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The original documents are located in Box 22, folder "1975/01/04 S2994 National Health
Planning and Resources Development Act (1)" of the White House Records Office:
Legislation Case Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 22 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
APPROVED JAN 4 1975
THE WHITE HOUSE
ACTION
WASHINGTON
Last Day: January 4
1/4/75/6/75
January 2, 1975
10 ARCHIVES Pated
MEMORANDUM FOR:
THE PRESIDENT
FORD is LIBRARY GERALD
FROM:
KEN COLE
SUBJECT:
Enrolled Bill S. 2994 National Health
Planning and Resources Development Act
SEALO R. FORD
BACKGROUND
Since 1967 the Federal Government has been supporting state and local
comprehensive health planning through a series of formula grants to state
agencies and through project grants to local agencies, both Governmental
and non-profit. This legislation would create new health planning machinery
in every state and local health service area to replace existing activities.
The bill also authorizes a continuation, with amendments, of the Hill-Burton
medical facilities construction program.
CURRENT SITUATION
Earlier this year, the executive branch proposed legislation to improve health
planning activities. While this bill incorporates elements of the Administration's
approach toward local health planning, it goes beyond the Administration's
proposals by specifying coordination, administrative and procedural require-
ments in extensive detail. In addition, it would require more direct Federal
involvement in the development and administration of health planning agencies
- particularly at the State level - then currently exists.
The bill authorizes spending of over $1 billion for fiscal years 1975, 1976 and
1977. Your revised 1975 and 1976 budget decisions and the OMB projection
for 1977 contemplates spending of approximately $500 million over the same
time period. Hill-Burton construction grants account for $390 million of
the total.
Additional information is provided in Roy Ash's enrolled bill report (Tab A).
There is a great deal of interest in this bill. In the health establishment, the
AMA has urged you to veto the bill. The National Blue Cross Association,
the American Nursing Home Association, and the Health Insurance Association
-2-
of America, recommend that you approve the bill. Mel Laird and Elliot
Richardson have called asking that they be recorded as recommending approval.
Jim Hastings has asked that you be informed that he has spent 2 years working
on this bill. He thinks it is a good bill and urges you to sign it.
The National Governors' Conference has not taken a formal position on the
enrolled bill. The Conference staff reports that they "got 80% of what the
Governors' wanted in the bill." Governor Cal Rampton, currently Chairman
of the Governors Conference, urges approval. On the other hand, Governor
Reagan has sent you a telegram urging disapproval of the bill. The National
Association of Counties will support approval or a veto. They are concerned
about how HEW would administer the program.
The original bills passed the Senate by a vote of 65 to 18 and the House of
Representatives by a vote of 236 to 79. The Conference Report was adopted
by voice vote in both houses.
OPTIONS
1.
Sign the bill
Pro: Would consolidate and improve Federal health planning
authorities, phase out the poorly conceived regional medical
programs and refocus the Hill-Burton programs on areas of
recognized need.
Con: Excessive statutory requirements at the state and local
levels which, when coupled with Federal approval of such
detailed matters as staff size and qualifications, internal
operating procedures of the state, etc. , have the appearance
of a virtual federalization of the health planning apparatus at
the state and local levels.
2.
Pocket veto the bill
Pro: The high authorization levels - $1 billion over 3 years
compared to $500 million contemplated by OMB - would
create strong pressures for greater spending. Would also
require an additional 200-350 Federal employees to administer.
Con: Even if fully funded, federal spending under these programs
would amount to only .3 percent of the U.S. health care
dollar - a small investment compared to the potential benefit
of correcting serious defects in a major sector of the economy.
-3-
RECOMMENDATIONS
Areeda -
Sign the bill. OMB not persuasive - Federalism
argument not strong. Funding authorization
is too high, but President could cover this
with a signing statement.
Weinberger -
Approve - it is example of effective legislative
cooperation between the Administration and
the Congress - product of bipartisan effort -
bill will consolidate and improve health planning
efforts and help reduce rapidly rising cost of
medical care. The Secretary would like to talk
to you if you are considering a veto.
Cole -
I recommend approval.
Friedersdorf -
Pocket veto
(Vern Loen)
Ash -
Pocket veto - bill incorporates many Admin-
istration provisions but we have reservations
about the extensive Federal role and costs.
DECISION: S. 2994
Sign (Tab C)
me
Pocket Veto
(Sign memorandum of
disapproval at Tab B)
THE WHITE HOUSE
ACTION
WASHINGTON
January 3, 1974
MEMORANDUM FOR:
THE PRES/IDENT
FROM:
KEN COLE
SUBJECT:
Secretary Weinberger's views
on three pending enrolled bills
Secretary Weinberger called this morning to strongly
urge that his personal views about the following
three bills be brought to your attention. The
Secretary's views will be transmitted to you in the
enrolled bill memorandum.
1. H.R. 17045 - Social Services Amendments of 1974
The Secretary strongly recommends that you sign
this bill.
2. S. 2994 National Health Planning and Resources
Development Act of 1974
Here again the Secretary strongly recommends your
approval of this bill.
3. H.R. 14449 - Extension and Modification of the
Economic Opportunity Act
On this bill the Secretary feels strongly that
you veto this bill and issue a memorandum of
disapproval.
I call these three bills to your attention separately
because of the Secretary's strong recommendations.
You may want to telephone him prior to acting on these
bills.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 31 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 2994 - National Health Planning
and Resources Development Act of 1974
Sponsor - Sen. Kennedy (D) Mass.
Last Day for Action
January 4, 1975 - Saturday
Purpose
Authorizes the establishment of a new Federal program to
assist State and local health planning; continues and
amends the Hill-Burton medical facilities construction
program.
Agency Recommendations
Office of Management and Budget
Disapproval (Memorandum of
Disapproval attached)
Department of Health, Education,
and Welfare
Approval
Department of the Treasury
Would concur in disapproval
recommendation
Department of Housing and Urban
Development
Defer to HEW (Informally)
Veterans Administration
Defer to HEW
Discussion
S. 2994 would require the creation of new health planning
machinery in every State and local health service area
to replace current health planning activities of existing
State and areawide comprehensive health planning (CHP)
agencies and planning activities undertaken in the past
by some Regional Medical Program (RMP) entities. S. 2994
would also continue and amend the Hill-Burton medical
facility construction program.
2
Current health planning at the Federal, State and local
levels is largely fragmented, uncoordinated and ineffective.
Earlier this year the Administration proposed legislation
to improve planning activities primarily at the local level.
While S. 2994 incorporates elements of the Administration's
approach toward local health planning, it goes far beyond
the Administration's proposals by specifying organization,
administrative and procedural requirements in extensive
detail. Moreover, it would require substantially more
direct Federal involvement in the development and admin-
istration of health planning agencies--particularly at the
State level--than currently exists or was proposed by the
Administration.
The following sections of this memorandum--on health planning,
health resources development, and budgetary impact--compare
the major provisions of S. 2994 with the Administration's
proposal.
Health Planning
S. 2994 contains three major provisions authorizing the
establishment of new national health planning machinery.
It would require the development of (1) national guidelines
for health planning, (2) a nation-wide system of regional
health systems agencies (HSAs), and (3) two types of State
health planning bodies--the State health planning agency and
the State Health Coordinating Council (SHCC).
