SENATE 
No. 10 
C&e Commontoealt!) of £pa00acfm0ett0 
REPORT ON SICKNESS BENEFITS 
THE 
STATE ADVISORY COUNCIL 
OF THE 
DIVISION OF EMPLOYMENT SECURITY 
Under Chapter 54, Resolves of 1943 
November 1, 1944 
BOSTON 
WRIGHT & POTTER PRINTING CO., LEGISLATIVE PRINTERS 
32 DERNE STREET 
1944 CONTENTS. 
Authority for the Study, Chapter 54, Resolves of 1943 .... 5 
Letter of Transmittal .......... 7 
PAGE 
Social Security in America — its Purpose and Principles .... 9 
Scope of Specific Study . . . . . . . . . .11 
Historical Background .......... 12 
Foreign Countries . . . . . . . . . .12 
United States ........... 14 
Recent Developments in Health Insurance in — 
Great Britain ........... 17 
Canada . . . . . . . . . .18 
United States ........... 18 
Part I. — Introduction. 
Informal and Public Hearings ......... 24 
Need for Compulsory System — “Pros” and “Cons” . . 26 
Part II. — Public Opinion. 
Part III. — Administration and Financing. 
Adaptability to Unemployment Compensation . . . . . .28 
Question of Administrative Funds in Joint Relationship with Unemploy- 
ment Compensation and Federal Attitude . . . . .29 
Possible Application to Other Programs ....... 30 
Financing of Separate Sickness Benefits Fund . . . . . .31 
Administrative Costs .......... 33 
Financial and Actuarial Difficulties in Present Abnormal Period . . .33 
Types of Levy — “Pros” and “Cons” . . . . . .34 
Part IV. — Extent of Coverage under Voluntary Plans in Massachusetts. 
Employment Establishments ......... 36 
Benefit Societies ........... 38 
Part V. — The Trend. 
Rhode Island . . . . . . . . . . . .38 
New Hampshire . . . . . i . . . . . .38 
Studies by Other States .......... 38 
Voluntary Plans ........... 39 
Health and Accident Policies with Private Carriers — Group and Individual 39 
Hospitalization Plans . . . . . >. . .40 
Medical Society Approved or Sponsored Plans . ., . . .41 
Union Sponsored Plans . . . . . . . . . .41 
Coverage through Collective Bargaining . . . . . . .42 4 
CONTENTS. 
PAGE 
Summary ............ 42 
Recommendation ........... 46 
Part YI. — Conclusions. 
Exhibits. 
A. Schedule of Meetings held by State Advisory Council, Division of Em- 
ployment Security, on Sickness Benefits . . . . . .47 
B. Extent of Payments now being made to Workers for Time Lost because 
of Illness in Establishments subject to the Massachusetts Employ- 
ment Security Law and Practices in Connection therewith . . 48 
Chart A. Per Cent of Workers Customarily Receiving Payments for 
Periods when Absent through Illness, by Major Industry Divisions . 66 
Chart B. Per Cent of Workers Customarily Receiving Payments for 
Periods when Absent through Illness, by Size-of-Establishment Groups 67 
Chart C. Per Cent Distribution of Estimated Total Number of Workers 
Customarily receiving Payments for Periods when Absent through Ill- 
ness, by Type of Coverage (or Combination of Types) reported by 
Employing Establishments ........ 68 
Chart D. Per Cent Distribution of 589,582 Workers Customarily Re- 
ceiving Payments when Absent through Illness, by Type of Financing 69 
Chart E. Distribution of Workers Customarily Receiving Payments 
for Periods when Absent through Illness, by Method of Financing, by 
Type of Coverage .......... 70 
Sample of Questionnaire . . . . . . . .71 
C. Disability Coverage of Benefit Societies registered with the Massachu- 
setts Division of Insurance ....... 72 Cf)t CommontoealtJ) of 9ia00acf)ii0ctt0 
AUTHORITY FOR THE STUDY. 
Resolve providing for an Investigation relative to the Payment 
of Benefits under the Employment Security Law to Employees 
who are Absent from Work on Account of Sickness. 
Chapter 54, Resolves of 1943. 
Resolved, That the state advisory council in the division of employ- 
ment security is hereby authorized and directed to make an investigation 
of the subject matter of current senate document numbered two hundred 
and twenty-nine, and of current house documents four hundred and fifty- 
eight, eleven hundred and twenty-four and eleven hundred and thirty- 
three, relative to the payment of benefits under the employment security 
law to employees absent from work on account of sickness. Said advisory 
council shall report to the general court its findings, and its recommenda- 
tions, if any, together with drafts of legislation necessary to carry such 
recommendations into effect, by filing the same with the clerk of the 
senate on or before the first Wednesday in November in the year nineteen 
hundred and forty-four. Approved June 11, 1943. Ct)e Commontoealtl) of Q^a00acf)U0ett0 
Division of Employment Security, 
State Advisory Council, 
Boston, November 1, 1944. 
To the Honorable Senate and House of Representatives of the Commonwealth 
of Massachusetts in General Court assembled. 
In accordance with the responsibility assigned to the 
State Advisory Council of the Division of Employment 
Security, under chapter 54 of the Acts and Resolves of 
1943, we have the honor to submit the accompanying report 
of the Council’s investigation with respect to the possi- 
bility of protecting individuals against wage loss incurred 
due to sickness or non-industrial accident. 
This report is based on the results of extensive hearings 
with representative groups throughout the Commonwealth, 
and analysis of research and statistical data. 
In making its investigation, the Council enjoyed the full 
co-operation of the Director of the Division of Employ- 
ment Security, who made possible the compilation and 
analysis of the research and statistical material. 
The Council is also indebted to the public-spirited groups 
representative of labor, management, private insurance in- 
terests, the medical profession, and interrelated state de- 
partments who were most helpful in discussing the subject 
matter with the Council on several occasions. The public- 
spiritedness of many citizens of the Commonwealth, exem- 
plified by their appearance at the public hearings of the 
Council, was also gratifying, and the opinions expressed at 
these hearings were of much assistance to the Council. 
Respectfully submitted, 
WILLIAM G. SUTCLIFFE, 
Chairman. 
ALFRED E. RANKIN. 
FRED W. STEELE. 
MARY M. RILEY. 
JOSEPH J. CABRAL. 
Mr. Henry Cloutier has not signed this report as he was 
absent at the time of its adoption. Cl)t Commontoealtf) of apasisaclmmtis 
REPORT ON SICKNESS BENEFITS. 
Part I.—Introduction. 
Social Security in America — its Purpose and 
Principles. 
The purpose of Social Security in America — or Social 
Insurance, as it is more popularly called —• is to provide 
protection against the major economic hazards of life which 
are sufficiently widespread and have the effect of producing 
a dependency problem for society, thus becoming “social” 
in scope. 
Its objective is to provide a measure of economic security 
against major hazards only when it has been determined 
through the democratic processes that former methods by 
which society attempted to meet its obligations have be- 
come inadequate through drastic changes in the social and 
economic structure of the country. Thus, with the cata- 
strophic mass unemployment in the depression years of the 
1930?s, there came a full recognition of the need of protec- 
tion against the threat of loss of income due to unemploy- 
ment and also to old age — both inevitable economic haz- 
ards and beyond the control of the individual. Such a 
national crisis brought proposals for social and economic 
security within the scope of national legislation. The Social 
Security Act, enacted in 1935, was designed to meet this 
need. 
In the case of unemployment, the aim in this country 
has been to grant as a measure of security an amount suffi- 
ciently adequate to provide a minimum protection for the 
worker in times of depression. This “minimum,” or “basic 
layer of protection,” is intended to tide the worker over 
for a temporary period of time while he seeks to re-establish SENATE — No. 10. 
[Jan. 
10 
himself in permanent security by means of a job. In pro- 
viding this protection to the worker, it is not the govern- 
ment that gives it to him. Social Insurance means that the 
government merely provides the compulsory method by 
which numbers of people facing a given hazard share among 
themselves the agreed cost of those individuals for whom 
the hazard exists. Work is the real security of the American 
workingman. He wants this above anything else. Work 
means practical slavery in lands where Nazism and Fascism 
flourish, but in a democracy such as ours, work means free- 
dom and the acceptance of personal responsibility; the 
opportunity for initiative and private enterprise; and a 
challenge to acquire backbone and not wishbone. 
In a democracy entertaining a free enterprise system of 
government such as that enjoyed in America, with its 
differing ideologies from those of totalitarian or national 
socialistic systems existent in many parts of Europe, the 
concept of Social Security necessarily differs also. In the 
democracy, the ideology is one of the right of the individual 
citizen to set up in business for himself and to possess the 
mechanical means of production. Under this system, an 
individual is granted maximum personal liberty and free- 
dom, and for this liberty and freedom he assumes responsi- 
bility for protecting himself and his family against the major 
hazards of life. Under national socialism, the ideology is 
one of collective ownership by the State of the means of 
production, with its attendant suppression and relinquish- 
ment of individual personal liberties and responsibilities. 
It follows, then, that in the democracy, the concept of Social 
Security is not and should not be one of competition with, 
or negation of, the system of free enterprise. Its intent 
and purpose must necessarily be one of supplementation to 
private enterprise for such emergencies or hazards arising 
under the existing economy which are determined to be 
beyond the control of society within the free enterprise 
system. 
In whatever protection is offered to him in the form of 
social insurance, the worker in America wants it, not at the 
cost of suppression or attrition, but with full preservation 1945.] 
SENATE —No. 10. 
11 
of his freedom and liberty. He wants it only as a temporary 
stop-gap until such time as he is able to protect himself, 
either by a job or by individual savings. This safeguards 
and insures his dignity and self-respect. Instinctively, 
therefore, he wants jealously guarded the boundary between 
what government may or may not do for him, so as to pre- 
serve the democratic system which guarantees his personal 
liberties to him. 
Scope of Specific Study. 
A very important form of insurance upon which much 
attention is now being focused in this country is Health 
Insurance, which includes — 
1. Preventive and curative medical care. 
2. Compensation for loss of wages due to illness or acci- 
dent of a non-occupational nature. 
It is with the latter that this Council has been chiefly 
concerned, assuming it to cover the intent of Chapter 54 
of the Resolves of the 1943 session of the Legislature. 
There are important interrelations between disability 
insurance and a general Health Program, however, which 
must be recognized in approaching the problem. For 
instance, while it may be said that cash benefits for tem- 
porary disability are not necessarily part of a Medical Care 
Program, it can well be argued that the cost of compensa- 
tion for disability can be needlessly high if wage earners 
generally do not receive essential medical care. 
A complete Health Insurance Program has long been a 
controversial issue in the United States. Its advantages 
and disadvantages, however, are not considered to be within 
the scope of the Council’s study. The Council’s investiga- 
tion has necessarily been confined to the possible protection 
of workers who become unemployed because of sickness or 
non-industrial accident, or who become ill during a period 
of unemployment. 12 
SENATE— No. 10. 
[Jan. 
Historical Background. 
Foreign Countries. 
With the transition from agriculturalism to industrialism 
came recurring cycles of depression and prosperity, the 
division of labor, and a new economy which made the worker 
increasingly dependent upon his weekly wage as his sole 
means of livelihood. Too often this wage was a mere sub- 
sistence wage which left the worker open to many dangers 
and economic hazards. 
This transition occurred earlier in Europe than in the 
United States, and the evils inherent in the system were 
recognized and social reforms instituted to cope with the 
situation. 
Starting in Germany during the latter part of the nine- 
teenth century, and spreading to other European countries 
shortly thereafter, programs of Social Insurance included, 
as a first essential protection of workers, insurance against 
the risks of ill health, including medical care and cash 
benefits to compensate for wage loss. Other forms of pro- 
tection, such as Unemployment Compensation, Old Age 
and Death Benefits, followed. 
It is well to remember that the need for social security 
benefits to a worker in Europe, when unemployed because 
of sickness or lack of work, is infinitely greater than in this 
country by virtue of their relatively low wage scale. 
Foreign Health Insurance Systems. — Nearly all foreign 
Health Insurance systems provide four kinds of benefits: 
(1) Sickness Benefit; (2) Maternity Benefit; (3) Death or 
Funeral Benefit; and (4) Medical Benefit. 
The Sickness Benefit is the cash payment to compensate 
for wage loss during illness. In England, it is a flat sum, 
but in most countries it is fixed as a certain percentage of 
the “basic” or normal wage. Generally it represents from 
one half to two thirds of what the employee would receive 
if he were working. There is usually a waiting period of 3 
to 5 days, and then payments continue in a number of 
countries up to 26 weeks. When the right to Sickness 1945.] 
SENATE — No. 10. 
13 
Benefit is exhausted, a disabled person goes on an invalidity 
pension or disablement benefit, at a lower rate. 
The Maternity Benefit generally consists of obstetrical 
attendance, and a cash payment for a certain number of 
weeks prior to and after confinement. 
The Death or Funeral Benefit is a cash payment designed 
to aid in meeting funeral expenses. It is usually equal to 
twenty or thirty times the insured person’s normal daily 
wage. 
The Medical Benefit consists of medical care, the range 
of which varies considerably from system to system. In 
England general practitioner service and medicines only 
are furnished. In some countries practically complete care 
is given, including the services of general practitioners, 
specialists, hospital and sanatorium care, medicines and 
appliances. In Germany some of the funds require the 
patient to pay a small fee when the doctor is first consulted. 
In France the insured person pays the physician’s fee and 
the cost of medicines, but is later reimbursed in part by his 
insurance society. As a general rule, however, the insured 
person is free to consult a physician and will receive all 
forms of care, furnished by the system, without cost other 
than his regular contribution. Some countries furnish care 
to dependents on the same basis as to the wage earner; 
others allow dependents to receive certain forms of care. 
The coverage in Compulsory Health Insurance in most 
countries has usually applied to persons employed in indus- 
try and commerce. Recent developments extend Health 
Insurance to the farm population in some agricultural 
countries. Only six countries covered agricultural workers 
up to 1939, however. 
The cost of financing Health Insurance is borne princi- 
pally by the insured persons and their employers, although 
the governments often make either direct or indirect con- 
tributions from general tax receipts. In England, the 
insured pay a uniform rate (different for the sexes), but in 
most countries the worker’s contribution is fixed as a cer- 
tain percentage of wages, and is deducted from earnings 
by the employer. Such contributions are customarily sup- 
plemented or matched by contributions from the employer. 14 
SENATE — No. 10. 
[Jan, 
United States. 
Social reform in the United States progressed at a slower 
pace. It differed in approach and concept from the European 
system. The pattern in this country has been set up on a 
categorical rather than a unitary basis. In other words, 
adding, by governmental compulsion, only that security 
which is recognized to be necessary and which will at the 
same time guard jealously the preservation of America’s 
proud heritage of private initiative and personal liberty. 
In the United States we have a nation of nations, with each 
“nation” or “state” a separate sovereignty, with inalien- 
able rights and powers separate and distinct from those of 
the federal or national government. The democratic proc- 
esses under such a structure of necessity work more slowly 
but more thoroughly in the decisions and distinctions which 
must be made between federal and state control of any 
function determined essential of governmental performance. 
