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H.R. 1 



JULY 27, 29 ; AUGUST 2, AND 3, 1971, AND 
JANUARY 20, 21, 24, 25, 26, 27, 28, 31 ; FEBRUARY 1, 2, 3, 4, 7, 8, AND 9, 1972 


Written Testimony Received 

Printed for the use of the Committee on Finance 








H.R. 1 



JULY 27, 29 ; AUGUST 2, AND 3, 1971, AND 
JANUARY 20, 21, 24, 25, 26, 27, 28, 31 ; FEBRUARY 1, 2, 3, 4, 7, 8, AND 9, 1972 


Written Testimony Received 

Printed for the use of the Committee on Finance 



72-573 WASHINGTON : 1972 


For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 - ?rice $3.00 


RUSSELL B. LONG, Louisiana, Chairman 




J. W. FULBRIGHT, Arlcansas LEN B. JORDAN, Idaho 



HARRY F. BYRD, Jr., Virginia ROBERT P. GRIFFIN, Michigan 

Tom Vail, Chief Counsel 





Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 - Pages 2759-3464 

Discussions Between Members of the Committee on Finance and the Witnesses 


Russell B. Long (chairman) 1-3, 

27, 29, 48-51, 62, 71, 93, 94, 97, 107, 111-114, 117, 121, 123-125, 
127, 128, 135, 137, 142, 143, 148, 158, 159, 162-165, 174-186, 190, 
215, 221, 226, 228, 231, 235-239, 242, 248, 249, 251, 252, 257, 258, 
267-276, 280, 281, 302-309, 317, 325, 735-739, 743, 750, 756, 
757, 759, 770, 783, 792, 796, 797, 800, 801, 806, 810, 811, 822-831, 
833, 835-838, 844a-848, 860, 863-865, 867, 887, 889-896, 899, 
902, 903, 906-908, 917-919, 924-933, 943, 944, 968, 972, 974-988, 
1027, 1032, 1033, 1043, 1047, 1053, 1058-1062, 1064-1066, 1088, 
1092-1094, 1101, 1112-1116, 1208, 1209, 1212, 1224, 1236, 1240- 
1248, 1251, 1252, 1260, 1263-1266, 1291, 1292, 1298-1302, 1304, 
1307-1310, 1312, 1313, 1320, 1324-1330, 1344, 1377, 1381, 1392, 
1393, 1396, 1397, 1471, 1476, 1477, 1479, 1480, 1630-1633, 1637, 
1639, 1641, 1649-1656, 1660, 1670-1672, 1690, 1717-1720, 1727, 
1729, 1735, 1736, 1742, 1743, 1748, 1750, 1751, 1769-1771, 1775, 
1780, 1781, 1788, 1794, 1796-1799, 1831, 1832, 1868-1870, 1873, 
1876, 1878-1881, 1888, 1891, 1892, 1939, 1942, 1947, 1948, 1953- 
1959, 1998, 2014-2016, 2018, 2019, 2022, 2023, 2056, 2062, 2067, 
2068, 2072-2074, 2121, 2122, 2131-2136, 2138-2145, 2147, 2151, 
2152, 2157, 2170-2176, 2214, 2220-2225, 2234, 2236, 2239, 2249, 
2252, 2270-2272, 2383, 2386, 2393-2397, 2482, 2494, 2507-2509, 
2516, 2520-2522, 2527, 2528, 2552, 2553, 2581, 2599, 2603, 2605, 
2606, 2633, 2634, 2636, 2662-2664, 2667, 2668, 2670, 2697, 2757 

Clinton P. Anderson 50» 

187, 242, 258, 283, 770, 822, 893-896, 902, 903, 947, 1205, 1210, 
1215, 1220, 1224, 1401, 1486, 1510, 1511, 1514, 1522, 1692, 1700, 
1701, 1703, 1714, 1751, 1753, 1759-1760, 1769, 1921, 2051, 2137, 
2172, 2260, 2280, 2399, 2404, 2412, 2415, 2419, 2584, 2585, 2597 

Herma n E. Talmadge 289- 

291, 1517, 1518, 1623, 1626, 1646, 1647, 1656, 1661-1668, 1827, 
1884-1886, 1952-1954, 1998, 2014, 2025, 2026, 2136, 2137, 2270- 
2272, 2288, 2289, 2292, 2302, 2335, 2338, 2340, 2354, 2356, 2359- 
2361, 2370-2373, 2382, 2511, 2513, 2516 

A'orahin R ibicoff 3-5, 

99, 103-107, 121, 124, 125, 148-159, 163, 164, 187-190, 202, 211, 
212, 214, 215, 231, 232, 736, 737, 806-811, 813, 818, 822, 827, 
829-833, 838, 844b, 943, 944, 951-954, 967, 968, 971, 972, 974, 986b, 
987, 1033-1035, 1051-1055, 1062, 1063, 1066, 1098-1101, 1107- 
1109, 1114, 1242, 1244, 1253-1255, 1257-1262, 1393-1395, 1401, 
1451-1456, 1645, 1646, 1656-1661, 1671, 1692, 1788-1790, 1794- 
1797, 1827, 1890-1893, 1895, 1896, 1898-1902, 1920, 1952, 2007, 
2010-2012, 2126-2131, 2141, 2145-2147, 2156, 2157, 2161-2167, 
2225-2227, 2386 

Fred R. Harris 165-174, 

2026, 2033, 2070-2073, 2338-2340, 2355, 2356, 2359-2361 



Discussions Between Members of the Committee on Finance and the 

Witnesses — Continued Page 

Harry F. Bvrd, Jr 112-117. 

221-228, 267, 283-289, 291-294, 296-302, 861, 869, 870, 971, 1471, 
1486, 1518, 1519, 1629, 1630, 1670, 1692, 1911-1918, 1950-1952, 
2061, 2070, 2168, 2169, 2419 

Gaylord Nelson 117-121, 

236, 238, 240, 241, 834-836, 965-968, 988, 1106, 1107, 1643, 1794, 
2070, 2125, 2155-2157, 2277, 2608, 2635, 2636 

Wallace F. Bennett 27-29, 

50, 97, 98, 127, 128, 135-137, 142, 143, 736, 737, 757, 758, 770-772, 
968, 987, 1035, 1038, 1039, 1041, 1047, 1049-1051, 1065, 1095, 
1110, nil, 1215, 1220, 1224, 1244, 1247-1253, 1304, 1305, 1307- 
1314, 1324, 1329, 1330, 1344, 1350, 1351, 1353, 1354, 1376, 
1395-1398, 1402, 1477-1479, 1511, 1514, 1518, 1519, 1656, 1714, 
1715, 1720, 1726, 1735, 1743, 1751, 1780, 1786-1788, 1902, 1948, 
1954, 1957, 1958, 2030, 2157, 2239, 2240, 2242, 2358, 2361, 2397- 
2402, 2404, 2416, 2418, 2419, 2425, 2439, 2516, 2518, 2522-2524, 
2565, 2566, 2573-2575, 2584, 2592, 2640 

Carl T. Curtis 50, 

51, 62, 71, 85-88, 235, 248, 251-267, 309-314, 742, 743, 758, 759, 
777, 778, 807, 809, 817-821, 860, 867, 868, 918, 919, 947-951, 968, 
971, 972, 974, 1094-1097, 1109-1112, 1296-1298, 1381, 1382, 
1392, 1397-1400, 1449-1451, 1480, 1481, 1510, 1514, 1523-1525, 
1656, 1692, 1701-1703, 1771, 1780, 1781, 1787, 1828-1830,1832, 
1833, 1876, 1882-1884, 1952, 2013, 2014, 2020, 2023-2025, 2030- 
2033, 2168, 2228, 2255, 2256, 2268, 2276-2278, 2394, 2395, 2402- 
2404, 2411, 2412, 2418, 2419, 2424-2426, 2524-2527, 2639, 2640, 
2649-2651, 2665 

Jack Miller 93-98, 

232, 242, 243, 245-248, 259, 1046, 1055-1057, 1446-1449, 1887- 

Len B. Jordan 108, 

109, 111, 112, 159-161, 163-165, 814-817, 892, 893, 954-958, 
1035-1038, 1056, 1057, 1215, 1441, 1445, 1446, 1452, 1522, 1656, 
1795, 1796, 1902-1906, 1959, 2012, 2013, 2072, 2242, 2527, 2604, 
2634, 2635, 2640-2642, 2697 

Paul J. Fannin 143- 

148, 215-218, 220, 221, 744, 812-814, 868, 869, 895, 903, 920, 
921, 959-962, 1057, 1058, 1063, 1097, 1098, 1401, 1402, 1444, 
1481-1486, 1519-1522, 1668-1670, 1781, 1906-1911, 2016-2018, 
2054-2056, 2157-2161, 2228-2231, 2236, 2237, 2242-2244, 2256, 
2260, 2292, 2293, 2301, 2302, 2354, 2355, 2438, 2439 

Clifford P. Hansen 137- 

143, 212-215, 232, 234, 235, 258, 276-280, 302, 317-326, 811, 
833, 834, 919, 920, 962-964, 1058, 1115, 1215, 1255-1257, 1312, 
1324, 1325, 1348, 1444, 1514-1517, 1919-1921, 2016, 2026, 2070, 
2130-2132, 2136, 2137, 2144, 2154, 2155, 2163, 2231-2233, 2244, 
2299, 2300, 2302, 2352, 2651 

Robert P. Griffin 228, 1308, 1309, 1312, 1314, 1320 

Administration Witnesses 

Hon. Elliot L. Richardson, Secretary of Health, Education, and Welfare, 
accompanied by : 

Hon. John G. Veneman, Under Secretary; 

Hon. Robert M. Ball, Commissioner, Social Security Administration; 
Hon. Howard Newman, Commissioner, Medical Services Administra- 
tion; and 

Hon. Stephen Kurzman, Assistant Secretary for Legislation 29, 187, 283 

Hon. James D. Hodgson, Secretary of Labor, accompanied by: 

Hon. Malcom R. Lovell, Assistant Secretary for Manpower; and 
Hon. Jerome M. Rosow, Assistant Secretary for Policy, Evaluation, 
and Research 128 

Public Witnesses 

AFL-CIO, Andrew J. Biemiller, Legislative Department; accompanied by: 

Bert Seidman, Department of Social Security, AFL-CIO 1790 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Public Witnesses — Continued 

Aid to Dependent Children Association of Lane County, Oreg., Lynda 

Wilt, president, accompanied by: P*8e 

Patricia Ban, Robin Derringer, and Loretta Daniel 2336 

American Association of Foundations for Medical Care, F. William Dowda, 
M.D., secretary and member, board of directors; accompanied by: 

James Bryan, consultant, Washington representative, AAFMC 2511 

American Association of Retired Persons, Peter Hughes, legislative repre- 
sentative, accompanied by: 

Robert Sy kes, legislative representative 750 

American Civil Liberties Union, James H. Heller, chairman 2376 

American Council of the Blind, Washington, D.C, Durward K. McDaniel, 

national representative 780 

American Council of Medical Staffs, Jose Garcia Oiler, M.D.; accompanied 

Edward S. Hyman, M.D., secretary, ACMS 2683 

American Dental Association, James A. A. Catchings, D.D.S., member. 
Council on Dental Health; past president. National Dental Association; 
accompanied by: 

Hal M. Christensen, director, Washington Office, American Dental 

Association 2415 

American Dietetic Association, Frances E. Fisher; accompanied by: 

Lois Earl, nutritionist, Washington, D.C, member, ADA 2589 

American Federation of Government Employees, Clyde M. Webber; ac- 
companied by: 

Stephen A. Koczak, director of research 175 1 

American Federation of State, County, and Municipal Employees, AFL- 

CIO, Paul J. Minarchenko, director of legislation 1767 

American Foundation for the Blind, Washington, D.C, Irvin P. Schloss, 

legislative analyst 790 

American Home Economics Association, Thomas M. Brooks, member and 
dean, School of Home Economics, Southern Illinois University, Carbon- 
dale, 111., accompanied by: 

Doris Hansen, executive director, American Home Economics Asso- 
ciation 1637 

American Hospital Association, Richard M. Loughery; accompanied by: 
Kenneth Williamson, deputy director, AHA, and director, Washington 

Service Bureau 2274 

American Life Convention, John S. Pillsbury, Jr., chairman and chief ex- 
ecutive officer, Northwestern National Life Insurance Co 740 

American Mutual Insurance Alliance, Andre Maisonpierre 2548 

American Nurses' Association, Virginia Stone, chairman, executive com- 
mittee. Division of Geriatric Nursing Practice; accompanied by: 

Constance Holleran, director, Governmental Relations Department, 

ANA 2421 

American Physical Therapy Association, Royce P. Noland, Washington, 

D.C .. - . ...... - 2486 

American Public Welfare Association, George K. Wyman, president; ac- 
companied by: 

Wilbur J. Schmidt, chairman, National Council of State Public Welfare 

Administrators; and 
Lloyd E. Rader, director. State Department of Institutions, Social 

and Rehabilitative Services, Oklahoma 1643 

American Speech and Hearing Association, Richard J. Dowling, director, 
Governmental Affairs; accompanied by: 

Dr. F. T. Spahr, deputy executive secretary, ASHA 2573 

American Veterans Committee, F. J. Pepper, M.D., vice chairman 2288 

Area Resources Improvement Council, George A. Welch, Benton Harbor, 
Mich.; accompanied by: 

J. Howard Edwards, executive director, ARIC; 

Roger Curry, executive vice president. Twin Cities Area Chamber of 

Commerce; and 
Andy Takacs, director, Government and Urban Affairs, Whirlpool 

C6rp 1320 


Public Witnesses — Continued 

Arkansas Prosecuting Attorneys Association, Samuel A. Weems, prosecut- Fage 

ing attorney for the 17th Judicial District, legislative chairman 835 

Association of American Medical Colleges' Council of Teaching Hospitals, 
Leonard W. Chronkhite, Jr., M.D., chairman-elect; accompanied by: 
John M. Danielson, director. Department of Health Services and 

Teaching Hospitals, AAMC 2630 

Association of American Physicians and Surgeons, Thomas G. Dorrity, 
M.D.; accompanied by: 

Frank K. WooUey, executive director, AAPS 2644 

Association of State and Territorial Health Officers, HoUis S. Ingraham, 

M.D 2383 

Banaszynski, Thomas J., president, National Federation of Student 
Social Workers; accompanied by: 

Hector Sanchez, coordinator of education, NFSSW 1867 

Beaver County Commissioners, Hon. James E. Ross, chairman, Beaver, 
Pa. ; accompanied by : 

Cosmo Morabito, assistant administrator, Beaver County Hospital, 

Pa 2581 

Bellmon, Hon. Henry, a U.S. Senator from the State of Oklahoma 2019 

Benson, Lucy Wilson, president. League of Women Voters of the United 
States; accompanied by: 

Leonard, Lesser, consultant; 

Jack T. Conway, president. Common Cause; and 

Jack Moskowitz, consultant 1136 

Biemiller, Andrew J., director. Legislative Department, AFL-CIO; ac- 
companied by: 

Bert Seidman, director. Department of Social Security, AFL-CIO 1790 

Biggs, William F., executive officer. Salt Lake Area Community Action Pro- 
gram, Salt Lake City, Utah; accompanied by: 

Bonnie Hartley, vice president, Utah Welfare Rights; and 

Andrew Gallegos, Coalition of Spanish Speaking Organizations of 

Utah 2358 

Blue Cross Association, Bernard R. Tresnowski, senior vice president for 

Federal programs 2744 

Brookings Institution, Joseph A. Pechman; accompanied by: 

Alice M. Rivlin 801 

Brooks, Thomas M., dean, School of Home Economics, Southern Illinois 
University, Carbondale, 111., member, American Home Economics Asso- 
ciation ; accompanied by : 

Doris Hansen, executive director, American Home Economics Associa- 
tion 1637 

Brown, Mrs. Donald, national board member, National Council of Jewish 
Women; accompanied by: 

Mrs. Bernard Koteen, chairman, day care committee 1733 

Burk, Mike, legislative advocate. National League of Senior Citizens, 

Los Angeles, Calif 899 

California Chamber of Commerce, Roy A. Green, Jr., director, welfare 

department 1827 

Catchings, James A. A., D.D.S., member, Council on Dental Health, 
American Dental Association; past president. National Dental Associ- 
ation; accompanied by: 

Hal M. Christensen, director, Washington office, American Dental 

Association 24 15 

Chamber of Commerce of the United States of America, Seymour L. 
Wolfbein; accompanied by: 

Karl T. Schlotterbeck, consultant on economic security 1389 

Child Welfare League of America, Joseph H. Reid; accompanied by: 

Jean Rubin, staff 2026 

Chiles, Hon. Lawton, a U.S. Senator from the State of Florida 2051 

Cohelan, Jeffery, executive director. Group Health Association of America; 
accompanied by: 

W. Palmer Dearing, M.D., medical consultant, GHAA 2390 

Cohen, Hon. Wilbur J., former Secretary of HEW, dean. School of Edu- 
cation, University of Michigan 2121 

Community Council of Greater New York, Rev. Robert P. Kennedy, chair- 
man. Task Force on Adequate Income and Services; accompanied by: 
Bernard M. Schiffman, executive director, CCGNY; and 
Jerry A. Shroder, director of information services, CCGNY 1344 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Public Witnesses — Continued 

Conner, Hon. Louise T., State senator from Delaware; accompanied by: p^k* 

Arva Jackson, aide to Gov. Russell W. Peterson of Delaware 2268 

Corcoran, Rev. Msgr. Lawrence J., secretary, National Conference of 

Catholic Charities 1727 

Cosgrove, John E., director, social development, U.S. Catholic Conference. 1714 
Coughlin, Rev. Bernard J., chairman, Division Cabinet of Social Policy 
and Action, National Association of Social Worliers, Inc.; accompanied 

Glen Allison, director, Washington Office, NASW 1690 

Council for the Advancement of Psychological Professions and Sciences 
(CAPPS), Jack G. Wiggins, psychologist, member. Board of Governors, 
Cleveland, Ohio ; accompanied by : 

A. Eugene Shapiro, diplomate, clinical psychology, consultant in 

psychology, St. Michael's Hospital, Newark, N.J 2434 

Council of State Chambers of Commerce, Paul P. Henkel, chairman. 
Social Security Committee, accompanied by : 

William R. Brown, associate research director 754 

Cronkhite, Leonard W., Jr., M.D., chairman-elect. Association of American 

Medical Colleges' Council of Teaching Hospitals; accompanied by: 

John M. Danielson, director. Department of Health Services and 

Teaching Hospitals, AAMC 2630 

Dealaman, Doris, Freeholder, Somerset County, N.J., chairman. Welfare 

Committee of the National Association of Counties; accompanied by: 

Ellis P. Murphy, director, social services, Los Angeles County, Calif., 

president. National Association of County Welfare Directors; 
David Daniel, director. Public AID, Cook County, 111.; and 
Ralph Tabor, director. Federal Affairs, National Association of Coun- 
ties 1220 

Delta Associates International, William H. Shaker 2299 

Dibble, E. T., management systems consultant, Atlanta, Ga 2370 

Dorrity, Thomas G., M.D., president. Association of American Physi- 
cians and Surgeons; accompanied by: 

Frank K. WooUey, executive director, A APS 2644 

Dowda, F. William, M.D., secretary and member, board of directors, 
American Association of Foundations for Medical Care; accompanied 

James Bryan, consultant, Washington representative, AAFMC 2511 

Dowling, Richard J., director, governmental affairs, American Speech and 
Hearing Association; accompanied by: 

Dr. F. T. Spahr, deputy executive secretary, ASH A 2573 

Duke University School of Law, Clark C. Havighurst 2563 

Eagleton, Hon. Thomas F., a U.S. Senator from the State of Missouri. . . 2249 
Edwards, Ozzie, National Federation of Social Service Employees and 

Affiliated Organizations ^non 

Evans, Hon. Daniel J., Governor of the State of Washington 1939 

Ewing, Margaret, attorney, national health and environmental law 
program. University of California, Los Angeles; accompanied by: 

Harvey Makadon, health law project. University of Pennsylvania 

Law School 2702 

Federation of Protestant Welfare Agencies of New York, John J. Keppler; 
accompanied by: 

Samuel Felder, consultant l'"*! 

Fisher, Frances E., American Dietetic Association; accompanied by: 

Lois Earl, nutritionist, Washington, D.C., member, ADA 2589 

Freeman, Roger A., senior fellow, the Hoover Institution on War, Revolu- 
tion, and Peace, Stanford University, California 1511 

Gaboury, Fred, cochairman. National Coordinating Committee for Trade 

Union Action and Democracy 1775 

Gaver, Kenneth, M.D., Department of Mental Hygiene and Corrections, 
Columbus, Ohio; accompanied by: 

Harry C. Schnibbe, executive director. National Association of State 

Mental Health Program Directors, Washington, D.C 924 


Public Witnesses — Continued 

Gavin, James A., legislative director, National Federation of Independent 

Business; accompanied by: P*k« 

Thomas Rae, Washington, D.C., staff 914 

Gibson, Robert W., M.D., medical director, the Sheppard and Enoch 

Pratt Hospital, Towson, Md 2408 

Gilligan, Hon. John J., Governor, State of Ohio; accompanied by: 

John E. Hansan, director. Department of Welfare, Ohio 1101 

Goldwater, Hon. Barry, a U.S. Senator from the State of Arizona 1783 

Gravel, Hon. Mike, a U.S. Senator from the State of Alaska 2599 

Green, Roy A., Jr., director. Welfare Department, California Chamber of 

Commerce 1827 

Group Health Association of America, Jeflfery Cohelan; accompanied by: 

W. Palmer Dearing, M.D., medical consultant, GHAA 2390 

Gurney, Hon. Edward J., a U.S. Senator from the State of Florida 797 

Harrell, Edward M., M.D., president, Louisiana State Medical Society; 
accompanied by: 

Paul Perret, associate secretary-treasurer, LSMS 2663 

Havighurst, Clark C, professor of law, Duke University School of Law_ _ 2563 
Health and Welfare Council, Chester Shore, chairman. Committee on 

Federal Legislation 2289 

Heller, James H., chairman, American Civil Liberties Union ".376 

Henkel, Paul P., chairman. Social Security Committee, Council of State 
Chambers of Commerce; accompanied by: 

William R. Brown, associate research director 754 

Holmes, Burton C, vice chairman. National Association of Life Under- 
writers Committee on Federal Law and Legislation; accompanied by: 

Michael Kerley, staff counsel, N ALU 906 

Hoover Institution on War, Revolution, and Peace, Roger A. Freeman, 

senior fellow, Stanford University, Calif 1511 

Hughes, Peter, legislative representative, National Retired Teachers 
Association and the American Association of Retired Persons, accom- 
panied by: 

Robert Sykes, legislative representative, both associations 750 

Ingraham, HoUis S., M.D., president, Association of State and Territorial 

Health Officers 2383 

Jordan, Vernon E., Jr., executive director, National Urban League 2210 

Kennedy, Rev. Robert P., chairman, Task Force on Adequate Income and 
Services, Community Council of Greater New York; accompanied by: 
Bernard M. Schiffman, executive director, CCGNY; and 

Jerry A. Shroder, director of Information Services, CCGNY 1344 

Keppler, John J., executive vice president, Federation of Protestant Wel- 
fare Agencies of New York; accompanied by: 

Samuel Felder, consultant 6714 

Kessler, Mrs. Gladys, Counsel, Working Mothers United for Fair 

Taxation 1741 

Knack, Lee E., director of labor relations, Morrison- Knudsen Co. of Boise, 

Idaho 1441 

Knebel, James D., executive vice president, National Association of Blue 
Shield Plans; accompanied by: 

Lawrence C. Morris, vice president, Planning and Programing, 

NABSP 2737 

Koch, Hon. Edward I., a Representative in Congress from the State of 

New York 2606 

Kurfess, Charles F., speaker, Ohio House of Representatives, in behalf of 
the National Legislative Conference; accompanied by: 
Allen Dines, State senator, Colorado; and 

Richard S. Hodes, State representative, Florida 2252 

League of Women Voters of the United States, Lucy Wilson Benson, presi- 
dent; accompanied by: 

Leonard Lesser, consultant; 

Jack T. Conway, president. Common Cause; and 

Jack Moskowitz, consultant 1236 

Leopold, Jonathan, M.D., commissioner. Department of Mental Health, 

Montpelier, Vt.; and Gaver, Kenneth, M.D., commissioner. Department 

of Mental Hygiene and Corrections, Columbus, Ohio; accompanied by: 

Harry C. Schnibbe, executive director. National Association of State 

Mental Health Program Directors, Washington, D.C 924 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 ---- Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Public Witnesses— Continued 


Liberty Lobbv, Washington, D.C., Warren S. Richardson 770 

Licht, Hon. Frank, Governor, State of Rhode Island; accompanied by: 
John J. Affleck, director, Rhode Island Department of Social and Re- 
habilitative Services; and 
Joseph F. Murray, acting administrator, assistance payments program, 1027 
Life Insurance Association of America, John S. Pillsbury, Jr., chairman 
and chief executive officer. Northwestern National Life Insurance 

Company -.----,--. V" L • V ^"^^ 

Life Insurers Conference, John S. Pillsbury, Jr., chairman and chief execu- 
tive officer. Northwestern National Life Insurance Company 740 

Loughery, Richard M., administrator, Washington Hospital Center, on 
behalf of the American Hospital Association; accompanied by: 

Kenneth Williamson, deputy director, AHA, and director, Washing- 
ton Service Bureau 2274 

Louisiana Hospital Association, Warren W. Simonds, president; accom- 
panied by: Charles R. Gage, executive director, LHA 2516 

Louisiana State Medical Society, Edward M. Harrell; accompanied by: 

Paul Perret, associate secretary-treasurer, LSMS . 2663 

McDaniel, Durward K., national respresentative, the American Council 

of the BHnd, Washington, D.C 780 

McLean, Mrs. Elaine, vice president, Washington State Welfare Rights 

Organization - -. 2239 

Maisonpierre, Andre, vice president, American Mutual Insurance Alliance. 2548 

Management Systems Consultant, E. T. Dibble, Atlanta, Ga 2370 

Meskill, Hon. Thomas J., Governor of the State of Connecticut 2007 

Michigan University, School of Education, Hon. Wilbur J. Cohen, dean_- 2121 
Minarchenko, Paul J., director of legislation, American Federation of 

State, County, and Municipal Employees, AFL-CIO 1767 

Mitchell, Clarence, director of the Washington Bureau of the National 

Association for the Advancement of Colored People 2220 

Modlin, E. C, president. North Carolina Social Services Association; 
accompanied by: ^ ,. 

Beverly Heitman, chairman, H.R. 1 Task Force of North Carolina.. 1700 
Montoya, Hon. Joseph M., a U.S. Senator from the State of New Mexico. 1205 
Moore, Florence, executive director. National Council for Homemaker- 
Home Health Aide Services, Inc.; accompanied by: 

Patricia Gilroy, executive director, Homemaker Service of the Na- 
tional Capital Area, Washington, D.C 2491 

Morrison-Knudsen Co. of Boise, Idaho, Lee E. Knack, director of labor 

T^plof 1 Qr\g _ _ l^rt 1 

Murphy, Richard E., assistant to the general president. Service Employees 
International Union, AFL-CIO; accompanied by: 

Paul Quirk, president, local 509, Boston, Mass 1^59 

Myers, Robert J., former chief actuary, Social Security Administration. 861 

Nagle, John F., chief, Washington office, National Federation of the Bhnd 77o 
National Association of Blue Shield Plans, James D. Knebel; accompanied 


Lawrence C. Morris, vice president, planning and programing, 

NABSP -r-'-^iS.- ^"^" 

National Association for Mental Health, Hilda Robbins, member, I'ublic 
Affairs Committee; president, Pennsylvania Mental Health, Inc., Fort 

Washington, Pa \;--\--p^^ 

National Association for the Advancement of Colored People, Clarence 

Mitchell, director, Washington Bureau 2220 

National Association of Counties, Doris Dealaman, Freeholder, Somerset 
County, N.J., chairman. Welfare Committee; accompanied by: 

Ellis P. Murphy, director, social services, Los Angeles County, Calif., 

president. National Association of County Welfare Directors; 
David Daniel, director, public aid. Cook County, 111. ; and 
Ralph Tabor, director, Federal affairs. National Association of Coun- 
ties ^^^^ 

Public Witnesses — Continued 

National Association of Life Underwriters Committee on Federal Law and 

Legislation, Burton C. Holmes, CLU, vice chairman; accompanied by: P»Ke 

Michale Kerley, staff counsel, NALU 906 

National Association of Social Workers, Inc., Rev. Bernard J. Coughlin, 
chairman, Division Cabinet of Social Policy and Action; accompanied 

Glen Allison, director, Washington Office, NASW 1690 

National Association of State Mental Health Program Directors, Jonathan 
Leopold, M.D., commissioner. Department of Mental Health, State of 
Vermont; Kenneth Gaver, M.D., commissioner. Department of Mental 
Hygiene and Corrections, State of Ohio; accompanied by: 

Harry C. Schnibbe, executive director 924 

National Conference of Catholic Charities, Rev. Msgr. Lawrence J. 

Corcoran, secretary 1727 

National Coordinating Committee for Trade Union Action and Democracy, 

Fred Gaboury, cochairman 1775 

National Council for Homemaker-Home Health Aide Services, Inc., 
Florence Moore; accompanied by: 

Patricia Gilroy, executive director, Homemaker Service of the Na- 
tional Capital Area, Washington, D.C 2491 

National Council of Jewish Women, Mrs. Donald Brown, national board 
member; accompanied by: 

Mrs. Bernard Koteen, chairman. Day Care Committee no6 

National Federation of Independent Business, James A. Gavin, legislative 
director; accompanied by: 

Thomas Rae, Washington, D.C, staff 914 

National Federation of the Blind, John F. Nagle, chief, Washmgton office.. 775 
National Federation of Social Service Employees and Affiliated Organi- 
zations, Ozzie Edwards -.- 2507 

National Federation of Student Social Workers, Thomas J. Banaszynski; 
accompanied by: 

Hector Sanchez, coordinator of education, NFSSW ... 1»d7 

National health and environmental law program, Margaret Ewing, 
University of California, Los Angeles; accompanied by: 

Harvey Makadon, health law project. University of Pennsylvania 

Law School 2702 

National League of Senior Citizens, Mike Burk, legislative advcoate, 

Los Angeles, Calif ^^^ 

National Legislative Conference, Charles F. Kurfess, speaker, Ohio 
House of Representatives; accompanied by: 
Allen Dines, State senator, Colorado; and 

Richard S. Hodes, State representative, Florida - - 2252 

National Medical Association, Emerson Walden, M.D.; accompanied by: 
Drs. John Chissell, Erman Edgecomb, John A. Kenney, Jr. ; and 

Loy Kirkpatrick, counsel 2b6o 

National Retired Teachers Association, Peter Hughes, legislative represent- 
ative; accompanied by: 

Robert Svkes, legislative representative ooi n 

National Urban League, Vernon E. Jordan, Jr., executive director 2210 

National Welfare Rights Organization, George A. Wiley, executive director; 

accompanied by: oncLQ 

Beulah Sanders, national chairman, NWRO >^ "ttt' " V 

New York State Civil Service Employees Association, Theodore C. Wenzl, 

president :f'^^^ 

New York State Legislature, Hon. Henry A. Wise, former member Ib/b 

Nixon, Allen, president-elect. Southern States Industrial Council; accom- 
panied by: „ 

Anthony Harrigan, executive vice president ao^^" 

Noland, Royce P., executive director, American Physical Therapy Associa- 

tion, Washington, D.C --"V 

North Carolina Social Services Association. E. C. Modlm, president; 

accompanied by: i-rnn 

Beverly Heitman, chairman, H.R. 1 Task Force of North Carolina. .. 17UU 
Northwestern National Life Insurance Co., John S. PUlsbury, Jr., chairman 
and chief executive officer ''* 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 - Pages 2759-3464 

Public Witnesses — Continued 

Obey, Hon. David R., a Representative in Congress from the State of Pa»?e 

Wisconsin 1212 

Oglivie, Hon. Richard B., Governor, State of Illinois; accompanied by: 

Edward T. Weaver, director, Illinois Department of Public Aid 1043 

Oiler, Jose Garcia, M.D., president, American Council of Medical Staffs; 

accompanied by: „^oo 

Edward S. Hyman, M.D., secretary, ACMS 2683 

Pechman, Joseph A.; accompanied by: 

Alice M. Rivlin, Brookings Institution 801 

Pepper, F. J., M.D., vice chairman, American Veterans Committee 2288 

Percy, Hon. Charles H., a U.S. Senator from Illinois 1377 

Pillsbury, John S., Jr., chairman and chief executive officer. Northwestern 
National Life Insurance Co., on behalf of American Life Convention, 
Life Insurance Association of America, and Life Insurers Conference, 
accompanied by: ■ ^An 

Richard Minck, actuarv. Life Insurance Association of America 740 

Public Services Committee, P. Richard Stoesser, chairman. Board of 
Commissioners, Midland County, Mich; accompanied by: 
R. Jerry Bennett, chairman, Board of Commissioners; and 

H. M. Meredith, county social services director 1303 

Reagan, Hon. Ronald, Governor of the State of California; accompanied 

Robert Carieson, director of social welfare 1873 

Reid, Joseph H., executive director, Child Welfare League of America; 

accompanied by: onna 

Jean Rubin, staff ^^;f^ 

Richardson, Warren S., general counsel. Liberty Lobby, Washington, D.C. 77U 
Robbins, Hilda, member, PubUc Aflfairs Committee, National Association 
for Mental Health; president, Pennsylvania Mental Health, Inc., Fort 

Washington, Pa .---^7-, 

Rockefeller, Hon. Nelson A., Governor of the State of New York; accom- 
panied by: T^ A. 4. t 
Barry Van Lare, executive deputy commissioner. Department ot 

Social Services, New York State 2144 

Ross, Hon. James E., chairman, Beaver County Commissioners, Beaver, 

Pa.; accompanied by: tt -4. 1 

Cosmo Morabito, assistant administrator, Beaver County Hospital, 




Salt Lake area community action program, William F. Biggs, Salt Lake 
City, Utah; accompanied by: 

Bonnie Hartley, vice president, Utah Welfare Rights; and 
Andrew Gallegos, Coalition of Spanish Speaking Organizations of 

Utah -'"""■j'r 

Sargent, Hon. Francis, Governor of Massachusetts; accompanied by: 
Leonard Hausman; and 

Edward Moscovitch, economists l"i,V'A 

Schloss, Irvin P., legislative analyst, American Foundation for the Blind, 

Washington, D.C V "t.' " V," " " L" " 

Service Employees International Union, AFL-CIO, Richard E. Murphy, 
assistant to the general president; accompanied by: 

Paul Quirk, president, local 509, Boston, Mass l^g^ 

Shaker, WiUiam H., Delta Associates International - - - - - - ^j'^^ 

Sheppard and Enoch Pratt Hospital, Robert W. Gibson, Towson, Md.. 24U» 
Shore, Chester, chairman, Committee on Federal Legislation, Health and 

Welfare Council of the National Capital area ^^^^ 

Simonds, Warren W., president, Louisiana Hospital Association; accom- 
panied by: 9 KIR 

Charles R. Gage, executive director, LH A ^^'•O 

Smith, Hon. Preston, Governor, State of Texas; accompanied by: 
Raymond Vowell, commissioner of pubUc welfare, and 

Ed Powers - 


Smith, Richard ' S","welfare supervisor, Prince Georges County, Md., 

Department of Social Sciences °°' 


Public Witnesses — Continued 


Social Security Administration, Robert J. Myers, former chief actuary 861 

Southern Illinois University, Carbondale, 111., Thomas M. Brooks, dean, 
School of Home Economics, member, American Home Economics 
Association; accompanied by: 

Doris Hansen, executive director, American Home Economics As- 
sociation 1637 

Southern States Industrial Council, Allen Nixon, president-elect; accom- 
panied by: 

Anthony Harrigan, executive vice president 1620 

Stoesser, P. Richard, chairman, Public Services Committee, Board of 
Commissioners, Midland County, Mich.; accompanied by: 
R. Jerry Bennett, chairman. Board of Commissioners; and 

H. M. Meredith, County Social Services Director 1303 

Stone, Virginia, chairman. Executive Committee, Division of Geriatric 
Nursing Practice, American Nurses' Association; accompanied by: 
Constance HoUeran, director, Governmental Relations Department, 

ANA-. 2421 

Thompson, William, stated clerk, United Presbyterian Church, U.S.A.; 
accompanied by: 

Dorothy Height, vice president. National Council of Churches of 

Christ in the U.S.A.; and 
Hobart Burch, general secretary for health and welfare, United Church 

of Christ Board for Homeland Ministries 1472 

Tresnowski, Bernard R., senior vice president for Federal programs. Blue 

Cross Association , 2744 

Trister, Michael B., Washington Research Project Action Council; ac- 
companied by : 

Nancy Duff Levy 2352 

UUmann, Hon. AI, a Representative in Congress from the State of Oregon. 1292 
United Presbyterian Church, U.S.A., William Thompson, stated clerk; 
accompanied by: 

Dorothy Height, vice president. National Council of Churches of 

Christ in the U.S.A.; and 
Hobart Burch, general secretary for health and welfare, United Church 

of Christ Board for Homeland Ministries 1472 

U.S. Catholic Conference, John E. Cosgrove, director, social development. 1714 
Walden, Emerson, M.D., president. National Medical Association; ac- 
companied by: 

Drs. John Chissell, Erman Edgecomb, John A. Kenney, Jr.; and Loy 

Kirkpatrick, coun.sel 2636 

Washington Hospital Center, Richard M. Loughery, administrator, on 
behalf of the American Hospital Association; accompanied by: 

Kenneth WiUiamson, deputy director, AHA, and director, Wash- 
ington Service Bureau 2274 

Washington Research Project Action Council, Michael B. Trister; accom- 
panied by: 

Nancy Duff Levy 2352 

Washington State Welfare Rights Organization, Mrs. Elaine McLean, 

vice president 2239 

Webber, Clyde M., executive vice president, American Federation of 
Government Employees; accompanied by: 

Stephen A. Koczak, director of research 1751 

Weems, Samuel A., prosecuting attorney, 17th Judicial District, State of 
Arkansas, legislative chairman of the Arkansas Prosecuting Attorneys 

Association 835 

Welch, George A., Area Resources Improvement Council, Benton Harbor, 
Mich.; accompanied by: 

J. Howard Edwards, executive director, ARIC; 

Roger Curry, executive vice president, Twin Cities Area Chamber of 

Commerce; and 
Andy Takacs, director, government and urban affairs. Whirlpool Corp. 1320 
Wenzl, Theodore C, president, New York State Civil Service Employees 

Association 2234 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Public Witnesses — Continued 

Wiggins, Jack G., psychologist, Cleveland, Ohio, member. Board of 
Governors, Council for the Advancement of Psychological Professions 
and Sciences (CAPPS), and executive committee; accompanied by: 

A. Eugene Shapiro, diplomate, clinical psychology, consultant in PaB« 

psychology, St. Michael's Hospital, Newark, N.J 2434 

Wiley, George A., executive director, National Welfare Rights Organiza- 
tion; accompanied by: 

Beulah Sanders, national chairman, NWRO 2059 

Wilt, Lynda, president. Aid to Dependent Children Association of Lane 
County, Oreg. ; accompanied by: 
Patricia Ban; 
Robin Derringer; and 

Loretta Daniel 2336 

Wise, Hon. Henry A., former member of the New York State Legislature.. 1626 
Wolfbein, Seymour L., Chamber of Commerce of the United States of 
America; accompanied by: 

Karl T. Schlotterbeck, consultant on economic security 1389 

Working Mothers United for Fair Taxation, Mrs. Gladys Kessler ... 1746 

Wyman, George K., president, American Public Welfare Association; 
accompanied by: 

Wilbur J. Schmidt, chairman, National Council of State Public Welfare 

Administrators; and 
Lloyd E. Rader, director. State Department of Institutions, Social and 

RehabiUtative Services, Oklahoma 1643 


Abzug, Hon. Bella S., U..S Representative from New York 2778 

AcuflF, Charles E., president, National Association of Coordinators of State 

Programs for the Mentally Retarded, Inc 3318 

AFL-CIO, Andrew J. Biemiller, director, Department of Legislation 1825 

Agnes, Sister Mary, O.P., administrator, Holy Family Hospital 2983 

Air Line Pilots Association, International, Capt. Paul Metcalf, chairman, 

Committee on Discrimination in Pilot Employment 3360 

Alabama State Agency for Social Security, Edna M. Reeves, director 3323 

Allied Pilots Association, Martin C. Seham, general counsel . 3445 

American Association of Bioanalysts, Bernard Diamond, chairman, 

Government and Professional Relations Council 3406 

American Association of Blood Banks 3297 

American Association of Dental Schools, John J. SoUey, D.D.S., president. 2993 
American Association of University Women, Mrs. Sherman Ross, chairman, 

legislative program committee -- 3447 

American Bar Association, Milton M. Carrow, chairman, section of admin- 
istrative law 2857 

American Chiropractic Association and International Chiropractors Asso- 
ciation, Dr. John L. Simons, president, American Chiropractic Associa- 
tion; and Dr. William S. Day, president. International Chiropractors 

Association 2857 

American Clinical Laboratory Association, James L. Johnson, president — 3426 
American Life Convention, Life Insurance Association of America, William 
B. Harman, Jr., general counsel, ALC, and Kenneth L. Kimble, vice 

president and general counsel, LI AA — 749 

American College of Nursing Home Administrators, Donovan J. Perkins, 

D.P. A., president . 2860 

American Insurance Association, T. Lawrence Jones, president 2558 

American Medical Association 3242 

American Nurses Association, Inc.: 

Constance HoUeran, director Government relations 2434 

Eileen M. Jacobi, R.N., Ed. D., executive director -.-- 3240 

American Nursing Home Association of the Medicare and Medicaid 

Programs, John K. Pickens 2528 

American Optometric A.ssociation 2994 

American Parents Committee, Inc., George J. Hecht, chairman 2861 

American Pharmaceutical Association 3292 

American Podiatry Association, Ernest M. Weiner, D.P.M., president 3305 


Communications — Continued 


American Public Health Association 3364 

American Society of Medical Technologists 3259 

American Speech and Hearing Association, Kenneth O. Johnson, Ph. D., 

executive secretary 2862 

Andersen, Arthur & Co., Allan J. Winick, partner 2863 

Annunzio, Hon. Frank, U.S. Representative from Hlinois 2781 

Anti-Defamation League of B'nai B'rith, David A. Brody, director, 

Washington office 3094 

Armstrong, A. W., business office manager, Overlake Memorial Hospital.. 2976 

Arthur Young & Co., Washington, D.C 2374 

Associated General Contractors of America, WilUam E. Dunn, executive 

director 323o 

Association of American Physicians and Surgeons, Walter R. Buerger, 

M.D., secretary-treasurer 3390 

Association of Children and Youth Project Directors, Fred SeUgman, M.D., 

M.P.H ., chairman 3288 

Baker, Gerald W., administrator, Willapa Harbor Hospital 2979 

Ballard, John H., executive director. Welfare Council of Metropolitan 

Chicago 3253 

Baroness Erlanger Hospital, E. B. Craig, controller, T. C. Thompson 

Children's Hospital 2864 

Beilenson, Hon. Anthony C, U.S. State senator from California 2810 

Bennett, R. Jerry, chairman. Board of Commissioners 1319 

Benson, Lucy Wilson, president. League of Women Voters of the United 

States. 1268 

Bentley, C^ D^, administrator, the Valley Memorial Hospital 2980 

Bernadette, Sister Mary, administrator, Saint Margaret's Hospital 3098 

Bernardin, Most Rev. Joseph L., general secretary, U.S. Catholic Con- 
ference. 1726,3447 

Biaggi, Hon. Mario, U.S. Representative from New York 2782 

Biemiller, Andrew J., director. Department of Legislation, AFL-CIO.... 1825 
Bigelow, John, executive vice president, Washington State Hospital 

Association 00^4 

Bird, Robert J., Bird & Tansill 3274 

Blackburn, Clark W., general director, Family Service Association of 

America o^et 

Blair, F. E., executive director, Ohio Valley General Hospital Association. 2967, Paul S., administrator, Seattle General Hospital 2979 

Blomquist, Paul, administrator. Grays Harbor Community Hospital 2978 

Boucher, Anne Carey, chairman, Maryland Commission on the Status of 

Women, Department of Employment and Social Services 2940 

Boyer, John C, business manager. Mount Carmel Hospital 2976 

Boynton, Alice, consultant. United Low Income, Inc 3258 

Brighton-Allston Community Health Corp., Robert A. England, president. 3098 

Bristor, Delos J., hospital administrator, Coulee General Hospital 298o 

Brodv, David A., director, Washington Office, Anti-Defamation League 

of B'nai B'rith - 3094 

Bromberg, Michael D., director, Washington Bureau, Federation of 

American Hospitals o^cf 

Brown, Hon. Garry, U.S. Representative from Michigan . 2785 

Buck, Arthur L., state representative. National Legislative Conference 

Task Force on Human Resources 2855 

Buck, Hon. Arthur L., U.S. State Representative from Wyoming .... 2991 

Buerger, Walter R., M.D., secretary-treasurer. Association of American 

Physicians and Surgeons a a 

Bumpers, Hon. Dale, Governor of Arkansas 844a 

Buonopane, Pat, East Boston Neighborhood Health Committee, Boston, 

Mass .-: 3097 

Burk, Mike, legislative advocate. National League of Senior Citizens 905 

Burns, Hon. John A., Governor of Hawaii ^^qq 

Cahill, Hon. William T., Governor of New Jersey 2799 

Carkulis, Theodore, State of Montana, Department of Public Welfare 3441 

Carlton, Robert A., chairman, Monroe County Coalition for Welfare 

Justice 3410 

Carney, Hon. Charles J., U.S. Representative from Ohio ^'oo 

Carrow, Milton M., chairman. Section of Administrative Law, American 

Bar Association 2857 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Communications — Continued 


Carter, Hon. Jimmv, Governor of the State of Georgia 1999 

Cascade Valley Hospital, Allen K. Remington, administrator 2979 

Central Memorial Hospital, Clarence M. Pritchard, administrator 2982 

Chamber of Commerce of the United States, William P., McHenry, Jr., 

economic security manager 1428, 2864 

Child Care and Preschool Programs Commission, Office of Education, 

Santa Cruz County, Calif., Richard R. Fickel, superintendent 2878 

Chisholm, Hon. Shirley, U.S. Representative from New York 2787 

Church, Hon. Frank, U.S. Senator from Idaho -- 2761 

Cimino, Bonnie, welfare chairman, League of Women Voters of Columbia, 

S.C.: - 1276 

Coalition of Independent Health Professions on Peer Review Systems 3363 

College of American Pathologists, Dr. C. A. McWhorter 2880 

Col well, David, president, Council of Planning Affiliates 2920 

Committee on Income Maintenance, Joan Foley 2888 

Community Service Society, Bernard C. Fisher 2889 

Community Service Society, representing the Committee on Aging, Com- 
mittee on Family and Child Welfare, Committee on Health in the 

Department of Public Affairs 2997 

Cook Countv Department of Public Aid 1234, 2918 

Cornelius, Dorothy, A., R.N., executive director, Ohio Nurses Association.. 2965 
Coon, Dr. Robert W., National Committee for Careers in Medical Tech- 
nology 3032 

Coulee General Hospital, Delos J. Bristor, hospital administrator 2985 

Council of Jewish Federations and Welfare Funds, Inc., Max M. Fisher.. 2920 

Council of Planning Affiliates, David Colwell, president 2920 

Council of State Governments, William L. Frederick, director, eastern 

office 3156 

Craig, E. B., controller, T. C. Thompson Children's Hospital, Baroness 

Erlanger Hospital 2864 

Cruikshank, Nelson H., president, National Council of Senior Citizens 2964 

Dailey, J. A., administrator, Walla Walla General Hospital 2982 

Daniel, David L., director. Cook County Department of Public Aid 1234 

Davey, Mrs. Elizabeth, member, board of directors. League of Women 

Voters of Michigan 1278 

Davis, James A., president, board of trustees. Ferry County Memorial 

Hospital 2974 

Davis, Leon J., president. National Union of Hospital and Nursing Home 

Employees, RWDSU, AFL-CIO 2987 

Day, Dr. William S., president. International Chiropractors Association.. 2857 
Dayton General Hospital, Fred Schreck, chairman of board, and Cecil 

Mackliet, secretary onfa 

Deaconess Hospital, Harry C. Wheeler, administrator 2976 

Dechant, Tony T., president. National Farmers Union 2964 

Department of Church in Society of the Christian Church (Disciples of 

Christ), Indianapolis, Ind 1^"' 

Department of Employment and Social Services, Anne Carey Boucher, 

chairman, Maryland Commission on the Status of Women 2940 

Department of Health and Hospitals, Dr. Rowland L. Mindlin, director, 

maternal and child health 2992 

Department of Health, Section of Hospitals and Medical Facilities, Verne 

A. Pangborn, director 3130 

Department of Justice, State of California, Evelle J. Younger, attorney 

general . — 3159 

Diamond, Bernard, chairman. Government and Professional Relations 

Council, American Association of Bioanalysts 3406 

Dimmick, William A., president. Health and Welfare Planning Council of 

Memphis-Shelby County, Tenn 3217 

Doctors Hospital, Seattle, Wash., Dr. S. A. Tucker, director ..-- 297o 

Dolan, Merrilee, chairone. Task Force on Women in Poverty, National 

Organization for Women oooo 

Doss, Lawrence P., president. New Detroit, Inc 3262 


Communications — Continued 


Drinan, Hon. Robert F., U.S. Representative from Massachusetts 2788 

Dunn, William E., executive director, the Associated General Contractors 

of America 3235 

East Boston Health Center, Dr. James O. Taylor, medical director, staff- 3098 
East Boston Neighborhood Health Committee, Boston, Mass., Pat 

Buonopane- ^ 3097 

Educational Testing Service, Princeton, N.J., National Committee for 

Careers in the Medical Laboratory 3023 

Eid, Elmer O., administrator, Memorial Hospital, Inc 2987 

Egan, Hon. William A., Governor of Alaska 2002 

Eilberg, Hon. Joshua, U.S. Representative from Pennsylvania 2789 

ElUott, John Doyle, secretary, Townsend Foundation 3384 

England, Robert A., president, Brighton-Allston Community Health 

Corp 3098 

Episcopal Community Services, diocese of Pennsylvania, Charles L. 

