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TABLE 3.-Old-age assistance and aid to dependent children, separatelyCost standards for basic requirements estimated at twice specified

food costs in USDA low-cost food plan: Financial need met by public assistance payments for basic requirements and special needs other than for medical care at end of calendar year 1958, under specified measure of total cost for basic items 1

Low-cost USDA food plan from which estimate of total cost of basic

requirements is derived 3

Geographical region 2

Geographical region 2

United
States

United
States

North-
east

South

West

North-
east

North
Central

North
Central

South

West

1. Standard USDA food plan:

(a) Average U.S. cost

(6) Average cost in specified region..
2. Adaptation of standard plan for South 4

94.2
94.4
94. 5

99.4
99.3

96.4
96.1

87.7
88.4
88. 6

99.4
99.4

56.8
57.1
58.2

79.5
71.4

64.0
60.5

33. 6
38.2
40.2

86.1
78.6

1. Standard USDA food plan:

(a) Average U.S. cost

(6) Average cost in specified region.
2. Adaptation of standard plan for South 4

$3.98
3. 84
3. 78

$0.51

1. Standard USDA food plan:

(a) Average U.S. cost.

(6) Average cost in specified region
2. Adaptation of standard plan for South 4

$115, 050
110, 940
109, 120

$1, 765
2,145

$17, 375
18, 745

$93, 160
87, 300
85, 480

$2,750
2,750

$671, 095
663, 320
634, 560

$61, 880
95, 880

$124, 635
144, 230

$453, 480
370, 770
342,010

$31, 100
52, 440

1. Standard USDA food plan:

(a) Average U.S. cost.

(6) Average cost in specified region
2. Adaptation of standard plan for South 4_

6.1
5.9

1 Amount of needed increase shown is total of amounts under State cost standards (as
shown on table 2) plus amounts by which State cost standards for basic items were inad-
equate under the measures in which the total cost for basic items was estimated at twice
the food costs in the specified low-cost USDA food plan.

2 See table 2 for relevant footnotes.

3 See text of app. B for discussion of the USDA food plans.
4 Figure for United States includes figures for the South that were derived from the
adaptation of the standard USDA low-cost food plan and figures, for other regions derived
from the regional cost of the standard food plan,

In other words, when this committee is considering the fiscal implications of the program, I think you have to be aware of the fact, as I know you have been many times when proposals for changing the Federal-State formula are concerned, that the estimate shows that, if you were to bring all the States up to this minimum level there would need to be $268 million more.

Senator CURTIS. How much is spent now?
Mr. COHEN. On medical care?

Senator CURTIS. Well, on this item where you said there was a deficit of $268 million.

Mr. COHEN. Well, on medical care alone, using your staff's excellent report on this matter, they show that for vendor payments and medical care in old-age assistance in table 2 of your report that $220 million was spent in 1959.

Senator CURTIS. That is Federal funds?
Mr. COHEN. No, that is the total that is Federal-State.
Senator CURTIS. The total!
Mr. COHEN. Yes, sir.
Senator CURTIS. And you say that is $268 million short?
Mr. COHEN. Yes, sir; according to the reported based on 1958 levels.

Senator CURTIS. What is the per capita cost there, if they would supply this deficit?

Mr. COHEN. The per capita cost is for medical care.

Senator CURTIS. Assuming that the Congress would provide the deficit which you say exists?

Mr. COHEN. I can give it to you.
Senator CURTIS. It would be over $200 ?

Mr. COHEN. About $9 per month or about $100 per year per capita. I want to also give you a much more startling figure. The study estimated what the total deficit would be for all of old-age assistance of the present old-age assistance beneficiaries because

Senator CURTIS. I don't want to remain on this too long, but maybe you ought to define what a deficit is. Do you mean checks written where there is no money in the bank?

Mr. COHEN. No, sir.
Senator CURTIS. What is it?

Mr. COHEN. Each State determines for itself what is the standard of assistance in a State. That requirement was put in this 1935 at Senator Byrd's insistence. I remember that very distinctly. Each State sets its own standard and has to submit to the Federal Government what that standard is. Now, not all the States have that money to pay that standard. They define the standard and then if the legislature does not put up enough money that biennium they pay a proportion of that amount or a maximum put in the limit.