National guidelines. S. 2994 would require the HEW Secretary
to issue within 18 months "guidelines concerning national
health planning policy, " including " standards for the
appropriate supply, distribution and organization of health
resources, " and a statement in "quantitative terms"--to
the maximum extent practicable--of "national health planning
goals.'
The bill also would establish a National Council on Health
Planning and Development in HEW. This 15-member advisory
council would include representation from VA, DOD, HEW,
Health Systems Agencies, State Health Coordinating Councils
and the public.
The Administration bill did not propose national health
policy planning guidelines. Moreover, it specifically
proposed the termination of the existing Advisory Council
on Comprehensive Health Planning on the grounds that such
a council was unnecessary.
3
Health Systems Agencies. The provisions in S. 2994 for the
designation of health service areas and the HSA membership
requirements conform closely to those contained in the
Administration's proposal. The Administration proposal did
not, however, contain the entitlement-type formula grant
provision, the Fund for development grants, or requirements
for staff size and structure as detailed as those in the
enrolled bill. Moreover, it would have restricted HSAs to
private non-profit entities.
A major provision of S. 2994 would require establishment
of health service areas throughout the United States and
the creation of Health Systems Agencies (HSAs) for each
area. The HEW Secretary would be required to designate
HSAs within 18 months from the date of enactment, giving
priority to applications from existing areawide comprehensive
health planning agencies established under section 314 (b)
of the Public Health Service Act, or from RMPs. The boundaries
of the health service areas for which HSAs would be designated,
would, however, be designated by the Governor of each State
and would be subject to revision by the HEW Secretary if the
area failed to meet the criteria in S. 2994, including in
most instances a population requirement of between 1/2 to
3 million. The Secretary would designate health services
areas if a Governor failed to submit areas for the Secretary's
approval. It is anticipated that approximately 200 HSAs
would ultimately be designated throughout the country.
HSAs could be private non-profit corporations, regional
planning bodies (under certain conditions) or single units
of general local government. The bill would require consumers
to constitute a majority, but not more than 60%, of the
HSA governing body membership. The remainder of the governing
body would have to include "providers" of health care,
local government officials, representation from non-
metropolitan residents, the Veterans Administration, and
health maintenance organizations (HMOs). S. 2994 would
specify in detail the types of staff expertise HSAs must
have and would set minimum staff sizes for HSAs (based on
population). The bill would require an absolute minimum
HSA staff of 5, with a minimum of 25 for areas with larger
populations.
HSAs would be required to establish and update annually
a health system plan and an annual implementation plan.
These plans would consist of a detailed statement of HSA
goals for developing and improving health services and the
4
specific actions proposed to achieve those goals. HSAs
would implement their plans by providing technical assistance
to individuals and public and private entities through
project grants and contracts funded through the Area Health
Services Development Funds, also required by S. 2994.
HSAs would have the authority to review and approve or dis-
approve the proposed use of virtually all HEW funds provided
for services or construction in the HSA area. The Secretary
could, however, make grants for such disapproved projects,
after notifying the HSA of his reasons for doing SO.
S. 2994 would require HEW to award minimum annual "planning
grants" to each HSA for its operating costs in an amount
equivalent to 50¢ multiplied by the population of the area
or $3.8 million whichever is less; the minimum grant to any
HSA, however, would be $175,000. HSAs receiving certain
non-Federal funds would be eligible for additional Federal
bonus monies.
In addition to operating support, S. 2994 would require HEW
to make annual development grants to each HSA of not more
than $1 multiplied by the population of the health service
area to enable the agency to establish and maintain an
Area Health Service Development Fund. Development grants
would be used for the "planning and development of projects
and programs necessary for the advancement of the health
system" described in the health system plan but could not
be used for the construction or financing of health services.
The Fund would be, for all practical purposes, a bank account
into which the annual HEW development grant would be deposited.
State planning. The Administration bill would have left
health planning at the State level generally up to the
States. In contrast, S. 2994 would require State health
planning and development agencies to be established, would
authorize operating grants to be made to the State agencies,
and would specify in extensive detail the functions and
procedures to be followed by the agencies--all of which HEW
would be required to approve.
Under S. 2994, states would be required to establish State
agencies within 4 years or face a cut-off of all HEW health
service and resource development funds. In addition, the
Governors would be required to appoint State Health Coordinating
Councils (SHCCs) to prepare the final State health plans
based upon the HSAs proposals, and to coordinate the health
5
systems plans and annual implementation plans of the HSAs.
Federal operating grants to State agencies would be limited
to 75 percent of costs; these funds could not be used to
reduce the amount States spent on health planning activities.
The enrolled bill would mandate State agencies to prepare
"State Administrative Programs" which Governors would be
required to publish for public comment and to submit to
HEW annually for approval. S. 2994 enumerates extensive
requirements for the State planning agency which the HEW
Secretary would have to stipulate and approve in areas
such as staff size and qualifications, operating procedures,
health information statistical gathering, evaluation methods
and procedures, fiscal controls, and appeal procedures in
those situations where the State and an HSA may disagree.
In addition, State planning agencies would be required to
review at least every 5 years and to make public their
findings with respect to the appropriateness of all institu-
tional health services being offered in the State. S. 2994
would also authorize grants to up to six State agencies for
the demonstration of health care rate regulation functions.
While the provisions in S. 2994 relating to State Health
Coordinating Councils and rate regulation grants are similar
to those contained in the Administration proposal, the
Administration opposed Federal designation of State planning
agencies, the extensive, detailed requirements for functions
to be performed by State planning agencies and State Health
Coordinating Councils, and the regulatory and approval rela-
tionship between those State bodies and HEW.
Other provisions. In addition to the activities described
above, S. 2994 contains the following planning requirements,
none of which were in the Administration proposal:
-- creation of a national health planning information
center
-- development, within one year, of a Federal classifi-
cation system for health services institutions and uniform
systems for calculating (a) individual institutional costs
and volume of service, (b) aggregate health care operating
costs and volume of service and (c) rates to be charged
to health insurers by health service institutions
-- funding for at least five centers for multidisciplinary
health planning development and assistance, to be in
6
operation by June 1976 "to the extent practicable"
-- review by HEW of the budget of each HSA and State
agency annually and an evaluation of their performance and
operations at least every three years
-- preparation of a report within one year to the Congress
containing recommendations with respect to the termination
of (a) advisory committees established by the PHS, mental
health and alcoholism Acts, and (b) agency reports required
under such Acts. S. 2994 would prohibit the termination of
these advisory committees except by an Act of Congress.
Health Resources Development (Hill-Burton)
The other major section of S. 2994 would revise the authorities
for making grants and loans under the Hill-Burton hospital
construction program.
The Administration bill proposed limited project grant
Federal assistance for modernization or replacement of public
or other nonprofit hospitals and the construction of out-
patient facilities. Priority would have been given to
hospitals (not less than 100 beds) in medically underserved
areas whose facilities are decrepit and whose acute-care
bed occupancy rate has been 80 percent for at least two
years.
The Administration proposed terminating HEW approval of
State facility plans and allocation of funds by State formula.
The Administration proposal also would have terminated direct
Federal loans and loan guarantees, relying exclusively on
project grants.
S. 2994 would amend the Hill-Burton program to provide
Federal grants and loans to public and non-profit private
agencies, and loan guarantees and interest subsidies to
non-profit private agencies, for the following:
-- modernization of existing medical facilities
--- construction of new outpatient facilities
-- construction of new inpatient facilities in areas
which have experienced recent rapid population growth, and
-- conversion of existing medical facilities to provide
new health services.