Ritchie, Jr., president, board of council 3321 

Erickson, Robert J., counsel. Kaiser Foundation Health Plan, Inc 3448 

Evergreen General Hospital, F. A. Gray, administrator 2984 

Everson, Miss Mary Lou, Department of Social and Health Services, 

Economics Services Division I960 

Eye and Ear Clinic Inc., P.S., Wenatchee, Wash 2975 

Family Service Association of America, Clark W. Blackburn, general 

director 3294 

Federal Register, vol. 36, No. 40— February 27, 1971, Safeguarding Infor- 
mation 489 

Federation of American Hospitals, Michael D. Bromberg, diiector, Wash- 
ington Bureau 2928 

Federation of Protestant Welfare Agencies, Inc., John J. Keppler, execu- 
tive vice president 1745 

Ferry County Memorial Hospital, James A. Davis, president, board of 

trustees 2974 

Fickel, Richard R., superintendent, Child Care and Preschool Programs 

Commission, Office of Education, Santa Cruz County, Calif 2878 

Fineman, Hon. IJerbert, U.S. State Representative from Pennsylvania. . - 2848 
First Church of Christ, Scientist, Boston, Mass., H. Dickinson Rathbun, 

manager 3446 

Fisher, Bernard C, Community Service Society 2889 

Fisher, Max M., Council of Jewish Federations and Welfare Funds, Inc 2920 

Foley, Joan, representing the Committee on Income Maintenance 2888 

Fox, Thomas P., chief clerk of the assembly, Wisconsin Legislature 2854 

Fraser, Hon. Donald M., U.S. Representative from Minnesota 2790 

Frederick, William L., director, eastern office, the Council of State Govern- 
ments 3156 

Gamble, Howard M., administrator, Okanogan-Douglas County Hospital.. 2985 

Garrett, Roberta M., R.N., administrator, Metahne Falls, Wash 2974 

Garrett, Roberta M., R.N., administrator, Public Hospital District No. 2, 

Pend Oreille County, Wash 2974 

General Hospital of Everett, Stephen C. Saunders, president, board of 

trustees 2981 

Giaimo, Hon. Robert N., U.S. Representative from Connecticut 2790 

Good Samaritan Hospital and Rehabilitation Center, David K. Hamry, 

administrator ^^^n 

Gottlieb, Donna, Brighton, Mass 3100 

Gould, Dr. John H., coordinator, M.I.C.-C. & Y. programs, St. Ehzabeths 

Hospital 3102 

Grasso, Hon. Ella T., U.S. Representative from Connecticut 2793 

Gray, F. A., administrator, Evergreen General Hospital 2984 

Gray, Mrs. Robert, Jr., president. League of Women Voters, Ripon, Wis.. 1288 

Grays Harbor Community Hospital, Paul Blomquist, administrator 2978 

Gronvold, Martin N., executive director, North Dakota Old Age and 

Survivor Insurance System, and the social security contribution fund.. 3327 
Gross, H. William, D.D.S., president, Lehigh Valley Committee Against 

Health Fraud, Inc 3105 

Hall, Hon. David, Governor of Oklahoma 1652 

Hamilton, Hon. Lee H., U.S. Representative from Indiana 2792 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Communications — Continued 

Hamry, David H., administrator, Good Samaritan Hospital and Rehabili- ?««« 

tation Center 2984 

Handbook of Public Assistance Administration, Eligibility 2987 

Hanson, Robert A., administrator, the Riverton Hospital 2987 

Harman, William B., Jr., general counsel, American Life Convention, and 

Kenneth L. Kimble, vice president and general counsel, Life Insurance 

Association of America 749 

Hawkins, Paul M., Washington counsel. Health Insurance Association of 

America 2725 

Health and Welfare Planning Council of Memphis-Shelby County, Tenn., 

William A. Dimmick, president 3217 

Health Insurance Association of America, Paul M. Hawkins, Washington 

counsel 2725 

Heap, Irene C 2930 

Hecht, George J., chairman, the American Parents Committee, Inc 2861 

Helsel, Elsie D., Ph.D., Washington representative, United Cerebral Palsy 

Association, Inc 3329 

Heitman, Sister M. Clara, O.S.F., administrator, St. Mary's Hospital, 

Nebraska Citv, Nebr 3137 

HEW, John G. Veneman, Under Secretary 972, 1309 

Holleran, Constance, director, Government relations, American Nurses' 

Association, Inc 2434 

Holman, Steve 2990, 3094 

Holy Family Hospital, Sister Mary Agnes, O.P., administrator, and James 

J. Murray, assistant administrator, fiscal services 2983 

Hopkins, Joe, administrator, Mark E. Reed Memorial Hospital, Inc 2978 

Hospital Association of Rhode Island, Wade C. Johnson, executive 

director 346 1 

Hriczlev, Sister Mary Caroline, staff nurse, Labour^ Center Visiting Nurse 

Service, Sisters of Charity 3098 

Huber, W. L., executive vice president, Tacoma General Hospital 2974 

Hudon, Sister Margaret, administrator, St. Joseph Hospital 2984 

Huegli, Richard F., executive vice president, United Community Services 

of Metropolitan Detroit 3375 

Huesers, Robert E., administrator, Puget Sound Hospital 2983 

Hunt, Max L., administrator, Yakima Valley Memorial Hospital 2981 

International Society of Clinical Laboratory Technologists, Keith Knudson, 

president 3456 

Irvis, Hon. K. Leroy, majority leader, Pennsylvania House of Representa- 
tives 1 2850 

Island Hospital, Ray W. Nierman, comptroller 2975 

Jacobi, Eileen M., R.N., Ed. D., executive director, American Nurses' 

Association, Inc 3240 

Javits, Hon. Jacob K., a U.S. Senator from the State of New York 2763 

Johnson, James L., president, American Clinical Laboratory Association.. 3426 
Johnson, Kenneth O., Ph. D., executive secretary, American Speech and 

Hearing Association 2862 

Johnson, Wade C, executive director. Hospital Association of Rhode 

Island ;-- 3461 

Jones, T. Lawrence, president, American Insurance Association 2558 

Kaiser Foundation Health Plan, Inc., Robert J. Erickson, counsel 3448 

Kemper Insurance, Wash., D.C., Steven H. Lesnik, Washington manager, 

corporate relations 3459 

Keough, Sister Mary, administrator, St. John's Hospital, Longview, Wash. 9752 
Keppler, John J., executive vice president, Federation of Protestant Welfare 

Agencies, Inc 1745 

Kinnarney, Sister Eileen, administrator. Labour^ Center Sisters of Charity. . 3099 

Kludt, John W., administrator, St. Luke's General Hopital 2977 

Knack, Lee E., director of labor relations, Morrison-Knudsen Co., Boise, 

Idaho 1463 

Knebel, James D., executive vice president. National Association of Blue 

Shield Plans 2740 

Ti-^TX n - 79. - nt_ 6 -- 2 


Communications — Ctintinued 

Knudson, Keith, president, International Society of Clinical Laboratory Page 

Technologists 3456 

Koretz, Sidney 3277 

Kowal, John, president, Planetarium Neighborhood Council 3361 

Labour^ Center Sisters of Charity: 

Sister Eileen Kinnarney, administrator 3099 

Sister Sheila O'Friel, director. Home Management Department 3099 

Labour^ Center Visiting Nurse Service, Sisters of Charity, Sister Mary 

Caroline Hriczlev, stafif nurse 3098 

Lampson, Charles L., administrator, Tri-County Hospital Association 2980 

Landis, Mrs. Evelyn, member, board of directors, League of Women Voters 

of Louisiana 1282 

League of Women Voters of: 

Boston 1274 

Columbia, S.C 1276 

Connecticut 1285 

Illinois 1289 

Louisiana 1282 

Massachusetts 1275 

Michigan 1278 

Nebraska 1283 

New Jersey 1287 

New York Area, G reater 1290 

Northfield, Minn 1273 

Ohio 1274 

Ripon, Wis 1288 

South Carolina 1290 

South Dakota 1272 

United States 1268 

Wyoming . . 1291 

Lebel, Sister Louise, administrator, Providence Hospital 2981 

Lehigh Valley Committee Against Health Fraud, Inc., Dr. H. William 

Gross, president 3105 

Lesnik, Steven H., Washington manager, corporate relations, Kemper 

Insurance 3459 

Lev, S. Nathan, president, South Jersey Chamber of Commerce 2856 

Licht, Hon. Frank, Governor of Rhode Island 1035 

Los Angeles County Department of Public Social Services, Ellis P. Murphy, 

director 1232 

Lowenthal, Martin D., director. Social Welfare Regional Research In- 
stitute, Boston College 3311 

Lowenthal, Martin, Ph. D., director. Social Welfare Regional Research 

Institute, Institute of Human Sciences, Boston College 3311 

Lucey, Hon. Patrick J., Governor of Wisconsin 2803 

Lutheran Council in the U.S.A., Division of Welfare Services 2932 

Lynch, Mrs. Charles, president; and Mrs. Campbell L. Searle, welfare 

chairman. League of Women Voters of Massachusetts 1275 

McCraven, Carl C., national executive board member, National Association 
for the Advancement of Colored People, and chairman, Health Com- 
mittee, Southern California N AACP 2950 

McHenry, William P., Jr., economic security manager. Chamber of Com- 
merce of the United States 1428, 2864 

Mclnnes, Si.ster Catherine, administrator, St. Joseph's Hospital 2977 

Mclntyre, Hon. Thomas J., U.S. Senator from New Hampshire 2764 

McKay Hospital, Soap Lake, Wash., Gertrude M., Philips, administrator. . 2977 

McWhorter, Dr. C. A., College of American Pathologists 2880 

Mackliet, Cecil, secretary, Dayton General Hospital 2982 

MacMillin, Frederick N - 3328 

Mager, T. Russell, ACSW 2937,2939 

Magnuson, Warren G., a U.S. Senator from the State of Washington 3428 

Mark E. Reed Memorial Hospital, Inc., Joe Hopkins, administrator 2978 

Markus, Glenn, Education and Public Welfare Division, Congressional 

Research Service, the Library of Congress 2782 

Martin, Rose G., executive director, National Ai^sociation for Practical 

Nurse Education and Service, Inc 3096 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Communications — Continued 


Maxwell, Mrs. Wm., president, League of Women Voters of Wyoming,.. 1291 

Memorial Hospital, Inc., Elmer O. Eid, administrator 2987 

Memorial Hospital, M. L. Traylor, administrator 2980 

Menashe, S., Oregon Physicians' Service 2967 

Metaline Falls, Wash., Roberta M. Garrett, R.N., administrator - 2974 

Metcalf, Capt. Paul, chairman. Committee on Discrimination in Pilot 

Employment, Air Line Pilots Association, International 3360 

Meverhoff, Gordon R., M.D., Long Island, N.Y 3452 

Michaelian, Edwin G., county executive, Westchester >ounty, N.Y 1^29 

Michigan State Employees Association, Lawrence Pich6, president 3100 

Mindlin, Dr. Rowland L., director, maternal and child health, Depart- 
ment of Health and Hospitals 2992 

Minshall, Hon. William E., U.S. Representative from Ohio 2994 

Missouri Federation of the Blind, Inc., G. Arthur Stewart 2252 

Mondale, Hon. Walter, U.S. Senator from Minnesota 2766 

Monroe County Coalition for Welfare Justice, Robert A. Carlton, chair- 
man ^^i , 

Montana Department of Public Welfare, Theodore Carkulis ^441 

Montoya, Hon. Joseph M., a U.S. Senator from the State of New Mexico- . 1207 

Moore. Alta E.. director, Wisconsin Department of Employee Trust Funds. 3327 
Morrison-Knudsen Co., Boise, Idaho, Lee E. Knack, director of labor 

relations- - 146o 

Moss, Hon^ Frank 'e?, U.S. Senator from Utah 2771 

Mount Carmel Hospital, John C. Boyer, business manager 297b 

Moxon, Mrs. Robert K., president, League of Women \ oters of South 




Murphy, Ellis R, Director of the Los Angeles County Department of 

Public Social Services a---.---V^-- V 

Murphy, Richard E., Assistant to the General President, Service Employees 

International Union. 


Murray, James J., assistant administrator, fiscal services, Holy Family 

Hospital .---;v-.--.-:-V- hot 

Myers, Robert J., former Chief Actuary, Social Security Administration.- 88U 
National Assembly for Social Policy and Development, Inc.— Forum on 

Social Issues and Policies — - — - — 2941 

National Association for Practical Nurse Education and Service, Inc., 

Rose G. Martin, executive director 3096 

National Association for Retarded Children ... -------- 3255 

National Association for the Advancement of Colored People, Carl U. 

McCraven, national executive board member 2950 

National Association of Blue Shield Plans, James D. Knebel, executive 

vice president i."\L"^i"^'yi~ 

National Association of Coordinators of State Programs for the Mentally 

Retarded, Inc., Charles E. AcufF, president : - - 3dlo 

National Association of Counties, Ralph L. Tabor, director. Federal Affairs. 1229 

National Association of Independent Insurers - - 31U^ 

National Association of Manufacturers ^94b, 666^ 

National Association of Retail Druggists, WiUiam E. Woods, Washington 

representative and associate general counsel ™*'""rf' " 

National Association of Social Workers, Inc., Panhandle-South Plains, lex., 

Frank B. Reyes, president — - — - 

National Committee for Careers in the Medical Laboratory, Educational 

Testing Service, Princeton, N.J -^'WCl'xxf 

National Committee for Careers in the Medical Technology, Dr. Robert W. 

Coon A"/^" " \'/r' ' I "r> 

National Conference of Catholic Bishops, Washington, D.C., Most Rev. 

Joseph L. Bernardin, general secretary ^''^°' "11:!, 

National Council of Senior Citizens, Nelson H. Cruikshank, president 2y52 

National Farmers Union, Tonv T. Dechant, president 2954 

National Federation of Settlements and Neighborhood Centers, Walter 1^. 
Smart, executive director 



Communications — Continued 


National Grange, Washington, D.C., John W. Scott, Master 3441 

National League for Nursing, Council of Home Health Agencies and Com- 
munity Health Services 3309 

National League of Cities and the U.S. Conference of Mayors 2809 

National League of Senior Citizens, Mike Burk, legislative advocate 905 

National Legislative Conference Task Force on Human Resources, Arthur 

L. Buck, State representative 2856 

National Organization for Women, Merrilee Dolan, chairone, Task Force 

on Women in Poverty 3284 

National Union of Hospital and Nursing Home Employees, RWDSU, 

AFL-CIO, Leon J. Davis, president 2987 

New Detroit, Inc., Lynn A. Townsend, chairman, and Lawrence P. Doss, 

president 3232 

New York State Department of Social Services, George K. Wyman, 

commissioner 1662 

New York Women's Bar Association 3308 

Nierman, Ray W., controller. Island Hospital 2975 

Nixon, Allen, president, E. C. Barton & Co 1623 

North Dakota Medical Association, Vernon E. Wagner 3217 

North Dakota Old Age and Survivor Insurance System, and the social 

security contribution fund, Martin N. Gronvold, excutive director 3327 

Nugent, William P., senate chief clerk, senate chamber, Wisconsin Legisla- 
ture 2854 

Ogilvie, Richard B., Governor of Illinois 1086 

O'Hara, Hon. James G., U.S. Representative from Michigan 2794 

Ohio Nurses Association, Dorothy A. Cornelius, R.N., executive director 2965 

Ohio Valley General Hospital Association, F. E. Blair, executive director 2966 

Okanogan-Douglas County Hospital, Howard M. Bamble, administrator.- 2985 

Oregon Physicians' Service, S. Menashe 2967 

Ormsby, Ross R., president. Rubber Manufacturers Association 2968 

Outlook-appraisal of current trends in business and finance 2769 

Overlake Memorial Hospital, A. W. Armstrong, business office manager. _ 2976 
Pangborn, Verne A., director. Department of Health, Section of Hospitals 

and Medical Facilities 3130 

Pearson, Sister Virginia, administrator, St. Helen Hospital 2986 

Pennsylvania Department of Public Welfare, Helene Wohlgemuth 2588 

Pepper, Hon. Claude, U.S. Representative from Florida 2796 

Perkins, Donovan J., D.P.A., president, American College of Nursing Home 

Administrators 2860 

Pharmaceutical Manufacturers Association, Washington, D.C., C. Joseph 

Stetler 3453 

Philips, Gertrude M., administrator, McKay Hospital, Soap Lake, Wash., 

McKay Memorial Hospital 2974 

Physician's Forum, Inc., New York, N.Y., Victor W. Sidel, M.D., chair- 
man 345 1 

Piche, Lawrence, president, Michigan State Employees Association 3100 

Pickens, John K., American Nursing Home Association of the Medicare 

and Medicaid Programs 2528 

Planetarium Neighborhood Council, John Kowal, president 3361 

Pritchard, Clarence M., Central Memorial Hospital, administrator 2982 

Providence Hospital, Sister Louise Label, administrator 2981 

Public Hospital District No. 2, Pend Oreille County, Wash., Roberta M. 

Garrett, R.N 2974 

Puget Sound Hospital, Robert E. Huesers, administrator 2983 

Railsback, Hon. Tom, U.S. Representative from Illinois 2796 

Rathbun, H. Dickinson, manager, First Church of Christ, Scientist, 

Boston, Mass 3446 

Reals, William J., president. College of American Pathologists 2885 

Reeves, Edna M., director, State Agency for Social Security, Alabama 3323 

Reitzer, William G 3235 

Remington, Allen K., administrator. Cascade Valley Hospital 2979 

Reyes, Frank B., president, National Association of Social Workers, Inc., 

Panhandle-South Plains, Tex 3409 

Richardson, Elliot L., Secretary, HEW 1119,2629 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 224^2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Communications — Continued 


Riechman, Rosalie 3383 

Ritchie, Charles L., Jr., president. Board of Council, Episcopal Community 

Services Diocese of Pennsylvania 3321 

Riverton Hospital, Robert A. Hanson, administrator 2987 

Rose, Paul S., chairman. Division of Family Services 2369 

Rosenthal, Hon. Benjamin S., U.S. Representative from New York 2797 

Ross, Austin, administrator, Virginia Mason Hospital 2982 

Ross, Mrs. Sherman, chairman, legislative program committee, American 

Association of University Women 3447 

Rubber Manufacturers Association, Ross R. Ormsby, president 2968 

Saint Margaret's Hospital, Sister Mary Bernadette, administrator 3098 

Sargent, Hon. Francis, Governor of Massachusetts 1010 

Saris, Ruth, president, League of Women Voters of Boston 1274 

Saunders, Stephen C, president, board of trustees. General Hospital of 

Everett 2981 

Schmidt, Wilbur J., secretary, Wisconsin Department of Health and Social 

Services 3463 

Schreck, Fred, chairman of board, Dayton General Hospital 2982 

Scott, John W., Master, National Grange, Washington, D.C 3441 

Seattle General Hospital, Paul S. Bliss, administrator 2979 

Seattle Urban League, Seattle, Wash 3428 

Seham, Martin C, general counsel. Allied Pilots Association 3445 

Seigman, Mrs. Carole, human resources chairman. League of Women 

Voters of Nebraska 1283 

Seligman, Fred, M.D., M.P.H., chairman, Association of Children and 

Youth Project Directors 3288 

Service Employees International Union, Richard E. Murphy, assistant 

to the general president 1 764 

Shapp, Hon. Milton J., Governor of Pennsylvania 2807 

Sidel, Victor W., M.D., chairman. Physician's Forum, New York, N.Y 3451 

Sims, Mrs. Ruth, League of Women Voters of Connecticut 1285 

Simons, Dr. John L., president, American Chiropractic Association 2857 

Smart, Walter L., executive director, National Federation of Settlements 

and Neighborhood Centers 3217 

Smiley, Jon D., administrator, Stevens Memorial Hospital 2986 

Social Welfare Regional Research Institute, Boston College, Martin D. 

Lowenthal, director 331 1 

SoUey, John J., D.D.S., president, American Association of Dental Schools. 2993 
Southern California NAACP, Carl C. McCraven, chairman, Health 

Committee 2950 

South Jersev Chamber of Commerce, S. Nathan Lev, president 2856 

St. EUzabeths Hospital, Dr. John H. Gould, coordinator, M.I.C.-C.& Y. 

programs 3102 

St. Helen Hospital, Sister Virginia Pearson, administrator 2986 

St. John's Hospital, Longview, Wash., Sister Mary Keough, administrator, 2975 

St. Joseph's Hospital, Sister Catherine Mclnnes, administrator 2977 

St. Joseph Hospital, Sister Margaret Hudon, administrator 2984 

St. Luke's General Hospital, John W. Kludt, administrator 2977 

St. Mary's Hospital, Nebraska City, Nebr., Sister M. Clara Heitman, 

administrator 3137 

Stetler, C. Joseph, Pharmaceutical Manufacturers Association, Washing- 
ton, D.C 3453 

Stevens, Hon. Ted, U.S. Senator from Alaska 2772 

Stevens Memorial Hospital, Jon D. Smiley, administrator 2986 

Stewart, G. Arthur, Missouri Federation of the Blind, Inc 2252 

Stokes, Hon. Louis, U.S. Representative from Ohio 2798 

Tabor, Ralph L., director, Federal affairs, National Association of 

Counties 1229 

Tacoma General Hospital, W. L. Huber, executive vice president 2974 

Taylor, Dr. James O., medical director, staff, East Boston Health Center. 3098 


Communications — Continued 


Tennessee Conference on Social Welfare 3227 

Thompson, Rosemary oo ? 

TowTisend Foundation, John Doyle Elliott, secretary 3384 

Townsend, Lynn A., chairman, New Detroit, Inc 3232 

Traylor, M. L., administrator. Memorial Hospital 2980 

Tri-Countv Hospital Association, Charles L. Lampson, administrator 2980 

Tri-State Memorial Hospital, Inc., W. J. Yeats, administrator 2977 

Tucker, Dr. S. A., director, the Doctors Hospital, Seattle, Wash 2975 

United Cerebral Palsy Association, Inc., Elsie D. Helsel, Ph. D., Washing- Page 

ton representative 3329 

United Community Services of Metropolitan Detroit, Richard F. Huegh, 

executive vice president 3375 

United Low Income, Inc., Alice Boynton, consultant 3258 

Valley Memorial Hospital, C. D. Bentley, administrator 2980 

Veneman, Hon. John G., Under Secretary, HEW... 838, 972, 1309 

Virginia Mason Hospital, Austin Ross, administrator 2982 

Wagner, Corydon, Tacoma, Wash 2975 

Wagner, Vernon E., North Dakota Medical Association 3217 

Wallace, Jim 2969 

Walla Walla General Hospital, J. A. Dailey, administrator 2982 

Warren, Janice T., welfare chairman, League of Women Voters of Ohio.-- 1274 
Washington State Hospital Association, John Bigelow, executive vice 

president 2985 

Weder, Wilbur A., MASW 2918 

Weiner, Ernest M., D.P.M., president, American Podiatry Association 3305 

Welfare Council of Metropolitan Chicago, John H. Ballard, executive 

director 3253 

Wheeler, Harry C, administrator. Deaconess Hospital 2976 

Whittet, Jean, director, pubHc policy, YWC A National Board 3384 

Willapa Harbor Hospital, Gerald W. Baker, administrator 2979 

Williams, Hon. Harrison, U.S. Senator from New Jersey 2774 

Winick, Allan J., partner, Arthur Andersen & Co 2863 

Wisconsin Department of Employee Trust Funds, Alta E. Moore, director, . 3327 
Wisconsin Department of Health and Social Services, Wilbur J. Schmidt, 

secretarv 3463 

Wohlgemuth, Helene, Pennsylvania Department of PubHc Welfare 2588 

Woods, William E., Washington representative and associate general 

counsel. National Association of Retail Druggists 3227 

Wyman, George K., commissioner. Department of Social Services, State 

of New York 1662 

Yakima \'alley Memorial Hospital, Max L. Hunt, administrator 2981 

Yeats, W. J., administrator, Tri-State Memorial Hospital, Inc 2977 

Younger, Evelle J., Attorney General, State of California 3159 

YWCA National Board, Jean Whittet, director, public poHcy 3384 

Additional Information 

Material submitted for the record by the Departments of Health, Education, 
and Welfare, and Labor: 

Article entitled "Poverty Increases by 1.2 Million in 1970," from the 

Bureau of Census publication, Consumer Income 202 

Assumptions used in caseload projections 314 

Eligible persons under H.R. 1 compared with projections under H.R. 

16311 (91st Congress) 85 

Federal outlays benefiting the poor 190 

Fraud, report on disposition of public assistance cases involving ques- 
tions of, fiscal year 1970 99 

Indians, summary of relationships of H.R. 1 to — Briefing memorandum, 

HEW 218 

Number of employees required for income maintenance under H.R. 1- _ 290 

Questions submitted for Secretary Hodgson by Senator Ribicoff 125 

Surplus commodity program , issue paper on 277 

Work incentives in H.R. 1 — Comparison of benefits available for 
selected income-tested programs under H.R. 1 and current law — 

tables '2 

Desertion in AFDC families 88 

Work incentives in H.R. 1, note on 109 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 --- Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Additional Information — Continued 

Material submitted for the record by the Departments of Health, Educa- 
tion, and Werare, and Labor— Continued P*^* 

Confidentiality of welfare case file information - - - 838 

Material relative to amendment 559 969ff, 975tf 

Changes in food stamp program 972 

Distribution of payments and coverage in 1977 under amendment 

No. 559 to H.R/l, table 986a 

Discussion of poverty line 98ob 

Views of the Department of Health, Education, and Welfare on the 
testimony of Samuel A. Weems, prosecuting attorney for the 17th 

Judicial "District of the State of Arkansas 1117 

Work programs in Michigan 1309 

HEW policy on work relief programs under pubhc assistance 13U9a 

Income maintenance experiments ^1 

Federal employment of certain State and local employees m the 

administration of programs created byH.R. 1 'r\j" 

HEW status report on implementation of the recently enacted New 

York State work related requirements for welfare recipients II 

Articles, pamphlets, reports, etc.- 

Poverty Increases by 1.2 Million in 1970 ?,'"."", 

Committee on Finance press release announcing hearings on Social 

Security and Welfare ;^---r-- '^^ 

The Future of Social Security— Is It in Conflict With Private Pension 

Plans? by Robert J. Myers, FSA 874 

Where Will the Pending Social Security Amendments Take the Pro- 
gram? by Robert J. Myers °°1 

Welfare Cheating Ring Uncovered _ _ --- 890 

Developments in Dealing With Questions of Recipient Fraud in Fubhc 

Assistance 1951—67 llo7 

Occupational Characteristics of Urban Workers - - 1429 

An Idaho Solution Is Offered in the District of Columbia to a Problem 

on Welfare. 


Essentials of Pubhc Welfare— A Statement of Principles 1684 

The Cost Impact of H.R. 1 on the State of California 18^o 

Welfare: Separating Myth and Fact 1909 

Welfare Maze Traps a Proud Mother ^} J^ 

Incentives for Independence — ---- ^^191 

Eligibility and Payments to Individuals — Part IV of the Handbook of 

T)|»Vvi|rt A ^^i^t fLTiPf* — ____ — — — — — — — — — — — __ — — — oij\j 

Increasing State Fiscal Relief Through Welfare Reform - ^r ' ^^* 

Psychiatric Services and Medical Utilization in a Prepaid Health Plan 

Setting - ----,- 

Testing of Alternatives to AFDC, excerpt from Senate Report 91-1 4cJl, 

report to accompany H.R. 17550 ;^1^^ 

A New Look at the Visiting Nurse r'T'um" 

Psychiatric Services and Medical Utilization in a Prepaid Health Plan 

Setting v;---S-^-''" 

R ecipient Fraud Incidence Study— Conducted by the Fraud Review 
Panel for the State of California : 

Part I: Study and Findings ^J"^ 

Part 2: Recommendations <3l8b 

Financing Health Maintenance, Care and Delivery, NAM position 

paper '^'^^^ 

Federal regulations: „__ 

Safeguarding information .- ^^'^ 

Application, determination of eligibility and furnishing assistance— 

Public assistance programs ^91 

Expiration of community work and training program i<jOD 

Selected tables and charts: ,„ 

Total Federal welfare costs ^" 

Federal involvement in day-care, fiscal year 1971 


Additional Information — Continued 

Selected tables and charts — Continued 

Social security contribution rates, present law, H.R. 17550 as reported Paee 

by the Finance Committee, and H.R. 1 47 

"Williams Charts," updated, current law (1971) benefits potentially 
available to 4-person female-headed families in: 

Phoenix, Ariz 52 

Wilmington, Del 58 

Chicago, 111 54 

New York City 55 

"Williams Charts," updated, H.R. 1 benefits potentially available to 
4-person female-headed families in: 

Phoenix, Ariz 57 

Wilmington, Del 58 

Chicago, 111 59 

New York City 60 

Tables taken from the June 1970 committee print entitled "H.R. 16311, 
the Family Assistance Act of 1970, Revised and Resubmitted to the 
Committee on Finance": 

Current law (1970) benefits potentially available to 4-person 
female-headed families in: 

Phoenix, Ariz 63 

Wilmington, Del ^ 64 

Chicago, 111 65 

New York City 66 

H.R. 16311 benefits potentially available to 4-person female- 
headed families in: 

Phoenix, Ariz 67 

Wilmington, Del 68 

Chicago, 111 69 

New York City 70 

HEW charts, current law (1971) benefits potentially available to 
4-person female-headed families in: 

Phoenix, Ariz 75 

Wilmington, Del 76 

Chicago, 111 77 

New York City 78 

HEW charts, H.R. 1 benefits potentially available to 4-person female- 
headed families in: 

Phoenix, Ariz 80 

Wilmington, Del 81 

Chicago, 111 82 

New York City 83 

Projected eligibles under the family programs in H.R. 1 and H.R. 

16311 (91st Congress), fiscal year 1973 85 

Annual break-even incomes under H.R. 1 and H.R. 16311 86 

Number of children receiving AFDC money payments by status of 

father, 1940 to date 90 

AFDC families by status of father, 1969 91 

AFDC families by whereabouts of father, 1969 91 

AFDC families in which father is absent because of divorce, sepa- 
ration, or desertion, by time father last left home, 1969 92 

Proportion of population receiving welfare under current law and 
proportion of population eligible for benefits under H.R. 1 by State, 

fiscal year 1973 93 

Family benefit schedule HO 

Persons below the poverty level by family status and sex and race 

of head 204 

Negro persons below the poverty level by family status 206 

Persons below the poverty level in 1970, by family status and sex and 

race of head 206 

Selected characteristics of families below the poverty level in 1970. .. 207 
Families and unrelated individuals below the poverty level in 1970, 

by type of residence, region, and race 208 

Weighted average thresholds at the poverty level in 1970 by size of 

family and sex of head, by farm-nonfarm residence 208 

Size of income deficit for families and unrelated individuals below the 

poverty level in 1970, by sex and race of head 209 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 Pages 2759-3464 

Additional Information — Continued 

Selected tables and charts — Continued 

Distribution of poor families and unrelated individuals and aggregate PaK« 

income deficit, 1970, 1969, and 1959 209 

Persons below the near-poverty level in 1970 by family status and sex 

and race of head 210 

Benefit levels and tax rates — Payments and caseloads 229 

Breakdown of 19.4 million FAP-OFP eligibles 238 

Characteristics of persons covered by the $6,500 welfare reform plan. 239 
Estimates of costs and eligible recipients under alternative plans: 

$720 disregard 244 

$360 disregard 244 

$0 disregard - 245 

Employment figures for the Department of Health, Education, and 

Welfare 250 

Comparison of welfare reform costs estimates 250 

Relation of supplements to straight time hourly earnings in 24 indus- 
tries, 1969 v---r-f,-r--- ^^^ 

Total full-time permanent employment. Department of Health, Educa- 
tion, and Welfare, and Social Security Administration, 1962-1972 

(est.) : 289 

Federal costs of welfare program qiR« 

Public assistance caseload charts qok 

Medicaid, work disincentive in HEW charts fZ' 

Contribution of pension fund saving to the economic growth of the 

United States 749 

Employer contributions for OASDI and private pension-deferral 

profit sharing plans '^° 

How the employee-employer maximum annual tax is allocated to old 

age (OASI), disability (D.L), and hospital (H.I.) trusts 767 

Comparison of accumulated employer-employee maximum social 
security taxes (for old age and survivor benefits only) with the 

maximum monthly social security benefit (PI A) obtainable 768 

Accumulated employer-employee maximum social security taxes 

allocated for disability and hospital insurance 768 

Comparison of accumulated maximum OASI taxes with maximum ex- 
pected lifetime OASI benefits '^^ 

Basic allowances, break-even points, and level at which present income 
tax schedule appUes under a proposed negative income tax with a: 

High basic allowance °J^ 

Low basic allowance ^^^ 

AFDC families by status of father, 1969 - o^* 

Number of children receiving AFDC money payments by status of 

father, June of selected years, 1940 to date o24a 

Estimated progress of OASI trust fund and DI trust fund combmed 
under H.R. 1 as passed by House using tax schedule in H.R. 1 and 

alternative tax schedule proposed by Robert J. Myers, 1972-80 8bb 

Number of welfare recipients tmder current law and number of persons 
eligible for benefits under Ribicoff amendment, by State, fiscal year 



Proportion of population receiving welfare under current law and 
proportion of population eligible for benefits under Ribicoff amend- 
ment, by State, fiscal year 1973 ^^ 

Ribicoff amendment No. 559 ^'^ 

Projected potential maintenance payments under Ribicoff amend- 
ment and under current law, fiscal years 1973-77 — "'1 

The food stamp program— monthly co<ipon allotments and purchase 
requirements (effective Jan. 26, 1972), 48 States and District of 
Columbia ^'"^ 

Number of welfare recipients under current law, and number of persons 
eligible for benefits under H.R. 1 and Ribicoff amendment No. 559, 
by State, fiscal year 1973 ^'^ 

Proportion of population receiving welfare under current law ^d pro- 
portion of population eligible for benefits under H.R. 1 and Ribicoff 
amendment No. 559, by State, fiscal year 1973 ^'' 


Additional Information — Continued 

Selected tables and charts — Continued 

Projected recipients under current law, persons eligible for Federal 

payments under H.R. 1, and persons eligible for State supplementary PaK« 

payments only, fiscal years 1973-77 981-982 

Potential fiscal year 1973 costs of assistance provisions: 

Under H.R. 1 983 

Under Ribicoff amendment No. 559 984 

Projected potential maintenance payments under H.R. 1, under current 

law, and Ribicoff amendment No. 559, fiscal years 1973-77 985-986 

Distribution of payments and coverage in 1977 under amendment 

No. 559 to H. r: 1 986a 

Work incentives under alternative welfare reform plans 991 

Fiscal relief under the Ribicoff-Sargent Plan — State spending under 

alternative welfare plans 992 

Cost of alternative plans 993 

Comparison of House bill with $3,000, 50 percent plan, fiscal year 

1973 1007 

Comparison of State expenditure under various welfare plans for fiscal 

1973 1008 

Increased benefits to the States by moving from the House bill to the 

$3,000, 50 percent plan 1009 

Earned income and Federal assistance benefits for families of: 

Two to eight— H.R. 1 1293 

Four and eight under H.R. 1 1294 

Long range average annual costs for social security and medicare pro- 
visions in H.R. 1 1415 

Rise in the cost of living compared with benefit increases approved by 

Congress, December 1950 to January 1971 1416 

Comparison of increases in average wages and cost of living 1418 

Reasons cited by male beneficiaries, aged 62-64, explaining early retire- 
ment --- 1421 

Social security and medicare taxes — present law compared with 

House-passed social security bill (H.R. 1) 1425 

Comparison of social security taxable wage base with median annual 

earnings of "regularly employed workers," 1960-75 1425 

Social security and medicare tax take, present law compared with 

H.R. 1, 1971-77 1426 

Schedule of social security and medicare (HI) tax rates for H.R. 1 and 

modifications thereof 1427 

Schedule of social security and medicare (HI) tax rates for H.R. 1 and 

equivalent alternative 1427 

Employed persons in the United States, by major occupational group 

and color, 1970 annual averages 1430 

Employed persons in the central cities and suburban rings of all 

SMSA's and the 20 largest SMSA's, by major occupation group 

and color, 1970 annual average 1431 

Employed persons in the 20 largest SMSA's, their central cities, and 

their suburban rings, by occupation, 1960 and 1970 1433 

Unemployment rates by occupation for all SMSA's, their central 

cities, and their suburban rings, by occupation and color, 1970 

annual averages 1434 

Total employment by occupation for the 20 largest SMSA's, their 

central cities, and their suburban rings, 1970 annual averages 1436 

Definitional changes in the 20 largest standard metropolitan statistical 

areas, 1960-70 1438 

Number of employee annuitants and survivor annuitants on the 

retirement roll as of June 30, 1970, by monthly rates of annuity. .. 1757 
Welfare payments in the RibicoEf-Javits amendments for a family 

of 4 ■- 181<J 

Total income after social security and income taxes for a family of 4 

under the Ribicoff -J avits amendments 181' 

Aid to families with dependent children; regular caseload in selected 

States, July 1967-July 1971 (July 1967=100) 1941 

Disability assistance caseload index, in selected States, July 1967- 

July 1971 (July 1967-100) 1943 

Agencies providing assistance and services to families under H.R. 1.. 1944 


Volume 1 Pages 1-734 Volume 4 Pages 1643-2247 

Volume 2 Pages 735-1203 Volume 5 Pages 2249-2757 

Volume 3 Pages 1205-1641 Volume 6 - Pages 2759-3464 

Additional Information — Continued 

Selected tables and charts — Continued 

Demands on State revenue increase faster than revenue growth in Page 
times of recession, State of Washington, fiscal years 1968 and 1971. . 1947 
Employability status of public assistance grant recipients, Washington 

State, December 1971 1949 

Estimated effects of H.R. 1 in Washington State, fiscal 1973 1963 

Comparison of adult and family cases and assistance expenditures 
under current law with those under H.R. 1, fiscal 1973, all programs, 

total 1964 

Comparison of estimated adult cases and expenditures under current 
law with those under H.R. 1, fiscal 1973: 

All adult programs, total 1966 

Old age assistance 1967 

Aid to blind 1968 

Comparison of estimated aid to families with dependent children cases 
and expenditures under current law with those under H.R. 1, fiscal 

All family programs, total 1970 

Aid to families with dependent children — Regular 1971 

Aid to families with dependent children — Unemployed father 1972 

Typical example of work incentive under H.R. 1 2094 

Disposition of persons required to report to the New York State 

Employment Service, September 1971 2186 

Persons placed in jobs during September 1971, subsequent dependency 

status, September 1, 1971-December 31, 1971, New York State.. . 2187 
Total expenditures for medical assistance, and welfare expenditures, 

fiscal year 1971 2261 


Appendix A — ^Volume 1 

Geographical variations in costs of living as measured by currently avail- 
able BLS data 327 

Appendix B — ^Volume 1 

Material related to H.R. 1 — Work and training provisions — Prepared by 
the staff of the Committee on Finance 341 

Appendix C — Volume 1 

Material related to H.R. 1— Welfare programs for families — Prepared by 

the staff of the Committee on Finance 417 

Appendix D — ^Volume 1 

"The Effect of Three Income Maintenance Programs on Work Effort," a 
report prepared for the Chamber of Commerce of the United States of 
America — Prepared by Alfred and Dorothy Telia 493 

Appendix E — Volume 1 

Responses of the Department of Labor to questions of Senator Abraham 

Ribicoff 533 

Appendix F — Volume 2 

Views of the Department of Health, Education, and Welfare on the testi- 
mony of Samuel A. Weems, prosecuting attorney for the 17th Judicial 
District of Arkansas 1117 


Appendix G — Volume 4 

Income Maintenance Experiments — Material requested by Senator Fage 
Abraham Ribicoff on January 28, 1972, during hearings on H.R. 1 G-1 

Appendix H — Volume 4 

Federal Employment of Certain State and Local Employees in the Admin- 
istration of Programs Created by H.R. 1 — Proposed amendment 
reflecting the views of the Department of Health, Education, and 
Welfare and the U.S. Civil Service Commission H- 1 

Appendix I — Volume 4 

Department of Health, Education, and Welfare, status report on imple- 
mentation of receatly eaacted New York State work related requirements 
for welfare recipients I-l 

Communications Received by the Committee Expressing 

an Interest in H.R. 1, the Social Security 

Amendments of 1971 


Testimony by Hon. Frank Chtjrch, a U.S. Senator From the State of Idaho 

Mr. Chairman, thank you for the opportunity to testify here this morning on 
H.R. 1, a bill which may be the most important domestic legislation that the 
Senate will consider during this session. 

As Chairman of the Senate Committee on Aging, I shall direct my remarks to 
the sections in the bill which are of vital concern to the Nation's elderly. 

Several provisions in this measure, I am pleased to say, are either identical or 
similar to proposals I have advanced, such as : 

Major increases in minimum monthly henefits for persons with long periods 
of covered employment ; 

Cost-of-living adjustments to protect the elderly from inflation ; 
Full benefits for widows, instead of only 82l^ percent as under present 

Liberalization of the retirement test ; 
An age-62 computation point for men ; 

Protection against retroactive denial of payments under Medicare ; 
Coverage of the disabled under Medicare ; and 

Replacement of old age assistance with a new income supplement program 
to be administered by the Social Security Administration. 
These welcome changes provide a solid foundation for making many crucial, 
reforms for strengthening and improving our Social Security, Medicare and in- 
come supplement programs for the elderly. However, more comprehensive and far- 
reaching action is needed now — not two or three years from now — if the aged are 
to escape from the economic treadmill which keeps them running but going 

Make no mistake about it, the elderly are slipping further behind on a number 
of key fronts in terms of achieving economic security. 

Today more than 4.7 million persons 65 and older fall below the poverty line, 
nearly 100,000 more than in 1968. Older Americans are now more than twice as 
likely to be poor as younger Americans. One out of every four persons 65 and 
older — in contrast to one in nine for younger individuals — lives in poverty. 

If the marginally poor are also included, their impoverished nimibers swell 
to more than 6.5 million. The net Impact of these figures is that one out of every 
three aged i>ersons is poor or near poor. 

And by povertv, I mean a "rock bottom" standard. According to Census defini- 
tions, it' is $1,852 for a single person and $2,328 for an elderly couple. The near 
poor threshold is 125 percent of these figures : $2,315 for individuals and $2,910 
for couples. 

Inadequate retirement income also takes its toll in many other forms : sub- 
standard housing, isolation, loneliness, malnutrition, and poorer health. 

For these reasons, it is absolutely essential that the Senate make important 
finishing touches to perfect the House-passed Social Security-Welfare Reform 


Heading the list in my judgment is the need for a larger benefit increase for 
Social Security recipients. The House-passed bill proposes a 5 percent across^ 
the-board raise to take effect this June. 

This proposal is certainly welcome, but it simply does not go far enough to 
deal effectively with the retirement income crisis which now affects millions 
of older Americans and threatens to engulf many more. To put it bluntly adding 
a few dollars every one or two years is not going to solve this mounting prob- 

Moreover, the rise in the cost-of-living since the last Social Security increase— 
which was effective in January 1971— is almost certain to outstrip the proposed 
5 percent raise in H.R. 1. 

With poverty on the rise for the elderly, a more substantial benefit increase 
is urgently needed, and not in June but to take effect January 1. 



For these reasons, I am proposing — as I have in my omnibus Social Security- 
Welfare Reform proposal. S. 1645 — that there should be an across-the-board 
increase which would average about 12 percent for all Social Security recipients. 
However, this rise would be weighted to provide for larger percentage increases 
for persons who need them the most, individuals with inadequate benefits because 
of low lifetime earnings. 

For example, persons with average monthly lifetime earnings between $150 
and $200 would be entitled to benefit increases averaging about 21 percent. 
And individuals with creditable earnings ranging from $200 to $300 would 
receive approximately an 18 percent raise. 

A principal advantage of this approach is that it could lift large numbers 
of older Americans out of poverty without the necessity of resorting to welfare. 
Additionally, it recognizes this very basic fact : persons who now receive low 
Social Security benefits are less likely to have other resources than higher 
income beneficiaries. 

And in terms of dollars and cents, this proposal would provide nearly $130 
more per year than allowed under the 5 percent benefit increase in H.R. 1. 


One of the major innovations in H.R. 1 is the replacement of the adult cate- 
gorical assistance programs — aid to the aged, blind and disabled — with a new 
Federal program to be administered by the Social Security Administration. 

