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Proposed for separate transmittal:

HEALTH INSURANCE FOR THE AGED

Legislation will be proposed to provide health insurance for the aged. This program will be incorporated into the social security system and will be financed from increases in the contributions made by employers, employees, and the self-employed. The proposal will also contain special provisions, financed from general revenues, to extend health insurance protection to those of our aged who are not now covered under social security. There will, however, be no fiscal impact before 1965.

GRANTS TO STATES FOR PUBLIC ASSISTANCE

For grants to States for old-age assistance, medical assistance for the aged, aid to families with dependent children, aid to the blind, and aid to the permanently and totally disabled, as authorized in titles I, IV, X, [and] XIV, and XVI of the Social Security Act, as amended (42 U.S.C. ch. 7, subchs. I, IV, X, [and] XIV[), $2,538,300,000], and XVI), $2,950,000,000, of which such amount as may be necessary shall be available for grants for any period in the prior fiscal year subsequent to March 31 of that year. (Department of Health, Education, and Welfare Appropriation Act, 1963.) Program and Financing (in thousands of dollars)

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Total program costs, funded. Change in selected resources 1. Adjustment between State expenditures and Federal grants advanced to States... ... ...

Total obligations (object class 41).

Financing:
Appropriation available from subsequent
year (-)....
Appropriation available in prior year..

2,473,425 2,677,713 2,950,000

-580,587-720,000-720,000 508,362 580,587 720,000

New obligational authority (appropriation) 2,401,200 2,538,300 2,950,000

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Grants for old-age assistance, medical assistance for the aged, aid to families with dependent children, aid to the blind, and aid to the permanently and totally disabled are made to States that have plans for these programs ap proved by the Department of Health, Education, and Welfare. Effective October 1, 1962, the Public Welfare Amendments authorized, as an alternative to separate plans for each program, grants under a combined single plan for the adult assistance programs covering old-age assistance, medical assistance for the aged, aid to the blind, and aid to the permanently and totally disabled. Fiftyfour jurisdictions including all the States, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands have approved plans for old-age assistance, aid to families with dependent children, and aid to the blind; 51 jurisdictions now have approved plans for aid to the permanently and totally disabled and 1 additional State is expected to have such a plan in 1963. Under the Social Security Amendments of 1960, Federal participation in programs for medical assistance for the aged became effective on October 1, 1960. State legislation was necessary in most States before they could initiate programs for medical assistance for the aged. The number of jurisdictions expected to have approved plans for this program is 28 in 1963 and 35 in 1964. All these programs will be in operation in 1964 either under a separate plan or under a combined single plan.

The Public Welfare Amendments of 1962 to the public assistance titles of the Social Security Act and certain administrative actions taken by the Secretary of Health,

Education, and Welfare made far-reaching changes which are designed to strengthen and improve the public assistance programs and enhance their effectiveness in preventing and reducing dependency. The major changes involving additional expenditures from Federal funds are as follows: 1. An increase of about $4 per month per recipient in the Federal share of assistance payments to the aged, blind, and disabled.

2. Extension until 1967 of the program of aid to families with dependent children to families in which a parent is unemployed; and inclusion of a second parent, if incapacitated or unemployed, in computing the Federal share of assistance payments to families with dependent children.

3. Provision, at a State's option, for a single plan for the adult assistance programs.

4. Exemption, at the option of States, of income. earned by recipients of old-age assistance, up to a maximum of $30 (the first $10 and one-half of additional earnings up to $50), in determining the need of a recipient.

5. An increase from 50% to 75% in the Federal share of the State and local costs of providing preventive and rehabilitative services, as defined by the Secretary of Health, Education, and Welfare; and in the costs of training State and local welfare personnel.

In addition to the foregoing changes, which occurred as a result of legislative action, the Secretary of Health, Education, and Welfare took a number of administrative actions affecting the public assistance programs. The major action affecting Federal expenditures provides for: 6. Extension of the public assistance programs to include needy persons on conditional release from mental institutions.

The request for 1964 includes an amount of $409.5 million to cover the costs of the Public Welfare Amendments of 1962 and the administrative actions taken by the Secretary, including those mentioned above and certain less costly items. The estimated cost of these changes in 1964 is $144 million more than for 1963 primarily because some of the changes will be in effect for the entire year of 1964 whereas, in 1963, they are in effect for only part of the year.