7
The bill would also authorize HEW to provide direct assistance
through project grants for up to 75 percent of the costs
(100 percent in poverty areas) for construction and moderniza-
tion projects designed to prevent or eliminate safety hazards
in medical facilities or to avoid noncompliance with State
or voluntary licensure or accreditation standards.
S. 2994 would continue the requirement that States prepare
and maintain State medical facilities plans for approval
by the Secretary of HEW. Responsibility for determining
medical facility construction priorities would be vested
in the new State agencies that S. 2994 would require. The
Secretary of HEW would issue regulations under which each
State agency would be required to give "special considera-
tion" in determining priorities to rural communities, rural
or urban poverty areas, areas with small financial resources,
and densely populated areas. Like the old Hill-Burton
program, individual applications for Federal medical facility
development would generally originate at the HSA level and
be forwarded to the State agency and SHCC for approval. HEW
would approve every individual proposal after review at the
HSA, State agency and SHCC levels.
S. 2994 would authorize HEW to make an annual allotment to
each State of not less than $1 million based on population,
financial need and the need for medical facilities projects.
HEW also would be authorized to make direct loans for medical
facility construction and modernization from a loan revolving
fund to be established in the Treasury. In addition, HEW
would be authorized to guarantee loans made to private non-
profit entities by private lenders or the Federal Financing
Bank, and to pay a 3 percent interest subsidy on such loans.
S. 2994 would remove the current statutory limit of $1.5
billion on the amount of outstanding loan principal which
may be guaranteed or made directly by HEW. In addition,
unlike current law, S. 2994 contains no provision which would
make taxable the interest on any loans made to public bodies
and sold and guaranteed by HEW.
Administration proposals not incorporated in S. 2994, in
addition to those already mentioned, included a lower
Federal share (12.5 percent V. the 66 to 100 percent generally
in S. 2994), mandatory State matching funds, a finding that
applicants are unable to obtain other assistance, and a
requirement that applicants establish a sinking fund to cover
future modernization needs.
8
Budgetary Impact
S. 2994 would authorize spending of over $1 billion for
fiscal years 1975 through 1977, as detailed in the attached
table. In contrast, the revised 1975 and 1976 Budget
decisions, and the current projection for 1977 contemplate
spending of approximately $500 million over the same 3-year
period. The higher authorizations contained in S. 2994
would likely generate strong pressures for high funding levels.
Arguments in favor of approval
1. HEW contends that the enrolled bill marks "a major
Administration triumph" because it would:
-- phase out RMP, "a significant achievement in an
era when Congress has resisted vigorously attempts to
eliminate health programs,'
-- "combine scattered, sometimes inconsistent and
uncoordinated planning authorities into a single, carefully
structured program,"
-- "take a giant step toward converting Hill-Burton
from a rigid formula grant program to a flexible project
grant program,' and
-- "encourage State regulation of the rates at
which health services are provided," e.g., physician fees
and hospital charges.
2. Even if fully funded, the total Federal spending
for these programs authorized in S. 2994 would amount to
only about .3 percent of total national health spending--
a relatively small investment compared to the potential
benefits of correcting serious defects in a major sector of
the economy.
3. A viable network of improved planning entities
could make a potentially important contribution to the
successful implementation of national health insurance.
HEW suggests that the development of such a planning network
is an "essential base for any national health insurance
financing system."
4. The formula-type mechanisms for allocating funds
would reduce controversy by providing a uniform and rela-
tively objective means of funding hundreds of potential
9
grantees. It also would reduce the size of the HEW
administrative apparatus potentially needed to run a project
grant program properly.
5. S. 2994 would achieve a measure of reform in the
medical facilities (Hill-Burton) construction program by
significantly reducing the authorization levels, limiting
the different kinds of construction for which Federal
assistance would be available, and requiring that special
consideration be given to rural and urban poverty areas
and densely populated areas.
6. Disapproval could result in a protracted period
of wasteful funding of the nearly defunct RMP and Hill-
Burton programs, at levels considerably higher than the
proposed 1975 authorizations in S. 2994.
7. Many of the provisions contained in S. 2994 are
desirable and would probably be detailed in HEW implementing
regulations in any event. Moreover, the CHP and RMP programs
suffered from too little statutory specificity, making their
objectives vague and transitory.
8. There is no reason to expect that the 94th Congress
would produce legislation in this area any closer to the
Administration bill than S. 2994. On the other hand, it
is difficult to envision a more detailed bill than S. 2994.
Arguments against approval
1. S. 2994 would stipulate excessively detailed
Federal requirements for the organization, operation and
administration of local and State health planning agencies.
The extensive involvement of the Federal Government required
by S. 2994 would mean that State and local health planning
agencies would effectively lose much flexibility and
initiative to develop various solutions tailored to their
particular situations.
2. The patterns of Federal/State relationships in
S. 2994 constitute an undesirable precedent for other areas
where the Federal government supports planning programs,
e.g., community development, manpower, social services. For
example, three of the most undesirable requirements are that
HEW (1) annually approve the budgets of some 250 State and
local planning and development agencies, (2) conduct evaluations
10
of State and local planning agency performance every three
years, and (3) establish minimum staff sizes for State
and local planning agencies.
3. The high authorization levels contained in S. 2994--
$1 billion over 3 years compared to approximately $500
million contemplated by the Administration--would create
strong pressures for greater spending. Moreover, HEW has
informally indicated that the current HEW staff for health
planning and resources development activities of 300 would
have to be increased by 200. We believe this is an under-
statement--given the Federal responsibilities under S. 2994--
and that as many as 300 to 450 more persons ultimately could
be required.
4. The formula-type appropriations authorizations
would encourage long-term Federal financial support, making
it increasingly difficult to terminate this type of Federal
grant assistance. It would also reduce HEW's ability to
target limited resources on higher priority areas.
5. S. 2994 would undesirably give priority to existing
CHPs (314 (b) ) and RMPs in being designated as HSAs. Many
of the existing agencies have been poor performers. A
principal objective of the Administration's proposal was
to make these agencies compete for the designation as the
new planning body in order to achieve the most efficient
and effective performance.
6. S. 2994 fails to adopt the Administration's
recommendations for limiting Federal construction assistance
strictly to modernization of existing hospitals serving
shortage areas and construction of outpatient facilities
and for imposing cost-sharing and managerial reforms on
participating institutions. It also undesirably retains
the formula grant mechanism of the Hill-Burton program
for allocating as much as 78 percent of the construction
grant funds.
7. Although S. 2994 formally phases out RMP, the authority
for HSAs to make "development" awards represents a defacto
continuation of many of the activities supported by RMPs in
the past. The potential growth in budgetary requirements for
such funds is indicated by the authorization levels in S. 2994--
$25 million, $75 million, and $120 million for 1975, 1976, and
1977-and by the fact that the $1/population formula could be
cited to justify annual spending of over $215 million.
RAID
11
Recommendations
In his letter recommending approval of S. 2994, the HEW
Secretary concludes:
"While the enrolled bill does not include all
the provisions we advocated, I believe it can stand
as an example of effective legislative cooperation
between the Administration and the Congress. Moreover,
the bill is the product of an intensive bipartisan
effort on the part of the pertinent congressional
committees, and is heavily supported by the Congress
as a whole. Of particular significance to me is that
this bill will consolidate and improve our health planning
authorities, phase out the poorly conceived regional
medical programs and refocus the Hill-Burton program
on areas of recognized need. Further, by requiring all
States to enact a certificate-of-need law it can sub-
stantially aid in our efforts to reduce the very sizeable
excess of hospital beds and other expensive facilities
that now contribute to the rapidly rising costs of
medical care."