This is certainly a step in the right direction. But the fundamental weakness 
is that the income standard would be too low for the elderly. The proposed 
$1,560 income level for fiscal 1973 for a single person is still about $300 below 
the 1971 poverty threshold. By the time 1973 rolls aroimd, it is likely to be 
several hundred dollars below the poverty index. 

For these reasons, I urge that the income standards be raised to a level to 
wipe out poverty once and for all for older Americans— to $160 a month for a 
single aged person and $200 for a couple. Moreover, I propose that these stand- 
ards be adjusted annually with rises in the cost-of-living to make them inflation- 
ary proof for these low-income persons. 

Certainly the wealthiest Nation in the world can make that commitment to 
a generation who worked so hard for the high standard of living we now enjoy. 


Important as a soundly conceived income strategy is, we must not overlook 
the need for major Improvements in Medicare. Today the rising costs of medical 
care and proposed cutbacks in coverage pose a very serious drain upon the 
limited incomes of the elderly. Medicare now covers only about 43 percent of 
their expenditures because gaps in coverage still exist. 

One of the major gaps is coverage of out-of -hospital prescription drugs. This 
constitutes the largest health care cost which they must meet almost entirely 
from their own resources. 

Today prescription expenditures for persons 65 and older average about $84 
per year, nearly three times as high as for younger individuals. For aged per- 
.sons with severe chronic conditions — about 15 percent of all older Americansi — 
drug costs are six times as high as for younger persons. 

Several renowned authorities — including the 1971 Social Security Advisory 
Council, the HEW Task Force on Prescription Drugs, and the White House Con- 
ference on Aging — have all gone on record in supi)ort of this badly needed cover- 
age. And now, the Congress shonld go on record unequivocally to extend this 
long overdue protection for the aged. 

Another major expenditure for the elderly is the $5.60 monthly premium charge 
for Part B of Medicare. In July, this will rise to $5.80. On an annual basis, this 
will mean that an elderly couple will pay nearly $140 for doctor^s insurance. 
For persons living cm fixed incomes, this can represent a very substantial 

Again, I recommend that this charge be eliminated for the aged. Instead, the 
Part B and Part A Ho.spital In.surance programs would be combined and financed 
by one-third contributions from employees, one-third from employers, and one- 
third from general revenues. 

This proposal is patterned after the recommendation in the 1971 Social Se- 
curiay Advisory Coimcil rejwrt. And for the typical retired worker, this change 
alone would be almost the equivalent of a 5 percent increase in benefits. 



My earlier remarks have focused basically on positive action that the Senate 
can take to improve H.R. 1. Now I would like to turn to some undesirable pro- 
visions in H.R. 1 which, I believe, can limit the quality and scope of care for 
the aged. 

Since other Members of the Committee on Aging will talk at greater length on 
many of measures, I shall only concentrate on two of these proposals. 

i^irst, H.R. 1 establishes a new $7.50 copayment charge for each day in the 
hospital from the 31st to the 60th day. ITiis, of course, would be in addition to the 
$GS deductible which the elderly would be required to pay out of their own pocket 
for ho.spitalization. 

For an individual requiring 60 days in the hospital, this charge alone could 
add $225 to his bill. The irony of it all is that this provision is likely to hurt 
the very person that Medicare is supposed to help the most — the individual with 
a large health care bill because of a prolonged period in the hospital. 

And remember this: About 9 out of every 10 persons who reacli age 65 will 
require at least 1 stay in the hospital during their remaining years. About two 
out of every three will require at least two hospital stays. 

Additionally, H.R. 1 would raise the deductible for Part B from $50 to $60, 
once again driving up the health care costs for the elderly. 

These measures, I believe, should be deleted or substantially altered by the 


At the recent White House Conference on Aging, 3,400 delegates from every 
State in the Union made a ringing call for action on several fronts. 

Soon the Senate will consider H.R. 1, a measure that can be landmark legisla- 
tion in providing genuine economic security for the aged. 

Again, I reaflSrm my strong support for early and favorable action on this 
bill, along the lines that I have outlined in my statement. 

We owe this pledge to moi-e than 20 million Americans who are now Go and 
older. And we owe this pledge to the millions more nearing this age. 

Statement of Hon. Jacob K. Javits, a U.S. Senator from the 
State of New York 

I urge committee acceptance of Amendment No. 945 to HR 1. This amendment 
is identical to S-961, a bill I had introduced on Feburary 25, 1971, to amend the 
Social Security Act with respect to exclusion of certain income received by artists 
and composers from the sale after age 65 of works created prior to their reaching 
age 65. 

The Social Security Act now provides that individuals 65 years and over who 
are receiving royalty income attributable to copyrights or patents obtained be- 
fore age 65 may exclude such income from their gross income in determining their 
.social security entitlement. 

Amendment No. 945 extends the provision to artists and composers who sell 
uncopyrighted works, thereby placing them on an equal basis with artists and 
composers receiving royalty income from copyrights or patented works. The 
burden of proof remains upon the individual artist or composer to establish to 
the satisfaction of the Secretary of Health, Education, and Welfare when the 
art work or composition was created and when sold. 

Although no precise estimates are available as to the number of individuals 
who would become eligible under this amendment, it should be noted that in or- 
der to be eligible, an individual author or artist must have created the work 
prior to age 65, and that his outside income does not exceed $1,680, the figure at 
which social security benefits are reduced. Estimates of the numbers of artists 
taking advantage of the present royalty income exclusion range in the low hun- 

Thus, we are talking about a relatively few individuals out of almost 26.2 million 
social security recipients. 

This propcsal should be relatively easy to administer. By placing the burden of 
proof upon the individual we have followed the pattern of the 1965 amendments 
to the Social Security Act. The individual is thus required to prove his claimed 

-pt. 6- 


exclusion to the Secretary's satisfaction consistent with existing law. Finally, the 
Secretary already has general rulemaking power under the law with which to 
establish an orderly procedure for individuals claiming the right to exclude in- 
come under this amendment. 

I iirge that the Committee on Finance in its consideration of HR 1 favorably 
consider this proposal to correct an inequity in the law which penalizes older 
artists and composers at a time when they are living upon modest fixed incomes 
and dependent upon social security benefits. 

U.S. Senate, 
Washington, B.C., February 2, 1972. 
Hon. Russell Long, 
Chairman, Senate Finance Committee, 
Senate Office Building, Washington, B.C. 

Dear Mr. Chairman : Last year I introduced S. 918, which was designed to 
provide a minimum income with a floor no lower than that set for the poverty 
program for those on Social Security. 

My schedule will preclude my appearing personally before the Committee dur- 
ing your hearings but I would appreciate having the attached statement appear 
as part of the hearings. 
With best wishes. 

Thomas J. McIntyre, 

U.S. Senator. 

Mr. McIntyre. Mr. Chairman : Last year I introduced a bill to amend title II 
of the Social Security Act to provide supplementary payments to certain low- 
income recipients of monthly insurance benefits covered under the Act. 

I urge the Committee's consideration of this proposal as it deals closely with 
questions of welfare and social security. 

In view of the sharp rising costs of the past few years and the still anticipated 
increased consumer costs, our senior citizens must live in constant terror of 
poverty. Even today 25 per cent of Americans 65 or over live on a bare poverty 
level income or below. 

Unfortunately, there are too many who are naive enough to believe that social 
security benefits and private pension plans adequately cover our senior citizens. 
This is just not so. Ironically, retired people are forced to exist on less than 20% 
of their preretirement income at a time when their needs are, in some cases, 
greater than before their retirement. Special care, housing, diets, inaccessible 
transportation, and other problems peculiar to the elderly are not cheap. 

I would like to cite the following statistics received for the Department of 
Health. Education, and Welfare, based on the 1970 census, to stress the mounting 
degree of this problem. 

First, every tenth American is 65 years of age or older. The older iwpulation 
(aged 65 and over) grew faster than the remaining population since the 1960 
cen.sus count (21.1% vs. 12.5%). 

Second, about 4.7 million older persons or almost a quarter lived in households 
where the total income fell below the poverty threshold. 

My purpose in introducing this legislation is simple and clear : it is to assure 
that no one on social .security will be forced to live on an income which is less 
than what is considered to be the minimum above poverty : namely $1,800 a year 
for an individual, $2,400 a year for two persons and $3,000 a year for three or 
more persons. 

My bill has the additional feature of providing an automatic adjustment in this 
minimum benefit to reflect rises in the cost of living as determined by the De- 
partment of Labor ; the official cost-of-living figures for the Federal Government. 

I believe that the best approach — at least for the present — to guaranteeing 
our senior citizens a minimum income is through social security. Social security 
benefits remain the major source of income for most retirees. The social .security 
system has proven to be a fast and effective way to deliver income assistance at 
retirement. In supiwrt of the social security approach to income maintenance, 
Nelson Cruiskshank. president of the National Council on Senior Citizens, Inc., 
in testimony before Senator Williams' subcommittee said : 


"Of all persons C5 or older, nine in ten now receive, or are eligible to receive, 
Social Security benefits. This fact, in combination with the urgent need for action 
documented by the findings above, clearly indicates that the fastest and most 
direct way of improving the income situation of the total aged population is 
through ail increase in the benefits of the Social Security system." 

My choice of the social security system as tlie means for providing immediate 
help for senior citizens is not meant to preclude careful consideration of alterna- 
tive measures for income guarantee for our aged ; for example, proposals for a 
negative income tax or a guaranteed annual income. But I feel strongly that the 
severity of the situation facing our elderly today demands immediate action. We 
cannot afford to wait until alternate approaches have been tested. 

I do not see how in good conscience we can ignore this group of aged poor any 
longer. To me, it is unthinkable that some of our aged citizens must get along on 
the current social security minimum of $64 a month when the poverty line for a 
single person is over $150 a month. 

This is why I feel so strongly about the importance of my proposal to provide a 
minimum income through social security of at least $150 for a single person and 
$225 for a couple. Nearly every responsible expert agrees that this income is on 
the brink of poverty in the United States. I do not see how we call in all honesty 
say that $1,800 is the basic minimum for the general population and then deny 
this amount to our senior citizens who have contributed so much to the wealth of 
our country. . 

I realize that it will be said that many senior citizens have outside sources of 
retirement income which would preclude the necessity of a $1,800 or $2,700 a year 
minimum. My bill would take this condition into account. Without causing any- 
one to suffer a reduction in payments, my bill would provide that the minimum 
payments be payable only in the absence of outside income or as a supplement to 
this income wherever it is less than the income considered at the poverty thresh- 
old. In this way, we will be able to reach the thousands of senior citizens who, 
because they have worked in low-paid or seasonal jobs, are forced to live on in- 
comes below $150 a month. I think all would agree that this is woefully inade- 
quate. The only way of providing them relief through social security is by assur- 
ing them a minimum benefit level. 

I would like to emphasize that my proposal for increasing the minimum income 
of those receiving social security benefits has considerable acceptance among 
senior citizen groups and various task forces which have studied the problem. 
The President's Task Force on the Aging reported as its first recommendation 
raising the incomes of all older Americans above the poverty line. William C. 
Fitch, the Executive Director of the National Council on Aging, in his testimony 
before Senator William's subcommittee, stated that raising the minimum stand- 
ard of benefits for the elderly under social security should be the first step taken 
toward meeting the economic needs of the elderly. His recommendation was en- 
dorsed by 400 repre-sentatives of public and voluntary agencies who were called 
together by NCOA for the purpose of establishing priorities for the 1970's. 

I know that this proposal will be costly to finance, and I realize that we have a 
responsibility for insuring the cost of these additional benefits be bonie in the 
most equitable and fair way. Recently, there has been a great deal of discussion 
about the possibility of financing any increases in minimum payments through 
the general revenues. Most notably, the President's Task Force on Aging, in its 
report "Toward a Brighter Future for the Elderly," suggested that the Federal 
Government bear 100 percent of the cost of bringing the incomes of the elderly up 
to the poverty line and that these benefits be distributed through social security. 

I think there are a number of apparent advantages to this method of financing. 
First of all, it would eliminate the necessity of asking those who have invested a 
great deal in social security to finance the payments of those who have contributed 
very little. Second, by restricting use of general revenues to only the financing of 
the minimum payments differential, we would know the limits of our costs and we 
would not run the risk of completely open-ended appropriations for social security. 

But I know that many of my colleagues would suggest alternate methods of 
financing, and I do not want to foreclose discussion of these alternatives. For 
instance, I believe it is possible to finance additional payments in an equitable 
fashion by increasing the wage base. The Senate Finance Committee recom- 
mended to us a raise in the w-age base from $7,800 to $0,000. I believe the base 
could be further extended to absorb the cost of providing a minimum income 
level of $1,800 to all those on social security. 


I must admit, very frankly, that I have considered other approaches to reach- 
ing these people but have found them to be inadequate. One alternative I con- 
sidered was a proposal for removing the income limitation which would have 
the effect of allowing senior citizens to earn outside income without suffering 
any loss in their social security benefits. But, this would have the effect of 
granting benefits only to the working elderly, leaving less funds for the non- 
working elderly, whose incomes are lower. 

Let us not forget that old age is not a far-out issue. It is a here-and-now issue 
and the solution of the problems of the elderly rests heavily upon our shoulders. 
Old age is as sure as tomorrow's sunrise and the only way to escape old age 
and its perplexities is to die young — and who of us would choose this escape? 

Mr. Chairman, I appreciate the committee's consideration of my views. I sin- 
cerely hope that in the deliberations on HR 1 and related propo.sals that the Com- 
mittee give consideration to my bill, S. 918, and the principle it sets forth of 
providing a minimum income for our Senior Citizens with a floor at the poverty 

Testimony Submitted by Hox. Walter F. Mondale, a U.S. Senator From 
THE State of Minnesota 

elimination of the supplementary medical insurance (part b) premium 

Mr. Chairman, I would like you and each of the members of this distinguished 
committee to know how much I appreciate this opportunity to testify on the sub- 
ject of the Medicare Part B pi-emium. The whole subject of Medicare and Social 
Security is enormously important, and it is a privilege to participate in the work 
which the Senate Finance Committee is doing in this area. 

Mr. Chairman, last week on February 4, I introduced for myself and ten other 
Senators (several more co-sponsors have joined us since the bill was introduced) 
a bill to eliminate the Medicare Part B premium. This premium is now paid by 
more than 19 million of our elderly citizens. Ninety-six percent of all those who 
are eligible for Medicare hospitalization also pay the premium for Supplementary 
Medical Insurance. 

In my home state of Minnesota. 405,000 elderly citizens were enrolled in this 
I)rogram in 1970. They pay about $27.2 million per year in premiums. The 
premium charges, therefore, were more than 4.6% of total security benefits paid 
in ^Minnesota during 1970. 

Eliminating the Part B premium will be the equivalent of almost a o% raise 
in the average social security benefit. This will be true in Minnesota, and it will 
be true in the rest of the country. And the premium payments which the elderly 
snve will be immediately available to them for their use in meeting other urgent 

Mr. Chairman, the rapid increase in the cost of the Part B premium is a gi'aphic 
example of the effects of inflation on the elderly. Since 1967, the premium has 
gone from .$.3.00 per individual per month to $5.60 per month per individual. In 
.Tuly of 1972 it is scheduled to move up to $5.80. And if nothing is done about it, 
the i)remium will continue to rise. 

It is true that H.R. 1 would limit the rise to one proportional with benefit in- 
creases. But if the premium is not eliminated altogether, month by month our 
elderly will be forced to pick up a heavy share of rapidly rising medical costs. 

$5.60 a month may not seem like much to most Americans. But to many of the 
elderly it is a high and cruel monthly charge. For many of them, it means the 
difference between being able to buy a new pair of shoes or going another year 
or tv\ o with the old ones. 

One of my constituents has recently written to me that she has not had a new 
pair of shoes in ten years or a new dress in four. It is a national disgrace that 
we ask old people who are barely able to clothe and feed themselves adequately 
to pay almost .$6 a month from their meager incomes for this Supplementary 
Medical Insurance. 

The key point is that the elimination of the Part B premium is the equivalent 
of almost a 5% in social .security benefits. I am in favor of raising social 
security benefits, not only by eliminating this premium, but by voting a larger 
benefit increase than is proposed in H.R. 1. But the elimination of the premium 
will be an important step in the right direction. 


The elimination of the premium is only a step in easing the medical burdens 
of the aging. We should not think that its elimination would lift the entire bur- 
den of medical expenses from their shoulders. Supplementary Medical Insurance 
still will include a heavy deductible charge. 

Medical expenses which are not covered by SMI because of its deductibles, cost 
the elderly more than $1 billion per year. And these charges will continue to 
fall on the elderly even when the premium is eliminated. In fact, H.R. 1 calls for 
an increase in the deductible, which is now $50, to $60, and it still includes a pro- 
vision for a 20% co-insurance feature. Until 1976, the increase in the deductible 
proposed in H.R. 1 actually will out weigh the advantage to the elderly of the 
limitation on the increase in the premium also proposed in H.R. 1. 

I recognize that the committee is very concerned — as we all are — with the 
rapid increase in medicare costs. Some people may argue that removing the 
premiums will lead to a wasteful increase in the use of physician services by the 
elderly. I think removing the premium might in fact ease any tendency which 
exists to "over use" Part B services. Now the fact that the elderly have already 
in a sense paid for services through the premium may encourage some of them to 
use services they do not need. Of course, the deductible and co-insurance fea- 
tures discourage this, but nevertheless the fact that the premium is paid may 
push people to unnecessarily try to get something for their payments. 

This is not to say that I support the deductibles. I think deductibles should be 
eliminated also, but at the very least we must eliminate the premium. 

Mr. Chairman, I believe that my proposal for eliminating the Part B premium 
is important because it will be the equivalent of about a 5% benefit increase for 
most social security recipients. But it is also vitally important because it main- 
tains a provision for general revenue financing. 

Many people have asked me how I intend to finance the elimination of the 
premium. At present, as you know, the elderly pay 50% of the costs of supple- 
mentary medical insurance through the premium. The other 50% is paid from 
general revenues. My bill shifts the entire costs of the supplementary medical 
insurance program to general revenues. This is a very important point and I want 
to discuss it at length. 

The elderly beneficiaries of supplementary medical insurance benefits have 
by-and-large not paid in contributions adequate to cover this insurance. This is 
an insurance provision which was added after most of them had completed their 
payroll tax payments. We want them to have adequate medical insurance but 
it is unfair to ask salaried workers alone to finance these benefits which are 
also the responsibility of the rest of us. Congress recognized this in 1965 when 
it provided for a general revenue contribution to finance one-half of the cost 
of SMI. My bill would continue this policy. 

Moreover, if the full cost of SMI is shifted to general revenues, this will 
bring the financing of the program into roughly the relationship which was 
recommended by the 1971 Advisory Council on Social Security. 

Hospital insurance plus SMI cost approximately $7.47 billion in 1970-71. If 
the $2.03 billion cost of SMI had been borne entirely by general revenue, financing 
would be on the one-third general revenues, one-third employer, one-third em- 
ployee basis recommended by the Advisory Council. 

I was pleased by the President's announcement in his State of the Union 
Message that he would support the elimination of the Part B premium. However, 
I was disappointed to see on page 147 of his 1973 Budget that he still intends 
to shift the cost of eliminating the premium to the payroll tax. The President 
had proposed this regressive step last year, but I had hoped he would change 
his mind. Instead, I gather that his aim is not only to shift the cost of the 
premiums to the payroll tax, but to eliminate the present general revenue 
contribution as well. This would mean an additional charge of more than .$2.5 
billion on the payroll tax this year. It flies in the face of past decisions of this 
Committee and the recommendations of the Advisory Council. 

Mr. Chairman, in my opinion, it would be grossly unfair to shift the cost 
of eliminating the Part B premium to the payroll tax. Our elderly citizens do 
not want to burden their working children unfairly by shifting the premium 
burden in this way. 

The National Council of Senior Citizens has said that paying for the elimina- 
tion of the Part B premium "through additional taxes borne by younger memliers 
of . . . families who are still working" ... is "completely unacceptable to the 
members of the National Council of Senior Citizens." 


Mr. Chairman, shifting the burden of the Part B premium to the payroll 
tax is a bacliward step anyway it is done. If the cost of eliminating the premium 
were shifted to the payroll tax by increasing the tax rate, it would require 
a very steep rise in that rate. Estimates are that financing elimination of the 
Part B premium in this way would add .25 to .3% to both the employees and 
the employers tax. The 1972 tax would jump from an already high 5.2% to 
about 5.5%. In 1973, the rates would be 5.95% for both employees and employers. 

It seems, however, that President Nixon now is planning to increase the payroll 
tax earnings base as a means of financing the elimination of the premiums. This 
is fairer than increasing the tax rate but it still jueans that salaried workers 
rather than those with other forms of income — and these are our wealthy 
citizens — would be carrying the load. 

Everyone knows that the payroll tax, unlike the income tax and the corporation 
tax, is regressive, falling particularly heavily on salary working people. 

Capital gains, interest payments and other income sources which salaried 
working people rarely enjoy, are not touched by the payroll tax. We need to 
eliminate the Part B premium. We need to improve the situation of our elderly 
in many other ways also. Prescription drugs should be covered by medicare as the 
1971 Advisory Council on Social Security recommended. Medicare deductibles 
should be reduced and eliminated. But we should not try to finance all or even 
most of these improvements by taxing only the American working man or woman 
through the payroll tax. This could generate a dangerous backlash. 

So fax*. Mr. Chairman, we always have had tlie support of working men when 
we wished to increase social security benefits. But increases in the payroll tax 
have brought increasing protests from salaried workers who are being squeezed 
by the rapid rise of these taxes. The danger is that we will begin to have the 
same sort of reactions to social security benefit increases that we have had 
recently in the area of education. The payroll tax has many of the regressive 
features of the property tax and we should remember this. 

The Wall Street Journal has joined many others recently in recognizing the 
alarming trend in our tax policy. Progressive taxes are being reduced while 
payroll taxes are increasing. 

Mr. Chairman, I would like to insert in the Record a January 31 article from 
the Wall Street Journal on this point. I would also like to insert an editorial 
from the Washington Post dated January 29. These articles underscore the 
urgency of reexamining the role of the payroll tax. 

Last October, I introduced with Senator Muskie a bill aimed at giving the 
payroll tax a degree of progressivity similar to the income tax. This proposal 
to cover the elimination of the Part B premium from general revenues is related 
to that bill. We must ask ourselves whether it is fair or even possible to keep 
shifting our tax burden onto regressive taxes which are not shared equitably by 
all Americans. 

In closing, Mr. Chairman, I want to indicate that the elimination of the Part 
B premium is not the only change which I recommend in the social security 
legislation now being considered by this committee. I think several other changes 
should also be made. 

I mentioned two of them during the course of my remarks. 

I think that the 5% across-the-board benefits increase proposed in H.R. 1 is 
too small. It will hardly allow beneficiaries to keep up with inflation. It will do 
little to bring benefits up to a decent level. 

In the medicare area I continue to support Senator Montoya who has long 
taken the lead in arguing that prescription drugs should be included in the 
medicare program. 

I note also that H.R. 1 provides only that 6 years instead of the present 5 
years may he dropped out of the calcxilation which is used to arrive at the com- 
putation base for social security benefits. 

I introduced a bill last March to use the 10 highest years in the computation 
of benefits. It is clearly necessary to move in this direction. As the system works 
now. the period used for computation gets longer unless Congress takes specific 
action. This means that too many lower wage years are used in calculating 

Workers who retire early under other pension plans, or who are forced out of 
the work force by unemployment are unfairly discriminated against. 


If the ten highest years formula is not adopted, a similar formula which will 
prevent the computation base from lengthening should certainly be incorporated 
into the bill. 

Last year, I also introduced a bill to increase the earnings limitation from the 
present $1,680 to S2.400. H.R. 1 moves a part of the way in this direction, to 
$2,000. I think we should move the rest of the way. 

Mr. Chairman, I hope that the committee will adopt the suggestion that I have 
offered to eliminate the Part B premium and to finance this change from general 
revenues. I hope also that the other proposals which I have mentioned can be 

I thank you very much for allowing me to testify. 

[From the Wall Street Journal, Jan. 31, 1972] 

The Outlook — Appraisal of Current Trends in Business and Finance 

(By Richard F. Janssen) 

On the Washington economic policy front, the waning days of January are 
almost as hot as was the weekend of last Aug. 15 — only after seasonal adjustment, 
to be sure. Unlike the tense time summer when suddenly the unthinkables of 
controls and dollar devaluation became reality, the period in which the budget and 
economic reports are bunched (along with rampant rumors, last-minute revisions, 
inces.sant press briefings and instant hearings on Capitol Hill ) constitutes a quite 
predictable crisis. 

Predictably, too, the attention centers on the government's siJending plans and 
economic forecasts. Especially this time, with no new revenue-raising requests 
to make news, there's been little said about the tax half of fiscal policy. 

Still, a close look at the new budget does offer insights into taxes, not the least 
of which is the betw^een-the-lines implication that the subject won't stay out of 
the limelight long. 

It is "remarkable as it is unremarked," Director George P. Shultz of the Office 
of Management and Budget says, the way the income tax load has been lightened 
lately. In the fiscal year starting next July 1. Mr. Shultz notes, "the American 
people will pay $22 billion less in individual income taxes than they would have 
been required to pay under the tax rates, bases, and structure prevailing at the 
time the President took office." 

However cold the comfort may seem when we start matching our W-2 Form 
and our Form 1040 sometime between now and mid-April, this table abbreviated 
from the budget does show a striking lightening of the load during the last 
decade for typical married couples with two children : 

Annual wage income Tax 1962 Tax 1969 Tax 1971 Tax 1972 





These cuts, Mr. Shultz says, amount to "a way of returning power to the 
people in the most fundamental sense." He calls them "revenue sharing with 
the basic unit of government, the individual and the family." Thanks also to 
the unexpectedly sluggish economy in the last couple of years, the Treasury 
expects to collect only $86.5 billion in personal income tax in the current 1972 
liscal year ending next June 30, or $270 million less than the year before and 
about $4 billion less than the record $90.4 billion of fiscal 1970. 

Xor does the government have hope that the yield will swell enough in coming 
years to cover even a conservative estimate of future outlays. By fiscal 1976, 
Mr. Shultz glimpses only a $5 billion budget surplus, so thin a crack of light as 
these things go that it could disappear overnight. By fiscal 1977, he can see 
alnisot .$25 billion of prospective daylight, but this is due "almost entirely" to 
a scheduled — and postponable — 1976 increases in Social Security tax rates. 

This points up a significant trend : The individual income tax isn't nearly the 
budgetai'y mainstay it once was. Instead, less-noted increases in Social Security 


















and other employment-type taxes have been made these taxes increasingly im- 
portant. The table below, based on original budget documents, shows how many 
cents of each fiscal year's budget dollar were expected from the main revenue 
sources : 

Source 1964 1970 1971 1972 1973 

Personal Income tax 

Corporation income tax. 

Employment tax 

Excise taxes 


Other , 





























The spending bind which is related to the relatively waning role of the income 
tax is a very good thing, some of Mr. Nixon's advisers argue. The sheer absence 
of a lot of budget leeway ahead, one says, is a "philosophic cutting edge" that 
should help limit the size and role of the federal government. It is true, agrees a 
non-political Treasury aide, that the government tends to increase spending ac- 
cordingly whenever some extra revenue looms ahead. 

More than accordingly, the record shows. From $111.3 billion in fiscal 1963, 
spending has grown to President Nixon's projected $246.3 billion for fiscal 1973. 
And in each of those 11 years (except fiscal 1969 when Mr. Nixon and Lyndon 
Johnson could share honors for the slight offset of a $3.9 billion surplus) spend- 
ing exceeded revenues — by a wide enough margin to add up to a deficit of about 
$140 billion. 

So it isn't merely rhetoric in the budget which warns that unless spending in- 
creases are sliced to "a small fraction" of their past trends, "the only alternatives 
are higher taxes or higher prices." 

Because Washington rarely makes such clear-cut choices, it is probably prudent 
to count on having some of all three. 

After election year pressures that are likely to swell spending and the deficit 
even beyond the' President's projections, advises private New York economist 
Alan Greenspan, a tax-increase bill of some sort is "seemingly inevitable in 1973." 
That does raise a clear-cut question, though : What kind of tax? 
Clearly, the Nixon administration is anxious to try transplanting EuroiJe's 
"value-added tax" to the United States. It is based on the difference between 
each business' purchases and sales, and proponents assert such advantages for 
the VAT as rebating on exports and encouraging investment over consumer spend- 
ing. It's often described as a "national sales tax" ultimately borne by the con- 
sumer, but administration men say they can avoid it being "regresssive" through 
special income tax rebates to lower-income consumers. 

At least from a professional standpoint, though, there's still a lot of support 
among Democratic economists for what former Nixon budget aide Maurice Mann 
calls the "castrated" income tax system. "Despite the enormous erosion, con- 
tends tax expert Joseph Pechman of the Brookings Institution, "the income tax 
is. on balance, progressive," and he favors loophole-closing reforms or rate in- 
creases over trying an entirely new tax. 

The choices aren't pleasant ones. But if the politicians face up to them early 
enough, the next fiscal crisis may at least be the prescheduled variety. 

[From the Washington Post, Jan. 29, 1972] 

Power to Which People? 

The President describes the recent income-tax cuts, in his budget message, as 
"the return of power to i:»eople." Money is power — "economic power, real i>ower" — 
and Mr. Nixon reasons that a reduction in the income-tax rates shifts more of it 
to the individual citizen. He believes, further, that private citizens "can use that 
money more productively for their own needs than government can use it for 
them." „^ 

A highly significant shift is overtaking the federal tax system. The proportion 
of the load carried by the income tax is declining. Much more is now raised by 
payroll taxes. This shift has been under way for a long time, under both parties, 
but it has been sharplv accelerated during the present administration. President 


Nixon cuts income taxes, and takes credit for it. Congress increases the payroll 
taxes to broaden Social Security benefits, and takes credit for it. The effect is to 
ease the load off a graduated tax system, adjusted to take account of each family's 
special circumstances, and to push it onto a tax that is a flat percentage of the 
first $7,800 that a wage earner gets each year. That flat percentage takes no 
account of the wage earner's other income, the size of his family, his medical bills 
or anything else. 

The trend is clear. In 1963, payroll taxes raised only 42 per cent as much money 
as the personal income tax. By 1968, when Mr. Nixon was elected, the ratio had 
risen to 50 per cent. Bv last year it was 56 per cent and by next year, according 
to the budget estimates, it will be 68 per cent. To put it another way, in 1963 the 
payroll taxes accounted for only 19 per cent of federal budget receipts from all 
sources. By 1968, they accounted for 23 per cent. By 1971 it was 26 per cent and 
bv 1973 it will be 29 per cent. 
" Under Mr. Nixon, there have been two rounds of heavy cuts in income taxes, 
one in 1969 and the other last month. "In 1973." Mr. Nixon said in his message, 
"individuals will pay $22 billion in federal income taxes than they would 
if the tax rates and structures were the same as those in existence when I took 
office." If the economy picks up as Mr. Nixon predicts, personal income taxes 
next year will return $94 billion dollars, which is $25 billion more than in 1968. 
In contrast, over the same five years, payroll taxes will have increased $29 bil- 
lion. The payroll taxes are not only rising at a faster rate. They are rising faster 
in absolute magnitudes. 

It is a curious characteristic of American politics that the largest changes m 
public policy go all but unremarked, while minor matters are endlessly debated. 
In the case of federal taxation, this effect no doubt arises because the subject is 
forbiddingly technical. Perhaps it arises also because many Americans do not 
think of their payroll taxes as taxes. A certain public confusion has surrounded 
the nature of Social Security financing ever since the system was founded a gen- 
eration ago with a heavy emphasis on its similarities to an insurance program. 
But it has never been insurance, and payroll taxes are not insurance premiums. 
They are general taxes to meet necessary and expanding public responsibilities. 
They are measured by the same standards of fairness and efficiency as any other 
tax. The steady movement from income to payroll taxation is. obviously, a retreat 
from the top bracket to the bottom one. Mr. Nixon says that he is returning 
power to people. Which people? The answer can be read in the tax tables. 

U.S. Senate, 
Washington, D.C., February 11, 1972. 
Senator Russell B. Long, 
Chairman, Senate Finance Committee, 
Washington, D.C. 

Dear Chairman Long: I would very much appreciate the opportunity of hav- 
ing the enclosed statement included in the Finance Committee testimony on 
HR 1. 

I would also ask sympathetic consideration of my proposed amendment which 
would increase the Social Security "outside earnings" exemption to $210 per 
month. Upon consideration of recent Department of Labor statistics, this figure 
would seem the most appropriate if we are to allow our senior citizens the 
opportunity to earn a moderate standard of living. 
Best regards. 

Frank E. Moss, U.S. Senator. 

Statement of Hon. Frank E. Moss, a U.S. Senator From the State of Utah 

For this reason, I urge the Senate Finance Committee to raise the "earnings 
test" to $2,520 per year. I believe that this amount is a just and reasonable level. 
It recognizes both the economic situation and also the desires of our senior 
citizens for personal independence. I believe that the "outside earnings" level 
proposed in HR 1 continues to ignore these realities. It denies to our elderly 
citizens their full opportunity to maintain their hard-earned standards of living. 

Section III of the bill woud permit Social Security recipients to earn only 
$2,000 a vear without suffering the penalty of lost benefits. To the average couple 


receiving Social Security, this is hardly snfBcient for the maintenance of their 
standai-ds of liA-ing. Today the average monthly Social Security check received 
by a couple comes to about $219. Adding this basic annual income of $2,628 to 
the $2,000 out.side income permitted under HR 1. the average couple would still 
not have reached an amount consistent with a moderate standard of living. 

Accoi'ding to the recent consumer price information and Bureau of Labor 
Statistics reports on the cost-of-living, an elderly couple living in an urban area 
requires approximately $4,800 to maintain an "inteiTnediate" living standard. 
Even with the full $2,000, the average elderly couple cannot make ends meet. 

Subject: An amendment to HR 1, liberalizing the social security "outside earn- 
ings" test 

Mr. Chairman, I have long been a consistent advocate of liberalizing the "earn- 
ings test" which limits the amount of income which Social Security recipients are 
allowed to earn free of penalty. Two years ago, the Senate moved in this direction 
by raising the "retirement test" to $2,400. Unfortunately, the Social Security 
Amendments Act of 1970 never reached conference and recipients continue to 
suffer under what I consider to be an out-dated and unreasonable "out.side 
earnings" limitation. 

Today, more than ever before, I am convinced that further liberalization of 
the "earnings test" is the right course. As a member of the Senate Special 
Committee on Aging, I have had ample opportunities to sense the great desire 
of our senior citizens to "earn their own way" ... to gain the maximum level of 
economic self-reliance which their circumstances permit. There is also a continual 
need on the part of Congress to allow elderly Americans to maintain their 
standards of living in the face of a persistent inflation. 

Senior citizens should be given the opportunity to earn at least enough to 
guarantee themselves a moderate standard of living. I, therefore, urge that the 
Finance Committee reconsider their decision to limit the "earnings test" to 
$2,000 a year . . . what amounts to a step backward from earlier Senate decisions. 

We must recognize the growing need for more liberal retirement standards. 
With so many Americans now beginning second careers at mid-age, it would be 
counter-productive to penalize couples who want to go on working after the 
traditional retirement ages. Congress should recognize their citizens' willingness 
and ability to be of productive service to our society. 

Congress should also appreciate the specter of poverty that haunts even the 
moderately well-to-do elderly citizen. With taxes and consumer prices rising 
persistently, older Americans are determined not to be caught on fixed incomes 
which appear to offer an ever-declining purchasing power. 

In 1962. for example, the average income of a family headed by a senior citizen 
could count on 50% of the average income of a family with a head of household 
less tban 65. Today, the family with a senior citizen as the head of household can 
expect about 43% of the average income of his younger counterpart. 

All the Social Security benefit increases passed by the Congress have been only 
stop-gap measures designed to keep the elderly "even" with the rest of the 
population. I urge that the committee grant those senior citizens an opportunity 
to earn the stronger measure of economic security which these times require. 

Statement of Hon. Ted Stevens, a U.S. Senator From the State of Alaska 



Mr. Chairman and Members of the Committee : I am in support of your efforts 
to reform our current welfare "system," a system which now is 50 diverse, often 
inequitable and highly variable approaches to the need to provide a livelihood 
for our Nation's poor and unemployed or unemployable citizens. Tlie complex 
problem and challenge of both helping to ensure that the millions of children 
who are born to our poorer families will have a decent chance at the opportunity 
for the fuller life so many of us take for granted and also that their parent or 
parents will be employed whenever possible is a most urgent undertaking. The 
curi-ent system's tendency to break up families and too often make it more 
profitable not to work must be changed. 

Thus, H.R. I's proposed inclusion of the working poor and unemployed fathers 


as well as its strong emphasis on registering to work and providing job training, 
day care facilities, and public service employment is to the good. Similarly, I 
believe the establishment of a single national program with uniform standards 
and policies will help eliminate acknowledged inequities in the current "system." 
By providing for federal administration of the basic program, states can be 
saved funds currently expended for administration costs, especially if they elect 
to have the federal government also service their state supplement programs. 

By and large, I believe most people are not on welfare by their own choosing. 
And, while I fully support mandatory employment for those on welfare who can 
and should work when a job is available, I am not at all convinced this should 
include the mothers who have children under age 6 at home who need their care. 
I would strongly recommend the age 3 limit in the House-passed bill be changed 
by your committee to age 6. In fact, in thinking of our welfare system, a very 
real tragedy to me is the children who must grow up within it. They represent 
over half of our Nation's 14 million welfare recipients. 

In working for an improvement to our current system, I hope we may always 
keep them in mind. They are born to a circumstance totally beyond their control, 
and, I believe it is our responsibility not to make their lives become hindered with 
a sense of inferiority so often associated with a recipient of welfare. These chil- 
dren deserve decent clothes, food, shelter, and a good education as much as ours 
do. Hopefully, if they then grow up with a sense of confidence and integrity in 
their own ability, they will not spend a lifetime on welfare. They can and will 
move into a full life with the opportunity for jobs, travel, art, friendsliips, and 
challenges that we take as commonplace. 

I am fully aware of the unique and high cost problems we are facing in Alaska 
by the bill's inclusion of the working poor and employable fathers provision. 
Accordingly, I am a co-sponsor of Senator Metcalf's amendment which will pro- 
vide for full federal funding of a state's supplementary costs under H.R. 1 to 
American Indians. Eskimos, and Aleuts. The federal government has long had 
the prime responsibility for our country's Indian population. In Alaska, our wel- 
fare roles are about 80% Native. Under H.R. 1, unless the state chooses the 
totallv inequitable approach of a dual level system whereby current recipients 
are paid at the full state standard of $2,700 to $4,500 for a family of four, and 
new working poor and unemployed father families are paid at the totally inade- 
quate federal level of $2,400, the state stands to literally triple its welfare costs. 
It would jump from current state costs of $0 million to state supplement costs of 
$30 million in order to have all eligible families receive the same payment levels. 

Because the preponderance of these newly eligible families are among our 
Native people for whom the federal government has consistently assumed pro- 
gram responsibility, I believe it is totally unfair to Alaska's state government 
to expect them to now triple their welfare costs in order to have this welfare 
"reform" function equitably in our state. 

The working poor and unemployed father families need to be included in your 
bill. It is one of the most fundamental and important changes for the good which 
this landmark legislation provides. But. in accomplishing this. I strongly urge and 
request the federal government to continue its responsibility for our Indian 
population, or Alaska wi'l be faced with the terrible alternative of either current 
costs or having a built-in and unfair tripling inequity in their welfare system 
family allocations. I iirge you to include the ?tletcaif amendment in the bill which 
you report to the floor to avoid this unacceptable situation for my state. 

May I also request that, as in numerous other federal programs. Alaska's enor- 
mousiy high cost of living be taken into account and our federal base payment be 
raised from .$2,400 to at least a 2.5% increase up to .$3,000. It is an acknowledged 
fact in federal programs ranging from housing to food stamps to providing fed- 
eral employees a 25% increase in their salaries when they go to Alaska to work 
that our state is a much more costly place to live than the "Lower 48." 

Our i)oor need this adjustment as much, if not more, than other Alaskan citi- 
zens. I believe that the state of Hawaii has similar difficulties. I hope you will 
take this to heart and provide for such a of living increase, as has been done 
time and time again, in other federal programs. Otherwise, Alaska's poor will, 
in effect, be given only a $1,800 federal payment instead of the $2,400 to which 
they are entitled. 

One last point — in Alaska, many of our recipients of welfare live in remote 
villages which are difficult and costly to fly to. I understand that quarterly eligi- 
bility reviews are required of families covered by H.R. I's welfare provisions. It 


is essential that the law have enough flexibility to allow this to be done by mail 
and perhaps less frequently. The costs of personal visits by state or federal 
employees each quarter would be astronomical. We have over 200 Native villages 
scattered across our land, and it would take an army of bureaucrats with prac- 
tically unlimited funding resources to reach each of these villages four times a 

Thank you. 

Statement of Hon. Harrison A. Williams, Jr., a U.S. Senator From the 

State of New Jersey 

Mr. Chairman, thank you for the opportunity to present my views on Social 
Security reform to the Senate Finance Committee. Although I intend to direct 
most of my remarks to Social Security and Medicare problems, I do want to 
express my approval of the new approaches being taken on the issue of welfare 
reforms. My views on this subject have been stated many times before, but I 
believe that we are finally agreeing that we must develop a new system which 
provides an adequate welfare payment, creates effective incentives for recipients 
to obtain employment, establishe.s workable administrative machinery, and pro- 
vides a significant measure of fiscal relief to the states. I realize this is an enor- 
mous task. Perhaps it is more than can be accomplished immediately with the one 
bill before the Committee now. Nevertheless, a substantial beginning should be 
made as soon as possible. But if we must further evaluate welfare reform, we 
should not delay the pressing need for Social Security reforms at the same time. 

OUR obligation to older AMERICANS 

In speaking of improving the lot of our senior citizens, I must admit the sense 
of frustration which I feel because attempts to provide meaningful reforms have 
never been as successful as many of us keep hoping they will be. However, I 
am continuing my efforts for greater reforms I am convinced that as 
legislators, as American citizens and as human beings we owe the greatest debts 
to our elderly. They are our living heritage, and we are often too concerned 
with other problems to remember that fact. Most of those citizens retiring today 
have shared the destiny of the United States for nearly one third of its entire 
history. They have lived through fantastic events as they nurtured this country 
to a prosperous maturity. They have witnessed two world wars, a severe depres- 
sion, the advent of the automobile and airplane, nuclear power, wonder drugs, 
landing on the moon, and the increasing destruction of our environment. And. 
they were not only witnesses to great events and rapid changes. They were 
also the participants, the contributors and the builders as those events occurred. 
Moreover, they retain the faith that what they have accomplished will give 
their successors the ability to meet new challenges and to live better lives. 

Yet. their society which our older citizens served so well is ignoring their 
basic needs at the time when they are most vulnerable to physical and financial 
reverses. Although they are our link to this nation's past and the builders of 
what we have in the present, the older citizens are often neglected or left very 
low in our priorities. 

Indeed, it would seem to be to everyone's interest to improve the lot of the 
elderly. Probably, more than any other factor, aging is the common denomina- 
tor of mankind. Whatever our .social or economic standing, ethnic background, 
sex, aptitudes or beliefs, we share the fact that we all grow older. What we do 
to aid today's older citizens, we potentially do for everyone no matter how re- 
mote retirement may seem. 

Today. 4.7 million persons 65 and older fall below the poverty line, nearly 
100,000 more than in 1968. For elderly per.sons living alone or with nonrela- 
tives, 60 percent would be considered poor or near poor. And for elderly Negro 
women living alone, more than 88 percent — or nearly nine out of every 10 — 
live in poverty or are marginally poor. 

According to the Bureau of Labor Statistics, an intermediate budget for an 
aged couple would be around 4,500 per year. Yet, approximately 41 percent of 
all aged couples have total incomes below $4,000. Having these dismal statis- 
tics available, we should now act to correct this tragic situation immediately. 

The net impact of these statistics is that our Nation, as wealthy and powerful 
as it is, still permits one out of every four older Americans to live in abject 

poverty. Moreover, these figures clearly underscore the need for bold, imaginative, 
and comprehensive reforms in our social security programs. 

Many of the Social Security reforms H.R. 1 is trying to meet have been 
delayed for too long. But H.R. 1 does provide an excellent basis for improv- 
ing the Social Security system. I am pleased that several of the measures in 
the House-passed bill are identical or similar to the recommendations I pro- 
posed in my omnibus Social Security legislation, S. 923. Both measures provide 

An across-the-board increase in benefits ; 
Cost-of-living adjustments to protect the aged from inflation ; 
Substantial raises in minimum monthly benefits for person with long 
periods of covered employment ; 

One hundred percent benefits for widows, instead of only 82^^ percent 
as under ijresent law ; 

Liberalization of the retirement test ; 

More equitable treatment for couples with working wives ; 
An age-62 computation point for men, the same as now exists for wom- 
en ; and 

Updating the retirement income credit for former policemen, firemen, 
teachers, and other government annuitants. 
While I applaud these improvements. I believe some other changes must be 
made by the Senate to meet the needs of our Social Security beneficiaries. 


For some 27 million Social Security beneficiaries the most important feature 
of the bill is the provision for a 5 percent benefit increase that would become 
effective next July. This quite clearly is not an adequate increase and it does 
not come soon enough. As your committee print of July 14, 1971 points out, a 5 
percent increase would mean an $8 increase in the average retirement benefit pay- 
able next June to retired individuals and a $12 increase in the average benefit 
paid to older couples. As a result, the average retirement benefit would be $141 
a month and the average couple would receive $234. When we consider that Social 
Security has developed into the country's major retirement income program, 
it is obvious that these amounts are too low. Because the majority of the elderly 
have little or no other income to supplement their Social Security benefits, we 
should take steps to provide substantial increases in these benefits. 

In fact, the 5 percent increase that the House has sent to us is nothing more 
than a cost-of-living increase based on the Committee on Ways and Means 
estimate of last spring as to economic changes in the period from January 1971 
through June, 1972. The benefit increase that is needed should do more than 
keep up with the rise in the cost of living. It should provide a meaningful 
increase in the real income of Social Security beneficiaries. For my part, I 
would think that an immediate 15 percent rise in benefits effective January 1 
of this year would be more in keeping with our commitment and responsiveness 
to the needs of older people. For a retired worker, this would provide an 
additional $160 above the annual benefit raise under H.R. 1. For an elderly 
couple, this approach would mean $265 more per year than under H.R. 1. 
And in my own State of New Jersey, a 15 percent increase in Social Security 
benefits would provide an additional $160 million in annual income to nearly 
875,000 recipients. 

For elderly persons struggling to make ends meet, these are compelling 
reasons to raise Social Security benefits to a more realistic level. 

Those of us who have studied the problems of the elderly, you on this com- 
mittee, and those of us on the Special Committee on Aging and the Committee 
on Labor and Public Welfare, have learned many times over that adequate 
income is the major need of the aged. It did not require the White House 
Conference on Aging to verify this fact. But now that the recent White House 
Conference is over, and the people who came to this conference have made their 
views known, this has become clear to the entire Nation. And the people of 
America are waiting to see what our response will be. I believe there is general 
agreement that one of our first priorities should be an adequate income for all 
Social Security beneficiaries. 

I am happy to see that H.R. 1 would increase the benefits paid to aged 
widows. I have been very puzzled by that fact that when a man dies his 


widow gets only S2.5 percent of his basic benefit. I Ijnow tliat women have 
been discriniinated against in many ways in our history, but it has always 
seemed to be contrary to experience to contend that a woman can get along on 
a smaller income than a man. 

