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Kering the cost of medical cart 1 tot way for most of our people to provide themselves the resources to 41.3 muud medical care is to participate in voluntary health-insurance plans. kuring the past decade, private and nonprofit health insurance organizations die made striking progress in offering such plans. The most widely pur421 type of bealth insurance, which is hospitalization insurance, already approf.mately 40 percent of all private expenditures for hospital care. 3 progress indicates that these voluntary organizations can reach many bo vple and provide better and broader benefits. They should be encourpart BH helped to do so. Bralet health insurance protection for more people can be provided. Itt Government need not and should not go into the insurance business to trich the protection which private and nonprofit organizations do not now puide. But the Government can and should work with them to study and Te better insurance protection to meet the public need. I premtuend the establishment of a limited Federal reinsurance service to ancrage private and nonprofit health insurance organizations to offer broader both fitotertion to more families. This service would reinsure the special writi nal risks involved in such broader protection. It can be launched with a apiai fond of $25 million provided by the Government, to be retired from ounce fees. six grunt-in-uid approach Uy message on the state of the Union and my special message of January 14 og trend out that Federal grants-in-aid have hitherto observed no uniform pattern. Baju iste has been made first to one and then to another broad national need. a tard of the grant-in-aid programs, including those dealing with health, child meture, and rehabilitation of the disabled, a wide variety of complicated matchformulas have been used. Categorical grants have restricted funds to speci

purpuses so that States often have too much money for some programs and Da eagh for others,

Itin patchwork of complex formulas and categorical grants should be simpliel usd improved. I propose a simplified formula for all of these basic grant-inand prograus which applies a new concept of Federal particiation in State proaux. This formula permits the States to use greater initiative and take more hapur sibility in the administration of the programs. It makes Federal assislzire ware responsive to the needs of the States and their citizens. Under it, fimbral support of these grant-in-aid programs is based on three general criteria:

Psst, the States are aided in inverse proportion to their financial capacity. Li relating Federal financial support to the degree of need, we are applying Depruren and sound formula adopted by the Congress in the Hospital Survey 200 Construction Act.

Second, the States are also helped, in proportion to their population, to extend O cupirove the health and welfare services provided by the grant-in-aid proThird

, a portion of the Federal assistance is set aside for the support of unique o jos is of recional or national significance which give promise of new and better Poly of serving the human needs of our citizens. Two of these grant-in-aid programs warrant the following further recommaatioas. Beguilitation of the disabled Tiking with only a small portion of the disabled among our people, Federal

* Governments and voluntary organizations and institutions have proved De tantage to our Nation of restoring handicapped persons to full and proVibes our State-Federal program of vocational rehabilitation began in 1920, the verwies rendered were limited largely to vocational counseling, training, and brement. Since then advancing techniques in the medical and social aspects inhabilitation have been incorporated into that program. lost are now 2 million disabied persons who could be rehabilitated and thus multo productive work. Under the present rehabilitation program only

to these disabled individuals are returned each year to full and productive fra Sleanwhile, 250,000 of our people are annually disabled. Therefore, we D:sing ground at a distressing rate. The number of disabled who enter proone oployment each year can be increased if the facilities, personnel, and Locial support for their rehabilitation are made adequate to the need.

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Considerations of both humanity and national self-interest demand that strpg #1 be taken now to improve this situation. Today, for example, we are spending three times as much in public assistance to care for nonproductive disabled people as it would cost to make them self-sufficient and taxpaying members of their communities. Rehabilitated persons as a group pay back in Federal income taxes many times the cost of their rehabilitation.

