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Everyone today is well aware of the tremendous contribution made by the FHA program toward providing housing for the people of our country. I feel certain that had it not been for the FHA program, many communities throughout the land would have been in desperate position from the standpoint of housing their citizens. I feel strongly that a plan similar to the FHA program would provide the most effective means of meeting our present public health problem as it concerns the inadequacy of medical facilities.

One of the basic functions of our Mutual Service Insurance Co., is to keep the funds of our policyowners invested in such a way as to assure security of principal and adequate return. Another criterion that our companies follow in their investment program is to invest our funds in such a manner as will most effectively serve the best interests of the policyowners to whom the funds belong. For these reasons we have been and will continue to be vitally interested in the possibilities of making investments which will contribute toward a solution to this broad public health problem which now prevails.

There have been times in the past when we have considered mortgage loan applications where the proceeds would be used for the construction or improvement of medical facilities. In most cases our desire to make such loans has been thwarted by the inadequacy of the security we feel we must have in order to maintain a sufficiently high standard in our mortgage loan portfolio. I believe that a program such as is contemplated under H. R. 7700 would contribute a great deal toward improving the possibilities for our companies to consider mortgage loans for the purpose of improving and constructing medical facilities.

We are pleased to have this opportunity to express our views with respect to H. R. 7700. I wish to state again that in my opinion this would be a most constructive piece of legislation and I hope very much that it will be recommended to the House of Representatives by your committee. I firmly believe that if passed by the Congress this bill would contribute immeasurably toward the solution of one of the most pressing internal problems in our country. I want to thank you for the opportunity of expressing the views of our organization in this matter. Very sincerely yours,

MUTUAL SERVICE INSURANCE COMPANIES,
F. F. RONDEAU, President.

AMERICAN LIFE CONVENTION,
LIFE INSURANCE ASSOCIATION OF AMERICA,

WASHINGTON OFFICE,

Washington, D. C. May 12, 19.5.4. Hon. CHARLES A. WOLVERTON, Congress of the United States, House of Representatives,

Washington 25, D. ('. DEAR MR. WOLVERTON : We are replying to your letters of May 5 concerning H. R. 7700 which is presently under consideration by your committee.

No group in the United States has a greater interest in measures to improve the Nation's health standards than the life-insurance companies. We have long been identified in many fields of endeavor devoted to promoting public health.

Medical facility mortgages constitute an investment area into which a large volume of private investment funds have not always readily flowed because of the risks involved. The mortgage loan insurance plan offered in this bill should stimulate investment in such loans.

The volume of investment money which might be attracted into this field at any given time would depend upon conditions existing in the capital markets at that time. We believe, however, that under present conditions the program proposed by H. R. 7700 should be attractive to investors such as life-insurance companies and thus would result in increasing the availabality of funds for medical facility loans.

In the case of life-insurance companies, the field of permissible investment is, of course, subject to the limitations imposed by the laws of the several States. In some instances, these laws might restrict the ability of these companies to undertake the type of loan contemplated by the bill. For example, in some States life-insurance companies can make loans only on buildings used for residential or commercial purposes, and medical-facility loans would qualify in such States only if the medical facilities were considered to be used for commercial purposes. Again H. R. 7700 provides for loans up to 90 percent of realestate value, an amount which exceeds the loan to value ratio (usually 6643 percent) permitted by State law. While some 15 States except from this limitation loans guaranteed by the United States Government or by an agency or instrumentality thereof, in most States the exception is limited only to FHA or VA guaranties and thus is not broad enough for the purposes of H. R. 7700. Finally, H. R. 7700 authorizes leasehold mortgages and in a number of States life-insurance companies are not authorized to acquire this type of mortgages.

I trust that the foregoing constitutes the information you desire. If we can be of further assistance, please do not hesitate to call upon us. Very truly yours,

AMERICAN LIFE CONVENTION,
CLARIS ADAMS,
Executive Vice President and General Counsel.
LIFE INSURANCE ASSOCIATION OF AMERICA,
EUGENE M. THORÉ, General Counsel.