While on the subject of discrimination, the Social Security Act also has 
discriminated against men. Perhaps this is designed to equalize the provision 
which discriminates against women. The way men's benefits are computed takes 
into account years up to age 65 while for a woman only years up to age 62 
are used Inasmuch as this discrimination relates to determining a divisor for 
the purpose of arriving at an average wage, the shorter period used for women 
can result in a higher benefit for a woman than for a man, even though they 
had equal earnings. H.R. 1 contains a provision to correct this situation. How- 
ever, I think that we can improve on the provisions in H.R. 1. Under the 
House-passed provision, as well as under the 1970 Senate-passed provision, the 
new computation would apply only to people who become entitled to benefits 
in the future and there would be a three-year transition period in which the 
new rules would be applied gradually. I hope that the Committee will recon- 
sider this matter and make the provision effective not only for future benefits 
but also apply it immediately to all present beneficiaries. 

If my understanding is correct, the 1970 decision to apply this provision pro- 
spectively was based in large measure on cost factors ; the first year cost of the 
bill was reduced by about $900 million. Conditions have changed since then, 
though. The economy is lagging; unemployment is iip ; people are being forced to 
retire earlier than they had planned. This additional money along with the in- 
crease that would re.sult from raising the basic benefits by 15 percent could be 
of significant assistance in providing the stimulus needed for our lagging econ- 
omy. Moreover, it is needed by those who would receive it, and this would be 
in keeping with our traditional policy of applying benefit increases to present 

I would like to turn now to a discussion of the retirement income test. As you 
are aware this is probably the most disliked provision in the Social Security law. 
I recognize the arguments for keeping the test in the law. On the other hand, 
the present provision is dated and needs to be liberalized to take into account 
the economic and social changes which have occurred since 1967. Twice the 
Senate has acted to increase the exempt amount to $2,400 a year, $400 more 
than in H.R. 1. I firmly believe that we must include some substantial liberaliza- 
tions in the bill passed by the Senate this year. 


I am in strong agreement with the provisions in H.R. 1 to improve our Medicare 
system. But, again, I feel this bill is too limited and many important changes 
should be made to protect the health care of our elderly. I believe effective re- 
form requires : 

Including the cost of out-of -hospital drugs under Medicare ; 
Elimination of the monthly premium charge for supplementary medical 
insurance ; 

Rescinding of the raise in the deductible for Part B of Medicare from $50 
to $60 ; 

Disallowing the increase in the hospital deductible from $60 to $68 ; 
Elimination of the proposed $7.50 copayment charge for hospitalization 
from the 31st to the 60th day of confinement : and 

Repeal of the requirement for 3 days of hospitalization prior to eligibility 
for home health care ; and 

Liberalization of the 2 year waiting period for disability coverage under 
Today persons 65 and older comprise about 10 percent of our total population. 
Yet, they account for nearly 27 percent of all health care expenditures in the 
United States. 

Unfortunately, gaps in Medicare coverage make it necessary for the average 
elderly person to pay $226 per year for medical expenses, 125 percent more than 
younger persons with larger incomes. A classic examples is out-of-hospital 
prescription drugs, which constitute an enormous expenditure for many elderly 
individuals. Drug expenditures for older Americans now average three times as 
high as for younger Americans. And for aged persons with severe chronic con- 


clitions — about 15 percent of all individvTals 65 and older — prescription ex- 
penditure are six times as great as for young people. 

Prescription expense now account for about 20 percent of all out-of-pocket 
health expenditures for the aged. In fact, drugs constitute their largest personal 
health care cost. 

For these reasons. I urge that the Senate broaden Medicare coverage to include 
out-of-hospital prescription drugs. Several renowned authorities, including the 
1971 Social Security Advisory Comicil, have already recommended that this 
measure be enacted into law. 

Another significant health expenditure for the elderly is the $5.60 monthly 
premium charge for supplementary Medicare insurance — Part B of Medicare. 
On an annual basis, this amounts to about $130 for a couple. And for the great 
majority of older Americans, this cliarge constitutes a rather heavy financial 

Again. I recommend— as I did in my omnil)us Social Security bill, S. 923 — that 
this premium cost be eliminated for the elderly. This change alone would amount 
to about a 5-percent increase for the typical retired worker. This proposal is 
also strongly endorsed by the Social Security Advisory Coiuicil. The premium 
older people must pay for supplementary medical insurance, Part B of Medicare, 
is steadily rising and is more than most older people can afford. On the other 
hand, they cannot afford to be without this insurance protection so many are 
forced to go without other necessities in order to pay this premium. Therefore, I 
am pleased to note that the Administration has adopted the position that this cost 
should be eliminated. Although it has not yet submitted legislation to accom- 
plish this. I recommend such a provision be included in H.R. 1 as it was in 
S. 923. I would further recommend a provision to eliminate the recent increases 
in the deductible amount from $60 to $68. This increase occurred under the 
guidelines of the present law, and the present law should be amended to correct 
this fault. i\Iy suggestion would be to make any such increase possible only after 
a determination by the Secretary of Health, Education and Welfare that the 
increase would not impose a financial hardship on patients. 

In additoin, H.R. 1 would make the elderly subject to a $7..50 daily copay- 
ment charge for each day in the hospital from the 31st to the 60th day. This 
would be in addition to the first $60 which the elderly would be required to meet 
out of their own pockets. For an elderly person in the hospital for 60 days, 
this could mean an additional charge of $225. Moreover, this measure would prob- 
ably fall most heavily on the patient Medicare is supposed to help the most — 
the person who may be exposed to catastrophic health care expenditures be- 
cause of a prolonged period in the hospital. Again, I believe this burden should 
not be forced on our hospitalized Medicare patients. 

Currently, under Title 18 of the Social Security Act, essential home health 
care is covered only after a 3-day hospitalization. This includes visits by phy- 
sicans, nurses, physical therapists, occupational thex'apists, speech therapists, 
and home health aides. I favor the extension of home health care to those covered 
by Medicare when prescribed by a physician. The present system not only acts 
as an obstacle to efiieient health care for our elderly, but it also increases the 
expenses of Medicare hospital fees needlessly by encouraging doctors to hos- 
pitalize patients three days in order to qualify for home health care. 

H.R. 1 fills a major gap in Social Security protection by providing Medicare 
benefits for disabled Social Security beneficiaries. The House-passed version, 
however, does not provide this protection at the time when the need is greatest. 
I would urge that this Committee modify the provision so that disabled bene- 
ficiaries would be entitled to Medicare benefits from the first month of entitle- 
ment to disability benefits rather than having to wait until 2 years after en- 

This provision brings out what is, in my view, a major weakness in H.R. 
1. The primary problem with this provision is that it seems to be promising 
benefits and at the same time limiting eligibility to the extent that many needy 
beneficiaries will not receive them. As a result, we have a provision that is 
basically sound, but that will fail to achieve its full promise because the pro- 
vision is too restrictive. 

One of the provisions relating to medicaid, the one-third reduction in match- 
ing funds for long-term patients, seems particularly ill-advised to me. It will, 
I fear, reduce the availability of quality care to needy people and at the same 
time result in increased out-of-pocket expenditures by people who now have 


far less than is needed to meet the costs of everyday living. This provision is 
ostensibly intended to encourage more outpatient care under medicaid, but 
the proposed reduction in matching funds to meet the costs of hospitalization 
after the 60th day in a general or TB hospital and after 90 days in a mental hos- 
pital seems unnecessary. It will only cut back on the funds available to treat 
the worst cases and encourage the premature discharge of people. Further, 
this will increase the costs to the States which are already in serious financial 
difficulty. Thus, the liklihood is that the provision will actually be more ex- 
pensive in the long run. 


As I have indicated, much more than stopgaps are needed as we consider re- 
form of this system. For example, we have to provide for automatic cost-of-living 
increases and' I am happy to see the provision in H.R. 1 which would provide 
annual cost-of-living increases whenever there is a 3 percent rise in the Con- 
sumer Price Index. However, I think it has become clear that using only Social 
Security tax to pay for increased benefits is becoming an ever-increasing burden 
on the "average worker who must pay the cost of these improved benefits. Even 
now Social Security taxes are more than income taxes for many workers. There- 
fore, the time has come for a major revision in the method of financing Social 
Security. I suggest that we take immediate steps to provide a significant portion 
of the cost of the Social Security program from general revenues. 

The idea of using general revenues to pay a part of the cost of the Social Secu- 
rity program is not new. From the very start in the 1930's. the designers of the 
program envisaged a time when the income from Social Security taxes would have 
to be supplemented from general revenues. During World War II, scheduled in- 
creases in Social Security taxes were postponed and appropriations from general 
revenues were authorized on an "as-needed" basis. This authority was never used 
and after a time it was repealed. Then, in the 1950's the long escalation of both 
tax rates and the tax base began. 

When this escalation will end is unclear. Your committee print of July 14, 19 1 1 
projects a tax base of $26,100 for 1994 with a combined employer-employee tax 
payment of as much as $3,862.80. Clearly, it is time to call in a third partner and 
permit general revenues to pay, say, one-third of the cost of the program, with 
the remaining two-thirds being divided between employees and their employers. 
I do not believe Congress can enact this proposal now in its entirety, under pres- 
ent economic conditions and budgetary conditions. The President's large deficit 
would be unacceptably increased by immediate adoption of general revenue financ- 
ing. However, we could write this principle into the law and include a schedule 
for the gradual assumption by the Federal government of one-third of the cost 
of the program. . ^ , 

Again, I wish to express my approval of H.R. 1 as the basis for meaningful re- 
forms in our Social Security system. However, much more is needed if our Nation 
is to come to grips with the economic crisis which now affects millions of older 
Americans and threatens to engulf many more approaching retirement age. 

I believe the recommendations I have made are essential to meet the needs 
I have outlined. 

Statement of Hon. Bella S. Abzug. a U.S. Representative From the State of 

New York 

Chairman Long, Members of the Committee, I am pleased to have the oppor- 
tunity to present my views on H.R. 1. To many, this bill brings important benefits. 
It grants a substantial increase in social security benefit payments. It liberalizes 
a number of benefit eligibility requirements. It provides for future adjustments 
in benefit levels to reflect increases in the cost of living. Unfortunately, it does 
far too little for one of our more maligned groups, women, and actually worsens 
the lot of another, the poor. 


The amendments to Title II of the Social Security Act which are proposed in 
this bill gives women far less than they need and far less than they deserve. 
There is no provision for benefits to homebound women independent of their 
spouses' earnings. There has been no change in the benefit structure for divorced 


women except for a minor alteration removing dependency requirements. There 
has been no effort to give the working woman her due — benefits which are based 
entirely upon her own accumulated earnings and not computed together with 
those of her spouse. Under this computation system, called the family maximum, 
she receives in benefits only that percentage of her earnings and wife's benefit 
which is statutorily allowable depending upon what her spouse's earnings have 

The benefit structure must be fully reformed and equalized, and I recommend 
to you the following steps as possible avenues for accomplishing this: 

First, it is imperative that women's benefits be separated from those of their 
husbands, in order to erase the stigma of dependency which women have had 
to bear since the inception of the "wives' benefit" of the Social Security program. 
In its place, there should be established an independent "Woman's Basic Benefit" 
that would be paid in varying amounts to different classes of women : full time 
housewives, full time housewives with household help, working women with 
household help, and working women without household help. Second, women who 
worked would receive the full benefit depending on the amount of their earnings, 
regardless of the amount of their "Woman's Basic Benefit." There would be no 
■•family maximum." Each member of a family would receive as much as he or she 
is legally entitled to, depending on his or her individual salary. 

It is also important that women have the opportunity to get out of the house 
in order to earn the salaries on which their Social Security benefits are based. 
To that end, I recommend that a tax credit be allowed all working women to 
cover the cost of day care for every child in the family. Or, where this is not 
appropriate, direct Federal payments would be made to cover the full cost. 

Another important structural change which affects both men and women is 
the methodology of actuarial computation, which results in women receiving 
different aggregate benefits because they live longer and have worked in lower 
paying jobs than men. The tables should reflect an average between the two 
sexes, and benefits should be computed in that light rather than in the present 
manner. Also, both men and women should receive benefits at the same time 
rather than women receiving benefits at age 62, and men at age 65, as is now the 


I strongly oppose Title IV of the bill, which would enact two new family 
programs — Opportunities For Families (OFF) and the Family Assistance Plan 
(FAP) — in place of the current Aid to Families with Dependent Children 
( AFDC ) program. This portion of the bill represents a giant step backward. 

It compels mothers to work without providing for adequate care for their 
children. It provides for a basic level of benefits which is barely one-third of the 
Bureau of Labor Statistics' "Lower Living Standard." It encourages the States 
to reduce benefit levels and discourages them from raising benefit levels, even if 
there are major increases in the cost of living. It contains distinctions between 
the family programs and the other federally assisted categories which can only 
have as their basis a desire to discriminate on the basis of sex and race. Under 
the guise of being a reform measure, it wull leave many recipients of public 
assistance — perhaps 90 percent — worse off then under the present system. 

Women are the primary victims. Under H.R. 1, they would be forced to undergo 
training for menial, low-paying jobs. They will be made to accept those jobs no 
matter how demeaning. And, most important of all, they may well be compelled 
to leave their children at home or on the streets, without adequate child care, in 
order to go to work or to attend training. 

Only 16 percent of women presently receiving public assistance have completed 
high school, but job "training" under this bill will not even include basic adult 

The money which H.R. 1 authorizes for child care — $700 million — would not 
even begin to meet the needs for children currently on welfare. When this meas- 
ure was debated on the House floor. Chairman Mills assured me that no 
mother would be compelled to work if child care were not available, and that 
the amount authorized under the bill would be sufficient to meet the require- 
ments for child care (Congressional Record, June 21. 1971, page H 5545). It 
is my understanding that there are presently 1,262,400 children under the age 
of five on welfare. The conservative. Administration estimate of the cost of 
child care is $1,600 per annum per child. By my calculations, the cost of child 

72-573— 72— pt. 6 4 


care for the children of mothers compelled to work under this bill will exceed 
■$2 billion. This is a far cry from the $700 million Mr. Mills says will meet 
the need as he has estimated it. 

What this tells me is that the proponents of this bill either believe that the 

money will materialize, unauthorized, out of thin air, or that they are not 

disturbed by the fact that thousands of welfare mothers will be compelled 

. to leave their children without adequate care while they are at work or training. 

This tragedy is compounded by the fact that President Nixon vetoed S. 2007, 
the only piece of legislation in the last session of Congress that addressed 
itself to the needs of poor as well as lower middle class working mothers. If 
it had been signed, that bill would have initially l)enefitted families with 
incomes below the poverty level, $4320, by providing them with free child 
care services. From that income level to a level of $0000. there would have 
been a nominal fee. 

This woiild have a wholly voluntary program ; no parent would have been 
forced to put his or her children into day care. In fact, the only place in which 
we find coercion is H.R. 1, which requires mothers with children three years 
old or older to place these children in day care centers and got to work. The 
President's veto, taken together with the day care requirements of H.R. 1. 
leads to the inescapable conclusion that forced custodial day care for the i)oor 
i.s acceptable. I)ut voluntary day care is not. The Child Development Act. con- 
tained in S. 2007. included provisions for substantial pai'ent involvement and 
could not possibly have been as weakening to the family as is H.R. 1 in its 
present form. 


The bill ju-ovides for a basic income level of .$2400 per year for a family 
of four, with no requirement that the States supplement this at all. In January 
1970. the Bureau of Labor Statistics" "Lower Living Standard" was set at 
$6960 for a family of this size, and the 6.0 percent increase in the cost of living 
since then would bring this figure up to $7380 today. States which keep pay- 
ments at the present level will be protected by the "hold harmless" clause of 
the bill if their total payments exceed current levels due to caseload increase, 
but a State which increases its level of lienefits for individuals will receive 
no such protection. This means that for cities such as New York, where the 
cost of living is rising faster than in the nation as a whole, there will be an 
almost insurmountable disincentive to the granting of even cost-of-living in- 
creases. This leaves Congress in the rather hypocritical position of passing a 
bill which grants cost-of-living increases to those who receive their federal 
benefits under the Social Security .system while effectively prohibiting the 
granting of such increases to those who receive their federal benefits under 
the two new family programs. Furthermore, it will help people in only the 
five or six States whose payment level is now less than $2400. It will not help 
the industrial States and it will not help the cities. 

In addition, the bill provides for significant differences between payment levels 
imder the family programs and those under the existing categorical programs — 
aid to the aged, blind and disabled. By 1974. for example, an aged, blind, or dis- 
abled couple will be receiving the same amount — $2400 — as a family of four 
receiving assistance under one of the family programs. Even allowing for the 
fact that very young children might require less food than adults, it is incon- 
ceivable that a family of four under program requires no more money to live than 
a family of two which happens to be receiving its benefits under a different 

The reason for this gross distinction is this : most of the families which 
presently receive benefits under the AFDC program, and which will be receiving 
l>enefits under the family programs proposed in this bill, are families which are 
headed by women ; in addition, far more of these families are black, Puerto Rican 
and Mexican-American than are in the aged, blind and disabled programs. 
This bill not only continues this country's pattern of discrimination against 
women and other oppressed groups, but actually makes it even more pronounced. 

Title IV of H.R. 1 strikes out against poor people, women and children. It helps 
few people and harms many. It is presented as a reform bill, but its thrust is a 
backward one. I respectfully urge upon this committee the elimination of Title IV 
from the bill. 

Thank you. 


Statement of Hon. Frank Anxcnzio, a U.S. Representative From the State 

OF Illinois 

the need for prescription drugs under medicare 

Mister Chairnuin, Members of the Committee — over 20 million older Americans 
are looking to this Committee and this Congress for relief from the hnancial 
hardships associated with high-cost prescription drugs. Ever since 1967, we have 
been telling our aged population that Congress is deeply concerned with the plight 
of those older Americans wh(j must bear alone the full weight of expensive out- 
patient prescription medicines. Five years ago we directed the Department of 
HEW to appoint a special Task Force to study the necessity and feasibility for 
an outpatient prescription drug benefit under Medicare. The results of this ex- 
haustive study conclusively showed that such a program was both desirable and 
economically and medically feasible. 

In the time that has passed since that study and the reviews that followed, we 
have continued to talk about the desirability of such a program. But as we have 
talked, both in the halls of Congress and before this Committee, millions of older 
Americans have suffered severe financial and even medical harm from our need- 
less delays. Our elderly must now spend 20 cents of their health care dollar on 
prescription medications. This amounts to about $1 billion a year, or about 25 
percent at the Nation's total outlay for prescription drugs. 

When we consider that many of these older people are living on minimal fixed 
incomes, that fully 25 percent of them are living at or below the poverty level, 
then we cannot help but realize the terrible strain which high-cost drugs must 
place on their limited financial resources. Furthermore, drugs for the elderly 
cannot be considered luxury items easily eliminated from the family budget in 
times of financial stress. Effective drug therapy is frequently essential to the 
well-being of millions of older Americans. About 80 percent of the elderly — as 
opposed to only about 40 percent of those under 65 — suffer from one or more 
chronic diseases or other conditions. Arthritis and rheumatism afflict 33 percent ; 
heart disease, 17 percent ; high blood pressure, 16 percent ; for those suffering 
from these ailments, prescription drugs are essential. 

Year after year we have seen legislation introduced to eliminate or reduce this 
problem for our elderly. Once again we have been presented with a positive solu- 
tion to the problem, a bill (H.R. 2355) which would amend the part A program 
under medicare to cover the cost of outpatient prescription drugs. As one of the 
more than one hundred house sponsors of this bill. I want to say that enactment 
of this legislation is clearly and urgently needed. The untiring efforts of the dis- 
tinguished Senator from New Mexico, the Honorable Joseph Montoya, and my 
able colleague from Wisconsin, the Honorable David Obey, on behalf of this vital 
piece of legislation are to be especially commended. 

H.R. 2355 is designed to correct one of the more sei'ious shortcomings and 
defects in the existing medicare program by providing insurance protection 
against the costs of outpatient prescription drugs. It has been suggested by some 
that private health insurance, complementary to medicare, is available to the 
elderly and that drug insurance protection should be sought from this source. 
However, the facts indicate that the private sector fails to pi-ovide adequate 
protection at a cost that the aged can afford. Recent data shows that approxi- 
mately 914 to 10 million persons 65 or older have private protection supplemen- 
tary to medicare for the cost of hospital and physician services. As for drug cov- 
erage, however, the statistics are even more alarming. Only about 3 million older 
people — or about 15 percent — have any protection against drug costs. Nearly 17 
million have no private protection whatsoever in this area. As a result, drug 
outlays continue to represent the largest single out-of-pocket health expenditure 
among older Americans. 

It is. in my judgment, absurd to underwrite — as medicare does — the costs of 
ho.spitalization and other institutional care, and not underwrite the cost of the 
very items which might prevent institutionalization altogether. It is also incon- 
sistent to pay for drug costs in a hospital or extended care facility — as medicare 
does— but not pay for the same drugs outside the institution. Because 
of this gap in coverage, it is highly possible that many elderly persons are hos- 
pitalized simply because that is the only way they can get the medications they 
need. Thus, the extra cost of needless overatilization of hospital facilities is loaded 
onto the taxpayers who support this program. 


There can be no question about the need for this program. The subject has been 
studied, restudied. and overstudied — always witli the same conclusion : do it 
now. I urge this Committee to act promptly and favorably on H.R. 2355 and thus 
provide our $20 million older Americans with a well-designed, uncomplicated but 
effective drug insurance program. Thank you. 

Statement of Hon. Mario Biaggi a U.S. Representative in Congress from 
THE State of New York 

outpatient prescription drug coverage under medicare 

Mr. Chairman, thank you for giving me this opportunity to express my views 
on providing outpatient prescription drug coverage under Medicare for our 
senior citizens. 

Today, over 25 percent of the more than 20 million Americans over the age 
of 65 live below the poverty level. Moreover, more than 300 thousand citizens 
earn less than five thousand dollars per annum. 

In light of the financial plight of our senior citizens, I have introduced a 
package of bills designed to relieve this burden. My proposals would provide 
these citizens with the opportunity to enjoy the fruits of their labors instead of 
merely being provided with an income which is barely adequate enough to live 
on. In addition, these individuals are on a fixed income and any increase in the 
cost of living simply magnifies the problem. One of the bills in my package of 
social security reforms, H.R. 9672, would include prescription drugs under 

Health care is a primary factor in the older Americans' battle with inflation. 
Nearly seven out of every eight Americans over the age of 65 have a heath 
problem vphich requires some type of constant care, either with medicine and 
doctor's visits or hospital and nursing home care. For many, however, the 
greatest expenditure is for the purchase of prescription drugs which can run as 
high as hundreds or thousands of dollars yearly for these citizens, none of 
which is covered by Medicare. 

Is this the way we reward those citizens who have worked so long and so 
hard to build this country? These are the people that have transformed the 
United States into the technological giant that it is today. These people have 
contributed into the social security system for many years only to discover thai 
the payments which they receive after they have retired are grossly inadequate. 

My bill, H.R. 9672, and others like it would help solve this problem by extend- 
ing medicare benefits to cover the cost of prescription drugs to medicare recipi- 
ents. Also, a minimum payment of one dollar per prescription is required by the 
beneficiary, so that low cost items are excluded. 

Mr. Chairman, at this point I would like to include for the record, a Library 
of Congress, Congressional Research Service report which analyzes the views of 
the American College of Apothecaries on my bill, H.R. 9672. The report follows : 

The Librart of Congress, 
Congressional Research Service, 
Washington, D.C., January 20, 1972. 
To : Honorable Mario Biaggi. 
From : Education and Public Welfare Division. 

Subject : Views of the American College of Apothecaries on drug insurance under 

This is in response to a request made some time ago by Mr. Peter K. Uchuk of 
your staff for a review of a number of legislative recommendations suggested by 
officials of the American College of Apothecaries regarding certain features of 
H.R. 9672. This bill was introduced by you in July of last year. It would amend 
the present program of health insurance for the aged, or medicare program, by 
providing protection against the costs of certain prescribed and other drug prod- 
ucts purchased on an outpatient basis by older people. Such a benefit is not now 
a part of the medicare program. 

In his communication, Mr. Ilchuk indicated that there was no need for an im- 
mediate reply to his inquiry. We have delayed a response this long, because of a 
possibility that drug insurance proposals for the medicare program might have 
received attention in social security hearings before the Senate Committee on 
Finance before the end of the 1st Session of the 92nd Congress. As you know, no 


hearings were held, but are now scheduled to begin later this month. This report, 
therefore, may be of timely interest to Mr. Ilchuk. 

In a letter from the American College of Apothecaries, four specific changes 
to your bill were proposed. Each of these changes is discussed below. In the 
event that Mr. Ilchuk has any questions regarding this report, please have him 
give us a call. 

Recommendation No. 1 — Discounting of the copayment. — As it is presently 
drafted, H.R. 9672 would amend the hospital insurance portion of the medicare 
program to provide benefits toward the costs of certain prescribed and other drug 
products purchased by insured persons on an outpatient basis from participating 
vendors of pharmaceutical services (e.g., participating retail community phar- 
macies). Such participating pharmacies would provide the aged with drug serv- 
ices and, in turn, bill the Federal Government for reimbursement for the costs of 
such services. Under the bill, reimbursement would be based upon the lesser of (1) 
an amount established for each prescription drug in accordance with provisions 
in the legislation or (2) the actual, usual or customary charges at which the 
{)harmacy usually sells or offers the drug to the public. 

The actual amount of reimbursement to which a vendor would be entitled would 
be reduced by a fixed monetary amount per each prescription filled. This amount 
is known as a copayment and would be set at $1.00 per prescription at the be- 
ginning of the program. The copayment amount could be increased in future 
years to reflect any increases in the costs of drug benefits under the program. 
Sponsors of similar or identical drug insurance proposals have always assumed 
that vendors would collect the copayment amount from each beneficiary at the 
time of each prescription purchase. The bill would amend an existing provision 
in the medicare program permitting vendors to make such collections before dis- 
pensing prescriptions to the aged insured under the program. 

The American College of Apothecaries has expressed concern, however, that 
some vendors might discount a portion or all of the copayment amount required 
by the legislation. The Apothecaries suggest that discounting could seriously 
compromise any utilization control value that a copayment system might bring 
to a drug benefit program and that such discounting would also interfere with the 
"delivery of complete professional pharmaceutical service." The College proposes 
amendments to make it clear that patients would be responsible for meeting the 
ropayment requirement and that any discounting on the part of vendors would 
result in banishment from participation in the medicare program. 

Although College officials are not explicit on this point, it seems clear that 
they are concerned about the possibility that some vendors would use discount- 
ing as a loss-leading device to attract elderly beneficiaries to their particular 
retail establishments. In other words, discounting could result in "unfair" com- 
petition. Most small independent pharmacies do depend upon their prescription 
business for a substantial portion of their sales volume and "unfair" competi- 
tion from discounters could seriously affect their capacity to survive. The pre- 
scription business of discounters, on the other hand, may only account for a 
small portion of their total sales volume, so that discounting of the copayment 
could be an attractive policy to pursue. Precisely how widespread such discount- 
ing might become, however, is difficult to estimate. 

The bill was not designed to resolve small business problems in the retail 
drug industry nnd, therefore, does not deal with the discounting issue insofar 
as the copayment features of the legislation are concerned (there are provisions 
in the hill which take into account the sometimes wide disparities in the prices 
charged by drug suppliers to different classes of retail pharmaceutical outlets). 
If. however, you believe that the bill should be amended to deal with a potential 
copayment discounting problem, there are several alternatives you might wish to 
examine. One approach, of course, is to incorporate the amendatory language 
proposed by the College of Apothecaries. A second way would involve an amend- 
ment to section 3(e) of the bill which presently authorizes a pharmacy vendor 
to collect the copayment. This provision could be changed to require collection 
of the copayment and to require, as a condition of participation, that the vendor 
certify that such collections have been made with respect to all bills submitted 
for reimbursement to the Government. Still another approach would involve 
an amendment to the new section lS19(a) proposed in the bill dealing with maxi- 
mum allowable cost. Section 1819(a)(1)(B) could be changed to read "the 
actual, usual, or customary charge at which the dispenser in fact sells or offers 
the drug to each beneficiary." Under such a provision, discounters of the copay- 


ment could lose as much as $2.00 per prescription submitted for reimbursement, 
a significant economic disincentive against discounting : 


Ingredient costs of a cover drug .$."i 

Reasonable fee recognized 2 

Total charges 7 

Reimbursement to non-discounter : 
Patient pays $1 copayment 

Government reimbui-ses on basis of actual charges minus the .$1 co- 
Payment to vendor equals $6. 
Reimbursement to discounter : 

Copayment discounted entirely 1 

Actual charges 6 

(Government reimburses on the basis of actual charges minus the 
copayment of $1.) 
Payment to vendor equals 5 

There are a number of ways of dealing with the copayment discounting 
issue, if Mr. Ilchuk desires to explore this matter greater detail. 

Recommendation No. 2 — Drugs excluded from the formulary.- — The bill adds a 
new section 1818 to the Social Security which would establish within the De- 
partment of Health, Eduction and Welfare a committee known as a Formulary 
Committee. This Committee would be assigned a number of responsibilities in 
connection with the drug insurance program proposed in the legislation. Among 
other things, this Committee would be responsible for establishing a Formulary 
of drugs for which reimbursements would be made under the program. 

Section 1818(d) (5) of the bill authorizes the Formulary Committee to exclude 
from the Formulary those drugs which the Committee, in its professional judg- 
ment, does not find necessary for proper patient care. Such decisions to exclude 
any drugs would have to take into account the availability of alternative sub- 
stances listed in the Formulary. The College of Apothecaries has propo.sed to 
amend this section of the bill to require that any decisions of the Committee to 
exclude drugs be supported by "the National Academy of Pharmaceutical 

The bill, as it is now drafted, contains a number of provisions that are intended 
to assure that full and complete drug information is available to the Formulary 
Committee when it considers whether to include or exclude a drug from the 
Formulary used for medicare reimbursement purposes. The composition of the 
Committee itself is also intended to assure that a variety of expert judgment is 
at hand during Committee deliberations. It is not clear, therefore, why the Com- 
mittee's decisions to exclude certain drugs from the Formulary coincide with 
the views or findings of a specific expert panel out-side of' the Department of 
Health, Education and Welfare. It could be argued that there are any number of 
such organizations whose views on certain drugs are important enough to limit 
the Committee's ability to act in this area. Should each of these groups be 
named in the legislation? How would the Secretary resolve differences of opin- 
ion among these different groups, or would the existence of such differences pre- 
vent tlie Committee from taking any action at all? It could also be argued that, 
if the Committee's decision to exclude a drug had to coincide with the findings 
of some independent panel, then why use a Committee at all to make these de- 
cisions? The recommendation of the College of Apothecaries might be evaluated 
in light of some of these questions. 

Recommendation No. 3 — Hearinrjs pursuant to delisting of a drtirj. — As now 
drafted, the bill establishes a hearings procedure for manufacturers whose drnsrs 
might be removed from the Formulary by the Committee. The College of Apothe- 
caries proposes that such an opportunity for a hearing be granted to all medical 
practitioners as well. Since the Committee would be in a position to evaluate a 
brond range of information about specific drugs, before proposing delistinir. it is 
not clear what purposes would be served by permitting each and every prnctitioner 
an oiii)ortunity for a formal hearing on the Committee's proposed action. The 
College's proposal could, in fact, prevent the Committee from ever delisting any 
drug whatsoever from the Formularv. 


It might also be argued that individual practitioners do not have .sufficient in- 
terests regarding delisting actions to warrant granting them an opportunity for 
a hearing or judicial review of a Committee determination in this area. Nothing 
in the legislation prevents any practitioner from prescribing any drug he chooses 
to order for his patients. 

The Formulary features of the bill are only intended to help decide whether 
the patient or medicare would pay for such prescription. Furthermore, unlike 
manufacturers, practitioners have no economic interests at stake in Committee 
decisions to delist specific drugs, since they are not involved in paying for the 
drugs they order. Before considering the College's recommendation, therefore, 
perhaps a rationale should be supplied for including practitioners in the hear- 
ings process. 

Recommendation No. 4 — Inclusion of drugs in the formulary. — The College's 
fourth recommendation is a variant of No. 3 above. Under the bill, a manufacturer 
is entitled to petition the Committee for the inclusion of a drug in the Formulary. 
If such a petition is denied, a hearing may be sought and judicial review if neces- 
sary. The College proposes that individual practitioners be granted the same op- 
portunities for petition, hearing and judicial review. As before, it is suggested 
that a rationale be obtained, in order to evaluate the desirability of including 
such a change in your bill. 

We hope this brief review is of some assistance to Mr. Ilchuk, and if we can be 
of further help in this matter, please let us know. 

Glenn Markus. 

Statement of Hon. Garry Brown, a U.S. Representative in Congress 
From the State of Michigan 

Mr. Chairman and distinguished members of the Committee, I very much 
appreciate this opportunity to present brieliy what I consider to be a few of the 
pertinent facts and reasons compelling amendment of tli,e social security legisla- 
tion currently being considered by this Committee to provide outpatient prescrip- 
tion drug coverage under Medicare. 

As you know, the largest health-care cost of the elderly not presently covered 
by Medicare is out-of-hospital prescription drugs. While the elderly constitute 
approximately 10 percent of the American people, they account for well over 20 
percent of all outpatient prescriptions and for 25 percent of all outpatient drug 

The nation's elderly assume these continually increasing medical-care costs, even 
though those over 65 years of age, on the average, live on less than half of the 
income of those under 65 years. The sad fact is that older persons in America are 
twice as likely as younger persons to be poor. 

Under the resulting, often intolerable financial circumstances, older people 
currently live without any substantial private insurance protection. Only about 
three million older people — about 15 percent — have any private insurance pi'otec- 
tion covering drug costs. Nearly 17 million senior citizens have no private pro- 
tection whatsoever. 

Present law only covers the cost of drugs furnished to patients in hospitals and 
extended care facilities and drugs administered in a physician's office which 
cannot be self-administered. 

Given these and other similar, supporting facts, I have sponsored in the House 
of Representatives legislation which would provide outpatient prescription drug 
coverage to senior citizens under Medicare. This Committee, of course, is pres- 
ently considering Senate companion legislation offered to amend the Medicai'e 
portions of the Social Security Act. I urge the Committee's adoption of S. 936. 

Simply put, it is unfair to force the elderly to bear the constantly increasing 
cost of their own medical treatment at a time in their lives when they are least 
prepared to afford it, living as most do on small, fixed incomes. 

Aside from the inequity worked by present law, the law makes for I)ad public 
policy. Presently, the Federal Government is in the position of underwriting the 
costs of hospitalization, including drugs, while failing to provide an ounce of pre- 
vention by underwriting the cost of outpatient prescription drugs, an expenditure 
which in tending to make needed drugs more accessible to the elderly might also 
be expected to reduce the numbers needing institutionalization. It is a case of 
being penny wise and pound foolish. 

There is, of course, an inconsistency in a policy which would have the Federal 


Government pay for drugs taken in a hospital but not pay for the equally neces- 
sary expense of having to take many of the same drugs out of a hospital. 

Of course. Mr. Chairman, I realize that equity and the demands for a coherent, 
reasonable public policy are not in and of themselves suflScient cause for change 
unless these two goals can be realized in a change capable of practical, economical 
and effective implementation. I am convinced that in this instance they can be, 
and I think facts and reason bear me out. 

To emphasize the practical, economical nature of the proposed change, I briefly 
summarize it now, noting the rationale of some of its main provisions. 

Under the proposed plan, the beneficiary would simply go to the pharmacy of 
his choice. If the needed drug were on a list of medically necessary drugs covered 
by the program, he pays the pharmacist $1 to fill the prescription. The list of 
"medically necessary drugs" would be annually drawn up by a committee of 
physicians. If the drug is not covered, he pays for it the same way he does now un- 
der Medicare — out of his own pocket. 

Virtually everyone over 65 would be eligible, and thus, the administrative costs 
of ascertaining eligibility would be eliminated. 

The need for a prescription and the listing of drugs covered by the program 
would provide safeguards against abuse. 

The proposed amendment would have the pharmacist reimbur.sed by the pro- 
gram, providing protection to the elderly under part A of the hospital insurance 
portion of Medicare. By providing the benefits under part A, the program is 
financed through regular payroll deductions; the individual thus paying for his 
drug insurance during his working years when he is financially most able. 

Amending part A also relieves citizens of the burden of recordkeeping and the 
need to file large numbers of small claims, and saves the considerable administra- 
tive expenditure that would be required to handle and process such claims. Fiir- 
ther. it permits maximum of automatic data processing in handling claims. 

Mr. Chairman, the amendment being considered here in the Senate, and its 
companion legislation in the House, are the result of considerable study. 

The proposed inclusion of outpatient prescription drug coverage under Medi- 
care has been endorsed by numerous conferences — including the White House 
Conference on Aging, government agencies — including the Social Security Ad- 
ministration, and various groups in the private sector — including the American 
Pharmaceutical Association, to say nothing of the many other expert witnesses 
who have testified before this Committee. 

The time has come to act. Equity, the need to establish a sound, coherent policy, 
and the practical efficacy of the proposed amendment along with its overwhelmine 
support among those most aware of the problems of the aging, compel adoption of 
this plan to include outpatient prescription drug coverage under Medicare. 

Thank yon. 

Statement of Hon. Ctt.^rtes .T. Carney, a U.S. "Represextative in Congress 
From the State of Ohio 

Mr. Chairman, I share eompletelv the views of many of our colleagues that 
there is an urgent need for immediate amendment of the medicare program to 
provide insurance protection nsrninst thp costs of outpatient prescription drugs. 

For over five years the question of drug coverage under Medicare has been 
under contimiing studv by various task forces and commissions. This data has 
now been compiled and analyzed : the recommendations proposed and evaluated. 
The results of these protracted investigations are not surprising for they con- 
firm that the aged are burdened by drug costs. But the results are disturbing 
because they demonstrate the weight of that burden and the absence of possible 
relief from other sources. 

As a group, the elderly comprise approximately 10 percent of the population. 
And yet they account for well over 20 percent of all outpatient prescriptions and 
for 25 percent of all outpatient drug expenditures. For some of the aged out of 
pocket expenditures for drugs reach hundreds of dollars annually. Medicare at 
present provides no relief from these enormous costs. 

It is true, of course, that many older T>eople have purchased additional health 
insurance protection on their own to romplement the protection afforded by 
Medicare. However, this additional protection does not usually include the 
coverage of outpatient pre.scription drugs. The Social Security Administration 


recently reported that only about 3 million older people, about 15% of the 
elderly, have managed to obtain out of hospital drug insurance. 

About the time that one of the first studies on jnedicare coverage of outpatient 
prescription drugs began in 1967 the average annual expenditure by the aged for 
outpatient prescription drugs was $54.15. During fiscal year 1969 the private 
expenditures for prescription drugs and drug sundries purchased by the aged 
was $70.25. 

In the face of the increasing burden that the costs of drugs places on the aged, 
it would be a grave oversight on the part of the Congress to ignore the gaping 
hold in Medicare coverage which now exists because of the omission of a drug 
insurance benefit. Therefore, Mr. Chairman, I strongly recommend that the Sen- 
ate Finance Committee adopt Amendment No. 464 to the Bill, H.R. 1. 

Statement of Hon. Shirley Chisholm. a U.S. Representative in Congress 
From the State of New York 

outpatient prescription drug coverage 

Mr. Chairman, members of the Finance Committee, I am thankful for this 
opportunitv to testify on the outpatient prescription drug coverage amendment 
to H.R. 1. * 

As pointed out by the recent White House Conference on Aging, our senior 
citizens have too long been a forgotten segment of our society. The old adage 
"out of sight, out of mind" seems to have been applied to them. But for those 
who must live out their lives in a nursing home or in a lonely apartment with 
only an occasional visitor, life has become a burden, often complicated by the 
crippling effects of those ailments that appear with advanced age. 

Old age is trying enough for anyone; for the elderly who are in ill health, 
the burdens are multiplied. The ailing senior citizen has a diflSciUt time just 
getting to a doctor's clinic. Until the introduction of medicare, he had a hard, 
sometimes, imjwssible struggle to meet the costs of medical care while subsisting 
on a meager pension or on social security payments. Now, at least, that cost has 
been partially met through the advent of medicare payments to the aged who 
need certain types of medical care. 

But in the years since the passage of medicare, the elderly have become pain- 
fully aware that there are gaps in medicare coverage. One of these — outpatient 
prescription drug coverage — has a large negative effect on the jwcketbooks of the 
elderly. Some, for example, must pay more for drugs than for food. Others, who 
cannot afford the drugs their doctor tells them they need, must limp along with- 
out the necessary prescriptions. This, of course, renders their medical care 

Gentlemen, the time has come for us to include outpatient prescription drug 
coverage under medicare. Inclusion of drug costs in the medicare benefits of 
those confined to hospitals has given us a sound rationale for extending such 
benefits to outpatients : it shows that we have recognized that many senior citi- 
zens cannot afford to pay their drug prescription costs. 

One major objection to the inclusion of outpatient drug coverage under medi- 
care will be its I say to you that a nation that could afford to pay its elderly 
social security benefits 35 years ago is strong enough to sustain the cost of 
aiding them today. A nation that in the last decade initiated medicare supiwrt 
on the grounds that the elderly desperately need health care support cannot 
turn its back today on a vital ingredient in health care — prescription drugs. 

We must remember that this proposal is structured so as to get the maximum 
amount of prescription drug aid for each dollar. First, in determining the maxi- 
mum allowance for drugs which may be available from a number of comi>etiug 
companies, the formulary committee, which sets such allowances, will capitalize 
on drug industry competition by weighting its allowances in the direction of the 
lowest-priced, best-quality versions of a drug. Second, we will be capitalizing on 
the les.sons we learned from administering the pioneering medicare programs 
in the 60s. Third, with their one dollar per prescription contribution, the elderly 
will have a stake in keeping program costs down. 

Gentlemen, we have a moral obligation to serve those who have served us so 
long and well. The health and welfare of the impoverished elderly depend on 


what action you take to ping up this loophole which is so costly to the elderly 
.so that they can live out their remaining years with a modest standard of living. 
I hope that when you make your decision, you make it with the interests of our 
senior citizens in mind. 

Statement of Hon. Robert F. Drinan, a U.S. Representative in Congress From 
THE Commonwealth of Massachusetts 

Mr. Chairman and distinguished members of the Committee : 
I am grateful for the opportunity to testify in support of Senator Montova's 
proposal— originally introduced as S. 936 and now pending before your Committee 
as an amendment to H.R. 1 — to include outpatient prescription medication cover- 
age in a drug insurance program under Medicare. 

Before I begin. I wish to commend Senator :Montoya for his five years of dedi- 
cated effort in his area, and Representative David Obey, whose companion legis- 
lation in the House of Representatives (H.R. 235.5) now has 113 cosponsors as 
a result of more than a year of diligent work. I also wish to thank the Chairman 
of this distinguished Committee, who since 1967 has lent his considerable prestige 
and support to the passage of this legislation. 

Although the elderly comprise only 10 percent of our national population, 
they account for approximately 25 percent of all expenditures made for pre- 
scription drugs purchased outside of hospitals or other institutional facilities. 

This is understandable, since SO percent of the elderly suffer from chronic 
disease or other ailments, as opposed to about 40 percent of those under 65 years 
old who suffer from such ailments. Yet the elderly also happen to be one of the 
nation's poorest minorities, with per-capita earnings substantially below the 
national average. America's senior citizens, with limited income and limited sav- 
ings, must face the heavy burden of drug costs precisely at the moment when 
financial resources are dwindling and the need for prescription drugs is increasing. 
The resulting financial squeeze can put terrible, terrible strains on the nation's 

In Leomin.ster, Massachusetts, for example, a retired man living on Social 
Security payments of $307 a month suffered a debilitating stroke which cost 
him his ability to move and his ability to speak. His wife, who suffered from 
diabetes and a severe kidney ailment, could manage to save enough for her hus- 
band's medication only by skimping on her own. She suffered greatly — and need- 
lessly, I might add. had Senator Montoya's l)ill been passed years ago. 

The elderly spend an estimated 20 percent of their private medical expendi- 
tures on prescription medication, their largest single-out-of-pocket outlay. Yet 
Medicare, which has been reasonably successful in reducing the cost of hospitaliza- 
tion and in-patient medical care, affords no relief for the long recuperative periods 
when prescription drugs are the major expense. Perhaps it is this fact that 
prompted the Department of Health, Education and Welfare's Task Force on 
Prescription Drugs to include in its report the following recommendation : 

We therefore find that, in order to improve the access of the elderly to high 
quality health care, and to protect them where possible against high drug 
exi>enses which they may be unable to meet, there is a need for an out-of- 
hospital drug insurance program under medicare. 

These words were written three years ago. It is my belief that we should 
enact such a program immediately, without further delay. The legislation we 
are considering today is the product of almost five years of refinement and re- 
search. It has been endorse by thr AFL-OIO Executive Council, the National 
Council of Senior Citizens, the American Pharmaceutical Association, and many 
other orffanizations. 

It is the most comprehensive, most workable bill Congress has ever produced on 
this subject. 

I would like to comment on some of the specific provisions and features of this 

First, the legislation is financed under the Part A "Hospital Insurance Pro- 
gram" portion of Medicare, which in my opinion is one of its most commend- 
able features. Individuals will pay for the drug insurance program during their 
working years, rather than later when retirement reduce.? income .sharply. It is 
this provision which makes possible the one-dollar copayment feature, the key- 
stone of the entire program. 

Second, the legislation retains the "formulary" provisions included in previous 


bills but refiued in the bill we consider today. A "Formulary Committee" of dis- 
tinguished doctors and druggists would select the drugs to be covered, place 
them on a master list, and distribute the list to participating pharmacies. In pre- 
paring the list, the drugs would be listed by generic name rather than brand 
name, and would be Included under a "maximum allowable cost" provision which 
Avould lower the overall cost of drugs on the list. 

And third, the legislation has as its most important feature a one-dollar co- 
payment provision. Medicare beneficiaries would go to a participating pharmacy 
and purchase any drug listed in the formularly for $1. If the prescribed drug is 
not on the list they would pay for it out of their own pockets, as they do now. 
The pharmacist would then be reimbursed by Medicare on the basis of maximum 
allowable cost plus a small professional fee. Thus the program would be easy to 
administer and would permit Medicare beneficiaries to purchase prescription 
drugs at a reasonable price without any bothersome paperwork at all. 

I would like to say one additional word about cost Several people have 
criticized this legislation on the grounds that it is prohibitively expensive. I an- 
swer : nonsense. Of course the program is expensive — most important programs 
are, especially those which Congress delays action on for five years. But even the 
most inflated cost estimate I have seen amounts to a fractional increase in total 
Medicare expenditures — an increase, I might add, which does not even keep pace 
with the increase in prescription drug costs since this legislation was first pro- 
posed.^ Furthermore, to quote from Senator Montoya's testimony before this 
Committee : 

As the Committee knows, I have had very troublesome experiences with 
HEW on cost estimates in the past. I should like to submit that, based on 
those experiences, any estimate will be inflated. At no time have they taken 
into consideration the experiences of such programs after the initiation of a 
formulary. We therefore must assume that the costs will be less than we 
will be asked to assume. 

