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COMMITTEE ON APPROPRIATIONS

GEORGE H. MAHON, Texas, Chairman

ALBERT THOMAS, Texas
MICHAEL J. KIRWAN, Ohio
JAMIE L. WHITTEN, Mississippi
GEORGE W. ANDREWS, Alabama
JOHN J. ROONEY, New York
JOHN E. FOGARTY, Rhode Island
ROBERT L. F. SIKES, Florida
OTTO E. PASSMAN, Louisiana
JOE L. EVINS, Tennessee

EDWARD P. BOLAND, Massachusetts
WILLIAM H. NATCHER, Kentucky
DANIEL J. FLOOD, Pennsylvania
WINFIELD K. DENTON, Indiana
TOM STEED, Oklahoma
GEORGE E. SHIPLEY, Illinois

JOHN M. SLACK, JB., West Virginia
JOHN J. FLYNT, JR., Georgia
NEAL SMITH, Iowa

ROBERT N. GIAIMO, Connecticut

JULIA BUTLER HANSEN, Washington
CHARLES S. JOELSON, New Jersey
JOSEPH P. ADDABBO, New York
JOHN J. MCFALL, California
W. R. HULL, JR., Missouri

D. R. (BILLY) MATTHEWS, Florida
JEFFERY COHELAN, California
THOMAS G. MORRIS, New Mexico
EDWARD J. PATTEN, New Jersey
CLARENCE D. LONG, Maryland
JOHN O. MARSH, JR., Virginia
ROBERT B. DUNCAN, Oregon
SIDNEY R. YATES, Illinois

BILLIE S. FARNUM, Michigan

FRANK T. BOW, Ohio

CHARLES R. JONAS, North Carolina
MELVIN R. LAIRD, Wisconsin
ELFORD A. CEDERBERG, Michigan
GLENARD P. LIPSCOMB, California
JOHN J. RHODES, Arizona
WILLIAM E. MINSHALL, Ohio
ROBERT H. MICHEL, Illinois
SILVIO O. CONTE, Massachusetts
ODIN LANGEN, Minnesota
BEN REIFEL, South Dakota
GLENN R. DAVIS, Wisconsin
HOWARD W. ROBISON, New York
GARNER E. SHRIVER, Kansas
JOSEPH M. MCDADE, Pennsylvania
MARK ANDREWS, North Dakota

KENNETH SPRANKLE, Clerk and Staff Director

(II)

SUPPLEMENTAL APPROPRIATION BILL, 1966

SUBCOMMITTEE ON DEPARTMENTS OF LABOR AND HEALTH, EDUCATION, AND WELFARE APPROPRIATIONS

JOHN E. FOGARTY, Rhode Island, Chairman

WINFIELD K. DENTON, Indiana

DANIEL J. FLOOD, Pennsylvania

D. R. MATTHEWS, Florida

ROBERT B. DUNCAN, Oregon

BILLIE S. FARNUM, Michigan

MELVIN B. LAIRD, Wisconsin

ROBERT H. MICHEL, Illinois

GARNER E. SHRIVER, Kansas

TUESDAY, AUGUST 31, 1965.

DEPARTMENT OF HEALTH, EDUCATION, AND

WELFARE

SOCIAL SECURITY AMENDMENTS

WITNESSES

WILBUR J. COHEN, UNDER SECRETARY

ROBERT M. BALL, COMMISSIONER OF SOCIAL SECURITY

DR. ELLEN WINSTON, COMMISSIONER OF WELFARE

DR. JAMES HUNDLEY, ASSISTANT SURGEON GENERAL FOR OPERATIONS

JAMES F. KELLY, DEPARTMENT COMPTROLLER

JACK S. FUTTERMAN, ASSISTANT COMMISSIONER FOR ADMINISTRATION, SOCIAL SECURITY ADMINISTRATION

HENRY A. CROOKS, DIRECTOR, DIVISION OF FINANCIAL MANAGEMENT, SOCIAL SECURITY ADMINISTRATION

ROY WYNKOOP, EXECUTIVE OFFICER, WELFARE ADMINISTRATION DR. ARTHUR LESSER, DEPUTY CHIEF, CHILDREN'S BUREAU

Mr. FOGARTY. The committee will come to order.

