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The CHAIRMAN. Your proposal will cost the Federal Government and the States $1,400 million in addition to the House bill, which costs around $300 million. That makes a total cost of $1,700 million.

Secretary FLEMMING. Mr. Chairman, we estimated that the cost of our proposal would be $1.2 billion, and then added to that $100 million, because of a stepup in public assistance payments making a total of a billion three hundred million. That was our estimate of the total cost of our program.

The CHAIRMAN. Take a billion three.

Secretary FLEMMING. That is right.

The CHAIRMAN. And add to it $339 million as proposed under the House bill.

Secretary FLEMMING. That's right; that would give you a billion six hundred and thirty-nine. And as I indicate there would probably be some overlapping there so that we could, I think, round that figure out at a billion six.

The CHAIRMAN. Does the administration favor an increase to the extent of one billion three above the House bill, does the Budget Director favor it?

Secretary FLEMMING. Mr. Chairman, as I know you appreciate, the billion three represents the total Federal-State costs.

The CHAIRMAN. I understand that but in order to pay-wait 1 minute.

Secretary FLEMMING. Yes.

The CHAIRMAN. In order to avail themselves, the States in order to avail themselves, they will have to increase their taxes.

Secretary FLEMMING. That is correct.

The CHAIRMAN. $800-some-million; that is correct, is it not?
Secretary FLEMMING. Approximately, that is right.

The CHAIRMAN. Then the Federal Government must get $800 million from some source.

Secretary FLEMMING. That is correct.

The CHAIRMAN. That must come from current tax revenue or from borrowing. There is this talk about a 1961 surplus which, in my judgment, has no basis in fact. This money has got to be either borrowed funds or current tax revenue. Does the administration, or the Budget Director, approve this proposal?

Secretary FLEMMING. The plan which I have just outlined to you is the plan that I outlined to the House Ways and Means Committee with the complete support of the administration.

The CHAIRMAN. Did the Budget Director approve it?

Secretary FLEMMING. Well, he testified to that effect before the House Ways and Means Committee.

The CHAIRMAN. Did he affirmatively approve it or not?

Secretary FLEMMING. Well, of course, he can be the best witness on that. All I know is that when I presented it to the Ways and Means Committee I had the complete support of the administration in presenting it.

The CHAIRMAN. Does that include the Budget Director?

Secretary FLEMMING. The Budget Director is a part of the administration, Mr. Chairman.

The CHAIRMAN. Has he affirmatively approved it?

Secretary FLEMMING. Mr. Chairman, he testified before the Ways and Means Committee and I don't want to interpret his testimony. It is available and should be read.

The CHAIRMAN. But you said it has the complete approval of all the administration, beginning with the President and running down; is that correct?

Secretary FLEMMING. Mr. Chairman, when I talk about the approval of the administration, of course, I would not come up and present a program of that kind without the approval of the President of the United States, and he is the only person who can set administration policy. No one else can set it.

The CHAIRMAN. Has the Budget Director affirmatively approved it? [Laughter.] That is a fair question.

Secretary FLEMMING. I can only testify

The CHAIRMAN. The Budget Director represents the administration in matters of expenditures does he not?

Secretary FLEMMING. The President represents the administration, and the President

The CHAIRMAN. Do you want us to call the President down here before the committee?

Secretary FLEMMING. Well, Mr. Chairman, I would not have presented the program to the House Ways and Means Committee without the approval of the President of the United States.

The CHAIRMAN. I have asked you a simple question-
Secretary FLEMMING. That is the administration.

The CHAIRMAN. I have asked you a simple question: Does the Budget Director affirmatively approve this increase in expenditures? Secretary FLEMMING. I cannot testify for the Budget Director, Mr. Chairman, and I don't think it is fair to ask me to do it.

The CHAIRMAN. He has testified at different times and you have talked to him, have you not?

