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also helps through its legislative reference process in the development and coordination of his legislative program.

Through the budget process, the Bureau of the Budget plays a sig, nificant role in the allocation of resources and the determination of priorities among competing demands.

Budgeting is essentially an orderly way of making choices. The shaping of the President's budget and of the fiscal and economic policies which underlie it involve extensive consultation for many months among the executive agencies.

In the last few years we have endeavored to improve the effectiveness of the Federal budget process as an instrument of long-range planning and programing. The actual weighing of agency budget requests is accomplished through procedures encompassing long-range plans and budget projections prepared well in advance of the development of detailed agency proposals, full-dress agency budget submissions, hearings, and Presidential determinations on agency budgets,

In this process agency proposals for health programs are considered in relation to each other and to the funds requested for other activities of the Government. This budget review also encompasses the fiscal impact of proposals in the President's legislative program.

The Office of Science and Technology is another significant instrument in the coordination of health research programs. Dr. Wiesner will, of course, discuss its work in his presentation.

Finally, it should be noted that in recent months the President has appointed a Special Assistant for Mental Retardation who is concerned at the Executive Office level with health activities insofar as they affect that field.

It is evident from the data which I have presented that the health activities of the Federal Government are in a phase of rapid development. Many new programs have been enacted in recent years.

A number of extremely significant legislative proposals in the health field are now before the Congress, including several important ones assigned your committee.

One of the most significant changing areas in the health field is in the area of science. As Federal funds for medical research have been multiplied, it is only natural that we should be concerned as to whether the capacity to do high-quality research is keeping pace and whether this investment in research will continue to yield high results.

The question of priorities in research, and as between research and other programs, is one of the most troublesome problems in the Federal budget.

Because of the very nature of research and because of the difficulty in either predicting or measuring returns from research, budgeting for these activities is extremely difficult and must rely in considerable part on the judgment of the executive and the legislative branches as to the possible long-term gains to be achieved.

Other difficult scientific problems also face us in the health area. A stronger scientific base for the food and drug regulatory and the environmental health activities of the Government is indicated by the increasing recognition of problems in the drug, food additives,

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radiological health, air pollution, and pesticides areas, to name a few topics of current concern.

Another concern relates to the development of more effective techniques for communicating the vast output of new knowledge, both within the research community and from the scientific community to medical practice.

How largo is the existing gap between new information which is already available from medical science and its application in the current practice of medicine as it is carried out by the thousands of doctors in our country?

The rapidly increasing costs of hospital and medical care, and of drugs, also pose major problems of medical costs and economics, which underlie the urgency of Federal financial assistance for medical care.

In addition, rapid growth in our population and the increasing proportion of aged citizens make their effect felt, for example, in the existing shortages of nursing homes.

The rapid growth of Federal funds for medical research has produced a close relationship between the Federal Government and the universities. As this process goes on, there arise many crucial questions of Federal Government-university relations, all centering around the key question of whether the Federal Government and the universities can exercise adequate stewardship of the funds which are provided in a manner which will maintain the academic freedom of the university community.

We need to reassess the whole process in the Government for awarding and for administering research grants and to develop appropriate criteria and principles of Government-wide application.

Another problem is that of overcoming the great shortages of skilled personnel in the health specialties. Training programs must obviously be related to manpower needs and this in turn gives rise to many basic questions, such as whether categorical approaches or more general approaches should be utilized to stimulate and support the training of necessary skilled personnel.

It is necessary in these circumstances to develop now organizational arrangements to meet emerging needs. At the Executive Office level and at the interagency level, the establishment of the Office of Science and Technology and the Strengthening of the Federal Radiation council in recent months represent real progress.

Likewise, the enactment of Public Law 87–838, which permitted the establishment at the National Institutes of Health of the new Institute of Child Health and Human Development and the Institute of General Medical Sciences, represented a significant step.

Clearly, in this rapidly changing area we need the flexibility to organize properly so the agencies can meet new problems as they arise without the restriction of previous patterns of organization which are no longer suitable in the light of new knowledge and new requirements.

The provision of authority included in H.R. 2410 to permit the Surgeon General to reorganize the Public Health Service in keeping

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with the emerging requirements to emphasize both environmental health and community health activities would be an important step.

It would recognize the increasing importance of these areas and would thus assist in attracting outstanding scientific and administra. tive talent into the Public Health Service.

Improved organization is necessary if the Nation is to meet successfully the health challenges of a growing America.

Mr. STAATS. Mr. Chairman, we have attached to this statement, which I will not read, a statement called the “Special Analysis of Federal Medical and Health-Related Programs,” which is a tabulation of funds for fiscal years 1962, 1963, and 1964 and a description of the programs administered by the principal agencies which I have briefly touched upon here in this statement this morning.

Mr. ROBERTS. Without objection, you may include that in the record.

(The statement referred to follows:)

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EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET,

WASHINGTON, D.C.

SPECIAL ANALYSIS OF FEDERAL MEDICAL AND HEALTH-RELATED PROGRABLS

(Tabulations of funds for the fiscal years 1962, 1963, and 1964 and descriptions

of programs administered by the principal agencies with medical or healthrelated activities)

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In order to present an overview of the many medical and health-related activities carred on by the Federal Government, there follow three tables which summarize Federal obligations for these programs. There also is attached a summary statement describing the health activities, including their costs for the fiscal years 1962, 1963, and 1964, for each of the seven departments and seven agencies having major responsibility for Federal health activities. These tables and statements are intended to provide a general description of agency activities in the health area and are not intended as definitive statements of program mission and goals.

