of Duluth, Minn., the Community Health Association of Two Harbors, Minn., the Federated Trades Assembly of Duluth, Minn., and District 133 of the International Association of Machinists.

The Arrowhead Health Association and the Community Health Association are cooperative, nonprofit associations which are formed for the express purpose of providing preventive and curative medical care on a prepaid basis.

The Arrowhead Health Association was organized on the 5th day of July 1947, with the support of the American Federation of Labor, the CIO, and the railroad brotherhoods and the Independent Association of Machinists. It was also vigorously supported by many individuals in the community who were not affiliated with any of these groups but who realized the necessity of obtaining good medical care on a prepaid basis.

The Community Health Association of Two Harbors was organized on the 1st day of November 1944, and was supported in its organization by all of the liberal elements in the community.

The Community Health Association of Two Harbors is located in the city of Two Harbors which has a population of approximately 5,000 and is today practically serving all of the medical needs of that town and the adjacent rural community. There is only one doctor in the city who is not associated with the Community Health Association.

The Arrowhead Health Association is located in the city of Duluth, Minn., which is a highly industrialized community and has a population of over 100,000 persons. It is located in the section of the city where a majority of the workers and their families live. In the brief history of its existence it has grown until today it provides medical care to approximately 7,500 individuals on a directservice prepayment program.

In order to become a member of either association, an individual must purchase a membership in the organization for the sum of $100 but which can be paid over a period of time. This membership does not entitle an individual or his family to medical services. To obtain these medical services, it is necessary for the persons to pay monthly dues. The dues which are charged by the organizations are:

Arrowhead Health Association of Duluth, Minn.:

Single person.

Family of 2.

Family of 3

Family of 4..

Family of 5 or more..

Community Health Association of Two Harbors:

Single person__

Family of 2_

Family of 3 or more.

Annual dues_____

$3.25

6.00

7.00

7.50

8.00

$3.25

5.75

6.75

1.00

For these dues the individual and his family receives comprehensive medical and surgical care in the clinic or in the hospital. An additional charge is made if a doctor is required to visit the individual in his home. Minimum additional charges are made for other services. Both the benefits and the additional charges are set forth clearly in the descriptive bulletins of both plans which are attached to this statement.

The Arrowhead Health Association occupies a modern 50-bed hospital and clinic building. It purchased this building on a contract for deed which calls for yearly payments of $10,000. It has not, however, been able to put its hospital into operation because it has been unable to raise the capital necessary to complete this project; this despite the fact that approximately $75,000 is all that is needed. The Community Health Association of Two Harbors is in a greatly similar position.

For purposes of further discussion, it might be well to limit the remainder of my time to the problem of the Arrowhead Health Association, as its problems are similar to those of Two Harbors, and to point up the fact that its difficulties would be met through S. 1805.

The question immediately raised is, that if the organization is supported by the labor organizations in a city the size of Duluth that it should be easy to raise this capital. Our experience has demonstrated that this is not the case. A detailed examination of the facts will explain the reasons.

The average weekly earnings in manufacturing industries in the city of Duluth according to the most recent report of the Minnesota Division of Employment and Security were $58.58 per week. An individual with a wife and family earn

ing $58 a week is indeed fortunate to be able to pay the dues necessary in order to give him good medical care, let alone to make a substantial capital contribution. Our experience in connection with the individual memberships was such that we found that we were not able to meet the needs of our community if we continued the practice of requiring an individual to be a member of the association and to pay $100 before he was entitled to medical care. We found this to be true even though we allowed the individual to pay $20 down on a membership and to pay the balance on a basis of $5 per month. The workers simply do not have $5 a month to pay on a capital contribution after making the payments that are required for their monthly care. To met this problem, we found that we had to define the word "member" to include a union and to allow a union to purchase a membership which would cover all of its members. This, of course, means that we were not able to reply upon the one device which we had for the raising of substantial amounts of capital.

It might next be suggested that if groups of employees in these communities are not able to raise the capital from individual subscription, that they might be able to do it by borrowing the money from the local unions in the community on a long-term, low-interest basis.

As a representative of most of the unions affiliated with the A. F. of L. and the Independent Association of Machinists in Duluth, I have had an opportunity to prepare the financial reports which are required of them under the provisions of the Labor Management Relations Act of 1947 and can state categorically that there are no local unions within the city of Duluth which are in a position to make a long-term loan to the Arrowhead Health Association, for the reason that they do not have the amount of capital necessary to meet the problem, and for the further reason that they are not able to loan out money for the length of time required.