There are no statistics to portray the full depth and meaning in human terms of the rehabilitation program, but clearly it is a program that builds a stronger a America.

nom We should provide for a progressive expansion of our rehabilitation resources, and we should act now so that a sound foundation may be established in 1971. My forthcoming budget message will reflect this objective. Our goal in 1955 is to restore 70.000 disabled persons to productive lives. This is an increase of 10,000 over the number rehabilitated in 19:3. Our goal fur 1936 should be 100,000 rebal.ilitated persons, or 40,000 persons more than those restored in 1953. In 1976, also, the States should begin to contribute from their own funds to the cost of rehabilitating these additional persons. By 1939, with gradually increasing State participation to the point of equal sharing with the Federal Government, we should reach the goal of 200,000 rehabilitated persons each year,

In order to achieve this goal we must extend greater assistinre to the States, We should do so, however, in a way which will equitably and gradually transfer increasing rpsponsibility to the States. A program of grants should be undertaken to provide, under State auspices, specialized training for the professional personnel necessary to carry out the expanded program and to foster that research which will advance our knowledge of the ways of overcoming handi. capping conditions. We should also provide, under State auspices, clinical facil. ities for rehabilitative services in hospitals and other appropriate treatment centers. In addition, we should encourage State and local initiative in the development of community rehabilitation centers and special workshops for the disabled.

With such a program the Nation could, during the next 5 years, return a total of 860,000 of our disabled people to places of full responsibility as actively working citizens. Construction of medical-care facilities

The modern hospital-in caring for the sick, in research, and in professional educational programs--is indispensable to good medical care. New hospital construction continues to lag behind the need. The total number of acceptable beds in this Nation in all categories of non-Federal hospital services is now about 1,000,000). Based on studies conducted by State hospital authorities, the perd for additional hospital beds of all types-chronic disease, mental, tuberei. losis, as well as general--is conservatively estimated at more inun 300.000

A program of matching State and local tax funds and private funds in the construction of both public and voluntary nonprofit hospitais where these are most 10ler is therefore essential.

Since 1916, nearly $600 million in Federal funds have been allocated to almost 2200 hospital projects in the States and Territories. This sum has be matched by over $114 billion of State and local funds. Projects already coinpleted or under construction on December 31, 1973, will add to our national resources 106,000 hospital pseuls and 464 public health centers. The Inrgest proportion of Federal funds has ben and is being spent in low-income and rural areas where the need for hospital beds is greatest and where the focal means for providing them are smallest. This federally stimulated accomplishment has by no means retarded the building of hospitals without Federal aid Construction costing in axress of $1 billion has been completed in the last 6 yonrs without such as

Hospital construction, however, meets only part of the urgent need for medical facilities,

Not all illness need he treated in elaborate general hospital fncilities, costly to construct and costly to opwrute. Certnin nonacute illness conditions, includ. ing those of our hospitalized aged people, requiring institutional bed cure can he handled in fncilities more economical to build and operate than a general hospital, with its dingnostic, surgiral, and treatment enuipment and its full staff of professional personnel. Tovag beds in our hospitals for the chronically int take care of only 1 out of every 6 persons suffering from such long-term illnesses as cancer, arthritis and heart disease. The inadequacy of facilities and services to cope with such illness is disturbing. Morenver. If there were more nursing and convalescent home facilities, beds in general hospitals would

be released for the care of the acutely ill. This would also help to relieve some
of the serious problems created by the present short supply of trained nurses.

Phisical rebabilitation services for our disabled people can best be given in
Despitals or other facilities especially equipped for the purpose. Many thousands
leople remain disabled today because of the lack of such facilities and
Pervices

Maoy illnesses, to be sure, can be cared for outside of any institution. For such
Loestes a far less costly approach to good medical care than hospitalization
Bould be to provide diagnostic and treatment facilities for the ambulatory
patient. The provision of such facilities, particularly in rural areas and small
Sated communities, will attract physicians to the sparsely settled sections
where they are urgently needed.

I recommend, therefore, that the Hospital Survey and Construction Act be
imedded as necessary to authorize the several types of urgently needed medical
de facilities which I have described. They will be less costly to build than
tural hospitals and will lessen hte burden on them.
Ipresent four proposals to expand or extend the present program:

(1) Added assistance in the construction of nonprofit hospitals for the care of the chronically ill. These would be of a type more economical to build and operate than general hospitals.