THE MARINE MIDLAND TRUST COMPANY OF NEW YORK,

New York, N. Y., May 7, 1954.
Hon. CHARLES A. WOLVERTON,
Chairman, Committee of Interstate and Foreign Commerce,

House Office Building, Washington, D. C.
SIR: I should like to be recorded in support of H. R. 7700.

I believe that the American public is entitled to good, comprehensive medical care at a cost that it can afford. I further believe that this should and can be done within the framework of the free-enterprise system of ours which, in my opinion, is the true greatness of this country.

A bill such as H. R. 7700 realistically recognizes one of the fundamental difficulties in bringing to the public this type of medical care, that is, the almost insurmountable problem of getting the sizable amounts of capital necessary to construct the medical centers which are essential to modern scientific medical practice. Being so-called single-purpose buildings and being in a new field, the normal sources of mortgage money have been uninterested, placing a serious obstacle in the path of proper development of low-cost medical care for the American people within the framework of private enterprise.

It is because a bill such as H. R. 7700 would encourage private lending institutions to finance sound medical projects and would prove invaluable in bringing good comprehensive medical care to American families at a cost that they can afford that I feel it is to the interest of the country that it be passed. Yours very truly,

H. F. VULTEE, Vice President.

FARM BUREAU MUTUAL AUTOMOBILE INSURANCE CO.,
FARM BUREAU MUTUAL FIRE INSURANCE Co.,

FARM BUREAU LIFE INSURANCE Co.,

Columbus, Ohio, May 25, 1954. Hon. CHARLES A. WOLVERTON,

House Office Building, Washington, D. C. DEAR CONGRESSMAN WOLVERTON: I sincerely appreciated having your letter relative to H. R. 7700. I want to say that we are very much in accord with what you are trying to do, and feel that this amendment to the Public Health Service Act will render an invaluable service to the public.

We are indeed interested in the whole development of plans to bring to the American people greater facilities for obtaining comprehensive medical care on a prepaid basis. We have also recognized that a major obstacle to the realization of that objective is the lack of adequate sources for investment in the capital costs of medical-care centers. Our companies have recently adopted a policy of taking mortgages on the property of, or making term loans to, cooperatively organized medical-care plans, when prudent business judgment indicates that such mortgages or loans are sound investment for our companies.

We heartily endorse your proposal and if there is anything in addition which we can do in support of it, I hope that you will not hesitate to correspond with

me.

Sincerely,

MURRAY D. LINCOLN, President,

THE BOWERY SAVINGS BANK,

New York, N. Y., May 25, 1954. Hon. CHARLES A. WOLVERTON, Chairman, Comittee on Interstate and Foreign Commerce,

House of Representatives, House Office Building, Washington, D. C. DEAR MR. WOLVERTON : In answer to your request for a written expression of my views as to whether a Federal mortgage-insurance program for medical facilities, with terms similar to the present Federal housing-insurance program, might encourage private lending institutions to extend credit in cases where the lender is satisfied as to the credit standing and financial responsibility of the borrower and the borrower's ability to service the loan out of earnings, as proposed in H. R. 7700, the following are my thoughts in connection with the proposal :

It is generally recognized that mortgage investment funds are not readily available for special-purpose properties, which category would include medical facilities. With the sort of loan-insurance program, similar to the Federal housinginsurance program, as proposed in this bill, and with the present availability of mortgage investment funds, it would seem that financing of medical facilities under such a program might be more readily obtained. However, the provision in section 706 (3), stating that “in making his determination of the mortgagor's financial responsibility and ability to repay the obligation, the Surgeon General may rely upon the recommendations of the mortgagee"; should be eliminated and the full responsibility for making the determination of the mortgagor's financial responsibility and ability to repay the obligation should be that of the Surgeon General. Obviously, he should be in a much better position to make this determination, and should, in effect, set up administrative procedures sufficient to make such determination before insuring the loan.

