of medical services. Under this approach, the individual would have no opportunity to determine for himself the particular pattern for meeting the threat of large medical expenses that best suits his own needs and desires. In addition, by compulsorily extending health benefits to aged persons eligible for oldage, survivors, and disability insurance, many persons would be included who have the resources and the opportunity to obtain protection against long-term or other expensive illnesses without Government help.

2. These amendments would establish an exclusively Federal program. This administration has consistently endeavored, however, to strengthen our system of government by encouraging State and local governments to assume responsibility for the many public needs which can be met through Federal-State partnership and by supporting programs to stimulate greater State and local effort in areas of critical national concern. Health care for the aged is an area of activity admirably suited to such a sharing of responsibility. In addition to bolstering the underlying cooperative foundation of our Federal system, with governmental powers divided between State and Nation, Federal-State partnership places the control over daily program operations at the level of government closest to the persons affected by the program. Thus, an individual's needs may be more immediately and effectively reflected in the current operations and the development of the program.

3. The approach proposed in the amendments would constitute a serious threat to the orderly development of present retirement, survivorship, and disability benefit features of the social security system.

The payroll tax for old-age, survivors, and disability insurance is already scheduled ultimately to be 42 percent each on employees and employers and 64 percent on the self-employed. Further liberalization in retirement, survivorship, and disability benefits may call for additional revenues, which can only come from increases in the payroll tax or increases in the earnings base, or both. If health insurance as envisaged in these amendments were to be added to the system, the payroll tax would need to be increased by a total of one-half to 1 percent. As in the case of cash benefits, there would undoubtedly be insistent demands for improving the medical benefits beyond those which can be financed by the tax increase for medical benefit purposes. Increases in both health and cash benefits would place the retirement, survivorship, and disability portions of the system in competition with the health benefits for available funds, since the revenue possibilities from a payroll tax are not limitless.

It is therefore far better to reserve the payroll tax for the retirement, survivorship, and disability features of the social security system so that the revenue source is not overburdened. Whatever the Government needs to do in the area of health care for the aged should be done by the appropriation of general revenues. Such appropriation would provide for a more equitable distribution of the fiscal load than would a payroll tax on earnings of $4,800 or less.

TEXT OF AMENDMENT 6-24-60-C

Intended to be proposed by Mr. MCNAMARA (for himself, Mr. KENNEDY, Mr. CLARK, Mr. RANDOLPH, Mr. SYMINGTON, Mr. HUMPHREY, Mr. WILLIAMS of New Jersey, Mr. MAGNUSON, Mr. McGEE, Mr. YOUNG of Ohio, Mr. DOUGLAS, Mr. GRUENING, Mr. LONG of Hawaii, Mr. MURRAY, Mr. HART, Mr. MORSE, Mr. HENNINGS, Mr. JACKSON, Mr. PASTORE, Mr. MCCARTHY, Mr. BARTLETT, Mr. ENGLE, Mr. GREEN, and Mr. MANSFIELD) to the bill (H.R. 12580), viz: On page 154, beginning with line 1, strike all through line 18 on page 172, and insert in lieu thereof the following:

TITLE VI-AMENDMENTS TO TITLE II OF THE SOCIAL SECURITY

ACT

SEC. 601. (a) Title II of the Social Security Act is amended by adding after section 225 the following new section:

"MEDICAL INSURANCE BENEFITS

"SEC. 226. (a) (1) Every individual who—

"(A) has attained retirement age (as defined in section 216(a)),

"(B) is retired (as defined in paragraph (3)),

"(C) is, or would upon filing application be, entitled to monthly benefits under section 202,

shall be eligible to receive medical insurance benefits. Payment of such benefits shall be made in accordance with the provisions of this section, but only if application is filed for such payment in such form and in such manner and by such person as the Secretary may by regulation prescribe. The provisions of clauses (B) and (C) shall not apply to any person (i) who is the husband or wife of an individual eligible to receive medical insurance benefits and (ii) who was receiving more than one-half of his or her support from such individual for one year provided such year began no earlier than the calendar year preceding the year such person attained retirement age.

"(2) Payment of medical insurance benefits shall be made for hospital services, nursing home services, home health services, diagnostic outpatient services, and very expensive drugs (as defined in subsection (c)).

