This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Purchase of Medical Care Through Fixed Periodic Payment Volume Author/Editor: Pierce Williams, assisted by Isabel C. Chamberlain Volume Publisher: NBER Volume ISBN: 0-87014-019-1 Volume URL: http://www.nber.org/books/will32-1 Publication Date: 1932 Chapter Title: Chapter IX. Fixed Payment Medical Service For Railroad Employees' Chapter Author: Pierce Williams Chapter URL: http://www.nber.org/chapters/c6512 Chapter pages in book: (p. 193 - 215) CHAPTER IX FIXED PAYMENT MEDICAL SERVICE FOR RAILROAD EMPLOYEES MPLOYEESof a number of trunk-line railroad systems in the United States normally secure medical, surgical and Ehospital care arising out of injury or sickness by virtue of their membership in employee hospital associations.' In all, twenty-seven separate hospital associations have been found. In some instances, because of consolidations, one railroad system may have more than one hospital association; in others the hospital association may cover employees of only a part of the system. Twenty of the hospital associations found in the course of this investigation are connected with railroads op- erating out of Chicago and west of the Mississippi River, and seven with systems operating in states east of that river. The funds out of which the cost of the service provided by these railroad hospital associations is met are derived chiefly from dues collected by the railroad companies from employees through a deduction from wages, and turned over to the hos- pital associations. Most associations receive some financial support from the railroad company, in payment of the expense of hos- pital care necessitated by injuries sustained "in line of duty." In some hospital associations, such payment is on a case-by-case basis; in others, a periodic lump sum payment by the railroad company discharges its responsibility for medical care arising out of "duty" accidents. As pointed out in Chapter I, there is no Federal Workmen's Compensation Act applying to employees engaged in interstate commerce, but only a Federal Employers' Liability Law, liberal- 1Figuresgiven in this chapter have been compiled from Stathiics of Ra'ilwcys in the United States, 1929,InterstateCommerce Commission, Washington, 1930,and periodical statistical releases. A Class Irailroadis one having annual revenue over $j,ooo,ooo. Class I railroads operated 92.2percent of the steam railroad mileage at the close of 1929;theyhad on their payrolls 98 per Cent of the total steam railroad employees. '93 MEDICAL CARE THROUGH FIXED PERIODIC PAYMENT izing the conditions of recovery of damages from the employer by the employee engaged in interstate The present system under which American railroads in practically all cases pay for medical, surgical and hospital care to employees disabled by a "duty", injury, as well as compensate the employee for loss of earning power, is the result of mutual understandings between the railroad management and the employees. MEMBERSHIP AUTOMATIC In most of the railroad employee hospital associations, mem- bership is automatic; all officers and employees of the company from the president down belong to the association. Strictly speak- ing, membership in the hospital association ceases when employ- ment ceases, or when the employee ceases to pay his dues. Usually, however, there is a provision for continuance of membership in the hospital association during a period of "lay-off". Dependent members of families of employees are not entitled to free hos- pital service by virtue of the breadwinner's membership in the association, but it is customary to allow them reduced rates.3 COMPANY-OWNED AND "DESIGNATED" HOSPITALS Of the 27 associations, 17 directly operate a total of 33 hospi- tals, located at strategic points along the lines of their respective railroads and ranging in size from 20 to 300 beds, and represent- ing a total bed capacity of Title to these hospitals is gen- erally held by the railroad company. Hospital associations not directly operating hospitals arrange with independent institu- tions in cities and towns along the line of the road, to provide 2 In 1911-12 a Federal Commission made an extensive study of compensation for injured railroad employees, reporting a Workmen's Compensation Bill which both Houses of Congress, but with, amendments that were not agreed upon when Congress adjbu,rncd. Since 1912 billshave been introduced in Congress, but havç never been reported out of committee. 