Treasury states that it "would concur in a recommendation
that the enrolled enactment not be approved." In its letter,
Treasury notes that S. 2994 contains no provision "which
would make taxable the interest on any loans made to public
bodies and sold and guaranteed by the Secretary of HEW."
Treasury also notes that HEW previously opposed certain
objectionable features of S. 2994, including the loan and
interest subsidy provisions, the excessive authorizations,
the formula grant mechanisms and the nature and size of
the development fund proposals.
********
We believe S. 2994 should be disapproved. The bill contains
many far-reaching provisions opposed by the Administration.
These include excessive statutory requirements at the State
and local levels which--when coupled with Federal approval of
such detailed matters as staff size and qualification, internal
operating procedures of the State, etc. result, in effect,
in a virtual Federalization of the health planning apparatus
at the State and local levels. In addition, the excessive
appropriation authorizations could lead to strong pressures
for spending at higher levels than are necessary.
12
Although S. 2994 incorporates provisions sought by the
Administration, our reservations over the extensive
Federal role and costs lead us to recommend against
restructuring the nation's health planning machinery
along the lines of S. 2994. Accordingly, we recommend
disapproval of S. 2994. A proposed memorandum of disapproval
is attached for your consideration.
FOPD
&
0764
purson
a
Director
Enclosures
Attachment
S. 2994, "National Health Planning and Resources Development Act of 1974
Comparison of Authorization and Funding Levels
($ in Millions)
1975
1976
1977
1974
S. 2994
Budget
S. 2994
Presidential
S. 2994
Actual
Authorization
Request
Authorization
Decisions
Authorizatior
Expired Programs (RMP,
CHP, and Hill-Burton)
307
-
---
--
--
--
Planning:
Planning grants to Health
Systems Agencies
-
60
50
90
75
125
State Planning Agency
grants
---
25
---
30
--
35
Rate regulation demon-
stration grants
--
4
-
5
--
6
Centers for Health
Planning
--
5
-------------------------
8
--
10
Development grants to
HSAs
--
25
--
75
----
120
Construction:
Construction grants
-
125
100
130
100
135
Loan Fund
---
"such sums"
--
"such sums"
--
"such sums" "
Totals
307
244
150
338
175
421
OF EDUCATION
HEALTH.
DEPARTMENT OF HEALTH, EDUCATION. AND WELFARE
U.S.A.
Honorable Roy L. Ash
DEC 3 1 1974
Director, Office of Management
and Budget
Washington, D. C. 20503
Dear Mr. Ash:
This is in response to Mr. Rommel's request for a report
on S. 2994, an enrolled bill "To amend the Public Health
Service Act to assure the development of a national health
policy and of effective State and area health planning and
resources development programs, and for other purposes."
The bill, when approved, will be cited as the "National
Health Planning and Resources Development Act of 1974".
Broadly speaking, the bill would accomplish two objectives.
First, in place of Federal assistance now provided under
the Public Health Service Act for the State or areawide
planning components of five programs--comprehensive health
planning under sections 314 (a) and 314 (b), the Hill-Burton
program under title VI, the regional medical programs
under title IX, the program supporting area health education
activities funded through the regional medical programs, and
the program assisting experimental health services delivery
systems under section 304--the bill would assist in the
establishment of a single network of health planning
organizations, known as "health systems agencies", to plan
for the provision of adequate health services throughout
the United States.
Second, the bill would refocus the Hill-Burton program to
emphasize assistance for modernizing the existing health
facilities without increasing bed capacity, and assisting
health facilities to come into compliance, or avoid
noncompliance, with Federal, State, or local safety codes
and State or voluntary licensure or accreditation standards.
The bill would phase out regional medical programs under
title IX.
Honorable Roy L. Ash
2
Overview
The new health planning structure will primarily employ
three types of agencies: the previously mentioned health
systems agency (HSA), which will formulate health goals
and the means for their implementation within the geographic
areas to which they are designated; the State health planning
and development agency (the State Agency), a public agency
which will function as the arm of the State for the
administration of the Hill-Burton program, and for implementing
a State health plan and the plans of the HSA's relating to
the State; and a Statewide Health Coordinating Council for
each State (SHCC), which will be responsible for welding the
individual plans of the State's HSA's into a coordinated
State health plan and for advising the State Agency.
These agencies will operate within a framework of the
Secretary's national guidelines for health planning, which
will reflect national health goals and priorities. Apart
from financial assistance, discussed below, the Secretary
will provide HSA's and State Agencies with technical assistance
and establish a national health planning information center
to facilitate the exchange of information concerning health
services, health resources, and health planning and resources
development practice and methodology. The bill would also
encourage the Secretary to support the development and
operation of at least five centers for multidisciplinary
health planning development and assistance, in order to make
available to the Secretary, to HSA's, and to State Agencies
technical and consulting assistance.
The bill establishes formulas under which HSA's will receive
annual planning grants and State Agencies will receive up
to 75 percent of their costs of operation. A formula is
also established under which the Secretary will contribute
to an Area Health Services Development Fund maintained by
each HSA. The funds are intended to support grants (not to
exceed $100,000 each except in extraordinary circumstances)
by HSA's for planning and development necessary for the
achievement of planned health systems.
Within 18 months of the bill's enactment, the Secretary would
be required to issue the previously mentioned guidelines on
Honorable Roy L. Ash
3
national health planning policy, which would give special
consideration to ten goals, of which the most significant
is the provision of primary care services for medically
underserved populations, especially those located in rural
or economically depressed areas. In the development of
these guidelines, the implementation and administration of
the bill, and in the evaluation of the implications of new
medical technology for the organization, delivery, and
equitable distribution of health care services, the Secretary
would be assisted by a newly-established National Council
on Health Planning and Development. (The current National
Advisory Council on Comprehensive Health Planning Programs
would be abolished, and the Federal Hospital Council would
be allowed to terminate under the provisions of the Federal
Advisory Committee Act.)
The bill would establish a procedure under which the Governor
of each State would take the initiative, subject to the
Secretary's final approval, in establishing geographical
areas, to be known as "health service areas", within which
there will be available a comprehensive range of health
services, and which will encompass a region appropriate for
the effective planning and development of health services.
The procedure looks to the setting of most area boundaries
within 210 days after the bill's enactment, and completion
of the process within one year of that enactment. Generally
speaking, population of the areas would range in size between
one-half to three million. Existing regional planning areas,
developed under section 314 (b), would be designated as health
service areas if they otherwise meet the requirements for
designation.
Health Service Agency
To each of these health service areas there would be designated
an HSA, which would be a nonprofit private corporation, a
public regional planning body, or a single unit of general
local government. In any case, the HSA would be required to
comply with very detailed organizational requirements. Most
significantly, it or its governing body must consist of a
majority (but not more than 60 percent) of health care
consumers, with the balance of the membership consisting of
representatives of health professionals, allied health
Honorable Roy L. Ash
4
professions, health care institutions, health care insurers,
and health professional schools. Public officials would be
included, either as consumer or provider members. Membership
would be balanced to assure representation of individuals
living in nonmetropolitan areas, of Veterans Administration
facilities, and of HMO's, located within the HSA's health
service area.