"(3) For purposes of paragraph (1)—

"(A) Except as may be provided in subparagraph (B), an individual shall be retired with respect to the period for which he files for payment of medical insurance benefits if

"(i) he had total earnings (as defined in section 203 (e) of less than $2,000 in any calendar year preceding the year in which the first day of such period occurs, provided such calendar year is no earlier than the year preceding the year in which he attained retirement age,

or

"(ii) he did not render services for wages of more than $100, and did not engage in self-employment in each of at least three months in any calendar year, provided such third month preceded the first day of such period and such calendar year is no earlier than the year preceding the year in which he attained retirement age, or

"(iii) he attained the age of seventy-two in a month prior to such period.

"(B) For the purposes of benefits for very expensive drugs, an individual shall be retired if on the first day of the month in which he incurs the cost of such drugs he meets the provisions of clause (i), (ii), or (iii) of subparagraph (A). Such first day shall be deemed the first day of the period for which he files for the payment of medical insurance benefits. For purposes of subparagraph (A)(ii), an individual shall be presumed not to have engaged in self-employment with respect to any month if, by applying the provisions of section 203 (e) and the regulations issued thereunder, the Secretary determines that such individual did not engage in self-employment in such month, except that for such purposes the term 'substantial services', as used in paragraph (3)(B) (i) of such section 203 (e), shall mean services rendered by such individual with respect to his trade or business in seven or more days in such month.

"(4) Payment of medical insurance benefits which an individual is eligible to receive may be made for

"(A) hospital services furnished to such individual for a total of not more than ninety days in any calendar year;

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(B) nursing home services furnished to such individual for a total of not more than one hundred and eighty days in any calendar year; "(C) home health services furnished to such individual for a total of not more than two hundred and forty days;

"(D) diagnostic outpatient services but only to the extent the Secretary, after consultation with the advisory council established pursuant to subsection (f), may by regulation specify;

(E) very expensive drugs furnished such individual, but only to the extent the Secretary, after consultation with such advisory council, may by regulation specify.

The maximum of any combination of hospital services, nursing home services, and home health services for which payment may be made for such services furnished, during any calendar year, to any individual eligible to receive medical insurance benefits shall not exceed ninety units of services. For the purpose of the preceding sentence, one unit of services' equals (i) one day of hospital services, (ii) two days of nursing home services, or (iii) two and two-thirds days of home health services.

"(5) Notwithstanding the previous provisions of this subsection, no individual shall be eligible to receive medical insurance benefits insofar as they relate to hospital services, nursing home services, or home health services, unless such services are rendered after referral by a physician licensed to practice surgery

or medicine in a State and such physician certifies in writing that such hospital services, nursing home services, or home health services are or were required for his medical treatment; except that such referral shall not be required for hospital services in case of an emergency which makes such referral impracticable. Periodic recertification that medical treatment which extends over a period of time is required shall, in accordance with regulations established by the Secretary, be a condition of continuing eligibility to reecive such benefits during the period such services are furnished.

"(6) (A) An application for the payment of medical insurance benefits shall be valid, with respect to a period during which one or more of the services described in subsection (c) are furnished, if such application is filed no earlier than the first day of the third month preceding the month in which the first day of such period occurs or no later than the last day of the twelfth month succeeding the month in which the first day of such period occurs. An application for the payment of medical insurance benefits shall be valid with respect to the cost incurred for a very expensive drug if such application is filed within such time as the Secretary may by regulation prescribe.

"(B) For purposes of this section, a period during which—

"(i) hospital or nursing home services (or both) are furnished means a consecutive number of days (including only one day) in which services are furnished;

"(ii) home health services are furnished means one or more days (but not exceeding two hundred and forty days in any calendar year) in which such services are furnished, but only if the number of days elapsing between any two days in which said services are furnished does not exceed thirty; "(iii) diagnostic outpatient services are furnished means one or more days (but not exceeding in any calendar year the number of days specified by the Secretary pursuant to paragraph (4) (D) of this subsection) in which such services are furnished, but only if the number of days elapsing between any two days in which such services are furnished does not exceed fourteen.

"EVIDENCE AND DETERMINATIONS OF ELIGIBILITY

"(b) (1) Proof that an individual is entitled to monthly insurance benefits under section 202 by reason of having attained retirement age shall be conclusive evidence that such individual has attained retirement age.