It is likewise impossible to obtain loans from private individuals or concerns which will be spread over a sufficient period of time and at a low-enough interest rate to meet the needs of a nonprofit association which is formed to give medical care on a prepaid basis.

After a good deal of study on the provisions of S. 1805, we are convinced that our capital needs and those of other similar groups can be met if this bill becomes law.

We feel that the provisions of the bill which provide for loans not to exceed 35 years with interest on the unpaid balance at the rate of 2 percent are reasonable and that the terms are such that groups should be able to meet them without too much difficulty.

The standards which are established in section 3 are reasonable and to the best interest of the consumer and the medical profession.

The Arrowhead Health Association and the Community Health Association have both prepared a body of policy which was designed to meet the standards established by the American Medical Association in 1949. These statements of policies are attached to the written statement which I have presented. You will note from an examination of these bodies of policy that we meet each of the standards.

(a) Our regular monthly dues are sufficient to meet operation costs.

(b) Each person who is a participant is entitled to one vote in the selection of the governing body.

(c) There is absolutely no interference by the lay management in the practice of medicine and the plan which we have worked out for compensating our physicians is mutually satisfactory.

(d) We provide for preventive as well as curative care, group pracaice and comprehensive medical care.

(e) Participation in the plan by both members and physicians is entirely voluntary.

A way must be found to provide good medical care to these people in the lowerand middle-income brackets. Our experience in Duluth and Two Harbors has demonstrated completely that we are able to provide that medical care. Our experience has also taught us that individuals are completely willing to make the necessary monthly payments to receive this care but that they are unable to make substantial contributions to capital. A means must be found to meet this capital need. We feel that S. 1805 is the best means that has yet been provided for this purpose.

Senator HUMPHREY. Now, I know it is very late, but Mr. Halvorson has been waiting so patiently. If you will just come to the stand, and

if Senator Donnell will bear with me, I will be glad to stay and we will listen to your testimony.

STATEMENT OF LLOYD C. HALVORSON, ECONOMIST FOR

THE NATIONAL GRANGE

Mr. HALVORSON. I am Lloyd Halvorson, economist for the National Grange. I was reared in west central Minnesota, and I graduated from the College of Agriculture.

Senator DONNELL. You testified before a committee a year or so ago, did you not, Mr. Halvorson?

Mr. HALVORSON. Yes, I did.

I am a graduate of the University of Minnesota, class of 1939. I continued my graduate work at Iowa State Colloge for 1 year, and returned to Minnesota and spent 1 year as an intern in the Government here in Washington, and got my Ph. D. in agricultural economics in 1943.

I worked for Farm Credit in Kansas City, Mo., for 3 years, and in 1945 I joined the National Grange as an economist.

Senator HUMPHREY. You represent today the National Grange; is that correct?

Mr. HALVORSON. Yes, sir.

For a number of years, the National Grange has given serious study to the problems of rural health. We have concluded that something needs to be done to help rural people enjoy better medical services. The selective-service records showed that the health of rural youth is not what it should be. We know that infant and maternal mortality rates are higher in rural areas than in large cities, and we know that diseases which modern science and sanitation are best able to prevent take a higher toll in rural areas than in the cities.

Senator DONNELL. Is that true of contagious diseases, Mr. Halverson?

Mr. HALVORSON. That is true. Contagious diseases are less preventable in the rural areas. Many of these rural areas do not have public health departments, which is one of the big reasons for it. There are sometimes no quarantines, and wells are not inspected.

In rural areas, there is on the average only 1 doctor for every 1,700 people, while in the cities there is 1 doctor for every 650 people. Not only are doctors scarce in rural areas, but many are old and not upto-date on medical developments. The shortage of dentists and nurses in rural areas is even more pronounced. While rural people rear about half of the Nation's children, nearly all the pediatricians are in large cities.

Senator HUMPHREY. Now, where do you get that information? Mr. HALVORSON. This is from a bulletin published by the Department of Agriculture, in regard to the pediatricians, and is a result of a survey made by the doctors, themselves, the pediatricians.

Senator HUMPHREY. The pediatricians as a profession; is that correct?

Mr. HALVORSON. Yes. These are facts from Government publications.

Medical facilities in rural areas are inadequate and as a general rule are not up to modern standards. The Hospital Survey and Con

struction Act has helped and will help considerably, but some rural communities that need a hospital or a health center and are eligible for grants lack the necessary local organization to take advantage of the aid. Also, some rural communities that do not need a hospital or health center do need a well-equipped doctor's office or a small clinic.