Secretary FLEMMING. I don't think it is fair for me to interpret the views of the Budget Director. He testified before the Ways and Means Committee. I was not there. I have not read it but I am sure the Ways and Means Committee will make it available to this committee.

The CHAIRMAN. Have you ever discussed it with the Budget Director?

Secretary FLEMMING. There were a lot of discussions on this.
The CHAIRMAN. Did he approve it?

Secretary FLEMMING. I am not in a position to speak for him.

The CHAIRMAN. Why is there any secrecy about what the Budget Director says?

Secretary FLEMMING. I am not in a position to speak for the Budget Director. I can only speak for myself and for the position of the administration.

The CHAIRMAN. Do you have a list showing the burden that is going to fall upon the States under your proposal?

Secretary FLEMMING. Pardon me?

The CHAIRMAN. Do you have a list showing what each State will have to raise in the form of taxes to meet the provisions of your proposal?

Secretary FLEMMING. Just one moment. I have a table here which I think covers the point which you have in mind.

The CHAIRMAN. I want to say you are the first witness we have had before this committee who has not been willing to say "Yes" or "No" on how the Budget Director stands. We shall be forced to call the Budget Director and get that information direct from him.

Secretary FLEMMING. Well, Mr. Chairman, I certainly don't want to be in a position of not cooperating with you on a matter of this type.

The CHAIRMAN. Mr. Flemming, the Budget Director has stated his position one way or the other in all these conferences, has he not? Secretary FLEMMING. He participated in it but I don't think it is fair for me to present to a committee of Congress the views expressed by my colleagues on matters that were under discussion in the executive branch after the President has made a decision. As you know, if I had certain views on a matter, and the President made a decision, which was not in complete conformity with my views, I would be up here defending not my views but the views of the President of the United States. He is the only elective officer in the executive branch.

The CHAIRMAN. Is there any secret about how the Budget Director stands? You have talked to him about it; he has been in all these conferences. Is he for it or against it?

Secretary FLEMMING. Mr. Chairman, he has testified in favor of the administration proposal before the Ways and Means Committee, according to my understanding. I was not there

The CHAIRMAN. He testified affirmatively?

Secretary FLEMMING. That is my understanding. I was not there

but

The CHAIRMAN. Why didn't you say so in the first instance?

Secretary FLEMMING. Well, I did say it in the first instance, but I wasn't there. Mr. Chairman, I don't want to be in a position of saying that the

The CHAIRMAN. In other words you are not at liberty to state anything that occurred in conferences between you and the Budget Director; is that correct?

Secretary FLEMMING. After the President has made a decision.

The CHAIRMAN. Well, you are aware of the fact that practically every bill that is submitted by congressional committees to the dif ferent departments of Government comes back with a statement as to whether the Budget Director approves it. You know that, don't you?

Secretary FLEMMING. But he speaks in behalf of the President, and what he sends up here is in behalf of the President, and there are some matters that are so important that the policy decisions as to whether or not the administration favors or is not in favor is a policy decision that is made by the President, and in this particular instance

The CHAIRMAN. You think it is important that you can't give definitely the position of the Budget Director as to the money involved? Secretary FLEMMING. As to what?

The CHAIRMAN. As to the amount of money involved. Do you think that should not be disclosed here because it is so important? Secretary FLEMMING. No.

The CHAIRMAN. How is it important?

Secretary FLEMMING. Mr. Chairman, all I am saying

The CHAIRMAN. Let's leave that, I see you don't intend to answer. Secretary FLEMMING. All I am saying is that I think the views of the Budget Director-he obviously is the best witness about that.

The CHAIRMAN. We'll have the Budget Director, so you just forget about it. We don't need to ask any more questions, I see you are not going to answer them so we will leave it.

I want a breakdown showing how much each State has to pay. Secretary FLEMMING. Mr. Chairman, I have a table here headed table 2, which is a total estimated annual expenditure by States. The CHAIRMAN. Read it.

Secretary FLEMMING. If all States participate as of January 1, 1960. The CHAIRMAN. Would you be so kind as to read it, I would like to hear it.