With the increased wage base under H.R. 1 and the moderating influence 
of wage and price guidelines to keep Medicare costs within bounds, there is no 
reason in the world for claiming that the drug insurance program is prohibitively 

"For many elderly people." concluded the Task Force on Prescription Drugs, 
"illness serves as a major cause of their poverty by reducing their incomes, while 
poverty serves as a major contributory cause of illness by making it difficult for 
them to obtain adequate health care." Could it be that by attacking the prescrip- 
tion drug problem we are attacking the poverty problem as well? 

I think so. We have a bill which is easy to administer, reasonably priced, and 
visionary in scope. But most important of all, we have a bill which in some small, 
tentative way begins to repay our enormous debt to America's elderly citizens. 
With this one bill, we can make progress on two important fronts — improving 
medical care for the aged, while simultaneously taking a genuine step to solve 
the poverty problem. This legislation will go far to justify the faith that the 
elderly have in their government, a faith which has lasted until now but which 
cannot help but diminish if Congress does not justify it soon. 

We have ignored the special needs of the elderly. Now, perhaps, we have an 
opportunity to justify their patience. Let us hope it is not our last chance. 

Statement of Hon. Joshua Eilberg, a U.S. Representative in Congress From 
THE State of Pennsylvania 

co^t:rage op outpatient prescription drugs under medicare 

Mr. Chairman, five years ago the Congress directed the Secretary of Health, 
Education and Welfare to study the possible coverage of outpatient prescription 
drugs under Medicare and to report back to us on the need for and the design 

1 The National .Tournal estimates the cost of the druff prescription program at $1.7 
billion — 22.7% of Medicare's .$7. .5 billion budget for Fiscal Year 1971. 

From 1967 (when Senator ^lontoya introduced his first legislation on this subject) 
until 1970 (the last year for which figures are availalile), the per-capita expenditure for 
prescription drugs for those over 65 years old increased from $40.6.5 to $50.94 — an 
increase of 25.3%. (Figures from the Social Security Administration's Prescription Drug 
Data Summary, table 1.4). 


of a workable program. The results of that study were forwarded to the Cougress 
on February 7, 1969, over two years ago. Those results provide irrefutable 
evidence that the need for such a program does exist. As a group, the elderly 
comprise about 10 percent of the population, but they account for well over 20 
percent of all outpatient prescriptions, and for 25 percent of all outpatient drug 
expenditures. Private insurance protection for the cost of prescription drugs is 
not a realistic alternative for the bulk of the elderly. The Social Security Admin- 
istration recently reported that only about 3 million older people, or about 15 
percent of the elderly have managed to obtain out-of-hospital drug insurance 
from private sources. 

During the time that the question of Medicare coverage of prescription drugs 
has been studied and considered, the burden of drug costs on the elderly has 
grown progressively greater. In 1967, about the time that the HEW study of 
the problem began, the average expenditure by the aged for outpatient prescrip- 
tion drugs was $54.15 ; during fiscal year 1969, the private expenditures for 
prescription drugs purchased by the elderly was $70.25. Clearly, the cost of 
Congressional inaction has fallen on those of our citizens least able to bear it. 

Therefore, Mr. Chairman, I am proud to join your colleague, the Honorable 
Joseph Montoya of New Mexico in the general effort to provide coverage of 
prescription drugs under Medicare and many of my colleagues in the House of 
Representatives in cosponsoring H.R. 2235. This bill, which embodies many 
of the administrative features recommended by the government study groups, 
would establish outpatient drug benefits as part of the Medicare hospital insur- 
ance program. Under the proposal, community pharmacies and other qualified 
pharmacies would enter into agreements with intermediaries or other agencies 
to provide a wide range of pharmaceuatical services for medicare beneficiaries. 
Through this "vendor" approach, the patient would be relieved of claims record- 
ing and filing responsibilities and the need for numerous exchanges of small 
benefit amounts would be eliminated in favor of consolidated transactions 
between the vendors and the intermediaries. 

In addition, beneficiaries would incur a one dollar copayment for all prescrip- 
tions filled under the program so that both patient and provider would know 
the extent of the patient's liability at the time the services are provided. The 
bill also contains a provision for adjusting the amount of the copayment to 
reflect changes in the general level of prescription prices. 

Mr. Chairman, I commend this important piece of legislation to the members 
of this committee for their careful consideration and for inclusion among the 
provisions of the Social Security Amendments- Welfare Reform Act of 1971 (H.R. 
1 ) when reported to the full Senate. 

Thank you. 

Congress of the United States, 

House of Representatives. 
Washington, D.C., August 12, 1971. 
Hon. Russell B. Long, 
Chairman, Senate Finance Committee, 
yew Senate Office Building. 

Dear Mr. Chairman : ^Mien H.R. 1 was before the House in June, I voted to 
strike Title IV because I felt that this legislation represented an inade(iuate 
response to the need for meaningful welfare reform. 

If true welfare reform is to be enacted in this session of Congress, it is 
incumbent upon the Senate, and particularly the members of the Senate Finance 
Committee, to draft legislation which improves on the House passed bill in a 
number of areas. 

I would like to urge adoption of the following provisions : 

1. States must maintain their present level of benefits. No welfare recipients 
should be worse off financially under the new program than they are under the 
present AFDC system. President Nixon made this comment to the nation when 
he announced his welfare reform program in August. 1969. 

In the vast majority of states, recipients are currently receiving higher bene- 
fits than the $2400 floor established in H.R. 1. The federal government must 
pledge to undertake a significant percentage of the cost if the states are realis- 
tically to be expected to supplement the new federal payment levels. The hold 
harmless provision does not provide sufficient assurance that states will main- 
tain their current level of benefits. 


2. The $2400 benefit level for FAP-OFF recipients is inadequate and inequi- 
table. Administration spokesmen have admitted that such is true. We cannot 
establish a payment level that Is woefully below the poverty level as determined 
by the Department of Labor. Neither can we adopt a payment standard which 
would result in an aged couple receiving the same stipend from the government 
that a poor family of four does. 

S. Payments to FAP-OFF families must be adjusted automntically to the rise 
in the cost-of-living. This principle has been adopted for Social Security bene- 
ficiaries under Title I of H.R. 1. If it is not extended to FAP-OFF recipients, 
their status as second-class citizens will again be worsened. 

Ji. Mothers of children under six must not be required to seek job training. 
Under current law, the mother may remain in the home until her child reaches 
the age of six. The Administration supports keeping the age level at this poAnt. 
The change in the law under H.R. 1 is certainly not in accord with effortsf to 
strengthen the family unit of the welfare recipients. 

5. Adequate funding must he provided for child care centers and for the job 
training-employment aspects of the bill. We cannot force mothers to register for 
job training if the child care available for their off-spring is not in the best inter- 
ests of the well being of those children. That will assuredly not be the case if we 
fail to increase the present allocation of $2 billion for the child care of l\i million 

It is the Administration's estimate that 2.6 million families contain people who 
will register for employment services. Yet H.R. 1 provides for only 412,000 train- 
ing and job placement slots and 200.000 public service jobs. The sum allotted for 
job training is only $540 million. We cannot hold out child care centers and job 
training as panaceas to the endless cycle of welfare dependency if we fail to fund 
these programs at a realistic level. 

6. Restrictions on college-level training programs for recipients must be elimi- 
nated. H.R. 1 currently prohibits assistance payments to a family whose head of 
household is a full time college student. This provision, if allowed to stand, could 
seriously cripple useful new programs such as the one at the University of 
Minnesota where 400 AFDC recipients are enrolled on a full time basis. 

7. Proper working conditions must be insured for tvelfare recipients. People 
should not be forced to accept work at $1.20 an hour, three-fourths of the federal 
minimum wage. The only provision in the bill limiting the types of jobs to which 
recipients can be assigned is a prohibition against their being used to break 
strikes. Further protections must be added to the bill to guarantee that employed 
welfare recipients will not be forced to work under substandard conditions. 

8. The rights guaranteed to welfare recipients under current law must not be 
tampered with. The provisions of H.R. 1 permitting the states to reimpose resi- 
dency requirements and weakening the procedural rights of welfare recipients are 
most glaringly in disaccord with this principle. If we expect welfare recipients to 
become full citizens of our society, they must be treated as such. 

9. Eligibility for assistance must be based on the current need of the applicant. 
H.R. 1 would disqualify any person who had earned an amount of income over the 
previous nine months that, if earned regularly, would make him ineligible for 
assistance. This provision is highly discriminatory towards seasonal workers, such 
as migrant laborers. This marks a change from the present practice of eligibility 
being based on current need. 

10. Assistance must be provided for indigent couples without children as icell as 
single individuals. At present some states have undertaken such assistance pro- 
grams without any federal financial assistance. Coverage should be extended to 
such individuals under the Family Assistance Plan. 

Thank you for your consideration. 

DOXALD M. Fkaser. 

Statement of Hon. Robert N. Giaimo a U.S. Representative in Congkess Feom 
THE State of Connecticut 

Mr. Chairman : May I thank you and the members of your committee for 
allowing me this opportunity to present a statement in favor of outpatient pre- 
scription drug coverage under Medicare. 

If I had to select the most pressing social needs that should be dealt with 


realistically during the current session of Congress, the need for outpatient pre- 
scription drug coverage, especially for the elderly poor, would be high on the list. 
There are presently 113 cosponsors of legislation to amend H.R. 1, and 11. R. 
6234, of which I am a cosponsor, would satisfy this pressing need. It is striking 
that these supporters represent a broad cross section of the nation as well as the 
concerned chairmanships and sul)Coumiittees of the House of Representatives. 

The legislative need is obvious, most notably in the economic sphere relative 
to our elderly poor. At present, there are over 20 million Americans covered l)y 
Medicare. Of these, four and a half million are older Americans beneath the 
poverty threshold. Since the median annual earnings of the elderly poor is around 
$1,888, it is difficult to believe that any of this deserving group could atford out- 
patient prescription drugs that are required for long-term use in easing or elimi- 
nating medical problems usually confronting the elderly, specifically heart 
disease, high blood pressure, arthritis or kidney disorders. 

As the Senate Special Committee on Aging reported, poverty for persons 60-64 
years old has increased from 1968 to 1970 by almost 100,000. While these aged 
citizens comprise only ten percent of the population, around one-fourth of the 
1.7 billion annual prescriptions for drugs are for the elderly. With the cost of 
drugs being what they are, it is inconceivable to exi)ect that the aged poor could 
continue to pay for outpatient health-sustaining drugs without incurring severe 
economic losses. 

I could not support a measure to provide outpatient prescription drug coverage 
under Medicare unless I believed it was economically, medically and administra- 
tively feasible. In 1967, when the Administration first studied the matter, it was 
concluded that a drug coverage program would have to be designed meticulously 
to avoid (1) a giveaway syndrome, (2) bureaucratic entanglements, and (3) 
arbitrary selection of the drugs to be provided. During the Nixon Administra- 
tion, there have been two studies on the subject and each has empha.sized the 
need for drug-selection management and financial control. I believe that H.R. 
6243 includes decisive provisions to satisfy these requirements. 

Drug selection, insuring that safe, effective and only necessary drugs are cov- 
ered by the outpatient prescription program, would, as authorized by the bill, be 
accomplished by a Formulary Committee, a body consisting of meml)ers in the 
fields of medicine, pharmacology, and pharmacy. This committee would prepare 
an indexed listing of the favored drugs which would be delivered to all regis- 
tered pharmacists. In order for a Medicare patient to take advantage of cover- 
age, the drug he desires to purchase at a participating pharmacy of his choice 
must be on the list prepared by tlie Formulary Committee. 

Financial advantages exist in the copayment system provided by the bill. The 
beneficiary, to receive the prescription on the formulary list, must pay $1.00 out 
of his own pocket. The $1.00 copayment, regardless of the type of drug prescribed, 
is a fixed fee. This copayment provision, by alerting the user that he is sharing in 
the cost of his required prescriptions, should promote cost effectiveness. 

When we speak of the elderly jwor, we sometimes fail to remind ourselves that 
it is often their illnesses and the sort of outpatient drugs that have caused their 
poverty. By amending H.R. 1 and delivering to the poor under Medicare an out- 
patient prescription drug coverage program, many unnecessary poverty condi- 
tions can be eliminated and many lives extended. 

At this point, I would like to add that H.R. 6243 and identical bills have the 
support of the American Pharmaceutical Association, the AFL^CIO Executive 
Council, the Senate Special Committee on Aging, twelve members of the House of 
Representatives Appropriations Committee, to inclv;de two subcommittee chair- 
men six members of the House Ways and Means Committee, the distinguished 
chairman. Honorable Harley Staggers, and nine members of his House Interstate 
and Foreign Commerce Committee. 

Considering the broad support and the pressing needs of our elderly, which 
were confirmed again during the recent White Conference on Aging, it 
appears that the time has arrived for outpatient prescription drug coverage 
under Medicare. I desire continued and new support for such legislation which 
is contained in H.R. 6243 of which I am a cosponsor. I strongly urge that it be 
dignified by this committee as soon as possible reported and transformed into 
law. The Septembers of our aged citizens need not be cruel. 

Thank you verv much. 


Statement of Hon. Ella T. Grasso, a Representative in Congress from the 

State of Connecticut 

amendment 464 to h.r. 1 

Mr. Chairman, prescription drugs must be made available to older Americans 
under the Medicare program. 

There is no reason for the elderly to continue to bear the burden of the high 
cost of out-of-hospital prescription drugs. It is inexcusable that many of them are 
forced to resolve a dilemma between tv^'o grim alternatives — either enduring pain 
or incurring additional expenses which overtax their incomes. 

Today, one out of every ten Americans has passed his 65th birthday, and some 
70 percent of this group have joined since 1961. Nearly 46,000 elderly persons 
live in Connecticut's Sixth District alone. 

Throughout the country, millions of the elderly exist with an income below the 
poverty level ; their median income is below $2,000. These people are cruelly 
punished by increases in the cost of living. 

It is a cruel and unfortunate fact of life that as we grow older, we acquire more 
ills and longer illnesses ; with these come greatly increased medical expenses. It 
has been estimated that the elderly incur health care expenses 275 percent higher 
than the costs borne by any other segment of society. Older Americans comprise 
only 10 percent of the population ; however, their prescriptions account for 23.5 
percent of all those filled in 1971. Furthermore, the average price per prescription 
paid by people sixty-five years old and older is 10 percent higher than the prices 
paid by individuals of all ages. 

With food and essential services comprising such a large percentage of the 
elderly's income, many older people cannot bear the expenses of essential medi- 
cines. To ask that people who have contributed so much to this country be forced 
to choose between spending their resources on either food or medicines is a dis- 
grace. They must have the means to buy both. 

To include prescription drugs under Medicare would alleviate some of the finan- 
cial burden the elderly must endure today. In 1969, the Task Force on Prescrip- 
tion Drugs reported that a drug insurance program under Medicare is needed by 
the elderly, and that such a program would be both economically and medically 
feasible. The recent White House Conference on Aging also recommended that 
the cost of prescription drugs be included under Medicare. Legislation introduced 
in both Houses of the Congress has proven the desirability of such a program. 

This subcommittee is presently considering Amendment number 464 which 
would help implement these recommendations. 

As a cosponsor of this measure in the House. I wholeheartedly endorse the 
coverage of prescription drugs under Medicare. Because of the importance and 
necessity of out-of-hospital prescription drugs for the well-being of our elderly, 
and because financial burdens have made many of these drugs luxury items-^ 
though in reality they are neces.sities of life — I believe that Amendment 464 
should receive the strong support of this subcommittee. 

No other age group in our society has been so hard pressed by the spiralling 
trend in our economy. Our elderly had to bear the burden of these costs far 
too long. It is the responsibility of all of us to provide better programs for older 
Americans — and surely we must provide these programs now. 

Testimony of Hon. Lee H. Hamilton, a U.S. Representati\-e 
From the State of Indiana 

Mr. Chairman : I appreciate the opportunity to add my expression of support 
for the proposed amendment to H.R. 1 which would provide outpatient prescrip- 
tion drug coverage under Medicare. 

One of the most frequent complaints which I receive from elderly constituents 
who are trying to make ends meet on a limited income is the increasing cost of 
health care, and particularly, prescription medicines. 

The proposal by Senator Montoya, amendment No. 464. and the companion 
legislation which I co-sponsored in the House of Representatives (H.R. 2.355),. 


goes to the heart of this complaint. The amendment establishes a comprehen- 
sive drug insurance program aimed at alleviating the crushing financial burden 
of our older, infirmed citizens whose only source of income often is a social 
security pension. 

It i.< not uncommon for me to receive a letter, or to have one of my older 
constituents tell me, that half of a monthly benefit check was needed for doctor 
and medicine bills. 

The elderly have inordinately high health costs. The Task Force on Prescrip- 
tion Drugs reported recently that for many of the elderly, the cost of recovery 
from an illness amounts to financial disaster. Ill health pushes many into 

The central aims of the amendment are to : 

1. Provide coverage, under Medicare, of prescription drugs and some non- 
prescription drugs of life-stistaining value. 

2. Eliminate the Part B Premium of Medicare, along with the required 
record keeping and claim requirements, and finance the prescription drug 
program under Part A of Medicare. 

3. Establish an appropriate committee of authorities in the health field 
to determine the drugs to be covered. 

4. Require a $1 co-payment from the purchaser for each prescription of 
medication deemed to be of life-sustaining value. 

This approach offers the promise, not only of easing the financial burden of 
our older residents, but also of providing additional health care. 

It has widespread support in the Congress, as evidenced by the number of 
co-sponsors in the and Senate versions of the bill. 

I respectfully urge that you give favorable consideration to the legislation 
as an amendment to H.R. 1. 

Statement of Hon. William E. Minshall, a U.S. Repeesentative 
From the State of Ohio 

Mr. Chairman, distinguished Members of this Committee, I am grateful to 
you for this opportunity to testify in behalf of including prescription drugs 
under Medicare coverage. As a co-sponsor of H.R. 11249, I feel this amendment 
to present law is long overdue and is absolutely essential to ease the financial 
burden of our elderly citizens. 

Out-patient prescription drug costs impose a significant economic drain on 
the often very limited incomes of the 20 million Americans under Medicare. Such 
drugs now represent the greatest single personal health expense these citizens 
must meet from their personal incomes. It has been pointed out before, but 
bears repeating, that annual per capita expenditures for prescription drugs for 
the aged is three times those for persons under 65, and annual per capita expen- 
diture for drugs on the part of the severely disabled is six times that of the 
population as a whole. 

I know the committee is aware that the President's Task Force on the Aging 
has filed a report, "Toward a Brighter Future for the Elderly", in which it rec- 
ommends : "Coverage of out-of -hospital drugs at the earliest date administra- 
tively feasible". 

I feel that H.R. 11249 sets forth a sound and practical program for achieving 
this objective, and I urge the committee to incorporate its provisions in H.R. 1. 

Statement by Hon. James G. O'Haka. a U.S. Representative from the State of 


prescription drug coverage under medicare 

I appreciate this opportunity to present testimony to the Senate Committee on 
Finance in support of legislation which would provide for prescription drug cover- 
age under Medicare. 

A.S a sponsor of similar legislation in the House of Representatives, I am de- 
lighted that Senator Montoya and so many of his colleagues have introduced S. 
936 to achieve this purpose, and I hope that the Committee will adopt this legisla- 
tion as an amendment to H.R. 1. 


I am convinced of the urgent need for this legislation. The prescription drugs 
which America's elderly require are too expensive for many of them — yet the 
medication is vital to sustain life. 

As things stand now, many elderly people are trapped between medical need 
on the one hand and economic insufficiency on the other. 

The concept of financing the cost of outpatient prescription drugs is consistent 
with the basic premise which led the Congress to enact Medicare into law to begin 
with. We knew that, as a person grows older, his need for medical care of all 
kinds increases sharply. Tliis need reaches its maximum intensity at precisely 
the point in time when the individual is least able to pay for them — at the time 
when his income is sharply reduced due to retirement. 

Medicare has made it possible — through the instrumentality of the Social Se- 
curity System — for the individual to pay for his medical insurance during his 
working years, and to receive the benefits of that insurance during his retirement 

From the point of view of the nation's elderly, Medicare has worked reasonably 
well during the first few years of its existence. It is not a perfect program — but, 
then, nobody expected it to be perfect. What we intended it to be was a hopeful 
beginning — a start along the road toward providing quality medical care for 
tiie elderly without bankrupting either the retiree or his family in the process. 

We have learned some valuable lessons during these first few years of Medicare. 
One of the lessons we have learned is that there is a compelling need for broad- 
ening the law's provisions to include the cost of outpatient drugs and certain 
non-prescription drugs which are considered to have life-sustaining value. 

This legislation differs from past Medicare drug coverage bills in that it would 
be financed under the payroll tax portion of Medicare, rather than through higher 
monthly premiums paid by beneficiaries. As a matter of fact, the experience that 
we have developed since the passage of Medicare suggest strongly that we should 
take another look at the question of whether or not there should be any monthly 
premiums charged to retirees. These premium charges may seem modest to any- 
one with a regular income. But they loom large, indeed, when they are laid aside 
the completely inadequate retirement benefits that most of our elderly citizens 

As in the legislation which I sponsored in the House. S. 936 would provide for 
a $1 payment for prescription drugs by the beneficiary, himself. This should pro- 
vide a measure of assurance that there would not be any serious abuse of the 
program by Medicare recipients. 

The balance of the cost for prescription drugs would Ite paid by the Federal 
Oovernment. which would reimburse pharmacists directly, on the basis of a 
"maximum allowable cost" plus a professional fee for the service rendered. This 
procedure should provide reassurance against any abuse of the program — either 
by druggists or the pharmaceutical industry. 

The direct payment to the pharmacist will have another benefit : It will mean 
that people over 05 will not be burdened with the task of keeping records of their 
drug purchases, or with the problem of filing claims and waiting for 

The legislation now before the Committee calls for the establishment of a 
nine-member Formulary Committee — composed of two officials of the Depart- 
ment of Health, Education and Welfare and .seven individuals from outside the 
Federal Goveriuuent. the majority of whom must be physicians. Under the legis- 
lation, these are to be people of recognized professional standing and distinction 
in the fields of medicine, pharmacology and pharmacy. 

The of this P'ormubiry Committee would be to .«elect the drugs that are 
to be covered under this provision of the Medicare program. This wou'd include, 
as I indicated earlier, both prescription drugs and certain non-prescrintion drugs 
that have special life-su-stfiining value. It is envisioned that all commonly used 
drugs would be covered, with the Formulary Committee screening out worthless 
or dangerous drugs. 

In summary, this legislation provides the mechanism for assuring retii'ed 
Americans that they will be able to obt;iin the medication which they require 
to maintain their heaHh. and to make it possible for them to do so without 
courting economic hard.sliip. 

As a Member of Congress who has sponsored identical legislation in the 

72-573 — 72 — pt. 6- 


of Representatives, and as a sponsor of other legislation which seeks to provide 
broad-range national health insurance for all Americans, I thank the Committee 
for this opportunity to present my views in support of S. 936 introduced by 
Senator Montoya. I hope that the Committee will give careful consideration and, 
ultimately, its full support of this legislation so that our elderly can take another 
step forward in their search for the dignity that accompanies physical good 
health and economic good health — worthy goals which they are entitled to attain 
after their working years are over. 

Statement of Hon. Claude Pepper, a U.S. Representatpve 
From the State of Florida 

Mr. Chairman, along with more than 100 of my colleagues in the House, I am 
a co-sponsor of H.R. 2355, and its companion bills, which are the counterparts of 
S. 936, which is under consideration today and which is designed to correct one of 
the most serious shortcomings in the present program of health insurance for the 
aged, the absence of any outpatient prescription drug benefit. Five years ago. Con- 
gress directed the Department of Health, Education and Welfare to study the 
extent to which drug costs constitute a major financial burden on older person.s 
and to report to us regarding the feasibility and design for a workable program 
covering the costs of prescription drugs under medicare. The Final Report of this 
special Task Force made it abundantly clear that older Americans .sorely need 
assistance with their prescription drug expenditures. 

Although the elderly represent somewhat less than 10 percent of the Nation's 
population, they account for more than 20 percent of outpatient prescriptions writ- 
ten in the United States and about 5 percent of total expenditures for prescribed 
drugs purchased on an outpatient basis. This, of course, is understandable, since 
about 80 percent of the eldei'ly — as opposed to only about 40 percent of those 
under 65 — suffer from one or more chronic diseases or other conditions for which 
pharmaceutical therapeutics is often used. 

In recent years, prices for goods and services throughout the economy have 
shown the effects of marked inflation. Prices for prescription medications have 
been no exception. The most recent available figiires for the Consumer Price Index 
show that the index for drugs and prescriptions moved more than t^ice as fast in 
1970 as in 1969 — 2.5 percent, as compared with 1.1 percent. It has been established 
that by 19S0. per capita annual expenditures for drugs and drug sundries will 
amount to as much as $56, or almost twice the per capita expenditure for 1968. 
This increased financial burden will fall heaviest upon the elderly, for whom the 
number of drug acquisitions is more than double that for the total population and 
nearly three times that for the under 65 age group. 

The measure you are considering today, represents an effective and workable 
solution to the problem of covering drug costs under the Medicare program. 
Beneficiaries would incur initially a $1 copayment per prescription for all pre- 
scriptions filled under the program. An advantage of this .system is the fact that 
everyone would know in advance the patient's liability at the time the services 
are provided. A mechanism in the bill provides for an adjustment in the amount 
of copay borne by the beneficiary as the general level of prescription prices rises 
in future years. 

On behalf of myself and the other House sponsors of H.R. 2355. I commend to 
you the features of this proposal and convey my strong belief that positive action 
should be taken on this measure at the earliest possible moment. Thank you. 

Statement of Hon. Tom Railsback, a U.S. Representative From the State 

OF Illinois 

Mr. Chairman, Approximately 80 percent of the aged population suffers from 
one or more chronic conditions for which drugs are required. Those persons 65 
or older use twice as many drugs as do the rest of the population. Their expenses 


can run into hundreds of dollars annually — expenses hardly budgetable for those 
living on fixed and limited cash incomes. 

In Illinois, over 10% of the population is composed of persons 65 or older, 
and it is estimated they pay at least 25% of all outpatient drug costs. 

In 1967, the Department of Health, Education, and Welfare was ordered by 
Congress to study the need of older Americans for prescription drugs and a 
design of a workable program for their distribution. Their result;? made it clear 
that older Americans sorely need assistance to meet the expense of prescription 
drugs, but no action was taken as a result of the study. 

Unfortunately, H.R. 1, which was designed to make improvements in national 
health programs, passed the House of Representatives without a prescription 
drug program. To rectify this situation, legislation has been introduced on both 
the House and Senate sides to provide for prescription drug coverage under 
Medicare. I was pleased to join on the House effort. 

Under such legislation, a Formulary Committee, composed primarily of phy- 
sicians, will select drugs to be covered by the program. An elderly person may 
go to the particii>ating pharmacy of his choice. He will incur initially a one dollar 
charge for each prescription filled under the program, and the pharmacy will be 
reimbursed for the remaining amount by the program. If, however, the prescrip- 
tion drug is not listed by the Formulary Committee, the beneficiary will do as 
he always has — pay out of his own pocket. 

Mr. Chairman, I hope this proposal will be given an evaluation at the earliest 
possible time. HoiJefully, you and the other Members will determine it is neces- 
sary to amend H.R. 1 to provide outpatient prescription drug coverage under 
Medicare. I know I am convinced we must establish a comprehensive program 
for the twenty million Americans covered by Medicare whose prescription drug 
problems have been ignored too long. 

I thank you for providing me with this opportunity to present my position. 


Testimony of Hon. Benjamin S. Rosienthal, a U.S. Representatrts in 
Congress From the State of New York 

Mr. Chairman, I appreciate this oportunity to testify in behalf of H.R. 2355, 
a bill designed to provide prescription drugs to Medicare patients outside the 

Health care costs have continued to skyrocket in this country while the 
quality of health care has not. This is particularly so for the elderly and others 
on fixed incomes. Unfortunately, adequate health care in this country is too often 
viewed as a privilege rather than as the right it should be. 

A large portion of health care costs stem from the purchase of drugs. This is 
especially true of our elderly who must spend 20 cents of their health care dollar 
on medicine. While the elderly represent only 10% of our population, they 
accoimt for 25% of the nation's prescription drug expenditures, or about $1 
billion a year. It is essential that we make the purchase of these drugs less of a 

Our elderly are faced with rising needs and costs for medicines when they 
can least afford it. Many are living on minimal, fixed incomes, and expenditures 
for drugs can have substantial impact on their often too small financial resources. 
Furthermore, chronic illnesses requiring continuous drug use are prevalent 
among the elderly and pose a tremendous burden for this age group, fully 25% 
of whom are living at or below the poverty level as measured by Social Security 
Administration indices. 

Aside from financial difficulties, the elderly face additional obstacles. They 
frequently have transportation problems and find it difficult to shop around for 
the lower prices they might be better able to afford. Oftentimes, their very 
illnesses present impediments to their exercising full consumer power. 

This measure, I believe, will have a significant side benefit. Many times, the 


elderly must be admitted to hospitals in order to qualify for Medicare coverage 
of drug purchases that could otherwise be prescribed on an outpatient basis. 
The present bill will not only eliminate this unfortunate use of much needed 
hospital space, but will avoid the potentially tragic psychological impact that a 
hospital stay can have on older people. This is a price that the elderly should no 
longer be expected to pay. 

This program would also help avoid much worry and bother for Medicare 
patients. They would simply pay the pharmacist .$1 for each prescription and 
not have to worry about keeping any records, paying monthly premiums, filing 
claims or getting tangled up in any red tape. A person would pay for this cover- 
age during his working years, rather than after he retires and his income is 
sharply reduced. 

Any program has potential administrative problems, and this bill is no 
different. Yet, the $1 co-payment, the reimbursement directly to pharmacies, 
and the formulary committee proposal strike me as offering a balance between 
safeguards against waste, on the one hand, and protection and convenience 
for pharmacists, the government .and, of course, the elderly, on the other. 

And most programs. Mr. Chairman, are expensive. Again, this one is no 
different. Yet, the human costs of not enacting this bill, and thus i>eri)etuating 
this hardship for our elderly, are far greater than the financial costs involved. 
In an age when we talk of spending over $10 billion on space shuttles and one 
tenth that amount on elaborate univei'sity campuses and government ofiice 
complexes, surely we must find the necessary funds to provide drugs for our 
elderly citizens. 

There is no reason why the wealthiest, most technically and scientifically 
advanced nation on earth cannot .also be the healthiest. We can no longer permit 
the dire shortage of medical personnel, the lack of adequate facilities, the 
unequal geographical distribution of those facilities, and the soaring costs of 
the available services .and facilities to prevent every American citizen from 
receiving complete and preventative health care. An integral part of this effort 
is making the necessary drugs available to all who need it. regardless of their 
ability to pay. 

Statement of Hon. Louis Stokes, a U.S. Representative From the State 

OF Ohio 

Mr. Chairman : I appreciate this opportunity to testify in support of Senator 
Montoya's proposal to provide Medicare coverage for outpatient prescription 
drugs. I am one of the 113 co-sponsors of Congressman Obey's companion bill, 
II.R. 2355. 

Since Senator Montoya first introduced his proposal in 1967, the subject has 
been studied and reviewed and reported on several times. Meanwhile, our senior 
citizens have had to bear their heaviest health burden, ijrescription drugs, with 
no help from the federal government. Many of them have undoul)tedly been 
hospitalized in order to have drug costs paid by insurance or Medicare. Even 
more serious, many prescriptions are not refilled or never filled at all because 
of the high cost. 

The Health Education and Welfare Department's Task Force on Prescription 
drugs has shown the need and the feasiblility of this program. The President's 
Task Force on the Aging has also recommended such a program. Despite these 
recommendations, the first of which was nearly two and one half years ago, 
the Administration has not introduced a proposal to meet this critical need. 

The studies indicate that the problem of costs is manageable. The formulary- 
system and the requirement of a co-payment provided in the proposal are 
promising means of holding down costs. The human costs of our delay in enacting 
such a program are immeasurable. We must institute the program and use all 
of the data provided by the studies which have been to hold down the costs. 

About 17 million people or 85% of those over the age of 65 have no private 


insurance protection covering out-patient prescription drugs. In the Greater 
Cleveland area alone, the number of ijersons in this category is about 170,000. 
In my central city district, where the aged poor are concentrated, very few 
senior citizens are able to afford prescription drugs. For these individuals the 
cost of prescriptions is the largest single health item. Our senior citizens have 
been promised assistance with this burden for too long. It is time to deliver on 
the promise. 

I commend Senator Montoya for offering his proposal as an amendment to 
H.R. 1 and urge the committee to approve the amendment. 

Statement of Hon. John A. Burns, Governor, State of Hawaii 

As the Governor of the State of Hawaii, I am privileged to be afforded the 
opportunity to present to the Senate Finance Committee my testimonv relating 
to H.R. 1. 

It is most encouraging that the Finance Committee considers welfare legisla- 
tion to be a piece of top priority domestic legislation and is accordingly com- 
mitted to a viable program of welfare reform. 

With regard to the Family Programs of H.R. 1, I urge the Committee's full 
and favorable consideration and support of the amendments proposed by your 
colleague. Senator Ribi-coff. The amendments represent significant improvements 
over the measures passed by the House and brings true welfare reform closer to 

The shortcomings of the current welfare program and the mounting fiscal crisis 
confronting states, I am sure you will concur are undisputable. 

Whereas the President of the United States has recommended a deferment of 
the effective date for new welfare programs for a period of 18 months after en- 
actment, I believe it is paramount that measures for immediate fiscal relief to 
states be enacted now and be incorporated in welfare legislation, to preclude the 
necessity for reduction in the current level of assistance payments. Mounting fiscal 
pressures have already resulted in approximately 20 states reducing its level of 
payment with the probability that more states would follow. 

The future of 25 million Americans is in your hands ; welfare reform must be 

I submit my testimony in hopes of favorable action of my recommendations by 
you and your Committee. 

Testimony of Hon. William T. Cahill. Governor. State of New .Jersey 

I would like to preface my remarks by stating that I wholeheartedly endorse 
the basic principles of welfare reform embodied in H.R. 1. 

Since January of 1969, New Jersey has supported a State-wide program of As- 
sistance to Families of the AVorking Poor, which has included needy families 
with children, identified as "underemployed" and "never employed" as well as 
tho.'^e federally classified as "unemployed." This is in addition to New Jersey's 
very progressive program of Assistance to Dependent Children. Our program 
of A.ssistance to Families of the Working Poor was recently modified and is now 
wholly funded by the State and its counties. Today New Jersey's welfare pro- 
grams are probably closer than those of any other State in the union to the 
types and organization of programs recommended in H.R. 1. 

Just as other states in the union have felt the severe increases in welfare costs, 
so has New Jersey. However we have had no choice hut to accept these costs 
in order to provide for the needy in the state. Consequently. I strongly support 
the increased federal financial role that is implicit in H.R. 1 and .se'veral of 
the proposed amendments. 


I believe that the time for experimentation has passed and now is the time 
for decisive federal action in this area. Nonetheless, if the Congress concludes 
that the new federal program of a national minimum income standard for all 
families should be conducted first on a trial basis, I urge that New Jersey — 
because of the existence of a substantially similar program — be used as a pilot 
state. This would not only accelerate the test period, but New Jersey's history 
with programs of Assistance to the Families of Working Poor will provide a 
valuable, historical data bank to assist in the evaluation of such a program. 
Statistics on the New Jersey program have been and will continue to be gathered 
by its Research and Evaluation Committee, established last year to analyze 
welfare problems and programs in our state. 

There are several provisions of H.R. 1 on which I would like to comment spe- 
cifically. I do not want these comments, which are intended to be in the nature of 
constructive criticism, to be interpreted as diminishing my enthusiasm for and 
support of H.R. 1. 

H.R. 1 will significantly increase the number of eligible welfare recipients in 
New Jersey. The provisions to "hold harmless" the state for increased cash as- 
sistance payments to the 1971 level are not only very wise but imperative. How- 
ever, there is no practical protection against the related increase in the cost of 
Medicaid. True, the state will not be mandated by statute to make Medicaid cov- 
erage available to the new welfare recipients who will be eligible under H.R. 1 
but strong pressure will be exerted to make these people eligible for Medicaid ; 
consequently, I urge the introduction of a medicaid "hold harmless" provision. 

Your Committee has had extensive discussion concerning the level of the mini- 
mum income standard. In my opinion, this level should be kept reasonably low, 
$2,400 for a family of four would seem to be a standard acceptable to most states. 
I make this statement, however, with a strong qualification that the states be 
encouraged to supplement that minimum standard. Under H.R. 1 there is, unfor- 
tunately no provision for federal cost sharing in the state supplement. I believe 
that the state supplement gives the program the type of flexibility which it needs 
to meet the varying requirements of states as different as New Jersey. New York, 
Mississippi and Alabama. With no federal matching of the state supplement, the 
higher Income states will be and have been forced to press for increases in the 
national minimum income standard in spite of the fact that such increases might 
have adverse economic effects on the lower income states. Consequently, I be- 
lieve that the federal government should match the state supplement. At the same 
time, I recognize that the federal government should be in a position to limit 
supplement matching to a level which it deems appropriate. 

In accord with the above, I support that portion of the Ribicoff proposal which 
would lead to eventual full federal funding of all public assistance costs in every 
state. I also believe that full federal funding need not and should not result in 
the identical dollar standard for every state. The possibility of identifying and 
administering varying regional standards, related to regional "poverty levels," 
should be explored. 

Under existing regulations the earned income disregards, except for expenses 
of employment, are not taken into account in determining initial eligibility for 
welfare. Under H.R. 1 a modified income disregard is taken into account in 
detemiining eligibility. This will result in making a large number of people who 
are earning incomes in excess of the poverty level eligible for income supple- 
ments through welfare. I cannot support that concept. I believe that H.R. 1 
must he modified so that the income disregards, other than the $60.00 per month 
provision for expenses of employment, will not be applied in determining eligi- 
bility. I recognize that this will continue the present inequitable situation which 
makes some families ineligible for assistance though their earned income is less 
than the combined earned income plus benefits of other families receiving welfare 
assistance. The existing inequity is. however, less destructive than the proposed 
application of the income disregards to eligibility because the application of the 


diregards will introduce many thousands of persons presently earning an income 
in excess of the poverty level to welfare. To introduce these people to vpelfare 
cannot possibly provide them with work incentive ; in fact it would seem to 
provide them with exactly the opposite. 

Under H.R. 1 computable earned income is credited 100% to the Federal con- 
tribution. Just as I believe that there should be federal matching for the state's 
supplement, I also strongly urge you to consider amending the bill so that com- 
putable earned income can be applied pro rata to the state share as well as the 
federal share of the assistance grant. 

In New Jersey, as in many other states, assistance to the single adult and to 
the childless couple is financed largely at the municipal level. Municipalities 
have felt the pinch of increased welfare costs to the same extent as have state 
governments. Without proposing a specific amendment to the bill, I ask that you 
give consideration to including assistance to single adults and to childless couples 
in H.R. 1, if only on a modified basis. While the original concept of the federal 
welfare program was focused on the aged, blind, disabled and certain families 
with children, it is clear that today our concept is one of aid to the poor. Equity 
requires that this progi'am be extended to single adults and to childless couples. 
The favorable financial impact this will have on our already financially dis- 
traught cities needs no further comment here. 

As I said in the beginning of my remarks, welfare is a national as well as a 
local problem. H.R. 1 economically mandates a complete federal takeover of ad- 
ministration of the income-maintenance aspects of welfare programs. I believe 
that so long as there is any state or local money Involved in the payment of 
welfare assistance the states must be given the option without financial penalty 
to administer the program themselves. Consideration should also be given to the 
possibility of local administration through private agencies on a contract basis. 

I support the provisions of H.R. 1 that strengthen the validation procedures 
in determining and reviewing eligibility. There is strong evidence that the "sim- 
plified method" heretofore prescribed is not now working. I support the implicit 
provision in H.R. 1 that welfare grants to individual families vary only by family 
size and income ; in July of 1971, in keeping with this theory, New Jersey modi- 
fied its grant procedures to establish a program of so-called "flat grants" that are 
at the core of the simplified and efficiently manageable system of income main- 
tenance for individuals and families which true welfare reform requires. I also 
support the provisions in the bill that strengthen the effort to make the deserting 
father financially responsible. 

The bill calls for wide-ranging changes in the administration and scope of 
Day Care Services and Worker Training Programs. In theory, I support these 
provisions, but I strongly urge your Committee to give careful consideration to 
legislated provisions in order to insure adequate standards of accoimtability and 
performance measurement as well as standards of quality and quantity. For 
example, I do not believe that it is socially or economically desirable to provide 
Day Care at a cost of $2,000 to $5,000 i>er year per child for a family of four or 
five children for the purpose of enabling a mother to get a job paying $5,000 or 
$6,000 a year. Similarly, I cannot support expensive Worker Training Programs 
which train people for menial jobs which have neither financial nor psycholog- 
ical benefit to the woi-ker. I am pleased to see that the already enacted Talmadge 
Amendment provides a clear beginning emphasis on monitoring and evaluation 
which is result oriented. 

I support the provisions for making available expanded public service jobs 
to welfare recipents. However, I think that federal support for those jobs would 
be more effective if it were decreased to half the rate now contemplated in the 
program but over a longer period of time. 

I appreciate this opportunity to testify before your Committee and I am hope- 
ful that you will be able to give full consideration to my recommendation. 


Statement of Hon. David Hall, Governoe of the State of Oklahoma 

Mr. Chairman, I thank you for giving me the opportunity of presenting my 
views on legislation pending before the Senate Committee on Finance, on H.R. 1. 
First, let me say, that I wish to go on record as favoring the principles of wel- 
fare reform, as adopted by the Governors' Conference in Puerto Rico, which I 
understand have been filed with the Committee. In general, I support the prin- 
ciples which appear in H.R. 1, and which principles I think should be enacted 
into law. 

While our current system of providing for the welfare of the people was ade- 
quate in its day and served well, as did the Model-T Ford, changes in our society, 
both economically and socially, have necessitated an up-dating of our system of 
caring for people in need. 

The very immensity of our federal government and its spending or lack of 
spending in different areas has such an economic impact on a community and in- 
dustry that a given state cannot adequately meet the economic and employment 
needs of its citizens during such periods, even with federal matching under cur- 
rent programs. 

It is with this in mind that I believe the time has come to finance the care of 
the needy from federal funds entirely, or with a very limited state supplementa- 
tion, witii some percentage of federal matching of the supplement. Much discus- 
sion has been given to the method of administration of H.R. 1 when enacted. 
The concensus of those in discussions I have heard favor state administration, 
with federal financing, similar to the relationship between the Department of 
Labor and the unemployment compensation programs. I am advised that the 
Chairman has stated his own inclination relative to this type of administration, 
using federal guidelines and supervision to assure compliance, with virtually 
all federal financing, and the basic administration being done at state and local 
levels. I heartily endorse what I understand to be the Chairman's views. 

In the event that there are some states which, for reasons peculiar to that 
specific state, feel they cannot adequately administer the provisions of H.R. 1, 
the legislation should contain other provisions for making the administration op- 
tional with the state. 

Time will not permit me to deal with the specifics of H.R. 1. as passed by the 
House, and now pending before this Committee. However, we in Oklahoma are 
much concerned relative to the administration of a welfare reform law, when 
enacted by Congress. Permit me to quote from the resolutions of the Governors' 
Conference on this subject : 

c-2 — welfare reform 

F. Allow for state administration without financial penalties if the state 
chooses to administer the program. (Policy Positions of National Governors' 
Conference 1971) 

While I endorse the principle of the option, and consider it to be a "must" that 
the states be given the sole responsibility of the decision to opt or not to opt for 
state administration, I would like to state our thinlcing on the question of ad- 
ministration. As far as the State of Oklahoma is concerned, we feel very strongly 
that it is far better for the State to administer the program, than for the federal 
government to attempt to set iip a new system. This is also the opinion of the 
nine-member Constitutional Board, the Oklahoma Public Welfare Commission, 
and its Director, L. E. Rader, who is authorized by me, as Chief Executive, and 
by his Commission, in nddition to my statement, to advise the Committee of his 
and our great concern relative to this question of administration. I would lilv« 
to point out what I consider to be some of the rationale of this position : 

If states administer the program, through their welfare boards or commissions 
and the state administration, they will be better able to recognize the needs of 
their particular state. The state will have more input into the program, which 


should provide a stabilizing effect and a more objective evaluation of the pro- 
gram, on a day to day basis. 

States currently have trained staffs which can put a new program into effect 

States currently have offices leased or owned by the state which could continue 
to be used under the new program. This would prevent a tremendous problem 
in setting up a new program and would be much less costly administratively to 
the nation's taxpayers. 

States currently have office equipment, desks, typewritei's, and electronic data 
processing equipment which could continue to be used. With a change to federal 
administration, millions of additional tax dollars would have to be expended just 
to purchase equipment to begin the program. The logistics of this alone would 
bottle-neck the program, no doubt, for years following passage of the bill. 

Mr. Rader advises me that it is his understanding that the Chairman has re- 
quested the Committee staff to prepare an amendment for a take-over of the bulk 
of state and local share of the medical care program for indigents, again using 
the states to handle eligibility and certification with the Social Secui-ity Adminis- 
tration making payments direct to liospitals and other providers and practition- 
ers. This approach has my endorsement in principle. 

I appreciate having the opportunity to share my views with the Committee 
and applaud your leadership in attempting to solve this very complex problem. 


Testimony op Hon. Patrick J. Lucey, Governor, State of Wisconsin 

I wish to thank the members of the Senate Finance Committee for the oppor- 
tunity to present written testimony on H.R. 1 as passed by the House of Repre- 
sentatives. I regret that I was unable to appear before the Committee during 
the .January hearings as I had originally hoped. The critical importance of the 
subject matter of this legislation has so considerable an impact on state gov- 
ernment that I am pleased to have this opportunity to present my evaluation of 
H.R. 1 for the Committee's consideration. 

At the outset, I think it is important to identify the specific objectives that a 
welfare reform bill must include : 

a. Immediate substantial fiscal relief to the states, with a commitment 
towards eventual complete federal assumption of the costs ; 

b. Increased financial assistance to our poor, particularly those now receiv- 
ing the least financial assistance ; 

c. Equal financial assistance standards for all families of a similar size 
in a geographic area regardless of the existence of a male head or the em- 
ployment status of each head ; 

d. An administrative structure that is simple, efficient and that respects 
the dignity of recipients ; 

e. Adequate employment opportunities and related supportive services ; 

f. Meaningful incentives for employment. 

The income maintenance system contained in H.R. 1 fails to meet these ob- 
jectives. It would appear, however, that H.R. 1 does not contain any substan- 
tial fiscal relief for the State of Wisconsin except at the expense of the recipient. 
Advocates of H.R. 1 estimated that the bill would mean savings of $33 million 
for Wisconsin. The analysis in the attached tables, however, suggests that Wis- 
consin will have to spend from $10.7 million to $18.3 more than is budgeted for 
1972-73 to insure that all recipients receive the level of assistance presently 

The major reason for this discrepancy is that H.R. 1 requires that the "hold 
hanuless provisions" be applied to state programs as they applied in January, 
1971. Under the provisions of H.R. 1. the state would presumably save the dif- 
ferences between the proposed benefit levels. Wisconsin, however, has raised 
1972-73 assistance standards by more than $12 million and re-established AFDC- 


U. In order for Wisconsin to realize substantial fiscal relief, recipients would 
lose between $25.9 million and $33.8 million in benefits. 

