1950 period,
officials reported, CHI had a total
income of $17,110,000, against to-
tai expenses of $17,760, 900. OF
the expenses. about $15.8 million
went to hospitals in direct pay
ment for services given subScrib-
lerS.
| The deficit during the five years,
the officials said, resulted in a
withdrawal of about SCOT 900 from
the reserve fund to meet the ex-
penses. officials estimated that
at present the fund stands at
IahniIt SQ5C nm TIndeI plue CrnSS