Each HSA would establish for its area, and keep current, a
health systems plan (the HSP), which would be a statement
of its goals for assuring the availability of quality health
services for all residents of its area at reasonable cost,
and an annual implementation plan (the AIP), which would
describe, and establish the priorities among, objectives
that will achieve the HSP goals. Among the functions
performed by the HSA to implement its HSP and AIP would be
that of making grants or providing contract assistance from
the previously mentioned Area Health Services Development
Fund. These development funds could not be used for services
and would be for no more than one year, with no more
than two years of such assistance to any recipient. The
committee of conference also expresses its expectation that
such grant or contract will rarely exceed $100,000.
(H. Rep. No. 93-1640, p. 71.) In this regard, each fund
would be supported by an annual grant to the HSA of an amount
not in excess of $1.00 multiplied by the population of the
area it serves. Appropriations for the fund would be
authorized at $25 million, $75 million, and $120 million
for fiscal years 1975, 1976, and 1977, respectively.
Also in aid of its HSP and AIP, an HSA would, within certain
limitations, review and advise on (but is not empowered to
veto) the use of funds within its area appropriated under
the Public Health Service Act, the Community Mental Health
Centers Act, or the Comprehensive Alcohol Abuse and Alcoholism
Prevention, Treatment, and Rehabilitation Act, or funds made
available in its area by the State in which the area is
located, if from assistance under those Acts, for the
development, expansion, or support of health resources.
Honorable Roy L. Ash
GERALD
5
Other provisions ensure HSA review of institutional health
services offered within the area, and coordination of HSA
activities with Professional Standards Review Organizations
designated under the Social Security Act and with other
regional planning or administrative agencies.
In the case of HSA's that are conditionally designated, i.e.,
that are not yet able to assume all of the specified HSA
functions, the Secretary shall make planning grants in
amounts he deems appropriate. No HSA may enjoy conditional
designation for more than two years. To an HSA finally
designated as such, the Secretary shall make an annual grant,
subject to a $3.75 million ceiling, equal to $0.50 multiplied
by the population of the area served by the HSA, and an
additional amount equal to the lesser of the non-Federal funds
employed by the agency during the grant period or $0.25
multiplied by the area's population. No grant to an HSA
under the formula would be less than $175,000. A pro rata
reduction provision would prevent an HSA from claiming an
entitlement to these amounts in the absence of a supporting
appropriation. (Note that this provision marshals the
appropriation to preserve the $175,000 floor per HSA to
the extent of the appropriation.)
Appropriations for the planning grants would be authorized
at $60 million, $90 million, and $125 million for fiscal years
1975, 1976, and 1977, respectively.
State Health Planning and Development Agency
The Secretary would also enter into an agreement with the
Governor for the designation of a State health planning
and development agency, mentioned previously, to carry out
the State health planning and development functions. If,
after four fiscal years after the expiration of the calendar
year of the bill's enactment, this agreement has not yet
been entered into by a State, no assistance under the Public
Health Service Act, the CMHC Act, or the Alcohol Act for
development, expansion, or support of health resources
within the State would be available until the agreement were
entered into.
Honorable Roy L. Ash
6
Except in certain situations in which designation of a
different agency is permitted, the State agency would be
required to administer a State certificate-of-need program,
conduct the review of capital expenditures required by
section 1122 of the Social Security Act (in the case of a
State that has entered into an agreement with the Secretary
under that section), prepare a preliminary State health plan
(made up principally of the HSA HSP's) for submission to
the SHCC, review (with HSA recommendations) the need for
new health services within the State, and assist in the
review of a medical facilities plan contemplated by the
bill's restructured Hill-Burton program. The State Agency
must in all cases serve, also, as the agency for Hill-Burton
administration.
The Secretary shall make grants to a State Agency in an
amount not to exceed 75 percent of its costs of operations
during the period for which the grant is available for
obligation. For this purpose, the bill authorizes the
appropriation of $25 million, $30 million, and $35 million,
for the fiscal years 1975, 1976, and 1977, respectively.
State Health Coordinating Council
The State Agency would be advised by the SHCC. This consists
of representatives of the State's HSA's appointed by the
Governor, and other members also appointed by the Governor.
A majority of SHCC members would be representative of
consumers of health care.
The SHCC reviews and coordinates the HSP's and AIP's of
the State's HSA's. (!?) After receipt from the State
Agency of the previously mentioned preliminary State plan,
it prepares the final State plan. It is limited, however,
essentially to melding the HSP's and AIP's into an integrated
plan of Statewide application, and may not undertake
fundamental changes. The SHCC revisions are ultimately fed
back to the HSA's for incorporation into their individual
HSP's and AIP's. The SHCC also reviews HSA budgets and
reports to the Secretary on them; reviews HSA applications
for planning grants, and reviews HSA applications for
contributions to its AHSD Fund. It also advises the Secretary
Honorable Roy L. Ash
7
on PHS Act, CMHC Act, and Alcohol Act State formula grants,
with an apparent new power in the Secretary to deny a
formula grant if the SHCC disapproves of it.
Multidisciplinary centers
To fund the previously mentioned multidisciplinary centers,
which will assist the Secretary in the provision of technical
assistance to HSA's and State Agencies, the bill authorizes
the appropriation of $5 million, $8 million, and $10 million
for. fiscal years 1975, 1976, and 1977, respectively. There
would also be authorized for those years $4 million, $5 million,
and $6 million, respectively, for a demonstration program,
involving no more than six State Agencies, of grants to
assist those agencies in the regulation of the rates for the
provision of health care within their States, where such
regulation is authorized under State law.
Assistance for health resources
Having completed this rather general description of the
bill's health planning aspects, we turn briefly toward its
health resources portion. In substance, this portion is
an updated, significantly pruned Hill-Burton program,
which provides grants and subsidized loans to public and
nonprofit private agencies, and loan guarantees and interest
subsidies for loans to nonprofit private agencies, for
(1) modernization of medical facilities, (2) construction
of new outpatient facilities; (3) construction of new
inpatient facilities in areas of population explosion,
(4) conversion of existing medical facilities for new health
services; and grants for construction and modernization to
eliminate or prevent imminent safety hazards or to avoid
noncompliance with State or voluntary licensure or accreditation
standards (referred to below as "section 1625 aid").
Allotments of grant assistance would be made among the States
on the basis of population, financial need, and the need
for medical facilities projects. Assistance under the
allotments would be provided under a medical facilities plan
administered by the State Agency which, among other things,
would require that the assistance (other than section 1625
aid) be approved by a State SHCC as consistent with the
previously described State plan developed by it under the
planning portion of the bill.
Honorable Roy L. Ash
8
An allotment would be available to pay the Federal share
of a project. This share, in the case of certain small
modernization projects, could not exceed 100 percent of the
first $6000 of cost and 66-2/3 percent of the next $21,000
of cost to a total ceiling of $20,000 of Federal assistance.
In the case of other projects assisted under the allotment
(except projects involving section 1625 aid, discussed below)
the Federal share could not exceed 66-2/3 percent of cost,
except for projects in urban or rural poverty areas, where
100 percent of the cost may be paid.