Provisions for determining the Federal share of assistance payments-1. Provisions applicable under separate plans for programs of old-age assistance, aid to the blind, and aid to the permanently and totally disabled.-The amount of assistance payments subject to Federal participation is limited to a monthly average expenditure of $70 per recipient. (In addition under old-age assistance the Federal government participates in up to an additional $15 per month in the form of payments for medical or remedial care.) The average monthly amount is based on expenditures for money payments to recipients and direct agency payments to vendors for medical or remedial care. Within this maximum, the Federal share is twenty-nine thirty-fifths of the first $35 per recipient plus a proportion of the balance, which varies among States from 50 to 65% depending upon the per capita income of the State.

The foregoing provisions apply in all jurisdictions except Guam, Puerto Rico, and the Virgin Islands; for these jurisdictions the Federal share is one-half of total expenditures within a maximum monthly average of $37.50 per recipient subject to an overall limitation on the total annual Federal funds for assistance and administration for all programs combined for each jurisdiction.

2. Provisions applicable under a single plan for the adult assistance programs.-Except for recipients of medical

assistance to the aged, the provisions are the same as those applicable under the separate plans, as described in item 1. Provisions for additional Federal participation in assistance payments, based on the amount of direct agency payments to vendors for medical or remedial care (vendor medical payments), are described under item 3.

3. Provisions applicable under separate plans for old-age assistance and under a single plan for the adult assistance programs. Additional Federal participation in assistance payments, beyond that described in items 1 and 2, is based on the amount of direct agency payments to vendors for medical or remedial care (vendor medical payments).

For States with average monthly payments over $70, the Federal Government participates in the expenditures in excess of that amount, to a maximum of $15, except that such participation is limited to the amount of the average vendor medical payment. The Federal share in the excess expenditure consists of the Federal medical percentage for the State, which ranges from 50% to 80% under a formula based on per capita income.

For States with average monthly payments of $70 or less, the additional Federal share in average vendor medical payments up to $15 is an additional 15% over the usual Federal percentage (based on per capita income) applicable to the amount of payments falling between $35 and $70.

This percentage, when added to the usual Federal percentage for the second part of the payment, results in a total Federal share of from 65% to 80%. The additional Federal share of 15% also is available to States with average monthly payments over $70 when it is advantageous to them as an alternative to the method described in the preceding paragraph. For Guam, Puerto Rico, and the Virgin Islands, comparable provisions for direct agency payments to vendors for medical or remedial care are in effect.

4. Provisions applicable in medical assistance for the aged. For all 54 jurisdictions the Federal share of expenditures for the program of medical assistance for the aged is the Federal medical percentage of the amounts expended by the State for such assistance. The Federal medical percentages for the individual States range from 50% to 80% under a formula based on per capita income. The Federal share is the same regardless of whether the program is administered under a separate plan or under a single plan for the adult assistance programs.

5. Provisions applicable in aid to families with dependent children. For the 50 States and the District of Columbia, the amount of assistance payments subject to Federal participation is limited to a monthly average expenditure of $30 per child or adult recipient in the family. The average monthly amount is based on expenditures for for medical or remedial care. money payments to recipients and payments to vendors Within this maximum, the Federal share is fourteen-seventeenths of the first $17 per recipient plus a proportion of the balance, which varies among States from 50 to 65%, depending upon the per capita income of the States. For Guam, Puerto Rico, and the Virgin Islands the Federal share is one-half of total expenditures within a maximum monthly average of $18 per recipient and within an overall limitation on total annual Federal funds for assistance and administration for all programs combined for each jurisdiction. For purposes of determining the amount of payments subject to Federal participation, the count of recipients in all jurisdictions includes dependent children under 18 years of

SOCIAL SECURITY ADMINISTRATION-Continued General and special funds-Continued

GRANTS TO STATES FOR PUBLIC ASSISTANCE-Continued age, one relative caring for the children (usually the mother), and a second parent living in the home, if incapacitated or unemployed.

Provisions for determining the Federal share of administration, services, and training. The Federal share is 75% of: (1) the cost of providing preventive and rehabilitative services that are specified by the Secretary of Health, Education, and Welfare as (a) services that will help dependent persons to develop their capacities for self-care and self-support and to achieve greater family stability; and (b) services that may be provided, at their request, to persons likely to become dependent; and (2) the cost of staff training, including educational leave, and agency training sessions.

The Federal share of costs, other than those specified above is 50%.

These provisions are applicable in all programs and all jurisdictions.

Provisions for demonstration projects. For years 19631967 up to $2 million of the amount appropriated for any year may be used to help meet the State share of costs of demonstration projects that could be expected to contribute significantly to existing knowledge about the kinds and scope of services or methods of work which enhance the agency's capacity to assist needy persons in solving problems that threaten the stability of family life and prevent persons from attaining self-support or self-care.