(2) Assistance in the construction of nonprofit medically supervised nurslng and convalescent homes.

(3) Assistance in the construction of nonprofit rehabilitation facilities for the disabled.

(4) Assistance in the construction of nonprofit diagnostic or treatment centers for ambulatory patients. Finally, I recommend that, in order to provide a sound basis for Federal assistaber in such an expanded program, special funds be made available to the States to help pay for surveys of their needs. This is the procedure that the Congress rigely required in connection with Federal assistance in the construction of bopitals under the original act. We should also continue to observe the prinEinle of State and local determination of their needs without Federal interfrence. These recommendations are needed forward steps in the development of a sound program for improving the health of our people. No nation and no administration can ever afford to be complacent about the health of its citizens. While optinuing to reject Government regimentation of medicine, we shall with vigor and imagination continuously search out by appropriate means, recommend, and put into effect new methods of achieving better health for all of our people. We shall pot relax in the struggle against disease. The health of our people is the very essence of our vitality, our strength, and our progress as a nation.

I urge that the Congress give early and favorable consideration to the recom. mendations I have herein submitted.

DWIGHT D. EISENHOWER. Thi. WHITE HOUSE, January 18, 1954.

Senator PORTELL. Mrs. Hobby, we will be pleased to have you
proceed.

Mrs. Hobby. Thank you, sir.
Mr. Chairman, before proceeding with my prepared statement, I
should like to introduce and identify for the record several officials
of the Department who are here with me this morning.
First may I present Mr. Nelson Rockefeller, Under Secretary of
the Department, and Mr. Roswell B. Perkins, Assistant Secretary
of the Department. Dr. Scheele, Surgeon General of the Public
Health Service and Mr. Arthur Kimball, Acting Deputy Director of
the Office of Vocational Rehabilitation, will participate in the pres-
entation of our prepared statement. Also present to assist in answer-
ing technical questions on the provisions of the bill are Dr. John W.
Cronin, Chief, Division of Hospital Facilities of the Public Health
Service, and Miss Mary Switzer, Director of the Office of Vocational

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Rehabilitation.

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STATEMENT OF MRS. OVETA CULP HOBBY, SECRETARY, DEPART.

MENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED
BY NELSON A. ROCKFELLER UNDER SECRETARY, AND ROSWELL
B. PERKINS, ASSISTANT SECRETARY, DEPARTMENT OF HEALTH,
EDUCATION, AND WELFARE; DR. LEONARD SCHEELE, SURGEON
GENERAL, PUBLIC HEALTH SERVICE; ARTHUR KIMBALL, ACTING
DEPUTY DIRECTOR, OFFICE OF VOCATIONAL REHABILITATION;
DR. JOHN W. CRONIN, CHIEF, DIVISION OF HOSPITAL FACILITIES,
PUBLIC HEALTH SERVICE; AND MISS MARY SWITZER, DIRECTOR,
OFFICE OF VOCATIONAL REHABILITATION

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Mrs. Hobby. Mr. Chairman and members of the committee, I appreciate the privilege of appearing before you today in support of S. 2758, which was introduced by the chairman of your committee to implement one of President Eisenhower's principal recommendations for progressive health legislation. This bill relates to the construction of hospitals and related health facilities. Our testimony will also encompass the provisions of H. R. 8149, a bill passed by the House last week which is identical in most respects.

As your subcommittee chairman has indicated, the legislation you are considering this morning is part of an integrated health program proposed by the President in his special message to the l'ongress of January 18. The schedule of hearings arranged by your subcommittee will provide an excellent opportunity for thorough consideration of each proposal contained in the President's program.