No more than 20 percent of a State's allotment in any fiscal
year may be used for construction of new inpatient facilities,
and at least 25 percent of it must be used for outpatient
facilities (of which portion at least one-half must go to
rural facilities) For grants under the allotment the bill
authorizes $125 million for fiscal year 1975 and $130 million
for each of the next two fiscal years.
The bill also authorizes the Secretary to make direct loans,
from a revolving loan fund that the bill establishes, to pay
the Federal share of the previously described projects. The
Secretary may also guarantee to non-Federal lenders for their
loans to nonprofit private entities for these projects, and
to the Federal Financing Bank for its loans to nonprofit
private entities for such projects, the payment of principal
and interest on those loans. Loans and loan guarantees
would be allotted among the States on the basis of population,
financial need, and need for the facilities. The Secretary
would pay to the holder of a loan to a nonprofit private
entity guaranteed by him an interest subsidy sufficient to
reduce the interest rate otherwise payable by 3 percent.
Similarly, direct loans would bear an interest rate comparable
to those of guaranteed loans, minus 3 percent. To revolve
the loan fund, the Secretary would be authorized to sell
guaranteed paper (including guarantees of his own loans) and
deposit the proceeds in the fund. The availability of the
fund and the maximum outstanding principal of loans and
loan guarantees would be governed by appropriation Acts.
The Federal share for which loans and loan guarantees under
Honorable Roy L. Ash
9
this portion of the bill would be available may not exceed
90 percent of facility cost (when added to any other Hill-Burton
assistance), except with respect to facilities in rural or
urban poverty areas, where the share may rise to 100 percent.
In the case of section 1625 aid, grants may not exceed
75 percent of cost, again with the exception for rural and
urban poverty areas. Note that 22 percent of the appropriation
for the previously described grant allotment is reserved for
this section 1625 aid.
Comments
On March 11, 1974, we submitted to the Congress on behalf
of the Administration a draft bill entitled "the Health
Resources Planning Act". The health planning portions of
the enrolled bill establish a mechanism that, except as
explained below, is similar to that which we proposed. Like
the enrolled bill, the Administration bill, introduced as
S. 3166 in the Senate, would have established a procedure
under which State governors would take the initiative in
establishing health service areas within which there would
be available a comprehensive range of health services, and
which--with populations, like the enrolled bill, between
1/2 and 3 million--would be rational areas for the effective
planning and development of health services. The Secretary
would certify to those areas private nonprofit organizations
(the enrolled bill adds certain public entities as well) as
HSA's. Like the enrolled bill's HSA's, the HSA's of S. 3166
would direct their efforts at aiding the major sectors of
the health care market within their areas--consumers, health
care providers, health care insurers, health educational
institutions, and government--to develop for the area adequate,
equitably distributed health services of high quality at
reasonable cost. The HSA, like that of the enrolled bill,
would supply this aid by preparing and keeping current a
comprehensive health plan for services, facilities, and
manpower; by reviewing and advising the Secretary with
respect to applications to the Secretary for financial
assistance for the construction of health facilities, the
development of health services, or the training of health
manpower; by advising State and local governments in regard
to actions those governments may propose relating to health
Honorable Roy L. Ash
10
services, facilities, or manpower; and by providing technical
assistance, including grants and contracts not in excess of
$25,000 each (compared to the enrolled bill's $100,000 each)
for projects and activities that would contribute to
implementing the comprehensive health plan. Like the
enrolled bill, the Administration proposal would support
these activities through grants (although, unlike the enrolled
bill, the grants would not have been based upon a formula),
technical assistance, and amounts (again, not by formula)
to fund the HSA's own assistance grants and contracts. A
system of SHCC's would also have been established under
S. 3166 to perform functions similar to those performed by
SHCC's under the enrolled bill.
CRALD
The Administration proposal would also have established a
program of State formula grants, based upon a State's population
and the cost of the services for which the grant is supplied,
to aid each State in paying its costs of regulating capital
expenditures for health care and the payment or reimbursement
for health care services. This compares with the enrolled
bill's demonstration program to assist a limited number of
States to implement a program of rate regulation, and its
requirement for State certificate-of-need legislation.
Like the enrolled bill, the Administration proposal would
have replaced the State or areawide planning components of
programs now scattered throughout the Public Health Service
Act and which will be replaced by the enrolled bill.
The major point of difference between the two planning
proposals is the enrolled bill's reliance upon a State Agency
to prepare a preliminary State plan for the State and exercise
the State's planning responsibilities in other respects.
Although the Administration bill would not have interfered
with the State's establishment of such an agency, it would
not have had the SHCC rely upon it for assistance in preparation
of the State plan. Although under the enrolled bill
membership of HSA's and SHCC's is more clearly consumer
oriented than under the Administration bill and, in the case
of the SHCC's, in large part determined by the State's
chief executive officer, these differences do not touch
Honorable Roy L. Ash
11
significantly on HSA and SHCC functions, or their capacity
to perform those functions, and therefore seem largely to
be differences of detail.
On August 12, 1974, the Department submitted a proposal,
consistent with the Administration's objectives, to provide
for assistance for the modernization and replacement of
hospitals. The proposal, a replacement for the Hill-Burton
program, envisioned direct project grants targeted on the
modernization or replacement of aged public and other
nonprofit hospitals, including their outpatient departments.
The Federal contribution would have been subject to a ceiling
of 12-1/2 percent of cost and would have required matching
non-Federal public funds for the project. Applicants would
have had to establish a sinking fund, as a condition of
receiving a grant, to provide for future modernization or
replacement. The enrolled bill's Hill-Burton substitute,
more nearly than the Department's proposal, resembles the
:
current Hill-Burton program.
Notwithstanding several reservations to it discussed below,
the enrolled bill marks a major Administration triumph.
First, the bill would phase out the RMP program, for which
$684 million was authorized during the four preceding fiscal
years and for which $409 million was appropriated. This is
a significant achievement in an era when Congress has
resisted vigorously attempts to eliminate health programs.
Second, as the Administration proposed, the enrolled bill
would combine scattered, sometimes inconsistent and
uncoordinated, planning authorities into a single, carefully
structured program, thereby greatly contributing to
rationalizing the process of planning the provision of health
services and resources throughout the United States. A
system to provide this planning is an essential base for
any national health insurance financing system.
Third, the enrolled bill would take a giant step toward
converting Hill-Burton from a rigid formula grant program
to a flexible project grant program. Moreover, it would
refocus the program so as to emphasize the modernization of
Honorable Roy L. Ash
12
facilities and the provision of facilities for ambulatory
care. These objectives are essentially the ones sought by
the Department's own Hill-Burton proposal.
Fourth, although in a less ambitious fashion than the
Administration proposal, the enrolled bill would encourage
State regulation of the rates at which health services are
provided. It would also, for all practical purposes, mandate
the States to administer certificate-of-need programs and
would also facilitate their execution of section 1122
agreements.
We are concerned, of course, with the bill's authorization
ceilings which, if viewed as appropriations targets, would
be excessive. In our view the amounts provided in the
Department's budget for health planning and health systems
development, a total of $325 million for fiscal years 1975
and 1976 (exclusive of certain mandated interest payments
on existing obligations), is sufficient, if appropriately
reallocated among the enrolled bill's programs, to fund an
effective health planning and resources development effort
over those years.
Other aspects of the bill, although troublesome, are of
less concern. We do not consider the formula allocations
to HSA's a desirable means of financing their planning
activities or their planning and development grants.
