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U.S. SENATE, June 28, 1960. Hon. HARRY F. BYRD, Chairman, Finance Committee, U.S. Senate, Washington, D.C.
DEAR SENATOR BYRD: Permit me to submit for your consideration the attached communications which have come to me from the public employees retirement system of Ohio with reference to H.R. 12580, the omnibus social security bill which is presently pending before your committee.
You will note that concern is expressed over the possible amending of the bill in your committee to permit what is known as the divisional method of voting on social security.
Interest is also expressed in the passage of an amendment which would provide that at the option of the public employee who is covered by a statewide retirement system, but not covered by social security, he could secure such social security coverage as if he were a self-employed person.
I hope your committee will give careful consideration to the views expressed by the public employees retirement system of Ohio when this legislation comes up for official action. With kindest regards, I remain, Sincerely yours,
FRANK J. LAUSCHE.
PUBLIC EMPLOYEES RETIREMENT SYSTEM OF OHIO,
Columbus, June 16, 1960. Mr. RAY M. WHITE, Secretary to Senator Frank J. Lausche, Senate Office Building, Washington, D.C.
DEAR RAY: It was good to see you and Joe on June 3. Too, I want to express to both of you again my appreciation for seeing me even though I had not had an opportunity to ask for an appointment.
Incidentally, through the assistance of some of our friends over in the House we were successful in having deleted from the pending social security legislation the amendment which was so objectionable to our people and to public employees in several other States, particularly Illinois, Colorado, and California. The amendment was another “back door” attempt by the social security staff and a small minority group in these States, including Ohio, to slip social security coverage in for a handful of public employees over the objection of the overwhelming majority.
Here is how it would have worked. It is known as the “divisional" method of voting on social security. The explanation (by the proponents) sounds fair enough—but. It goes like this—all public employees in a given State (any of the 50) would be given an opportunity to vote on social security coverage and those who want it get it and those who don't stay in the local retirement system. This the fair-sounding part. But—if there are 156,000 public employees in the State (as there are in PERS in Ohio) 1,000 or 100, or theoretically just 1 affirmative vote could affect the future equity of the other 155,000 plus. Why? Because the joker is that while currently only the 1,000 or 100 or 1 who voted for social security coverage would be covered, however the social security law would bind all future entrants into social security instead of into PERS. Consequently, in future years fewer and fewer employees would be covered by PERS and more and more employees would be covered by social security. Too, more and more (as the rates advance and as more employees are covered) of the employers' payments would go to social security instead of to our system.
The only possible end result would be an ever-increasing weakening of our financial structure and the complete loss of our greatest asset, actuarial soundness. The only offset to this destruction would have been to sock the taxpayers of Ohio some $15 million per year (currently—in 1969 or sooner if the rates advance, as most certainly they will, the cost would be above $22 million) by adding social security coverage on and above the present PERS plan. Not only that but if it was added for our people the school teachers and school employees in Ohio would demand equal benefits and boom, the cost would double.
So, I think you and Joe and the Senator can understand why we were so intent on eliminating the cancer in the House. Undoubtedly we will have to guard against the reinsertion of the amendment in the Senate Finance Committee when the bill gets over there. Yours very truly,
FRED L. SCHNEIDER.
PUBLIC EMPLOYEES RETIREMENT SYSTEM,
Columbus, Ohio, June 16, 1960. Supplemental Memo No. 1. To: Mr. Ray M. White.
As I explained to you and Mr. Scanlon in your office on June 3 we (the three State retirement systems—Teachers, School Employees and Public Employees, here in Ohio) together with large groups of public employees in other States are interested in one phase of social security legislation. We feel an amendment inserted in H.R. 12580 (the omnibus social security bill which in some form now seems certain of passage at the current session of Congress) in section 218(d) would provide an equitable and working solution to the problem of social security coverage for public employees, which has been with us in almost every session of Congress since 1945.
This amendment simply would provide that at the option of the public employee who is covered by a statewide retirement system but not covered by social security could secure such social security coverage as if he were a self-employed person. This would mean two things :
First—That only those who were interested would apply for coverage and would pay both the employee and the employer cost. Just as he would if he wanted to go out and buy an annuity.
Second–That the employer would not be saddled with this extra and ever increasing cost. Nor would the actuarial soundness of the System and the equity of the thousands of members be threatened.
Now, we know the Social Security staff will cry discrimination and malarky about unfair selection. I say "malarky" because if ever there is “unfair selection” the “divisional” voting proposal is exhibit A. Too, the history of social security legislation is full of far worse examples of adverse selection.
As I am certain you understand we shall hope to get the amendment to permit public employees to be considered as self-employed for social security coverage purposes included in H.R. 12580 when it is up for consideration by the Senate Finance Committee. At that time we hope you and Senator Lausche will support and guide our actions.
In order to give you some further assurance that there is substantial support for this self-employed status amendment I am attaching a photocopy of a resolution passed on June 4 by the National Conference on Public Employees Retirement at its annual Conference at the Manger Hamilton Hotel, Washington, D.C. Membership in the National Conference includes the retirement administrators of public employees in more than 40 of the States. Cordially yours,
NATIONAL ASSOCIATION OF STATE RETIREMENT ADMINISTRATORS As you can see here is a national organization which is the largest group of retirement systems interested in the two phases of the Social Security Act mentioned in my letter.