Grange members have always believed that they should do all they can to meet their own needs and that they should call upon Government for as little aid as possible. Because of this philosophy, Grange members have frequently turned to cooperatives as a means of establishing essential services. In 1916, when better credit facilities were needed by farmers, the Grange urged the Congress to set up the Federal land bank system which is a cooperative system of credit. While Federal funds have been used at times, the system is now self-supporting, and it has done much to advance our agriculture and preserve the financial stability of family-sized farms. The cooperative idea advanced into other credit fields as well and more recently into the telephone and electric service business. Here, again, the cooperative form of organization has had phenomenal success in providing essential services which increase the efficiency of farming to the benefit of all and in improving rural living conditions. All this has been accomplished with but little cost to the Federal Government, and even more important, control and responsibility remains with the local people with the prospect that in time the Federal Government can withdraw from the field.

Because of the successful experience with cooperatives, the Grange some years ago began to give serious consideration to the possibility of meeting the health needs of rural people through health cooperatives. We learned of the successful operation and growth of the Farmers' Union Cooperative Hospital at Elk City, Okla., and of other cooperative health plans as well. The idea of group practice, prepayment of medical expenses, emphasis on preventive medical care, and the efficient use of medical personnel made it quite evident that the cooperative form of organization was well-adapted to health

services.

Many rural communities that lack adequate health services or have none at all, have a difficult time attracting medical personnel. Most doctors are city-reared and, in addition, the cost of establishing a complete office or clinic in rural areas in these days of expensive medical equipment is too much for many individual doctors, especially young doctors looking for a place to establish practice. It is imperative in most rural areas that some form of community organization be established if the rural people are ever to enjoy adequate medical care and the fruits of medical progress. For this reason, the organization of health cooperatives or something like them is basic to any self-help solution of the rural health problems no matter what kind of health legislation may be enacted in future years.

At our last annual session, two of our committees expressed themselves on health cooperatives. The education and health committee said:

We believe that through health cooperatives rural people can have high quality comprehensive and preventive medical care at a very reasonable cost.

We recommend that the National Grange initiate or support legislation that would provide financial aid, technical assistance, and stimulation to the formation of health cooperatives as in rural electrification and rural telephones.

The cooperative committee said:

We believe that through health cooperatives, a great service can be rendered rural people and that through a voluntary cooperative health program, there would be no need for a Government-controlled compulsory medicine.

Both these statements were adopted by the delegate body.

Senator HUMPHREY. Would you just let me interrupt a moment. What is the membership of the National Grange?

Mr. HALVORSON. It is about 835,000.

Senator HUMPHREY. How many States does it have its units in? Mr. HALVORSON. In 37.

Senator HUMPHREY. Are these the results of your last annual session; is that correct?

Mr. HALVORSON. That is right; at Sacramento, Calif.

Senator HUMPHREY. How many delegates were at that meeting?

Mr. HALVORSON. Well, there are two from each State, the State master and his wife, and most of the actions arise on the basis of resolutions that come in from the States.

The committee has some right to change the resolutions and add something to them, and so on, but for a number of years the Grange has had resolutions come in from the States favoring the development of health cooperatives, even before this bill came up. In fact, we thought that you had drawn your bill somewhat from our resolutions. Senator HUMPHREY. Well, as a matter of fact, may I say that Mr. Goss-I believe he is one of your representatives, or he is the head of the National Grange-has been gracious enough to send me resolutions of the Grange not only since I have been here in Washington, but the National Grange used to send them to me even while I was the mayor of Minneapolis, because we had a Grange organization in Minnesota, and I was interested in their work.

I have known the Bureau supported the basic program, but as far as the details of the program are concerned, I was not aware of what your attitude was on those particular details.

Now, just one other question: How would you evaluate the political temperament of the Grange?

Mr. HALVORSON. I think it is considered, if anything, to be slightly conservative, but probably somewhat, I would consider it, middleof-the-road; but we look upon this bill not at all as being socialistic, as one of the previous witnesses considered it but, rather, as a way of avoiding compulsory health insurance and as probably the only way we will ever get decent medical service in rural areas.

Senator HUMPHREY. I am interested in your comments, because I wondered how many Socialists do you suppose you have I mean, people of Socialist ideology, in the Grange?

Mr. HALVORSON. Well, there are certainly not enough of them to have much influence, if any, on our policy.

Senator HUMPHREY. Would you say there was 100,000 out of the 800,000?

Mr. HALVORSON. I doubt, sir, if it would be that many.

Senator HUMPHREY. In other words, it is pretty much of a freeenterprise American institution, is it not?

Mr. HALVORSON. That is right.