8 According to figures published by the Interstate Commerce Commission ment No. M-3oo,February,1932)thetotalnumber of employees onClassI steam railroads in the middle of February 1932, was 1,093,215, a decline of 567,635 from the averagetotalof1,660,850forthe year1929. Presumably there was a corresponding decline, in the number of employees entitled to medical care from the railroad hospital associations. Figures compiled from American Medical Association Hospital Census for 1930. All of the 33 hospitals arc registered by the American Medical Association. '94 RAILROAD EMPLOYEE MEDICAL SERVICE hospitalization to members disabled by a "non-duty" injury or sickness. These areknownas "designated" hospitals. The hos- pital association pays the hospital for service rendered, either on a case basis, or under a definite contract arrangement. Where the designated independent hospital provides care arising out of an injury sustained in the course of duty, payment is usually paid directly to the hospital by the railroad company. Practically all American trunk-line railroads maintain a staff of employed physicians and surgeons to render first-aid to em- ployees and passengers injured in connection with the operation of the railroad. Where there is a hospital association, the physi- cians on the medical staff of the association are usually the com- pany physicians and surgeons. Various methods are employed of adjusting their remuneration for services rendered, between the company and the association. Only one of the 27 associations definitely states that the company has a separate staff of sur- geons to care for employees injured on duty; in the event that the association takes care of such patients, the company reim- burses it for any expense incurred. Another association states that the company "appoints the Association physicians as Company Surgeons." Otherwise all information available indicates that association physicians are also the company medical staff; in fact, in many cases they are referred to as "company surgeons". On the smaller roads only the chief surgeon, the district sur- geons, and the head of the hospital are full-time salaried officers, others being employed on a part-time basis, or on a fee basis. The associations operating large hospitals employ full staffs, some on full-time, some on part-time basis. Specialists are usually on a fee basis, sometimes "fixed" fees, according to a regular schedule of rates. Consultants on the staffs are paid for their services either by a regular salary, a retaining fee, or for services as rendered. CASH BENEFIT PAID BY TWOASSOCIATIONS Only two out of 27 hospital associations studied provide any monetary benefit to the members covering the loss of regular earnings during the period of disability.5 As will be shown in detail in Chapter XIII Union Sick Benefit Plans)1 '95 MEDICAL CARE THROUGH FIXED PERIODIC PAYMENT On railroads which do not have employee hospital associations, employees make their own private arrangements for medical, surgical and hospital care arising out of a "non-duty" injury or illness. On. such roads, surgical and hospital care necessitated by a "duty" injury are usually provided at company expense by the railroad's own staff of surgeons, in independent hospitals desig- nated by the railroad company. The following table shows the total owned mileage and aver- age total number of employees in 1929 of all Class I railroads in the United States (classified by railroad "regions") that have All Class I Railroads Reporting Per Cent of Total Steam Railroads Hospital Associations Districts and Regions MileageEmployeesMileageEmployeesMileageEmployees Owned Owned Owned Eastern and Southern Districts 68,8501,029,739 15,949 146,847 23.2 14.3 Western District:— NorthWesternRe- gion 44,300 197,285 20,887 54,266" 48.0 27.5 Central Western Re- gion 37,956 281,344 27,158 224,630 71.6 79.8 South Western Region 24,724 152,482 23,590 145,662 95.4 95.5 Totals 175,8301,660,850 87,584 571,405 b 49.8 34.4 Includes only the 10,439employeesof the Chicago, Milwaukee, St.Paul and Pacific Railway on the lines west of Mobridge, So. Dakota; the remaining 37,456 employees of this Railway System, on lineseast of Mobridge, do not participate in the Hospital Association. bTomake the figures comparable with estimated total number of employees in the mining and lumber industries who receive medical service from the employer, the percentage figure shown in the last column hasbeen applied to the total num- ber of employees of Class I steam railroads reported to the Interstate Commerce Com- mission for April x5, 1930,—the month during which the Federal Census was taken. This figure was 1,572,566. Railroads not heard from accounted for 8.2 per cent of the total employees. In the Eastern and Southern Districts,the proportion wasi1.1percent;in the Northwestern Region,i.6 per cent;inthe Southwestern Region,4.9per cent.It does not seem likely that reports from these railroads would increase the number entitled to hospitai care as members of hospital associations. national railroad brotherhoods and their local lodges, as well as many of the local unions affiliated with the shop craft national unions, provide cash disability benefits to members temporarily deprived of regular earnings through sickness or accident. 196 RAILROAD EMPLOYEE MEDICAL SERVICE hospital associations, and the per cent of such mileage andnum- ber of employees to the total mileage and number of employees for the entire country.