254 
MAJORITY REPORT. 
CONTRACT ADMINISTRATION PAYMENTS. 
620. Our attention has been directed to an arrangement which 
exists in certain Societies whereby out-of the amount available 
to the Society for purposes of administration a lump-sum 
payment is made to the parent body with which the Society 
is associated, and in return for that payment the parent body 
carries out the administration of National Health Insurance on 
behalf of the Society. We are informed that the arrangement 
is in every case expressly authorised by the rules of the Society, 
and that the terms of the agreement and the rates of payment 
are subject to annual review and are approved by the National 
Health Insurance Joint Committee. Although the number of 
Societies which have made arrangements of this kind is small, 
they have an aggregate membership of about 6% millions, or 
nearly half the total insured population. We may quote from 
the evidence of Sir Walter Kinnear on the subject :— 
‘“ We have a limited number of cases, possibly not more 
than a dozen in number, where a certain proportion, not 
the whole, of the administration allowance is paid over with 
the sanction of the Minister to what I might call the inde- 
pendent side of the organisation. As a rule we insist that 
the cost of certain services which are peculiar to National 
Health Insurance, such as medical referees, sick visitors, 
and matters of that kind must be paid for and retained on 
the Approved Society side of the organisation. But certain 
Societies have represented to us that they have common 
organisation and common staffing in the offices, and they 
said it would be a businesslike arrangement for us to allow a 
proportion of the administration allowance to be handed over 
to the parent body and the latter would contract with the Ap- 
proved Society to give the services of their whole organisation 
to the benefit of the Approved Society for that sum, apart 
from any special services which are peculiar and can be ren- 
dered only for the purpose of National Health Insurance. 
That is a system which has been in force for a good many 
years, and T am not inclined to think it is abused. It is true 
that at headquarters we have no means by which we can 
analyse how the amount is spent, once having fixed upon a 
lump sum. We have simply to look at the cost of that 
Society as compared with the ‘cost of other Societies, and 
endeavour as best we can to decide whether that lump sum 
which is agreed upon is a fair and equitable amount. I do 
not think the system has been abused; I do not think that 
the Society is placed at any serious disadvantage by the 
arrangements; but, of course, it is open to the criticism 
that there is a very considerable expenditure over which we 
have no supervision or no auditorial rights.” (Q. 23,527.) 
621. We recognise that an arrangement of this kind may 
have some advantages from the business point of view, and we