Thus, the first approach to compulsory social measures 
was the requirement by the States for the establishment of 
Workmen’s Compensation, which required employers to 
pay insurance premiums against the risk of occupational 
disease or accident of their employees while in the course 
of their employment. Outside of Workmen’s Compensa- 
tion and special Retirement Systems for state, local and 
federal government employees, most of which provided dis- 
ability benefits prior to retirement, Social Security, as we 
now know it, was not determined to be necessary in this 
country until the depression years of the early 1930’s. The 
outstanding development in social legislation then took 
place in the enactment of the Social Security Act in 1935, 
which has been amended in 1939. 
While consideration was given to the subject of a com- 
plete Health Insurance Program by the Committee on Eco- 
nomic Security, who drew up the Social Security Bill, no 
such measure was recommended or provided for by the 
committee in the Social Security Act, due to organized pro- 
fessional opposition. The less controversial Public Health 
and Maternal and Child Health Programs received pro- 1945.] 
SENATE —No. 10. 
15 
fessional as well as lay endorsement, however, and were 
enacted by Congress in the Social Security Act of 1935. 
Social Security Act. — The purpose of this act is “to 
prevent and to relieve the misfortunes that come when 
earnings are cut off by lack of work, old age, blindness or 
death; when children are left with no one to support them, 
or when they lack necessary care; and when the health of 
the community is not properly protected.” 
The act is made up of nine separate but related programs 
which may be classified under three headings: Social In- 
surance, Public Assistance, and Health and Welfare Serv- 
ices. The purpose, by categories, is set forth below: 
Social Insurance: 
Purpose. 
1. Unemployment Insurance 
Provides a temporary weekly income for a 
worker who loses his job through no fault 
of his own. 
2. Old-Age and Survivors’ In- 
surance 
Provides a monthly income for a worker and 
his family when wages stop because of old 
age; or for his family in case of his death. 
Public Assistance: 
3. Old-Age Assistance 
4. Aid to the Needy Blind 
5. Aid to Dependent Children 
Provides a monthly income for persons who, 
because of their age, or mental or physical 
disability, are unable to support themselves, 
and are in need. 
Health and Welfare Services: 
6. Child Welfare Services 
Provides for the protection and care of home- 
less, dependent and neglected children, and 
children in danger of becoming delinquent. 
7. Services for Crippled Chil- 
dren 
Provides for medical care and other services 
for crippled children. 
Provides for strengthening state and local 
Health Services to mothers and children and 
extending Maternal and Child Health Serv- 
ices in rural areas. 
8. Maternal and Child Health 
Services 
Provides for extending state Health and 
other governmental units in maintaining 
adequate Public Health Plans. 
(The United States Public Health Service, 
under the Social Security Act, also receives a 
separate appropriation for the investigation 
of diseases and related problems which are 
national or interstate in character. The en- 
tire amount is used for the prevention of 
preventable sickness.) 
9. Public Health Services 
Old-Age and Survivors’ Insurance is administered en- 
tirely by the federal government. The other eight are 16 
SENATE —No. 10. 
[Jan. 
operated by the States, with federal co-operation and finan- 
cial assistance. 
The Social Security Board, created by the Social Security 
Act, is the federal agency for the first five of these programs. 
The three Child Health and Welfare Programs fall under 
the jurisdiction of the Children’s Bureau of the Depart- 
ment of Labor, and that of the Public Health Services under 
the United States Public Health Service, as the federal 
agencies responsible for co-operation with the States. 
Principle of Compulsion. — The fundamental principle 
underlying each and every one of the above categories, and 
which would apply also to a Program of Sickness Benefits, 
if one were adopted, is the assumption of an economic need 
and the inability of the individual to provide for that need; 
hence the need for compulsory legislation to spread the risk 
and cost. 
As to the specific Social Insurance Programs, the under- 
lying theory, in addition to the person’s inability to provide 
for himself, is that the catastrophe or happening is beyond 
the individual’s control. The inevitability of old age and 
the phenomena of unemployment have been determined 
legislatively to be beyond an individual’s control, and there- 
fore become a public concern. 
Accidents and certain diseases attributable to one’s em- 
ployment have been held to be beyond the individual work- 
er’s control, and therefore must be indemnified by those 
most responsible for their occurrence, — namely, employers. 
It is difficult to get agreement, on the other hand, that 
sickness contracted away from one’s occupation is any- 
thing but a personal responsibility. However, there are 
those who contend the maintenance of productive capacity 
and the morale and physical well-being of workers should 
be the concern of an employer. 
When a hazard becomes a public concern, as distinguished 
from private, compulsory government methods to alleviate 
the hazard are justified on two premises: (1) that the func- 
tion is essential to the general welfare, and (2) that it is 
not in the public interest to restrict the function to private 
enterprise. Having established a justification for assuming 1945.] 
SENATE— No. 10. 
17 
a responsibility in the field of social insurance beyond the 
regulatory function, compulsion by government is invoked 
either by making the purchase of insurance compulsory on 
certain classes of citizens, or by actually underwriting and 
assuming the risk, or both. Thus, the actual assumption 
of the risk by government is not necessarily a character- 
istic of social insurance. Illustrative of this is the Work- 
men’s Compensation Insurance which is written in this 
country principally by private companies. It becomes 
“social” because employers are compelled to purchase the 
insurance for their employees’ benefit. 
Recent Developments in Health Insurance in Great 
Britain, Canada and the United States. 
Within the past year increased interest in Health Insur- 
ance has resulted in proposals for the adoption of compul- 
sory Health Insurance in the United States and Canada, 
and for the expansion of the program in Great Britain. 
Great Britain. 
In Great Britain, the widely discussed Beveridge Report 
was submitted to Parliament on December 1, 1943. As the 
report states, its main feature is “a scheme of social insur- 
ance against interruption and destruction of earning power 
and for special expenditures arising at birth, marriage or 
death. The scheme embodies six fundamental principles: 
flat rate of subsistence benefit; flat rate of contribution; 
unification of administrative responsibility; adequacy of 
benefit; comprehensiveness; and classification. . . . The 
aim of the Plan for Social Security is to make want under 
any circumstances unnecessary.” 
The Plan contemplates the “separation of medical treat- 
ment from the administration of cash benefits and the set- 
ting up of a comprehensive medical service for every citizen, 
covering all treatment and every form of disability under 
the supervision of the Health Department.” 
The Plan would increase the weekly amount of cash pay- 
ments during disability (for a married man with a non- 18 
SENATE —No. 10. 
[Jan. 
working wife) from the present rate of 18s to 40s and would 
remove the present limit of 26 weeks on duration. 
Canada. 
Over a period of some years, the subject of Health In- 
surance has been considered by the Canadian Parliament 
with increasing interest, culminating in 1942 in the appoint- 
ment of an Advisory Committee on Health Insurance. This 
committee’s report, which was submitted to the Minister of 
Pensions and National Health on March 1, 1943, contains 
a draft health insurance measure for Canada. Benefits 
under the proposed measure are described, in part, as follows: 
The benefits comprise prevention of disease and the application of all 
necessary diagnostic and curative procedures and treatments, including 
medical, surgical, obstetrical, dental, pharmaceutical, hospital and nursl- 
ing benefits, and such other ancillary services as may be deemed neces- 
sary. Provision is not made for cash benefit due to unemployment causej 
by illness, as it is considered that such benefit should be provided by Un- 
employment Insurance or by other means. 
It is interesting to note that both the Beveridge Plan and 
the Canadian measure contemplate administration of the 
health services by an agency separate from that charged 
with the responsibility for cash benefits. Both plans are 
still in the discussional stage. 
United States. 
The Beveridge Report in England, and the Marsh Report 
in Canada, have focused attention on over-all proposals 
for greatly expanded Social Security Programs, the counter- 
part of the foregoing in this country being the Wagner- 
Murray-Dingell Bill, or the so-called “ Cradle-to-the-Grave ” 
plan. 
Federal Level: Wagner-Murray-Dingell Bill (S. 1161).— 
The far-reaching proposal suggested in the Wagner-Murray- 
Dingell Bill would create a “Unified National Social Insur- 
ance System,” accomplishing complete centralization of 
authority in Washington over all social insurances, includ- 1945.] 
SENATE —No. 10. 
19 
ing a new program for Permanent and Temporary Disa- 
bility, Hospitalization and Medical Care. 
This bill, like similar measures in England and Canada, 
contemplates a method of joint administration with the 
Unemployment Compensation Program for the temporary 
cash payments for loss of wages due to illness separate and 
apart from the permanent disability benefits, which it would 
place under the Old-Age and Survivors’ Insurance Program; 
and from the Medical Care Program, which it would place 
under the jurisdiction of the Surgeon-General of the United 
States. In attaching temporary disability benefits to the 
Unemployment Compensation system, however, the bill 
includes them as part of a federalized program. The oppo- 
sition of this Council to such federalization of the Unemploy- 
ment Compensation system is well known to the Legislature. 
Under the proposal employers would be taxed 6 per cent; 
employees, 6 per cent; and the federal government would 
contribute 6 per cent if at a later date it was found to be 
necessary. On its face value, this would be an increase in 
tax to the workers of Massachusetts of 5 per cent, as they 
now pay but 1 per cent for Old-Age and Survivors’ Insur- 
ance; and an increase of 2 per cent to the employers of 
Massachusetts, as they now pay 3 per cent under the Un- 
employment Tax Act, and 1 per cent under Old-Age and 
Survivors’ Insurance. As a matter of cold economics, how- 
ever, it may be contended that the entire 18 per cent would 
be shared by the worker in that the employer’s tax is passed 
on to the consumer in the price of the article, and the 
government’s share is passed on to the taxpayer. 
Already the taxes are exceedingly heavy for the worker. 
Worthy as any program might be in the interests of the 
American workingman, the question he will want answered 
is, How much Social Security can he afford? 
Were such a national program as that set forth in the 
Wagner-Murray-Dingell Bill to be adopted, a state plan 
for Sickness Benefits would, of course, be futile unless the 
state plan offered higher benefits than the national plan. 
Proponents of an American “ Cradle-to-the-Grave ” plan 
would emulate the European theory of centralizing all 20 
SENATE —No. 10. 
[Jan. 
social legislation in a national authority. The preponder- 
ance of public sentiment expressed thus far, however, has 
been from opponents of such a national plan, who prefer 
to remember, and to continue to favor, our American form 
of government, composed of forty-eight sovereignties, able 
and willing to enact laws for the best interests of their 
people, and to think of the federal government as assisting 
the States, or performing only those functions which the 
States cannot perform. 
The most vehement opposition to the Wagner-Murray- 
Dingell Bill has been that expressed within the medical 
profession to the Medical Care and Hospitalization feature 
of the proposal. Such opponents within the medical pro- 
fession hold that if this proposal ever became law, it would 
destroy the effectiveness of medical care in the country; 
that incentive for the physician to become skilled in the 
art of medical practice would be entirely lost; and both 
the quality and quantity of medical care would drastically 
decline. 
The medical profession maintains, and properly so, that 
the medical progress made in this country is greater than 
anywhere in the world under any methods. This by no 
means is to be taken as total satisfaction by the profession 
with its progress. The profession encourages the develop- 
ment of soundly conceived Sickness Insurance and Medical 
Care plans in the middle and lower income groups, but 
would prefer to see this development continue along the 
voluntary lines already established and well under way in 
this country. Those who would have no interference with 
their personal liberty and freedom of choice of physician 
join the medical profession in stoutly declining anything 
resembling compulsion in so personal a matter as individual 
illness, and would prefer to see permitted the opportunity 
for the continued development of voluntary plans of Sick- 
ness Benefits and Medical Care. 
State Level: Rhode Island. — At the state level, the State 
of Rhode Island represents the only jurisdiction in the 
United States which has enacted legislation providing for 
the payment of benefits for unemployment due to illness. SENATE — No. 10. 
21 
Thus, by the traditional American categorical approach, 
Rhode Island attacks the problem of wage loss to workers 
by provision of cash sickness benefits as a separate item 
from any consideration of medical care. 
The Rhode Island law became effective May 10, 1942, 
with benefits under it starting as of April, 1943. It is ad- 
ministered jointly with the Unemployment Compensation 
Law, in that the same personnel and machinery are utilized 
and the same benefit formula and coverage apply. A sepa- 
rate state fund, however, is maintained for the payment of 
Sickness Benefits, which is financed entirely by employee 
contributions representing 1 per cent of wages (up to 13,000) 
earned in “covered employment” after June 1, 1942. 
This method of financing was particularly acceptable in 
Rhode Island because that State had previously required 
for purposes of Unemployment Compensation employee 
contributions of 1| per cent. Upon enactment of the Cash 
Sickness Insurance Law, employee contributions for unem- 
ployment insurance were reduced to per cent. Accordingly, 
the employee now pays for a combination of Cash Sickness 
Insurance and Unemployment Compensation no more than 
he previously paid for the latter alone. Such contributions 
are withheld by the employer and forwarded to the Rhode 
Island Unemployment Compensation Board, which is 
charged with the responsibility of administering the fund. 
Administrative expenses are limited to 1 per cent of the 
amount collected. Since the Social Security Act makes no 
provision for grants to States to cover administrative costs 
of any form of Health Insurance, the use of Unemployment 
Compensation personnel and machinery in connection with 
the administration of Cash Sickness Insurance in Rhode 
Island is permitted by the Board on a proportional division 
of costs basis between the two programs. 
As originally enacted, the Rhode Island Law excluded 
from Cash Sickness Benefits individuals receiving Work- 
men’s Compensation or payments from their employers. 
By amendment in 1943, however, such individuals were 
permitted to receive Cash Sickness Benefits even when 
receiving one or both of the foregoing types of payment. 22 
SENATE —No. 10. 
[Jan. 
This has been subjected to much criticism as to its unsound- 
ness, permitting, as it must in some cases, receipt by the 
worker of more income while sick than when working. It 
has the effect of fostering malingering, stifling initiative, 
and thus defeating the purpose of social insurance. 
The law requires that each claimant see a doctor within 
five days after the start of an illness, and, with few excep- 
tions, at least once a week thereafter until work can be 
resumed. Even with this required medical treatment, which 
ordinarily should reduce and minimize otherwise lengthy 
illnesses, and even with employment opportunities at a 
maximum, cash sickness benefit payments have been con- 
siderably in excess of expectations. As a further means of 
preventing malingering, the Rhode Island Unemployment 
Compensation Board added a medical panel to the adminis- 
trative staff to review the certifications of the doctors and 
to examine persons whose claims were questionable. Even 
with this additional method of control, however, the outgo 
in payments has been so high that the contribution rate of 
1 per cent has not been considered sufficient to support the 
plan. One important factor in the continual high claim 
load is believed to be due to the increased number of mental 
and physical ailments brought on by wartime overwork and 
nervous tension. 