"(2) The provisions of section 205 relating to the making and review of determinations shall be applicable to determinations as to (i) whether an individual is eligible to receive medical insurance benefits, and (ii) the number of days, in any calendar year, for which an individual is eligible to receve such benefits.

"DESCRIPTION OF MEDICAL INSURANCE BENEFITS

"(c) (1) Hospital services' means, subject to further definition and limitation by regulations, the following services provided an individual as an inpatient: bed and board in a hospital, in semiprivate accommodations unless they are unavailable, or unless other accommodations are occupied at the request of the patient or, are required for medical reasons; and such medical, nursing, ambulance, and other services, and such drugs, supplies, and appliances, as the hospital customarily provides bed patients either through its own employees or through arrangements with others, except that this term shall not include services provided in connection with cosmetic or plastic surgery performed for beautification.

"(2) 'Nursing home services' means, subject to further definition by regulations, skilled nursing care, related medical and personal services required for the treatment of the patient, and accompanying bed and board furnished to an individual as an inpatient in any skilled nursing facility (including a home for the aged).

"(3) Home health services' means, subject to further definition by regulations, professional nursing care (including part-time homemaker services, physical and occupational therapy, medical social services, dietary counseling, ambulance service, and similar allied services) in a place of residence maintained as an individ ual's home, furnished by a public or other nonprofit home health service agency "(4) 'Diagnostic outpatient services' means, subject to further definition by regulations, such services furnished by a hospital and prescribed by a physician licensed to practice surgery or medicine to any individual as an outpatient for purposes of diagnostic study.

"(5) 'Very expensive drugs' means, subject to further definition by regulations, any drug which has been prescribed by a physician licensed to practice surgery or medicine in a State for use of an individual, if such drug is prescribed by its official title as included in United States Pharmacopoeia, National Formulary, Homeopathic Pharmacopoeia, or New and Non-Official Remedies, or in any other compendium recognized by law as an official compendium and the cost of which is in excess of an amount fixed by the Secretary. Nothing in this definition shall be construed to prevent any physician from prescribing by brand or trade name if the prescription bears a notation by the prescribing physician to the effect that for medical reasons no substitution may be made.

"(6) Notwithstanding the description of services in the preceding paragraphs of this subsection, such services shall also include that part of similar but of more expensive services as is equivalent in cost to the services specified in such preceding paragraphs.

"AGREEMENTS WITH PROVIDERS OF HEALTH SERVICES

“(d)(1)(A) The Secretary shall publish, at such time or times as he designates, a list of (i) hospitals, (ii) hospitals furnishing outpatient diagnostic services, (iii) facilities furnishing nursing home services, and (iv) public or other nonprofit home health services agencies in the United States, which meet the standards prescribed by him for providing hospital services, diagnostic outpatient services, nursing home services, and home health services, and which have filed with him agreements under subparagraph (B) of this paragraph. No institution or agency required by or pursuant to State law to be licensed shall be included in any such list unless it is duly licensed. In setting eligibility standards for any class of institutions or agencies, the Secretary may take account of standards set by any recognized national listing or accrediting body. The Secretary may utilize the service of appropriate State agencies in determining whether providers of services meet such standards as he shall prescribe.

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'(B) No hospital, nursing home, or home health service agency shall be included in a list under subparagraph (A) unless it has filed with the Secretary an agreement to make no charge to or on account of individuals for services furnished to such individuals who are eligible to receive medical insurance benefits under this section (and abide by regulations of the Secretary with respect to making charges in cases of uncertainty or delay in determining eligibility), but such agreements shall not preclude the making of charges to such individuals or persons for accommodations or services, furnished at their request, which are in addition to, or more expensive than, those for which patients are eligible to receive as individuals eligible for medical insurance benefits by reason of this section. An agreement under this paragraph may be terminated by the provider of health services at such time and upon such notice to the Secretary and to the public as he may specify by regulations.

"(C) No mental or tuberculosis hospital shall be included in a list under this paragraph.

"(2) (A) Any hospital, nursing home, or home health services agency, listed by the Secretary under paragraph (1) for providing a class of services, which provides services of that class to an individual eligible to receive medical insurance benefits under this section shall be entitled to receive payment for such services under this title. Under conditions specified in regulations, and in amounts determined in accordance therewith, payments shall be made to hospitals not listed by the Secretary for emergency hospital services rendered to individuals eligible to receive medical insurance benefits under this section.