Mortgage lenders in general, while conversant with many types of property operation and management, are in no position to make a determination such as is contemplated in the wording above quoted.

It would seem that with the deletion of this provision, mortgage investment capital might be attracted to the financing of such facilities. Very truly yours,

HARRY HELD, Vice President.

IDAHO ASSOCIATION OF LICENSED NURSING HOMES, INC.,

Caldwell, Idaho, February 20, 1954. Hon. GRACIE PFOST,

House of Representatives, Washington, D. C. DEAR MADAM: I am writing to you as secretary of the Idaho Association of Licensed Nursing Homes, Inc., in regard proposed Federal legislation allowing grants to private nonprofit nursing homes under the Hill-Burton Act.

Please be informed that it is our opinion such outright grants are detrimental to proprietary nursing homes and detrimental to the cause of private enterprise. It places the Government in a position of competing with private nursing homes. We feel that private nursing homes are in a better position to provide the necessary personal care and medical attendance required by the occupants of the numerous nursing homes over the United States, particularly in the State of Idaho.

We feel that if the Government shall be placed in a position of active competition with us, that we should be given the weapons to compete with the Government. That is, proprietary nursing homes be made the proper subject and title for FHA-type loans that will allow a nursing home administrator to borrow 90 percent of the equipped value of a nursing home for 40 years at no more than 5 percent interest. It is our understanding that bill H. R. 7700, as amended, includes the provision above stated to allow FHA type loans for proprietary nursing homes.

We urge your support in this matter which is so important to private enterprise. Very truly yours,

Mrs. ANNA E. FRINT, Secretary.

CRESTWOOD CONVALESCENT HOME,

Mount Vernon, N. Y., April 19, 1954. Representative RALPH A. GAMBLE,

House of Representatives, Washington, D. C. DEAR MR. GAMBLE: A successful proprietary nursing home business is one which gives a great deal of satisfaction to the operator. The care of the aged and infirm has become one of national importance. I attended recently a conference in Washington held by the national committee on the aging of the National Social Welfare Assembly on the question of methods of establishing and maintaining standards in institutions for older people.

If Congressman Wolverton's House bill H. R. 7700 is passed by the House it would be possible for many proprietary nursing home operators to expand their present limited facilities and would in turn help in the solving of this very great problem of care for our older people.

I am writing to ask if you will do all you can to try to help the passage of this bill H. R. 7700. Your effort will be greatly appreciated. Very truly yours,

ANNA M. MOCRACKEN.

CRESTWOOD CONVALESCENT HOME,

Mount Vernon, N. Y., April 19, 1954. Representative RALPH A. GAMBLE,

House of Representatives, Washington, D. C. DEAR MR. GAMBLE: It was my pleasure to attend the first regional conference held in Washington by the national committee on the aging of the National Social Welfare Assembly, on the question of methods of establishing and maintaining standards in institutions for older people.

I have owned and operated a proprietary nursing home for the past 10 years. I know this type of home holds a very definite place in the future plans for the care of older people. As a result, I am greatly interested in Congressman Wolverton's House bill H. R. 7700 which should make it possible for many nursing home operators to expand present limited facilities. Consequently, more of these aged and chronically ill may then be cared for in homes where a homelike rather than institutional-like atmosphere prevails.

I am writing this to ask your help in trying to pass this bill H. R. 7700. I and other nursing home operators will be very grateful for all you can do to help us. Very truly yours,

MURIEL M. HEPNER.

AMERICAN MEDICAL ASSOCIATION,

Chicago, Ill., April 26, 1954. Hon. CHARLES A. WOLVERTON, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR SIR: I would like to take this opportunity on behalf of the American Medical Association to submit for your consideration our views concerning H. R. 7700, 83d Congress, which is currently being studied by your committee.

The stated purpose of the bill is to amend the Public Health Service Act to provide mortgage loan insurance for hospitals and other medical facilities used in connection with voluntary prepayment health plans.