To prevent a possible deficit in the Sickness Benefits 
Fund, the Rhode Island Unemployment Compensation 
Board found it necessary to ask the 1944 General Assembly 
of Rhode Island to increase th(f employee contribution to 
the fund to per cent. It would be possible to make this 
increase without additional cost to the employee merely by 
eliminating the Unemployment Compensation contribution 
and transferring it to the Sickness Benefits Fund. 
The Rhode Island Board also asked the General Assembly 
to increase the amount of money for administrative pur- 
poses from 1 per cent to 3 per cent of the amount collected. 
In addition, the Board recommended the denial of Sick- 
ness Benefits to employees who continue to receive wages 
from employers during illness or who receive Workmen’s 
Compensation or primary insurance benefits under Title II 1945.] 
SENATE— No. 10. 
23 
of the Social Security Act (Old-Age and Survivors’ Insur- 
ance). This would repeal the amendment of 1943, which 
never had the approval of the Unemployment Com- 
pensation Board, and bring the law back to its original 
concept. 
State Level: New Hampshire Proposal. — In other States, 
legislation along these lines has been proposed from time to 
time, but none has yet been enacted outside of Rhode 
Island. 
In 1939, the New Hampshire Legislature created a Com- 
mission on Disability Benefits, “to compile a report on the 
possibility of protecting individuals unemployed because 
of sickness or ill health.” This commission rendered a re- 
port to the Governor in February of 1941, recommending 
the adoption of a system of Disability Insurance, the ad- 
ministration of which should be integrated with that of 
Unemployment Compensation. The life of the commission 
was extended for another two years to continue its study 
in the light of changing conditions and to submit its final 
report in 1943. The results of the commission’s further 
studies were summarized in its Supplemental Report sub- 
mitted in March of 1943. In this report, the commission 
expressed the opinion that the system should be compul- 
sory: “It is the definite conclusion of the Commission that 
the need for such a program exists and that the only method 
whereby complete coverage may be achieved is through the 
operation of a compulsory system of Disability Insurance.” 
Undoubtedly a major factor contributing to the recommen- 
dation of the commission for a compulsory system was the 
extent of voluntary protection found to be available in 
employment establishments in New Hampshire. As a re- 
sult of spot checks, the Commission estimated that “prob- 
ably 35 per cent of the ‘ covered ’ population had protection 
of one type or another.” In other words, slightly more 
than one third of the working population covered under 
the New Hampshire Unemployment Compensation Law 
were covered in their places of employment by some 
form of voluntary protection against loss of wages due to 
illness. 24 
SENATE —No. 10. 
[Jan. 
After pointing out the legal obstacles in the way of 
combining the administration of the system as a branch or 
an integral part of the Unemployment Compensation Divi- 
sion, the commission recommended: 
In the event that congressional action is taken to provide by law for 
either a definite agreement to allow complete co-operation between the 
two systems or for the total administrative financing of the new program 
by the federal government . . . that favorable consideration be given by 
the Legislature to the enactment of the accompanying draft bill or similar 
legislation. 
The draft bill which accompanied the commission’s report 
provided that the program should be financed by a 1 per 
cent employee contribution, that administrative expenses 
should be limited to 2 per cent of such contributions, and 
that benefits should be paid for weeks of partial or total 
unemployment due to illness, with a one-week waiting period 
in each spell of unemployment. Rates and duration were 
to be based upon total annual earnings in the base period, 
with rates from $6 to $18 per week, set uniformly at 18 
weeks. 
More recently, and at the 1944 session of the Legislature, 
a bill was introduced which it is understood was sponsored 
by the Manufacturers Association of New Hampshire, pro- 
viding that the State set up minimum standards and then 
require that every employer of a certain size either pur- 
chase a private insurance company policy which at least 
conforms to the minimum standards or set up a similar in- 
surance plan of its own. Thus, it appears that in New 
Hampshire, employers are pressing to keep health and acci- 
dent insurance in the hands of private carriers rather than 
to have the government enter the business. 
Part II. — Public Opinion. 
Informal and Public Hearings. 
Over a period of many months during 1943, the Council 
conducted informal hearings with such representative groups 1945.] 
SENATE— No. 10. 
25 
as manufacturers and their associations, labor, insurance 
companies, the medical profession, and interrelated state 
department officials. At these meetings, the Council sought 
to determine the attitude of these interested groups to a 
State Compulsory Program of Sickness Benefits. 
In April of 1944 a second series of meetings was held 
with the representatives who participated in the prelimi- 
nary conferences of 1943, to get the benefit of their addi- 
tional views and opinions. 
Public hearings were also held in the principal industrial 
cities throughout the State to get the sentiment of the pub- 
lic, including the rank and file of labor. (See Exhibit “A” 
for list of meetings held by the Council throughout the 
State.) 
On the whole, the manufacturers and their representa- 
tives feared most the excessive burden of taxation, which 
would not only place them at a competitive disadvantage 
with employers in other States, but would also have the 
effect of nullifying private and group insurance plans now 
so well covered in employing establishments. 
The insurance companies questioned the expediency of 
enacting legislation for Sickness Benefits in the present 
period of emergency and unsettled conditions, and cited 
as one important factor for serious consideration the addi- 
tional cost to the program occasioned by the influx of 
women into industry in the war effort. 
The two major movements of organized labor in Massa- 
chusetts appeared to be divided. One group very definitely 
favored a state compulsory plan of Sickness Benefits, even 
if the workers had to carry it alone. In the other group, 
the officials of the state headquarters opposed it if the 
workers were called upon to finance the program, while the 
rank and file of labor who attended hearings throughout 
the State favored the program even to the extent of em- 
ployee participation. 
The medical group’s chief concern was the fear of even- 
tual regimentation of medical care in the hands of a bureau- 
cracy. 26 
SENATE —No. 10. 
[Jan. 
Need for Compulsory System — “Pros” and “Cons.” 
Expression of opinion for and against a State Compulsory 
System of Sickness Benefits appeared to be as follows: 
Pro. — Disability is one of the serious economic risks threatening the 
security of the workers. Some workers, particularly those in the low 
income group, cannot put aside sufficient money to see them through 
illnesses. The result is they neglect small illnesses until a serious illness 
develops, the payment for which often becomes a charge on society. A 
compulsory system is felt to be the only way in which these people can 
be protected. If they have been left unprotected by their employers, 
and they do not have the means to protect themselves individually, com- 
pulsory insurance becomes necessary, as it can be obtained for them at a 
much lower cost than they could afford individually. 
Con. — As illness of the individual appears to be of such a personal 
nature, many individuals instinctively put away some reserve against 
this personal contingency. There are many who can, but who do not, 
due to lack of foresight and the will power to forego current demands in 
order to make provision for indefinite future contingencies. To safeguard 
a minimal percentage of the population who will not, or cannot, provide 
for themselves, a state compulsoiy system of Sickness Benefits would 
penalize the majority of the people for that which they either do not 
require or are able to provide for themselves. 
Opinion was expressed that compulsion along this line is an initial 
entrance into the field of compulsory budgeting of one’s expenditures, 
and amounts to an infringement on an individual’s liberty. In approach- 
ing this new area of compulsion, it is argued that it is conceivable it might 
become more desirable to compel people to spend more for life insurance, 
or for adequate housing, with perhaps less for automobiles, etc. 
The very definite feeling was expressed that Sickness Benefits or any 
similar compulsory social insurance health measure would substitute a 
concentrated and coercive system of health care for the traditional and 
highly effective voluntary system now enjoyed through private enterprise, 
and that such legislation was definitely bureaucratic in its trends. 
Pro. — Loss of income is greater when out of work because of illness 
than when out of work because of unemployment, due to the additional 
burden of medical expenses. This means an aggravation of the very 
conditions that cause an impairment of health. Cash payments would 
assist such individuals in the payment of such medical treatment as may 
be necessary to get them back to work. The present Unemployment 
Compensation system presents an anomalous situation in this respect in 
that the unemployed worker receives no benefits if he is unfortunate 
enough to become disabled as well as unemployed. 1945.] 
SENATE —No. 10. 
27 
Con. — At the present time incomes are higher. Personal thrift is 
being recognized by the federal government as a noteworthy quality 
through its war bond and anti-inflation campaign. More people are 
building up their personal cash reserves, as evidenced by the bond sales 
and the tremendous bank savings. Therefore, there should be compara- 
tively few who will be unable to take care of themselves for some time to 
come following the war. 
It has been estimated that by the end of 1946 approximately 13,000,000 
additional or emergency workers will have been brought into the labor 
market because of the labor scarcity during the war. 
Statistics indicate that incomes have increased considerably, the 
greatest gains having been in the low-income class. 
Pro. — Among those most in need of protection, the low and middle 
income group, the number of persons insured under voluntary dis- 
ability insurance plans is comparatively small. While nation-wide 
surveys place the average compensable duration of illness per worker 
per year (following a one-week waiting period) at one week, considered in 
terms of the individual worker, the risk is capable of producing cata- 
strophic effects. 
Con. — The counter-argument presented was the remarkable growth 
of not only group insurance plans between employers and employees, 
but of the private hospitalization plans especially designed for the low 
and middle income group. The voluntary methods were held to be far 
more preferable to the governmental compulsory methods in that they 
allow for freedom of choice in obtaining insurance for the specific risks 
desired, either individually or by groups. The effect of a compulsory 
system of Sickness Benefits would be the cancellation of such private 
and group plans. It was brought out that in normal times, illnesses of a 
catastrophic nature could be considered to be but 10 per cent of all illness. 
Pro. — The insurance of relatively few persons under voluntary group 
plans furnishes a narrow distribution of risks, and consequently limits 
benefits. The cost under a state compulsory Sickness Benefits Plan 
should be cheaper in view of its larger coverage. 
Con. — Most of the individual and group health and accident policies 
provide hospitalization and death benefits in addition to the weekly 
indemnity payable during periods of incapacity at very nominal costs 
and in many cases at no cost to the worker, while a compulsory state plan 
of Sickness Benefits would include but one feature, — the weekly in- 
demnity payment for a fixed number of weeks based on the worker’s 
earnings. 
Pro. — In a period of much employment, workers and employers can 
afford the cost of an additional Social Program which would share the 
risks of sickness. 28 
SENATE —No. 10. 
[Jan. 
Con. — In spite of much employment and higher incomes, workers and 
employers can ill afford to pay for additional insurances with the already 
great burden of taxation on them at the present time, and which it is to 
be expected will continue some time following the war in order to pay for 
the war’s indebtedness. 
Secondly, it should be considered a most inexpedient time to impose 
further costs or burdens on either employers or workers until the war 
emergency is over and a return is made to more normal conditions, when 
better judgments can be formed as to economic necessities. 
Pro. — The morale and efficiency of employees should be higher with 
the assurance all income will not stop should severe illness strike them. 
Con. — Contention is made that employees paid while out sick do tend 
to malinger. Absenteeism could not help but increase if state benefits 
were to be given in addition to salary and Workmen’s Compensation, 
as is done in Rhode Island. Policing the situation by individual employers 
is a far simpler and cheaper matter than could hope to be expected under 
a state-wide plan. 
Part III. — Administration and Financing. 
In the consideration of administration and financing of a 
Sickness Benefits Fund, as well as the source of adminis- 
trative funds, several methods presented themselves. 
Adaptability to Unemployment Compensation. 
It was suggested that, essentially, the same general type 
of organization would be required for the administration of 
a program of disability benefits on the assumption of a 
similar coverage as under the Unemployment Compensa- 
tion Law. The existing Unemployment Compensation ma- 
chinery and procedures for the collection of contributions, 
the filing of wage record data, and the payment of claims 
were considered to be readily adaptable to similar functions 
under a disability program. The only exception to this 
would be the claims-taking function which would have to 
be done by mail, followed by medical certifications as to 
the authenticity of illnesses. The economy and efficiency to 
be gained by the utilization of such existing machinery, 
and the ease with which the two programs could be inte- 
grated, appeared to be obvious. 1945.] 
SENATE —No. 10. 
29 
It was pointed out that the objectives of the two plans 
are similar, — namely, the compensation of workers for 
wage losses suffered as a result of unemployment. The only 
difference between the two systems lies in the reason for 
the worker’s unemployment. In the case of Unemployment 
Compensation, the unemployment results from lack of work 
and the individual is available to take another job. In the 
case of the disabled person, the unemployment results from 
illness or non-industrial accident, and the person is not 
available to take another job, as he will return to his old 
one when well again. Otherwise, temporary disability is 
like temporary unemployment, and an insurance system 
covering it may be patterned after Unemployment Com- 
pensation, with repetitive certification of disability by a 
licensed physician as a procedure analogous to repetitive 
registration at an employment office. 
Question of Administrative Funds in Joint Relationship with 
Unemployment Compensation, and Federal Attitude. 
Under Title III of the Social Security Act, administra- 
tive funds are furnished to the States only for the adminis- 
tration of a program of unemployment benefits to those who 
have been thrown out of work through no fault of their 
own and who are able and available to take other work. 
It has been ruled by the Social Security Board that such 
funds cannot be used for the administration of a Sickness 
Benefits Plan. The only solution to their use for both 
programs would be an amendment to the Social Security 
Act eliminating the qualifying provision of “ availability for 
work,” thus permitting benefits for unemployment caused 
by either lack of work or by sickness. 
The attitude of the Social Security Board in this respect 
is one of status quo in view of their recommendation to Con- 
gress for the centralization of all types of social insurance, 
including a new program of Permanent and Temporary 
Disability, under the Board’s control in Washington. 
Until such time as congressional action permitted the 
payment of administrative expenses out of Title III funds, 30 
SENATE —No. 10. 
[Jan. 
it would be necessary to establish, by a certain percentage 
of collections, a separate State Cash Sickness Benefits Ad- 
ministrative Fund, out of which the Social Security Board 
would be reimbursed, on a proportional division of costs 
basis, for the utilization of the Unemployment Compensa- 
tion personnel and machinery in the administration of a 
Sickness Benefits Program. 
Possible Application to Other Programs. 
The observation was offered that a system of Sickness 
Benefits could be considered more analogous to Workmen’s 
Compensation than Unemployment Compensation in that 
the worker who is unemployed because of illness or accident 
is not off the pay roll and is not available for other work; 
whereas, the primary requisite for receiving benefits under 
the Unemployment Compensation system is that the worker 
be able and available for work. Under such a set-up, it 
presupposes the State would assume the r61e of compelling 
employers to arrange for insurance for the benefit of their 
employees against the hazard of non-occupational accident 
or illness similar to the compulsion required for occupa- 
tional accidents and illness. Under such an arrangement, 
one suggestion was offered that while employers should 
be compelled to provide for such insurance for their em- 
ployees, it should be voluntary on the part of the employees 
as to whether or not they would be included under the em- 
ployers’ plans. 
The further observation was offered that benefits for 
non-occupational accidents and illness involved questions 
which must be handled from entirely different approaches 
than those necessary under either Unemployment Compen- 
sation or Workmen’s Compensation. Secondly, that it 
might be advisable to extend the coverage to the entire 
working population rather than to restrict it to the “cov- 
ered” working population of either of the foregoing pro- 
grams. 
Were extensions to be made to those persons whose in- 
come is not subject to pay-roll accounting, such as domes- 1945.] 
