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"(j) The term 'laboratory and X-ray services' includes only such services prescribed by a physician.

“(k) The term 'prescribed drugs' means medicines which are prescribed by a physician.

“(1) The term 'hospital' means a hospital (other than a mental or tuberculosis hospital) which is (1) a Federal hospital, (2) licensed as a hospital by the State in which it is located, or (3) in the case of a State hospital, approved by the licensing agency of the State.

(m) The term 'nursing home' means a nursing home which is licensed as such by the State in which it is located, and which (1) is operated in connection with a hospital or (2) has medical policies established by one or more physicians (who are responsible for supervising the execution of such policies) to govern the skilled nursing care and related medical care and other services which it provides.

MISCELLANEOUS DEFINITIONS

"SEC. 1607. For purposes of this title

“Federal Share

“(a) (1) The Federal share' with respect to any State means 100 per centum less that percentage which bears the same ratio to 50 per centum as the per capita income of such State bears to the per capita income of the United States, except that (A) the Federal share shall in no case be less than 3313 per centum nor more than 6643 per centum, and (B) the Federal share with respect to Puerto Rico, the Virgin Islands, and Guam shall be 6643 per centum.

(2) The Federal share for each State shall be promulgated by the Secretary between July 1 and August 31 of each even-numbered year, on the basis of the average per capita income of each State and of the United States for the three most recent calendar years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the eight quarters in the period beginning July 1 next succeeding such promulgations.

(3) The term 'United States' means the fifty States and the District of Columbia.

(4) Promulgations made before satisfactory data are available from the Department of Commerce for a full year on the per capita income of Alaska shall prescribe a Federal percentage for Alaska of 50 per centum and, for pur. poses of such promulgations, Alaska shall not be included as part of the 'United States'. Promulgations made thereafter but before per capita income data for Alaska for a full three-year period are available from the Department of Commerce shall be based on satisfactory data available therefrom for Alaska for such one full year or, when such data are available for a two-year period, for such two years.

“Deductible Amount "(b) The 'deductible amount for any individual for any enrollment year means an amount equal to $250 of expenses for medical services (determined without regard to the limitations in clauses (i), (ix), and (x) of section 1602 (a) (2) (A)) incurred in such year by or on behalf of such individual, whether he is married or single, except that, in the case of an individual who is married and living with his spouse at the beginning of his enrollment year, it shall be an amount equal to $400 of expenses for medical services (so determined) incurred in such year by or on behalf of such individual or his spouse for the care or treatment of either of them, but only if application of such $400 amount with respect to such individual and his spouse would result in payment under the plan of a larger share of the cost of their medical services incurred in such year.

“Enrollment Year

"(c) The term 'enrollment year' means, with respect to any individual, a period of twelve consecutive months as designated by the State agency for the purposes of this title in accordance with regulations prescribed by the Secretary. Subject to regulations prescribed by the Secretary, the State plan may permit the extension of an enrollment year in order to avoid hardship.

Recipient of Public Assistance “(d) The term ‘recipient of public assistance' with respect to any month means an individual who

“(1) receives old-age assistance, aid to dependent children, aid to the blind, or aid to the permanently and totally disabled for such month pursuant to a State plan approved under title I, IV, X, or XIV, as the case may be; or

“(2) would, upon application, receive old-age assistance for such month pursuant to a State plan approved until title I if an appropriate portion of the enrollment fees, the deductible amount, and the remainder of the cost of medical services (determined without regard to the limitations in clauses (i), (ix), and (x) of section 1602 (a) (2) (A)) not met from expenditures under the State plan approved under this title were included in determining his need, and if such plan approved under title I contained no citizenship requirement and imposed no residence requirement which excluded any resident of the State.

“Major Medical Expense Insurance Policy

“(e) The term 'major medical expense insurance policy' means, with respect to any State, a policy offered by a private insurance organization licensed to do business in the State, which is approved by the State agency (administering or supervising the administration of the plan approved under section 1602), which is noncancelable except at the request of the insured individual or for failure to pay the premiums when due, which is available to all eligible individuals in the State, and which provides for payment of all or a portion of the costs, in excess of a deductible which is not less than $250 and not more than such amount as may be prescribed by the Secretary, of medical services and other health care (or such portion of such services and care as may be permitted in regulations of the Secretary).