The following agencies are covered in the tables and the descriptive statements : Department of Agriculture

Department of Justice Atomic Energy Commission

Department of Labor Civil Service Commission

National Aeronautics and Department of Defense

Space Administration Department of Health,

National Science Foundation Education, and Welfare

Small Business Administration
Housing and Home Finance Agency Department of State
Department of the Interior

Veterans Administration
For a more extensive analysis of these activities as they existed several years
ago, attention is called to Senate Report 142 of the 87th Congress, 1st session.
This earlier report was prepared by the Subcommittee on Reorganization and
International Organization of the Senate Committee on Government Operations.

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ORGANIZATION OF PUBLIC HEALTH SERVICE

WEDNESDAY, MAY 15, 1963

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON PUBLIC HEALTH AND SAFETY
OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in the caucus room, Cannon Building, Hon. Kenneth Roberts (chairman of the subcommittee) presiding. Mr. ROBERTS. The subcommittee will please be in order. We will continue our hearings today on H.R. 2410, the purpose of which is to reorganize the Public Health Service.

Our witness today is Mr. Elmer B. Staats, who is Deputy Director of the Bureau of the Budget. We welcome you to our hearing and you may proceed with your statement.

STATEMENT OF ELMER B. STAATS, DEPUTY DIRECTOR, BUREAU OF
THE BUDGET; ACCOMPANIED BY HIRST SUTTON, CHIEF, LABOR
AND WELFARE DIVISION; MICHAEL S. MARCH, ASSISTANT TO
CHIEF OF LABOR AND WELFARE DIVISION, LEGISLATIVE AND
PROGRAM ANALYSIS; WILLIAM H. KOLBERG, CHIEF, PUBLIC
HEALTH BRANCH, LABOR AND WELFARE DIVISION
Mr. Staats. Thank you, Mr. Chairman. I would like to say, before
beginning my statement, that we in the Bureau of the Budget were
very happy to learn about these hearings. We believe that the

programs of the Public Health Service have become increasingly important both in terms of the dollars required for them in the total Federal budget, and also in terms of their obviously increasing imvortance to the welfare and the economy of the country.

We therefore believe that a broad review of the type undertaken by his committee is very much in order. We hope the committee will iggest ways in which executive branch review and conduct of these rograms may be improved. I know we in the Bureau would

parcularly welcome such suggestions. Mr. ROBERTs. Thank you, sir. We are happy to have you and I ould like you at this time, if you would, to introduce the members your staff for the record, please. Mr. Staats. I have to my immediate left Mr. Hirst Sutton, who is ad of our Labor and Welfare Division, to which most of the health tivities of the Government are assigned, and to his left Mr. Kolberg, o is Chief of the Public Health Branch of that Division. To my ht is Mr. March, who is the Assistant to the Chief of that Division. Mr. ROBERTS. Thank you, sir.

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complexity of the medical and scientific problems which affect the derise

Mr. Staats. I have a fairly long statement, Mr. Chairman. There inals fore, I would welcome your interrupting at any point that you wish to ask questions. I will try to read it as rapidly as possible

. Mr. ROBERTS. Thank you, sir.

Mr. Staats. I am happy to accept your invitation to present information on the health responsibilities of the Federal departments and agencies other than the Department of Health, Education, and Welfare.

Effective and readily available health services are essential to our national welfare. The Federal contribution toward the Nation's health is a significant one.

More than a dozen departments and agencies make substantial expenditures for medical and health-related programs. In this statement I will present an overall picture on Federal health outlays, emphasizing departments and agencies other than the Department of Health, Education, and Welfare, whose representatives have testified before you during the past several weeks.

The committee's objective of evaluating the mission and programs of the Public Health Service in the context of the health responsibilities of the Federal Government, as a whole is a highly important one.

Increasing public interest in health matters, the rapidly growing national health, and the corresponding expansion of Federal health responsibilities make it highly desirable that we all have a broad perspective on the factors and developments which affect Federal health programs and their organization.

Many Federal decisions regarding health programs are made in the context of program goals and policies which have objectires broader than that of providing health services, although certainly all such health programs contribute to the national health.

As a consequence, many agencies and many programs in the Federal budget include health and health-related activities.

As background for considering the budgetary figures for health programs in recent years, a review of the trends they represent will be useful. Data compiled by the Department of Health, Education, and Welfare and published in the Social Security Bulletin for November 1962 show the following trends for expenditures for "health and medical care" during the 11-year period 1950-61:

Federal health and medical care outlays somewhat more than doubled during this period, rising from $1.4 to $3.1 billion. In fiscal year 1950 those outlays constituted about 3.5 percent of budget expenditures and in 1961 about 3.8 percent.

State and local health outlays slightly more than doubled, rising from $1.9 to $3.9 billion. Thus, the Federal Government has been participating in a phenomenon affecting State and local governments

Total public expenditures for health from Federal, State, and local sources increased from $3,3 billion in 1950 to $6.9 billion in 1961.

Federal expenditures constituted 43 percent of the total public expenditures for health in 1950 and 44 percent in 1961. The public expenditure for health, in turn, represented about one-fourth of all private and public health medical expenditures in both periods.

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as well.

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