we will get the proper designation so that we will each understand what we are talking about. I would like to have covered for 1965, the amount each State would be entitled to out of the $150 million authorized for hospital construction under the formula. You would have no problem about that?

Secretary CELEBREZZE. Under the Harris bill?

The CHAIRMAN. Yes.

Secretary CELEBREZZE. Yes, we will do that for you.

The CHAIRMAN. Under the administration proposal, as it has been so designated, there would be $100 million for 1965 for this same purpose. I want you to give me the information as to what each State would be entitled to out of that $100 million.

If you can, I want you to give the committee the information as to what each State would be entitled to have under the new formula out of the other $50 million.

Secretary CELEBREZZE. Yes, sir.

The CHAIRMAN. Have you reached the point that you can do that? Secretary CELEBREZZE. Yes, we can.

The CHAIRMAN. I think that would be helpful.

(The information to be submitted appears on pp. 101-104.)

The CHAIRMAN. Without asking too much, suppose we take the fifth year and do the same thing.

Secretary CELEBREZZE. We can do that.

The CHAIRMAN. Then we can get a picture of what the differences will be.

I think it will be helpful and help some of the members to clarify this, as to how many differences there are.

Secretary CELEBREZZE. There are differences under the formula. The CHAIRMAN. The difference runs a total of between $160 and $340 million. That is substantial, I would say.

Secretary CELEBREZZE. There would be a difference in allocation. (The information to be submitted follows:)

Major features of bills and major differences

HEW proposal

For long-term care facilities.

For rehabilitation facilities.

For long-term care.
For diagnostic or treatment cen-

$70

ters.

20

1967.

170

NOTE.-Virgin Islands, American Samoa, or Guam entitled to 1⁄2 of each of above if they demonstrate the need therefor to Surgeon General.

14. Financial aid to State agency: This is a new provision under which not
more than 2 percent of the aggregate allotments to a State for any year (but not
in excess of $50,000) would be available to pay up to 11⁄2 of the cost of administering
the State plan. A State would be entitled to such funds only on condition that
expenditures from State sources for such purposes are at least equal to the
amount expended from State resources during fiscal year 1964.

15. Withholding of payments: These provisions are essentially the same as
in existing legislation. Withholding would be authorized if there is a failure to
comply substantially with provisions required to be included in State plans or
failure to carry out assurances required to be given in application, or failure to
carry out approved plans and specifications, or failure to provide adequate
State funds for administration of State plan.

16. Judicial review (sec. 608): These provisions are essentially the same as
those included in existing legislation. Provision is made for judicial review of
the Surgeon General's refusal to approve a project or his action of withholding
funds.

17. Recovery (sec. 609): This section provides for recovery by the United States
of its proportionate share of the current value of any facility constructed with
the aid of funds under this title of the Public Health Service Act if, within 20
years after construction is completed, the facility is transferred or sold to any
person, agency, or organization not qualified to be an applicant for a project
under this part or not approved by the State agency or its successor or if, within
such period, the facility ceases to be a public or other nonprofit facility. As
distinguished from existing legislative provisions, the right of recovery could
be waived for good cause shown, as determined in accordance with regulations,
and the bill provides that the right of recovery shall not constitute a lien on the
facility prior to judgment.

18. Loans for construction or modernization of hospitals and other medical
facilities (sec. 610): This section is the same as the existing legislation.

This section would authorize loans for construction or modernization of
hospitals and other medical facilities in accordance with the same procedures
and subject to the same limitations and conditions as would be applicable to the
making of grants under this part. These loans for projects in a State could be
approved only if sufficient funds are available from the State's allotment under
sec. 602 for the type of project in volved-and the loans would be made from this
allotment and paid directly to the applicant.

The amount of any loan, or of any loan and grant, with respect to any project
could not exceed the Federal share of the cost of the project. Loans could be
made for periods of up to 40 years and would bear interest at a rate arrived at
by adding 14 of 1 percent per year to the rate which the Secretary of the Treasury
determines to be equal to the current average yield on all outstanding market-
able obligations of the United States, adjusted to the nearest % of 1 percent.
19. Mortgage insurance (sec. 621): Would authorize the Surgeon General to
insure mortgages securing loans for the construction of modernization of private
nonprofit hospitals and medical facilities and proprietary nursing homes.
Applications must be submitted through the State agency, and the State

H.R. 10041

agency must certify that there is a need for the project in accord with the State
plan. The mortgagor must assure that there will be compliance with State
standards for operations and maintenance. The principal obligations secured
by the mortgage must have a maturity satisfactory to the Surgeon General but
not more than 40 years, and the interest (exclusive of premium charges) can
not exceed an annual rate of 5 percent (or 6 percent if found necessary to meet
the mortgage market).

In the case of a project (other than a project for a proprietary nursing home),
the maximum amount of the principal obligation secured by the mortgage can-
not exceed 50 percent of the value of the facility, and when added to the amount
of any Federal grant or loan not in excess of 75 percent of the value of the facility.
In the case of a project for a proprietary nursing home, such maximum would
be 90 percent of the facility's value.

Authorizes insurance liability under this program up to a maximum aggre-
gate amount of $250,000,000 in fiscal year 1965, and additional liability of
$500,000,000 for each of the next 4 fiscal years.

Would establish a medical facilities mortgage insurance fund to be available
without fiscal year limitation for the mortgage insurance program. Premium
charges and other funds received by the Surgeon General in connection with
his operations under the program would be deposited in the fund. The fund
would be utilized to pay all operating expenses, including administrative
expenses authorized in appropriation acts to be paid from the fund. Authorizes
the appropriation of $5,000,000 in fiscal 1965, and such sums as may be necessary
for the next 4 fiscal years, for transfer to the medical facilities mortgage insurance
fund at the Surgeon General's direction. Sums appropriated would remain avail-
able until expended. If the fund is insufficient to make payments on defaulted
loans, the Surgeon General would be authorized to borrow from the Treasury
by issuing notes or other obligations on which interest would be paid at rates
based on the current average yield of outstanding obligations of the United
States of comparable maturities. The Surgeon General would fix premium
charges for insurance of mortgages at rates adequate to cover expenses and
probable losses, but not in excess of 2 of 1 percent per annum.
20. Federal Hospital Council (sec. 641): This section is substantially the
same as existing legislation. Per diem rate increased to $75.

21. Research studies and demonstrations (sec. 644(a)): As in existing legis-
lation, this section provides for the conduct by the Surgeon General of research,
experiments, and demonstrations relating to effective development and utiliza-
tion of services, facilities, and resources of hospitals or other medical facilities.
It would also authorize him, after consultation with the Federal Hospital
Council, to make grants-in-aid to public or private nonprofit entities, institu-
tions, or organizations for research, experimental, or demonstration projects
relating to the development, utilization, or coordination of such services,
facilities, or resources.

As new provisions, this section provides that, except in unusual cases, the
total paid for experimental or demonstration construction or equipment could
not exceed $500,000, and could not exceed 21⁄2 of so much of the cost of the facility
or equipment as the Surgeon General determines is reasonably attributable to
experimental or demonstration purposes. (Participation under existing legis-
lation has, through appropriation language, been restricted to 66% percent.)