COMMERCE & INDUSTRY ASSOCIATION OF NEW YORK, INC.,
New York, N.Y., June 29, 1960. Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C.
DEAR SENATOR BYRD: Yesterday we sent you the following telegram on H.R. 12580 because reports indicated your committee was considering this legislation only in executive session :
“Although we are not in accord with every provision of H.R. 12580, as passed by thte House of Representatives, we favor on balance enactment of this legislation. We remain, however, unalterably opposed to a compulsory medical care program of the Forand type.”
Since public hearings now are planned, we respectfully request that the following additional views of this association on this important subject be placed in the record for consideration by your committee.
As has been stated, we favor on balance H.R. 12580 as passed by the House. We are firmly opposed, however, to mandatory legislation, financed through an increase in social security taxes, providing medical care for the aged. Our reasons follow :
Mandatory health insurance would not bring about an increase in either the quality or the quantity of medical care now available. The threat of regulated medicine inherent in such legislation would discourage promising candidates from preparing for the medical profession, thereby aggravating the shortage of doctors and slackening the advances that have been so characteristic of free medicine.
Emphasis has been placed upon the high cost of medical care and the small cash income of the aged. Actually low cash income alone does not necessarily prove inability to pay. A 1957 survey by the Health Insurance Foundation indicated 88 percent of the aged reported that they could pay a medical bill of $500. In the same year, half of the OASI beneficiaries had medical expenses of less than $100 and 88 percent less than $500.
Furthermore, the number of old people who have resources to meet their medical expenses is increasing by reason of the ever-expanding voluntary medical care plans for the aged which are provided by Blue Cross-Blue Shield, individual and group insurance policies of private companies and group practice plans. With so many able to take care of their own requirements it seems unnecessary and wasteful to provide benefits for all gar of need.
Few realize the amount of medical care of the aged now financed by various levels of government. The Federal-State assistance program, hospital care paid for by State and local governments outside the assistance program, the Veterans' Administration medical program and the medical expense deduction under the Federal income tax law currently benefit 5 million aged at a total annual cost of $900 million. When we add the free care provided by doctors and various charities, it is hard to believe that there are many aged who need medical care they cannot obtain.
As many qualified actuaries have testified, the Forand or similar type bills proposing an increase in social security taxes on both employers and employees appear not to have adequately judged the cost of services to be provided, even in the first year of operation. Undoubtedly, these costs would increase substantially with the passage of time because (a) there would be more eligible OASI recipients and (b) the availability of free hospital service would increase its use, often as a convenience rather than as a necessity among aged persons. Experience in Canada and Britain indicates that utilization rates might increase by 50 to 60 percent. Furthermore, any program of health bene fits for all social security beneficiaries will entail, of necessity, substantial increased taxes on active employees. How long will active employees be willing to carry such an increasing tax burden?
Finally, we believe that the OASI program should not provide services, that the individual should be left free to apportion his own resources between food, clothing, shelter, medical care and other requirements. In our system of individual freedom of the citizens to determine his own economic welfare, the Government should provide assistance only where demonstrated individual need makes help imperative. In those instances where the aged individual finds himself in need, the Federal-State assistance program will come to his aid.
If medical care is made "free" for any age segment of the population, we will have taken a significant and irreversible step toward similar medical care for the entire population. Government management of the financing of medi. cal care, no matter what name may be given to the scheme, is in fact a long step toward socialism itself.
Accordingly, Commerce and Industry Association strongly urges that no affirmative action be taken on any mandatory health insurance legislation but that H.R. 12580 as passed by the House of Representatives be enacted. Sincerely yours,
RALPH C. CROSS, General Manager.
CLARKSBURG, W. VA., March 17, 1960. Re the Forand bill (H.R. 4700). Hon. HARRY FLOOD BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C.
HONORABLE SIR: You now have before you the controversial Forand bill and I would like to, if I may, call your attention to a few facts with which, no doubt, you may already be familiar.
The annual income of the Nation's older population, those 65 and over, has increased by at least $6 billion in the aggregate since the midfifties to the neighborhood of $30 billion, a rate of growth in keeping with the general rise and income levels and the progress of the economy during this period. There are some 15 million persons 65 and over as against 1342 million in 1954.
I am approaching retirement and, in fact, in about 2 more years will be eligible for retirement and during my lifetime I should have been able to save a substantial amount of money for retirement but because of the confiscatory taxing situation which the American public has forced upon them by the politicians, I am unable to retire when I should be enjoying the sunset years of life.
Now we have another bill before us (H.R. 4700) which will only burden the American tax people with further unnecessary taxes.
Here's a segment of the population with income of $30 billion and the politicians in Washington want us to further augment that income by furnishing them with free hospitalization, medical, nursing home, and surgical benefits. My question is this: Why should one segment of the population be subsidized at the expense of the rest of the population, and in connection with that, I'm now thinking, not only of this legislation, but also the farm subsidies which, is my estimation, is a crime and a disgrace.