We are meeting this morning to take up some of the last group of supplemental appropriation requests, we think, for this year. We are going to start with the Social Security Amendments of 1965, or medicare. The estimates are contained in House Document No. 278.

Mr. Cohen, we are pleased to have you here this morning. I don't think you have been before the committee since you received your promotion, have you?

Mr. COHEN. No, sir.

Mr. FOGARTY. I think you have worked very hard and have done a good job. I think you deserve the position of Under Secretary and will continue to do a good job. We will be very pleased to hear from you.

GENERAL STATEMENT

Mr. COHEN. Thank you, Mr. Chairman.

Mr. Chairman and members of the subcommittee, I appear before you today in support of the administration's request for a supplemental appropriation for the Department of Health, Education, and Welfare in the amount of $249 million in general funds and $129 million in trust funds.

I am accompanied by the Commissioner of Social Security, Mr. Robert Ball; the Commissioner of Welfare, Dr. Ellen Winston; the Assistant Surgeon General for Operations, Dr. James Hundley; and

other representatives of the Department. When I have finished my brief statement, we will all be happy to answer any questions you may have.

I want to take just a moment to sketch out the tremendous tasks which we have undertaken.

This bill we are going to be talking about today is 138 pages, so there are quite a lot of aspects in it that we are going to go over and they touch on a number of different programs. There is not just medicare in here, but there is a whole host of different kinds of programs.

The Social Security Amendments of 1965 were a product of the "Health Congress of 1965"-and surely this Congress deserves that title. The 1965 amendments will touch the lives of tens of millions of older citizens, disabled persons, widows, and needy and crippled children.

HEALTH CARE FOR THE AGED AND OASDI AMENDMENTS

For 20 years this country sought to provide in some measure for the health care needs of its senior citizens. For 20 years a great, creative dialog took place, refining, sharpening, and perfecting, as only the legislative process can sharpen and perfect.

In addition to providing a new comprehensive program of health and medical insurance for the aged, the 1965 amendments revised and improved the benefit and coverage provisions and the financing structure of the old-age, survivors, and disability insurance program.

Cash benefits were increased across the board for the first time since 1958.

OASDI benefits were made available to children up to age 22 if they are in an accredited high school, vocational school, or college. Formerly, benefits were payable only until an entitled child reached 18 years of age; this had the effect of forcing many of these children out of school and prematurely into the job market.

Other changes in the program allow widows to claim benefits, at an actuarially reduced rate, at age 60; broaden the disability test; revise the retirement test to allow an individual to earn substantially more without reduction of social security benefits. This last provision will allow additional persons to claim benefits for the first time.

Mr. Chairman, I have a table that gives the amount of these benefits State by State which I will put in the record at the end of my statement which the members might find of interest. (See p. 12.)

IMPACT OF AMENDMENTS ON SOCIAL SECURITY ADMINISTRATION

Let me detail the impact that these amendments will make on the Social Security Administration. Here are some of the things we know and expect that we must do, and a great portion of these tasks must be completed within a short, 10-month period:

Process applications from 1.9 million individuals age 65 and over who are not insured for old-age insurance benefits, and who must file an application to be entitled to health benefits.

Issue 19 million identification cards to the aged population covered by the hospital insurance programs.

Give an estimated 16 million explanations of the program in person, by telephone, or by letter, and establish the necessary electronic and

microfilm records for controlling and recording utilization of the health services.

Receive initial certification from State agencies for an estimated 5,700 hospitals, 2,000 extended-care facilities, and 1,000 home health agencies as providers of services under the programs.

Contact 19 million persons age 65 and over to determine if they wish coverage under the voluntary supplementary plan of medical insurance (our actuaries have estimated that between 80 and 95 percent of these people will elect coverage).

Mr. Chairman, I would like to show you what we claim is the most simple application form in the history of the U.S. Government for these people. These are going out this week, tonight at midnight. This is a form which we are sending to each of the aged persons asking them if they wish to voluntarily enroll or not under the so-called supplementary plan.