SENATE —No. 10. 
31 
tics and farm laborers, the same collection device as now 
used under the Unemployment Compensation Program 
could not be used. In other words, there would be a com- 
plete divorcement from the accepted insurance principle of 
basing pajunents on earnings and the collection of wage 
record data and taxes at the source. Coverage of the entire 
working population would presuppose the imposition of a 
flat premium, with perhaps a flat amount as a benefit, 
based on salary ranges rather than specific earnings, similar 
to private insurance methods. 
Financing of Separate Sickness Benefits Fund. 
Under the Massachusetts Employment Security Law, a 
Trust Fund is accumulated from employer contributions 
which, in compliance with the Social Security Act, can only 
be used for the payment of benefits to those unemployed 
because of lack of work. It would be necessary, therefore, 
to establish a separate State Sickness Benefits Fund for the 
payment of benefits to those unemployed because of illness. 
From the findings and recommendations by groups of 
experts who have studied extensively into a Sickness Bene- 
fits Program, a tax of 1 per cent of pay roll was considered 
sufficient to cover the cost. However, in the State of 
Rhode Island, which has had a similar program since April 1, 
1942, benefit payments under which became effective as of 
April 1, 1943, 1 per cent (paid entirely by employee con- 
tribution) has not proved to be wholly adequate to with- 
stand an abnormal drain upon the Fund. 
As mentioned previously, it was understood the Rhode 
Island Unemployment Compensation Board would ask its 
General Assembly of 1944 to transfer the employee con- 
tribution of .5 per cent under the Unemployment Compen- 
sation Program to the Cash Sickness Fund for the purpose 
of assuring the solvency of the latter fund. This would 
have the effect of eliminating entirely the employee contri- 
bution for Unemployment Compensation in Rhode Island, 
and the payment by the employee of per cent into the 
Cash Sickness Fund. 32 
SENATE— No. 10. 
[Jan. 
The reasons for the concern of the Rhode Island Unem- 
ployment Compensation Board in attempting to protect 
the solvency of its Cash Sickness Compensation Fund are 
evident. The fund has been experiencing a deficit of ap- 
proximately $100,000 a month since April 1 of this year. 
Some of the main reasons given for the sharp rise in pay- 
ments are as follows: 
1. The increased familiarity of workers with their right 
to collect benefits up to $18 a week in case of illness. 
2. The physical and mental effects of overwork during 
the war period. 
3. Payments to claimants who are receiving Workmen’s 
Compensation Insurance. 
4. Payments to claimants for the full duration of preg- 
nancy. 
The Rhode Island Unemployment Compensation Board 
feels very strongly that claimants who are receiving Work- 
men’s Compensation Insurance should not receive Cash 
Sickness Insurance at the same time, and that there should 
be a definite period of about ten or twelve weeks’ duration 
for pregnancy cases. 
It is said that if the deficit operation continues, the 
Rhode Island Reserve Fund will be completely exhausted 
within about twenty-seven months after it reaches its orig- 
inal starting level, which, at the present rate of drainage, 
would be reached in November of this year. 
An even greater threat to the solvency of the declining 
fund in Rhode Island lies in the fact that a possible post- 
war slump, with declining pay rolls, would drastically re- 
duce the fund’s income while it would have to continue to 
meet benefit applications from persons who are no longer 
working and thus no longer contributing to the system, 
but who can still collect on the basis of credits accumulated 
during the previous year. 
In a drive against malingering under the Rhode Island 
system, it is understood that about 90 per cent of the claim- 
ants are being asked to report for physical examinations to 
establish the validity of their claims, and that about 30 
per cent of these do not appear for such examinations. 1945.] 
SENATE — No. 10. 
33 
Pertinent to the problem of malingering, the argument 
was offered to the Council during its investigation that a 
uniform state-wide plan, when confronted with a rising 
claim rate, can only tighten its administrative controls or 
raise the contribution; whereas, under private plans de- 
signed to fit the needs of specific and smaller groups, indi- 
vidual provisions can be altered where special remedies are 
needed in isolated areas of abuse. 
In the New Hampshire proposal of the Commission on 
Disability Benefits of 1943 for a compulsory state system 
of Sickness Benefits, a 1 per cent tax on the employee was 
also proposed as sufficient to finance a program in that 
State. This undoubtedly was based on the Rhode Island 
law, as it was the only precedent to follow at that time. 
Administrative Costs. 
The Rhode Island law also provided that a sum not to 
exceed 1 per cent of the employee contributions received 
should be used for administration expenses. This, too, has 
proven to be wholly inadequate, and, as mentioned before, 
it was understood the Rhode Island Unemployment Com- 
pensation Board would ask its General Assembly of 1944 
to increase the amount of money for administrative pur- 
poses from 1 per cent to 3 per cent of the contributions. 
Under the New Hampshire proposal of the Commission 
on Disability Benefits, it was figured 2 per cent of collec- 
tions would be necessary to administer a program in that 
State. 
Financial and Actuarial Difficulties in Present 
Abnormal Period. 
Under the present abnormal conditions, it is practically 
impossible to estimate with any degree of safety the tax 
necessary to finance a Sickness Benefits Fund, nor the 
amount necessary to administer it. The high claim rate in 
Rhode Island and the experience of private insurance com- 
panies during the last year have pointed up very forcibly 
important factors for consideration in the administrative 34 
SENATE —No. 10. 
[Jan. 
and financial aspects of such a program. Among the ele- 
ments affecting the claim rate, with their attendant drain 
on the fund, are: 
Relationship of Amount of Benefits to Salary when work- 
ing. — The higher the percentage goes, the higher you may 
expect to have'the claim rate. If a person receiving Cash 
Sickness Benefits also receives all or part of his regular 
earnings or other benefits, a very unfavorable experience 
will be the result. 
Claim Rate for Women. — The claim rate for women is 
much greater than for men. Under normal conditions, it 
might be assumed it is twice that of men. Under present 
conditions, however, it is further affected by the increased 
number of married women in industry due to the war effort. 
The longer work week for both men and women, with its 
attendant mental and physical fatigue adding nervous ex- 
haustions to the claim list. 
The lowered physical standards for employment, with their 
obvious effect on absenteeism. 
In addition, proper claim administration requires a high 
standard of medical certification and much personal atten- 
tion to claims, all of which is evidence that many factors 
of an administrative nature as well as actuarial factors are 
important considerations in determining the possible claim 
rate and the proper assessment to finance it. 
Types of Levy — “Pros” and “Cons.” 
At its hearings, the Council assumed, as a basis for dis- 
cussion only, a Sickness Benefits plan patterned after the 
Unemployment Compensation law as to coverage and bene- 
fit formula, with the amount of assessment left open. Any- 
where from 1 per cent-to 2 per cent of wages (up to $3,000) 
was mentioned as a possibility. What the Council sought 
principally was expression of opinion as to the acceptance 
of responsibility for the financing of such a fund; i.e., 
whether it should be financed by the employer alone, by 
the employee alone, or by both, or possibly by a combina- 
tion of employer, employee and the State. There was lack 
of agreement, however, on this basic question. 1945.] 
SENATE — No. 10. 
35 
If it be granted that a Medical Care Program is entirely 
a social problem separate and apart from cash payments for 
wage losses and should apply to all the population, fixation 
of responsibility for financing such a program by general 
taxation would be a comparatively simple matter, and many 
felt such a program was definitely a Health Department 
problem in that certain preventive medical care is now 
carried on by that Department. 
Likewise, if it be granted that a system of cash pay- 
ments for wage losses is a separate and distinct problem and 
one which applied only to the “covered” working popula- 
tion under the Unemployment Compensation law, then 
there appeared to be general agreement the insurance prin- 
ciple could be applied, basing the tax on a basis of earnings 
or pay-roll deductions. Differences of opinion arose, how- 
ever, as to the group to be taxed. The main arguments for 
and against each of the various types of levy are summarized 
below: 
Employee Contribution. 
For. — Except for occupational disability, which is already covered 
by Workmen’s Compensation, disability is a personal matter not neces- 
sarily connected with employment. If compulsory insurance of this risk 
is established, the cost should be borne by the individual insured. 
Withholding by the employer is a relatively inexpensive method of 
collection from the viewpoint of the administration. 
Policing and better controls would be possible, due to personal financial 
interest. 
Against. — The incidence of disability is greatest among those whose 
income is the lowest and who can ill afford to have deducted from their 
wages an amount large enough to finance cash benefits during disability. 
Workers already have so many items deducted from their wages that 
they might object to a further deduction even for the financing of Cash 
Sickness Benefits. 
Employer Contribution. 
For. — Since disabling illness is a more or less constant cause of unem- 
ployment, a portion of the resulting wage loss should be included in labor 
costs of the establishment employing the worker. This can be accom- 
plished by requiring the employer to contribute to a fund to be used for 
the payment of Cash Sickness Benefits. 
Pay-roll taxes are expedient, in that they are relatively easy to collect. 
Against. — The employer has practically no control over absence due 
to illness. 36 
SENATE— No. 10. 
[Jan. 
Illness may be regarded as a social problem rather than as an industrial 
one, and wage losses should therefore be made up from general taxation. 
For. — Neither industry nor the worker himself has much control over 
unemployment due to sickness. It is a social rather than industrial or 
personal risk, and its incidence is largely accidental. Therefore, cash 
benefits for wage losses due to sickness should be financed by general 
taxation rather than by a tax on industry or the worker, or both. 
Against. — If Cash Sickness Benefits are to be limited to workers, or 
to given classes of workers, financing should come from these workers 
and/or their employers, rather than from all taxpayers. 
General Taxation. 
Part IV. — Extent of Coverage under Voluntary Plans in 
Massachusetts. 
Employment Establishments. 
To assist the Council in its investigation, the Director 
of the Division of Employment Security requested all 
employers of twenty or more individuals subject to the Mas- 
sachusetts Employment Security law to furnish, on a ques- 
tionnaire form provided for the purpose, certain basic 
information regarding practices in their establishments with 
respect to payments to workers absent because of illness. 
Questionnaires were mailed in January of 1944 to some 
8,156 Massachusetts employers. Notwithstanding the fact 
that these questionnaires were received by them at a time 
when end-of-the-year work on various governmental reports 
was at its peak, Massachusetts employers extended to the 
Division the outstanding co-operation that has character- 
ized their relations with the Division since its inception. 
The most important facts revealed by the replies are as 
follows: 
1. Of the workers employed in the reporting establish- 
ments, it is estimated that nearly 600,000, or nearly two 
thirds (65.9 per cent), receive some payment for periods 
when they are absent from work because of illness. 
2. It appeared that about 305,500, or slightly more than 
one third (34.1 per cent), of the workers in the responding 
establishments were wholly without coverage of any kind 
for wage losses due to disability (other than that covered 1945.] 
SENATE — No. 10. 
37 
by Workmen’s Compensation). Of these, approximately 
85 per cent were employed by manufacturing concerns, 
and nearly all of them were non-salaried or production 
workers. 
3. The replies reflected the growing popularity of group 
health insurance, which was the sole source of payments in 
establishments employing 26.5 per cent of the estimated 
covered workers, and was one of the sources in establish- 
ments employing a further 21.2 per cent where pay-roll 
payments and/or an employees’ benefit society was also 
reported. 
4. In establishments accounting for 32.5 per cent of the 
estimated total of workers customarily receiving disability 
payments, the employer assumed the entire financial bur- 
den. In addition, replies covering 60.1 per cent of the esti- 
mated total workers indicated that payments were financed 
in part by the employer and in part by the worker, in vary- 
ing proportions. It appeared that only 6.6 per cent of the 
estimated total workers were employed in establishments 
where the employer assumed no part of the expense. 
5. The analysis revealed close correlation between the 
size of the establishment and the percentage of workers 
paid while ill. While the estimated coverage for all report- 
ing establishments averaged nearly 66 per cent, that for 
establishments with less than 50 workers was only 42 per 
cent, while establishments with 2,000 or more workers 
showed an average of 79.6 per cent, the percentage in- 
creasing constantly as the size of the establishment in- 
creased. 
The questionnaire did not specifically request a report 
on amounts or duration of disability payments. However, 
many employers volunteered that information. It appears 
that in many cases, especially where the entire burden is 
assumed by the employer, duration of payments is likely to 
be limited to short periods. However, statistics show that 
most absences for illness are also of short duration. In 
cases where there was a group health insurance policy in 
force, a week’s waiting period was customarily required. 
In the case of benefit societies, the waiting period was often 38 
SENATE— No. 10. 
[Jan. 
of shorter duration than seven days. (For details of sur- 
vey, see Exhibit “B.”) 
Benefit Societies. 
A study of the fraternal benefit societies registered with 
the Massachusetts Department of Insurance in accordance 
with chapter 176 of the General Laws revealed that there 
were 572 of them paying benefits to members when ill. Of 
these, 43 associations, comprising 18,253 members, were 
connected with establishments covered by the Massachu- 
setts Employment Security law, and are already represented 
in the survey of employment establishments above. The 
other 529 organizations included 151,563 Massachusetts 
members who received some form of remuneration from 
fraternal societies when ill. (For details of survey, see 
Exhibit “C ”) 
Part V. — The Trend. 
Rhode Island. 
Through enactment in 1942 of its Cash Sickness Com- 
pensation Act, Rhode Island became the first State to put 
into effect a compulsory state system of Sickness Insurance. 
The experience thus gained in Rhode Island will be of much 
interest and service to other States in their exploration of 
the subject matter. 
New Hampshire. 
New Hampshire is the only other State at the present 
time, as far as this Council knows, with proposals before 
the State Legislature on the subject matter. 
Studies by Other States. 
It is understood several other States are studying the 
matter seriously with a view to reporting to their respec- 
tive Legislatures in the near future. It is a matter of record, 
too, that all State Employment Security Agencies have been 
urged through the Interstate Conference of Employment 
Security Agencies to explore the subject as a possible next 
step in the social legislative field. 1945.] 
SENATE— No. 10. 
39 
Voluntary Plans. 
Health and Accident Policies with Private Carriers — Group 
and Individual. 
In addition to the Council’s research study into the ex- 
tent of present coverage under voluntary private and group 
plans in existence in the Commonwealth for the protection 
of individuals during illness, information elicited concern- 
ing the growth of voluntary plans for the country as a whole 
seems to indicate a positive trend in a growing interest and 
desire on the part of individuals and employers to favor 
such private coverage. 
Private insurance carriers do not hesitate to admit that 
the threat of the possible entrance of the government into 
the insurance field has added impetus to their efforts to 
assume a larger responsibility and more personal concern 
with the possibilities of enlightening and enlisting more of 
the populace in private protection under health and accident 
policies. 
A satisfactory trend is indicated in the numbers insured 
under group policies, with every prospect of its continuing, 
provided there are no developments which will make it 
impractical or difficult for employers and employees to carry 
such insurance. While group insurance in this country has 
been in existence for the last twenty years, it originally 
covered only life insurance. Of recent years, however, it 
has extended into the field of health and accident, hospital 
expense, and surgical operation coverage. Available figures 
indicate that the total number of employees insured under 
group health and accident insurance plans with private 
insurance carriers are as follows: 
Group health and accident 6,500,000 
As compared with 2,600,000 five years ago, and 1,500,000 
ten years ago. 