Senator CURTIS. Is the usual deficit between what the States determine as a standard and what they actually spend ?

Mr. Cohen. That is correct, sir. I will give you what the deficit is. Senator CURTIS. You have already told us.

Mr. COHEN. No, I just did that for medical care. I am now going to give you the standard

Senator CURTIS. I am just talking about medical care.

Mr. COHEN. Let me start over again. The deficit for all assistance-old age assistance and aid to dependent children—including medical care on the State's own standard for 1958—was $576 million. Senator ('URTIS. Twenty-five years after the social security law was passed?

Mr. (ONEN. That is correct. Page 69 of the report.

If you then take a different standard, that is using the U.S. Department of Agriculture low-cost food standard plan, and assume that food represents for these low-income people 50 percent of the cost, the deficit comes to $1,108,335,000.

Now, the reason I mention that is, it gives you, irrespective of whether you happen to agree with these particular standards or not, some idea of the gap that exists today with respect to the existing program. This committee and the Congress is already extending to the States an offer to match part of the cost. You already in the Social Security Act hold out io each State, saying within the limits that have been put on, if you put up more money, we will finance more of that cost.

Senator Curtis. What you are saying is 25 years after the enact

ent of title 2, it misses taking care of our aged, according to our figures, by half a billion dollars a year.

Mr. Conex. Yes, sir, and I am only talking about the 2.4 million aged out of the roughly 16 million and the dependent children.

Senator CURTIS. Now, the theory of the Forand bill would go ahead and leave out all of those people again.

Mr. (OHEN. Mr. Curtis, as a matter of social priority, in determining what needs to be done, the medical care needs of the people now on old-age assistance ought to be given very careful consideration by this committee and it is for that reason that I am going to suggest that you do something to improve medical care also for people now on old-age assistance, and my specific suggestion, as you know

Senator CURTIS. Would you treat them just like you treat present beneficiaries of OASI ?

Mr. COHEN. What do you mean, Senator Curtis ?

Senator CURTIS. Well, the Forand bill, which I do not approve of, takes care of present beneficiaries of OASI, but it excludes all other old people of this generation.

Mr. Cuen. Well, if you are going to adopt, as I hope you would, some kind of an insurance program that would take care of medical costs for these people, then I think you have two alternatives that are open to you: You either must greatly improve title I to take care of the medical care needs of the people who are not covered, or you must, out of Federal funds, in a sense blanket in or purchase the cost of the equivalent medical care for people who otherwise would not be covered by that, and of those two alternatives

Senator CURTIS. In the Forand bill, I don't want to drag this out too long, but in the Forand bill you blanket in all the present beneficiaries of OASI, do you not?

Mr. COHEN. The OASI?
Senator (URTIS. Yes.

Mr. COHEN. You give them the medical care benefits, yes, that is correct.

Senator Curtis. That is my quarrel with the architects of social security. Our economy carries an enormous load to support the social security system, and it is still a selective program. It was testified to here this morning that people who went on the beneficiary rolls in

1940 have not paid anything since. They got on the average $22 and now get $50-some, and now you gain propose a payroll tax to add to it medical and hospital benefits. But you exclude all the rest of the aging population.

Senator DOUGLAS. Senator, are you proposing that we make this more universal?

Senator CURTIS. I am against this medical section, but I have always felt that our social security system failed in both respects: One, to set up a prepaid plan for the present generation, which I doubt if it could do, or otherwise meet our problem in this generation.

Senator DocGLAS. I would like to point out that the McNamara bill includes those under old age insurance, those under old age assistance, but also those in an intermediate zone who are not under either of those two systems and which includes everybody except the aged who are employed fulltime. Your statements in these last few minutes have given me hope, Senator, that you have become a convert to the McNamara plan. (Laughter.) ]

Senator CURTIS. No, no. I am against both the Forand and the McNamara proposal.

