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;

"(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

"(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;

"(8) provides safeguards which restrict the use or disclosure of information concerning applicants for and recipients of benefits under the plan to purposes directly connected with the administration of the plan;

"(9) includes (A) provisions, conforming to regulations of the Secretary, with respect to the time within which individuals desiring benefits under the plan may elect between medical benefits or insurance benefits for any enrollment year and may apply for such benefits for such year and (B) to the extent required by regulations of the Secretary, provisions, conforming to such regulations, with respect to the furnishing of medical benefits under the plan to eligible individuals during temporary absences from the State; "(10) provides for establishment or designation of a State authority or authorities which shall be responsible for establishing and maintaining standards for

"(A) hospitals providing hospital services,

"(B) nursing homes providing skilled nursing home services, and

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"(C) agencies providing organized home health care services,

for which expenditures are made under the plan; and

"(11) provides that the State agency will make such reports, in such form and containing such information, as the Secretary may from time to time require, and comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports. "(b) In the case of any individual who is a recipient of public assistance for each month of an enrollment year, the 80 per centum limitation in clause (2) of section 1602 and the requirement of payment of enrollment fees pursuant to clause (4) of such section shall not apply for such enrollment year. The Secretary shall prescribe regulations governing the extent to which such limitation and such requirement shall not apply, and the extent to which the deductible amount shall be paid on behalf of any individual who is a recipient of public assistance for only some of the months in his enrollment year.

"PAYMENTS'

"SEC. 1603. (a) From the sums appropriated therefore, each State which has a plan approved under section 1602 shall be entitled to receive, for each calendar quarter, beginning with the quarter commencing July 1, 1961, an amount equal to (1) the Federal share for such State of the total amounts expended during such quarter by the State under the plan as medical or insurance benefits, plus (2) one-half of the total of the sums expended during such quarter as found necessary by the Secretary for the proper and efficient administration of the State plan.

"(b) Payment of the amounts due a State under subsection (a) shall be made in advance thereof on the basis of estimates made by the Secretary, with such adjustments as may be necessary on account of overpayments or underpayments during prior quarters; and such payments may be made in such installments as the Secretary may determine. Adjustments under the preceding sentence shall include decreases in estimates equal to the pro rata share to which the United States is equitably entitled, as determined by the Secretary, of the net amount recovered by the State or any political subdivision thereof, with respect to benefits furnished under the State plan, whether as the result of being subrogated to the rights of the recipient of the benefits against another person, or as the result of recovery by the recipient from such other person, or because such benefits were incorrectly furnished, or for any other reason.

"(c) For purposes of subsection (a) expenditures under a State plan in any calendar year shall be included only to the extent they exceed the amount of the enrollment fees collected in such year under the State plan in accordance with the provisions of section 1602 (a) (4).

"OPERATION OF STATE PLANS

"SEC. 1604. If the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of any State plan which has been approved under section 1602, finds

"(1) that the plan has been so changed that it no longer complies with the provisions of section 1602; or

"(2) that in the administration of the plan there is a failure to comply substantially with any such provision;

the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to parts of

the State plan not affected by such failure) until the Secretary is satisfied that there is no longer any such noncompliance. Until he is so satisfied, no further payments shall be made to such State (or payments shall be limited to parts of the State plan not affected by such failure).

"ELIGIBLE INDIVIDUALS

"SEC. 1605. (a) For the purposes of this title, the term 'eligible individual' means, with respect to any enrollment year for any individual, an individual who

"(1) (A) is 65 years of age or over,

"(B) resides in the State and at the beginning of such year, and

"(C) meets, with respect to such year, the income requirements of subsection (b); or

"(2) (A) resides in the State at the beginning of such year, (B) was an eligible individual for the preceding enrollment year, and (C) paid enrollment fees under the plan for the preceding enrollment year, or had a major medical expense insurance policy and the State made payments under the State plan toward the cost of the premiums of the policy during such year, or was a recipient of public assistance for each month of such year. "(b) For the purposes of this title, the income requirements of this subsection are met by any individual with respect to any enrollment year if, for his last taxable year (for purposes of the Federal income tax) ending before the beginning of such enrollment year,

"(1) he did not pay any income tax, or

"(2) (A) his income did not exceed $2,500 in the case of an individual who, at the beginning of such enrollment year, was unmarried or was not living with his spouse, or

"(B) the combined income of such individual and his spouse did not exceed $3,800 in the case of an individual who, at the beginning of such enrollment year, was married and living with his spouse.

