Mr. DANIELS. I want to compliment you for bringing this to the attention of the committee and assure you we will go into the problem, and will also ask the Civil Service Commission to give a full report on your bill, H.R. 16555. We will try to work out any inequity that exists.

Any questions?

Mr. BROYHILL of North Carolina. In regard to the bill that has been introduced by the chairman of this subcommittee, H.R. 6351, do you have any comment on that? Would your bill be a supplement to it or an alternative?

Mr. BROYHILL. Is that the bill that provides a greater participation on the part of the Federal Government in the program?

Mr. BROYHILL Of North Carolina. That is right.

Mr. BROYHILL. I would support that program. If that bill is enacted I think it would naturally follow you would have to sweeten this bill a little bit because it would still require the Federal employee to pay into the supplemental B portion.

As I said before, and I say again for emphasis H.R. 16555 is only one approach to the problem. There is an inequity. We should eliminate it. Whatever the committee does in that direction I think will be helpful. I have no pride of authorship and if the committee wants to take another approach to the problem, that is agreeable to me. But there is an inequity. The Ways and Means Committee, after considerable discussion, agreed there was an inequity but felt it was in the jurisdiction of this committee. I think we should get to it as soon as

we can.

Mr. DANIELS. You seem to be well versed in the subject matter. I notice you were testifying without notes, so you are well versed in the subject matter.

Mr. BROYHILL. Thank you.

(As previously ordered, the prepared statement of Mr. Broyhill follows:)

PREPARED STATMENT OF HON. JOEL T. BROYHILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. Chairman, it is a pleasure to appear here today in behalf of H.R. 16555, to amend the Federal employees and retired Federal employees health benefits program to insure that retired Federal employees do not have to pay twice for benefits provided both under such programs and under the health insurance program for the aged under the Social Security Act.

As the committee knows, Federal employees, annuitants, and their dependents who participate in Federal health benefits plans are penalized under present law. H.R. 16555 is designed to correct this inequity in existing law.

Under provisions of this measure, the supplemental medical insurance of the Medicare program would become the essential and mandatory unit of coverage for high option plans. Premiums would be based on the $4 SMI rate.

Five categories of employees and annuitants would be affected: (1) the single employee or annuitant with supplemental coverage and eligible for medicare; (2) the single employee or annuitant with high option not eligible for medicare: (3) the married employee or annuitant eligible for medicare whose spouse is also eligible for medicare; (4) the married employee who is not eligible for medicare and his spouse is; and (5) the married employee and annuitant and spouse neither of whom are eligible for medicare.

In the first group, the single employee on reaching age 65 and becoming eligible for Medicare would have his premium reduced to $4 per month, which would go to social security to enroll him in part B of the Medicare program.

In the second group, the single annuitant who is ineligible for Medicare on reaching age 65 would have his premium remain unchanged. However, he would receive the benefits of the SMI program as well as those provided for in his policy. The carrier, in turn, would forward $4 a month to the social security trust fund. In the case of the married annuitant who is eligible for Medicare, his premium would be reduced to $4 and that portion of the premium chargeable for his spouse would remain unchanged. If the spouse is eligible for Medicare, his or her portion of the premium would reduce to $4 a month upon reaching the age 65. The married annuitant who is ineligible for Medicare as well as his spouse would continue to pay the same premium he had contracted for originally. In any event, however, he and his spouse will be eligible for SMI benefits and the additional coverage contracted for in their plan,

Mr. Chairman, in all instances the Federal employee and annuitant will benefit by better protection. In those instances where he or his dependents or both are eligible for Medicare, they will then benefit from greatly reduced premiums.

Mr. Chairman, I believe this plan is sound financially, and should be acceptable to the actuaries of the private carriers and to the social security trust fund as well.

Mr. DANIELS. Our next witness is Mr. Carl K. Sadler, assistant legislative representative of the American Federation of Government Employees. Mr. Sadler, we thank you for returning here this morning. We are sorry we did not reach you yesterday.

TESTIMONY OF CARL K. SADLER, ASSISTANT LEGISLATIVE REPRESENTATIVE, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, ACCOMPANIED BY STEPHEN A. KOCZAK, ASSISTANT DIRECTOR OF RESEARCH

Mr. SADLER. Thank you. I have with me this morning Mr. Stephen A. Koczak, our assistant director of research.

Mr. DANIELS. We are pleased to welcome Mr. Koczak.

Mr. SADLER. I would like to express Mr. Griner's regrets at not. being able to be here this morning.

The American Federation of Government Employees has a continuing active interest in maintaining a Federal employees' health benefits program at least comparable to the plans evolving in private industry. As the largest organization of Federal employees in the country, with a current membership in excess of 285,000, our organization is committed to the principle that Federal employees are entitled to enlightened health, hospitalization, life insurance, and retirement benefits which do not lag behind the benefits currently applying in large-scale private industry.