"ADVISORY COUNCIL ON HEALTH INSURANCE

"SEC. 1608. (a) There shall be in the Department of Health, Education, and Welfare an Advisory Council on Medical Benefits for the Aged (hereinafter referred to as the 'Council) to advise the Secretary on matters relating to the general policies and administration of this title. The Secretary shall secure the advice of the Council before prescribing regulations under this title.

“(b) The Council shall consist of the Surgeon General of the Public Health Service and the Commissioner of Social Security, who shall be ex officio members (and one of whom shall from time to time be designated by the Secretary to serve as chairman), and twelve other persons, not otherwise in the employ of the United States, appointed by the Secretary without regard to the civil service laws. Four of the appointed members shall be selected from among representatives of various State or local government agencies concerned with the provision of health care or insurance against the costs thereof, four from among nongovernmental persons who are concerned with the provision of such care or with such insurance, and four from the general public, including consumers of health care.

“(c) Each member appointed by the Secretary shall hold office for a term of four years, except that (1) any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (2) the terms of the members first taking office shall expire as follows: four shall expire two years after the date of the enactment of this title, four shall expire four years after such date, and four shall expire six years after such date, as designated by the Secretary at the time of appointment. None of the appointed members shall be eligible for reappointment within one year after the end of his preceding term.

“(d) Appointed members of the Council, while attending meetings or conferences of the Council, shall receive compensation at a rate fixed by the Secretary but not exceeding $50 a day, and while away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by law (5 U.S.C. 735—2) for persons in the Government service employed intermittently.

“(e) (1) Any appointed member of the Council is exempted, with respect to such appointment, from the operation of sections 281, 283, and 1914 of. title 18 of the United States Code, and section 190 of the Revised Statutes (5 U.S.C. 99), except as otherwise specified in paragraph (2). “(2) The exemption granted by paragraph (1) shall not extend

“(A) to the receipt or payment of salary in connection with the appointee's Government service from any source other than the private employer of the appointee at the time of his appointment; or

“(B) during the period of such appointment, to the prosecution or participation in the prosecution, by any person so appointed, of any claim against the Government involving any matter with which such person, during such period, is or was directly connected by reason of such appointment.”

PLANNING GRANTS TO STATES

SEC. 2. (a) For the purpose of assisting the States to make plans and initiate administrative arrangements preparatory to participation in the Federal-State program of medical benefits for the aged authorized by title XVI of the Social Security Act, there are hereby authorized to be appropriated for making grants to the States such sums as the Congress may determine.

(b) A grant under this section to any State shall be made only upon application therefor which is submitted by a State agency designated by the State to carry out the purpose of this section and is approved by the Secretary. Such grants for any State shall, subject to the provisions of subsection (c), be equal to 50 per centum of the cost of carrying out such purpose in accordance with such application.

(c) Payment of any grant under this section may be made in advance or by way of reimbursement, and in such installments, as the Secretary may determine. The aggregate amount paid to any State under this section shall not exceed $50,000.

(d) Appropriations pursuant to this section shall remain available for grants under this section only until the close of June 30, 1962; and any part of such a grant which has been paid to a State prior to the close of June 30, 1962, but has not been used or obligated by such State for carrying out the purpose of this section prior to the close of such date shall be returned to the United States.

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MISCELLANEOUS AMENDMENTS

SEC. 3. (a) Effective with respect to payments for quarters beginning after June 30, 1961, paragraph (1) of section 1101(a) of the Social Security Act is amended by striking out “and XIV” and inserting in lieu thereof “XIV, and XVI”.

(b) Section 6103(b) of the Internal Revenue Code of 1954 (relating to inspection of income tax returns by States) is amended by adding at the end thereof the following new paragraph :

(3) STATE PLANS FOR MEDICAL BENEFITS FOR THE AGED.-All income returns filed with respect to the taxes imposed by chapters 1 and 2 (or copies thereof, if so prescribed by regulations made under this subsection) shall be open to inspection, by the State agency administering or supervising the administration of a State plan for medical benefits for the aged which has been approved under title XVI of the Social Security Act, if the inspection is for the purpose of administering such plan. The inspection shall be permitted only upon written request of the governor of such State, designating the representative of such State agency to make the inspection on behalf of such agency. The inspection shall be made in such manner, and at such times and places, as shall be prescribed by the Secretary or his delegate. Any information thus secured by any State agency may be used only for the administration of such State plan (whether by such State agency or by the agency or agencies which it supervises).”.

