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Catalogue Reference:CAB/24/229
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CABINET.
ret
.118(32)
N a t i o n a l H e a l t h and C o n t r i b u t o r y P e n s i o n s
Memorandum b y t h e M i n i s t a r o f
1.
to
Insurance.
Health.
I h a v e i n t i m a t e d t h a t i t w o u l d p r o b a b l y be
introduce
a b i l l on National Health Insurance.
n e c e s s i t y a r i s e s out of the v e r y s e r i o u s e f f e c t
o f Approved S o c i e t i e s r e s u l t i n g from (a) v e r y
expenditure
finance
heavy
on s i c k n e s s and d i s a b l e m e n t b e n e f i t s
c o n t r i b u t i o n income by r e a s o n of
This
on the
of women,
p a r t i c u l a r l y m a r r i e d women, a n d (b) v e r y s e r i o u s
2.
necessary
loss
of
unemployment.
The s i t u a t i o n w a s f u l l y d e a l t w i t h i n t h e R e p o r t
t h e Government A c t u a r y on t h e T h i r d V a l u a t i o n o f t h e
and l i a b i l i t i e s
o f Approved S o c i e t i e s
(Cmd.3978) .
of
Assets
The f a c t s
t h e r e s e t f o r t h h a v e moved S o c i e t i e s t o p r e s s f o r
immediate
r e m e d i a l l e g i s l a t i o n end t h e o p p o r t u n i t y of such
legislation
c a n b e t a k e n t o d e a l w i t h t h e q u e s t i o n of p r o l o n g a t i o n
insurance,
now d e p e n d i n g o n a t e m p o r a r y e n a c t m e n t f o r
of
the
p e r i o d e n d i n g 3 1 s t December n e x t .
I.
3.
(8-gd.)
Women's C o n t r i b u t i o n s and B e n e f i t s .
The w e e k l y h e a l t h i n s u r a n c e c o n t r i b u t i o n f o r women
is
insufficient
to support the s t a t u t o r y b e n e f i t s
which they are e n t i t l e d ,
essential
if serious
l e a s t able
4.
and an a d j u s t m e n t o f t h e p o s i t i o n
losses,
especially
to b e a r them, a r e t o b e
Table X I I I of
shows t h a t t h e t o t a l
to t h o s e
avoided.
amount o f s i c k n e s s b e n e f i t
during the inter-valuation
Actuary
p a i d t o women
p e r i o d was 1 0 4 p e r c e n t ,
of
a o t u a r i a l p r o v i s i o n , w h i l e t h e amount of d i s a b l e m e n t
however,
is
Societies
the R e p o r t o f t h e Government
p a i d was 138 p e r c e n t ,
to
of t h e p r o v i s i o n .
r e p r e s e n t the e x p e r i e n c e of f i v e
These
the
benefit
figures,
years taken
together
/The
The c l a i m s w e r e r i s i n g
steadily
e x c e s s i n 1 9 2 7 and 1 9 2 8 ,
valuation,
5.
throughout
t h e p e r i o d and t h e
t h e l a s t y e a r s c o v e r e d "by t h e
was much g r e a t e r .
The s i c k n e s s c l a i m s
29 p e r c e n t ,
o f u n m a r r i e d women r o s e "by
and t h e d i s a b l e m e n t c l a i m s "by 5 4 p e r
b e t w e e n 1 9 2 3 and 1 9 2 7 .
cent,
I n t h e c a s e o f m a r r i e d women t h e
i n c r e a s e i n t h e same p e r i o d amounted t o 4 2 p e r c e n t ,
s i c k n e s s c l a i m s and 87 p e r c e n t ,
6.
for disablement
for
claims.
I n 1 9 3 0 and 1 9 3 1 t h e r e was some improvement i n
s i c k n e s s c l a i m s l a r g e l y a s the r e s u l t
Department t o
i n disablement
7.
of a c t i o n t a k e n by the
i m p r o v e m e d i c a l c e r t i f i c a t i o n and t h e
o f c l a i m s by S o c i e t i e s ,
but there i s
the
no m a t e r i a l
supervision
improvement
claims.
figures
s h o w i n g t h e s i c k n e s s and d i s a b l e m e n t
e x p e r i e n c e of a l a r g e r e p r e s e n t a t i v e g r o u p of
Approved
S o c i e t i e s h a v e b e e n o b t a i n e d and t h e s e show t h a t t h e
paid in benefits
benefit
amount
t o m a r r i e d women i n t h e y e a r 1 9 3 0 was 75 p e r
c e n t g r e a t e r t h a n t h e y would have r e c e i v e d
if
t h e y had
e x p e r i e n c e d t h e same amount o f i n c a p a c i t y a s u n m a r r i e d women
of
the same a g e s .