The income figures in connection with those over 65 disclose an outstanding area of growth in the classification of pension plans and individual annuities. Annual benefits paid under these programs, insured and not insured combined, almost doubled in the 1954–58 period, rising from approximately $800 million in 1954 to an stimated $112 billion in 1958. The number of pensioners 65 and over under private plans was around 112 million in 1958.
Public programs backed by the taxing power also experienced a marked growth in the 1954-58 period. Benefits under these programs increased from $5.9 billion in 1954 to a range of $10.5 billion to $11 billion in 1958. The major element is old-age and survivors benefits, representing about three-fifths of the total. The other programs are railroad retirement, government employees retirement, veterans programs, and public assistance.
Individual savings and investment programs are contributing a large sum to the income of the 65-and-over group. The 1959 total here was estimated at a range of $3.5 billion to as hight as $8 billion from interest, dividends, rents, and so forth, as compared with under $4 billion in 1954.
The American taxpayers are presently committed to expenditures of over $1 trillion. One-fourth of the total, or upward of $250 billion, is marked for payment of the present social security obligations. The fastest growing item in Feueral spending is not defense but social welfare programs, which have been increasing at the rate of $1 billion a year since 1953.
Federal welfare spending will amount to more than $20 billion during the next fiscal year. For the year ending June 30, 1958, special welfare expenditures at all levels of government amounted to $44 billion, 10 percent of the national output.
I'm of the old school.. I believe the people should support the Government and not the Government the people.
Another point that I would like to make is the fact that this proposal to raise social security benefits would put an unfair tax burden on wage earners, and ultimately would reduce American's power to advanced living standards for everyone. Frankly, I do not believe that these over-age-65 people need aid and assistance from the U.S. Government. They are, of course, indigents. We will always have indigents in our population, and they are being taken care of by the States, counties, and cities to the tune of many billions of dollars every year.
There's no doubt in my mind but what the Forand bill, if passed, will simply be an opening wedge or crack in the door for eventual socialized medicine.
We hear on every hand about creeping socialism." In my opinion, it is no longer creeping, it has now reached a gallop and apparently the two old parties, the Democrat and Republican are trying to outdo each other in giving away their American taxpayers' hard-earned dollars.
Summing this up you can only reach one conclusion and that is the fact that the politicians in Washington are indirectly trying to buy votes with these handouts and what a shameful and shocking situation where the Senate and Congress are trying to perpetuate themselves in office at the expense of the taxpayer and also with the possibility by adding these burdens to the Social Security Act may eventually cause its complete collapse.
I wonder if the Senate and the Congress of the United States realize that in 10 more years without any additional burdens being placed on the workers of this country, they and their employers will be paying 9 percent of the total wages earned simply to keep social security in the black. When we start adding such bills as the H.R. 4700 and 200 or 300 others which are floating around the Senate and House floors to this already staggering take from the taxpayer you can readily see that in another 10 or 20 years we may be paying as much as 15 to 25 percent to the social security fund. We earnestly solicit your good help in defeating this class legislation. Very truly yours,
S. FRANK STOUT.
BROOKLYN BUBEAU OF SOCIAL SERVICE AND CHILDREN'S AID SOCIETY
Brooklyn, N.Y., June 24, 1960. Senator HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C.
DEAR SENATOR BYRD: We are writing to express our strong conviction that any legislation for the inclusion of health benefits for the aged be incorporated within the existing framework of the Social Security Act's Old-Age, Survivors, and Disability Insurance system.
Any other arrangement seems to us to be wasteful and in the long run will defeat the objectives of such legislation.
We would appreciate your incorporating our statement in the official record of any hearing on the matter that the Senate Finance Committee may hold. Sincerely yours,
FREDERICK I. DANIELS,
AMERICAN HOSPITAL ASSOCIATION,
Washington, D.C., June 21, 1960. Hon. HARRY FLOOD BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C.
DEAR SENATOR BYRD: We are concerned about the provisions of H.R. 12580 which would remove the exemption of medical interns from the provisions of the Social Security Act. As you know, there were no hearings on this bill in the House, and so far as we are aware there has been no consideration of the fact that such interns are primarily students. The proposed coverage of selfemployed physicians is not, we believe, sufficient reason to extend such coverage back into the educational period which precedes active practice which in many States, indeed, is a prerequisite to licensure to practice.
Much effort has been devoted to maintaining and developing internship programs as a part of the educational process, with the American Medical Association prescribing educational standards as a condition for its approval of internships. Though admittedly there is an element of service in the approved internship, we believe it is and should be wholly incidental to the educational aspects. The internship is the period in a physician's education when he receives his basic instruction in patient care; it is an indispensable part of his education and of his preparation for practice. We believe that denominating this period as primarily one of employment, and subjecting the small stipend to an employment tax would jeopardize the educational focus which we think is so important to maintain.
We would accordingly urge the deletion of subsections (c) and (g) of section 104 of H.R. 12580 (p. 46, lines 5 and 6, and p. 47, lines 21 and 22, of the bill as introduced). Sincerely yours,
KENNETH WILLIAMSON, Associate Director.