Furthermore, the state could lose anywhere from $10 to $30 million annually 
in funds for social and rehabilitative services, depending on how the Department 
of Health, Education and Welfare interprets the provisions governing social 

Just as H.R. 1 does not provide fiscal relief for the states, it does not provide 
equal financial assistance for families. A family of four, headed by an under- 
employed father, will receive substantially less than an equivalent size family 
headed by a working mother. For instance, a family of four with $1,500 income 
is eligible for $1,854 under the proposed national standard ; however, if that 
family is headed by a female, the family would receive approximately $3,370, in- 
cluding state supplements at the existing levels and food stamps. The result is 
that two families of the same size and with the same earned income, would 
receive a difference of $1,500 in the amount of income support. 

H.R. 1 actually places the states in the role of perpetuating the growing in- 
equities in the welfare system. If the states do not give equal supplements, the 
objective of keeping families together will be defeated. Only at a cost of $15 
million annually could Wisconsin provide benefits for the working poor equal 
to those received by unemployed families supplemented by the state. 

The administrative structure proposed in this bill creates problems rather than 
solves them. Although basic grants will be simplified, federal agencies will have 
to keep two separate records — one for determining federal benefits and another 
for those cases eligible for state supplements. However, this extensive bureauc- 
racy does not relieve the state of the need for record keeping. States will want 
to review these records thoroughly to insure that they are not billed for cases 
that would be federally funded or for state supplements in excess of established 

Since administrative costs are relatively small in comparison to total assistance 
payments, most states will want to keep administrative control over their sup- 
plemental program to insure that the savings are realized. However, the bill 
is structured in such a way that states are in effect precluded from retaining 
administrative control of the supplements even though the state supplements 
may still approximate 50 percent of the total cost of benefits. 

The size and complexity of the administrative structure created by the bill 
is not a model of government efficiency. But we must look beyond the question 
of efficiency to the actual impact this administrative structure will have on 
state and local governments and recipients. The method of eligibility determina- 
tion and the amount of benefits paid will actually shift costs back to local 
general relief programs. The time needed to obtain data on an applicant's earn- 
ings for the past three quarters, verification of birth-dates and number of de- 
pendents claimed will delay substantially the granting of benefits. 

For example, the Social Securtiy Administration, which must obtain com- 
parable information, often requires three months to determine eligibility for 
OASDHI benefits. While some procedure may be desirable to prevent gross 
abuses, it is clear that families applying for relief will need immediate income — 
more than the $100 proposed in H.R. 1 — and state and local governments will 
have to pay the cost. 

It is also important to point out that counting income earned in the past three 
quarters to arrive at the amount granted means that in most cases recipients will 
receive less than they receive under the present system which is based on current 
need. In many cases, the difference between the federal benefit — including the 
state supplement — and the actual income needs of the family will be great. State 
and local agencies will have to make up the difference. This aspect of the benefit 
determination will be extremely severe on rural families who face seasonal un- 
deremployment, and who are often not covered by unemployment compensation. 
They ordinarily earn lower wages than male-headed families. 

Another defect of the bill is that the administrative structure provided does 
not guarantee recipients adequate legal protection. Under the present system. 


welfare recipients can obtain hearings and make use of federal district courts. 
Under H.R. 1 the Secretary's decision would be final. In addition, the Secretary 
can ban certain people from entering Family Assistance offices. This could mean 
the exclusion of people who help recipients obtain their legal rights. 

H.R. 1 does not accomplish welfare reform. It does not provide fiscal relief 
for Wisconsin ; it does not simplify administration of the program ; and overall, 
it does not provide added assistance for most recipients. In fact, the basic philoso- 
phy of the bill implies that individuals who are poor, seek to avoid employment 
It also suggests that income support should be fixed below the poverty level 
because it is hypothesized that initiative is destroyed if the income support level 
is raised. Such concepts are seemingly based on the assumption that economic 
motives are the principal influence of human initiative. H.R. 1 gives new life to 
the outworn myths of the past and perpetuates them through this proposed law. 

The mandatory work provisions of this bill will not remove many people from 
the welfare rolls. Similar provisions have been incorporated by Congressional 
amendment with other federal public assistance programs and there is no evi- 
dence to suggest that these provisions have significantly reduced caseloads. While 
registration for employment services or information about the latest training and 
employment opportunities may be helpful, all too often such requirements result 
in the harassment of the recipient. 

Unfortunately, the mandatory work requirement in H.R. 1 places employment 
counselors in the untenable position of determining whether or not a recipient 
is entitled to public assistance. Such action will foster an aura of suspicion and 
replace confidence with distrust. 

These provisions included in H.R. 1 create second-class citizenship. They also 
point to a contradiction in administration policy. President Nixon vetoed the 
Economic Opportunity Act which contained a new comprehensive child develop- 
ment program. This program would have provided substantial sums to create 
community child care and develop centers, but contained no requirement for a 
parent to place a child in such a center. In his veto message, the President ex- 
pressed concern that this program might supplant the essential responsibility of 
parents in raising their children. Yet H.R. 1 proposes to remove from mothers 
who have not outside means of financial support the responsibility and the right 
to choose how to raise their children. Mothers who receive social security or 
workmens compensation are not required to participate in employment programs; 
neither should mothers who are public assistance recipients. 

H.R. 1 can be amended to make it more acceptable to state and local gov- 
ernments. However, I think the time has come to design a public assistance 
program which contains a timetable for complete federal financing of an income 
maintenance program, establishes a schedule of federal standards for financial 
assistance and income exclusions, provides sufficient income to families to raise 
them above poverty and assures equal coverage to all families and individuals. 
Such a program is largely a proposal contained in the amount to H.R. 1 authored 
by Senator RibicofC of Connecticut. I wholeheartedly support this amendment 
as a point of departure for welfare reform. 

The three key provisions of this amendment which are likely to generate the 
greatest concern are 1) the federalization of the costs of the program. 2) the 
move towards uniform standards for benefits by 1976 and 3) the eligibility of 
all individuals for benefits. 

These reforms are absolutely essential because, under the present system, the 
federal government can shift the consequences of economic policies that en- 
courage unemployment to the state and local governments. The impact of un- 
employment on federal governmental operations is limited. Revenues may de- 
cline slightly, but deficits need not be made up through increased taxes. 

The increased cost to the federal government of public assistance is as low as 
one-tenth of one percent of the federal government's final outlays. However, at 
the state and local level, every dollar of a deficit must be made up immediately ; 
and a substantial share of a state or local government's deficit during a reces- 
sion is larger welfare expenditures. So while the federal government is passing 


tax cuts to stimulate the economy, state and local governments are completely 
offsetting the federal tax cuts with tax increases to make up the deficits created 
by national economic policies. 

Furthermore, under the present welfare system, the burden of "deflationary" 
economic policies falls heaviest on the poor, unemployed and underemployed. 
The Ribicoff amendment will guarantee that these families no longer bear the 
cost of such policies. The increased income provided to families who have press- 
ing consumer needs would probably do more to stimulate the economy than 
corporate tax cuts. 

The Ribicoff amendment also provides Congress with the opportunity to pass 
on to the states substantial fiscal relief and will remove them from a program 
over which they have no control. Also of importance is the fact that the amend- 
ment provides for an equitable distribution of relief because it is based on 
present burdens for state and local governments. ^ 

I also hope that the Committee will incorporate additional reforms to the 
Ribicoff amendment. I believe the issue of medical assistance must be dealt with 
at the same time that income maintenance aspects of the program are reformed. 
The added financial incentives to states for establishing programs with health 
maintenance organizations will probably accomplish little without establishment 
of a program to provide all medical services to all individuals in a community. 
Moreover, the single largest cost component of the medical assistance program 
is nursing care. Prepaid health insurance would have no impact on such care. 

I am convinced that H.R. 1, as it now stands, will not be of substantial benefit 
to Wisconsin. Furthermore, I believe the bill is essentially the expression of a 
regressive philosophy which does not deal adequately with the problems of the 
current pul)lic assistance system. I strongly urge this Committee to act favorably 
on the Ribicoff amendment to remedy the present defects in H.R. 1. In this man- 
ner you can make a significant advance toward meaningful welfare reform. 
Respectfully submitted, 

Patrick J. Lucey, 
Oovemor of Wisconsin. 


Total Federal State 

A. Estimated cost of financial grants I'nder present program for adult and 

family categories In fiscal 1972-73 $161,497,000 $100,420,000 $61,077,000 

B. Costs under H.R. 1 affected by hold harmless provision (1971 State 

costs $45,585,000): 

1. State supplement up to 1971 State standards and Federal 

benefits 102,293,000 73,030,000 24,263,000 

2. Foodstamps 21,092,000 21,092,00 

3. Adjustment to 1971 standards to set them at maximum 8,148,000 8,148,000 

Subtotal. _- 131,533,000 78,030,000 53,5003,003 

0. Adjustment to State share if B. 3 adjustment is accepted as part of hold 

harmless provision: Subtract $45,585,000 from State share... +7,918,000 -7,918,000 

Subtotal 131,533,000 85,948,000 45,585,000 

D. Costs not affected by hold harmless: 

1. Transfer of money payments for intermediate care facility 

patients to medical assistance 16,489,000 9,316,000 7,173,000 

2. Cost of increased state standards above 1971 levels 12,468,000 12,468,000 

3. Cost of aid to unmarried pregnant women 853,000 853,000 

4. Cost of aid to step children and children living witti nonlegal 

relatives .. 4,546,000 4,546,000 

5. Costofprovid'ingaidunderA'FDC-U(notin January 1971 plan). 3,255,000 2,866.000 890,000 

Subtotal 38,112,000 12,182,000 25,930,000 

E. Financial grants costs of H.R. 1: 

1. Based on adjustment made in item C 169,645,000 98,130,000 71,515,000 

2. Based on adjustment made in item B.3. but not subject to hold 

harmless provisions (B. &D.) 169,645,000 90,212,000 79,433,000 

F. Net change to present financial grants program: 

1 E 1-A -h8, 148, 000 -2,290,000 +10,438,000 

2. L2-fi^^W\\[[\\[[[[[[^[\\[^l^ll.. +8,148,000 -10,208,000 +18,356,000 

G. Other H.R. 1 cost implications: 

1. Changes to the medical assistance program. +3,098,000 

2. Income maintenance administration (county and State) —4,605,000 



S'.ate and 
Tota I Federal county 

1. Cost of financial grants at 1971 level of benefits $124,181,000 $70,162,000 $54,019,000 

2. Costof increased standards 12,468,000 7,044,000 5,424,000 

3. Cost of AFDC-U 3,756,000 2,122,000 1,634,000 

Subtotal. 140,405,000 79,328,000 61,077.000 

Value of food stamps 21,092,000 21,092,000 

Total _ 161,497,000 100,420,000 61,077,000 

Commonwealth of Pennsylv.\nia, 

Office of the Governor, 
Harriishurg, Pa., January 20, 1972. 
Hou. Russell B. Long, 
U.S. Senute, Washington, D.C. 

Dear Senator: I am writing to express my views on H.R. 1 which is before 
your committee. 

I continue to support the basic principles in H.R. 1 of a federal floor under 
income as I did when the bill was in the House Ways and Mean.s Committee. 
However, the bill in its present form is faulty in a number of respects. 

As you know, I have joined with more than 20 governors to suppoi't Senator 
Ribicoff's proposed Amendments to H.R. 1 in which he is joined by a number of 

These amendments go part of the way to meet the objectives I have in mind. 
I consider that the Ribicoff package is an irreducible minimum. I hoi>e they will 
be improved in your Committee. 

More sppcitically I urge that your Committee amend H.R. 1 so that it conforms 
fully with the fallowing principles : 

(1 ) A comiirehensive Federal income maintenance program with adequate 
national minimum standards. 

(2) Assistance given on the basis of need to all individuals and families, in- 
cluding the working poor. There should be a Federally established, regionally 
adjusted, poverty level. Work by the able bodied should be encouraged by a work 
incentive. An adequately financed public employment program for those unable 
to secure a job in the private sector is vital to this objective. 

Those able to work should work. Training for work is needed by ninny and 
should be provided. Women with school age children should be allowed to volun- 
teer for work. Many AFDC recipients are working, many more go in and out of 
the job nmrket constantly. The American work force contains a substantial iier- 
centage of all women of childbearing age. Adequate day care should be afforded 
to all women who work. 

State supplements to a Federal base should require that states maintain benefit 

(3) State financial particii>ation should be phased out gradually. The Federal 
tax system is capable of dealing somidly and equitably with the problem of 
poverty : State tax systems are not. Income maintenance is a national, not a local 

(4) H.R. 1 shoiUd include immediate fiscal relief for St<ates. Pressures are dif- 
ficu't now and states should not have to wait until fiscal 1973 for relief. 

(5) .\s State governments are phased out of income maintenance programs, 
their role in social services should be strengthened. Each state should be required 
to have a comprehensive social seiwices program dedicated to promoting oppor- 
tunities for self-supix>rt. to improve individual functioning, facilitate independent 
living, and strengthen family lives. Making family planning information and 


service available to all women should be a major part of this program as shotdd 
protection of children and adults who need protection. The State should have a 
major role in day care planning and fimding. 

Public Law 92-223 (H.R. 106(M) establishes a more clear social service role 
for states than does H.R. 1. Its provisions, plus others which my staff will sub- 
mit to your staff, can serve to establish a sound service program. 

All social services, including day care and child development services, should 
be available to all citizens. The non-poor should be able to purchase these serv- 
ices with participation in costs through use of a fee schedule. The law should 
provide a limitation on the amount of Federal funding available for those above 
the poverty line, as well as priorities for use of services funds. 

In addition, H.R. 1 proiwses a method of eligibility accounting which will deny 
benefits to many now eligible, including migrant and seasonal workers. This 
should be amended so that eligibility is based on need. 

H.R. 1 calls for Federal administration but does not make provision for en- 
suring the rights of State employees who may be Federalized. Such provisions 
are essentiaL 

H.R. 1 contains a number of Medicaid (Title XIX) provisions which disad- 
vantage some states financially. I recognize that the entire range of medical asi- 
sistance, health in.surance, and health care programs are under review; also 
that the health delivery system is, at best, a collection of uncoordinated, efforts. 
Nevertheless, I urge that in the course of .seeking solutions your Committee take 
cognizance of the fiscal plight of the .states. One approach, until sounder solu- 
tions are forth coming, is for the Federal government to assist the states by 
freezing their expenditures at 1971 levels. 

I hope that these suggestions may be useful to you and to your Committee. 
Please call on me or on members of my staff if we can be of further service in 
your most important efforts. 

Milton J. Shapp, Governor. 

Statement of the National League of Cities and the United States 
Conference of Mayors 

(Submitted by Patrick Healy, Executive Vice President, National League of 
Cities and John Gunther. Executive Director, U.S. Conference of Mayors) 

Both the National League of Cities and the United States Conference of Mayors 
support welfare reform. 

As the Kerner Commission pointed out almost four years ago, "The failures of 
the (welfare) system alienate the taxpayers who support it, the social workers 
who administer it, and the poor who depend on it." To this list of the dis- 
enchanted, our organizations would add the cities that have to pick up the pieces 
dropped by other levels of government that have failed to deal adequately with 
the problems of dependency. 

So much has been written and said about the need for welfare reform and the 
possible solutions that we do not need here to repeat information that we are 
sure is thoroughly familiar to the members of the Senate Finance Committee. 
We are, however, appending for the record the positions the National League of 
Cities and the United States Conference of Mayors on welfare reform adopted 
by delegates representing 15,000 local governments at their last annual national 

To get to the heart of the matters under current active consideration, both 
organizations support: 

Federal take-over of the welfare system, with due regard for the status of 
employees of local governments, who should be absorbed by the federal system 
if they wish. 

Mandated state supplements. 

Eventual assumption of all welfare costs by the federal government. 

Meanwhile, federal matching funds above the $1.G00 floor in the first year. 

An initial minimum payment level of $3,000 to a family of four. 

Coverage of the working poor, single individuals, and childless couples. 

A sufficient number of public service jobs to cover those willing and able to 
work but unable to find employment in the private sector. 

Expansion of child care facilities to provide for the needs of mothers covered 


by the program who are working or would be able to work if such facilities were 

The National League of Cities and United States Conference of Mayors wishes 
to thank the Senate Finance Committee for this opportunity to express their 

February IS, 1972. 

National Municipal Policy Adopted December 1, 1971, by National League 
OP Cities 48th Annual Congress op Cities 


2400 Public Asistance and Welfare Goals 

Welfare in the United States has become a national problem requiring solutions. 
Our present system of public assistance has been found to contribute materially 
to the tensions and social disorganization which jsermeate many areas of our 
cities. As one critic has stated, '"The welfare system is designed to save money 
instead of people and tragically ends up doing neither." 

The welfare program should be altered, expanded and coordinated tcith the 
medicare and social security programs to encompass all of those in genuine need, 
to remove from the tcalfare rolls all of those able to work by providing adeQuate 
employment opportunities and day care facilities, to provide a national minimum 
standard of assistance and eliminate demeaning restrictions, and thus help re- 
capture the rich human resources presently wasted by a system that creates and 
perpetuates dependency. 

2401 Funding 

A. Require assumption by the federal government of full responsibility for 
the administration and financing of the income maintenance program ; the social 
service asi^ects should be federally-mandated and federally-finanGed with open- 
eyided appropriations, but administered locally with cities having the option of 
prime sponsorship of such programs. 

B. Establish open-ended appropriations for the day care of children, including 
capital funds for the construction and/or renovation of facilities. 

C. Provide for federal matching of supplementary state benefits to assist states 
currently maintaining higher levels, and prevent states from curtailing such 
supplementary benefits. 

2402 Coverage 

A Transfer all aged, blind and disabled persons — the latter two categories at 
any age — to the Social Security System to be financed by general appropriations 
at benefit levels sufficient to maintain a minimally decent standard of living. 

B. Eliminate the categorical assistance system by including individuals, couples 
and families whose resources fall below the established benefit levels. 

C. Inchide individuals, couples and families who are employed but whose in- 
comes fall below established benefit levels. 

D. Provide for retention of a significant share of earnings. 

3403 Operation 

A. Require the use of a declaration form of application for assistance by all 
types of cases, including families and the working poor. 

B. Expand opportunities for job training and day care to enable women in 
female-headed families to work if they wish to, being careful to avoid any ele- 
ments of coercion. 

Resolution adopted June 16, 1971 at annual meeting of the United States Con- 
ference of Mayors : 

46. Welfare Reform 

Whereas, public assistance rolls have increased dramatically over the last 
decade ; and 

Whereas, the poverty population for the first time in ten years increased in 
1970 by 1.2 million American people over 1969; and 

Whereas, the present tax burden for financing welfare is now inequitably dis- 
tributed throughout the nation and is in part financed by regressive taxes, such 
as sales and real property, which unfairly burden low and middle income fami- 
lies : and 


Whereas, the U.S. Conference of Mayors has repeatedly called for a total re- 
form of the welfare system and the establishment of basic income supplement 
payments for all people unable to work and whose income falls below the officially 
recogTiized level of poverty ; and 

Whereas, the House Ways and Means Committee has reported out a welfare 
reform bill with an income maintenance payment of $2400 a year for a family 
of four ; and 

Whereas, the underlying principle of eligibility for public assistance .should be 
the need of the recipient rather than his category of disability, employment 
status, age. sex, or place of residence ; and 

Whereas, mayors and local governments have demonstrated a commitment to 
assume greater leadership and responsibmility for manpower and social services 
at the local level but cannot raise the funds needed to meet long-delayed health, 
welfare, education and social services and to train and employ participants in 
the Opportunities for Families Program ; and 

Whereas, Title XX of last year's welfare reform proposal provided the large 
cities the opportunity to be the prime sponsor of the delivery of social services ; 

AMiei-eas, the city itself is in the best position to determine the needs of its 
citizens, evaluate its economic and social resources, organize and operate man- 
power programs, and deliver social services effectively : and 

Whereas, state and local governments need immediate relief from spiraling 
welfare costs this year: and 

Whereas, the proposed funding fonnula would provide inadequate, uneven, and 
disproportionate relief for state and local governments that provide welfare costs 
this year : Now, therefore, be it 

Resolved. That the United States Conference of Mayors again affirm its sup- 
port for welfare reform with these features, among others : 

1. An adequate basic supplement for the working poor and payments to other 
American citizens who are unable to work and whose income falls below the 
officially recognized poverty level ; 

2. Eligibility based on need, rather than category ; 

3. A federally funded, comprehensive social services delivery system that 
governments of lacalities^ — regardless of their population — may have an oppor- 
tunity to coordinate and administer, if they choose to do so ; 

4. Immediate federalization of the funding of public assistance programs this 

.5. Federal matching of supplementary state benefits to assist jurisdictions that 
provide benefits at a higher level than will be supported by full federal funding ; 

6. One hundred percent funding of the public service jobs to be created under 
the Opportunities for Families Program and provision for integrating activities 
into planning, coordinating, and operating of ongoing manpower programs at the 
city level. 

7. Provision of vendor payments on recurring items, as well as nonrecurring 
items, at the option of the recipient, and exploration of this concept through 
demonstration projects and studies. 


California State Senate, 

Fe'bruanj n,1912. 
Hon. Russell B. Long. 
Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C. 

Dear Senator Long : As Chairman of the California Senate Health and Wel- 
fare Committee, and as author of our state's Welfare Reform Act of 1971, I have 
closely followed news accounts of your Committee's recent hearings on federal 
welfare reform legislation, H.R. 1. 

I am prompted to write you and your fellow Committee members at this time 
because of my concern that misleading testimony given on February 1 by Gov- 
ernor Reagan not go unchallenged. At the time, the Governor recommended nu- 
merous amendments to H.R. 1 based on what he termed "the product of our 
experience with an actual reform program that is succeeding in California." 

Unfortunately, the Governor's de.scrii)tion of our experience with reform bears 
little resemblance to what has actually transpired. Accordingly, I find it neces- 
sary to set the record straight. 


As you will recall, the Governor presented 25 specific reforms for the considera- 
tion of your Committee contending that the California reform experience con- 
stituted proof of the efficacy of his proposals. 

Upon close examination, however, only 10 of the 25 recommendations resemble 
measures adopted by the California Legislature in 1971. Further, of these 10 
items only three had been implemented by December 31.^ 1971 and two of the 
three had been stayed by the courts.^ 

In other words, only one of the Governor's total 25 projwsals can accurately be 
.said to have been an unimpeded part of applied reform in our state. 

The single operative item is a fiscal incentive to county government to work 
harder at securing support contributions from absent fathers of AFDC children. 
However, county welfare officials inform me that support contributions are pres- 
ently being collected from fewer absent fathers than before the Welfare Reform 
Act of 1971 became operative on October 1, 1971. 

These same county sources advise me that the California State Department 
of Social Welfare has completed a survey of welfare reform implementation 
which bears out this statement. 

Governor Reagan emphasized befoi'e this Committee that California welfare 
rolls dropiJed significantly during 1971. Yet the Governor did not tell this Com- 
mittee that he has requested a welfare budget increase of $118 million for the 
fi.scal year commencing July 1, 1972. Moreover, this $118 million was 
made assuming 100 percent implementation of our 1971 reforms, and it fails to 
take into account a major court decision that will mean an estimated added cost 
of $70 million for AFDC grants. 

In short, welfare costs in California are rising at a yearly rate of appi-oxi- 
mately $190 million. 

That fact alone makes it clear that caseload reduction figures merit close 

Of the 176,000 net reduction cited by the Governor, 108.000 were in the 
AFDC-U (Aid to Families with Dependent Children — Unemployed Parent) 
category. This reduction occurred over a period of a time during which the 
unemployment rate dropped in California from a ijeak of 8.1 percent to slightly 
over 6 percent. 

The fact that nearly two percent of California's labor force left the ranks of 
the unemployed obviously had a great impact on a welfare program for which 
eligibility is based on unemployment as AFDC-U is. 

Thus, the improved job situation would seem a much more likely explanation 
for the reduction in numbers of persons receiving AFDC-U benefits than any 
welfare reform efforts. 

Second, of the remaining 68.000 decrease, 47,548 were recipients of County 
General Relief — a program totally unaffected by our Reform Act. Hence, 8S<7< 
of the 176,000 decline was direc-tly attributable to improved employment condi- 
tions and a decrease in County Relief cases, neither of which can be properly 
ascribed to the reforms. 

Third, the Governor did not tell this Committee that more than 20,000 of the 
caseload drop was accomplished by a change in accounting procedures by Los 
Angeles County. Previously, many persons on County General Relief were 
counted twice because they also received AFDC benefits during the same month. 
Fourth, a significant portion of the overall caseload decrease stems fnmi a 
major decrease in average size of welfare families. In the AFDC-FG (Family 
Group) program, for example, cases increased by more than 3.000 during the 
March-December 1971 period cited by the Governor although the total number of 
persons on the program declined by more than 12,000. 

^ Welfare reforms relatinp to the list presented to the Committee which were actually 
Implemented In 1971 in California were : 
5. Work-relnterl expenses. 

10. Irirreaseil federal reimbursement for child support activities. 
22. Marital and community property resources. 
2 Reforms which were implemented and then stayed by court order before the end of 
1971 were : 

.">. Work-related expenses. 

22. Marital and community property resources. — A Superior Court rulinjr ordered 
the State Department of Social Welfare to cease and desist from presuming the 
availability of Income from a stepfather, basing the decision on 4.") CFR 2.S3.90, 
and HEW regulation specifically prohibiting such a presumption where there Is no 
legal support liability under a law of general applicability. (Stepfathers are not 
generally liable for the support of non-adoptive stepchildren under California law.) 

72-574— 72— pt. 6 6 


Finally, it should be noted that the California welfare system is presently 
under court order to reinstate 7,000 families whose aid was terminated last June 
under regulations subsequently found invalid by the State Supreme Court. 

So while there was a decline in tlie total number of Californians receiving wel- 
fare, the causal effect of welfare reform in that decline seems minimal. In the 
least, it certainly is not the kind of hard evidence on which to base long-term 

Nonetheless, any decrease in welfare caseloads is a good sign. My relief at the 
downturn is considerable. Were I self-seeking, I should be capitalizing on such 
good news, since the Welfare Reform Act of 1971 bears my name as lead author. 

My concern here, however, is not with credit but with credibility. I share your 
devotion to making public policy strictly on the basis of the facts. The Congress 
is now in its third year of debate on welfare reform. That is evidence that Con- 
gress has a deep concern for the possible effects of proposed welfare reforms on 
the poor people who are so vulnerable to public policy decisions in these matters. 
For that reason, I see it as my duty to warn you against drawing prematurely 
any general conclusions on the relationship between California "welfare reform" 
and California caseload declines. 

In this connection, the State Department of Social Welfare late last year sent 
auditors into every California county to examine case records in an effort to 
determine how welfare reform is working. 

This information has not been provided to the Legislature nor to the public. 
However, in view of the Governor's claims before your Committee, this factual 
report would seem most appropriate for your consideration. If the facts bear out 
the Govenor's claim, there should be no hesitancy in making this rex)ort available 
to you. 

Permit me at this point to offer a few comments on H.R. 1 from my viewT)Oint 
as a state legislator who has been actively involved in the complexities and intri- 
cacies of welfare reform. 

The overriding objective in welfare reform, in my view, should be to reduce 
poverty. Welfare costs have risen dramatically over the past decade largely be- 
cause we have failed to defeat poverty by reforming some of our more basic social 

Ironically, there are fewer poor people in the United States than ever before, 
just as there are more poor Americans on welfare than at any time since the 
Great Depression. The explanation for this is simple. As affluent America redis- 
covered poverty, poor Americans rediscovered welfare. 

In 1960, no more than one in seven or eiglit poor people received welfare bene- 
fits. The vast majority of the poor simply suffered on tragically substandard in- 
comes. Today, about half the poor people in America receive welfare benefits. 
Although those who subsist on welfare still do so for the most part at sub- 
standard income levels, they are relatively less destitute tlian they were a decade 

I .submit that in a limited sense we should take pride in our ability to assist the 
less fortunate to the degree we do. If we have something to worry about, it is 
that the size of our welfare population represents our failure to provide better 
alternatives to the disadvantaged. 

The adoption of a program of assistance to working poor families, regardless 
of the sex of the head of household or the parental deprivation status of the 
children will l)e a major step forward toward equitable treatment of the poor. 
It will only haunt us if we do not follow up with what is true welfare reform — 
namely the elimination of economic dependency for employable people by pur- 
suing every means at our command to insure a decent job at a living wage to 
every American who can work. It was done during World War II — it can be done 
without war. 

Likewise the adoption of a federal floor on income Is commendable. Unfor- 
tunately, the level of the income floor being considered is totally inadequate to 
meet the minimum needs of families without other resources. I will not belabor 
this point in view of the massive testimony you have already received on it. I do, 
however, urge that in the event Congress chooses to establish a floor without 
regard to adequacy, it does so in conjunction with absolute guarantees that exist- 
insr benefit levels in states with higher minimums be maintained. 

Finally on the matter of substantive programs, I urge the Committee to elimi- 
nate the forced labor provisions of HR 1. especially those which require ac- 
ceptance of a job paying substandard wages. There is absolutely no justification 


for such a corruption of our work ethic. The vast majority of welfare recipients 
who can be defined as "employable" have not been able to support themselves 
in the labor market for reasons other than those implied by the forced labor rule. 
Many are victims of systematic exclusion from opiX)rtunities to be self-support- 
ing as members of racial minorities, but even more to the point vis-a-vis welfare, 
because they are women. 

Even with the inclusion of the working poor, the large majority of heads of 
poor families will continue to be women. They are victims of restricted educa- 
tional opportunities and generally can find employment, when it is available, only 
in a very narrow range of jobs. Despite the increasing participation of women in 
the labor force, the average woman earns only slightly more than half what men 
earn. In addition. AFDC mothers generally have young children who need care, 
and until the expansion of child care programs proposed by HR 1 becomes a real- 
ity and those programs have been able to demonstrate their quality and effective- 
ness, it will be improper to force such services on a woman simply to push her 
into a dubious work situation. 

Associated with this problem is HR I's prohibition on aid to families headed 
by a full-time student. If we are truly concerned with promoting economic in- 
dependence of families who now need public help, it seems to me that we would 
encourage in every way possible an expansion of educational opportunities. 

Generally I support the approach of HR 1 to aid programs for the aged, blind 
and disabled. A uniform federal floor on such aid would be a giant step toward 
eventual integration of welfare with Social Security. The establishment of a 
livable minimum income for all persons covered is long overdue. 

Although the minimum standards for aid to adults is a great improvement over 
what is being proposed for families with children, the federal minimum is still 
below existing benefit levels in many states, including my own. I therefore urge 
Congress to require the states to guarantee maintenance of current benefit levels 
to the aged, blind and disabled where they are above the proposed federal floor. 
Further, as to aid to the aged, I strongly recommend that the Congress allow 
the states to give our senior citizens rebates on their property taxes without hav- 
ing such rebates considered as income for welfare purposes. 

In California, we have a Senior Citizens Property Tax Assistance law that 
provides for refunds to aged homeowners based on their income and the assessed 
valuation of their home. Yet aged welfare recipients are not eligible because such 
refunds would, under federal law, be considered as "income" and hence deducted 
from their subsequent Old Age Security grants. 

As a result of this present federal requirement, the elderly homeowners who 
most need this help are ineligible for it. I urge that this inequity be corrected. 
Any comprehensive discussion of welfare reform must deal with suggestions 
as to the federal administration of welfare programs. 

Experience has shown that poverty is a national problem that has not proved 
amenable to elimination or substantial reduction by state and local efforts. 

Further, the degree of federal participation has continually increased over the 
years due to the growing inability of state and local governments to raise the 
necessary revenues. The problem largely relates to the ability to finance such 
programs on a deficit basis. 

Welfare dollar needs are most pressing when there is an economic slump. This 
is the time when state and local governments suffer from reduced general reve- 
nues, which they cannot deal with through accumulation of debt to be reduced 
when the economy improves. The federal government, on the other hand, is able 
to adjust its finances on a countercyclical basis. For this reason, it makes sense 
for the federal government to assume the major share of expense, and, as HR 1 
proposes, to hold the states harmless against unanticipated cost increases. 

I firmly believe that the federal government is entirely capable of operating a 
national welfare system efficiently and humanely, if the genuine commitment to 
do so is made by the Executive branch and if Congress maintains a careful watch 
over implementation. 

The experience of the last several years in California has clearly shown that 
a State Government which .sets out to defy the Federal Government on a pro- 
gram for which it accepts Federal funds can do a great amount of mischief 
before Washington clamps down. The politics of such a situation is understand- 
able, but no less deplorable for its understandability. The courts have had to 
bear a great burden in forcing States like California to obey Federal law. I 
believe it is time that Congress relieve that burden on the courts, and to a 


great extent relieve the same kind of pressure that surely must be felt here by 
assuming the responsibility for welfare under a program of fair, uniform, and 
lawful Federal administration. 

From my own involvement in welfare legislation, I have come to the conclu- 
sion that the most useful efforts to improve the overall welfare situation are 
focused in three areas — job training and career development, easily available 
voluntary family planning services, and widespread and effective child care 
facilities. These three factors, I submit, offer the best hope for enabling people 
to become self sufhcient and to end their welfare dependency. 

A number of attachments are included for the purpose of providing the factual 
basis for the statements I have made in the foregoing. 

Your inclusion of this statement in your Committee's hearing record vdth 
respect to HR 1 would be genuinely appreciated. 

Anthony C. Beilenson. 


Summary of SB 796 (Beilenson) 
The Welfare Reform Act of 1971 

I. grant payments and treatment of income 

a. Section 11.5. — Amount of aid 

Existing law directs those administering aid to secure the "maximum amount 
of aid" for the recipient. This amendment deletes "maximum" so that the di- 
rection would be to secure the amount of aid to which the recipient is entitled. 

6. Section 20.5. — Earned income exemptions 

M(Hlifies the requirement that a recipient's earned income shall be disregarded 
to the maximum extent permitted by Federal law, and instead provides that 
earned income shall be disregarded to the extent required by Federal law ; 
provided that any exemption permitted by Federal law on August 1, 1971 and 
applied in California shall continue until Federal law is changed ("grand- 
father"' for existing exemptions) . 

c. Section 21. — Scholarship exemption 

Provides that certain loans or grants to undergraduates from the State Scholar- 
ship and Loan Commission or accredited colleges shall no longer be con.sidered 
in determining eligibility or the amount of the grant. 

d. Section 21.5. — Interest on savings accounts 

Repeals the provision excluding interest on savings accounts from income in 
determining eligibility. 

e. Section 22. — Treatment of casual income 

Provides that casual income to the extent of .$60 per quarter .shall be excluded 
in determining aid. 

/. Sections 213, 2/,.,',, 2//.///. 32.9, 312.— Treatment of lump sum income 

Provides that all non-recurring lump sum income received by applicants and 
recipients shall be regarded as income in the month received except for certain 
social insurance such as social security income and workmen's compensation 

{/. Section 25.1. — Immediate need 

Re(iiures the counties to i)ay an ai)plicant up to .$100 for immediate as.sistance. 
and re(iuires tliat verification of the applicant's eligibility within five days must 
be made, or the county bears the cost of such payment. 

h. Sections 28, 28.5, 29, 29.1.— Revised AFDO grant system— flat grants, cost-of- 
living adjustment, increased aid to truly needy 

A standard AFDC payment level is provided which will allow maximum admin- 
istrative efficiency. All recipients with no other income (.W% of cases) will 
receive incrciises ranging from 8% to 20%. About 1 out of .5 cases, with 
highest outside income and highest aggregate needs, will receive great decreases. 

AP'DC recipients will receive an automatic annual cost-of-living increase in 
grants, based on federal indices, beginning in .July 1973. 

In addition to the basic grant, all recipients will be entitled to a .special needs 
allowance when genuine need exists. 


/. Section 28.1. — Work-related expenses 

Restricts work-related expenses to $50 per month, plus reasonable and neces- 
sary costs of child care. Currently state law places no dollar limitation on work- 
related expenses. 
j. Section 28, 29.2. — Food stamp cash-out 

Anticipates federal welfare reform proposals by converting food stamp bonuses 
to cash benefits for AFDC recipients. This will protect recipient food purchasing 
power at no additional cost to state. 
k. Section 29.5. — AFDC grant mismanagement 

Requires, rather than permits, counties to pay aid in the form of goods or 
services (in kind) to recipients where there is mismanagement of aid payments 
by recipients themselves. 


</. Sections 115, 12, 13, IJf and 19. — Confidentiality 

Permits inspection of state income tax records, unemployment insurance rec- 
ords, and county records by the SDSW for purposes directly related to the ad- 
ministration of welfare. 
I). Section 23.2. — Verification of eligihility 

Provides that eligibility must be verified by the County Welfare Department 
before an applicant receives assistance. Currently, aid is granted on the basis of 
an applicant's simple declaration or affirmation of need. (See section 23.1, Imme- 
diate Need, for exception) 
c. Sections 2^.1, 2^2, 2^.12, 2^.13.— E.mmpt personal property 

Permits an applicant or recipient to retain items of nonliquid personal property 
up to a market value of $1,000 plus the entire value of wedding and engagement 
rings, heirlooms, and clothing, the reasonable value of household furnishings, 
other household equipment up to a market value of $300 for each item, reasonable 
value of equipment and material needed for employment, and certain other 
property rights. Liquid asset exemptions remain. 
<7. Section 24-5. — Annual income averaging 

Provides that the income of any person who has a contract of employment on 
an annual basis, but who works and receives income in fewer than 12 but more 
than 8 months shall be averaged over a 12-month basis for the purpose of deter- 
mining eligibility. 
c. Section 24.7. — EligiMlity of college students 

Limits AFDC eligibility of college students up to age 21 to those achieving 
passing grades. 
/. Section 25.— Redetermination of eligibility to he under penalty of perjury 

Requires that the certificate of eligibility in connection with an annual rede- 
termination of eligibility shall contain a written declaration by the recipient that 
it is executed under penalty of perjury. 

g. Section 25.2 — 156% of need limit 

To extent permitted by federal law, limits AFDC eligibility to families with 
gross incomes of or less than 150% of the applicable standard of need. 


a. Section 15. — Job development program 

Provides that the State Personnel Board shall develop jobs leading to perma- 
nent employment for welfare recipients, to be contracted for by the State Depart- 
ment of Human Resources Development under WIN (Work Incentive Program). 
All jobs developed shall pay the prevailing wage. 

b. Section 15.1. — Career oppcrrtunities development program 

Provides that State Personnel Board shall carry a career opportunities develop- 
ment program in state employment and provide technical assistance and direct 


grants to cities and counties and other untis of state and local government. 
Appropriation: $5 million 

c. Section 25.S. — PuUic assistance work force 

Establishes demonstration program, when federal law permits, to develop and 
implement a plan for community work experience programs so that welfare 
applicants and recipients may receive work experience that will assist them to- 
move into regular employment. If the adult recipient refuses to accept work, 
training or participate in a public assistance work force, his portion of the 
family's welfare grant will be terminated. Administered by HRD. 


a. Section 3.3. — Award of attorney fees to county 

Provides that attorney fees may be awarded by the court to a county in actions 
to enforce a support obligation. 

b. Sections 8.S and 31.5. — Attachment of earnings 

Provides for the enforcement of the support obligation of the absent parent of 
an AFDC child by attachment of earnings after judgment. 

Allows attachment of absent parent earnings in court actions to enforce 
support obligations to children receiving welfare aid. 

c. Sections 10, 25, and 27. — Social security numbers 

Requires the social security numbers of the parents on birth certificates, on 
the redetermination of eligibility and absent parent statements, as well as 
certain other information — all designed to assist in locating absent parents. 

d. Section 18. — Grand jury review of support activities 

Revises the provision requiring review of county child support activities and 
would require annual review by an auditor appointed by the county grand jury. 
A report would be made to the County Board of Supervisors and to the State 
Department of Social Welfare annually. 

€. Sections 25.4 ond 25.5. — Absent parent obligation 

A parent whose absence from the family results in the family's eligibility for 
aid shall be obligated to repay the amount of aid so paid. The District Attorney 
of the county adminisitering such aid is required to enforce this obligation. 

/. Section 30. — Enforcement of support 

Shortens the time for referral to the District Attorney of absent parent cases ; 
provides for use of liens where appropriate, and would give the District Attorney 
the authority to request immediate referral to his oflSce of any absent parent case 
for prosecution. 

g. Section 31. — Support recoveries 

Provides counties with a greater share of repaid or recovered monies as an 
inducement for county recovery efforts in the area of parental support liability. 

h. Section 3302. — Support enforcement incentive fund 

Appropriates state funds to the counties to offset county welfare costs to the 
extent of 75 percent of the amounts received or collected from absent parents. 
This is an incentive to the counties to retrieve absent parent payments. (The 
75 percent applies to non-federal share). 

i. Sections 8.6 and 26.1. — Support by remarried motliers 

Provides that the wife's interest in the community property, including earnings 
of her husband, is liable for support of her children with certain deductions. 
This would allow a remarried woman to use her community property interest in 
her husl)and's earnings, as well as her own. to support her children to the extent 
the natural father was not meeting his support obligation. However, all direct 
obligations of stepfathers are eliminated. 

v. oAs relative's responsibility 

a. Serfinn 3. — Duty to support aged parents 

Requires the children of a person receiving aid to the aged (OAS) to support 
such person to the extent of their ability. 


6. Section 33. — 0A8 relatives' responsiUUty 

Permits SDSW Director to increase the amount of support an adult child 
must contribute toward the support of a parent receiving OAS, depending on 
the adult child's ability to pay. 

c. Section S-J- — Contrihuti07is paid to count]/ 

Requires adult children's contribution toward the support of parents receiving 
OAS to be paid directly to the county. 

d. Section SJi.l. — Discretion of SDSW director 

States that OAS Relatives' Responsibility Program is operative at discretion 
of Director of State Department of Social Welfare. 


c. Section 23.5. — Out-of-state recipients 

Provides that the continued absence from the state of a recipient of public 
assistance will constitute prima facie evidence of his intent to establish residence 
elsewhere after a period of 60 days as opposed to the present period of one year. 
Requires the counties to make the necessary inquiries of such recipients. 

i. Section 2-'i.65. — Emergency residence requirement 

Establishes a one-year residence requirement for needy relatives under the 
AFDC program when the unemployment rate in the county of residence exceeds 
6 percent. 

c. Sections 23.6, 24.01, 24.6, 32.5, 38 and 39.5.— Durational residence requirements 
Eliminates all existing (durational) residence requirements, but makes clear 

that aid may be granted only to state residents. 

d. Section 24. — Illegal aliens 

Permits an alien to receive welfare if he certifies under penalty of perjury 
that he is in the country legally and entitled to remain indefinitely, or that he 
is not under order for deportation, or that his spouse is not under order for 
deportation. Upon such certification aid shall be paid pending verification by 
the U.S. Immigration Service. 

If alien can prove he has been in U.S. continuously for past 5 years, further 
verification of legal residence is not mandatory on county. 


a. Section 9.5. — Duplicate warrant 

Provides that where a welfare check is lost or destroyed, and only a portion 
of the original amount is still due, the county auditor shall, upon the filing of an 
affidavit, issue and deliver to the legal owner or custodian a duplicate welfare 
check for the amount still due. 

6. Section 20.3. — Restitution for underpayments, overpayments, fraud 

This amendment would reduce the period for a recipient to claim underpay- 
ment from 4 years to one year; would extend from two to six months the period 
of time a county has to seek an adjustment for an overpayment: and_ would 
allow a county one year following discovery of fraud to adjust grants, instead 
of the present two months. 

c. Section 22.5. — Repayment of aid hy ineligible recipient 

Requires the repayment of aid received by a recipient in good faith but when 
he was in fact ineligible because he owned excess property. 


a. Sections 61 and 17. — Family planning 

Requires counties to contract with the State Department of Public Health 
to provide family planning services for recipients of childbearing age desiring 
such services. 

Appropriation : $1 million 


6. Sections 1S.3 a7id 18.4-— Child care 

Requires counties to provide child care services for former, current, and 
potential recipients of public assistants wlio certify that they would otherwise 
be unable to accept or maintain employment or training and that they would, 
therefore, remain eligible for aid. The counties would be authorized to charge 
a fee for these .services based on the ability of a person to pay. 

A child care training program would be initiated giving priority to the train- 
ing and employment of public assistance recipients. 

Appropriation : .?2 million. 

c. Section 1S.5. — Social services 

Enables counties, if they wish, to provide any public social services permitted 
l>y federal law and for which federal participation is available. 

d. Section 39.01. — Health care for minors 

Parents of emancipated minors cannot be held financially responsible for health 
care services. 

IX. state/county eespoxsibilities 

a. Sections IS.l, 18.2 and 23. — Simplified administration 

Provides for contracts between the State Department of Social Welfare and 
the counties to enable the Department to simplify and tighten eligibility and 
grant determinations. 

Also authorizes SDSW to enter into agreements with the federal government 
for puri50ses of meeting possible requirements of federal welfare reform, with 
view to saving state and county funds. 

*. Sections 42.5 and 43. — State share in administrative costs 

The state will assume 50 percent of the non-federal share of county adminis- 
trative costs, beginning in 1972, in eligibity and grant determination, unless 
federal government assumes administrative costs (see c. below). 

c. Sections 39.1, 39.2, 39.3, 39.4 (^'^d 4^. — State funding of the aged, Mind and 

disabled programs 

Provides for the stae to pay 100 percent of non-federal grant payments in the 

aged and blind programs and 50 percent in the disabled program, beginning in 

1972, unless the fedei'al government assumes administrative costs (see b. above). 


a. Family planning (see social services) $1,000,000 

b. Child care (see social services) 2,000,000 

c. Job development (see employment and training) 5,000,000 

d. Career opportunities development (see employment and 

training) 5,000, 000 

e. Hearing officers — OflBce of Administrative Procedure (to cancel 

welfare fair hearing backlog) 600, 000 

Total 13, 000, 000 

f. Open-end apropriation — Restores county property taxpayer pro- 

tection language vetoed out of budget. 


October 1, 1971 or sooner at discretion of SDSW, except state/county sharing 
shifts begin June 1. 1972. 

Copy of the Report of the Legislative Analyst, the California Legislature's 
Non-Partisan Economic and Fiscal Expert, Whose Office Studied Welfare 
Reform Implementation in November, 1971 

major legislation 

Major legislation affecting the administration of welfare in California was 
enacted during the 1971-72 fiscal year. Chapter ."78, Statutes of 1971 (Senate 
Bill 790). requires the implementation of very significant program modifications 
relating to ('ligil)ility and grant determinations, the administrative and funding 
relationship between the counties and the state, OAS responsible relative liability, 


confidentiality, family planning services, day care services, and employability 
programs. Among the more significant changes required to be effected by the stat- 
ute are the following : 

(1) 150 percent of gross income limitation — Section 25.2 of the chaptered bill 
renders ineligible for aid, to the extent permitted by federal law, and AFDC 
recipient whose total gross income, exclusive of grant payment and prior to 
any detluctions. exceeds 150 percent of the need standards for such recipient. 
( Section 11267 of the Welfare and Institutions [W. and I.] Code. ) 

(2) Work Related Expenses — Section 28.1 provides that exemptions related 
to expenses incurred by employed AFDC recipients shall be limited to $.50 plus 
rea.sonable and necessary costs associated with child care. ( Section 11451.0 of the 
W. and I. Code.) 

