greetings to you and express his regret that he could not be here today in person. Unfortunately, urgent business makes it impossible for him to be here but he wanted you to know that he looked forward to reading your testimony in the transcript of today's hearing. Mr. Voorhis, you may continue.

STATEMENT OF JERRY VOORHIS, EXECUTIVE DIRECTOR,
COOPERATIVE LEAGUE OF THE U.S.A.

Mr. VOORHIS. Mr. Chairman and members of the committee, my name is Jerry Voorhis, and I appear before the committee on behalf of the Cooperative League of the U.S.A., which organization I am priv ileged to serve as executive director and president for the last 19 years.

The Cooperative League is a national federation of all kinds of mutual and cooperative enterprises in the United States. Its affiliated organizations comprise about 16 million different families in their members, and they are owners of their own businesses which serve their needs for insurance, housing, marketing of farm crops, procurement of farm supplies, credit, health care electricity, and household needs. The purpose of the Cooperative League is to encourage the use of the voluntary self-help method of solving problems which individual families cannot solve alone.

Our support of the legislation before the committee has been repeatedly and specifically expressed by biennial congresses of the Cooperative League which is the supreme delegated authority of our organization.

The reasons for that support are as follows:

Like the Group Health Association of America, the Cooperative League believes in the better and more rational organization of medical care and health services in our country. We do not believe in the interference of professional practice of medicine by laymen. We believe that there are four basic elements in that more rational and effective organization. One is group practice of medicine by balanced groups of doctors and professional medical personnel. Another is prepayment of the costs of medical care on a budgeted basis so as to bring the best of modern medical care within reach of as large a percentage of our people as possible. A third is preventive, comprehensive, regular care, aimed at maintaining family health and keeping people out of hospitals rather than episodic medical care which necessarily limited to attempting to cure disease after it has been serious. And the fourth element is the opportunity and the responsi bility of groups of our citizens to act voluntarily in the formation of group health plans in collaboration with groups of their doctors

and nurses.

Such plans are to be found all across our country, in all sorts of communities, among all kinds and groups of people. Their basic philosophy is that the doctor should be provided with an assured income as a reward for keeping people well instead of having to depend on an uncertain income derived from people after they have

become sick.

We support this legislation-H.R. 9256-because we are convinced it is necessary if voluntary constructive action by consumers of health

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Only where the costs of preventive care are already paid and where doctors' income is thus already assured through the voluntary action of his patients-only under these circumstances is there incentive on the part of doctor and patient alike to keep people out of hospitals and thus to check the alarming increase in costs of medical care and the alarming and soon to be aggravated pressure upon both hospital space and hospital costs. If time permitted I could give a personal illustration of this in the last 4 months. But I think I better not take time to do that because of other witnesses.

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We can submit carefully compiled evidence to show that subscribers group health plans do have hospital utilization rates which are from 50 to 80 percent of those of other insured groups in the populaBut for easily understood reasons group health plans face a difficult problem of receiving financing for the physical facilities they need. This has always been true and no one can accurately estimate how much benefit such plans might have brought to our country though the voluntary action of its citizens if the financial problem could have chbeen solved.

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Such consumer-sponsored plans are nonprofit, of course, to begin has with. They therefore cannot offer expectation of substantial earnings as security. We have all sorts of evidence from all kinds of different plans throughout the country to the effect that if they had been profitmaking organizations they would have had no difficulty, but the fact that they were nonprofit service agencies made it very difficult for them to borrow money they needed so badly. Second, the doctors' facilities, clinic buildings, and the like which are essential if such plans are to operate at all, are single-use buildings and therefore not in the nature of prime objects of investment by financial institutions. Third, in many, many cases the need is greatest in smaller communities where even if the local bank desires to make such loans, it simply lacks the resources with which to do so unless a guarantee is provided such as H.R. 9256 could give. Fourth, while the members and subscribers to such plans-or the potential members and subscribers to such plans-could and indeed have put up enough contribution to finance the operations of a plan, there are many, many instances where they are quite unable to subscribe the amounts of money necessary to finance expensive modern health facilities.

Let me cite a couple of examples.