Secretary FLEMMING. Mr. Chairman, do you want me to take it— you want me to take each State?

The CHAIRMAN. I am talking about the amount of money that the States are required to raise under the House bill, plus the amount of money they are required to raise under your bill.

Senator GORE. Mr. Chairman, before, if I may interrupt, since the Secretary is testifying on the administration proposal, I wonder if we might have a copy of it, the bill?

The CHAIRMAN. I don't think it has been introduced.

Senator GORE. I will be glad to introduce it so it will be before the committee.

Secretary FLEMMING. Mr. Chairman, I have a copy of the bill which I would be very glad to insert in the record at this point.

The CHAIRMAN. Without objection it will be inserted in the record. (The draft referred to follows:)

A BILL To establish a Federal-State program under which aged individuals with low incomes may secure comprehensive protection against major medical expenses, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Social Security Act is amended by adding at the end thereof the following new title:

"TITLE XVI-MEDICAL BENEFITS FOR THE AGED

"APPROPRIATION

"SEC. 1601. For the purpose of assisting the States to improve the health care of aged individuals with low incomes by enabling such individuals to secure, at low cost, protection against major medical expenses or, in the case of recipients of public assistance, to secure such protection without cost, there are hereby authorized to be appropriated for each fiscal year such sums as the Congress may determine. The sums made available under this section shall be used for making payments to States which have submitted, and had approved by the Secretary, State plans for medical benefits for the aged.

"STATE PLANS

"SEC. 1602 (a) The Secretary shall approve a State plan for medical benefits for the aged which

"(1) provides for establishment or designation of a single State agency to administer or supervise the administration of the State plan;

"(2) provides that each eligible individual (as defined in section 1605(a)) who applies therefor (and only such an individual) shall be furnished whichever of the following he may elect :

"(A) medical benefits, which, for purposes of this title, shall consist of payment on behalf of an eligible individual of 80 per centum of the cost above the deductible amount incurred by him for the following services (hereinafter in this title referred to as 'medical services') rendered to him to the extent determined by the attending physician to be medically necessary (but subject to the limitations in section 1606): "(i) inpatient hospital services for not to exceed 180 days in any enrollment year;

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(ix) laboratory and X-ray services not in excess of $200 in any enrollment year; and

"(x) prescribed drugs not in excess of $350 in any enrollment year; or

"(B) insurance benefits, which, for purposes of this title, shall consist of payment on behalf of such individual of one-half of the premiums of a major medical expense insurance policy for him up to a maximum payment of $60 for any year;

"(3) provides for granting an opportunity for a fair hearing before the State agency to any individual whose claim for benefits under the plan has been denied ;

"(4) provides for payment by eligible individuals applying for medical benefits under the plan of enrollment fees equal (except as provided in section 1605 (d)) to $2 per month, payable annually or more frequently, as the State may determine;

"(5) includes such methods of administration as are found by the Secretary to be necessary for the proper and efficient operation of the plan, including

"(A) methods relating to the establishment and maintenance of personnel standards on a merit basis, except that the Secretary shall exercise no authority with respect to the selection, tenure of office, or compensation of any individual employed in accordance with such methods; "(B) methods to assure that the applications of all individuals applying for benefits under the plan will be acted upon with reasonable promptness;

"(C) methods relating to collection of enrollment fees for medical benefits under the plan, except that the State may not utilize the services of any nonpublic agency or organization in the collection of such fees, and

"(D) methods for determining—

"(i) rates of payment for institutional services, and

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(ii) schedules of fees or rates of payment for other medical services,

for which expenditures are made under the plan;

"(6) sets forth criteria, not inconsistent with the provisions of this title, for approval by the State agency, for purposes of the plan, of major medical expense insurance policies;

"(7) provides for payment for his enrollment year of the deductible amount of any individual who is a recipient of public asistance for each month of such year, to the extent not already incurred and paid by him or on his behalf;

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