TABLE 1.-Distribution of Federal funds under medical services for the aged plan (proposed title XVI of the Social Security Act), by State

MEETING THE HEALTH CARE NEEDS OF OLDER PEOPLE THROUGH SOCIAL INSURANCE

Hon. RICHARD M. NIXON,

Vice President of the United States,

The Capitol, Washington, D.C.

Hon. LYNDON B. JOHNSON,

WASHINGTON, D.C., June 30, 1960.

Majority Leader, Senate of the United States,

Washington, D.C.

Hon. EVERETT MCK. DIRKSEN,

Minority Leader, Senate of the United States,
Washington, D.C.:

The undersigned who have long been identified with the American system of social security, having served the Government in administrative or advisory capacities, urge the incorporation in social security legislation now before the Senate of a program of contributory social insurance through which our citizens can pay for the cost of the hospital and related services they may need in old age. An extension of Federal old age, survivors, and disability insurance to include hospital coverage would provide a systematic way of financing serious illness and prevent the exhaustion of the savings of aged persons and the consequent, often devastating, demands upon the resources of their children. There is every indication of the willingness of Americans to share the cost of basic health protection for their elderly parents and later for themselves by paying for such a program through their working years. If such health protection were available for older persons, private organizations would be enabled to offer more economical protection to the younger people in our population.

We sincerely hope that the social security bill now pending before the Senate will be amended to provide for hospital and related services to older people through social insurance system.

Sincerely yours,

LIST OF SIGNATORIES

Mr. Arthur Altmeyer, Madison, Wis., former Chairman of Social Security Board and Commissioner for Social Security.

Mr. Joseph P. Anderson, executive director, National Association of Social Workers, member, Advisory Council, 1961 White House Conference on Aging. Dr. Eveline M. Burns, professor of social work, New York School of Social Work, Columbia University; former Consultant to Committee on Economic Security and Social Security Board, and member of Advisory Committee to Secretary of Health, Education, and Welfare (1954).

Mr. Wilbur J. Cohen, professor, Public Welfare Administration, School of Social Work, University of Michigan, member of the staff of the President's Committee on Economic Security (1934–35).

Mr. Nelson Cruikshank, AFL-CIO, Washington, D.C.: member, Advisory Council on Social Security (1948-49) and Advisory Council on Social Security Financing (1958-59).

Miss Loula Dunn, Chicago, Ill., member, 1959 Advisory Council on Public Assistance.

Mr. Fedele F. Fauri, dean, School of Social Work, University of Michigan; former consultant on social security to House Ways and Means and Senate Finance Committees.

Miss Helen Hall, National Federation of Settlements, member, Advisory Council of the President's Committee on Economic Security (1934–35).

Mr. Seymour Harris, littauer professor of political economy, Harvard University, consultant to President's Council of Economic Advisers.

Miss Jane M. Hoey, New York City, director, Bureau of Public Assistance, Social Security Administration (1936–54).

Mr. Raymond W. Houston, Commissioner, New York State Department of Social Welfare, member, 1959 Advisory Council on Public Assistance.

Mr. John Kidneigh, director, Graduate School of Social Work, University of Minnesota, chairman, 1959 Advisory Council on Child Welfare Services.

Mr. Murray Latimer, Washington, D.C., former chairman, Railroad Retirement Board.

Mr. Richard A. Lester, professor of economics, Princeton University, member, Advisory Committee to Federal Bureau of Employment Security.

Mr. Norman V. Lourie, deputy secretary, Pennsylvania Department of Public Welfare, member of ad hoc advisory committee to Department of Health, Education, and Welfare.

Mr. Charles I. Schottland, dean, Florence Heller Graduate School of Social Welfare, Brandeis University, former Commissioner of Social Security (1954-58). Mr. Karl de Schweinitz, Washington, D.C., former consultant to Social Security Board, and professor emeritus, University of California.

Mr. Herman M. Somers, chairman, Political Science Department, Haverford College, former consultant to Social Security Administration.

Mr. John W. Tramburg, commissioner, New Jersey State Department of Institutions and Agencies, former Commissioner of Social Security (1953). Mr. George K. Wyman, executive director, welfare council of Metropolitan Los Angeles, former Deputy Commissioner of Social Security (1959).

Mr. J. Douglas Brown, dean of faculty, Princeton University, chairman of Advisory Council on Social Security (1937-38) and member of Advisory Council (1948-49).

Mr. John J. Corson, McKinsey & Co., Washington, D.C., former Director, Bureau of Old Age and Survivors Insurance.