First, take the case of a small community threatened with loss of its only hospital and of all its doctors and where families subscribed $100 each to provide their town with desperately needed modern clinic facilities. Some $45,000 was needed to complete construction of these facilities over and beyond what could be raised by the people's efforts. In the absence of legislation like H.R. 9256, it took 15 years before these earnest people were able to borrow the funds necessary to supplement their own and to provide the facilities their town needed. Another case is one right now, where an already established group health plan in a rural area is ready and willing to construct a branch clinic in a neighboring community. The nearest hospital to this

Harvey, if research is a major factor and concern on the part of the Congress, and I am sure it is, then the existence of group practice and the fostering of group practice likewise has a secondary effect of fostering patient-oriented research. This is extremely important. Mr. HARVEY. Particular research is being done on the campus of the university; is it not?

Dr. HAFFNER. Yes, it is, but it is being conducted in large part through the clinical facilities at the school.

Mr. HARVEY. You are the executive secretary of the association, is that correct?

Dr. HAFFNER. No, sir, I am the executive director of the Optometric Center of New York.

Mr. HARVEY. I see.

Dr. HAFFNER. I direct the institution.

Mr. HARVEY. Let me ask you, in that capacity, have you received any letters or do you know of any specific instances where doctors of optometry have been denied the opportunity to practice as a group because of lack of financing? Have these specific instances been called to your attention by letter or complaint to the association that you know of?

Dr. HAFFNER. I believe that the American Optometric Association has on file a number of instances where these small business loans were not available to optometrists who were desirous of entering a group practice. I believe that is so. And I think that can be provided.

Mr. HARVEY. Are you telling us that because they were not able to get these small business loans they were not able to go into group prac tice or they were not able to go into group practice on as favorable terms as they otherwise would be able to?

Dr. HAFFNER. I would not know the specific instance, but I would judge it would be as a deterrent. The initial cost of the building and equipment constitutes a major deterrent.

Mr. HARVEY. Can you cite here today or can Mr. McCracken any specific instances anywhere in the United States about optometrists being denied the opportunity to practice in this matter because of the lack of financing? I asked that question not to put you on the spot, but again, because in the State of Michigan, in the banking industry our optometrists are looked upon very favorably with very high credit ratings and they are leading citizens and they are by and large good risks and I have not known them to be turned down by any lending organizations.

Dr. HAFFNER. There is a center in East Lansing which is a fledging institution very closely tied to the needs of the community and I have been in touch, particularly with Dr. Britton who is one of the prin cipals in the institution. They are particularly concerned with this area because they feel as well that such a bill would enable the institution to get started.

Generally, when you have an institution which is nonprofit, it is not within the purview of the Small Business Administration. So for the moment that institution, though it is a community group practice would not have the opportunity to borrow substantial funds for buildings and equipment.

Mr. HARVEY. Is it not true that the doctors themselves could go to the banks and sign, and a lawyer could go down-they have no trouble borrowing the money?

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DEMONSTRATION CITIES AND URBAN DEVELOPMENT 707

Dr. HAFFNER. I am sure that is true.

Mr. HARVEY. You are not telling us in Lansing or East Lansing that they are having trouble borrowing money?

Dr. HAFFNER. I wouldn't think so.

Mr. HARVEY. No. The answer is, the same for the dentists and the same for the physicians, and it is that they do have good credit and they are able to borrow at the present time under conventional terms. Dr. HAFFNER. Sure.

Mr. HARVEY. Thank you.

Mr. BARRETT. Thank you, Mr. Harvey.

Dr. Haffner, all time has expired and we certainly appreciate your coming today. You have given splendid testimony in your statement here this morning. Thank you very much.

Dr. HAFFNER. I am most obliged to you, sir.

(The following letter was submitted for the record:)

Congressman WRIGHT PATMAN,

PENNSYLVANIA OPTOMETRIC ASSOCIATION,

Hershey, Pa., March 14, 1966,

Chairman House Banking and Currency Committee,

tice as Ices been

ation th

House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN PATMAN: The Pennsylvania Optometric Association urges your favorable consideration of H.R. 9256 along with the "optometry" amendments as presented by the American Optometric Association.

