Under the loan provisions of the Health Professions Educational Assistance Act (sec. 741(e)) and the Nurse Training Act (sec. 823 (b)(5)), the interest rate which may be charged the borrower is limited to 3 percent per annum or the going Federal rate (as defined in the acts) at the time the loan is made, whichever rate is the greater. Under the Higher Education Act (sec. 428 (a)(2)) the Federal Government pays the first 3 percent of the interest due on the borrower's loan. Therefore, the refinancing of existing loans and the making of new loans under the Higher Education Act will result in increased net interest costs to the Government. Also, increased administrative costs can be expected in connection with loan refinancing_transactions. Sections 5, 6, and 7 of the bill would amend existing title VII and title VIII of the Public Health Service Act to encourage the use of private or other nonFederal funds to meet student loan needs by allowing the Secretary of Health, Education, and Welfare to (1) guarantee timely repayment of funds borrowed from private institutions, (2) reimburse the school for up to 90 percent of losses on loan defaults, and (3) make payments to the school for the difference between the interest payments received from student loans and the interest which the school or a student-assistance organization pays to borrow the funds. Moreover, the proposed legislation would authorize the Secretary, Health, Education, and Welfare with certain exceptions to guarantee and subsidize interest paid on a bank loan made to any student on the same terms as if made under one of the federally supported loan programs. Since the interest rates charged by private lenders probably would be higher than those provided for loans made from student loan funds, the Government may incur greater costs for the interest differential than would be incurred if appropriated funds were used for loan-making purposes. The bill would provide no criteria by which consideration would be given to the financial ability of the student or his family in determining whether all or a portion of the interest differential should be subsidized. The committee may wish to consider criteria for inclusion in the bill similar to that stipulated as a condition for student loans under section 428(a)(1)(C) of the Higher Education Act. The bill would create two revolving funds for the purpose of financing loans to students under titles VII and VIII, respectively, of the Public Health Service Act. These funds would be used to make deposits into student loan funds at those schools which are unable, for legal or other reasons, to take advantage of private capital with Federal assistance. The use of revolving funds to finance activities under the pertinent provisions of the bill would represent a departure from the regular annual review and affirmative action through the budgetary and appropriation processes and, accordingly, would result in a lessening of congressional control. Whether adequate justification exists for this departure we are not in a position to state, but suggest the matter be fully evaluated in the consideration of this bill. We note the bill would provide no limitation on the total amount of deposits into student loan funds which could be outstanding at any one time. If the revolving fund provisions are retained in the bill, the committee may wish to consider the desirability of establishing such limitations. Also, under the proposed legislation student notes would be assigned to the Secretary who could sell participations in obligations so acquired (through the Federal National Mortgage Association or otherwise) to secure capital funds from the private market for deposit in the revolving funds. In effect, the Secretary, Health, Education, and Welfare, would be authorized to borrow funds directly from the public to finance a portion of its student loan operations without showing such borrowings as part of the public debt. Also, since the bill provides that if at any time the Secretary determines that moneys in the funds exceed the requirements of the funds, such excess shall be transferred to the general fund of the Treasury, funds could become available for use for general Government purposes from borrowings not shown as part of the public debt. The rate of interest which would be paid by the Secretary on the participation obligations would be dependent on market conditions at the time the loan obligations are offered for sale. Consequently, it is not determinable at this time to what extent, if any, the interest costs of financing through the issuance of participation obligations would exceed the interest cost of financing through congressional appropriations and the related public debt obligations. However, to the extent that the interest rates on the participation obligations may be larger than the interest rate on public debt issues having comparable maturity, there would be added cost to the Government. In reports to the Congress on our audits of the Export-Import Bank of Washington for the fiscal years 1962, 1963, and 1964, we described sales by the ExportImport Bank of participation certificates to commercial banks. The interest rates on the participation certificates sold in fiscal years 1962 and 1964 were at least one-fourth of 1 percent higher than the interest rates on Treasury securities with comparable maturities issued at a comparable time. However, the interest rate on the participation certificates sold in fiscal year 1963 were about the same as the interest rates on Treasury securities with comparable maturities. Section 3(a) of the bill proposes an amendment to section 725(c) of the Public Health Service Act. It appears the reference should be to section 725(d). The last line in section 7 of the bill cites section 428(c)(1)(A) of the Higher Education Act of 1965, but the reference should be section 428(b)(1) (A). We have no other comment or recommendation to offer. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. The CHAIRMAN. When you stop to think about it, optimum use of present day medical knowledge could cut the death rate in half. That is how important the bill is. In the face of medical capabilities today, poor health is the greatest disgrace to our vaunted American regard for the human welfare. It has been said that disease causes more hospitalization of our fighting men in Vietnam than wounds. It has been said that the ratio is 4 to 1 on the casualty lists. I am glad to see that our Secretary of Health, Education, and Welfare and our Surgeon General are both back from Saigon safely. We welcome you back. We are glad to have you at the hearings. They must have decided, Dr. Stewart, that they did not need doctors so badly or they would not have let you come home. Our first witness this morning will be the Secretary of Health, Education, and Welfare, Hon. John W. Gardner. STATEMENT OF HON. JOHN W. GARDNER, SECRETARY OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY DR. WILLIAM STEWART, THE SURGEON GENERAL OF THE PUBLIC HEALTH SERVICE; DR. PHILIP LEE, ASSISTANT SECRETARY FOR HEALTH AND SCIENTIFIC AFFAIRS; AND JAMES KELLY, COMPTROLLER Secretary GARDNER. Mr. Chairman, members of the committee, I am happy to appear here today to express the Department's strong and enthusiastic support for H.R. 13196, the proposed "Allied Health Professions Personnel Training Act of 1966," introduced by the distinguished chairman of this committee, Mr. Staggers. Mr. Chairman, in the past 3 years the Congress has enacted a number of major pieces of health legislation that will contribute significantly to improvement in the quantity and quality of our health manpower resources. Most of this legislation came from this committee. You have written into law the Health Professions Assistance Act of 1963 and the 1965 amendments; the Nurse Training Act of 1964; the Heart, Cancer, and Stroke Amendments of 1965, and other important measures. Under the Health Professions Educational Assistance Act of 1963, and the 1965 amendments, and under the Nurse Training Act of 1964, steps are being taken to narrow the gap between the supply and demand for physicians, dentists, nurses, optometrists, podiatrists, and pharmacists. Grants under these programs to date will result in the addition of 885 new first year places in medical schools, 372 new places in dental schools, and 1,125 new places in nursing schools. Every one of these new health laws was a major step forward, and a necessary one-necessary because as a nation we are committed to nothing less than providing the very best in health care to every American. The extent and complexity of that commitment requires that we utilize all of our health resources as efficiently and effectively as possible. H.R. 13196 is one step toward that end. It is one part of our overall approach to the complex and changing health care picture. It would carry out one of three major health proposals made by the President in his March 1 message on domestic health and education. Those recommendations related to modernizing obsolete health care facilities; revitalizing State and local public health services, and training highly qualified people in the allied health professions. It is, of course, toward this last objective that H.R. 13196 is directed. The goal would be to meet a growing need for supervisors of subprofessional workers, for teachers in the allied health professions, for highly skilled technical specialists and for new types of allied health professionals. The proposed legislation would authorize a 3-year program to provide Federal assistance to schools and students for the expansion and improvement of baccalaureate and advanced degree training. The bill also extends additional loan forgiveness to doctors practicing in poor rural areas. And it provides for conversion of the health professions and nurses student loan programs to a more flexible approach allowing both Federal subsidy and guarantee of privately financed loans as well as direct Federal loans. Mr. Chairman, the demand for health care in this country is growing, and will continue to grow, and here are some indicators. The annual expenditure on health and medical services in this country increased from $13 billion in 1950 and $27 billion in 1960 to approximately $40 billion last year. Private spending for personal health care in this country in 1965 was more than $26 billion-about 6.1 percent of personal consumption expenditures. Many factors are at work to enlarge the demand: rising incomes, better education, urbanization, population growth, the changing age structure of the population, and new mechanisms of payment for services, including private insurance coverage and public programs. Although physicians, dentists, and nurses form the nucleus of the health manpower team, we rely for services on an increasing number and variety of other health workers. There is a need for allied health professionals to extend the reach of services, both in terms of quantity and quality that can be provided by physicians and dentists. There is a need for a virtual army of health workers at the subprofessional level who will require training and supervision to provide needed services. Within the past 3 years, public or private agencies in many States have published studies pointing to shortages of health manpower, and the need for new and expanded training facilities. For example, a survey by the Georgia Hospital Association, reported on February 23 of this year, revealed 1,574 immediate openings in the paramedical area in hospitals and nursing homes. The shortages included a need for 20 medical record librarians, 30 dieticians, 58 medical technologists, 22 X-ray technologists and 15 physical therapists, and 6 occupational therapists. In another example, the Health Careers Council of Illinois reported in November 1965 that: "All doubts about the extent of personnel vacancies in Illinois hospitals have been removed by the just released study of budgeted hospital personnel vacancies, conducted by