SECRETARY

SEC. 4. As used in this Act and the amendments made thereby, the term "Secretary", unless the context otherwise requires, means the Secretary of Health, Education, and Welfare.

(NOTE. This proposal was subsequently introduced in the Senate as bill S. 3784, by Senator Leverett Saltonstall.)

Senator SMATHERS. I wonder do you have a copy of this list of States, the costs for each State?

Secretary FLEMMING. Yes.
Senator SMATHERS. Do you have a copy for all members !

The CHAIRMAN. If you will read those figures, I want to know whether they include, the amount that must be raised under the House bill and the amount that must be raised under the administration bill on the part of the States.

Secretary FLEMMING. Mr. Chairman, as soon as a copy is put in front of you I will do so.

The CHAIRMAN. Has the administration requested that this legislation be introduced by a Senator or Congressman?

Secretary FLEMMING. Not as yet, because, Mr. Chairman, as you know-when this was presented to the Ways and Means Committee they were holding a series of executive sessions over a period of about 10 weeks, and we presented this to them for consideration along with other matters that they were considering.

The CHAIRMAN. It has not been introduced in either branch of the Congress?

Secretary FLEMMING. That is correct.

On table 2, you will notice at the head there it has got a projected total of a billion 229 million, and then first of all, the total amount that would be available for the present old-age assistance recipients because, of course, this would call for a step up in their benefits, of $436 million. And then others of $793 million. And then the source of funds, $602 million Federal, $627 million State and local, and enrollment fees $181,700,000.

Then we have taken that by State. For example, Mr. Chairman, the State of Virginia the total would be 10 million, and as you will note there, $100,000, and, $13,100,000, with $2,100,000 on the OAA recipients, $11 million on the others and then the $13 million divided $7,800,000 Federal fund, $5,500,000 State funds.

The CHAIRMAN. On table 2 is that first column the amount of new money

that the States must raise? Secretary FLEMMING. No, that is the total amount of money that would be involved in this program. It is column 5 which shows the amount of new State money. That is the source of the funds, $627 million would come from State and local fund.

And then that is broken down by States, Virginia, for example, that would be $5.5 million.

Senator ANDERSON. Can you tell us how you determined how much a State has to pay?

I see Virginia has to pay $5 million as against the Federal Government's $7 million.

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New York has to pay $78 million as against the Government's $46. million. Virginia has a little of the best of it, which the chairman would appreciate, but the rest of us would like to know how you get to it!

Secretary FLEMMING. As I indicated in my opening statement, Senator Anderson, it is an equalization formula with a range of onethird-two-thirds. That is one-third for the States with the largest income, and then two-thirds on the part of the Federal Government in the States with the lowest income.

Senator ANDERSON. Therefore, this would indicate there are more poor people in Virginia, doesn't it? Is that what it means in simple terms?

Secretary FLEMMING. This formula is worked out in exactly the same way that you would, not exactly the same way but on the same principle as you work out the distribution of public assistance funds.

The CHAIRMAN. I wish to ask one more question. Could the States under the administration proposal set up fee schedules for doctors and hospitals and

standards of treatment? Secretary FLEMMING. Yes, the fact of the matter is under our proposal it would be the State that would administer the program, and it would be necessary for them

The CHAIRMAN. They could set up the fee schedule for doctors, fixing how much they may charge and how much the hospitals may charge.

Secretary FLEMMING. Just as they do now under the public assistance program, under the vendor payment provision of the public assistance program, that is going on in virtually all of the States at the present time and it is my understanding, Mr. Chairman, that it has been worked out in a completely satisfactory manner.

The CHAIRMAN. Senator Frear?
Senator FREAR. No questions.
The CHAIRMAN. Senator Carlson ?

Senator CARLSON. Mr. Secretary, Senator Anderson raised a question that I think we ought to have some figures on. Those of us who are familiar with this program realize that some of the rural States, of course, have great numbers of their population that were never under the OASI program, never covered, and therefore we have more substantial numbers on the old-age assistance rolls and also probably more people that get benefits from low paid OASI payments and in addition to that are also on the old age assistance rolls. I would like very much for the record to have a breakdown by States of the numbers of individuals who are covered by the OASI and those that are receiving old-age assistance, and those that receive both.

I think that enters into this picture. Could you supply that for the record ?

Secretary FLEMMING. Yes, without any difficulty at all, Senator Carlson. I would be very happy to do so.

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