Group hospital expense (employees and dependents) . . 6,100,000 
After only eight years of operation. 
Group surgical operation coverage 3,750,000 
After about five years of operation. 40 
SENATE —No. 10. 
[Jan. 
Under the most popular plan, benefits begin on the eighth 
day of incapacity and continue during disability for a maxi- 
mum of thirteen weeks, but other maximum durations, such 
as 26 or 52 weeks, are available. To prevent over-insurance, 
the benefits are limited to a reasonable proportion of the 
employee’s normal rate of weekly earnings. Special provi- 
sions usually apply for disability due to pregnancy and 
maternity. 
Illustrative of the growth in health and accident premi- 
ums written in Massachusetts by private insurance com- 
panies reporting to the Massachusetts Insurance Depart- 
ment are the following figures: 
Premiums increased from $4,370,105 in 1933 to $10,687,- 
830 in 1943, or an increase of 145 per cent during the 10- 
year period. Of that increase of somewhat over $6,000,000 
during the 10-year period, there was an increase during the 
last 5 years of $4,707,840, as compared with only $1,609,885 
during the first 5 years of that period. In other words, the 
increase during the last 5 years was almost three times as 
great as the increase of the first 5 years, showing that the 
business is growing at an accelerating rate. 
The above figures are exclusive of the Blue Cross Hos- 
pitalization Plan, with its over $3,000,000 of premiums, 
and is also exclusive of the various benefits offered by fra- 
ternal, employee and other benefit associations. Neither 
do they include the benefits paid by employers in the form 
of salary continuance, which was found to be a very com- 
mon practice, with such continuity of wage coverage, in 
whole or in part, extending not only to salaried personnel 
but often to wage earners as well. 
Hospitalization Plans. 
In the United States there are thousands of prepayment 
Medical Care and Hospitalization Programs operating suc- 
cessfully. Roughly, they are classified into such types as, — 
Company or Employee Medical Service Plans. 
Regular Insurance Company Group Policies. 
Medical Society Approved or Sponsored Plans. 
Union-Sponsored Plans. 1945.] 
SENATE —No. 10. 
41 
Co-operative Groups. 
Consumer-Sponsored Plans. 
Farm Security Administration Operations. 
Private Group Practice Clinics. 
Medical Society Approved or Sponsored Plans. 
Most popular and best known among these Hospitaliza- 
tion Plans are the Medical Society Approved or Sponsored 
Plans, better known as the Blue Cross Plans, of which there 
are approximately 80 scattered throughout the United States, 
with approximately 15,000,000 subscribers built up in a 
comparatively short period of time. In Massachusetts alone 
there are at present 850,000 participants in the Blue Cross 
Plan after only seven years of operation, with expectancy 
of coverage of 1,000,000 before the end of the year. 
The Blue Cross Plans are non-profit plans developed by 
community leaders and sponsored by the hospitals and the 
state medical societies, and are supervised by the State 
Departments of Insurance and Public Welfare. The move- 
ment is growing rapidly. Originally, these plans took in 
groups from factories and offices. At the present time ex- 
tensions of the group idea to entire industries are in the 
process of development, as well as a national contract, so 
that there can be the same general service given to all em- 
ployees of an industry wherever they are in the country. 
It can be seen that such hospitalization plans have wide 
possibilities for expansion of service. 
Union-Sponsored Plans. 
Health Programs organized and operated by trade unions 
to provide medical care to its membership at low cost have 
been in existence for many years. In many of the large 
unions these programs started with medical care and hos- 
pitalization plans by the institution of complete health 
centers. 
Under this and similar health programs of the trade 
unions, the expansion of Sickness Insurance in the form of 
cash benefits has been the greatest single development in 
recent years. The systems are compulsory for all qualified 42 
SENATE —No. 10. 
[Jan. 
members in those locals adopting a Sickness Insurance Plan. 
The plans appear to offer fair benefits commensurate with 
the amount of premium required. 
Coverage through Collective Bargaining. 
Significant in trend is that of the comprehensive group 
insurance coverage, including health and accident, obtained 
for members of a union or group of employees provided by 
a collective bargaining contract clause. It is understood 
there has been a substantial growth in the number of labor 
organizations which have been seeking such group insur- 
ance protection for employees through collective bargain- 
ing. A large part of the group coverage in Massachusetts 
at the present time can be attributed to this negotiation 
process between employers and labor unions. This would 
appear to be an indication of the acceptance of responsi- 
bility on the part of employers and representatives of labor 
for the general well-being of workers. 
While the cost of many of these plans is borne entirely 
by employers, some of them are contributory by employees. 
The plans usually include such benefits as weekly sickness 
and accident benefits; accidental death and dismember- 
ment; hospital benefits; medical service; surgical bene- 
fits; and special maternity benefits. In addition to the 
foregoing, many of them include a life insurance provision. 
Any injury or illness for which the worker is entitled to 
benefits under any Workmen’s Compensation law is not 
covered by this type of plan. No medical examination is 
required. The costs of the different plans vary from about 
1| per cent to per cent of weekly pay rolls. 
Part VI. — Conclusions. 
Summary. 
While the Council senses a strong desire for an extension 
of facilities to aid in meeting the costs of unusual or pro- 
longed illness, it is not convinced of any pressing need or 
urgency for governmental compulsion in the Common- 
wealth of Massachusetts to accomplish it at this time in 1945.] 
SENATE — No. 10. 
43 
view of the growth and trend of development along volun- 
tary lines. 
It was found on a spot check of the working population 
covered under the Unemployment Compensation law, which 
represents approximately 75 per cent of the total working 
population in the Commonwealth, that 65.9 per cent, or 
nearly two thirds, of the individuals were covered in their 
places of employment by some form of voluntary protection 
against loss of wages due to illness. This would appear to 
be indicative of the sympathetic understanding and har- 
monious working relations between employers, trade unions 
and the workers. 
In addition, the development and growth of voluntary 
hospitalization plans in the Commonwealth is evidence of 
the good faith and co-operation of the medical profession 
in its attempts to bring hospitalization, by a pooled method, 
within the reach of the low and middle income group of 
society. 
It was also found that outside of those connected with 
establishments covered by the Massachusetts Employment 
Security law, there are 529 fraternal societies in Massachu- 
setts which pay sick benefits with a membership of 151,563 
potential recipients. 
The Council has not lost sight of the fact, on the other 
hand, that slightly more than one third of the “covered” 
population under the Unemployment Compensation law do 
not appear to have some form of protection in their places 
of employment against wage loss due to illness. The trend, 
however, would seem to indicate a likelihood of their future 
coverage under voluntary auspices. Most of those in this 
category, it is safe to say, are found in the smaller estab- 
lishments. While private insurance group plans usually 
cover groups of at least twenty-five persons, evidence has 
been received indicating that plans are under way by some 
of the larger life insurance companies writing accident and 
health policies in the Commonwealth for the reduction of 
their coverage from groups of twenty-five to groups of ten 
individuals. Evidence has also been produced of the pres- 
ent existence of policies for the coverage of groups of as 44 
SENATE —No. 10. 
[Jan. 
few as five individuals, and at reasonable costs. These 
policies offer the liberal feature of covering any group of 
five individuals, whether they be employers or employees, 
and not necessarily those in the employ of a common em- 
ployer. In addition, they grant the privilege of continu- 
ance of policies as individual policies, at the group rate, in 
the event other policies in the group become lapsed or dis- 
continued. There is reason to believe that private insurance 
companies generally will consider it their responsibility to 
develop as attractive and economical plans as possible, 
consistent with costs of good administration, to answer the 
need for smaller group coverage. It is hoped that the plans 
available for smaller group coverage will be more widely 
publicized than they have been in the past, and that those 
employers without private plans of wage continuity in case 
of illness will come into line and avail themselves of some 
form of group coverage for their employees. 
Recognition must also be given to the many and varied 
types of individual health and accident policies available 
through private insurance carriers, but which, obviously, 
cannot be as attractive in premiums as the group plan of 
coverage. It is expected that serious study will be given 
by the private carriers to the further development of this 
type of insurance along more economical lines than hereto- 
fore when more normal conditions make it possible to do so. 
The Council is concerned with the possibility, although 
admittedly a remote one, that with the cancellation of war 
contracts, some employers may find it necessary to termi- 
nate private or group plans of insurance coverage on their 
employees as one method of reducing expenses. Employ- 
ers are free to admit, however, that this would take place 
only as a last resort, knowing full well the effect it would 
have on working relations with their employees. 
Perhaps the chief concern of the Council in connection 
with employer plans of group insurance is the present lack 
of continuity of coverage, or transferability of the em- 
ployee’s insurance protection, from one employer to another, 
although we can report the awareness of private insurance 
carriers with this problem and with their sense of responsi- 
bility in meeting it. 1945.] 
SENATE —No. 10. 
45 
Even with the sense of responsibility for the one third 
not covered by protection against wage loss due to illness 
in their places of employment, the Council would question 
very seriously whether the employer or employee can afford 
additional taxation at this time, with the already heavy 
burden imposed, and which will continue for some time to 
pay for the war indebtedness. When overtime is dispensed 
with and the forty-hour week is resumed, with its attendant 
drop in earnings, it is questionable, with the continued de- 
duction of the withholding tax, whether the balance of the 
worker’s income could stand an additional deduction. 
A most disastrous result to labor of employer participa- 
tion in an additional tax burden for such a program would 
be not only the fear, but inevitability, of pre-employment 
physical examinations for selection of workers (not present 
in private group plans) at a time when reconversion plans 
call for a maximum of employment and the elimination of 
any measure which would retard such employment. 
The present voluntary coverage in health and accident 
protection in Massachusetts, including cash payments for 
wage loss, is striking evidence of a consciousness on the 
part of employers, trade unions, private insurance carriers 
and the medical profession for the “social security” of the 
people in Massachusetts and of what can be accomplished 
through co-ordinated efforts in the private enterprise sys- 
tem. The plans in existence cover this protection to a 
previously unbelievable extent. Most remarkable, also, is 
the extent to which the citizens have availed themselves of 
the opportunities afforded by the various individual and 
group plans. The Council would question the advisability 
of disturbing or perhaps thwarting the gains thus made, as 
the economic independence thus attained when the people 
meet these problems themselves is democracy in action. 
Permission of the continuance of this movement by private 
enterprise and encouragement of its expansion, by groups 
or individually, to those not yet benefiting by such cover- 
age, would seem to be a very definite need. In the preser- 
vation of our American way of life, it would seem essential 
to establish beyond a reasonable doubt that private enter- 46 
SENATE —No. 10. 
[Jan. 
prise could not meet the problem effectively before govern- 
ment compulsion could be justified. 
It is clear that there is still much more to be explored, 
despite all the discussions that have taken place thus far on 
any phase of a Health Insurance Program under possible 
governmental control. As yet, some of the basic and fun- 
damental issues or questions have not been answered. It 
may be questioned, for example — 
1. Whether the broad concept that a “ minimum of pro- 
tection” against the major hazards of life should be carried 
over by the government into the field of illness. 
2. Whether a cash benefit for loss of income during illness 
is a separate, or even a major, phase of a Health Program. 
3. Whether anything but a major hazard should be pro- 
vided for by governmental compulsion. 
4. Whether governmental compulsion is necessary until 
such time as it is clearly demonstrated that private enter- 
prise cannot assume the responsibility. 
5. Whether the role of government should not be one of 
adding impetus to the establishment and expansion of pri- 
vate plans rather than in direct participation. 
Recommendation. 
Because too many unknown factors present themselves 
in these abnormal times to permit safe judgments; be- 
cause of the confusion in the minds of many due to the 
multiplicity of bills before Congress and the fact that basic 
issues remain unanswered : and because it would be most 
desirable to watch further developments under our private 
system of enterprise, the Council would recommend con- 
tinued study of the subject matter into more normal times, 
when answers to some of the unknown factors may be forth- 
coming and when better judgments may be made as to 
whether private enterprise in Massachusetts has met the 
challenge for even better and quicker progress in this field 
than heretofore. 
If it is the wish of the Legislature that this Council con- 
tinue in the study, we shall be glad to accept the assignment. 1945.] 
SENATE —No. 10. 
47 
Exhibit A. 
Schedule of Meetings held by State Advisory Council, Division of 
Employment Security, on Sickness Benefits. 
Separate groups: 
Date 
Labor (State Headquarters Officials) .... July 9, 1943 
Petitioners of Bills ....... July 15, 1943 
Manufacturing Employers: 
Associations ....... July 22, 1943 
Employers ....... July 29, 1943 
Employers ....... August 5, 1943 
Non-Manufacturing Employers: 
Associations ....... August 12, 1943 
Associations ....... August 19, 1943 
Employers (General) ...... August 26, 1943 
Employers (General) ...... September 2, 1943 
Employers (General) ...... September 9, 1943 
Employers (Retail Department Stores) . . September 16, 1943 
Employers (Utilities) ...... September 23, 1943 
Employers (Insurance) .... September 30, 1943 
Medical October 7, 1943 
Interrelated State Departments ..... October 14, 1948 
Fraternal Organizations ...... October 21, 1943 
Dr. Ylado A. Getting, Commissioner of Public Health . October 25, 1943 
Labor Representatives (International Organizations 
and Central Labor Unions) ..... 
November 1, 1943 
November 4, 1943 
\ April 12. 1944 
April 13, 1944 
[ April 14, 1944 
Combination of above groups ..... 
Public hearings (afternoon and evening meetings): 
Lawrence ........ April 17, 1944 
Fall River April 20, 1944 
New Bedford ........ April 20, 1944 
Springfield ........ April 26, 1944 
Pittsfield April 27, 1944 
Worcester ........ April 28, 1944 
Boston . . , May 1, 1944 
Insurance group 
f August 7, 1944 
[ October 9, 1944 48 
SENATE— No. 10. 
[Jan. 
Exhibit B. 
EXTENT OF PAYMENTS NOW BEING MADE TO 
WORKERS FOR TIME LOST BECAUSE OF ILLNESS 
IN ESTABLISHMENTS SUBJECT TO THE MASSA- 
CHUSETTS EMPLOYMENT SECURITY LAW AND 
PRACTICES IN CONNECTION THEREWITH. 
Foreword. 
The Advisory Council of the Massachusetts Division of Em- 
ployment Security was authorized and directed by the General 
Court in June, 1943, to make an investigation relative to the 
payment of benefits under the Employment Security law to 
employees absent from work on account of sickness, and to render 
a report thereon to the court at its next regular session. 
To assist the Council in its investigation, the Director of the 
Division requested all subject employers of twenty or more indi- 
viduals now subject to the Massachusetts Employment Security 
law to furnish, on a questionnaire form provided for the purpose, 
certain basic information regarding practices in their establish- 
ments with respect to payments to workers absent because of 
illness. A copy of this form is presented in Appendix A. 
