APPENDIX A.

51917,

do not think—it is not necessary to elaborate the reasons for our opinion—
that it is due to war disabilities. It is probably due, at least in part, to
the absence of the customary measures of controlling admission to membership,
 including medical examination, which were practised in the system of
voluntary insurance, the experience of which supplied the financial basis of
National Health Insurance. It is, however, by no means certain that this
is the whole explanation ; in this connection we would draw attention to the
study of the Selected Societies Experience contained in the Memorandum
appended, which has been prepared by the Government Actuary’s Department.
 It appears to us that questions of considerable administrative
importance as to the control of the claims upon Approved Societies are
raised by this Memorandum, and pending an examination of these questions
 by the responsible department we feel precluded from incorporating
in the permanent basis of the system a feature which may prove to be
capable of reduction 'by administrative action. Our reluctance to do so
is increased by the difficulty which presents itself in the rising cost of
disablement benefit to which we have drawn attention in para. 15. Fortunately
 an alternative course presents itself. The essential thing is to
provide at each age for a total outgo in sickness and disablement benefit
of an amount which, while it may be approached in actual experience,
is not likely to be exceeded in any material degree. On the facts brought
out we think that a reasonable provision for sickness benefit would be
80 per cent. of the present provision, and that as regards disablement
benefit an ultimate level 33% per cent. above the average of the Selected
Societies in the three years 1921-23 might he assumed. On these bases
the aggregate outgo at each age would be closely approximate to that
shown by the unloaded Manchester Unity Experience (1893-97) at all
ages under 45, and somewhat below it at ages between 45 and 65.
Having regard to these features and to the advantages inherent
in utilising an authoritative standard table, we propose to adopt this
basis, namely, the Manchester Unity (1893-97) without loading. If, as
the result of the administrative enquiries which we advise, the cost of
sickness and disablement benefits can he reduced below this standard,
some moderate provision for new services in excess of that which we
shall now find ourselves able to recommend may be possible at a
future day. If, on the other hand, the cost of benefits cannot be
influenced by the particular administrative steps to which we refer,
the total expenditure should still be within the provision which
we propose to make for it, and such further adjustment of the basis
as may be desirable hereafter will have no further effect than the transference
 to the heading of disablement benefit of some part of the provision
which we are assigning to sickness benefit. From this point of view it
is important to realise that, while an experience of disablement benefit
under which the claims are 150 per cent. of the standard must in all
circumstances call for attention, it will not in fact occasion loss upon the
estimates at a young age if against it can be set a saving of 5 to 10
per cent. on the provision made for sickness benefit. Thus at age 27
the rate of sickness, according to the present standard, is ‘78 of a week,
while the rate of disablement is -19 of a week; an excess of 50 per cent.
on the expected cost of disablement benefit would thus be balanced by
a saving of 6 per cent. on the expected cost of sickness benefit, bearing
in mind the fact that disablement benefit is only payable at half the
sickness rate. This compensatory influence is in full operation at the
Present time, and the basis which we propose to adopt will require its
continuance should it be found impossible to bring the claims for disablement
 benefit under closer control.

18. Women.—On referring to the statement in para. 13 above, it will
be seen that, unlike the corresponding experience in the case of men. the