(3) AFDC Flat Grant Schedule— Sections 28, 28.5. and 29.1 (a) eliminate the 
maximum participating base (MPB) and (b) provide for the establishment of 
a flat grant schedule adjusted to reflect only the differing dollar requirements re- 
lated to various family sizes. Grants paid to AFDC recipients are required to 
equal the amount specified by the schedule when added to all other income avail- 
able to the family after deduction from the gross income of the family of the ex- 
emptions required by federal and state law. The schedule is required to be 
adjusted annually, commencing during the 1973-74 fiscal year, to reflect changes 
ill the cost of living. (Sections 11450, 114.52, and 11453 of the W. and I. Code.) 

(4) Si:>ecial Needs — Section 28 eliminates state participation in the funding of 
allowances in the AFDC program for siiecial needs which are not common to the 
majority of needy i)ersons. Recurring special needs not common to the majority 
of needy persons and nonrecurring special needs caused by sudden and unusual 
circumstancee beyond the control of the needy family are to be funded by the 
counties. The strife continues to participate in the funding of recurring special 
needs which are common to the majority of recipients. (Section 11450 of the 
W. and I. Code.) 

(5) Verification of Eligibility — Sections 23.2 and 25.1 provide that verification 
of applications of recipients requiring immediate assistance must occur within 
five working days. If eligibility is not verified within five working days, the 
countv must bear the entire cost of the cash payment made to the applicant. 
( Sec-fions 11056 and 11266 of the W. and I. Code. ) 

(6) Exempt Property — Sections 24.1, 24.2, 24.12 and 24.13 repeal those sections 
of the Welfare and Institutions Code which provide for the exemption of certain 
personal property in determining eligibility for assistance under the provisions of 
the various aid programs. These sections establish maximum value limits relating 
to such personal property. (Sections 11155, 1125S, and 11261 of the W. and I. 

(7) Changed Sharing Ratios: Administrative Costs — Section 23 requires that 
the State Department of Social Welfare, rather than the counties, assume all 
responsibility relating to the control of the eligibility and grant level determina- 
tions which underlie the various aid programs. It further requires that the state 
fund 50 percent of the administrative costs related thereto. The State Depart- 
ment of Social Welfare is permitted, however, to contract with the counties for 
the discharge of its responsibilities relating to the determination of eligibility 
and grant amounts. This section of the chaptered l)ill is not to be implemented 
until July 1, 1972. (Section 11050 of the W. and I. Code.) 

(8) Changed Sharing Ratios: Grant Costs — Sections 39.1 through 39.4 provide 
(a) that the state and the counties shall share equally the nonfederal costs for 
support of ATD cash grant payments and(b) that the .state shall assume the full 
funding of the nonfederal costs for support of cash grant payments made to 
recipients of the three other adult aid programs, AB, APSB and GAS. This sec- 
tion of the chaptered bill is not to be implemented until July 1, 1972. (Sections 
15201, 15202, 15203, and 15204 of the W. and I. Code.) 

(9) Lump Sum Income and Casual and Inconsequential Income — Sections 22, 
24.3, 24.4, 24.14 and 32.9 of the bill very significantly reduce the exemptions which 
can be claimed on the basis of the lump-sum income and casual and inconsequen- 
tial income provisions of the Welfare and Institutions Code. (Sections 11018, 
11157, 11262, and 12052 of the W. and I. Code. ) 

(10) Absent Parents and Stepfather Restrictions — Various sections provide for 
the implementation of administrative machinery needed to facilitate the collection 
of ab.sent parent payments. In addition, Section 8.6 requires that a wife's com- 
munity property interest in a stepfather's income be used for support of her chil- 


dren by a previous marriage. 'Tlie section further provides, however, that in 
determining tlie wife's interest in her husband's community property, all prior 
support liability of her husband as well as $300 of his gross monthly income shall 
first be excluded. (Section 512.75 of the Civil Code.) 

(11) OAS Responsible Relative Liability — Section 33 authorizes a very sig- 
niticant increase in the relatives' contribution scale. In addition, the bill requires 
that relatives' contributions be paid directly to county welfare departments 
rather than tlie recipient. (Section 12101 of the W. and I. Code.) 

(12) Confidentiality — Sections 11.5, 12, 13 and 14 permit the release of in- 
formation by the State Franchise Tax Board and the Department of Human Re- 
sources Development to the Director of the State Department of Social Welfare for 
the purpose of determining entitlement to public social services. In addition. Sec- 
tion 19 permits county welfare departments to release lists of applicants for, or 
recipients of, public social services to any other county welfare department, the 
State Department of Social Welfare, or any other public agency to the extent 
required to verify eligibility. (Section 19286.5 of the Revenue and Taxation Code, 
and Sections 1094, 1095 and 2714 of the Unemployment Insurance Code.) 

(13) Work Programs — The statute appropriated $7 million to the State Per- 
sonnel Board for support of special work projects and career opportunities de- 
velopment programs and $2 million to HRD and SDSW for the work incentive 
program (Sections 11300-11308 of the Welfare and Institutions Code, Sections 
5000-5403 and 12000 of the Unemployment Insurance Code. ) 

(14) Day Care Services — The statute appropriated $3 million for support of 
an expansion of day care services throughout the state. Specifically, it requires 
each county to establish a day care program in cooperation with .the Depart- 
ments of Human Resources Development and Education. (Sections 10811 and 
10811-5 of the Welfare and Institutions Code. ) 

(15) Family Planning Services — Sections 16 and 17 provide that family plan- 
ning services shall be offered to all former, current, or potential recipients of 
child-bearing age. These services are to be provided on the basis of contracts 
between county welfare departments and the State Department of Public Health, 
subject to the approval of the State Department of Social Welfare. Section 39.7 
(a) appropriated $1 million to the Department of Public Health, to be used in 
conjunction with $3 million in federal matching funds, for provision of the fam- 
ily planning services. ( Sections 10053.2 and 10053.3 of the W. and I. Code. ) 


The Department of Social Welfare estimated that passage of the act would 
generate, on a full fiscal year basis, a General Fund savings of approximately 
^59.5 million during 1971-72. Table 2 depicts the estimated full-year savings 
associated with the various provisions incorporated into Chapter 578. 

Table 2. — SDSW estimated savings associated uoith implementation of 

chapter 518 

Provision : {millions) 

1. 150 percent of gross income limitation $4. 6 

2. Work-related expense exemption limitation 12. 

3. AFDC flat grant schedule .0 

4. Stricter eligiltility standards including reform of (a) special 

needs, (b) verification of eligibility, (c) exempt personal prop- 
erty 15. 

5. Standardized eligibility operations including (a) changed shar- 

ing ratios relating to grant and administrative costs and (b) 
contracting with counties to achieve enhanced administrative 
efficiency (not to be fully implemented until July 1, 1972) 5. 

6. Lump sum income and casual and inconsequential income re- 

strictions 5 

7. Absent parents and stepfather restrictionS-_"_Z__ZI_II_ri " 6. 8 

8. OAS responsible relative liability scale 17. 6 

9. Confidentiality H. 3 

in. Work programs including day care services (cost) 12^0 

11. Family planning (cost) 10 

12. Others (cost) I ~__ '3 

Total savings 59 5 



With the exception of the provisions relating to (1) state assumption of 
llie responsibilities underlying eligibility and grant determinations and (2) 
■changed administrative and grant cost sharing ratios, which are to become effec- 
tive July 1, 1972, implementation of Chapter 578 was scheduled for October 1, 
1971. Since the implementation date was three months subsequent to the 
start of the fiscal year, the savings estimates associated with passage of the 
<act had to be adjusted to reflect a maximum potential savings accrual period 
of only three-quarters of 1971-72 fiscal year. The adjustment reduced the maxi- 
mum savings estimate for 1971-72 from $59.5 million to $44.6 million. 


In early November, one month after the chaptered bill was scheduled to 
be implemented, we undertook a county survey in order to determine the extent 
to which the bill had been implemented and, in addition, the effectiveness of 
the administrative procedures developed by the department to effectuate the 
implementation. The survey was signed to serve as a monitoring device which 
could be used to determine the impact of the act throughout the course of the 
entire fiscal year. The survey will be updated in February and May of 1972. 
Sixteen counties, representing approximately 85 percent of the AFDC case- 
load and approximately 80 percent of the adult caseload, have been selected 
to participate in the survey. 


The November survey indicated that the October implementation of Chapter 
578 was undertaken amidst considerable administrative confusion. Of the 13 
major provisions of Chapter 578 which we reviewed in our survey, only three — 
the work-related expense limitation, the casual and inconsequential income 
restriction, and the stepfather restriction — were fully implemented in all 16 
of the survey counties. However, of these three provisions, only two were 
securing savings of any significance, the work-related expense limitation and 
the stepfather restriction. 

Five of the provisions, the 150 percent of gross income limitation, the AFDC 
flat grant schedule, the family planning provision, the confidentiality provision, 
and the employability program including day care services, had not been 
implemented in any of the 16 survey counties. 

The remaining four provisions, the five-day verification of eligibility restric- 
tion, the special needs restriction, the lump-sum income restriction, and the 
OAS responsible relatives' liability scale, had been partially implemented in 
several but not all of the survey counties. However, the counties which reported 
having implemented these four provisions indicated that significant savings 
related thereto had not yet materialized. 

Table 3 summarizes the extent of implementation achieved during October. 


Fully Implemented Not implemented Partially implemented 

$50 work-related expense limitation... 150-percent gross income limitation i.. 5-day verification of eligibility (no 

saving accruing). 

Casual and inconsequential income AFDC flat grant schedule 2 Special needs restrictions (no 

restriction (but no savings savings accruing), 


Stepfather restriction Family planning s Lump sum income restrictions (no 

savings accruing). 

Confidentiality' _ OAS responsible relatives liability 

Employability programs including scale (no savings have materialized), 

day care services 3. 

1 Counties instructed not to implement by the Department of Social Welfare. 

' Invalidated by the California Supreme Court. 

' Counties had received no implementing regulations from the State Department of Social Welfare. 



The extent of implementation revealed by our November survey caused us to 
further recalculate our estimate of savings associated with passage of the act. 

The reestimate was not intended to reflect the maximum potential savings 
which we expected to accrue as a result of passage of the act. Rather, it was 
intended only to indicate the amount of savings which would accrue unless the 
act were more effectively and extensively implemented during the ensuing months. 
Table 4 summarizes the calculations underlying oixr November reestimate. 


|ln millions) 

Further adjusted 

to reflect 

Estimated full Adjusted to actual October 

year 1971-72 reflect delayed implementation 

saving; depicted implementation per county 

Provision in table on Oct. 1,1971 survey 

1. 150 percent of gross income limitation.. _ $4.6 $3.4 .- 

2. Work-related expense limitation _ 12.0 9.0 $9.0 

3. AFDC flat grant schedule 

4. Stricter eligibility standards including reform of (a) special 

needs, (b) verification of eligibility, and (c) exempt personal 

property 15.0 11.1 -- 

5. Standardized eligibility operations including (a) changed 

sharing ratios relating to grant and administrative costs, 
and (b) contracting wth counties to achieve enhanced 

administrative efficiency 5.0 3.7 

6. Lump sum mcome and casual and inconsequential income 

restrictions .5 .4 .4 

7. Absent parent and stepfather restrictions 6.8 5.1 .8 

8. OAS responsible relative scale 17.6 13.2 (') 

9. Confidentiaiity 11.3 8.6 _.. 

10. Work programs including day care services 212.O 29.0 

11. Family planning services _. 21.0 2.8 _ _ 

12. Others _ _ 23 2.I '.1 

Total savings _._ 59.5 44.6 10.1 

' Survey indicated that counties, because of court challenge, are placing contributions collected from relatives in trust 
rather than using them as abatements to offset grant costs. Therefore no savings have yet materialized. 
2 Cost. 



In addition to revealing the confusion which characterized implementation of 
Chapter 578 during October, the November survey also highlighted many of the 
specific factors which gave rise to the confusion. 

(A) Department Reorganization — Throughout the course of the current fiscal 
year, the Department of Social Welfare has been undergoing a major reorganiza- 
tion. The reorganization reflects a reordering of priorities on the part of depart- 
mental management. Specifically, the fiscal responsibilities of the department are 
being empliasized much more than in the, and, correspondingly, the service 
responsibilities of the department are being less emphasized. We do not find fault 
with some shift of emphasis based upon a moi-e realistic assessment on the part 
of departmental management of the relative importance of its service and fiscal 
functions. Nevertheless, we do question the wisdom of attempting to undertake 
a major departmental reorganization while at the same time attempting to imple- 
ment the most complex, massive, and significant welfare act in the state's history. 

The effective implementation of any major program change requires an admin- 
istrative apparatus which is stable. I'innly established relationships between 
organizational units and management personnel within a department and be- 
tween the department and other governmental agencies are indispensable pre- 
conditions for undertaking an efficient program implementation effort. Conse- 
quently, it would appear that a departmental reorganization, which disturbs such 
relationships, should not have been attempted while the department was engaged 
in an effort to implement major program modifications. The Department of Social 
Welfare, we believe, by attempting to undertake reorganization while at the 


same time implementing Chapter 578, made administrative confusion almost in- 

(B) Elimination of the Field Representatives and the Erosion of tlie State- 
County Relationship — A serious administrative failing arising from the depart- 
ment's reorganization efforts was, we believe, the elimination of the department's 
Held representatives and the resultant weakening of the state-county relation- 
ship. The SDSW tield representatives have in the past helped to coordinate and 
supervise on a day-to-day basis the activities of the 58 county welfare depart- 
uieuts — the specific governmental units charged with the responsibility of directly 
administering the state's welfare programs. 

SDSW departmental management was not unaware of the communication and 
sni>ervisorial difficulties which were generated because of the elimination of the 
tield representatives. It did attempt to establish new points of liaison with the 
counties. Nevertheless, almost without exception, the various counties included in 
our November survey indicated that the termination of the field representative 
function resulted in a critical communications and supervisorial breakdown be- 
tween the counties and SDSW at a time when such a breakdown could have been 
least afforded. 

In short, rather than exerting every effort to reinforce the relationship between 
the state and the counties in order to expedite implementation of Chapter 578, 
the SDSW management chose to delete from the department's organizational 
structure a key administrative link mth the counties — a link which county wel- 
fare officials have relied upon heavily in the past. The ad hoc, interim points of 
contact which the state department estahlished as substitutes for the field repre- 
sentative positions proved to be incapable of providing the level of communica- 
tions and supervisorial efficiency necessary to assure a smooth implementation 
of Chapter 578. 

(C) Circumvention of County "Welfare Directors' Association (CWDA) by 
SDSW — The elimination of the field representative function is, while important 
in itself, also symptomatic, we believe, of a deeper, more general deterioration 
of the relationship between the State Department of Social Welfare and the 
various county welfare departments throughout the state. Testifying to this 
deeper, more general deterioration is the manner in which state welfare officials 
largely circumvented the County Welfare Directors' Association (CAVDA), the 
primary organizational entity representing and reflecting the interests and 
concerns of county welfare officials, during the initial drafting stages of the 
implementing welfare reform regulations. Recourse to CWDA by the State 
Department of Social Welfare is not required by statute. However, in the past 
CWDA has provided important input to the department relating to (a) how 
properly to draft regulations, (b) the clarity and completeness of proposed regu- 
lations, (e) the administrative workability of proposed regulations, (d) potential 
legal problems associated with proposed regulations, (e) the consistency of 
proposed regulations with those already implemented and (f) the need for new 
regulations. CWDA has, in addition, played an important role in identifying 
problem areas associated with the state's welfare programs and has suggested 
workable solutions. Its publication of Time for Chavge constituted the basis 
for many of the reform provisions incorporated into Ciiapter 578. Finally, the 
organizational structure of CWDA provides for a quick assignment of important 
program and fiscal matters to appropriate informed personnel, permitting it 
thereby to function as a ready information resource. Valuable information re- 
lating to the program and fiscal impact of the department's proposed regulations 
implementing Chapter 578 could have been provided to SDSW by CWDA had 
the relationship between the two oi-ganizational entities been more firmly estab- 
lished and more rigorously exploited. Instead, an inadequate level of county 
input characterized implementation of Chapter 578 resulting, we believe, in a 
considerable loss of administrative efficiency as well as additional costs to the 
taxpayer. Further discussion of the frayed relationship between state and county 
^^•elfare officials is discussed in Item 2.55 of the Analysis. 

The following recommendations have lieen made in order to (a) reinforce 
the state-county relationship by grounding it in formalized, institutional pro- 
cedures; (b) provide for a routine county check of the clarity, completeness, 
workability and consistency of proposed departmental regulations; and (c) 
afford counties adequate lead time to i)repare for implementation. 

(1) We recommend that the Legislature require the State Department of 
Social Welfare to submit all new proposed regidatiotis to the executive committee 
of the County Welfare Directors Association for its advice. 


(2) "We recommend that the Legislature require the State Department of 
Social Welfare to submit the proposed regulations to the executive committee 
no later than 30 days prior to the date of filing with the Secretary of State 
unless a regulation is to be adopted on an emergency basis in which case it shall 
be submitted to the executive committee no later than 15 days prior to the date 
of filing. 

(3) We recommend that the County Welfare Directors Association and the 
Director of the State Department of Social Welfare be required to jointly develop 
specific criteria establishing the basis for the issuance of emergency regulations. 
The association and the director should be further required to submit no later 
than the 30th day of the 1973 legislative session a listing of such criteria to 
the Legislature. 

(4) We recommend that in all eases in which the Director does not abide 
by the advice of the association, he be required to submit to it within 15 days 
a report specifying in detail the reasons for his refusal. 

(D) Internal Departmental Weakness — In addition to eliminating critical 
points of contact with the counties and, in general, damaging the relationship 
between state and county welfare officials, the department's reorganization 
efforts tended, we believe, to seriously weaken the relationship between the 
services and program staff of the department on the one hand and the fiscal, 
regulations, and executive staff of the department on the other. The counties 
which we surveyed indicated that many of the difBculties associated with the 
regulations developed and promulgated by the department to implement Chap- 
ter 578 could have avoided or at least alleviated if departmental management 
had vigorously required an adequate level of input on the part of its own program 
and services experts. 

(E) Inadequate Lead Time — without exception, the counties included in our 
November survey reported that the administrative difficulties associated with 
the lack of adequate lead time were, in many cases, insurmountable. Senate Bill 
796, Chapter 578, was signed by the Governor on August 13, 1971. The bill was 
scheduled to become effective on October 1, 1971. The amount of lead time, there- 
fore, afforded to the State Department of Social Welfare and the 58 county 
welfare departments throughout the state amounted to only 33 working days. 
In comparison to the amount of lead time provided by other major reform bills 
enacted by the California Legislature during recent years, a lead time of only 33 
working days is indeed very short. The Lanterman-Petris-Short Act, which re- 
vamped the provision of mental health services, was passed by the Legislature 
during 1967 with an effective date of July 1, 1969. a lead time of approximately 
two years. The Lanterman Mental Retardation Services Act, which established 
wholly new procedures for the care and treatment of mentally retarded persons, 
was enacted during the 1969 Legislative Session with an effective date of July 1. 
1971, a lead time of again approximately two years. The State Aid for Probation 
Services .\ct, which reorganized the probation system in California, was passed 
during 1965 with an operative date of July 1, 1966, a lead time of approximately 
one year. 

Furthermore, although Chapter 578 was signed by the Governor on August 13, 
1071. the initial guidelines for implementation were not provided to the counties 
until September 2. 1971. The guidelines, however, were not regulatory in effect, 
nor could it have been reasonably expected that the guidelines would be effectively 
u.sed by the counties as a basis for planning implementation. At the most, the 
guidelines issued on September 2 amounted to little more than a summary descrip- 
tion of the act itself. On September 14. supplementary guidelines were issued to 
the counties via telegram. These guidelines, like those issued on September 2, 
amounted to little more than a summary description of Chapter 578 and did not, 
therefore, furnish an adequate planning basis for implementation of the act. 
Further guidelines, similar to those issued on September 2 and 14, were provided 
to the counties on September 16 and 20. Finally, on September 23 through 29, 
advance and filed copies of the regulations began to arrive at county welfare 
departments. The actual amount of lead time, therefore, provided to county wel- 
fare departments to gear-up for implementation of Chapter 578 totaled little more 
thnii six working days. 

The lack of adequate lead time cannot be attributed to the State Department 
of Social Welfare nor to the 58 county welfare departments throughout the state. 
It was inherent in the act itself. However, county welfare officials have indicated 
that the absence of lead time has been an endemic problem during recent years. 
There can be no doubt that unless it is satisfactorily remedied an eflScient imple- 


mentation of departmental regulations will not be possible. We believe that the 
adoption of recommendations No. 2 and No. 3 (page 719 of the analysis) should 
help not only to reinforce the relationship between state and county welfare 
officials but, in addition, produce the lead time required by the counties. 

(F) Inadequate Training — Many of the difficulties associated with the* 
department's implementation of Chapter 578 during October 1971 can be at- 
tributed to an inadequate training effort on the part of the department. One of 
the most effective means of assuring an efficient implementation of any major 
program change is to furnish adequate training to the administration personnel 
responsible for effecting the change. Regardless of the amount of lead time 
provided and the adequacy of the implementing regulations, it is not reasonable 
to expect an effective implementation of a major program change in the absence 
of an intelligently devised and efficiently executed training effort. The orga- 
nizational structure of the Department of Social Welfare appears to reflect an 
understanding of this administrative principle. Specifically, a county training 
bureau is included in the administrative branch of the department. Ostensibly, it 
is charged with the responsibility of developing and implementing for county 
use training programs related to eligibility and grant determinations as well as 
the provision of social services. 

However, notwithstanding the department's establishment of a county training 
bureau, county welfare officials indicated during our November survey that de- 
partmental training related to the implementation of Chapter 578 was totally in- 
adequate. The department did provide for one statewide training conference to 
which key county personnel were invited. However, the county welfare officials 
interviewed indicated that the training provided at the conference was not very 
useful. They further noted that because the conference was not held until Septem- 
ber 29. 1971. only two days prior to the scheduled implementation of the act. the 
training, even if it had been adequate, could not have been brought back to the 
counties and put into effect in time to have lessened the administrative difficulties 
which developed during the first two weeks of October 1971. 

Again, the absence of adequate training cannot be fully attributed to the State 
Department of Social Welfare. The dei)artment was not provided sufficient lead 
time to permit the development of an effective training program. Nevertheless, the 
counties which we surveyed reported that the county training bureau of the 
State Department of Social Welfare has not furnished adequate training services 
to county welfare personnel even when sufficient lead time was available. County 
welfare officials further complained that in the past the bureau (a) did not suffi- 
ciently stress training for eligibility workers and (b) employed classroom instruc- 
tion techniques rather than on-the-job training. 

The department's failure to provide effective training to county welfare depart- 
ments reflects, we believe, an inadequate estimation of the crucial administrative 
role of the training function. Effective training of county personnel by a central- 
ized state training agency could, more than any other single undertaking, help to 
accomplish a uniform, efficient implementation of welfare regulations. Further- 
more, the department's past stress upon the training of social workers rather than 
eligibility technicians is difficult to understand. The eligibility and grant adminis- 
tration of county welfare departments is far larger, more costly, more complex, 
and much more vulnerable to administrative weaknesses than the administration 
of the social service function. The vast organizational network of county welfare 
departments relates almost entirely to the determination of eligibility and the 
payment of grants. In comparison, the social services program is merely an ad- 
junctive function. The adoption of the following recommendations will, we be- 
lieve, help to establish an appropriate role for the department's bureau of county 

(1) We recommend that the Department of Social Welfare be required to 
develop si)ecific. measurable goals as well as potential outputs for its bureau of 
county training and that these goals and outputs be included in the department's 
l>rogram liudget statement tor fiscal year 1973^74. The goals developed by tlie 
department should (a) assure a uniform application of welfare regulations 
tliroughout the state, (b) reflect a much heavier emphasis upon the training 
eligibility technicians than social workers, and (c) stress the use of on-the-job 
training in preference to classroom instruction. A listing of the goals developed by 
the department should be provided to the Joint Legislative Budget Committee no 
later than June 30, 1972. 

(2) We recommend that because of the altered training needs of county wel- 
fare departments, tlie Chief of the Bureau of County Training. State Department 


oi Social "Welfare, not be required to possess a master's degree in social work, 
which is the case under current departmental reflations. 

COUBT challenges: chapter 578 

Compounding the administrative diflaculties generated by departmental reor- 
aanization, inadequate lead time and poor training was a series of court chal- 
lenges directed at various provisiims of Chapter .ITs during the last three months 
oi' 1971. Specifically, suits were initiated against (a) the $50 work-related expense 
limitation, (b) the AFDC flat grant schedule, (c) the stepfather restrictions, (d) 
the OAS liability scale, and (e) the alleged inadequacy of notices of terminations 
and grant reductions sent by county welfare departments to affected recipients. 

(1) The $50 Work-Related Expense Limitation — On September 22, before the 
counties had received even the tirst i)acket of implementing regulations, the 
Sacramento Superior Court issued a temporary restraining order enjoining im- 
plementation of the $50 work-related expense limitation. On September 28. how- 
ever, the Court of Appeals, Third Appellate District, stayed execution of the 
restraining order. 

Ten days later, on October 8, the Sacramento Superior Court issued a pre- 
liminary injunction enjoining any further implementation of the provision. The 
State Department of Social Welfare appealed the injunction to the Court of Ap- 
peal, Third Appellate District. Five days later, the State Attorney General 
advi.sed the department that its appeal of the preliminary injunction had re- 
sulted in a stay of its execution. Consequently, the department directed the 
counties, pursuant to the advice of the Attorney General, to continue to implement 
the provision. However, on October 27, the Sacramento Superior Court issued 
another order stating that its October 8 preliminary injunction had not been 
stayed by the appeal and that full compliance should be immediately effected. 

On Xovember 1, the department filed an appeal from the October 27 sujierior 
court order. On the same day, the Attorney General advised the department that 
(1) the Sacramento Superior Court had no jiiri.sdiction to issue its October 27 
order and (2) the order was, in any case, stayed by the November 1 appeal. How- 
ever, on November 4, the Court of Appeals. Third Appellate District, declined to 
stay execution of the October 27 Sacramento Superior Court order. 

Apiiroximately one month later, on December 8, the California Supreme Court 
refused to transfer the case from the Third Appellate District and declined to 
halt further proceedings in the superior court. The following day, the depart- 
ment notified the counties to cease implementing the provision. 

Administrative costs: The counties included in our November survey reported 
that a significant portion of the excessive administrative costs incurred during 
October was attributable to the confusion generated by this cotirt challenge. 
They expressed the further concern — a concern which proved later to be well- 
founded — that eventually the court challenge would result in a stay of imple- 
mentation which would entail additional administrative costs to the cotinties by 
requiring exiiensive retroactive grant adjustments. 

(2) The AFDC Flat Grant Schedule— On September 29, the California Supreme 
Court issued an order staying operation of Section 28, the section of the act 
relating to the AFDC flat grant scliedule, pending a final determination of the 
proceedings. Enforcement of the entire section was stayed. 

The State Department of Social Welfare, claiming that the Seiitember 20 order 
precluded issuance of the October 1 AFDC grant payments, sought a clarification 
frimi the court on September 30. As a result, the California Supreme Court mo- 
difif^d i's September 29 order staying operation of Section 28 only as it affected 
.^ub.section A of Section 11450 of tlie Welfare and Instituticms Code. Procedurally, 
this required d) reversion to the old MPB, including the 21.4 percent increase 
required by departmental regulations issued in April, and (2) the use of the 
new minimum standard of adequate care. Section 114.52, instead of the old coded 
cost s -hedules. Xonexempt income was to be deducted from the minimtim stand- 
ard of adequate care rather than the fiat grant schedule as required by the in- 
va'idated jiortion of Section 28. 

This procedural change required county welfare departments to recompute all 
of the October 1 AP'DC grant payments. Such a recomi)utation was, of course, ad- 
ministratively impossible given a lead time of only one day. Consequently, the 
State D<'i)artment of Social Welfare filed an emergency regulation with the 
Secretary of State to itermit AFDC monthly grants to be paid in two unequal 
in'tnllments. This revision allowed counties to release the miscalculated October 1 
AFDC checks, which had been computed on the basis of subsection A. and correct 


for overpayments or underpayments in the balance of the monthly grants in- 
cluded in the midmonth October 15 payments. Nevertheless, several counties, not- 
withstanding the emergency regulations issued by the department, failed to mail 
the October 1 AFDC checks. Apparently, the confusion generated by a failure 
to anticipate the September 29 and 30 California Supreme Court orders in con- 
junction with the breakdo\vn of the communication and supervisorial relation- 
ship between state and county welfare officials proved simply too ovenvhelming 
to permit an orderly release of the first October grant payments as scheduled. 

On December 6, the California Supreme Court invalidated subsection A of 
Section 11450 of the Welfare and Institutions Code. The court ruled that non- 
exempt income must be deducted from the minimum standard of adequate care 
( Section 11452) not from the grant schedule. In addition, the court decision im- 
plied a return to the computation of AFDC payments on the basis of the flat grant 
schedule. (The September 30 California Supreme Court order had required that 
the computation of AFDC grant payments be made on the basis of the old MPB 
plus the 21.4 percent increase required by departmental regulations issued in 
April. ) 

The effect of the December 8 California Supreme Court order was to generate 
incTeased costs to the state. Ag originally designed. Section 28 would have entailed 
no additional costs. Specifically, the savings resulting from grant decreases to 
families with nonexempt outside income would have approximately balanced out 
the costs resulting from grant increases to families with no nonexempt outside 
income. However, as a result of having invalidated the deduction of nonexempt 
income from the AFDC flat grant schedule and requiring instead that the deduc- 
tion be made from the need standard, the court decision has, in effect, eliminated 
the savings aspect of the provision while at the same time approving the cost 
aspect We estimate that additional state funds of approximately $12 million 
will be required as a result 

Administrative Costs : Between October 1 and October 15, the date the second 
IJiayment of the October grant was scheduled to be mailed to recipients, all of 
the eoimties included in our November survey were able tO' secure sufficient 
clarification from the State Department of Social Welfare to i>ermit a recalcula- 
tion of the October grant and to adjust the October 15 payment accordingly. 
Thus, by the end of October, county welfare officials had largely overcome tlie 
initial confusion resulting from not planning for the two California Supreme 
Court orders. However, the administrative costs generated by that confusion were 
excessive. Many county welfare departments, especially those which have 7iot 
developed automated procedures for determining grant amounts, were compelled 
to spend large amounts of county funds for support of overtime i>ayments to staff- 

(3) The Stepfather Restrictions — On October 6, the Sacramento Superior 
Court issued a temporary restraining order enjoining implementation of the step- 
father restrictions. The case was, however, limited to three named recipiente. 
On October 19, the court broadened the case to a class action and issued a pre- 
liminary injunction. The dei>artment immediately appealed the injunction to the 
Appellate Court, Third Appellate District, and eight days later, pursuant to ad- 
vice provided by the Attorney General, notified the counties that its appeal of 
the October 19 injunction had resulted in a stay of its execution. Accordingly, 
the department directed the counties to continue to implement the provision. 

On November 19, the Court of Appeal, Third Appellate District, declined to 
halt further proceedings in the Sacramento Superior Court Accordingly, three 
days later the State Dei>artment of Social Welfare directed the counties to cease 
implementing the provision. On December 2. the department issued new regula- 
tions which required evidence that a stepfather's income is actually available, 
rather than merely assumed to be available, to the wife for support of her chil- 
dren by a previous marriage. 

Administrative Costs : The November survey did indicate that Implementation 
of the stepfather restrictions had been inefficient and excessively costly. However, 
the survey produced evidence revealing that the confusion which resulted was 
more attributable to inadequately developed regulations than to the October 6 
court challenge. 

(4) The OAS Liability Scale — On October 20, the Sacramento Superior Court 
issued a temporary restraining order enjoining enforcement of the OAS liability 
scale. However, nine days later the Court of Appeal, third Appellate District, va- 
cated the temporary restraining order and halted all further action of the Sacra- 
mento Superior Court, pending final determination of the proceedings scheduled 
for January 19, 1972. 

Many of the counties, because of the uncertainty generated by the court chal- 

72-573 O - 72 - pt. 6 -- 7 


lenge, are placing the contributions secured from relatives into trust funds rather 
than using the contributions as abatements to offset the cost of the OAS program. 
(5) The Inadequacy of the 15-Day Notices of Termination and Grant Reduc- 
tion — On September 28, the United States District Court for the Northern Dis- 
trict of California issued a temporary restraining order enjoining implementa- 
tion of the scheduled October 1 AFDC grant terminations, suspensions and 
reductions. The issuance of the temporary restraining order was based upon the 
alleged inadequacy of the SDSW designed 15-day notice of grant changes sent 
by county welfare departments to affected recipients. The court order further 
required that prior to October 8 supplemental payments be sent to recipients 
whose October 1 checks could not be corrected due to insufficient lead time. 

Administrative Costs — Because the court order required supplemental checks 
to be issued prior to October 8, county welfare departments were precluded from 
correcting for October 1 payment errors through a simple adjustment of the mid- 
month check. The counties reported that this resulted in very significant increased 
administrative costs in addition to further delaying implementation of Chapter 


The court action which occurred during October, November and December re- 
quired us to again recalciUate our estimate of savings associated with implemen- 
tation of Chapter 578. Table 5 depicts the amount of savings (cost) which can 



[In millions] 


Further adjusted 

to reflect both the 

results of the 

Estimated full Adjusted to county survey for 

year 1971-72 reflect delayed October and the 

savings depicted implementation November and 

in table on Oct. 1, 1971 December court 


1. 150 percent of gross income limitation $4.6 $3.4 

2. Work-related expenses limitation 12 90 

3. AFDC flat grant schedule 

4. Stricter eligibility standards including reform of (a) special 

needs, (b) verification of eligibility, and (c) exempt personal 

property 15.0 11.1 

5. Standardized eligibility operations including (a) changed shar- 

ing ratios relating to grant and administrative costs, and (b) 
contracting with counties to achieve enhanced administra- 
tive efficiency _ _ 5.0 3.7 

6. Lump sum income and casual and inconsequential income 

restrictions .5 .4 

7. Absent parent and stepfather restrictions '" 6.8 5!l 

8. OAS responsible relative scale 17.6 13.2 

9. Confidentiality. 11.3 8.6 

10. Worl< programs including day care services 312.0 ^g.'o 

11. Family planning services.. 21 s'g 

12. Others -...'.'.".".''"'.'.'.".".'.'.'.'.'."' .3 '.1 

Total savings 59.5 44.6 


2 -12.0 




2 11.6 

' Not implemented by order of State Department of Social Welfare. 

2 Cost. 

3 County survey conducted during November indicates no savings are accruing. Currently, staff of our office is planning to 
undertake an additional survey during February. That survey should provide further information as to savings potential 
of this provision. 

* Unknovi^n. 

5 County survey conducted during November indicated that counties, because of the court challenge, are placing contri- 
butions collected from relatives in trust funds rather than using them as abatements to offset cost of OAS program. Effect 
of this provision must remain unknown pending final determination of court proceedings. 

•County survey conducted during November indicated than no implementing regulations had been issued. Currently 
staff of our office is planning to undertake an additional survey during February. 


be anticipated if the current (December 1971) state of implementation is not 
improved during ensuing months. It is to be noted that should the current state 
of implementation continue to prevail during the remainder of 1971-72, a cost to 
the state of approximately $11.6 million may result- 
In short, rather than more extensively implementing the provisions of Chapter 
578 during the two months following October, state and county welfare officials 
have actually lost considerable ground because of successful court challenges. 


Implementation of Chapter 578 did not constitute the sole basis underlying 
the department's attempt to reform California's welfare system. The department 
proposed additionally to achieve reform and savings by recourse to unilateral ad- 
ministrative action. Specifically, the department developed and promulgated the 
following four major regulations for which no change in state or federal statute 
was thought to be necessary : (a) the elimination of AFDC-U families receiving 
Unemployment Insurance Benefits (UIB) ; (b) the redefinition of unemploy- 
ment to require that eligibility for payments under the provisions of the AFDC-U 
program not become effective until after 30 days of unemployment have ex- 
pired ; (c) the redefinition of unemployment to require the elimination of AFDC-U 
families with heads of households employed for more than 25 hours per week 
(100 hours per month) ; and (d) the redetermination of eligibility every four 

(1) Unemployment Insurance Benefits — The regulation requiring the elimi- 
nation of AFDC-U families receiving unemployment insurance benefits was to 
become effective January 1, 1972. The regulation had been filed with the Secre- 
tary of State and issued to the various county welfare departments. However, 
the Department of Social Welfare notified the counties by telegram on Decem- 
ber 27 and 28 and by letter on December 29 not to implement the regulation. 

Fiscal Effect : The department estimates that approximately 15 percent of 
AFDC-U families are securing unemployment insurance benefits and, in addi- 
tion, are entitled to an average grant of approximately $154 per month. Therefore, 
based upon the department's own caseload estimates, the failure to implement 
the UIB regulation will result in a loss of savings to the state of approximately 
$4.9 million during the current fiscal year. 

(2) 30-Day Waiting Period — The regulation rendering ineligible families with 
heads of households unemployed for less than 30 days became effective July 1, 
1971. However, in December, the Sacramento Superior Court invalidated the 

Fiscal Effects : It is estimated by the department that approximately three 
percent of the AFDC-U cases were affected by implementation of this regulation. 
The average grant is estimated to be approximately $200 per month. Therefore, 
based upon the department's own caseload estimates, the invalidation of the 
regulation will result in a. loss of savings to the state of approximately $2.6 
million during the current fiscal year. 

(3) 25-Hour Per Week Redefinition of Unemployment— On March 17, 1971. the 
department adopted regulations which required the termination of AFDC-U 
families with heads of households employed in excess of 25 hours per week (100 
hours per month). The regulation became effective July 1, 1971. Currently, the 
regulation remains in effect. 

Fiscal Effect : The department estimates that approximately seven i)ercent of 
the AFDC-U eases were affected by implementation of this regulation. The aver- 
age grant of the families affected is estimated to be $180 per month. Consequently, 
based upon the department's estimated caseload, savings to the state of approxi- 
mately $2.0 million should result during the current fiscal year. 

(4) The Four-Month Rule— In April 1971, the department adopted regula- 
tions requiring a redetermination of eligibility every four months. The regula- 
tion became effective on June 1. 1971. It was designed to eliminate AFDC fam- 


ilies with outside earned income which cannot be exempted on any basis other 
than the work-related expense exclusions. 

On May 25, the Sacramento Superior Court issued a temporary restraining 
order enjoining implementation of the regulation. However, the Department of 
Social Welfare, claiming that it was bound by an earlier Alameda Superior Court 
decision, continued to implement the regulation. Finally, on September 22, the 
California Supreme Court invalidated the regulation and, in addition, ordered 
retroactive grants to be paid to all of the families eliminated as a result of its 
implementation. The court further directed all county welfare departments to 
submit to the Director of the Department of Social Welfare a report identifying 
the administrative procedures and actions adopted to assure compliance with 
the order. 

Fiscal Effect : We estimate that the loss of state savings associated with the 
invalidation of the regulation totals approximately $9.0 million for the current 
fiscal year. 

Table 6 indicates the amoimt of savings which can be anticipated as a result 
of unilateral departmental action if the current (December 1971) state of im- 
plementation is not improved during the ensuing months. 



Estimated full Adjusted to 

year savings, reflect effect of 

1971-72 court action, 

Regulation (millions) 1971-72 

1. UIB regulation __ 

2. 30-day regulation _ 

3. 25-hour/week regulation _ 

4. 4-month rule __ _._ _._ _.. 

Total _ _._ 18.5 2.0 


Taible 7 depicts the current state of implementation of each of the major wel- 
fare reform measures undertaken by the State Department of Social Welfare 
during the current fiscal year. In addition, the table compares the estimated 
full-year savings related to each of the measures with the adjusted savings esti- 
mates which are based upon (1) our county survey for October and (2) court ac- 
tions which occurred during October, November and December. It should be noted 
that if the current state of implementation prevails throughout the remainder 
of the 1971-72 fiscal year, the department's reform efforts, both Chapter 578 and 
its unilateral administrative changes, may cost the state approximately $9.6 







[Dollars in millions] 

Reform measure 

savings State of implementation 




between esti- 
mated full-year 
savings and 

Chapter 578: 

1. 150 percent of gross in- 

come limitation. 

2. Work-related expense ex- 
emption limitation. 

3. AFDC flat grant schedule. 

4. Stricter eligibility stand- 

ards including reform of 
(a) special needs, (b) 
verification of eligibility, 
(c) exempt personal 

5. Standardized eligibility 

operations including (a) 
changed sharing ratios 
relative to grant admin- 
istrative costs, and (b) 
contracting with counties 
to achieve enhanced ad- 
ministrative efficiency. 

6. Lump sum income and 

causal and inconse- 
quential income restric- 

7. Absent parent and step- 

father restrictions. 

8. OAS responsible relative 

9. Confidentiality. 

Total for unilateral admin- 
istrative reform. 

Grand total. 

« Cost. 

> Negligible (October). 
3 Unknown (October). 
* Unknown. 

> October. 

$4.6 Not implemented by order of the depart- 
ment prior to October 1, 1971. 

12.0 Implementation enjoined by preliminary in- 
junction. Retroactive grant adjustments 
required. (Superior court.) 
Implementation of subsection A, requiring 
deduction of nonexempt income from flat 
grant schedule enjoined (California Su- 
preme Court.) 
Review of counties indicated a partial im- 
plementation but little savings accrual. 



10. Work programs including day 

care services. 

11. Family planning services 

12. Others 

Total for chapter 578 

Unilateral administrative reform: 

13. UIB regulation 

14. 30-day regulation 

15. 25-week regulation — 

16. 4-month rule 



Implementation enjoined - - • 

Implementation enjoined. Retroactive 

grant adjustments required. 
Currently in effect 

Invalidated by California Supreme Court. 
Retroactive grant adjustments re- 





5.0 Not to be fully implemented until July 1, 
1972. Review of counties indicates negli- 
gible savings. 

.5 Review of counties indicated a partial im- 5.5 

plementation but negligible savings ac- 

6.8 Stepfather restrictions enjoined from being .-- 

implemented by preliminary injunction. 
Retroactive grant adjustments. (Superior 
court.) Absent parent provisions not im- 
plemented due to administrative difficul- 
ties. ,,. 
17. 6 Not fully implemented. Savings accrual po- (^) 
tential unknown. Currently, counties not 
using collected contributions as abate- 
ments against the cost of the program. 
11.3 Review of counties indicated no imple- 
mentation. No regulations adopted by 
1 12.0 Survey for October indicated no imple- 
mentation. No regulations adopted by 

1 1.0 do 

.3 - - 

~59T ' * 11-6 
























The attached tables are taken from the monthly reports of 
the California State Department of Social Welfare, Public Welfare 
in California . The Los Angeles County reports on General Home 
Relief caseloads are appropriately marked. 

The virtual elimination of the GR family caseload in Los 
Angeles has been explained by county welfare officials as the 
result of an accounting procedure which eliminated duplicate 
counting of cases that received both GR and AFDC payments in the 
same month. The change was made possible by legislation which 
enabled Los Angeles County to meet emergent needs of AFDC applicants 
by checks issued from district welfare offices. Prior to beginning 
implementation of the legislation in March 1971, Los Angeles granted 
emergency GR to AFDC applicants in immediate need and prepared 
an AFDC warrant at a central location, a process which took 
several days. As a result, such cases were counted twice in 
the month of intake - once as GR, once as AFDC. 


December 1970 

All • nunllet 





C<l>wrji . . . . 


Conlij Cosia . . 

nci N< Mc . , . . 

El On' ado . . . . 
Glenn ...... 

Impel 4> 



► Loi AM-jeles . . . 


Maf)pj.« . . . . 
Mend-iino . . . 


Monlfrey . . . . 




Sj i.'nienio . . . 
Sa.. licnilo . . . 
San liona'dlno . 

Son Oieqo . . . . 
S.>n Iranclsco'. . 

San Luis OOispo 

5 an Mateo . . . 

!.anla Barbara . . 

^nla Clara . . . 

Sanla Cru7 . . . 





Si. Iter 



Tuolumne . . . . 


SI. 027, 464 











96 7 




















































! not tirfctly comparable. 


January 1971 

All counties 

Al«m«da . . . . 




Calaveras . . . . 


Contra Costa . . 
Del Norte . . . . 

El Dorado . . . . 



HumboltJt . . . . 






Mariposa . . . . 



Monterey . . . . 





Riverside . . . . 

San Bernardino . 

San Diego . . . . 
San Francisco . . 
San Joaquin . . . 
San Luis Obispo* 

San Mateo . . . 

Santa Bartjara . . 

Santa Clara . . . 

Santa Crui . . . 





Stanislaus . . . . 








a/ Excludes mis. 
Note: Because o 
■ Data estlmalo 









1.3 12 






























8.80 7 



















170.71 1 


10. 2701 







All I 


AUmed« .... 

CiUvsrjs .... 

0«l Notio . . . . 

El Oaiiao .... 



Humboldt .... 





Los Angeles . . . 


Mariposa .... 
Mendocino . . . 

Monterey .... 




Riverside .... 
Sacramento . . . 
San Benito . . . 
Sao Bernardino . 

San Diego .... 
San Francisco" . . 
San Joaouln . . . 
San Luis Obispo 

San Ualeo . . . 
Santa Barbara . . 
Santa Clara . . . 





Stanislaus .... 



^ufa .... 

!/ l»ciu.t.s inucli 
* Data estimated. 






























69.0 1 




95 00 

95 00 

216.913 I 






83.42 I S 3. 74 1.662 






71.841 I 

13.416 1 















238.42 7 




















' M.rcti 1»71 





y caici 





.. cai.» 












Art countlat . . . 




»5, 109.033 

• Ml. 533 





>1, 111,411 





































28 00 














COlltf* CostA 

Oct Norte 


El Dor«oo 
























86 1« 








1 3,04 7 






















9.4 55 



4 54 













Lo* Angclej 

























52.6 7 




















































80.4 7 















San Oenito 

Sai. B<>rnarc(lno .... 
































San Olow 

San 1 ranoico 

San Joaquin 

San Lut» Oblipo . . . 










146, S02 








122.251 ' 


\ 673.746 
\ 3.033 
\ 7,705 









Sao Mateo 

Santa Oarbara 

Santa Clara 

Santa Crui 

















173 79 


\ 73.223 

I 7.022 























\ 19.80 

\ 1.836 


1 677 

' 1 8.352 
































* ' 7.576 




















































Family cases | 



Family cases 


n cases 












All counties . . 









S3. 257. 928 

SI. 106.647 
























2 34.905 







8 00 










Del Norte 




El Dorado 













































2.4 7 1.040 

25 1 













43 03 
59 28 













»LOS Angeles ...... 


5 76.601 

M rl 






































7 84 






1 0. 1 9 1 

















46 39 

80.4 7 












San Benito* 

San Bernardino .... 


























3.94 1 





San Oiego 

San Francisco 

San Joaouin 

San Luis Obispo . . . 








7. 853 









183 18 












San Mateo 

Santa Barbara 

Santa Clara 

Santa Cruz 






















209.06 7 














8.6 3 8 




































37 85 


















4.1 10 






49 49 
78 45 






Y 1 









J/ Excludes mliccllancous general relic 
Note; Because of differences among co 
• Ma estimated, fcport(s) not roceiv* 

nd policy, data t 


All counllei 

Aljmcda . . . 


Amjdor . . . . 


Contra Cottii 
Del Norte . . . 

El Dorado . . . 
Fresno . . . . 


Humboldt . . . 





Lot Angeles . . 
Madera . . . . 


Mariposa . . . 
Mendocino . , 
Merced . . . . 

Modoc .... 