Questionnaires were mailed in January, 1944, to some 8,156 
Massachusetts employers. Notwithstanding the fact that these 
questionnaires were received by them at a time when end-of-the- 
year work on various governmental reports was at its peak, 
Massachusetts employers extended to the Division the outstand- 
ing co-operation, that has characterized their relations with the 
Division since its inception. Of the 8,156 questionnaires mailed, 
5,561 (or 68.2 per cent) were returned in time for inclusion in 
this report. These represented approximately 76 per cent of the 
estimated total number of workers employed in the establish- 
ments to which questionnaires were mailed. 
In addition to supplying specific answers to the items called 
for by the questionnaires, 223 of the responding employers co- 1945.] 
SENATE — No. 10. 
49 
operated further by enclosing with their replies additional infor- 
mation as to rates, duration, etc., in effect in their establishments. 
These enclosures will provide a wealth of material not otherwise 
available with respect to practices in Massachusetts. 
The questionnaires received have been coded by the Division 
by four-digit industry groups and by cities and towns. The 
information furnished by the employer included: 
1. The source of any cash sickness payments customarily made 
in the establishment. 
2. The class of employees customarily receiving such payments. 
3. The method of financing. 
For ease of analysis, the replies have also been classified by 
size-of-establishment groups. 
Summary of Findings. 
On the basis of the analyses completed to date, the most im- 
portant facts revealed by the replies are summarized as follows; 
1. It is estimated that nearly 600,000 employees in the respond- 
ing establishments now receive some form of disability payment. 
Even without allowance for establishments not canvassed or not 
replying, these 600,000 employees represent about 43 per cent of 
the total number of individuals on the pay rolls of all Massachu- 
setts employers covered by the Employment Security law. While 
the proportion of workers paid when ill would not necessarily be 
the same in the establishments not canvassed, or in those which 
failed to return the questionnaire, it is apparent from the survey 
that (subject to a waiting period in many instances) at least half 
of the employees covered by the Massachusetts Employment 
Security law are customarily paid for all or some portion of the 
time lost through illness. 
2. Of the workers employed in the reporting establishments, it 
is estimated that approximately two thirds (65.9 per cent) receive 
some payment for periods when they are absent from work be- 
cause of illness. However, in view of the diversity of practices, 
no attempt was made at this time to obtain information as to 
amount or duration of payments. 
3. The lowest percentage of workers customarily receiving pay- 
ments was found in the construction industries (12.7 per cent), 
while the highest percentage appeared in the finance, insurance 
and real estate division (96.6 per cent). In the manufacturing 
division (which accounts for 60 per cent of the total employment 
for establishments subject to the Massachusetts Employment 50 
SENATE —No. 10. 
[Jan. 
Security law), the percentage of coverage indicated was 59.3. 
(See Chart A.) For the textile, shoe and apparel industries, 
the percentage of coverage was considerably below this figure. 
4. It appeared that about 305,500 (or 34.1 per cent) of the 
workers in the responding establishments were wholly without 
coverage of any kind for wage losses due to disability (other than 
that covered by Workmen’s Compensation). Of these, approxi- 
mately 85 per cent were employed by manufacturing concerns, 
and nearly all of them were non-salaried or production workers. 
5. The replies reflected the growing popularity of group health 
insurance, which was the sole source of payments in establish- 
ments employing 26.5 per cent of the estimated covered workers, 
and was one of the sources in establishments employing a further 
21.2 per cent where pay-roll payments and/or an employees’ 
benefit society was also reported. (See Chart C.) 
6. In establishments accounting for 32.5 per cent of the esti- 
mated total of workers customarily receiving disability payments, 
the employer assumed the entire financial burden. In addition, 
replies covering 60.1 per cent of the estimated total workers in- 
dicated that payments were financed in part by the employer 
and in part by the worker, in varying proportions. It appeared 
that only 6.6 per cent of the estimated total covered workers were 
employed in establishments where the employer assumed no part 
of the expense. (See Chart D.) 
7. The analysis revealed close correlation between the size of 
the establishment and the percentage of workers paid while ill. 
While the estimated coverage for all reporting establishments 
averaged nearly 66 per cent, that for establishments with less 
than 50 workers was only 42 per cent, while establishments with 
2,000 or more workers showed an average of 79.6 per cent, the 
percentage increasing constantly as the size of the establishment 
increased. (See Chart B.) 
8. The questionnaire did not specifically request a report on 
duration of disability payments. However, many employers vol- 
unteered that information. It appears that in many cases, espe- 
cially where the entire burden is assumed by the employer, dura- 
tion of payments is likely to be limited to short periods. (However, 
statistics show that most absences for illness are also of short 
duration.) In cases where there was a group health insurance 
policy in force, a week’s waiting period was customarily required. 
In the case of benefit societies, the waiting period was often of 
shorter duration than seven days. 1945.] 
SENATE— No. 10. 
51 
These and other findings based upon an analysis of the data 
included in the questionnaires are commented upon in the pages 
which follow. 
Extent of Coverage. 
The extent of coverage for the 895,083 employees of the 5,561 
responding establishments may be summarized as follows: 
Number of Workers Employed. 
Total. 
Customarily 
Receiving 
Payments 
when 111. 
Not 
Receiving 
Payments 
when 111. 
Total — all responding establishments 
895,083 
589,582 
305,501 
Establishments reporting no payments . 
114,672 
- 
114,672 
Establishments reporting partial coverage (esti- 
mated distribution). 
267,459 
76,630 
190,829 
Establishments reporting complete coverage . 
512,952 
512,952 
- 
Per cent distribution — total workers 
100.0 
65.9 
34.1 
The foregoing tabulation shows that 65.9 per cent of the work- 
ers employed in the responding establishments enjoyed some 
degree of protection against wage losses due to illness, and that 
34.1 per cent of them did not. 
It is interesting to note that the 589,582 covered workers shown 
above represent (without adjustment for coverage in establish- 
ments not canvassed or not replying) about 43 per cent of the 
total number of individuals employed by all establishments sub- 
ject to the Massachusetts Employment Security law. While data 
are not available as to the extent of coverage among the 465,000 
employees not represented in the responses, it may be conserva- 
tively estimated that at least 100,000 workers not included in the 
survey have similar protection, and that, accordingly, at least 
one half of the employees covered by the Employment Security 
law customarily receive payments when unemployed because of 
illness. 
As indicated in the above summary, employees in establish- 
ments reporting partial coverage were distributed between the 
“covered” and “excluded” groups on an estimated basis. These 
estimates took into account the classes of employees reported as 
receiving payments, the industry division and the method of 
financing reported. Further details regarding such estimates 
appear below under “Workers Not Covered.” 52 
SENATE— No. 10. 
[Jan. 
Variations in Coverage, by Industry Divisions. 
After adjustment for the estimated number of workers ex- 
cluded in establishments reporting only partial coverage, the 
replies indicated the following distribution by industry divisions: 
Industry Division. 
Total 
Workers 
Represented 
in Replies. 
Estimated 
Number 
Customarily 
Receiving 
Payments. 
Per Cent 
of 
Total. 
Total 
895,083 
589,582 
65.9 
Construction 
13,629 
1,736 
12.7 
Manufacturing 
634,235 
376,194 
59.3 
Transportation, communication and utilities 
31,710 
23,846 
75.2 
Wholesale and retail trade 
142,991 
128,773 
90.1 
Finance, insurance and real estate .... 
38,273 
36,980 
96.6 
Service 
28,931 
19,411 
67.1 
Others 
5,314 
2,642 
49.7 
On the basis of the replies received, it appeared that in the con- 
struction industries payments during illness were largely limited 
to salaried and key workers, the total for the division being 
estimated at 12.7 per cent. 
At the other end of the scale, individuals employed by financial 
institutions, insurance companies, etc., where the employment is 
usually on a weekly basis, and often on a monthly or annual 
basis, the traditional attitude of the employer is reflected in the 
responses to the questionnaire. It appears that 96.6 per cent of 
the workers in establishments classified in this industry division 
customarily receive some compensation for time lost through 
illness. 
In the industry division representing the greatest proportion of 
Massachusetts employees — manufacturing — it appeared that 
59.3 per cent of the workers reported by establishments return- 
ing the questionnaires were accustomed to receive some payment 
for wage losses due to sickness. 
The next most important division, wholesale and retail trade, 
accounted for 142,991 (or 16 per cent) of the 895,083 workers 
represented by the returns. Here, the estimated number having 
some protection against wage losses through illness was 128,773, 
or 90.1 per cent. These variations are shown graphically in 
Chart A. 1945.] 
SENATE —No. 10. 
53 
Variations in Coverage, by Size of Establishment. 
After workers excluded in establishments in which only limited 
groups of emplbyees were paid had been prorated on the basis of 
the assumptions referred to above, it appeared that the percent- 
ages of employees who would receive payments, by size-of-estab- 
lishment groups, were approximately as follows: 
Size op Establishment. 
Total 
Workers 
Represented 
in Replies. 
Estimated 
Number 
Receiving 
Payments. 
Per Cent 
of 
Total. 
Total 
895,083 
589,582 
65.9 
Employees: 
20- 24 
23,484 
9,992 
42.5 
25- 49 
59,010 
24,954 
42.3 
50- 99 
75,764 
36,650 
48.4 
100- 249 
114,930 
61,536 
53.5 
250- 499 
99,468 
56,608 
56.9 
500 - 999 
109,153 
73,479 
67.3 
1,000- 1,499 / 
57,704 
45,514 
78.9 
1,500- 1.999 
33,414 
74.5 
2,000 and over 
310,732 
247,435 
79.6 
As the foregoing table shows, the percentage of workers paid 
during periods of illness increases generally as the size of the 
establishment increases (except for a slight drop in the case of 
establishments employing between 1,500 and 2,000 workers). The 
employee in the establishment employing 2,000 or more has ap- 
parently nearly twice as good a chance of being compensated 
while ill as does the employee in the establishment employing 
between twenty and fifty. 
It will be realized that the survey was limited to establish- 
ments employing twenty or more workers in June, 1943. That 
the ratio would continue to decline for establishments employ- 
ing less than twenty people is not to be assumed from the findings 
in this report. It will be noted that there is a slight increase in 
the smallest establishments covered, over the next larger group. 
This decline may be merely accidental, or it may indicate a tend- 
ency in the opposite direction which would increase as the size 
of the establishment decreased. Chart B presents graphically the 
variations among size-of-establishment groups. 54 
SENATE —No. 10. 
[Jan. 
Workers Not Covered. 
Of the 5,561 replies received, 1,519, reporting 114,672 workers, 
stated that no payments were made to any employees during 
disability. In addition, 2,135 other employers, accounting for 
267,459 workers in all, reported that only selected groups of such 
employees received disability payments. As indicated above 
(under “Extent of Coverage”), it appeared reasonable to assume 
that some 190,829 employees in these 2,135 establishments also 
received no wages or other payments while ill. 
A summary of the workers excluded, by description of coverage 
(if any), in the reporting establishments is as follows: 
Class of Workers Excluded. 
Number of 
Establish- 
ments. 
Total 
Workers 
Employed. 
Estimated 
Number 
Covered. 
Estimated 
Number 
Excluded. 
Total 
3,654 
382,131 
76,630 
305,501 
All (negative replies) 
1,619 
114,672 
- 
114,672 
Salaried workers 
26 
9,236 
8,397 
839 
Hourly-rate workers 
95 
6,804 
5,695 
1,109 
Extras, part-time workers, longshoremen, etc. 
3 
637 
673 
64 
All except salaried or other key workers 
2,011 
250,782 
61,965 
188,817 
Distribution of Workers Not Covered, by Industry 
Divisions. 
On the basis of the assumptions indicated above, it appeared 
that the estimated 305,501 workers not receiving payments when 
ill, representing 34.1 per cent of the total number of employees 
in the responding establishments (895,083), were distributed as 
follows among the various industry divisions: 
Indtjstbt Division. 
Workers Not Covered. 
Number. 
Per Cent. 
Total 
305,501 
100.0 
Manufacturing 
258,041 
84.5 
Wholesale and retail trade 
14,218 
4.6 
Construction 
11,893 
3.9 
Service 
9,520 
3.1 
Transportation, communication and utilities .... 
7,864 
2.6 
Finance, insurance and real estate 
1,293 
.4 
Others 
2,672 
.9 1945.] 
SENATE — No. 10. 
55 
Since manufacturing workers showed less-than-average cover- 
age (59.3 per cent as against an average of 65.9 per cent), and 
since they comprise more than 70 per cent of the workers repre- 
sented in the responses, it is to be expected that a very large 
proportion of the non-covered workers will be found in the manu- 
facturing division. It will be observed that 84.5 per cent of the 
305,501 non-co vered workers are employed by manufacturers. 
Type of Coverage. 
Provision was made in the questionnaire for the employer to 
indicate the source of any disability payments customarily made 
to workers in the establishment, as follows; 
(a) Employees’ benefit association. 
(b) Group health insurance policy. 
(c) Employer’s pay roll. 
By type of coverage, the reporting establishments and esti- 
mated total of 589,582 workers customarily paid when ill are 
summarized as follows: 
Type of Coverage. 
Establishments . 
Estimated 
Workers Covered. 
Number. 
Per Cent. 
Number. 
Per Cent. 
Total — all affirmative replies 
4,042 
100.0 
589,582 
100.0 
Employees’ benefit association only . 
118 
2.9 
60,336 
10.2 
Group health insurance only 
671 
16.6 
155,394 
26.5 
Employer’s pay roll only .... 
2,931 
72.5 
151,145 
25.6 
Combination — benefit society and group 
14 
.4 
11,909 
2.0 
health insurance. 
Combination — benefit society and pay-roll 
73 
1.8 
97,345 
16,5 
payments. 
Combination — group health insurance and 
205 
5.1 
46,690 
7.9 
pay-roll payments. 
Combination — all three sources . 
30 
.7 
66,763 
11.3 
It will be noted that the pay roll is the only source of payment 
in 72.5 per cent of the establishments, and is one of the sources in 
all but three of the categories listed above. In other words, the 
pay roll is a source of payment in approximately 80 per cent of 
these establishments, and in 72.5 per cent, the only source. (More- 
over, as indicated later in this report, the employer often bears 
a part or all of the cost in establishments where a group health 
insurance policy or employees’ benefit association is one of the 
sources of payment.) 56 
SENATE —No. 10. 
[Jan. 
The group health insurance policy was next in importance, 
being the sole source in 16.6 per cent of the establishments and 
one of the sources in a total of 6.2 per cent more. 
The employees’ benefit association was cited as the sole source 
of payment in only 2.9 per cent of the establishments, and ap- 
peared as one of the sources in 2.9 per cent more. Accordingly, 
it was by far the least important source of payment. 
Workers customarily receiving payments when ill are also dis- 
tributed by types of coverage in the above tabulation. The 
relative importance of the various types, from the standpoint of 
workers represented, is reflected by the percentage variations 
among them. However, for establishments where more than 
one source of payment was indicated, it was not possible from 
the data available to segregate the workers by source of payment; 
accordingly, the percentages receiving payments through each 
of the three sources could not readily be estimated. 