8.
As a r e s u l t
o f t h e i r h e a v y c l a i m s n e a r l y 3-g- m i l l i o n
women h a v e now c e a s e d t o be e n t i t l e d t o a d d i t i o n a l
A f t e r t h e s e c o n d v a l u a t i o n 98 p e r c e n t ,
obtained additional b e n e f i t s :
t o 38 p e r
9.
it
is
this
benefits.
o f t h e women i n s u r e d
proportion i s
now r e d u c e d
cent.
I n h i s r e p o r t t h e Government A c t u a r y s t a t e s
clearly necessary that
the f i n a n c e
the w h o l e p o s i t i o n
that
in regard
o f women"s i n s u r a n c e s h o u l d b e c o n s i d e r e d ;
that
e x i s t i n g s u r p l u s e s can o n l y p r o v i d e a temporary bulwark,
that serious
10.
situation
deficiencies
The p r a c t i c a b l e
are in
to
and
prospect.
alternatives'for
dealing with
the
are:­
(a)
by I d . ,
an i n c r e a s e
o f t h e women's w e e k l y
and a r e d u c t i o n o f
contribution
their disablement b e n e f i t
/7s.6dc
from
1 K 0
7s.5d. to 6s. a w e e k ;
or
Co) no increase in the contribution, b u t a r e d u c t i o n
of disablement benefit f o r unmarried women from 7s. 6d. to
Gs. a we ex, and, in the case of married women, a reduction
in the rates of sickness and disablement benefits (see
paragraphs 12 and 13).
11.
Under alternative (a) the increase in the contribution
should be placed on the employee (who at present pays Id. less
of the joint health and pension contribution tha$ her employer).
Increase of contributions in p r e s e n t
conditions
any case questionable as a matter of policy.
would seem in
But it has also
to be remembered that the unemployment contribution has recently
been increased and that provision i s made, in Section 43(2) of
the Contributory Pensions Act, 1 9 2 5 , for the combined pensions
CQ iitributions f o r women to b e increased by Id. a week from
1st January, 1936.
Moreover, any addition to the contribution
payable by all insured women would aggravate the burden already
borne by unmarried women for the benefit of the married, who
normally are in a better economic position than themselves.
12.
As regards alternative ( b ) t h e Government Actuary
has estimated that on the basis of the experience of recent
years, i f the present contribution is retained, the rate of
sickness benefit' f o r a l l women s h o u l d b e reduced from 12s.
to 1 0 s . per w e e k and the rate o f disablement benefit from
7 s . 6 d . to 5s. per w e e k .
As i n my o p i n i o n It would be difficult
to justify such an a l l round reduction i n the benefits of
insured
women the Government A c t u a r y has
made an -alternative
calculation in order to show w h a t benefits could be given to
married women on the assumption that the unmarried women would
receive sickness benefit at t h e present rate of 12s. a. week
and disablement benefit at 6s. a week (instead of the present
rate of 7s.6d.)
On this basis the Government Actuary estimated
/ that
t h a t t h e " b e n e f i t s of i n s u r e d , m a r r i e d women s h o u l d be
at the f o l l o w i n g
I feel
rates:-
Sickness Benefit
8s.6d.
Disablement
"
4 s . 3d.
Maternity
"
£1
p e r week
"
"
(instead of
t h a t a n y r e d u c t i o n i n t h e amount of t h e
benefit
at
to carry a proposal
s i c k n e s s and d i s a b l e m e n t b e n e f i t s
13-
£2).
maternity
t h e p r e s e n t moment would be u n w i s e and
i t would be v e r y d i f f i c u l t
low r a t e s
fixed
as 8 s . 6 d .
and 4 s . 3 d .
to reduce
of m a r r i e d women t o
a week
in
c o n j u n c t i o n w i t h t h e p r o b a b i l i t y t h a t some
further
reduction
diminished
attractiveness
be
justified
f o l l o w on t h e
of reduced b e n e f i t s ,
in fixing
I t h i n k t h a t we s h o u l d
the r a t e s o f b e n e f i t s
of
women r a t h e r h i g h e r t h a n t h o s e i n d i c a t e d by t h e
Actuary.