Group practices are a way of providing good health care but they must be provided by all health disciplines. To offer restricted care and not include optometric visual care would be to hinder the growth of our excellent health care.

Sincerely,

RAY L. KINCH, O.D., President.

Mr. BARRETT. For next witnesses we have an array of very distinguished gentlemen and we have one of our former colleagues here this morning. He was one of the most capable men in Congress during the time he served here in the House.

We are going to ask Mr. Jerry Voorhis, who is the executive director, representing the Cooperative League of the United States of America and the other witnesses to come forward.

We also have Mr. James Brindle, president, Health Insurance Plan of Greater New York, representing Group Health Association of America, and Mr. James F. Doherty, legislative representative, AFLCIO, accompanied by Mr. Richard Shoemaker, assistant director of the AFL-CIO Social Security Division.

Gentlemen, it is customary that we welcome you and make yourselves at home and I think the choice as to who desires to speak first should be agreed upon among yourselves.

Mr. VOORHIS. I think Mr. Brindle will be first.

Mr. BARRETT. Jerry, I want to say this, it is nice to see you back here again. It has been a long time since I have seen you. You certainly have been one of the most energetic Congressmen I have ever met on the Hill.

Mr. VOORHIS. I appreciate that very much. As a Congressman that was, you can imagine how kind that is from one who still is. I am very grateful.

Mr. BARRETT. To your associates here as well, I am hoping they can get the feeling that they are at home here and make their statements and we will be glad to start with Mr. Brindle.

STATEMENT OF JAMES BRINDLE, PRESIDENT, HEALTH INSURANCE PLAN OF GREATER NEW YORK, ON BEHALF OF THE GROUP HEALTH ASSOCIATION OF AMERICA; ACCOMPANIED BY DR. W. P. DEARING, EXECUTIVE DIRECTOR, GROUP HEALTH ASSOCIATION OF AMERICA

Mr. BRINDLE. Mr. Chairman and members of the committee, my name is James Brindle. I am president of the Health Insurance Plan of Greater New York, an active member organization of Group Health Association of America. With me are Jerry Voorhis, president and executive director of the Cooperative League of the United States of America and secretary of Group Health Association of America, Dr. W. P. Dearing, executive director of Group Health Association of America, and Gibson Kingren of the Kaiser Foundation Health Plan. My testimony today is on behalf of Group Health Association of America and in strong support of H.R. 9256.

Some background on Group Health Association of America may be helpful in evaluating my support of H.R. 9256.

Group Health Association of America is a nonprofit organization dedicated to improving the availability, efficiency and quality of medi cal care. Toward this end the association works especially for the creation and expansion of group health prepayment plans. These plans are actually organizations of consumers and physicians banded together to provide comprehensive health care on a nonprofit basis directly to the individual through group medical practice. The consumer pays a regular monthly fee, in advance, for his health care. I would like to emphasize some key words and phrases in this definition of Group Health Association of America and apply them to the reasoned need for H.R. 9256.

Very important is the word "nonprofit." It represents a blessing to the consumer, we believe on the basis of our experience, in the form of more quality comprehensive medical care for the dollar. Yet it represents years of financial difficulty and frustration for consumers who establish sponsoring organizations to try to build a modern group health program.

Our hope is that you will make it more feasible for these nonprofit groups of consumers, working cooperatively with physicians, to finance group health plans.

Groups of physicians seeking financing for profitmaking medical enterprise seldom have trouble getting financing from their local bank ing institutions or, in the case of loans of major size, from outside banking and insurance firms. When well-to-do physicians with estab lished practices plan to build in prosperous communities, money for f capital expenditures is readily available. For such commercial and profit-oriented ventures, doctors have also found the door of the Small Business Administration open to their needs.

ences.

Many nonprofit group health plans have had quite different experi What is required in the consumer's interest and what must be offered to attract physicians to an economically deprived urban or rural neighborhood may not offer the most attractive prospect venture capital. Location and design of a consumer-sponsored medi cal group facility is based on health service requirements rather than

for