Nevertheless, the size of these grants is controllable
through the appropriations process. *
/
078239
We would oppose the use of loans, loan guarantees, and
interest subsidies as a means of providing Hill-Burton
assistance. Here, again, through the budget process we
would seek to focus the program on grant assistance for
the purposes intended to be supported under the Department's
proposal. In this regard, the enrolled bill's reservation
of 22 percent of the Hill-Burton grant allotment for projects
to eliminate or prevent imminent safety hazards or avoid
* / It should be noted that the total of the appropriations
authorized by the bill for the current fiscal year for the
planning and resources development programs are below both
the total appropriations authorized and the total amounts
appropriated for CHP and Hill-Burton programs for this year
or for the preceding fiscal year.
Honorable Roy L. Ash
13
noncompliance with State or voluntary licensure or
accreditation standards will greatly aid in this focusing.
We are also pleased to note that the Hill-Burton authorization
levels are well below those provided in previous years.
While the enrolled bill does not include all the provisions
we advocated, I believe it can stand as an example of
effective legislative cooperation between the Administration
and the Congress. Moreover, the bill is the product of an
intensive bipartisan effort on the part of the pertinent
congressional committees, and is heavily supported by the
Congress as a whole. Of particular significance to me is
that this bill will consolidate and improve our health planning
authorities, phase out the poorly conceived regional medical
programs and refocus the Hill-Burton program on areas of
recognized need. Further, by requiring all States to enact
a certificate-of-need law it can substantially aid in our
efforts to reduce the very sizeable excess of hospital beds
and other expensive facilities that now contribute to the
rapidly rising costs of medical care.
We recommend that the enrolled bill be approved.
Sincerely,
of
THE
TREASURY
THE UNDER SECRETARY OF THE TREASURY
THE
WASHINGTON, D.C. 20220
1789
DEC 27 1974
Director, Office of Management and Budget
Executive Office of the President
Washington, D.C. 20530
Attention: Assistant Director for Legislative
Reference
Sir:
Reference is made to your request for the views of
this Department on the enrolled enactment of S. 2994,
"To amend the Public Health Service Act to assure the
development of a national health policy and of effective
State and area health planning and resources development
programs, and for other purposes. "
Section 4 of the enrolled enactment would add a
new title XVI to the Public Health Service Act under
which the Secretary of Health, Education, and Welfare
would be authorized to make and guarantee loans and
to provide interest subsidies to assist the construction
and modernization of certain medical facilities.
In a letter of October 2, 1974 to Senate Committee
on Labor and Public Welfare on S. 2994, the Secretary
of Health, Education, and Welfare objected to the loan
and interest subsidies features of the bill because
of their high expense and limited usefulness to those
entities which most need financial assistance.
The Secretary also opposed the excessive authorizations,
the formula grant mechanisms, and the nature and size
of the development fund proposals in the bill.
- 2 -
The credit program provisions of title XVI appear
to be patterned after the credit provisions of the
Hill-Burton loan and guarantee program contained in
title VI of the Public Health Service Act. Yet,
unlike the provisions of title VI, there is no provision
in proposed title XVI which would make taxable the
interest on any loans made to public bodies and sold
and guaranteed by the Secretary of HEW.
In view of the foregoing, the Department would
concur in a recommendation that the enrolled enactment
not be approved by the President. If, however, the
enrolled enactment is approved, in order to assure
that the loan program is not financed in the tax-exempt
bond market, the Department recommends that the
Secretary of Health, Education, and Welfare be instructed
that no loans to public bodies shall be sold except
to the Federal Financing Bank.
Sincerely yours,
Edward C. Schmults
FORD LIBRA
ADMINIST ATION
VETERANS ADMINISTRATION
OFFICE OF THE ADMINISTRATOR OF VETERANS AFFAIRS
WASHINGTON, D.C. 20420
1930
DECEMBER 27, 1974
The Honorable
Roy L. Ash
Director, Office of
Management and Budget
Washington, D. C. 20503
Dear Mr. Ash:
This will respond to the request of the Assistant
Director for Legislative Reference for the views of the Vet-
erans Administration on the enrolled enactment of S. 2994,
93d Congress, an act "To amend the Public Health Service
Act to assure the development of a national health policy
and of effective State and area health planning and resources
development programs, and for other purposes.'
On December 13, 1974, we submitted a report to your
office on S. 2994, 93d Congress, directed to the Chairman,
Subcommittee on Health and Hospitals, Senate Committee on
Veterans' Affairs. We favored the sections of the bill as
they applied to the Veterans Administration, with certain
technical changes, which were made. Section 1503 (b) of the
act requires the Chief Medical Director of the Veterans
Administration to serve as a nonvoting ex officio member of
a National Council on Health Planning and Development.
Section 1512 (b) (3) (c) provides that a representative of the
Chief Medical Director would serve as an ex officio member
of the governing body, and executive committee of any health
planning agency serving an area in which there is located
one or more hospitals or other health care facilities of the
Veterans Administration. Section 1524 (b) (1) (D) provides
that a representative of the Chief Medical Director of the
Veterans Administration would serve as an ex officio member
of the statewide health coordinating council where there
are two or more VA hospitals in a State.
As we mentioned in our December 13th letter, we
favor VA participation as outlined in the act. However,
we defer to the Department of Health, Education, and Welfare
regarding recommendations as to Presidential action on
S. 2994, since it would be ultimately responsible for imple-
mentation.
Sincerely,
Odell W.Vaugh
Denaty Leministrator - in the absence of
RICHARD L. ROUDEBUSH
Administrator
MORE FORD LIBRATOR
2.
THE WHITE HOUSE
WASHINGTON
1/2/75
MEMORANDUM FOR:
WARREN HENDRIKS
VL
FROM:
MAX L. FRIEDERSDORF
SUBJECT:
Action Memorandum - Log No.
Enrolled Bill S. 2994 National Health
Planning and Resources Development
Act of 1974
The Office of Legislative Affairs concurs with the Agencies
that the enrolled bill should be VETOED.
BLRALD R. LIBRE FORD
Attachments
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
December 31, 1974
7:00 p.m.
FOR ACTION: Jim Cavanaugh
CC (for information): Warren Hendriks
Max Friedersdorf
Jerry Jones
Phil Areeda
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
Time: noon
SUBJECT:
Enrolled Bill S. 2994 - National Health Planning and
Resources Development Act of 1974
FORD i LIBRARY DERALD
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
Sign the bill. OMB not persuasive too : federalion high, but
President argument could usuea signing saying
not strong. Funding authorization Statemst is that he
will OUK only responsible (k.e., reduced ) appropriation.
P. Auda /
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
telephone the Staff Secretary immediately.
For the President
Warren K. Hendriks
MEMORANDUM OF DISAPPROVAL
I have withheld my signature from S. 2994, the
"National Health Planning Resources Development Act
of 1974. "
S. 2994 would require the creation of new health
planning machinery in every State and in over 200 local health
service areas throughout the country. The bill would
attempt to improve State and local health planning efforts.
It would, however, impose Federal conditions and approval
requirements that sharply limit their initiative and
flexibility in meeting particular State and local problems.
Among other things, S. 2994 would require advance Federal
approval of the budget of every State and local health plan-
ning agency on an annual basis. It would also require a
detailed Federal evaluation of each agency's performance
every three years against such criteria as the competence
of staff, improvements in the health status of area residents,
quality improvements in health services, and the extent to
which health care costs have been restrained. States would
be required to establish State planning agencies and detailed
State administrative programs and procedures for health
planning that the Federal Government would have to approve.