I propose accordingly,
f o r m a r r i e d women s h o u l d b e f i x e d
5s.
Disablement B e n e f i t ,
such
recent
c l a i m s , and t a l c i n g t h i s
in the claims w i l l
the
respectively.
As m e n t i o n e d a b o v e t h e r e h a s b e e n a
improvement i n t h e s i c k n e s s
that
married
Government
t h a t the r a t e s o f
at 1 0 s . S i c k n e s s
w i t h no r e d u c t i o n i n t h e
benefit
Benefit,
Maternity
Benefit.
14.
I t may b e r e c a l l e d t h a t p r i o r t o 1 9 2 0 , when t h e
benefits
and c o n t r i b u t i o n s w e r e i n c r e a s e d ,
sickness
and d i s a b l e m e n t b e n e f i t s
5s.
the
rates
of
f o r women w e r e 7 s . 6 d .
and
respectively.
15.
Under a l t e r n a t i v e
(a)
an i n c r e a s e
c o n t r i b u t i o n by I d . w o u l d u l t i m a t e l y
i n v o l v e an i n c r e a s e
t h e -Qxchequer Grant b y £ 2 4 0 , 0 0 0 a y e a r ,
begin to m a t e r i a l i s e
of
although t h i s would not
f o r some y e a r s , b u t under a l t e r n a t i v e
t h e r e w o u l d b e an i m m e d i a t e
of t h e -Sxohequer
of t h e w e e k l y
(though o n l y temporary)
(b),
reduction
Grant.
/IS.
15.
After full consideration I have come to the
conclusion that the rates of benefit for women should be
fixed as follows:Single Women Sickness Benefit 12s. a week (present
rate
ISs.)
Disablement "
6s. a week (present
rate
7&6d.)
Married Women Sickness Benefit 10s. a week (present
rate 12s.)
Disablement "
5s- a week: (present
rate
7s.6d.)
Maternity Benefit to remain at £2 in each case.
17.
A recent deputation from the various groups,
including the Trade Unions, was unanimous in preferring that
the benefits should be reduced rather than that the
contributions should be increased.
11 *
Effect of Unemployment on
National Health Insurance
18.
The second main problem to be considered is that
of the loss of oontribution Income as the result of heavy
unemployment.
(1)
This involves two main questions ­
to what extent must the benefits of
an insured person be reduced on account
of arrears of contributions due to
unemplo yment?
and
f o r how l o n g can i n s u r a n c e b e c o n t i n u e d
(2)
after
a n i n s u r e d p e r s o n h a s c e a s e d t o b e employed a n d t o
pay
c ont r i b u t i ons ?
19
P r i o r t o 1928 i n s u r e d persons i n a r r e a r s
B
were
r e q u i r e d t o r e d e e m them by a c a s h payment o r w e r e s u b j e c t
a reduction of b e n e f i t s .
Act
l 28,
c
9
Under t h e N a t i o n a l H e a l t h
to
Insurance
f o l l o w i n g t h e R e p o r t o f t h e R o y a l Commission on
National Health Insurance,
all
a r r e a r s due t o
genuine
unemployment w e r e e x c u s e d and i n v o l v e d no r e d u c t i o n o f
benefit
0
T h i s was a g r e a t c o n c e s s i o n w h i c h was much v a l u e d and was
thought t o be p o s s i b l e h a v i n g regard t o t h e r a t e of
prevailing i n 1928
c
The Government A c t u a r y p o i n t s
h o w e v e r , t h a t , w i t h unemployment a t
its
c o n c e s s i o n p l a c e s on A p p r o v e d S o c i e t i e s
unemployment
out,
present f i g u r e ,
a b u r d e n of
the
over
£ 2 , 0 0 0 , 0 0 0 a y e a r , which i s a l t o g e t h e r beyond t h e i r
capacity.,
The r e s u l t
soundness
i s a w i d e s p r e a d undermining of f i n a n c i a l
With g r e a t r e l u c t a n c e I h a v e come t o t h e c o n c l u s i o n
a r r e a r s due t o unemployment
excused.
c a n no l o n g e r b e
that
completely
I propose accordingly that they should in future
excused o n l y t o t h e extent
of o n e - h a l f ,
0
so t h a t
one-half
be
of
t h e c o s t w i l l b e b o r n e on t h e f u n d s o f t h e S o c i e t i e s and t h e
remaining- h a l f b y t h e i n d i v i d u a l
will
insured person himself
This
0
i n v o l v e e i t h e r t h e making b y t h e i n s u r e d p e r s o n o f a
m o d e r a t e c a s h payment o f a f e w s h i l l i n g s t o b e p a i d o v e r
four
months t o r e d e e m h i s a r r e a r s o r a c o r r e s p o n d i n g r e d u c t i o n
h i s r a t e of b e n e f i t
20.
the cost
of
f o r t.:e e n s u i n g y e a r .