The bill would seek to achieve this purpose by authorizing the Surgeon General of the United States Public Health Service to provide, through the mechanism. of a Federal medical facilities mortgage insurance fund, Federal mortgage insurance of private loans for the construction of additional hospitals and related medical facilities supplying voluntary, prepayment, group practice medical care. The bill would also require that at least 60 percent of the insured facilities be available for serving members of group practice, prepayment health plans. It provides further that the aggregate amount of all outstanding mortgages could. not exceed $1 billion, except that the President could authorize an increase of an additional one-quarter billion.

In view of the aggregate amount of outstanding mortgages authorized to be insured, it is quite obvious that this bill contemplates something far broader than an experimental program.

The American Medical Association is opposed to the proposal for a number of reasons, the first and most important of which is the fact that there is no proved need for this type of legislation. To the extent that it would provide guaranteed loans for the establishment of “personal health service centers" and “offices for physicians and dentists” it definitely represents intrusion by the Federal Government into a field where the job is now being done adequately by private enterprise. Even in the smallest communities, experience has demonstrated that ample funds are available for these purposes from private sources, and that there is no need or desire for Federal governmental guaranties.

On the contrary, our records indicate many examples of communities building facilities to attract young physicians and providing agreeable arrangements with regard to rentals and purchase. This is a growing practice in remote areas.

Another of the stated objectives of the bill is to encourage group practice or, more precisely, “to increase the opportunities and facilities by which doctors may associate themselves together in groups, partnerships, and other private initiative arrangements.” The question immediately arises as to the advisability of enacting legislation through which the Federal Government will throw its weight behind a particular form of medical practice, i, e., group practice, as against the individual practitioner. We do not consider this advisable, and urge that the implications of such a policy be thoroughly explored prior to any action in this respect. The American Medical Association, representing as it does over 140,000 physicians, many of whom are in group practice and many of whom are in solo or individual practice, considers it inadvisable for the Federal Government to enact legislation favoring a particular segment of the profession.

For the foregoing reasons, the American Medical Association does not recommend favorable consideration of H. R. 7700, 83d Congress. Sincerely yours,

GEORGE F. LULL, M. D. Secretary and General Manager.

(The following letter addressed to Mr. Chad F. Calhoun, Vice President, Henry J. Kaiser Co., was transmitted to the committee in reply to the chairman's request for comments on H. R. 7700 :)

MORTGAGE BANKERS ASSOCIATION OF AMERICA,

Philadelphia 2, Pa., May 5, 1954. Mr. CHAD F. CALHOUN, Vice President, Henry J. Kaiser Co.,

1625 I Street NW., Washington, D. C. DEAR MR. CALHOUN: While in Washington Monday I discussed with Mr. Samuel E. Neel, our Washington counsel, your letter to me of April 27, 1954, about Congressman Wolverton's proposal to provide mortgage loan insurance for hospitals and medical facilities, H. R. 7700. In addition, I have personally studied the data you sent with your letter.

It is my personal opinion that the plan proposed has merit. It has been my experience that financing hospitals is a difficult undertaking for two reasons : (1) the management of a hospital is a very specialized operation that few, if any, mortgage lenders know anything about with the consequent fear that in the event of default they will have an unknown problem on their hands, and (2) there is a public-relations problem to consider. A large, national mortgage lender is always fearful of public reaction if a foreclosure is necessary on a property that involves the health and welfare of the general public. Mr. Wolverton's proposals for insuring mortgages secured by this type of property would eliminate both the limiting factors I have just mentioned.

To carry on with your request that the Mortgage Bankers Association interest itself in this proposed legislation, I asked Mr. Neel to prepare an analysis of the proposed bill and to forward his analysis with all other supporting data he feels is appropriate to the individual members of our executive committee for their comments and criticisms. We should have our committee's reactions within a reasonable time and I will forward them to you as soon as we have been able to get an expression of opinion. As stated above, my own personal reaction is favorable. Very truly yours,

W. A. CLARKE.

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