I would like to ask the witness, are you for the Forand bill?
Mr. COHEN. I am.
Senator CURTIS. Are you opposed to the McNamara bill?
Mr. COHEN. No.
Senator CURTIS. Which is your preference?

Mr. COHEN. Let me put it this way, Senator: I think the McNamara bill contains some very desirable provisions. But I am rather conservative myself, you may know from our long contact and experience, you may take a little exception to that slaughter] but if you are going to start on that principle, it is best to take a scope of benefits initially that can be administered efficiently and workably. I would, therefore, take a scope of benefits that would probably cost closer to a half percent of payroll at this time than a percent of pay, roll, because having been in on the initial administration of social security, I feel the most important thing on any new benefit that we take is to have a sound administrative program that will be effective. I don't believe in taking more than you can handle efficiently.

Senator CURTIS. You mean selecting your beneficiaries?
Mr. COHEN. No, I was not talking-
Senator CURTIS. From that vested group?
Mr. Cohen. No, no, you misunderstand me.

Senator CURTIS. No, I think I have been studying this thing for 20 years and I have heard you testify every time, you and Mr. Cruikshank, for a selected list of beneficiaries.

Mr. COHEN. No.

Senator DOUGLAS. I welcome a new convert to the McNamaraForand plan.

Senator CURTIS, I told you I was opposed to both, but I want to point out the weakness and the social injustice of the Forand bill.

Mr. COHEN. You didn't give me a chance to finish, Senator Curtis. I was talking about the scope of benefits and not the beneficiaries. I endorse completely the objective either in the McNamara bill or in the principles of title 16 of some method of providing protection to those groups that are not covered. But I do feel that in doing that you

а

have to keep in mind the criterion that Senator Byrd has said, how much do you want to spend out of general revenues? If you say to

Senator CURTIS. You are not proposing to pay the present OASI beneficiaries hospital and medical benefits out of general revenues, are

me

you?

Mr. COHEN. No. But I think that is
Senator CURTIS. All right. You are, you are selecting beneficiaries.

Mr. COHEN. We are selecting beneficiaries with respect to which the payroll tax income shall apply, yes.

Senator DOUGLAS. Senator, if we include this broader group will you join in your support?

Senator CURTIS. No.
Senator Douglas. If we meet your objection?

Senator CURTIS. I am against Government medicine, I am for the voluntary system. If you are going to force it on me, I want you to be fair in your distribution of the proceeds.

Senator Douglas. Then you won't criticize us if we do make it all inclusive?

Senator CURTIS. Why yes, I am criticizing it because I don't think I can convert you. [Laughter.]

Mr. COHEN. Senator Curtis, you remember several years ago in the Ways and Means Committee when we went over this again and again in talking about how to finance this out of general revenues. We have never been able to get the Ways and Means Committee or the Senate Finance Committee to go along and put the money up out of general revenues.

Senator CURTIS. You are not even suggesting that now?

Mr. Cohen. No, sir, I would. If the Senate Finance Committee would report out paying for that out of general revenues, I would feel it was a very sound idea, and I urge you to get the Senate Finance Committee to do that. But I

Senator DOUGLAS. I join the witness in that request.

Senator CURTIS. You still insist that a certain vested group should get it whether or not it comes out of general revenues ?

Mr. COHEN. I am not a perfectionist, if the Senate Finance Committee were to give me 80 percent of what I asked for I would be very happy and content.

Senator CURTIS. All you have to do is raise your request by 20 percent.

Mr. COHEN. Returning to my eighth point, I do want to urge that the Finance Committee give consideration to the restoration as a minimum of the deletions in public assistance that were made by the Finance Committee and on the floor of the Senate in 1958 under the threat of a Presidential veto when some of the public assistance modifications were dropped out of the bill 2 years ago. These would have been very helpful to the States in developing a broader program of assistance.

As the Senators here will recall, because of the lateness of the hour in 1958, and because the Secretary said that he would recommend that the President veto the 1958 bill if it contained the public assistance provisions of the House-passed bill, the Senate Finance Committee made certain deletions in the public assistance provisions, and Senator Smathers made certain others on the floor.

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