Amount of request.-For 1964, the total amount of Federal, State, and local expenditures for assistance, for administration, services, and training, and for demonstration projects is estimated at $4,940.2 million of which $2,971 million represents the Federal share. The appropriation request of $2,950 million is $21 million less than the estimated Federal share, because the States will have available for expenditures $21 million representing the Federal share of collections and adjustments for prior years. Of the total Federal share, $1,460.6 million is for old-age assistance; $209.9 million for medical assistance for the aged; $972 million for aid to families with dependent children; $50.9 million for aid to the blind; $275.6 million for aid to the permanently and totally disabled; and $2 million is for demonstration projects.

It is estimated that a supplemental appropriation of $250 million will be required for 1963 in addition to the $2,538.3 million already appropriated. The supplemental is needed primarily to finance the additional costs of the Public Welfare Amendments of 1962.

The appropriation request of $2,950 million for 1964 is $161.7 million more than the appropriation of $2,538.3 million plus the supplemental request of $250 million for 1963. Excluding the amount of $69.2 million used from the 1963 appropriation to complete requirements for 1962, and allowing for a drop of $240 thousand in the estimated amount of collections in 1964, the amount of the increase from 1963 to 1964 is $230.7 million. All programs contribute to the increase for 1964 over 1963, with the largest increase, $96.4 million, occurring in the program of old-age assistance.

The figures for 1963 used in the tables appearing under the activities below include the supplemental request of $250 million; the figures shown in the program and financing schedule include only the $2,538.3 million already appropriated.

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2. State and local administration, services, and training. The grants to States include 75% Federal share of the State and local costs of providing preventive and rehabilitative services, as defined by the Secretary of 1 The tables do not present data on the single plan for the adult categories be cause no basis for estimating the number of recipients and the amount of payments to be included under single plans is available.

The additional Federal costs under the single plans have been estimated and are included in the separate program amounts; the number of recipients is the same regardless of whether they are included under a separate or a single plan.

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Health, Education, and Welfare, and in the costs of training State and local personnel for more effective performance in administering the public assistance programs; and half the remaining costs of State and local administration that are found by the Department of Health, Education, and Welfare to be necessary for the proper and efficient administration of the State public assistance programs. The Federal share contributes toward the salaries and expenses of about 65,000 (including 4,500 for additional staff to be hired in 1964 to give preventive and rehabilitative services) State and local personnel.

Total costs in 1964 are estimated at $52 million more than in 1963; $37.9 million of this increase will come from Federal funds. The increase in costs is attributable primarily to (1) staff increases to handle a larger number of recipients including those who are to receive medical assistance as a result of the growth of the program of medical assistance for the aged; and to provide services to recipients directed toward self-care, self-support, and strengthened family life; (2) the administrative actions taken by the Secretary of Health, Education, and Welfare, including revised policy that recognizes eligibility for Federal financial assistance of persons on conditional release from mental institutions; and (3) salary increases given to keep pace with rising living costs and to compete successfully with other professions and agencies for staff.

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Under existing legislation, 1963.-In connection with its consideration of the Labor-Health, Education, and Welfare appropriation bill for 1963, Congress approved an appropriation of $2,538.3 million for grants to States for old-age assistance, medical assistance for the aged, aid to families with dependent children, aid to the blind, and aid to the permanently and totally disabled under titles I, IV, X, and XIV, respectively, of the Social Security Act, as amended. Subsequently the Public Welfare Amendments of 1962 were enacted and as a result of these and certain administrative actions taken by the Secretary of Health, Education, and Welfare, additional amounts for Federal grants-in-aid will be required.

Charges against the regular appropriation for 1963 include $69.2 million used to complete 1962 requirements, leaving $2,469.1 million to meet the requirements for 1963. Requirements for 1963 include $2,453.6 million to meet program costs exclusive of those due to legislative and administrative changes; $239.7 million to meet the costs of the legislative changes; and $25.8 million for the costs of the administrative actions. The balance in the regular appropriation is sufficient to meet the costs of the programs exclusive of legislative and administrative changes; and part of the costs-$15.5 million-of the administrative actions. The supplemental amount of $250 million is needed to meet the balance of the costs $10.3 millionof the Secretary's administrative actions and the total estimated cost-$239.7 million of the Public Welfare Amendments of 1962.

TRAINING OF PUBLIC WELFARE PERSONNEL

For necessary expenses, not otherwise provided, for training public welfare personnel, including direct training and grants or contracts with public or non-profit private agencies or institutions as authorized by the provisions of section 705 (f) of the Social Security Act as amended by the Public Welfare Amendments of 1962 (Public Law 87-543), $2,000,000.

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