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This is an increase of $1.3 billion in 2 years. Funds for all other agencies except HEW are estimated to rise from $3 billion in 1962 to $3.3 billion in 1964an increase of $0.3 billion.

However, from 1963 to 1964, total health funds increase by less than $0.2 billion, and the amount for all other agencies except HEW declines in the net by more than $0.1 billion.

Passing over the programs of HEW with which you are already familiar, I should like to give you a brief description of the health and health-related programs of each of the other major agencies.

Of the $1.2 billion that the Veterans Administration will obligate for health in 1964, 88 percent will be for care of veterans and disabled ex-servicemen--mainly for hospital care, and, to a lesser extent, for outpatient services.

More than 22 million veterans are presently or potentially eligible for care in VA facilities. First priority is given to treatment for service disabilities. Nonservice-connected cases are given hospital care if facilities are available and the veteran is unable to pay for services.

About three-fourths of the obligations of nearly $i billion in 1964 by the Department of Defense for health programs will be for hospital and medical care of its 2.7 million military personnel, their 3.9 million dependents, and care, when space is available, for 400,000 retired military personnel and their dependents.

In 1964 it is expected that the Army, Navy, and Air Force will operate 235 hospitals in the United States and abroad, with an average daily patient load of approximately 32,000.

In addition, it is estimated that about 1.4 million patient-days of care will be provided in civilian facilities for dependents of military personnel under the Dependents' Medical Care Act.

The Department of Defense will also spend about $94 million for medical research and facilities, over $20 million for training, and approximately $15 million for construction of hospitals and other facilities.

In 1964, the Civil Service Commission will disburse an estimated $122 million for medical care benefits received by active and retired Federal civilian employees.

Benefits are paid in part from employee contributions and in part from Federal contributions or appropriations. The employees' health benefits fund, which is estimated in 1964 to cover 2.3 million active employees, is expected to disburse $393 million, of which the Government will pay about one-third.

The retired employees' health benefits fund, covering 235,000 participants, is expected to make outlays of $29 million.

Mr. ROBERTS. Mr. Staats, what is the condition of that fund at the

present time?

Mr. STAATS. I would like to ask Mr. March if he would be willing to respond to that question, Mr. Chairman.

Mr. MARCH. Mr. Chairman, this is essentially a revolving fund-type operation. As you know, the Federal Government has an arrangement with private insurance carriers so that we don't really build

up
a fund.

They set the rates at intervals of 1 or 2 years to cover the necessary expenditures.

Mr. ROBERTS. In other words, it does not work in a similar way to, say, the railroad retirement fund?

source of somewhat more than half of the total Federal expenditures for medical and health-related programs.

It is estimated that total Federal obligations for such programs will amount to $6.4 billion in 1964, of which which $3.1 billion will be obligated by the Department of Health, Education, and Welfare and $3.3 billion by all other agencies.

Chart I shows the funds which the principal agencies will spend for health and health-related activities, with a twofold division among the types of activity.

(The chart referred to follows:)

FEDERAL OBLIGATIONS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY

(Fiscal year 1964. Dollar amounts in billions.)

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Mr. STAATS. As was pointed out earlier, the Veterans' Administration and the Department of Defense have major health programs. Moreover, as chart I indicates, the bulk of the funds expended by these two agencies is used for the provision of hospital and health care services—most of which are handled through their own hospitals and clinics.

The Department of Health, Education, and Welfare provides substantial funds for health care services, but most of its expenditures for this purpose are channeled through grants to States and localities. The Department of Health, Education, and Welfare nevertheless operates 67 hospitals containing about 16,000 beds.

Before turning to specific agency programs, one general point revealed by table A in the special analysis submitted with this testimony should be mentioned.

Total Federal obligations for health and health-related programs of $6.4 billion in 1964 compares with corresponding outlays of $6.2 billion in 1963 and $5.1 billion in 1962.

This is an increase of $1.3 billion in 2 years. Funds for all other agencies except HEW are estimated to rise from $3 billion in 1962 to $3.3 billion in 1964an increase of $0.3 billion.

However, from 1963 to 1964, total health funds increase by less than $0.2 billion, and the amount for all other agencies except HEW declines in the net by more than $0.1 billion.

Passing over the programs of HEW with which you are already familiar, I should like to give you a brief description of the health and health-related programs of each of the other major agencies.

Of the $1.2 billion that the Veterans' Administration will obligate for health in 1964, 88 percent will be for care of veterans and disabled ex-servicemen--mainly for hospital care, and, to a lesser extent, for outpatient services.

More than 22 million veterans are presently or potentially eligible for care in VA facilities. First priority is given to treatment for service disabilities. Nonservice-connected cases are given hospital care if facilities are available and the veteran is unable to pay for services.

About three-fourths of the obligations of nearly $i billion in 1964 by the Department of Defense for health programs will be for hospital and medical care of its 2.7 million military personnel, their 3.9 million dependents, and care, when space is available, for 400,000 retired military personnel and their dependents.

In 1964 it is expected that the Army, Navy, and Air Force will operate 235 hospitals in the United States and abroad, with an average daily patient load of approximately 32,000.

In addition, it is estimated that about 1.4 million patient-days of care will be provided in civilian facilities for dependents of military personnel under the Dependents' Medical Care Act.

The Department of Defense will also spend about $94 million for medical research and facilities, over $20 million for training, and approximately $45 million for construction of hospitals and other facilities.

In 1964, the Civil Service Commission will disburse an estimated $122 million for medical care benefits received by active and retired Federal civilian employees.