"(c) The term 'income' as used in subsection (b) means the amount by which the gross income (within the meaning of the Internal Revenue Code of 1954) exceeds the deductions allowable in determining adjusted gross income under section 62 of such Code; except that the following items shall be included (as items of gross income):

"(1) monthly insurance benefits under title II of this Act,

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'(2) monthly benefits under the Railroad Retirement Acts of 1935 and

1937, and

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'(3) veterans' pensions.

Determinations under this section shall be made (in the manner prescribed by the Secretary by regulations) by or under the supervision of the State agency administering or supervising the administration of the plan approved under section 1602.

"(d) In the case of any individual who would not be an eligible individual with respect to an enrollment year but for the provisions of subparagraph (2) of subsection (a), the enrollment fee for such individual for such enrollment year shall be increased (over the $2 per month specified in sec. 1602 (a) (4)) by the amount appearing in column II of the following table on the line on which is included in column I A or column I B, whichever is applicable to him, the amount by which his income for his last taxable year exceeds the income specified for him in subsecttion (b) (2):

The applicable amount in column II of the above table for any individual shall be reduced to the extent that it, plus the enrollment fee specified in section 602 (a) (4), exceeds for such State the average monthly cost of medical benefits per individual covered under the plan, as determined by the State agency (administering or supervising the administration of the plan approved under section 1602) in accordance with regulations of the Secretary.

"MEDICAL SERVICES

"SEC. 1606. Subject to regulations of the Secretary"(a) The term 'medical services' does not include

"(1) services for any individual who is an inmate of a public institution (except as a patient in a medical institution) or any individual who is a patient in an institution for tuberculosis or mental diseases; or

"(2) services for any individual who is a patient in a medical institution as a result of a diagnosis of tuberculosis or psychosis, with respect to any period after the individual has been a patient in such an institution, as a result of such diagnosis, for forty-two days.

"(b) The term 'inpatient hospital services' means the following items furnished to an inpatient by a hospital:

"(1) Bed and board, at a rate not in excess of the rate for semiprivate accommodations);

"(2) Physicians' services, nursing services, and interns' services; and

"(3) Laboratory and X-ray services, ambulance services, and other services, drugs, and appliances related to his care and treatment (whether furnished directly by the hospital or, by arrangement, through other persons).

"(c) The term 'skilled nursing-home services' means the following items furnished to an inpatient in a nursing home:

"(1) Skilled nursing care provided by a registered professional nurse or a licensed practical nurse which is prescribed by, or performed under the general direction of, a physician;

"(2) Medical care and other services related to such skilled nursing care; and

"(3) Bed and board in connection with the furnishing of such skilled nursing care.

"(d) The term 'physician's services' means services provided in the exercise of his profession in any State by a physician licensed in such State; and the term 'physician' includes a physician within the meaning of section 1101(a)(7).

"(e) The term 'outpatient hospital services' means medical and surgical care furnished by a hospital to an individual as an outpatient.

"(f) The term ‘organized home health care services' means (1) visiting nurse services and physician's services, and services related thereto, which are prescribed by a physician and are provided in a home through a public or private nonprofit agency operated in accordance with medical policies established by one or more physicians (who are responsible for supervising the execution of such policies) to govern such services; and (2) homemaker services of a nonmedical nature which are prescribed by a physician and are provided, through a public or private nonprofit agency, in the home to a person who is in need of and in receipt of other medical services.

"(g) The term 'private duty nursing services' means nursing care provided in the home by a registered professional nurse or licensed practical nurse, under the general direction of a physician, to a patient requiring nursing care on a full-time basis, or provided by such a nurse under such direction to a patient in a hospital who requires nursing care on a full-time basis.

"(h) The term 'physical restorative services' means services prescribed by a physician for the treatment of disease or injury by physical nonmedical means, including retraining for the loss of speech.

"(i) The term 'dental treatment' means services provided by a dentist, in the exercise of his profession, with respect to a condition of an individual's teeth, oral cavity, or associated parts which has affected, or may affect, his general health. As used in the preceding sentence, the term 'dentist' means a person licensed to practice dentistry or dental surgery in the State where the services are provided.