"(3) Payments for hospital services and outpatient diagnostic services, to hospitals listed by the Secretary, shall be equal to the cost of rendering the services. The method or methods of determining such cost shall be prescribed by regulations, issued after consultation with the advisory council.

"(4) No payment shall be made under this section for any hospital services which the hospital is obligated by law or by contract with the United States or a State or political subdivision thereof, to render at public expense and without regard to the income or resources of the patient. No such payment shall be made for any hospital services for any injury, disease, or disability for which the patient is entitled to hospitalization (or to the cost thereof) under any workmen's compensation law; except that payment may be made if (A) an appropriate application for hospitalization (or for the cost thereof) has been made under the workmen's compensation law, (B) entitlement thereto has not

58387-60-30

been finally determined, and (C) an arrangement satisfactory to the Secretary has been made for reimbursement of the Federal Medical Insurance Trust Fund if the claim under the workmen's compensation law is finally sustained. "(5) The amount of payments for nursing home services and for home health services shall be determined after consultation with the advisory council and shall be based on the reasonable cost of rendering the services.

"(6) (A) Any pharmacy which employs one or more pharmacists who are licensed under the laws of the State in which it is located to dispense drugs at retail shall be eligible to enter into an agreement with the Secretary whereby such pharmacy will be paid for furnishing drugs to individuals eligible to receive medical insurance benefits under this section.

"(B) Such agreement shall apply only to the furnishing of 'very expensive drugs' as defined in subsection (c) (5), and shall relate only to the part of the cost of such drugs which exceeds such amount as may be fixed by the Secretary. The method of determining the amount of the payments to a pharmacy shall be based on the reasonable cost of such drugs to such pharmacy plus such percentage of such costs as may be determined to provide adequate compensation to such pharmacy for its services in furnishing such drugs.

"(7) No supervision or control over the administration or operation, or over the selection, tenure, or compensation of personnel, shall be exercised under the authority of this section over any hospital, nursing home facility, home health services agency, or pharmacy which has entered into an agreement under this section.

"(8) Agreements under this section shall be made by the hospital, nursing home, home health services agency, or pharmacy providing the services described in subsection (c), but this paragraph shall not preclude representation of such institution or pharmacy by any individual, association, or organization authorized by the institution or agency to act on its behalf.

"(9) Nothing in such agreements or in this section shall be constructed to give the Secretary supervision or control over the practice of medicine or the manner in which medical services are provided.

"(10) Except to the extent the Secretary has made provision pursuant to subsection (g) (relating to utilization of private nonprofit organizations) for the making of payments to providers of health services, he shall from time to time determine the amount to be paid to each provider of health services under an agreement with respect to the services furnished and shall pay such amount, except that such amount may be reduced or increased, as the case may be, by any sum by which the Secretary finds that the amount paid to such provider of health services for any prior period was greater or less than the amount which should have been paid to it for such period. The Secretary of the Treasury, prior to audit or settlement by the General Accounting Office, shall make payment from the Federal Medical Insurance Trust Fund, at the time or times fixed by the Secretary, in accordance with such certification.

"FREE CHOICE BY PATIENT

"(e) Any individual eligible to receive medical insurance benefits under this section may obtain hospital services, nursing home services, home health services, or diagnostic outpatient services from any provider of health services which is listed by the Secretary under subsection (d) (1) as eligible to provide the class of health services in question and which admits such individual or undertakes to provide him services; and may obtain very expensive drugs, upon such payment as may be required, from any pharmacy with which the Secretary has in effect an agreement under subsection (c) (6).

"NATIONAL MEDICAL INSURANCE BENEFITS ADVISORY COUNCIL

"(f) (1) For the purpose of advising and assisting the Secretary in the formulation of policy and the promulgation of regulations in connection with the administration of this section, there is hereby created a National Medical Insurance Benefits Advisory Council which shall consist of the Commissioner of Social Security and the Surgeon General of the Public Health Service, who shall serve as co-chairman ex officio, and twelve members to be appointed by the Secretary. Not less than four of the appointed members shall be representatives of the general public, and the remainder of the appointed members shall be persons who are outstanding in the fields pertaining to hospitals and health activities. Each appointed member shall hold office for a term of four years,