All they have to do is check one or two of those boxes "yes" or "no," put it an envelope and send it back to us. I am very proud of that as a model of simplicity. That is something we have to get back from these 19 million people to know whether they are going to elect this coverage under the voluntary system.

Mr. DUNCAN. Where did you ever get the names of those 19 million people and their addresses?

Mr. COHEN. We got most of them as beneficiaries under the present system, and then some in the Railroad Retirement System and other systems. Then there are about 2 million or so whom we will have to search out.

Mr. BALL. Somewhat more than that, Mr. Secretary. We will reach by this direct mailing process around 80 percent of the aged. In addition, there are about 1,100,000 people who are insured under social security, or are dependents of such people, but have never filed because they are still working and we don't have their names and addresses. We will have to urge them to come in through general publicity and through contacting their places of employment.

Of the group that remains who aren't on social security, over half are on assistance rolls and the State welfare agencies will be in direct touch with those people.

For the remaining group, about 5 percent of the aged, who are neither working nor assistance recipients, nor social security or railroad beneficiaries, or eligible for social security, we will have to depend upon the cooperation of groups that work especially with the aged, and on general television, radio, and other general informational devices.

Mr. COHEN. This is the pamphlet that is going out to each of the people with that form to tell them about it. There is a very important point in there that will come up in the discussion where we are advising people not to cancel any private insurance they have because this program doesn't become effective until July 1, 1966.

Mr. BALL. One reason the form is so simply done, I might say, is that the pamphlet covers the complications.

There are complicated things which people just have to be told about and they are in the pamphlet.

Mr. COHEN. In addition to these things we have discussed, the Social Security Administration will have to:

Work out procedures for deducting the $3 monthly premium from the monthly benefits of OASDI beneficiaries who elect medical insurance coverage, and procedures for the collection of the monthly premiums from those who want to participate in the medical insurance program, but who are not entitled to OASDI benefits;

Make retroactive benefit payments to 21.1 million beneficiaries; Receive and process an estimated 2,100,000 more OASI claims applications than we did last year-an amount 69 percent higher than the estimate on which the 1966 regular appropriations request was founded. This will include 1.1 million persons over 65 who are working and eligible and will now wish to establish entitlement for health insurance; 413,000 resulting from the liberalization of benefits to children up to age 22; 177,000 as a result of the amendment allowing widows to receive reduced benefits at age 60; 30,000 as a result of the amendment liberalizing the amount of annual earnings from the retirement test allowed an individual; more than 320,000 resulting from the lowering of the insured status requirements; and

Receive and process 250,000 additional claims as a result of the broadening of the disability provisions.

Thus, the effect of the 1965 amendments on the workload of the Social Security Administration is immediate and great. In terms of volume, the amendments will result in an almost 40-percent increase in the workload over that anticipated for fiscal year 1966 in the regular appropriations request. The Social Security Administration has already experienced a marked increase in its workload. To handle the immediate increase in workload and the higher budgeted levels projected for the remainder of fiscal 1966, the Administration will be required to increase its manpower by 10,950 man-years. Part of this need an estimated 4,600 man-years-will be met through overtime employment of existing work force. The bulk of the additional manpower requirement will be met by increasing our permanent staff by about 8,300 employees and by using some temporary employees. This number of additional employees is less than the anticipated need for 1967, but it is the maximum number that we believe can be recruited and trained in order to cope with the immediate and substantial impact of the 1965 amendments. I am happy to say that our requests reflect a sharp increase in productivity-about 7 percent over the original 1966 budget estimate-without which our requests for additional manpower would have been considerably higher.

COST OF ADMINISTERING PROGRAM

The Social Security Administration is requesting $125,212.000 as a supplemental authorization from the trust funds for salaries and expenses. Of that amount, $15 million is to increase the current contingency reserve from $10 to $25 million. The remainder, $110,212,000, is to finance the work which must be handled by the Social Security Administration, by State agencies, and by private insurance carriers and contractors as a result of the amendments. Of the total

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