Also, minimum staff sizes for State and local planning agencies
would be established. Such extensive Federal intrusion in
State and local management responsibilities is unacceptable.
I support improvement in planning for health activities
at the State and local levels. Earlier this year the
Administration submitted health planning legislation and
some of those features are incorporated in S. 2994. The
Administration bill, however, would not have imposed on the
States and local governments the excessively detailed
administrative, procedural and structural requirements of
2
S. 2994. Even if all of the requirements of S. 2994 were
workable -- which is seriously questionable -- they in-
appropriately mandate Federal responsibilities far beyond
a reasonable oversight of State and local planning
activities.
S. 2994 is also objectionable because it would continue
the Hill-Burton program with only minimal changes. This
program provided needed hospitals in rural areas following
the post-World War II period. Over the longer term, it
resulted in a surplus of hospital beds nationally and the
construction of hospitals in areas other than those of the
greatest need. The program largely ignores the priority
FORD
needs of our older cities and urban areas.
The Administration proposed to reorient the Hill-
Burton program so that scarce Federal resources would be
targeted on modernization and replacement in areas suffering
a shortage of hospital beds. S. 2994 fails to accomplish
that purpose. Instead, it would continue a formula-grant
funding program to all States, whether or not a shortage
of beds and facilities existed. It would also continue the
requirement for annual Federal approval of State medical
facility plans and would provide excessive Federal matching
for construction projects.
The appropriation authorizations in S. 2994 for fiscal
years 1975, 1976 and 1977 are half a billion dollars more
than the levels I consider adequate. Approval of excessive
authorizations would create pressures for spending which
are inconsistent with my strong commitment to the American
taxpayers to hold Federal spending to essential levels.
Improvements need to be made in health planning at
the State and local levels. Unfortunately, S. 2994 does
not represent the best way to accomplish this objective.
3
Extensive Federal monitoring of State and local staffing,
organization, and administration of planning activities
can stifle the initiative we want to promote.
I will propose legislation to the 94th Congress to
provide an appropriate Federal role in supporting health
planning improvements at the State and local levels.
THE WHITE HOUSE,
FORD
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 31 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 2994 - National Health Planning
and Resources Development Act of 1974
Sponsor - Sen. Kennedy (D) Mass.
Last Day for Action
GERALD FORD VIBRARY
January 4, 1975 - Saturday
Purpose
Authorizes the establishment of a new Federal program to
assist State and local health planning; continues and
amends the Hill-Burton medical facilities construction
program.
Agency Recommendations
Office of Management and Budget
Disapproval (Memorandum of
Disapproval attached)
Department of Health, Education,
and Welfare
Approval
Department of the Treasury
Would concur in disapproval
recommendation
Department of Housing and Urban
Development
Defer to HEW (Informally)
Veterans Administration
Defer to HEW
Discussion
S. 2994 would require the creation of new health planning
machinery in every State and local health service area
to replace current health planning activities of existing
State and areawide comprehensive health planning (CHP)
agencies and planning activities undertaken in the past
by some Regional Medical Program (RMP) entities. S. 2994
would also continue and amend the Hill-Burton medical
facility construction program.
OK LD
MEMORANDUM OF DISAPPROVAL
I have withheld my signature from S. 2994, the "National
Health Planning Resources Development Act of 1974."
S. 2994 would require the creation of new health planning
machinery in every State and in over 200 local health service
areas throughout the country. The bill would attempt to im-
mens
on
prove State and local health planning efforts. It would, how-
ever, impose Federal conditions and approval requirements that
sharply limit their initiative and flexibility in meeting
particular State and local problems.
Among other things, S. 2994 would require advance Federal
approval of the budget of every State and local health planning
agency on an annual basis. It would also require
conjuct
a
detailed
Federal
evaluation of each agency's per-
such
formance every three years against criteria such as the compe-
tence of staff, improvements in the health status of area
residents, quality improvements in health services, and the
extent to which health care costs have been restrained. States
would be required to establish State planning agencies and de-
tailed State administrative programs and procedures for health
planning that the Federal Government would have to approve.
Also, minimum staff sizes for State and local planning agencies
would be established. Such extensive Federal intrusion in
State and local management responsibilities is unacceptable.
I support improvement in planning for health activities
at the State and local levels. Earlier this year the Adminis-
and
tration submitted health planning legislation; some of those
features are incorporated in S. 2994. The Administration bill,
9
however, would not have imposed on the States and local govern-
ments the excessively detailed administrative, a procedural and
GERALD FORD
of
2
an
structural requirements eight. S. 2994 would impose. Even if
all of the requirements of S. 2994 were workable --- which is
seriously questionable -- they inappropriately mandate Federal
responsibilities far beyond a reasonable oversight of State
and local planning activities.
S. 2994 is also objectionable because it would continue
an
the Hill-Burton program with only minimal changes. This pro-
gram provided needed hospitals in rural areas following the
post-World War II period. Over the longer term, it resulted
in a surplus of hospital beds nationally and the construction
of hospitals in areas other than those of the greatest need.
largely ignores
The program targeted on the priority needs of our
older cities and urban areas.
The Administration proposed to reorient the Hill-Burton
program so that scarce Federal resources would be targeted on
or
modernization and replacement in areas suffering a shortage
of hospital beds. S. 2994 fails to accomplish that purpose.
Instead, it would continue a formula-grant funding program
to all States, whether or not a shortage of beds and
facilities existed. It would also continue the requirement
for annual Federal approval of State medical facility plans
and would provide excessive Federal matching for construction
projects.
The appropriation$ authorizations in S. 2994 for fiscal
a
years 1975, 1976 and 1977 are half a billion dollars more
consider abovete.
than the levels I believe are Approval of
excessive authorizations would create pressures for spending
which are inconsistent with my strong commitment to the
American taxpayers to hold Federal spending to essential
levels.
GERRID FORD ABRAHA
3
Improvements need to be made in health planning at the
State and local levels. Unfortunately, + believe that S. 2994 does not
represent the best way to accomplish this objective. Exten-
a-
sive Federal monitoring of State and local staffing, organi-
zation, and administration of planning activities can stifle
the initiative we want to promote.
1
Signature 44th a
I will propose abill to the Congress showtly to provide
an appropriate Federal on role in supporting health planning
improvements at the State and local levels.
GLRAED FORD LIBRARY
THE WHITE HOUSE
LP
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date: December 31, 1974
Time:
7:00 p.m.
FOR ACTION: Jim Cavanaugh
CC (for information): Warren Hendriks
Max Friedersdorf
Jerry Jones
Phil Areeda
Paul Theis
OKLPAT
Jack Marsh
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
Time: noon
SUBJECT:
Enrolled Bill S. 2994 - National Health Planning and
Resources Development Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
1974 DEC 2 AM 8 28
GERALD FORD
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delcy in submitting the required material, please
Karren
X
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
December 31, 1974
7:00 p.m.
FOR ACTION: Jim Cavanaugh
cc (for information): Warren Hendriks
Max Friedersdorf yelo
Jerry Jones
Phil Areeda sign
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
Time: noon
SUBJECT:
Enrolled Bill S. 2994 National Health Planning and
Resources Development Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
GREAT FORD DIBRARY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President