The concept of comparability of Federal pay scales to equal those of private industry had been recognized as far back as 1962 in the Federal Salary and Reform Act of that year. Unfortunately, though written into law in 1962, one had to wait until the Postal Revenue and Salary Act of 1967 to set up a firm schedule to bring up Federal salaries to comparability with private industry not later than the first pay period in July 1969.

Our organization is most grateful that Congressman Dominick V. Daniels has decided to review the situation now appertaining in the Federal employees' health benefits program and we are confident that the concept of comparability will receive as much consideration from this subcommittee as that principle has received in the full Post Office and Civil Service Committee.

The trend in private industry is to full payment of hospitalization and health benefit premiums by the employer. Whereas just as little time back as 1962, most plans still required contributions by the employees, the latest figures available, those for 1966, show that the major industrial and craft organizations have come to accept the principle that the premiums should be paid completely by the employer.

As an indication of the rapidly accelerating trend in this direction. in private industry, I request permission to place into the record a partial list of hospitalization and health benefit programs in private industry where the entire cost of the premiums is paid by the employer. That list appears as an appendix to my statement.

Mr. DANIELS. Without objection, that appendix will be made a part of the record immediately following your testimony.

Mr. SADLER. Thank you.

Our organization is realistic and we appreciate that budgetary considerations will probably influence Federal contributions to its employees' hospitalization and health benefit programs. Therefore, until such time hopefully in the near future when the Federal Government finally extends comparability in its health and hospitalization programs for its employees, we suggest that an intermediate formula be devised which would eliminate the most serious aspects of the current inequities.

Under the current rule for both maximum and minimum hospitalization and health benefits programs, the Federal departments and agencies pay biweekly only up to a maximum of $4.10 for an employee with dependents and $1.68 for an employee without any dependents, provided that in no case is the Federal employer's contribution more than 50 percent of the total premium.

Keeping in mind current budgetary problems and drawing on the wisdom of the solution regarding comparability of pay scales, we have a very simple formula to offer to bring equity over a period of several years to the Federal Government's contributions to its employees hospitalization and health benefit programs.

Our proposal is that on July 1, 1969, the Federal Government pay to every plan a contribution of at least 50 percent of the costs of the premium not to exceed 50 percent of the most expensive high-option Government-wide indemnity or service plan approved by the Civil Service Commission. Effective July 1, 1970, the Federal Government's contribution would be raised so as to pay every plan up to 75 percent of the most expensive high-option Government-wide plans; and on July 1, 1971, the Federal Government's contribution would be raised again so as to pay to every plan up to 100 percent of the total costs of the most expensive Government-wide high-option plans. The result, we expect, would be the elimination of all low-option plans by July 1, 1971.

Other plans for hospitalization or health benefits would continue to be approved by the Civil Service Commission, under the same provisions and procedures as have existed heretofore. It would be the understanding of all parties that that portion of the total costs of these plans in excess of the schedules which we have proposed above would be paid fully by the enrollees of these other plans or by the organizations sponsoring the plans, or by any arrangement worked

out mutually between the sponsoring organizations and the plan's enrolled members.

In summary, our organization submits the view that to achieve comparability with private industry hospitalization and health benefit plans, the Federal Government should be paying the entire premium of the approved Government-wide plans.

Because of budgetary considerations, we should like to propose that this be achieved over a period of 3 years. The first phase should come into force on July 1, 1969, with the Federal Government paying up to 50 percent of the Government-wide high-option costs; the second phase on July 1, 1970, with the Federal Government paying up to 75 percent of these costs; and the final phase on July 1, 1971, with the Federal Government paying up to 100 percent of these costs. We anticipate that, effective July 1, 1971, the low-option plans would cease to exist and employees would choose between the Government-wide plans and other plans in which they would be entitled to enroll.

In closing, I wish to thank again the distinguished chairman of this subcommittee, Representative Dominick V. Daniels, for affording our organization the opportunity to testify during this session of Congress on this very important subject of Federal Government contributions to the premiums of the hospitalization and health benefit plans for Federal employees.

(As previously ordered, the following compilation is inserted in the record.)

HOSPITALIZATION PLUS HEALTH BENEFIT PLANS FINANCED IN FULL BY PRIVATE EMPLOYERS

(Note. The compilation shows the company and the labor union establishing the agreement by contract.)

The American Sugar Refining Co. (Brooklyn, N.Y.)-Longshoremen's Association. Swift & Co.-Meat Cutters; Packinghouse Workers (UPWA); Packinghouse Workers (NBPW).

Armour & Co.-Meat Cutters; Packinghouse Workers (UPWA).

American Millinery Manufacturers Association (New York, N.Y.)-Hatters, Cap and Millinery Workers.