The recommendation that the llospital Survey and Construction Act be broadened is the first of these proposals which you have selected for discussion. The hospital survey and construction program, generally known as the Hill Burton program, is one of the most success. ful health programs ever undertaken by the Federal Government in cooperation with the States. A large measure of credit for its success belong to your committee, which played such a prominent role in the enactment of the original Hospital Survey and Construction Act in 1916. The soundness of the program was reallirmed by the Congress in 1919 when it expanded the program and in 1953 when it extended its curation through the fiscal year 1957.

The essential features of the Hospital Survey and Construction et are well known to your committee. Brietly, the law provides that each State and Territory, as a prerequisite to obtaining Federal ait, shall prepare and keep current a survey of its existing hospitals and public health centers and of its need for additional facilities. On the basis of this survey, the state develops a plan, or program, for aduitional construction where it is most urgently needed.

Out of such sums as are appropriated annually by the ('ongres, allotments are made to the States and Territories to assist in the construction of hospitals in four major categories--general, mental, chronie dimase, abil tuberculowinnas well as for public health centers.

Progress under the program to date has indeed been very satisfying. We can now report that 2200 project have been approved, utilizing $600 million of Federal funds and $11, billion of State and local moneys. I total of 106,000 hospital bedis, 416 public health centers, and many related health projects, such as nurses training facilities

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and laboratories, are being added to our health resources. Neverthejess, there still remains much to be done,

Our greatest need today lies in the area of facilities for the chronically ill. By far the greatest percentage of construction under the pagram thus far has been in the general hospital category. As a ansequence there has been a national net gain in the number of a veptable general hospital beds since 1948, when construction under the program commenced. During this same period, however, there has been a net loss in the number of acceptable hospital beds for the (aft of patients with chronic diseases, including cancer, arthritis and heart disease. Thus, as valuable as the present program is, it has not, to date, provided a balanced answer to our Nation's needs for hospital and health facilities.

Before turning to the provisions of S. 2758, Mr. Chairman, I should
like to ask Dr. Scheele to present some additional background infor-
mation in graphic form.

Senator PURTELL. We will be very happy to have Dr. Scheele do so.
I think, Mrs. Secretary, that it is auspicious that we are starting
these hearings on St. Patrick's Day. If we can do as well with heal-
ing programs as St. Patrick is reported to have done with the snakes,
he will have accomplished a great deal.
Senator Hill. Do you have a magic wand?
Mrs. Horby. This one works today, Senator.
Dr. SCHEELE. Mr. Chairman, members of the committee, Mrs. Sec-
retary: Mrs. Hobby has described to you some of the accomplishments
of the program under the Hill-Burton Act to date. She has referred
to the construction or approval of projects for adding 106,000 beds to
our Nation's bed supply as a whole.

This chart A shows how these beds break down into the 4 principal
categories provided for in the original act: 86,000 of them are general
medical and surgical beds; 11,000 are mental beds; 3,000 are chronic
beds; and 6.000 are tuberculosis beds.

The Secretary has referred to another part of the program, namely, the assistance in construction of 446 public health centers. In addition, the act authorized, and there have been constructed, many facilities related to hospitals, such as diagnostic centers, nurseries for prenature infants, and training facilities for nurses. In addition, a number of State health department laboratories have

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been aided.

Now, the next chart (B) projects the beds that have been built and will be built with assistance under this program, against the total need in the four categories mentioned. The green areas showing in these bars, and showing in the following chart, represent the same beds that are shown here in the first chart.

Here we see that we have this projection against the total need for buls

. Total need is measured by the State in its survey, and these fieds are based on formulas which are in the act, for example, 41/2 to to beds in the general category, 5 per thousand in the mental health

5 category, 2 per thousand in chronic disease category, and 21/2 times the average annual deaths in the State measured over a 5-year period, 1944 to 1944, for figuring needs in the tuberculosis field. Also, the States investigate existing beds in the States to see if they are acceptable-that is, if they are in reasonably fireproof buildings; if they

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