The CHAIRMAN. Thank you very much, Mr. Cohen, you have made a very interesting statement.

Mr. COHEN. Thank you, Senator.

I may say in conclusion, I would like to be back here 25 years from now, but we will just have to wait and see how that works out. The CHAIRMAN. I remember how we worked together then.

Mr. COHEN. Yes, sir.

The CHAIRMAN. There will be inserted in the record a statement of the New Jersey Education Association and the New Jersey Civil Service Association at this point.

(The documents referred to are as follows:)

STATEMENT OF THE NEW JERSEY EDUCATION ASSOCIATION AND THE NEW JERSEY CIVIL SERVICE ASSOCIATION, PRESENTED BY JAMES P. CONNERTON, FIELD REPRESENTATIVE, NJEA, JUNE 30, 1960

I wish to express the appreciation of the members of the New Jersey Education Association and the New Jersey Civil Service Association for the privilege of this opportunity to present their problem to this committee.

Our members are well aware that your committee is at this time faced with a number of weighty problems which demand your attention.

We recognize also that our problem is one which affects a limited number of persons. However, the effect on these persons is so severe that we ask this committee to explore every possible avenue of relief.

As you have been informed by both Senators from New Jersey, approximately 2,130 retired New Jersey teachers and approximately 1,300 other retired New Jersey public employees face the grim prospect of suffering the loss of retirement income. For some of these people their already meager resources will be cut as much, as $1,450 per year. be approximately $1,300 per year. loss will average $960 per year.

The average loss to retired teachers will
For other retired public employees the

These people will lose this badly needed retirement income unless section 204 (a) of H.R. 12580 is amended to protect their interests.

The problem results from the fact that the two major public retirement plans in New Jersey (the teachers pension and annuity fund and the public employees retirement system) are integrated with the social security program. Under the terms of this integration these two State retirement funds are permitted to reduce the amount of pension paid by the State to a retired person if this person earned a social security benefit through public employment in New Jersey. The amount of reduction would be equal to the amount of the social security benefit.

In the long run this is a sound and acceptable procedure. In the short run, however, during the period of transition from separate to integrated benefits, some public employees can be adversely affected. Particularly affected are persons who are already entitled to social security benefits in addition to State pension as a result of work in private employment or as dependents of social security beneficiaries.

To cope with these transitional problems, some public pension funds have provided social security benefits for their people on the divisional basis. That is, by permitting those individuals who did not want social security coverage through public employment to elect not to participate in the proposed cooperative program.

In New Jersey, however, both teachers and other public employees were brought in under a plan which provided that all members of each State pension fund were to be participants in the integrated program. If the group voted to accept the plan, there was no provision for an individual to elect not to participate.

When teachers were asked to accept integration of their pension fund with social security, many older teachers were hesitant to go along for fear of financial loss. The argument which convinced many of these people to vote "yes" for integration was that under the terms of the proposal anyone who wanted to avoid integration could do so by retiring from New Jersey public employment before earning "fully insured" social security status.

This understanding was reinforced when the Division of Pensions of the State of New Jersey compiled and distributed to members of the two State pension funds the retirement manuals submitted with this statement.

I quote from one of these manuals, Public Employees Retirement System of New Jersey-Summary of Benefits and Contributions. On page 4 appears the statement, "No reduction is made from the PERS allowance at age 65 if the member does not qualify for social security benefits as a result of public employment alone. Generally, the ability to avoid this reduction depends upon the member's age and date of retirement * * *” Then on page 9 there appears a table which informs each member of the fund as to the date he must retire in order to avoid becoming subject to reduction of his pension.

(The table referred to follows:)

The social security offset schedule

(The following table applies to all active members in the Retirement System who were in public employment on Jan. 1, 1955)

NOTE -The above table does not consider the problem of those individuals who may earn $4,900 during the final ye ri which they will chieve the number of quarters needed for social security cover ge. Anyone whose earnings reach $4,200 during the final year is automatically credited with 4 quarters for that year under social security.

A number of teachers and other public employees followed these State manuals and advanced their retirement dates so as to avoid becoming subject to a reduction of State pension.

The retirement dates suggested by this table are designed to accomplish retirement before a social security benefit is earned through New Jersey public employment. The dates are based on the number of quarters of coverage required for "fully insured" status under the existing Social Security Act.

If, as proposed by section 204 (a) of HR. 12580, the number of quarters of coverage required for "fully insured" status is reduced, these tables cease to be valid.