the Illinois Hospital Association. Total budgeted vacancies have increased 79 percent from 1,950 vacancies reported in 1963 by 284 hospitals to 3,485 reported in 1965 by only 270 hospitals." Estimates based on studies by the Public Health Service and by professional groups show that to meet our needs in some of these fields would require that before 1975 American schools graduate annually an estimated: Twice the present number of medical and X-ray technologists; Eight or ten times the number of medical record librarians, physical therapists, and occupational therapists. Mr. Chairman, an excellent appraisal of the overall situation was made by the National Commission on Technology, Automation, and Economic Progress, which only a few weeks ago published its first report. In assessing the application of new technology to meeting the Nation's health needs, this distinguished Commission said: The gap between the technological potential and our ability to apply it effectively is partly due to the lack of a significant improvement in the proportion of physicians to population. We have also not developed the proper manpower training programs for the new technologies. We have continued to hold on to our traditional and basic training programs in the various health and medical fields without analyzing the new technologies available and the real possibility of training new categories of manpower who can perform many of the functions now carried out by highly skilled and scarce professional personnel. One solution lies in restructuring our training programs with current scientific and technological developments. The only solution, in the long run, is an increase in the number of trained medical personnel, physicians, nurses, and medical technicians in all categories. For this we need an extensive planned program of Government support for the creation of more schools, expansion of enrollments, knowledge and technology can be most effectively applieo, and as seems likely, training of new categories of health personnel to supplement and complement those already in existence. It will require an expansion of existing programs, and the development of new programs such as the one proposed in H.R. 13196, to meet the growing demand for health workers. We are, as you know, expanding our efforts to support the education of physicians, dentists, nurses, podiatrists, and optometrists. We are also expanding our support of programs to train subprofessional, prebaccalaureate health workers, such as practical nurses, nurses aids, dental assistants, cytotechnologists, medical assistants, and laboratory assistants. At the present time, substantial Federal aid is being made available. for the support of health occupations training at the vocational and technical level. Under the Office of Education's vocational education program, preparatory training is provided for some 56,000 persons annually in the subprofessional health occupations, including practical nurses, nurses aids, dental assistants, medical assistants, and laboratory assistants. This represents an almost tenfold increase in the past 10 years. Supplemental vocational training upgraded the skills of another 18,000. Additional technical personnel are trained under MDTA and various special-purpose programs such as cancer control. One of our best training programs for the allied health professions has been in the Vocational Rehabilitation Administration. These programs have trained people in physical therapy, occupational therapy, speech and hearing, and rehabilitation counseling, among others. H.R. 13196 would permit the construction of teaching facilities which is not possible under present VRA authority. We intend that the new program, if enacted, will complement the program now carried out by VRA and will be fully coordinated with it. We believe it is important to integrate closely as far as possible, training for the allied health professions. In the implementation of this legislation the VRA and other agencies of the Department would participate fully in the planning of the program and the review and approval of applications under the program. In order to provide supervisors and teachers for subprofessional workers and to provide workers to carry out highly skilled, specialized professional tasks we must expand and improve the present training programs for allied health professionals at the baccalaureate and advanced degree levels. TRAINING FOR THE ALLIED HEALTH PROFESSIONS In 1963 the last year for which official reports from the schools are available, there were some 5,000 graduates at the baccalaureate and about 2,000 more at the advanced degree levels in medical technology, X-ray technology, physical and occupational therapy, dental hygiene and other health professions. On the basis of information obtained from professional organizations in these fields, we estimate that there has been only a slight increase in the last two academic years. Under the proposed 3-year program in H.R. 13196, training capacity for these and similar groups might be increased by 3,000 to 4,000 depending on the size of the appropriation and the speed with which the schools are able to respond to this stimulus. H.R. 13196 would authorize: 1. Grants for construction of teaching facilities; 2. Grants for schools for educational improvement; 3. Traineeships to help prepare teachers, administrators, supervisors, and other personnel in specialized practice; and 4. Project grants to develop, demonstrate, or evaluate curriculums for training new types of health technologists. The construction grants are patterned after those now available for medical, dental, and certain other health professions schools under the Health Professional Educational Assistance Act, and to nursing schools and under the Nurse Training Act. I think it is important to emphasize the qualitative aspects of this bill, especially in view of the limited number of people it deals with in relation to the total demand. We are seeking to encourage the crea |