Subject to the limitations mentioned above in connection with 
establishments combining two or three types of coverage, the 
relative importance of the three types of coverage is indicated 
below: 
Type op Coverage. 
Per Cent op Covered Workers Employed 
in Establishments where Type 
op Coverage is Reported. 
Alone. 
In Combination with 
Other Types. 
Pay-roll payments 
25.6 
35.7 
Group health insurance 
26.5 
21.3 
Employees’ benefit society .... 
10.3 
29.8 
The responses indicate that in some establishments an em- 
ployee received payments from the employer as well as from the 
group health insurance policy or the benefit society. 
As stated above, it should be realized that in addition to pay- 
ments made direct to the employee through the pay roll, the 
employer often assumes a part or all of the financial burden of 
group health insurance premiums and frequently lends support 
to the employees’ benefit association, as commented upon in 
detail later in this report. 
Variations in Type of Coverage, by Industry Divisions. 
It was interesting to observe the variations in type of coverage 
by industry divisions, as shown in the following tabulation: 1945.] 
SENATE —No. 10. 
57 
IndustryDivision. 
Totals. 
Pay Roll, 
Only. 
Group 
Health 
Only. 
Benefit 
Association 
Only. 
Benefit 
Association 
and Group 
Health. 
Benefit 
Association 
and 
Pay Roll. 
Group 
Heai/th 
and 
Pay Roll. 
Combination 
All Three 
Types. 
Num- 
Per 
Num- 
Per 
Num- 
Per 
Num- 
Per 
Num- 
Per 
Num- 
Per 
Num- 
Per 
Num- 
Per 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
her. 
Cent. 
Total .... 
4,042 
100.0 
2,932 
72.5 
670 
16.6 
118 
2.9 
14 
.4 
73 
1.8 
205 
5.1 
30 
.7 
Agrieulture, etc. 
11 
100.0 
8 
72.7 
2 
18.2 
1 
9.1 
- 
- 
- 
- 
- 
- 
- 
- 
Mining and quarrying 
9 
100.0 
8 
88.9 
- 
- 
- 
- 
- 
- 
- 
- 
1 
11.1 
- 
- 
Construction 
138 
100.0 
126 
91.3 
10 
7.3 
- 
- 
- 
- 
1 
.7 
1 
.7 
- 
- 
Manufacturing . 
1,839 
100.0 
1,125 
61.2 
463 
25.2 
74 
4.0 
12 
.7 
43 
2.3 
107 
5.8 
15 
.8 
Transportation . 
169 
100.0 
109 
64.5 
34 
20.1 
4 
2.4 
- 
- 
5 
3.0 
14 
8.3 
3 
1.8 
Wholesale and retail trade 
1,071 
100.0 
836 
78.1 
111 
10,3 
31 
2.9 
2 
.2 
21 
2.0 
61 
5.7 
9 
,8 
Finance, insurance and real 
estate. 
373 
100.0 
343 
92.0 
18 
4.8 
- 
- 
- 
- 
1 
.3 
9 
2.4 
2 
.6 
Service .... 
393 
100.0 
346 
88.0 
m 
27 
6.9 
8 
2.0 
- 
- 
2 
.6 
10 
2.5 
- 
- 
Unclassified 
39 
100,0 
31 
79.5 
5 
12.8 
“ 
"" 
— 
2 
5.2 
1 
2.5 58 
SENATE— No. 10. 
[Jan. 
Group health insurance appears to be more popular among 
manufacturing establishments, nearly one third (32.5 per cent) of 
the affirmative replies reporting that plan either alone or in com- 
bination with other types of coverage, as shown by the percentages 
appearing in the above table. 
As the tabulation shows, the group health insurance plan had 
also been rather widely adopted in transportation, communica- 
tion and utilities industries, since it was indicated in 30.2 per cent 
in all, of the establishments in that industry division. 
Variations in Type of Coverage, by Size of Establishment. 
Analysis by size of establishment revealed that the source of 
payment was largely determined by the number of employees 
involved, as the following table indicates; 1945.] 
SENATE —No. 10. 
59 
Size of Establishment. 
Totals. 
Pay Roll 
Only. 
Group 
Hba,mh 
Only. 
Benefit 
Association 
Only. 
Benefit 
Association 
and Group 
Health. 
Benefit 
Association 
and 
Pay Roll. 
Group 
Health 
ajstd 
Pay Roll. 
Combination 
All 
Three 
Sources 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Num- 
ber. 
Per 
Cent. 
Total . 
4,042 
100.0 
2,932 
72.5 
670 
16.6 
118 
2.9 
14 
.4 
73 
1.8 
205 
5.1 
30 
.7 
1-25 
870 
100.0 
784 
90.1 
56 
6.4 
7 
.8 
- 
- 
3 
.4 
19 
2,2 
1 
.1 
25-49 
1,215 
100.0 
991 
81.6 
159 
13.1 
13 
1.1 
1 
.1 
7 
.6 
43 
3.5 
1 
.1 
50-99 
846 
100.0 
585 
69.1 
169 
20.0 
16 
1.9 
2 
.2 
9 
1.1 
61 
7.2 
4 
.5 
100-249 . 
611 
100.0 
357 
58.4 
151 
24.7 
27 
4.4 
8 
1.3 
22 
3.6 
37 
6.1 
9 
1.5 
250-499 . 
242 
100.0 
121 
50.0 
62 
25.6 
. 26 
10.7 
1 
.4 
9 
3.7 
19 
7.9 
4 
1.7 
500-999 . 
142 
100.0 
59 
41.5 
40 
28.2 
10 
7.1 
1 
.7 
9 
6.3 
19 
13.4 
4 
2.8 
1,000-1,499 
45 
100.0 
11 
24.4 
14 
31.1 
8 
17.8 
- 
- 
5 
11.1 
4 
8.9 
3 
6.7 
1,500-1,999 
25 
100.0 
8 
32.0 
10 
40.0 
3 
12.0 
- 
- 
2 
8.0 
1 
4.0 
1 
4.0 
2,000 and over 
46 
100.0 
16 
34.8 
9 
19.6 
8 
17.4 
1 
2.2 
7 
15.2 
2 
4.3 
3 
6,5 60 
SENATE —No. 10. 
[Jan. 
It is to be observed from the above tabulation that coverage 
is less likely to be limited to pay-roll payments as the size of the 
establishment increases, while the employees’ benefit association 
and group health insurance are more popular with the larger 
establishments. The benefit association appears to be a negli- 
gible factor in establishments where less than 100 workers are 
employed, although it was reported as the sole source, or one of 
the sources, of payments by 41 (or 35.3 per cent) of the affirmative 
replies received from organizations employing 1,000 or more workers. 
Distribution of Cost of Disability Payments as between 
Employer and Worker. 
Provision was made in the questionnaire for reporting whether 
the cost of disability payments made was borne by the employer 
alone (either directly or through group health insurance or a 
benefit society financed entirely by the employer), or whether 
the employees shared the cost or assumed the entire burden 
themselves. 
In order to simplify the employer’s task in filling out the form, 
no question was asked concerning the extent of the workers’ and 
the employer’s share of the cost when it was shared between them. 
In some cases, the replies indicated that the workers supported 
the benefit society themselves or paid the entire amount of the 
premiums on the group health insurance policy. In others, how- 
ever, it. was reported that the employer assumed the entire 
responsibility for pajunents to salaried workers, while other em- 
ployees paid a portion or all of the group health insurance pre- 
miums or supported the benefit society in whole or in part. 
It was therefore not possible, on the basis of the information 
obtained, to estimate what proportion of the cost of disability 
payments now being made to Massachusetts workers, as reported 
in the questionnaires, is borne by the employees themselves. 
The affirmative replies showed the following distribution: 
Affirmative Replies. 
Number. 
Per Cent of 
Total. 
Total — all bases 
4,042 
100.0 
Costs assumed entirely by employer 
3,066 
75.9 
Costs assumed entirely by employee 
127 
3.1 
► 
Costs snared between employer and employee (not necessarily 
826 
20.4 
on an equal basis). 
Financing not indicated 
23 
.6 1945.] 
SENATE —No. 10. 
61 
It will be noted that the employer carried the entire burden in 
more than three fourths (75.9 per cent) of the establishments in 
which some or all of the employees received disability payments, 
and also carried an undetermined proportion in another 20.4 per 
cent. 
As indicated earlier in this report, however, analysis of the 
replies showed many establishments in which only key workers 
or salaried employees enjoyed this protection. Most of these 
limitations were reported by establishments in which the em- 
ployer assumed the entire burden of disability payments. 
After elimination of the estimated number of workers excluded, 
the distribution of covered workers by financing was as follows: 
Estimated Covered 
Workers. 
Number. 
Per Cent of 
Total. 
Total — all affirmative replies 
589,582 
100.0 
Costs assumed entirely by employer 
191,780 
32.5 
Costs assumed entirely by employee 
38,577 
6.6 
Costs shared between employer and employees (not necessarily 
on an equal basis). 
354,287 
60,1 
Financing not indicated 
4,938 
.8 
Subject to the limitations set forth above, this distribution 
is shown graphically in Chart D. Chart E shows a further break- 
down by type of coverage. 
Since the questionnaire did not call for information regarding 
duration, these charts (Charts D and E) are not designed to show 
the relation of total costs of disability payments actually made as 
between employer and employee. 
Textile Industry. 
Of the 409 textile manufacturing establishments to which 
questionnaires were mailed, 333 (or more than 80 per cent) re- 
plied. The responding establishments represented 110,917, or 
85 per cent, of the total workers employed by the textile employers 
canvassed (130,628). This industry group is the most important 
in the Commonwealth from the viewpoint of workers employed. 
Replies indicating that none of the employees receive payments 
while ill numbered 116, and accounted for 34.8 per cent of the 62 
SENATE —No. 10. 
[Jan. 
responding establishments. They represented 18,291 workers, 
or 16.5 per cent of those employed in such establishments. 
Replies indicating that all or some portion of the employees 
were customarily paid when absent because of illness totalled 
217 and represented 65.2 per cent of the responding establish- 
ments. It is estimated that of the total number of workers rep- 
resented by the responding employers in the textile group, 110,917, 
only 49,389, or 44.5 per cent, customarily receive compensation 
either from the employer or from a benefit society or group health 
insurance policy for wage losses due to illness. It also appears 
that substantially all of the excluded employees are production 
workers. 
In this connection, it was noted that of the 47 replies indicating 
that all employees in the establishments are covered, 8 were 
from New Bedford employers who reported 10,358 workers 
covered by group health insurance policies. The contract between 
the New Bedford Cotton Manufacturers’ Association and the 
Textile Workers Union of America C. I. O., specifies that the 
association shall furnish group life, death and dismemberment, 
accident, health and hospital insurance for all employees of its 
member mills, without expense to the employee. Under this 
arrangement, textile workers in New Bedford receive weekly 
benefits of $10.50 beginning with the eighth day of disability due 
to sickness not covered by Workmen’s Compensation for a maxi- 
mum of 13 weeks for any one disability. We are informed that 
this provision is being inserted in the C. I. O. cotton textile work- 
ers’ contracts in other Massachusetts areas as such contracts 
come up for renewal. By April 20, 1944, it was reported that 43 
textile plants, scattered throughout the Commonwealth, had 
negotiated contracts in which this provision appears. 
This arrangement will provide coverage, during the term of 
these contracts, for a significant portion of the Massachusetts 
labor force. 
The group health insurance policy was by far the most impor- 
tant type of coverage indicated for the textile industry. By source 
of payment, the estimated number of workers customarily re- 
ceiving payments while absent through sickness was distributed 
as follows: 1945.] 
SENATE— No. 10. 
63 
Type op Coverage. 
, Estimated 
Number of 
Workers. 
Per Cent of 
Total. 
Total 
49,389 
100.0 
Benefit society only 
4,865 
9.9 
Group health insurance only 
35,900 
72.7 
Pay-roll payments only 
6,600 
13.4 
Combination of group health and pay-roll payments 
1,849 
3.7 
Combination — all three plans 
175 
.3 
In the textile group, payments to more than half of the esti- 
mated covered workers were being financed entirely by the em- 
ployer; in addition, the employer was sharing the burden, either 
by paying salaried workers while others financed their own dis- 
ability compensation (through group health insurance or a benefit 
society), or by contributing a part of the premium for group health 
insurance covering all or some portion of the employees. Less 
than 5 per cent of the covered workers were employed in establish- 
ments where the employer bore no part of the cost of the dis- 
ability payments being made. 
Cost Bokne by — 
Number of 
Workers. 
Per Cent of 
Total. 
Total 
49,389 
100.0 
Employee alone 
2,237 
4.5 
Employer alone 
25,108 
50.8 
Both contributing 
21,909 
44.4 
Financing not indicated ........ 
135 
.3 
Shoe and Leather Manufacturing. 
In pre-war times, shoe manufacturing and its related activities 
represented the second most important industry in Massachusetts. 
Questionnaires which were mailed to 469 employers in this 
group accounted for 63,770 employees. Replies were received 
from 346 employers (73.8 per cent of the total canvassed), repre- 
senting 47,444, or 74.4 per cent, of the total workers. 
The replies indicated that in 139 (or 40.2 per cent) of the re- 
sponding establishments, none of the 12,433 employees received 
any payments during illness. 64 
SENATE— No. 10. 
[Jan. 
The remaining 207 establishments, employing 35,011 workers, 
indicated that all or some portion of their employees were custom- 
arily receiving payments. On the basis of the information shown 
in the replies, the number receiving some form of disability pay- 
ment was estimated at 17,149, or 36.2 per cent; as in the textile 
group, the excluded employees are principally production workers. 
By type of coverage, this estimate of 17,149 workers is sum- 
marized as follows: 
Type of Coverage. 
Estimated 
Number of 
Workers. 
Per Cent 
of Total. 
Total 
17,U9 
100.0 
Benefit society only 
5,178 
30.2 
Group health insurance only . . 
5,508 
32.1 
Pay roll only 
2,116 
12.3 
Combination of group health insurance and benefit society 
920 
5.4 
Combination of benefit society and pay-roll payments . 
845 
4.9 
Combination of group health insurance and pay-roll payments 
2,292 
13.4 
Combination — all three sources 
290 
1.7 
As the above table shows, group health insurance is the most 
important source of payments in this industry also. The benefit 
society is apparently relatively more popular in the shoe industry 
than in either textiles or apparel manufacturing. 
Of the 529 establishments canvassed in this industry group, 
320, or 60 per cent, returned the questionnaires. These repre- 
sented 29,506, or 65.2 per cent, of the total workers in the 529 
establishments (45,269). 
The replies indicated that relatively few employees in this 
industry group receive any payments when they are unem- 
ployed because of illness. Of the 320 questionnaires returned, 
152 stated that none of the 12,057 employees was paid while ill. 
Affirmative responses were received from 168 employers rep- 
resenting 17,449 workers. In a large proportion of these, how- 
ever, the questionnaires showed that only a selected group of 
workers was actually paid while ill. The number customarily 
receiving such payments is estimated at 5,878, or 19.9 per cent, 
as compared with the state average of 65.9 per cent. As in the 
Apparel Industry. 1945.] 