Campbell Soup Co. (Camden, N.J.)-Packinghouse Workers (UPWA). Lumber industry, various employers (southern California)-Carpenters. Furniture Manufacturers in Southern California, Industrial Relations Council of-Carpenters.

Brewers Board of Trade (New York, N.Y.)-Teamsters.

Clothing Industry, men's and boys' various employers-Clothing Workers. National plan.

Furniture industry, various employers-Furniture Workers. National plan. Philip Morris, Inc.-Tobacco Workers.

Bigelow-Sanford Carpet Co., Inc.-Textile Workers (TWUA).

Continental Can Co., Inc., Robert Gair Paper Products Group-Papermakers and Paperworkers.

Printing industry, Chicago Lithographers Association, and other employersLithographers, Local 4.

The B. F. Goodrich Co.-Rubber Workers.

Bethlehem Steel Co.-Steelworkers.

Luggage and leather goods industry, various employers-Leather Goods, Plastic and Novelty Workers, National plan.

Publishers' Association of New York City-Typographers, Local 6.

Continental Can Co., Inc.-Steelworkers.

United States Rubber Co.-Rubber Workers.

The Firestone Tire & Rubber Co.-Rubber Workers.

Aluminum Company of America-Aluminum Workers; Steelworkers.

Chase Brass & Copper Co., Inc.-Automobile Workers.

United States Steel Corp.-Steelworkers.

Weirton Steel Co.-Independent Steelworkers Union.

Massachusetts Leather Manufacturers' Association-Leather Workers; Meat

Cutters.

Minnesota Mining & Manufacturing Co.-Oil Chemical and Atomic Workers.
California Metal Trades Association-Various unions.

Radio Corporation of America-Electrical (IUE); Electrical (IBEW).
American Can Co.-Steelworkers.

Caterpillar Tractor Co.-Automobile Workers.

North American Aviation, Inc.-Automobile Workers.

Ford Motor Co.--Automobile Workers.

Pullman Inc. (Pullman-Standard Div.)-Steelworkers.

General Motors Corp.-Automobile Workers.

Johnson & Johnson (New Brunswick, N.J.)-Textile Workers (TWUA). Construction industry, Associated General Contractors of America, and other employers (northern California)—Carpenters.

Jewelry industry, Associated Jewelers, Inc., Jewelry Crafts Association, and other employers (New York, N.Y.)—Jewelry Workers, Local 1.

Doll and toy industry, National Association of Doll Manufacturers, and other employers (New York, N.Y.)-Toy and Novelty Workers, Local 223.

Various Employers, St. Louis, Mo., area-Machinist, District 9.

Association of Master Painters and Decorators of the City of New York, Inc.— Painters, District Council 9.

Construction industry various employers (western Pennsylvania)-Various

unions.

Trucking industry, local cartage and over-the-road freight, various associations, and individual employers, Central States, Southeast and Southwest areasTeamsters.

Distributors Association-Longshoremen's & Warehousemen's Union, Locals 6 and 17.

Truck Owners Association of California-Teamsters.

Deere & Co.-Automobile Workers.

Coal industry (bituminous), various employers-United Mine Workers. Railroad industry, various employers-Various nonoperating railway unions. National Automobile Transporters Association-Teamsters, National Truckaway & Driveaway Conference.

Retail, wholesale, and warehouse industries, various employers (New York, N.Y.)-Retail, Wholesale & Department Store Union, District 65 (65 Security Plan).

New York Shipping Association, Inc. (Port of New York)-Longshoremen's Association.

Maritime industry, various employers, Atlantic and gulf coasts-Maritime Union.

Maritime industry, various employers, Atlantic and gulf coasts-Marine Engineers.

Hotel Association of New York, Inc.-New York Hotel & Motel Trades Council. Restaurant industry, various employers (New York, N.Y.)-Hotel & Restaurant Employees, Local 89.

Realty Advisory Board on Labor Relations, Inc. (New York, N.Y.)—Building Service Employees. Retail drug industry, various associations and employers (New York, N.Y.)— Retail. Wholesale & Department Store Union, Local 1199.

Retail trade industry, various employers (New York. N.Y.)-Retail Clerks. Laundry industry various employers (New York, NY.)-Clothing Workers. Maritime industry, various employers, Atlantic and gulf coasts-Seafarers. Construction industry, various employers (New York, N.Y.)-Carpenters. Mr. DANIELS. Mr. Sadler, under your proposal you would achieve comparability with some of private industry's health benefit programs in approximately 3 years?

Mr. SADLER. Right.

Mr. DANIELS. And you would eliminate all the low-option plans! Mr. SADLER. We feel this in effect would in itself eliminate the lowoption plans because the Government would eventually be paying the full 100 percent of a high-option plan.