In order t o a s s i s t
Societies
(about £ 1 , 0 0 0 , 0 0 0 a y e a r )
S o c i e t y w h i c h , on v a l u a t i o n ,
d e f i c i e n c y as a r e s u l t
5
it
t o meet t h e i r s h a r e
i s proposed that
of
any
i s found t o be t h r e a t e n e d w i t h a
of t h i s p r o p o s a l s h o u l d be e n t i t l e d
relief/
to
HQ
relief out of the Central Fund, into which, in order to assist
in meeting this additional liability, the unclaimed money from
thesale of insurance stamps will b e paid.
21.
This proposal is a matter o f great urgency as a new
contribution year will begin in July and it is necessary that
9
well in advance of that date, Approved Societies should be in
a position to notify their members of the new provisions,
22.
I now come to (2) the question of continuance of
insurance.
23o
The system of prolonging insurance rights for some
period after employment ceases is well established in national
health insurance, but in a contributory scheme it is essential
to avoid prolongation to such an extent as to place upon the
funds a greater burden than they can bear.
Under the Act of
1928, very generous provision was made for the continuance of
insurance after cessation of employment
G
A period of free
insurance of between eighteen months and two years was given
with a further extension of twelve months at reduced rates of
benefit, if the insured person had been continuously unemployed.
A special provision was made whereby elderly persons, becoming
unemployed after the age of 60 and having been insured for ten
years, were kept in insurance until the age of 65 when the
title to old age pension matures.
24.
At the time it was thought that these provisions
would satisfactorily cover all cases, but at the end of 1930
it was found that there was a considerable number of persons
who had been without any work for several years, and v/hose
insurance was consequently due to cease at the end of that
year.
The Government of the day introduced special legislation
to extend the insurance of these persons for a further year',
the/
t h e c o s t o f t h e e x t e n s i o n ( a b o u t £ 9 0 , 0 0 0 ) b e i n g b o r n e by t h e
Exchequer a s t h e S o c i e t i e s
were u n w i l l i n g t o b e a r t h e c o s t ,
many o f them w e r e o p p o s e d t o
25,
prolongation,
Towards t h e end o f 1 9 3 1 t h e same p r o b l e m had t o b e
f a c e d a g a i n a s t h e unemployment
Cabinet w i l l
remember t h a t
provide for further
p o s i t i o n was no b e t t e r and t h e
i n November l a s t
they decided to
p r o l o n g a t i o n o f i n s u r a n c e u n t i l t h e end o f
t h e p r e s e n t y e a r a t a c o s t to t h e E x c h e q u e r of a b o u t
£110,000,
but a s a p u r e l y temporary measure pending r e c o n s i d e r a t i o n
t h e whole question i n the l i g h t
of t h e Second Report of
R o y a l Commission on Unemployment I n s u r a n c e ,
of
the
As a m e n d i n g
h e a l t h i n s u r a n c e l e g i s l a t i o n must b e i n t r o d u c e d a t
once.to
d e a l w i t h t h e p r o b l e m o f women's i n s u r a n c e and a r r e a r s , I
it
and
think
d e s i r a b l e t o d e a l a t t h e same t i m e w i t h t h e p i ' o b i em of
d u r a t i o n o f i n s u r a n c e and t o put t h e scheme on a p r o p e r
in this respect
r a t h e r than to wait f o r t h e Report of
Royal Commission which i s n o t ,
i n my o p i n i o n ,
a n y v e r y d i r e c t b e a r i n g on t h e
question,
26,
the
l i k e l y to have
While I r e c o g n i s e t h a t t h e b a s i s of t h e 1928 A c t ,
with its free
(on a v e r a g e )
p e r i o d o f i n s u r a n c e e x t e n d i n g o v e r 24 y e a r s
of
unemployment i s a v e r y g e n e r o u s
provision
I am o f o p i n i o n , h a v i n g r e g a r d t o t h e p r e s e n t h i g h r a t e
unemployment, t h a t
some m o d i f i c a t i o n o f t h e H e a l t h
time longer,
and t h a t ,
of
Insurance
Scheme a s c o n t a i n e d i n t h e Act o f 1 9 2 8 i s n e c e s s a r y f o r
some
i n any c a s e , we s h o u l d i n c l u d e a
permanent p r o v i s i o n t o p r e s e r v e t h e t i t l e
to widows'
f o r some p e r i o d b e y o n d t h e t e r m i n a t i o n of H e a l t h
(at present
footing
t h e H e a l t h and P e n s i o n s Schemes a r e
pensions
Insurance
co-terminoas),
27.