SENATE —No. 10. 
65 
textile group, the excluded employees were principally produc- 
tion workers. 
In this industry group, group health insurance was the most 
important source of payments on the basis of estimated workers 
covered, as the following summary shows; 
Type or Coverage. 
Estimated 
Number of 
Workers. 
Per Cent 
of Total. 
Total 
5,878 
100.0 
Benefit society only 
41 
.7 
Group health insurance only 
2,568 
43.6 
Pay-roll payments only 
1,755 
29.9 
Combination of group health insurance and benefit society 
89 
1.5 
Combination of group health insurance and pay-roll payments 
1,435 
24.4 
Group health insurance coverage was indicated as the sole 
source of payments for 2,558, or 43.5 per cent, of the estimated 
total, and was one of the sources of payment in establishments 
employing an additional 1,524 workers. Benefit societies were 
reported by only two establishments, employing 124 workers. 66 
SENATE — No. 10. 
[Jan. 
PERCENT OF WORKERS CUSTOMARILY RECEIVING PAYMENTS 
FOR PERIODS WHEN ABSENT THROUGH ILLNESS 
CHART A 
MAJOR INDUSTRY DIVISIONS 
PERCENT 
Total—All industries 
Finance, insurance and 
Real Estate 
Wholesale and Retail Trade 
Transportation, Conmuni- 
catlon and utilities 
Service 
Manufacturing 
Mining and Quarrying 
Agriculture, Forestry 
and Fishing 
Construction 
Based upon replies received from 5,561 of 8,156 employers of 20 or more individuals. 1945.] 
SENATE — No. 10. 
67 
CHART B 
PERCENT OF WORKERS CUSTOMARILY RECEIVING PAYMENTS 
FOR PERIODS WHEN ABSENT THROUGH ILLNESS 
BY SIZE-OF-ESTABLISHMENT GROUPS 
PERCENT 
Total 
2000 employees and over 
1000-1499 employees 
1500-1999 
500-999 
250-499 
100-249 
50-99 
0-24 " 
25“ 49 
Based upon replies received from 5,561 of 8.156 employers of 20 or more individuals. 68 
SENATE —No. 10. 
[Jan. 
CHART C 
PERCENT DISTRIBUTION OF ESTIMATED TOTAL NUMBER* OF WORKERS 
CUSTOMARILY RECEIVING PAYMENTS-FOR PERIODS 
WHEN ABSENT THROUGH ILLNESS 
BY TYPE OF COVERAGE (OR COMBINATION OF TYPES) 
REPORTED BY EMPLOYING ESTABLISHMENT 
PERCENT 
Group health Insurance only 
Employer's payroll only 
Corrtbination—benefit society 
and employer’s peyroll 
Combination^—benefit society, 
group health insurance and 
employer’s payroll 
Benefit society only 
Combination—group health 
insurance and employer 
payments 
Combination—employer’s 
payroll, benefit society 
and group health insurance 
* Estimated at 589,582 for 5.561 responding establishments, employing 
895,083 workers. 
NOTE: Where the employer reported more than one type of coverage (e.g., 
group health and employer’s pay roll), it was not possible to 
determine how many workers were covered by each type; accordingly, 
coverage for such establishments can only be shown under the 
various combinations reported. 1945.] 
SENATE — No. 10. 
69 
CHART D 
PERCENT DISTRIBUTION OF 589,582 WORKERS CUSTOMARILY 
RECEIVING PAYMENTS WHEN ABSENT THROUGH ILLNESS 
TYPE OF FINANCING 
PERCENT 
Financing snared between 
employer and employee* 
Financed wholly by employer 
Financed wholly by employees 
Financing not indicated 
in varying proportions. 
NOTE: It most be realized that in the case of establishments reporting that costs 
are shared between employer and employee, information was not obtained as to 
the extent of such sharing, except in a few instances. 70 
SENATE —No. 10. 
[Jan. 
CHART E 
FINANCING NOT 
IM3ICATED 
NOTES: (a) it must be realized that in the case of establishments reporting that costs are shared between employer and 
employee , information was not obtained as to the extent of such sharing, except in a few instances. 
Accordingly, it should not be assumed'that such sharing was on an equal basis. 
(b) Where the employer reported more than one type of coverage (e.g., group health and employer’s pay roll), it 
was not possible to determine how many workers were covered by each type; accordingly, coverage for such 
establishments can only be shown under the various combinations reported. 
DISTRIBUTION OF WORKERS CUSTOMARILY RECEIVING PAYMENTS 
FOR PERIODS WHEN ABSENT THROUGH ILLNESS 
BY METHOD OF FINANCING 
BY TYPE OF COVERAGE 
flMNttO 6Y 
employee 
FINANCED BY 
employer 
w 
Est i mated 
Number 
of workers 
Represented 
Group health Insurance only 
Employer’s pay roll only 
Combination benefit society 
and employer’s pay roll 
Combination—all three 
sources 
Benefit society only 
Combination group health 
insurance and employer’s 
Combination benefit society 
and group health Insurance 
TYPE Of COVERAGE 
*U TYPES 1945.] 
SENATE — No. 10. 
71 
(fiviiioH ofi/fomyr/y 
88/ wcmttraM SX/ventf*. /S 
Research and Statistics 
To the Employer: 
The Advisory Council of this Division was directed by the Legislature 
at its latest session to make an investigation of the subject of cash sickness 
benefits for unemployment due to sickness and to render a report thereon. 
To assist the Council in obtaining information regarding existing plans 
and practices in Massachusetts in connection with payments to employees who are 
absent from work because of illness, I am requesting a selected list of employers 
to answer the questionnaire below. Having in mind the problems which all employers 
face in these days of labor shortages and increased reporting requirements by 
various governmental agencies, I have endeavored to make the questionnaire as 
simple as possible. The Council would be grateful for any additional information 
which you night care to furnish concerning rates, duration of payments, etc. If 
your plan is available in typewritten or printed form they would be pleased to re- 
ceive a copy. A self-addressed envelope on which no postage is required is en- 
closed for your reply. Please return with your reply the enclosed card containing 
your name, address, etc. 
Your cooperation in supplying this information by January 20th will be 
greatly appreciated. 
Yours very truly, 
Robert &. Marshall, Director 
Approximate number of employees 
Do workers in your establishment receive payments for periods when they are absent because 
of Illness? Yes o_ No n If so. please check the appropriate blocks below. 
Source of Payment, 
Class of Employees 
Receiving Payments 
Financing 
Paid by employees' benefit 
association 
Paid through group health 
insurance policy 
Paid by employer 
Other, please describe 
All employees 
Optional 
Salaried employees 
excluded 
"Hourly-rate" em- 
ployees excluded 
Limited to salaried 
employees 
Other, please describe 
Employee contributions! 
(or premiums) only ' 
Employer contributions. 
(or premiums) only I 
Both employer and em- . 
ployee contributions! 
(or premiums) 
(Name of Employer) 
Date 
By , 
(Title) 
Questionnaire. 72 
SENATE — No. 10. 
[Jan. 
Exhibit C. 
DISABILITY COVERAGE OF BENEFIT SOCIETIES 
REGISTERED WITH THE MASSACHUSETTS DI- 
VISION OF INSURANCE. 
In connection with the Advisory Council’s investigation of the 
subject of cash sickness benefits for unemployment due to illness 
the Department of Reports and Analysis has made a study of 
the organizations registered with the Massachusetts Division of 
Insurance in accordance with chapter 176 of the General Laws. 
This chapter requires, in effect, that all fraternal benefit societies 
paying death or disability benefits in Massachusetts shall be reg- 
istered with the Division and shall annually file certain informa- 
tion. Some of these organizations have been in existence for 
many years, as indicated by dates of incorporation running back 
to 1874. 
An examination of the by-laws of the registered organizations 
in the Division’s files reveals that 572 of them pay benefits to 
members when ill. Of these, 43 associations, comprising 18,253 
members, were connected with establishments covered by the 
Employment Security law, and are therefore already represented 
in the survey recently made by this Department.1 The other 
529 organizations included 151,563 Massachusetts members, and 
were classified as follows: 
Number of 
Organizations. 
Number of 
Massachusetts 
Members. 
Groups organized under the "lodge system” .... 
19 , 
72,353 
Groups of individuals of foreign birth or extraction 
414 
57,536 
Groups of public employees, such as policemen, firemen and 
postal workers. 
89 
13,309 
Occupational groups 
5 
5,225 
Other groups 
2 
3,140 
Total ........... 
529 
151,563 
1 “Extent of Payments Now being Made to Workers for Time Lost because of Illness in Es- 
tablishments Subject to the Massachusetts Employment Security Law, and Practices in 
Connection Therewith.” May 4, 1944. 1945.] 
SENATE — No. 10. 
73 
It should be realized that, with the exception of the societies 
representing public employees, any of the groups listed above 
may include workers covered by the Massachusetts Employment 
Security law. It is also possible for an individual to belong to 
more than one of these societies. 
Since membership in most cases is not restricted to employed 
individuals, it appears that some portion of the above total 
would be accounted for by housewives and others not normally 
a part of the labor force. 
Groups Organized under the “Lodge System.” 
Societies operating under the lodge system (as defined in sec- 
tion 2 of chapter 176), which paid temporary disability benefits 
to their members numbered 19 and reported a total membership 
of 72,353 in Massachusetts. 
The largest single organization was found in this group — 
L’Union St. Jean Baptiste d’Amerique. It had a membership 
of 29,093 in Massachusetts alone at December 31, 1943. 
Another large association operating under the lodge system 
was La Societe des Artisans, with a Massachusetts membership 
of 13,563 at tne end of 1943. 
Most of the societies in this class drew their membership from 
various groups of foreign birth or extraction. 
Groups of Fraternal Societies Not Operating under the 
“Lodge System” and Comprising Individuals of For- 
eign Birth or Extraction. 
About 80 per cent of the 529 societies paying disability benefits, 
as summarized above, came within this category. They accounted 
for a total of more than 57,500 members. 
Analysis of the membership requirements set forth in their 
by-laws showed the following distribution among nationality 
groups: 74 
SENATE — No. 10. 
[Jan. 
Nationality Groups. 
Societies. 
Membership. 
Number. 
Per Cent. 
Number. 
Per Cent. 
Totals 
414 
100.0 
57,536 
100.0 
Italian 
170 
41.1 
13,769 
23.9 
Portuguese 
24 
5.8 
11,237 
19.5 
Lithuanian 
68 
16.4 
10,827 
18.8 
French-Canadian 
8 
1.9 
6,756 
11.8 
Polish 
33 
8.0 
3,809 
6,6 
Jewish 
23 
5.5 
2,561 
4.5 
Miscellaneous 
88 
21.3 
8,577 
14.9 
Of the 88 societies listed above as “miscellaneous,” the names 
of a substantial number indicated that their members were prob- 
ably of foreign birth or extraction, but their nationality groups 
could not readily be identified. Also included under “miscella- 
neous” were certain nationalities represented by a few societies 
with a relatively insignificant total membership. 
It will be observed that, from the viewpoint of toal member- 
ship, the Italian societies were the most important, representing 
23.9 per cent of the total coverage, and that Portuguese organ- 
izations were next, with a percentage of 19.5. The third most 
important group were the Lithuanian societies, which accounted 
for 18.8 per cent of the total membership. 
A study of the by-laws indicated that approximately 63 per 
cent of the membership was accounted for by organizations com- 
prising both men and women. Organizations limited to men 
represented 24 per cent of the societies and 21 per cent of the 
membership, while women’s organizations accounted for 13 per 
cent of the societies and 16 per cent of the membership. 
Chapter 176 specifies that membership (so far as disability 
benefits are affected) shall be limited to persons between 16 and 
60 years of age. However, many of the societies set a minimum 
of 18 or 21 or an upper limit of 45, 50, or 55. 
It appeared that a substantial proportion of the societies, about 
26 per cent, representing 21 per cent of the total membership, 
undertook to furnish physicians’ services along with disability 
benefits. Only 28 per cent of the societies, accounting for 26 per 
cent of the membership, were definitely shown not to be furnishing 
physicians’ services, while the balance, representing 47 per cent 1945.] 
SENATE — No. 10. 
75 
of the total, and accounting for 54 per cent of the total member- 
ship, failed to indicate in their by-laws whether such services 
were furnished or not. 
Along with provisions for disability payments, a relatively 
■large proportion, 88 per cent of the societies, accounting for 89 
per cent of the total membership, also paid death benefits. Only 
four of the societies were definitely identified as not paying death 
benefits, while the by-laws of the remaining forty-three were not 
clear on this point. 
The lowest disability benefit rate indicated for these organiza- 
tions was $1.50 per week, while the highest was $15. The most 
popular rates among this group of societies were $5, $7 and $10. 
About half of them pay disability benefits of less than $7 per week. 
Maximum duration of benefits, as indicated by the by-laws, 
varied widely. A large proportion of these societies failed to 
indicate clearly in their by-laws whether the stated maximum 
applied to a calendar to a single disability, or was cumulative 
from the date of the member’s initiation. In many cases the rate 
diminished with duration of illness. On the basis of the informa- 
tion available, it appeared that nearly half of these societies, 
representing about 40 per cent of the total membership, restrict 
their maximum to less than $100, and that only 15 per cent of the 
organizations, covering about one fourth of the total membership, 
pay maximum amounts of $200 or more. 
Since organizations paying disability rates of not more than 
$10 are not required to file annual statements of income and ex- 
penditures, it was not possible to determine the amounts collected 
from members or the total amounts paid to them. 
Membership dues as shown by the by-laws are in some cases 
as low as 25 cents a month, and it is evident that disability pay- 
ments are financed by some societies, in part at least, from other 
sources, including the proceeds of social events and special assess- 
ments on members. 
These 89 societies, comprising over 13,000 members, represented 
firemen, policemen, postal workers, etc. 
While their stated annual dues were relatively low, their benefit 
rates and duration were much higher, on the average, than those 
paid by the foreign nationality groups, the main source of income 
probably being the social events which are run annually by many 
of them for the purpose of raising funds for the benefit society. 
Groups of Public Employees. 76 
SENATE — No. 10. 
[Jan. 1945. 
These five associations represented, respectively, marketmen, 
barbers, printers, perchers and commercial travelers. Their total 
membership was 5,225, of which 4,685 were accounted for by 
the Eastern Commercial Travelers’ Health Association. 
Occupational Groups. 
Other Groups. 
Two other societies found to be registered were not classifiable 
in any of the groups mentioned above, — the Massachusetts 
Benevolent Association for the Deaf, Inc., with a membership 
of 43, and the Masonic Casualty Company, with a Massachusetts 
membership of 3,097. Membership in the latter is restricted to 
members of the Masonic Fraternity. 
As indicated earlier in this report, the amount of benefits paid 
by these societies and the method of financing could not readily 
be determined from the records available. However, it was evi- 
dent from our study that the fraternal societies registered with 
the Division of Insurance play an important role in partially 
compensating the workers who belong to them for loss of wages 
due tr illness.