National Health Corps Scholarship Collection

Washington, D.C. The subcommittee met, at 10:07 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Charles H. Percy, chairman of the subcommittee, presiding.

Present: Senator Percy.

OPENING STATEMENT OF SENATOR PERCY

Senator PERCY. I will call to order this hearing of the Senate Subcommittee on Energy, Nuclear Proliferation, and Government Processes, inquiring today into the management of the National Health Service Corps scholarship program,

For years, I have insisted that debtors who owe the Federal Government must pay their debts back on time and must pay them back with interest. I have chaired a number of hearings on the subject. I have introduced a bill that is now law that was signed by President Reagan. So far, according to testimony given by the Comptroller General in this room several weeks ago, and additional information supplied by the Office of Management and Budget and the General Accounting Office, we have saved the taxpayers roughly $5 billion as a result of one law being put into effect, as well as simply enforcing statutes that were already in place. We had seen a great deal of laxity, and a lack of businesslike procedures which had a corrupting influence

on, for example, the student loans. The young people of this country, in their first relationship with the Federal Government, found the Federal Government inefficient, impotent, and lacking in meaning, and we have changed that. I think it has been for the better.

Five billion dollars is a big chunk out of the Federal deficit without new taxes or spending cuts, and we just have to look at what the compound interest every year would be on the $5 billion to realize how much money we have saved, and we have really just begun to implement that law.

One by one, we are solving our debt collection problems. We learned that criminals aren't paying their fines, so we held a hearing, and the Senate passed a bill to make criminals pay up when they are fined. We know by the last survey by the Department of Justice, that State and Federal penitentiaries are now at 110 percent of capacity. Judges may feel, therefore, that fines are an alternative to prison sentences,

but if those fines aren't paid, then crime does pay. We certainly are now trying to enforce their paying those fines.

We learned that Americans stranded overseas who then went to their Government and asked for assistance and help were given financial assistance; then went back home and simply didn't reimburse the State Department for the plane tickets that they got to come home. We held a hearing, enacted a law, and we are requiring those people to pay up to their Government once they have committed an obligation that they have to pay:

We also went in this way to Harvard Medical School representatives. The did not want to come in. I had to call the president of Harvard and say we would issue a subpena if they did not come in. What they disclosed was something they didn't want to testify to the tremendously high default rates among their medical school graduates. They have corrected that situation; delinquent student loans have been paid up; and Harvard is far more current today, and I think, feels a lot better about a program that they were reluctant to testify on originally:

Some of these programs are set up as a revolving fund. It is going to adversely impact upon new students if the old students do not pay up. I think we have just learned an awful lot by getting those students much more current and letting all students know the word is now out. This is a loan, it is not a gift, it is not a grant, it is a loan, and you better pay up or your car will be seized or your wages will be garnisheed, even if you are working for the Federal Government.

Secretary Bell and I addressed hundreds of the people in the Department of Education, hundreds of whom were delinquent, had never paid off their student loans despite the fact they got their Ph. D., and we simply said, “In 3 weeks, we will start to garnishee your wages, and that seemed to find a way to evaporate all those excuses that they couldn't start paying. They started to pay up, and I think it has been a good thing.

I have long since lost my surprise at the kinds of loans not being paid back, but I wish I had known about this when the President and I met and had lunch with the directors of the American Medical Association in Chicago a few months ago. I wasn't aware of this present situation. I felt they might be a little antagonistic about the aggressive way we have gone about collecting student loans of medical students. They weren't at all-not one single objection was raised by the directors of the American Medical Association. They felt it was about time the Government got a lot more businesslike.

But the case we are going to talk about this morning is an even more outrageous example of brazen debtors, and we will discuss it fully today. Here we have 1,700 doctors and other health professionals who got a free medical education by agreeing to spend a few years in areas where doctors are in short supply. They came, and they were the ones that voluntarily requested those grants, not loans, but grants, and they signed the papers making a commitment. Without those grants, they knew they could not get that education, but then once they got the education, they breached their agreement, and many are refusing to pay back what they owe.

Here we have doctors making upward of $100,000 a year refusing to pay back debts of $30,000 to $50,000. These are not $3,000, $4,000, $5,000, and $6,000 student loans. These are grants of $30,000 up as high as $50,000-some of these debtors owe as much as $200,000_sign

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do not

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We certa' ing an agreement, getting that education, and then pocketing the

agreement or tearing it up and simply saying it is inconvenient for

them to pay it back. As a group, they now owe the United States $61 e given fur million. mburse the That is not all. Some who breached and owe big debts are nonethe

home. T less collecting big medicare and medicaid payments. Close to $3 million 3 people tog

in medicare and medicaid funds have been paid to them. obligations This is just like the 65,000 students who took out student loans and

are receiving Federal paychecks twice a month and still have never epresentat paid back their loans despite the fact that their education was made Hartanda possible as a result of those student loans. We now have the power to That thert garnishee their wages, and we intend to do so unless they voluntarily tremendos agree to pay up, and they are beginning to do so. & Ther har

In this case, these doctors are not just turning their backs on taxел ра!!! payers. They are turning their backs on low-income people in this

country who do not now have access to quality medical care, people

in the inner city, people in isolated rural areas, elderly people who can't It is per

easily drive for hours to a distant town when they need medical care, and I just show, in this chart, an area of the country that I particularly know well, Illinois. The yellow areas show where part of the

county is designated as having a shortage of doctors, with a shortage and Tv of medical care and doctors, and the yellow areas, including St. Clair

County, one of our most populous downstate counties, and of course nt. Cook itself where we have a real shortage of doctors, doctors signing

up to go to those areas—and they have got a pretty wide range of places ad never from top to the bottom of our State that they can go to—and then reD. and

fusing to do so.

If some of these contract-breaching doctors would come to Illinois at the and live up to their agreements, much of this shortage of doctors would been disappear. That is why the Federal Government, the Treasury, and the

taxpayers made that huge investment, to have doctors on a volunbeing tary basis. They signed up, and they have refused to fulfill those E and agreements. As I just call them deadbeats. They are hurting the reputation of the

entire medical community, the huge majority of whom are hard worksive ing professionals who live up to their agreements and pay their bills ats. on time and are among the most respected members of their

communities.
I want to say at the outset that

this is one problem that I guarantee will be solved, and solved soon. If we have to hurt a doctor's credit rating, we are going to hurt it. If we have to garnishee medicare payments, let's garnishee them. If we have to repossess a Mercedes, let's repossess it. But those doctors who refuse to serve in shortage areas are going to pay up. We will have no more $100,000-a-year deadbeats if I have

anything to say about it. Fortunately, due to the good graces, the good Lord, and the voters of Illinois, we are going to have the ability to see that they do pay up, and I doubt that there are any doctors that would disagree, when they have seen what we have done to the student loan program, how strongly I feel about grants, which is even far greater a crime to evade those and evade the responsibility that they have in paying those back.

(The charts referred to follow:]

Wages,"

sent

1 See p. 5.

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National Health Corps Scholarship Collection: Hearing Before the ..., Numéro 58