I t h e r e f o r e propose as regards t h o s e
unemployed
p e r s o n s who a r e due t o go out o f I n s u r a n c e a t t h e 3 1 s t
December
n e x t t h a t t h e y s h o u l d b e c o n t i n u e d i n t h e I n s u r a n c e Scheme
f o r one f u r t h e r y e a r t o 3 1 s t D e c e m b e r 1 9 3 3 a n d b e
t o Medical B e n e f i t
Pension rights)
during that
and
s
entitled
year (together with
thereafter,
all
i f a man s h o u l d d i e
one y e a r o f c e a s i n g t o b e i n s u r e d b i s widow s h o u l d
e n t i t l e d to her pension - that
i s to say
9
the
remain
genuinely­
unemployed man w o u l d h a v e a f r e e p e r i o d o f H e a l t h
f o r a minimum o f 3 i t o 4 y e a r s
within
Insurance
and f o r w i d o w s p e n s i o n
s
of
b e t w e e n 4-g- ,and 5 y e a r s .
28.
A f t e r December
1 9 2 8 Act w o u l d a p p l y
1 9 3 3 t h e permanent p r o v i s i o n s o f
9
(i,e,
c o n t i n u a n c e of i n s u r a n c e
f o r 2 f y e a r s on a v e r a g e ) w i t h t h e p r o v i s i o n t h a t
t o widow's p e n s i o n would a l w a y s p e r s i s t
t h e c e s s a t i o n from H e a l t h I n s u r a n c e
in
status
the
title
f o r one y e a r
after
(i.e.
the
3 ^ y e a r s on a v e r a g e
all).
29.
It is
proposed that
the cost
of
prolongation
f o r t h e y e a r 1 9 3 3 s o f a r a s r e g a r d s h e a l t h i n s u r a n c e s h o u l d be
b o r n e on N a t i o n a l H e a l t h I n s u r a n c e f u n d s g e n e r a l l y
an a d j u s t m e n t o f
the t r a n s f e r v a l u e s which are c a r r i e d
t h e R e s e r v e S u s p e n s e Fund on t h e c e s s a t i o n o f
30.
The c o s t
during the f i r s t
one y e a r ' s
Fund
9
9
pro t a n t o
Exchequer under t h a t
31.
Pensions
p e r i o d of t h e o p e r a t i o n of t h e Scheme
9
would f a l l
upon t h e
increase the l i a b i l i t y
of
s
and
Pensions
the
Scheme.
As a f u r t h e r and v e r y a t t r a c t i v e
would propose t h a t ,
to
insurance.
of t h e two y e a r s e x t e n s i o n f o r
extension thereafter,
and w o u l d
through
concession I
i n t h e c a s e o f r e - e n t r y t o employment
insurance within a certain time the qualifying
conditions
and
for
widows/
widows pensions should h e t h e lapse of 26 weeks and the
9
payment of 2 6 contributions, after re-entry, instead of
104 weeks and the payment of 104 contributions as at present
S2
0
I invite the concurrence of my colleagues in
the introduction of legislation on the above lines, as
soon as possible after the reassembling of Parliament.
There is a meeting of' the Approved Societies Consultative
Council on the 8th of April, and it is most desirable
that I should have the views of the Cabinet before that
date,
(XntId o )
Ministry of Health,
April 1st,
1 9 2 2 o
EioiioYo
widows pensions should be the lapse of 26 weeks, and the
payment of 26 contributions, after re-entry, instead of
104 weeks ana the payment of 104 contributions as at present
52
0
I invite the concurrence of my colleagues in
the introduction of legislation on the above lines, as
soon as possible after the reassembling of Parliament,
There is a meeting of the Approved Societies Consultative
Council on the 8th of April, and it is most desirable
that I should nave the views of the Cabinet before that
date.
(Intld.) S.H.Y.
Mini stry of Health,
April 1st, 1952.