Benefits are paid in part from employee contributions and in part from Federal contributions or appropriations. The employees' health benefits fund, which is estimated in 1964 to cover 2.3 million active employees, is expected to disburse $393 million, of which the Government will pay about one-third.

. The retired employees' health benefits fund, covering 235,000 participants, is expected to make outlays of $29 million.

Mr. ROBERTS. Mr. Staats, what is the condition of that fund at the present time?

Mr. STAATS. I would like to ask Mr. March if he would be willing to respond to that question, Mr. Chairman.

Mr. MARCH. Mr. Chairman, this is essentially a revolving fund-type operation. As you know, the Federal Government has an arrangement with private insurance carriers so that we don't really build

up a fund.

They set the rates at intervals of 1 or 2 years to cover the necessary expenditures.

Mr. ROBERTS. In other words, it does not work in a similar way to, say, the railroad retirement fund?

Mr. Staats. No. It is not a funded type system. It is more or less just and accounting device through which funds flow and is a more or less short-term-type insurance operation, not one that extends for many years as you have in retirement benefits or, say, for example, as in the civil service retirement fund where we try to fund for obligations that extend 20 or 30, or even 40 years ahead.

Mr. ROBERTS. In your experience has it ever been necessary for the Government to put up money to cover a shortage in this fund at any particular time?

Mr. Staats. No. This fund, of course, as you know, is a fairly new one and my recollection is that the law contemplated there would be a review, I believe, at the end of either 3 or 5 years. So that I would not consider, Mr. Chairman, that the experience we have had to date would necessarily be conclusive as far as the long-term future is concerned, but as of the present time, the charges seem to be reasonable and in line with the cost.

These are carried by contract, as you know, with private carriers. Mr. ROBERTS. All right. Thank you very much.

Mr. STAATS. The $186 million to be obligated for international activities cover a broad range of health, sanitation, and nutrition programs.

This assistance is provided through annual contributions to international organizations such as the World Health Organization, the Pan American Health Organization, and the United Nations Children's Fund. It is provided also through bilateral AID projects which are mostly for control of communicable diseases and for water supply and sewerage systems.

Most of the estimated $136 million of obligations in 1964 for health and health-related programs by the Housing and Home Finance Agency will be for public facility loans to municipalities and other communities for sanitation facilities.

This agency also makes public works planning advances under the Housing Act of 1954 and college housing loans for infirmaries and health facilities.

In addition, under the Public Works Acceleration Act of 1962 grants totaling $316 million will also be made by HHFA in 1963 for health facilities; no such funds are projected for 1964. HHFA will also insure mortgages on nursing home loans representing an estimated 12,100 beds in 1964.

Mr. ROBERTS. Mr. Staats, let us go back to page 7. I have a question there. Do you have any amounts that have been obligated for international health research?

Mr. STAATS. Under the Health Research Act?
Mr. ROBERTS. Yes, sir.
Mr. STAATS. Is that what you have particular reference to?
Mr. ROBERTS. Yes, sir.

Mr. Staats. I believe we have the information for the State Department and AID programs. The amounts obligated are $2 million in 1962, $1 million in 1963, and $2 million estimated for 1964. It has not been a very large program.

Mr. ROBERTS. Could you also give us the amount which has been spent in counterpart funds?

Mr. STAATS. Under that same act?

Mr. ROBERTS. Yes, sir, under the category of U.S. funds. I think that is the way it is designated, isn't it, Mr. Borchardt?

Mr. BORCHARDT. Yes, sir.
Mr. STAATS. That is correct.
Mr. ROBERTS. Thank you very much. Mr. Nelsen has a question.

Mr. NELSON. With respect to sanitation facilities under the Housing and Home Finance Agency, would this include sewage disposal facilities, or what does it include?

Mr. Staats. It includes sewage disposal facilities financed under the Community Facilities Act. However, it does not include the facilities provided for under the Water Pollution Act.

Mr. NELSON. This would be connection

Mr. Staats. These would be in connection with, say, sewage lines for new subdivisions, or for connection of an industrial complex, or a shopping center, or something of that kind.

Mr. NELSON. Thank you.

Mr. STAATS. On page 14 of the supplementary statement, Mr. Nelson, there is a description which spells out in a little more detail what is spent under the Housing and Home Finance category.

Mr. NELSON. Thank you.

Mr. ROBERTS. One other question before we leave the international health research bill. In this bill, if I remember correctly, there was a question of delegating the President's powers to the Surgeon General. Has that power been delegated so far as you know?

Mr. STAATS. It has not.
Mr. ROBERTS. It has not?

Mr. Staats. It has not, and the reason for that, Mr. Chairman, has been the President's belief, both in the Eisenhower administration and in this administration, that the number of such grants is probably not going to be large.

There is always a problem of coordination here with the Department of State in terms of our timing and the approach to a particular situation.

Therefore, since it has been felt that it is feasible to continue to vest these powers in the President, the President has personally approved the actions to date under that act.

Mr. ROBERTS. Thank you, sir.

Mr. Staats. The AEC medical and health-related programs of $88 million in 1964 are almost entirely in the fields of basic

and applied research on the effects and the uses of radiation.

Approximately 60 percent of these funds are for research in the biological sciences, covering such areas as the effects of radiation on plants and animals, research on molecular and cellular structure, and the study of radiation genetics.

Another 25 percent of AEC's outlays are for research in the medical sciences, including radiological environmental health and various other fields.

Mr. Roberts. I would like to ask one question there if I may. Are we now through the AEC making some grants to colleges and universities for construction of atomic reactors on campuses?

Mr. STAATS. Such grants are not currently being made to colleges and universities. Of course, you are familiar with the Brookhaven complex in New York where, I believe, there are some nine universities involved.

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