Nevada .... 


Piumai . . . . 

Riverside . . . 

San eenllo . 

San OIC90 . . . 
San Francisco . 
San Joaquin . . 
San Luis Obispo 

San Mateo . . . 

Santa Barbara . 

Santa Clara . . 

Santa Cru/ . . 


Siskiyou . ! ! ! 

Sonoma .... 
Stanislaus . . . 


Tenama .... 




i/EKCludcs misceli 
Note: Because of • 
* Data estimated. 





































S3. 278. 515 











Alameda . . . 

Bulle .!!!.' 

Calaveras . . . 


Conlia Cotta 
Del None . . . 

El Dorado . . . 

Glenn . ' . ! ! 
Htimboldl . . . 

Imperial .... 



fcLo! Angeles . . 

Madera .... 



Monlorey . . . , 





Riverside . . . . 

Sacramento . . . 

San Ounlto . . . 
San Bernardino 

San Tranclsco '. . 
Son Joaauin . . . 
San Luis Obispo 

San Matoo . . . 

Sania BarDara . . 

Santa Clara . . . 

Santa Crul . . . 















84 3 








































■ 702 





. 7,669 




























34 7 




















1,6 76 




2 36 










I VPt 0^ CASt 

All counties 

AlAincdfl , . 

Amador . . . '. . 

CaLtwio . . 


Conlia Cola 
Ocl Noflf .... 

tl Ooiado* . . . 

Olonn .;.!!! 
Humboldt .... 





I Lot Angclei . . 


UarlpoM .... 
Mendocino . . . 



Monterey .... 


Plumaj* '.'.'.['. 

Sacramento . 
San Bonllo 
San Bi>rnaidlno 

San OI090 . , . 

San Lult Oblipo 

San Mateo . . . 
Santa Barbara 

Sanu Clara . . . 

Santa Crul . . . 




Solano' '.'.'.'. 



Tuolumne .... 

a/ excludes miscellaneous 9Cn 
b/ Data cstlm.>tcd by San Frar 
Note: Oecausc of differences Ji 
* Data estimated, repnrt(s) niv 













supplemental aid lo categorical I 
In general relief program and PC 





48 00 

52 73 
20 98 

61 98 



8.72 7 





























175. 76f 
















AuQuit 1971 






Fa, nil. 



F.mllv cases 


n case, 











AM countlot . . . 










«1, 079,401 



























94 02 





72 30 


27 00 
66.5 7 







Caiaverjt . 


Conlfj CoilJ 

Dri None ....... 




El Dorado 










8. 841 











78 C2 

8,54 1 

8,84 1 


3.7 74 


































52 24 
4 1.90 


70 60 








^oi Angelct 





















59 89 



















10,4 82 































S.ic<jrncnlo .'.'..'.'. 

Sj.i Oc-nllo 

San Bcrnjtdlno .... 






















81 49 
61 00 



8.4 70 

San Olego 

San Francisco 

San Joaguin 

San Luis Obispo . . . 















120 81 





33 34 







San Mateo 

Santa Cjaroara 

S'.iiUa Ciata 

Santa Cfui 























66 03 
112 95 
.54 68 

















110 43 




45 40 










24 1 











4 1 80 
52 8 7 





[uoufrnn. ! : ! ! ! ! ! 













JO 00 




60 33 




• 7 










3,04 1 





rcpurl(s} not received. 

72-573 O - 72 - pt. 6 -- 8 


Soplombor 1971 

Alameda .... 


Calaveras . . . . 


Contra Coila . . 
Del Norte .... 

El Dorado . . . . 



Humboldt . . . . 








Ma-lpoia . . . . 
Mendocino . . . 

Modoc .... 



Placer .!!!!'. 

Riverside . . . . 

Sacramento . . . 

San Benito . . . 

San Bernardino . 

San Diego . . . . 
San Francisco . . 
San Joaquin . . . 
San Luis Or>l5PO 

San Mateo . . . 

Santa Barbara . . 

Santa Clara . . . 

Santa Cruz . . . 

Shasta * 




Stanislaus ... 


Tetiama .... 

Trinity .... 

Tuolumna . . . 
Ventura .... 



a/ Excludes i 
B/ Data ostir 

























upplcmcntal aid to cate90rlc.1l aid recipients. 
In general relief program and policy, data In 



























118 40 




























































Alpltie . . . 

Aniadof . . 

Butte . . . 


Coluu . . . 
Contra Cosia 
Del None . 

ei Dorado . 

Glciiii . . . 
Humboldt . 

Imperial . . 
Inyo .... 
Kern . . , 
Kings . . . 

l_Jkc . . . 

^Lns Anqelei 
'Madera . . 

Merced . . 

Napa . . . 

Orange . . 
Placer . . , 
Plumas ' . . 

San Benito 
San Ucrnardl 

San Diego . 

San Joaguin 
San Luis Obi 

San Maleo 
Santa Barbar. 
S.^nla Clara 
Santa Cru2 

Snasta . . . 

Sierra . . . 

Siskiyou . . 

Solano . . 

Stanislaus . 
Sutler . . . 
Teliama . . 

Trinity . . 
Tulare . . . 
Iiinlumne . 

Volo . . . 
VuDa . . . 























86.6 7 


33 23 













AM COun((«i 

AlAmod* . . . . 




CjlAV*t«t* . . . 


ConttJ Cotl* . . 
Ool Nnilu . . 

El Oorado . . . . 

Olo.i.i .'.','.'.'. 
M<lm^nldl . . . . 






►Coi Ang«ict . . 


Mariposa . . . . 
Mendocino . . . 


Moiiioray . . . . 




nivi'ftido . . . . 

Sacramento . . . 

S«M Uenlio . . . IWrnardino . 

' Ole^u . . . . 
S.iit r'rancitco . . 

Sxn Lul» Oblino 

Sill Maloo . . . 

SanU BJrbarj . . 

Sjnia Clara . . . 

S^nia Cruj . . . 






Stanitiaut . . . . 




Tulare , 

Tuolumne . . . . 






























8.0 70 










/ '" 












16.? 12 













130 33 
25 00 

20 6 7 




67 30 






















70 60 
46 07 

82.6 7 
35 15 










IB I. 'Ml 

dll(«rar\cat among counl 
. roporl(t) riol rocfllvad. 

let In genwral i 



Average Number of Persons Per AFDC-FG (Family Group) Case 
December of Each Year, 1965 Through 1971 

Average No. 




Per Case 

December 1965 






























Source: State Department of Social Welfare 
Management Information Systems 
Public Assistance Caseloads and Expenditures 
(Monthly Report) 

Statement of Hon. Herbert Fineman, Speaker, House of Representatives, 
Commonwealth of Pennsylvania 

Approximately a. year ago, I submitted a statement to this Honorable Commit- 
tee when it was then considering the President's Family Assistance Program. 
At that time, I endeavored to indicate the measure of the impact on the states 
of the proposed Federal legislation concerning welfare. Because of this impact 
upon the states, I firmly believe any Federal legislation should be .approached 
on a reasonably reciprocative basis betwen the states and Federal Government. 
I think it is incumbent upon state oflBcials to make known what affect your 
proposals will have on their respective state governments. I am grateful to you, 
therefore, for this oijportunity to state the views herein contained. 

May I initially state that although I am solely responsible for this statement, 
the views expressed are in essence the views of oflacials of the Commonwealth 
of Pennsylvania. After HR-1 passed the House of Representatives, representatives 
of the Pennsylvania House and Senate, the Governor's Office and the Pennsyl- 
vania Departments of Public Welfare and Labor and Industry reviewed the 
provisions of the bill and developed a consensus position on recommendations to 
be made for amending the proposed legislation in the U.S. Senate. Therefore, 
while the following comments are mine, they also represent the thinking of 
the top government officials of the Commonwealth of Pennsylvania. 

Although there are a total of fourteen suggested revisions to the House bill 
that I would like to offer, I will address myself at this time to only several of 
the proposals which are of more important consequence to Pennsylvania and 
its citizens. 

HR-1, as it passed the House, makes state supplementation of welfare pay- 
ments optional. I can't help but believe that this is a grievous mistake. Knowing 
my fellow legislative leaders and the Governor of the Commonwealth, I can 


assure you that the idea of reducing i)ayments to public welfare recipients would 
be most repugnant to them. Despite this, however, I would have to state that 
legislative leaders and the Governor of the Commonwealth, during periods 
of extreme financial duress, could be forced into a position of seriously contem- 
plating welfare reductions. I would much prefer that the Federal law not make 
such a potential consequence possible. 

I assure you this is not an idle or unfounded apprehension. This can become a 
reality and in fact came close to being a reality in the State of Pennsylvania. 
A little over a year ago a former Governor of the (Commonwealth, in an effort to 
balance the State's budget without a tax increase, recommended to the General 
Assembly that the general assistance payments in the State be reduced by 75%. 
Along this line, recently the State of New York announced a 10% across-the- 
board reduction in welfare payments. Again, this was brought on by severe 
financial problems in the State of New York. I do not believe that the law 
should be so constructed, either state or Federal, that the poor people of our 
society can become the pawns in political hassles during a severe financial crisis. 
HRr-1, also calls for a Federal base payment for a family of four of $2,400 a 
year. It is our recommendation that this sum be increased, at the very least, to 
$3,000 a year. The establishment of such a low floor on the Federal payment 
would be a conscious penalty to those states, like Pennsylvania, who have made 
an effort in the past to have a reasonably decent public welfare program. With a 
Federal base of $2,400, the benefits to the State of Pennsylvania would be sig- 
nificantly and practically non-existent. There is just no motivation for Penn- 
sylvania to support such a rate. 

If one of the purposes of this Bill is to give financial relief to the states, it 
fails dismally in this goal in the Commonwealth of Pennsylvania, Figuring the 
benefits at the very possible maximum and giving the proposal the benefit of the 
doubt, the most Pennsylvania could hope to realize would be a $30 million dollar 
saving. This is compared against approximately $1,000,000 that the State expects 
to spend this year on public welfare. This simply cannot be viewed as significant 
or meaningful fiscal relief. 

I would like to endorse at this time, as a basic goal of this Bill, the phased, 
full Federal take-over of welfare costs for all categories. I am sure there are 
different processes by which this could happen, and I express no strong views as 
to the mechanics to be employed in implementing this takeover. However, I do 
find Senator Ribicoff's proposal on this matter to be highly acceptable. You are 
aware, I am sure, that the Senator recommended an increasing percentage of 
Federal assumption of welfare costs over a four or five year period until which 
time the Federal Government had assumed 100% of the financial responsibility. 
I further endorse the Senator's recommendation that this Federal assumption be 
based on the federally established poverty level. 

The restrictions in HR-1, on the Medical Assistance Program, are completely 
unacceptable to the Commonwealth of Pennsylvania. Whereas, the purpose of 
HR-1 is to give financial relief to the states, the title on medical assistance would 
cost the State of Pennsylvania approximately 12,000,000 additional dollars the 
first year and approximately 20,000,000 dollars the second year of the program. 
These limitations on skilled nursing care, mental hospital care and intermediate 
care would have an injurious effect not only on the State but on the citizens who 
would be put under a time limitation as to how many days they were permitted 
to be ill. 

HR-1, as it passed the House, has a rather unusual administrative mechanism 
for carrying out the purposes of welfare reform. The Departments of Labor and 
HEW are assigned similar responsibilities and would be required to perform the 
same services for welfare recipients depending on whether a family has an em- 
ployable person. In other words, a family without an employable person would 
receive their social welfare assistance and services from the Department of HEW 
or its state counterpart. If a family has an employable person, that family would 
receive its public welfare assistance and services from the Department of Labor 
or its state counterpart. This would result in having two parallel governmental 
agencies performing the same function. It just simply cannot be justified for our 
Pennsylvania Department of Labor & Industry to set up the same bureaucratic 
mechanism and hire a staff of social workers to perform the same functions 
which Pennsylvania Department of Public Welfare is already properly equipped 
to handle. 

I see nothing wrong -with the Bill requiring that employable persons be referred 


to the Department of Labor & Industry for training and employment, but I can 
see no advantage whatsoever for that Department to provide for welfare assist- 
ance and sers'ices. Even if the Labor Department would sign an agreement for the 
Welfare Department to perform this function, no advantages accrue in placing 
the legal responsibility on the Labor Department. 

One of the very big deficiencies in the present Bill is its silence on childless 
couples and single persons. They are excluded from any coverage in HR-1. It 
would be my recommendation that this oversight be corrected and a category, 
which is known as General Assistance in our State, be made part of the Federal 
Welfare Program. In addition to the above suggestions, I would like to list some 
other proposals that the Commonwealth of Pennsylvania is most desirous of 
having incoriJorated in the legislation in question. 

The poverty level, which would be used to determine assistance level, should 
be redetermined annually to reflect changes in the cost of living. The provety level 
should not be frozen at an amount that is specified by law. Updating should 
require amendment of the law. 

Reality would require that if we are going to have national standards on public 
welfare, we must also recognize that the cost of living varies between different 
regions in the nation and that there should be adjustments in payments between 
those regions. 

H.R.-1 presently provides that recipients could be required to accept employ- 
ment, at a pay level which is no more than three-quarters of the Federal minimum 
wage. This is completely unacceptable and is inconsistent with other Federal 
laws. The Bill should not require employment below the minimum wage. 

The provisions in this Bill to establish 200,000 public service jobs is in- 
significant, and this provision should be expanded considerably, to a more realistic 

The day care provisions are also extremely unrealistic and the provisions in 
the Bill for 875,000 day care slots should be increased by at least three fold. 

There is no provision in the Bill to protect a potential recipient in the event 
that there are no day care facilities, training or employment opportunities avail- 
able. No one should be denied benefits because of the lack of such facilities for 
which the recipient cannot be faulted. 

Federal courts have already stated that residency requirements for welfare 
recipients are unconstitutional and such requirements in HR-1 should be 

Regarding the goal for full Federal assumption of public welfare, we would 
like to see the Bill provide protection for the rights of all employees who are 
presently employed in state and local welfare programs. 

I cannot stress strongly enough the importance of welfare reform to the states 
of this nation. I would like to urge with all vigor that it is a critical need for the 
states to have help in public welfare just as quickly as possible. We, in state 
government, have been under the gun to take a more responsible position in 
solving our dome.stic problems such as education, housing, transportation, pollu- 
tion, etc. I want to assure this Gommittee that the legislative leaders of the State 
of Pennsylvania accept that responsibility, but we must have your help to fulfill 
it. If the U.S. Government will move toward a complete welfare reform which 
will include full Federal assumption of the welfare program, the states will be 
able to do much more toward the above-mentioned problem areas and to provide 
heavier financial assistance to their cities and municipalities, Which, in like 
turn, Should relieve considerably the pressures upon the Congress from the 
cities for urban aid. If you will help us help ourselves, you hopefully will be 
relieving yourselves of con.siderable jrressures for Federal assistance in the future. 

Thank you. I appreciate this opportunity to have submitted this statement. 

Statement of Hon. K. Leboy Irvis, Majority Leader, Pennsylvania House 

OF Representatives 

Mr. Chairman and members of the Senate Finance Committee, I am both 
pleased and honored to be able to present to you the following statement. 

I know this committee of senators has heard all types and kinds of testimony 
concerning the effect of HR-1 upon the various states. To a good bit of this testi- 
mony I will subscribe and a large part of it I can endorse ; and I will speak 
about some of it later. However, my immediate concern is not the government of 
the Commonwealth of Pennsylvania but rather its citizens. 


I would also like to preface my comments in an effort to put my statement into 
context. We have made an effort in the Commonwealth of Pennsylvania to ana- 
lize HR-1 in terms of the effect the bill would have on tlie Commonwealth and 
its citizens. A committee of people representing the Pennsylvania House and 
Senate, the Governor and two executive departments, Welfare and Labor and 
Industry analyzed HR-1 witli the purpose in mind that concrete and specific 
suggestions would be made for amending the bill in the United States Senate. 
The comments I will make will be consistent with this concensus position, which 
has been agreed to by the top elected and appointed officials in the State of 

HR-1 presently freezes welfare benefits for the next five years. This is terribly 
inconsistent with reality. It completely eliminates consideration of the condition 
of life some of our more unfortunate citizens must live. Even if the President's 
anti-inflation program should be successful, there is bound to be an inflationary 
process taking place, at the rate of at least 2 to 3 percent a year. I believe the 
President has indicated that he will consider his program successful if he can 
hold the inflationary spiral to 3 percent a year. Therefore, in actuality HR-1 
would call for at least a 3 percent annual decrease in benefits to welfare 
recipients. Of course, at this point those who are critically suspicious of the 
whole public welfare program could charge that there are too many ineligible 
l>eople on the welfare rolls. Even if this were true, which I seriously dispute, I 
ask you, do you want to i>enalize those unfortunate citizens who are legitimately 
on the welfare rolls by reducing their benefits because of a statutory freeze. 

It is my recommendation, therefore, that all such assistance benefits should be 
subject to cost-of-living increases to be implemented at least on an annual basis. 

One of the concepts that we in Pennsylvania have endorsed wholeheartedly 
both in the President's proposal and in the language of HR-1, are national stand- 
ards for both eligibility and benefits. Although we do endorse national standards, 
I think this can only be effective if we recognize the fact that there are different 
cost-of-living levels in different regions within the United States. I think it is 
rather obvious to most of us that a family is probably a little less economically 
deprived on $2,400 or $3,000 a year in a rural parish in Louisiana if compared 
to a $2,400 or $3,000 income in the cities of either Pittsburgh or Philadelphia. 
Having regional differences of benefits will not be an insurmountable administra- 
tive problem. I think the United States Government has more than ample data 
available to it to support such differences. 

I am sure that most of you are very much aware that HR-1 presently allows 
employment at three-fourths the federal minimum wage. In fact, it not only 
allows for sub-minimum pay but would require a welfare recipient to be willing 
to accept sub-minimum pay with threat of losing benefits if refused. It is incon- 
ceivable to me that the United States Government could on the one hand estab- 
lish an absolute minimum value for human labor and on the other hand ignore it. 
I can tell you precisely the psychological effect that such an inconsistency will 
have upon a wefare recipient. A large number of welfare recipients have prob- 
lems concerning their own self-esteem and self -value, and with a policy such as 
this, this will only emphasize their feeUng of being some kind of inferior human 
being. I believe it is the consensus of opinion of almost everyone that the present 
welfare system has been self-defeating. This has come about because the system 
has forced recipients to consider themselves inferior and therefore destroyed 
their ability to become self-sufficient citizens. The provision in HR-1 requiring 
recipients to work for sub-minimal pay will cause the new welfare program to 
be self-defeating in the same manner as the present program. I can only state 
with all the vigor at my command that this is the worst possible method to 
reduce the welfare rolls. Our job is to give these i)eople some self-esteem and 
feeling of self -value — not take it away — so that they will believe that it is within 
their power to elevate themselves. If there is any one thing in HR-1, as it is 
presently written, that I have to say is totally and completely repugnant to any 
sense of decency or propriety, it is this requirement that welfare recipients would 
have to be willing to work at a sub-minimum level of compensation. 

I, therefore, recommend as firmly as I can, that HR-1 be amended to state that 
no one would be required to accept woTk below the federal minimum wage as a 
condition for receiving benefits. 

HR-l's provision to provide approximately two-hundred-thousand public serv- 
ice employment jobs is begging the issue at best. I am in no way implying that I 
oppose public employment as a step in the process of making everyone self-sup- 


porting, but tw^o-hundred thousand, is meaningless. If this is not increased at 
least to approximately one-half million jobs, it will not be of any particular sig- 
niticance. On public service employment, there is an aspect of this that worries me 
considerably and has worried me since the passage of the Emergency Employment 
Act of 1971. How much the public employment provision in HR-1 worries me 
depends on how similar it is to the Emergency Employment Act provision. Under 
the Emergency Employment Act a state or a locality will receive federal funds 
to hire and train unemployed people. Under the Emergency Employment Act, 
after a certain period of lower unemployment the federal funds for the program 
can be withdrawn from the state or locality, which means that those people who 
iiave been holding jobs underwritten by the federal funds will again possibly find 
themselves unemployed. This process that we have been following in the last 
years of starting to help poor or under-privileged people and then suddenly 
dropping them has led to a horrible cynicism on the part of the under privileged. 
This cynicism makes it extremely difficult to motivate and lead these people to 
more positive attitudes toward life. I would ask you to review the provisions of 
HR-1 on public employment botii from the standpoint of expanding its provisions 
and to assure that it is intended to help and not damage. 

As we are all well aware, the very core of any welfare reform program should 
tenter around the children who are caught in the welfare trap. The self defeat- 
ing aspects of the present welfare program are no more evident than they are 
with the children of mothers who find it necessary to receive welfare. It is not 
difficu'*^ at all to obtain supporters for a day care program, which would permit 
mothers who are receiving welfare to obtain employment and leave the welfare 
rolls. However, what is much more important than just providing custodial care 
for children so the mothers can work, is the providing of developmental programs 
for the children. A comprehensive child welfare program, providing education, 
health and medical care, nutrition and positive social outlets in order that the 
children will have a fighting chance to develop into self confident and productive 
human beings is an absolute necessity. In lieu of the provisions of HR-1, I would 
recommend the program that was included in the OEO extension bill which the 
President vetoed. At the very least, I would recommend that Senator Ribicoff's 
proposal be accepted whereby the money provision of HR-1 for child care be in- 
creased from $700 million to $1.5 billion. 

The big issue that has provided the motivation for welfare reform has been a 
mythological issue whereby the average taxpayer feels that the average welfare 
recipient is a lazy bum, and will remain a lazy bum and on welfare unless he is 
provided with some pretty hard-nosed incentive, to get off his duff and get working. 
For those who believe this myth as being gospel and accept it as an absolute truth 
in our society, I will make no attempt to convince otherwise. I am sure they have 
lieard every argument which I am capable of mustering. They have heard all 
of the data ; they have been told all of the realities ; and they choose to believe that 
the average welfare recipient is still what they thought in the first place — a 
lazy bum. Accepting the fact that a large number of our population and also a 
large number of our elected public officials accept this myth, I am prepared to 
agree, especially in light of the recent passage of the Talmadge amendments to 
the Social Security Act, that HR-1 will have to include some provi.sion requiring 
a welfare recipient to register for work and/or training. I find this requirement 
repugnant among other reasons because it was built upon a myth that fact can- 
not seem to destroy. As I am prepared to endorse the consequence of this myth, 
I would like to ask you to consider the administrative reality of what this require- 
ment calls for. This means that there will have to be many, many more social 
workers, job counselors, education counselors and day care attendants. This is 
fine. I don't disagree with the concept that the public .should provide technicians 
to as.sist low income people, but what I am saying is that I doubt very much that 
either the of the United States or the legislatures of the va'rious states 
are going to be willing to appropriate any where near the necessary funds to 
provide all of these necessary employees. Considering that this is jirobably a 
better than even possibility that all of the necessary functions will not be financed, 
we will have to admit that a lot of welfare recipients will not be placed in train- 
ing and will not be placed in jobs. It is my recommendation that these people be 
protectetl in the bill from a loss of beenfits because of the absence of training or 
employment in their local area. I am requesting that language be written into the 
bill that would prohibit any state or locality from denying benefits to any indi- 


vidual who is unable to participate in either training or employment through no 
fault of his own. No fault would be interpreted as the lack of suitable and avail- 
able training or employment within a reasonable distance from his home. Avail- 
ability of transportation .should be a consideration in making this judgment. The 
lack of day care facilities should not be used to deny a recipient benefits. 

I would like to follow through on the requirement in HR-1 that would eventu- 
ally require the mothers of pre-school age children to register for work or train- 
ing. As a human being, I find this repugnant beyond belief that we can be so 
unrealistic as to separate a mother and a baby during one of the most critical 
periods of time in a child's growth. The Talmadge amendments to the Social 
Security Act recognizes this and does not place mothers of children under six in 
a forced work situation. Psychiatrists are now telling us that the emotional 
patterns of later life are fairly well e.stablished in the first few years of one's 
existence. They further tell us that these emotional patterns to a large degree 
depend on how much physical coddling and physical attention based on love the 
child received in its first few years of life. My friends of this committee, it is not 
my intention to wave a flag of motherhood before you, but I am citing to you what 
to my understanding is scientific fact. I would like to see the bill amended so as 
not to require any mother with pre-school age children to register for work or 

I would like to take this opportunity to endorse a couple of recommendations 
that were recently made by Governor Sargent of Massachusetts, Governor Shapp 
of Pennsylvania and a number of other Governors. I wholeheartedly endorse 
their suggestion that HR-1 have a basic floor of $3,000 a year for a family of 
four. I also endorse their recommendation that no recipient should receive less 
than he would have received under a combined program of food stamps and wel- 
fare payments under the existing programs. 

Following, I would like to leave with this committee a very brief outline of 
suggestions for amendment to the bill that would improve its administration from 
the viewpoint of the State. 

HR 1 should be amended to make State supplementation of welfare payments 
mandatory at least up to the level of their present benefits. To permit a state to 
lower its benefit level would both be disastrous for the welfare recipient and to 
the political process in the states. 

I wholeheartedly endorse the concept of full federal assumption of all welfare 
categories including state general assistance programs. I can endorse the proposal 
made by Senator Ribicoff to have a phased federal takeover in a 4 to 5 year 
period. This federal assumption of federal welfare benefits should be based upon 
the federal government's poverty level criteria. 

I am very much opposed to the restrictions in HR-1 on the medical assistance 
program. The limitations this bill would place on skilled nursing care, mental 
hospital care and intermediate care would be fiscally injurious to the State and 
inconsistent with one of the purposes of this bill to give the State fiscal relief. 

Under HR-1, as it is presently written, welfare services and assistance will be 
provided both by the departments of Labor and Health, Education and Welfare 
and their state counterparts. I think this would be very bad law and I think the 
responsibility for public welfare should be lodged with a single government 

I have submitted this statement with the expressed purpose of addressing my- 
self to the human aspects of HR-1. I am not unaware that when one addresses 
himself to the human aspects he runs the risk of the charge of "do-gooder" or a 
"bleeding heart". This risk I have taken wilfully and knowingly. I have taken 
this risk and I am willing to be called a "do-gooder" or a "bleeding heart", but 
what is more important is to get these people off the welfare rolls if it is possible. 
To this goal I will stand shoulder to shoulder with the most conservative person 
in the United States whose ambition it is to remove all people from the welfare 
rolls. I can think of nothing I would sooner do. I can think of nothing I would 
rather see happen. That is why I have spoken on this matter. I .see some aspects 
of HR-1 that would be self-defeating and I with everyone else would like to see 
welfare reform be successful. I would like to see all of our citizens self-supporting 
and off the welfare rolls ; and I can sincerely say that everything I have com- 
mented on has that goal in mind. 

Are there any among us who are not concerned about the poor? Of course not. 
Is there anyone who doesn't care? I doubt it very much. My only desire is to 


challenge all of us to direct that concern and care into a welfare reform program 
that will not be self-defeating. Let lis help people get off welfare — not trap them 
into an eternal hell of welfare. 

Wisconsin Legislature, 

Senate Chamber, 

January 31, 1972. 
Hon. IlussBXL B. Long, 
Chairman, Senate Committee on Finance, 
U.S. Congress, 
Senate Office Building, 

D&.\R Senator Long : Upon direction of the Wisconsin Legislature we are trans- 
mitting a copy of Senate Joint Resolution 19, memorializing Congress to enact 
federal legislation authorizing state public assistance programs to use vendor 
and voucher payments in certain circumstances. 

This Joint Resolution was adopted by both Houses of the Wisconsin Legisla- 
ture and expresses its feelings. 
Sincerely yours, 

William P. Nugent, 

Senate Chief Clerk. 

The State of Wisconsin — 1971 Senate Joint Resolution 

enrolled joint resolution 

Memorializing congress to enact federal legislation authorizing 
state public assistance programs to use vendor and voucher pay- 
ments in certain circumstances. 

Whereas, state administration of a public assistance program should recog- 
nize two basic objectives, first, the desirability of delegating some measure of 
moderate control to the local governments dispensing such assistance, and 
second, the necessity of taking into account the real difficulties encountered 
in administering assistance cases where there is a demonstrated mismanagement 
or misuse of funds ; and 

Whereas, in an attempt to meet the latter objective congress has heretofore 
enacted sections 603 (a) (5) and GOG (b) (2) of the federal social security act, 
which provide in part that aid to families with dependent children may include 
payments in behalf of any such children made either to another individual con- 
cerned with the welfare of those children or to a person furnishing food, 
shelter, or other goods, services or items to or for them, provided that the 
number of said individuals or persons (who are commonly referred to as 
"protective payees") do not exceed 10 per centum of the number of other recipi- 
ents of aid to families with dependent children in the state for anv particular 
month ; and 

Whereas, other sections of the social security act relating to the adminis- 
tration of public assistance require an unrestricted money payment unless 
the assistance agency has first provided the opportunity for a hearing to deter- 
mine that the public assistance recipient is incapable of handling his funds, 
and only then may the agency appoint a protective payee ; and 

Whereas, the protective payee system has proven completely unworkable be- 
cause local welfare directors find it difficult if not impossible to find persons 
willing to serve as protective payees ; and 

Whereas, as of January 1, 1971, Milwaukee county alone had 1,259 active 
cases in which there had been a demonstrated mismanagement of funds pri- 
marily because of failure to pay rent or utilities ; and 

Whereas, in certain cases under the federally subsidized program of aid to 
families with dependent children (AFDC) where there has been demonstrated 
mismanagement of funds, the local welfare department often finds it necessary 
to authorize a double payment for rent and utilities after the first payment made 
from AFDC funds has been misspent, with the second payment coming from 
strictly county funds ; and 

Whereas, failure to authorize federal funds for vendor and voucher payments 
made to AFDC recipients forces the state to assume an unfair burden in financ- 


ing public assistance cases where mismanagement of funds has been demon- 
strated ; and 

Whereas, the unrestricted money payment requirement causes problems for 
both the public and private assistance agencies because some AFDC recipients 
presently misuse the public funds given them for special needs, such as furniture 
and then proceed to obtain these special needs items from private agencies ; and 

Whereas, this situation results in a waste of public funds and depletion of 
the resources of private agencies ; and 

Whereas, the practice of prohibiting voucher and vendor payments to AFDC 
recipients is neither economical nor equitable for state and local agencies 
administering federal assistance programs ; and 

Whereas, as stated in the second paragraph hereof, the congress of the United 
States has already established the legislative precedent for a 10 per centum 
formula of restricted payments in AFDC cases : now, therefore, be it 

Resolved, By the senate, the assembly concurring. That the legislature of the 
state of Wisconsin urges federal legislation to permit a county government 
or its welfare agency administering federal assistance programs to authorize 
the following two-fold limited voucher and vendor plan in granting aid to fami- 
lies with dependent children, without the loss of reimbursement of the federal 
share of such aid : 1st, to dispense grants of aid to all new AFDC recipients 
in the form of vendor payments and vouchers for commodities for an initial 
period of up to 120 days wherever it is feasible to do so, provided that the num- 
ber of new recipients getting restricted payments do not exceed 10 per centum 
of the niunber of other AFDC recipients getting assistance from the same county 
government or agency for any particular month ; and 2nd, to give aid to families 
with dependent children, as provided in section 49.19(5) of the Wisconsin 
statutes, in the form of supplies or commodities or vouchers for the same, in 
lieu of money, as a type of remedial care whenever the giving of aid in such form is 
deemed advisable by the county welfare director dispensing such aid as a means 
either of attempting to rehabilitate a particular i)erson having the care and 
custody of any such children or of preventing the misuse or mismanagement 
by such person of aid in the form of money payments, provided that the number of 
such persons getting restricted payments do not exceed 10 per centum of the 
number of other AFDC recipients getting assistance from the same county 
government or agency for any particular month ; and, be it further 

Resolved, That duly attested copies of this adopted resolution be immediate- 
ly transmitted to the secretary of the federal department of health, education 
and welfare, the chairman of the finance committee and the secretary of the 
senate of the United States, the chairman of the ways and means committee and 
the clerk of the house of representatives of the United States, and to each 
of the 12 members of congress ftom this state. 

William P. Nugent, 
Chief Clerk of the Senate. 
Thomas P. Fox. 
Chief Clerk of the Assembly. 

Statement Prepared by State Representative Arthur L. Buck, Wyoming, 
National Legislative Conference Task Force on Human Resources 

enactment of h.r. 1 

It is the consensus that it might be better to defer enactment until pilot pro- 
grams in a few states, both sparsely and heavily populated, to determine merits 
of the program before adoption nationally. 

There was general concurrence with the statement of objectives for true welfare 
reform outlined by Chairman Russell Long : 

1. It must discourage family breakup and foster family unity ; 

2. It must prevent cheating and dishonesty and when this fails, detect it 
and deal firmly with it ; 

3. It must reward efforts at self-help rather than rewarding idleness among 
the employable ; and 

4. It must provide adequate child care services for children of low-income 
working mothers and mothers on welfare. 

Since tliere is considerable variation among the states in welfare volume and 
extent of services, some latitude should be left to the several states in adminis- 


tration of the program. (Only 3% of Wyoming's population, approximately 8,000 
persons, are on welfare. ) 

National minimum income standards 

In view of inflationary developments, there is an obvious need for upward 
adjustment, at least to the level of that proposed in H.R. 1. (Wyoming presently 
allows $104 monthly for individuals and $178 for couples.) 

Fiscal relief Or fiscal pi'otection for States 

States should have federal relief in the proposed program of national coverage 
in deference to the new residence requirement as determined by the courts. At 
least the states should have no additional liability. 

Financial incentives to work, or income disregards 

Incentives should be retained. (The first $30 and one-third of additional income 
are permitted in Wyoming. ) 

Work requirements and suitability of work 

Should be determined by the individual state, depending on nature of relief 
rolls and availability of opportunity. (In Wyoming, opportunity is limited, both 
in the private and public sector. Retraining, also expensive, is essential in many 

Federal-State administrative responsibilities and options 

Federal Regulations as a rule are not flexible enough to meet requirements of 
individual states. (Wyoming has no large urban areas which may be eligible for 
impact programs.) 

Day care and child development services 

Is needed at low income level when pay of parent does not compensate for cost 
of child's day care which in many cases is inadequate and not socially to best 
interest of the child. (Child care centers in Wyoming at present are inadequately 

Welfare administrative procedures 

Procedures should be implemented by, in addition to interview, validation of 
statements involving checking with various federal social security and tax 
information sources. 

In addition, a deserting parent would be obligated to the United States for the 
amount of any federal payment made to his family less any amount that he 
actually contributes by court order or otherwise to his family. 

State role in administering manpower, child care and supportive services in the 
opportunities for families program for employable recipients 
Administration should be left to the states without the involvement of the Labor 
Department Local agencies are more familiar with recipient needs in relation to 
actual working conditions and pay scales. (Employment is frequently limited to a 
short work week so that the employee does not qualify under existing statutes.) 

State administered social services 

The concept of an "open-ended" appropriation should be restored, eliminating 
the ceilings as provided in H.R. 1. 

South Jeesey Chamber of Commerce, 

Pennsauken, N.J., December 1, 1971. 
Re Social Security Tax— Provision of H.R. 1. 
Hon. Russell B. Long, 
Chairman, Senate Finance Committee, 
U.S. Senate, Washington, D.C. 

Dear Senator Long: On August 5, 1970 the South Jersey Chamber of Com- 
merce wrote you to express its views on H.R. 17050, a Social Security bill then 
under con.sideration by the Senate Finance Committee. We favored Social Secur- 
ity benefit increases but opposed automatic benefit increases and the method of 
financing the automatic increases. 

Fortunately H.R. 17550 was laid to rest and indeed we are grateful for the 
sound judgment that prevailed in the 91st Congress which prevented its passage. 


Congress did, however, increase Social Security Benefits and in fact over the 
past two years benefits liave increased some 25%. 

We are back again. Senator, to solicit your supix)rt for the defeat of the Social 
Security Provision of H.R. 1 which passed the House of Representatives June 22, 

Our organization opposes the Social Security Provision of H.R. 1 which pro- 
vides for automatic benefit increases because of the alarming additional taxes to 
individuals and their employers. 

President Nixon's Tax Reform Program proposes an increase in the individual 
income tax exemptions for 1972 and the enactment of the reference tax would 
off -set net tax relief for the middle class citizen. 

It would burden American Business with additional costs making it diflScult 
to compete with foreign competition. 

If the measure is enacted it would establish a dangerous precedent and those 
on welfare, unemployment compensation and State and local pensions would also 
demand automatic benefit increases. Again this would require substantial amounts 
of taxpayers funds whether from the State or local source. 

The South Jersey Chamber of Commerce represents over 600 businesses who 
employ in excess of 100,000 and we urge you to work for the defeat of the Social 
Security Provision of H.R. 1. 

Thank you for the opportunity of expressing our views to you on this vitally 
important matter. 

Sincerely yours, 

S. Nathan Lev, President. 

American Bab Association, 
Section of Administrative Law, 

Chicago, III., January 17, 1912. 
Hon. Russell B. Long, 
Chairman, Committee on Finance, 
U.S. Senate, Senate Office Building, Washington, D.C. 

Dear Senator Long : The Committee on Hearing Examiners of our Section has 
brought to my attention Section 2031(d) (2) and 2171(d) (2) of H.R. 1, presently 
I>ending before the Senate, proposing amendments to the Social Security Act. 
These are not consonant with the intent and policy of a resolution adopted by the 
Council of the Section of Administrative Law. 

The particular aspects of the bill which concern us are those that provide that 
the Secretary of the Department of Health, Education and Welfare would be au- 
thorized in his sole discretion to appoint persons to act as Hearing Examiners 
in Family Assistance Hearings and others, without requiring such persons to 
qualify as Hearing Examiners under the Administrative Procedure Act, 5 U.S.C. 
551 et seq. 

In view of our Council position, it is the policy of the Section of Administra- 
tive Law of the American Bar Association that the appointment of such Hearing 
OflScers by the Secretary would not promote the purpose of the Administrative 
Procedure Act, and consequently. Congress should grant such authority to make 
appointments of qualified per.sons only on condition that the Civil Service Com- 
mission is unable to provide the Social Security Administration with a large 
enough number of persons qualfied for, and willing to accept, appointments by the 
Social Security Administration as Hearing Examiners under 5 U.S.C. Sec. 3105. 
Very truly yours, 

Milton M. Carrow, 
Chairman, Section of Administrative Ldw. 

Joint Statement of American Chiropractic Association and International 
Chiropractors Association 

(Jointly submitted by: Dr. John L. Simons. President, American Chiropractic 
Association; and Dr. William S. Day, President, International Chiropractors 


1. H.R. 1 should be amended to include chiropractic benefits for Medicare bene- 
ficiaries. This can be accomplished by deleting Section 273 of H.R. 1 and sub- 


stituting Section 205 of H.R. 17550 (91st Cong., 2d Session) as passed by the 
Senate in 1970. 

2. No further study of chiropractic (as proposed by the House bill) is necessary, 
since the existing data among the States medicaid programs fully justifies chiro- 
practic inclusion in Medicare. 

3. The States are requiring the inclusion of chiropractic services in commercial 
health and accident insurance policies. 

4. Industry is providing chiropractic benefits in health programs for its em- 
ployees and retirees. 


Chiropractic urges this Committee to delete § 273 of H.R. 1 (pp. 280-1) which 
provides only for another study, and substitute in its place the language which 
this Committee previously adopted in 1970, under identical circumstances. Spe- 
cifically, we urge you to adopt the language of Section 205 of H.R. 17550, 91st 
Congress, 2nd Session, which would directly include chiropractic services, as 
follows : 

"(a) Section 1861(r) 'or (4)' of the Social Security Act ... is further amended 

"(1) striking out 'or (4)' and inserting in lieu thereof '(4)', and 
"(2) inserting before the period at the end thereof the following 'or (5) a 
chiropractor who is licensed as such by the State (or in a State which does 
not license chiropractors as such, is legally authorized to perform the serv- 
ices of a chiropractor in the jurisdiction in which he performs such services) 
and who meets uniform minimum standards promulgated by the Secretary, 
but only for the purpose of sections 1861 (s)(l) and 1861 (s) (2) (A) and 
only with respect to treatment by means of manual manipulation of the spine 
which he is legally authorized to perform by the State or jurisdiction in 
which such treatment is provided." 
(b) The amendments made by this section shall be effective with respect to 
services furnished after June 30, 1972." 

(N.B. — We have changed this date from the 1971 which appeared previously.) 


In the interest of saving the Committee's time, we shall not repeat the argu- 
ments presented to you when chiropractic testified on September 17, 1970, and 
request that you consider those earlier statements as part of this present one. 

Instead, we should like to call your attention to certain important developments 
that have taken place since we testified almost one and one-half years ago. 

1. A further study is unnecessary 

There is no need for any study of chiropractic in medicaid, as would be 
required by the House bill. The pertinent data is already available and it proves 
the wi.sdom of the Senate's previous action in including chiropractic. 

At present, some 18 States authorize chiropractic services in their medicaid 
programs. They are : California, Connecticut, Idaho, Indiana, Iowa, Kansas, 
Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New York, 
North Carolina, Ohio, Pennsylvania, South Dakota, Texas, and Washington 

Take California, for example. The oflBcial data from the California State De- 
partment of Health Care Services shows that in 1970 there were 469,915 visits 
to doctors of chiropractic and a total payment of $2,340,416 for these visits at 
an average cost of $4.94 per visit. (In addition, some $384,286 was paid for other 
services). The official data gives the "average monthly payment per eligible" to 
all providers of health care in 1969 and shows that the average monthly pay- 
ment to chiropractic doctors was the lowest, by far, of any of the providers : 80 
for chiropractic doctors, $7.70 for other doctors, $3.24 for pharmacists, $2.03 
for dentists, 440 for optometrists, 13^ for podiatrists, somewhere between $6.62 
and $7.85 for hospitals, and $9.47 for nursing homes. The total "average monthly 
payment per eligible" in 1969 was $39.56, of which the 80 paid to doctors of 
chiropractic represents only 0.002% of the total, or the infinitesimal amount 
of 2/lOOOths of the average monthly payment for California's medicaid 

The extremely small financial impact of chiropractic on the total cost of State 


medicaid programs througliout the country is illustrated also by the North 
Carolina program. In 1970, there were 21.*95 cases, and doctors of chiropractic 
were paid $114,361.06 out of the State's total expenditure of some $69 and one- 
quarter million, or Va of 1% of the 1970 total. A similar pattern appeared in 
Nebraska where the cost of the chiropractic program represented only 0.029% 
of the total medical assistance program for 1970. 

Let us turn to New York City's medicaid program. A survey made by the 
City Health Department for 1970 showed 27,737 cases under chiropractic care 
primarily for the treatment of neuromuscular skeletal disorders and that more 
than 509o of the cases treated retiuired fewer than 9 visits for completion of 

The data is already available without further study, and it is even more true 
now than it was in 1970 when the Committee's report stated : 

"The Committee on Finance believes, however, that further study of chiro- 
practic services under other plans is not required to support coverage of the 
services of chiropractors under the supplementary medical insurance program." — 
(Sen. Report 91-1431, pp. 142-3). 
a. States Insist Upon Chiropractic Benefits in Insurance Policies 

During the 1971 State legislative sessions, seven States adopted wliat have 
been called "insurance equality" laws. These st<atutes require that all insurance 
contracts written or renewed in the state thereafter which include physicians' 
services must also mandatorily include chiropractic services under the policy. 
These seven states are : Arkansas, Nevada, New York, Oklahoma, Pennsylvania, 
Washington, Wyoming. 

With these seven States, there are now 26 States that have enacted such 'in- 
surance equalitv" laws. And there is reason to believe that this number will be 
increased. These 26 States include 6',% of the entire American population. Thus, 
some 64% of all of our population must be offered the opportunity, in their free 
choice, to select chiropractic services under their commercial insurance policies. 

In addition, I should point out that there are other States which have the 
same kind of mandatory provisions about the inclusion of chiropractic services 
under Blue Cross-Blue Shield plans. For example, since the first day of 1971, 
Michigan's six million Blue Cross-Blue Shield beneficiaries have the statutory 
freedom of choice to select chiropractic care is they want it. 

The "insurance equality" laws represent a relatively new development. Of 
the 26 States that have enacted such statutes, 16 passed or amended their laws 
only since 1969. This is obviously the wave of the future. Mr. Chairman, and it 
completely justifies the action previously taken by this Committee in proposing 
immediate inclusion of chiropractic services in Medicare. There is nothing so 
strong as an idea whose time has come. These legislative developments alone 
illustrate clearly that the time has come for chiropractic inclusion in Medicare. 
Would it not' be odd if every insurance company in the States had to provide 
their beneficiaries with the option to choose chiropractic services — every one, 
that is. except that sponsored by the Federal Government? We do not believe 
that the Congress wants the Federal health care program to be out of step with 
the clearly expressed desires of the American people for chiropractic benefits in 
all of their health care programs. We respectfully submit that there is no valid 
reas"n for Medicare to deny to the American people the same right they have to 
obtain chiropractic services in commercial insurance. 

3. Industry provides chiropractic coverage 

Another significant development that took place last year is that large industry 
has derided to include chiropractic services in its own employee health plan. For 
example. General Motors changed its employee health benefit plan specifically 
in order to include chiropractic for all of its employees in the United States fl«<Z 
for its retirees. Another example : Monsanto Company, a leading American 
chemical producer, defines the term "physician" so as to cover the services of a 
chiropractic doctor which he is legally qualified and licensed to perform at the 
time and place where such health service is rendered. And similar actions are 
taking place in ever-increasing numl)ers. 


In terms of major current developments among the States and in industry, it is 
wholly anomalous for Medicare to exclude chiropractic services. It is contrary 

72-573 — 72— pt. 6 9 


to the best interests, as well as the clearly expressed desires, of the American 
people in their health care services. 

Therefore, we urgently suggest that once again this Committee take the leader- 
ship which you have already exhibited and that you amend H.R. 1 to include 
chiropractic health care services in Medicare. Specifically, we urge that you 
delete Section 273 of H.R. 1 and substitute in its place the provisions of Section 
20.J of H.R. 17550 reported by this Committee in 1970. Only in this way would 
Medicare beneficiaries have Freedom of Choice of their health care providers. 

Statement of the American College of Nursing Home Administrators,. 
Submitted by Donovan J. Perkins, D.P.A., President 

The American College of Xursing Home Administrators, the profe.ssionat 
society of individual administrators with a proved record of accomplishments; 
and dedication to high standards of professional administration, is deeply con- 
cerned over proposed sections 269 and 270 of H.R. 1, the Social Security Amend- 
ments 1971. which would permit states to grant permanent waiver licenses to- 
administrators who had been working as nursing home administrators for more 
than three years before the basic provision became effective in July. 1970, and 
which would terminate the National Advisory Council on Nursing Home Ad- 
ministration prematurely. 

The provision permitting the granting of permanent waiver licenses would 
almost certainly throw into total chaos the carefully con.structed and implemented 
licensing programs of the states participating in the Title XIX (Medicaid) 
program. The approach designed by the 1967 amendments establishing the initial 
requirements for licensure of nur.sing home administrators did not provide 
for such "grandfathering." The states, in order to comply with the original 
and subsequent requirements, have made great efforts to establish licensure- 
programs based largely on the extremely valuable guidance of the National 
Advisory Council. 

At this time the states already have licensed thousands of administrators,. 
many of these provisionally. Section 1908 of PL 90-248 permits states to grant 
provisional licenses to administrators who have .served as nur.sing home ad- 
ministrators during all of the calendar year immediately preceding the calendar- 
year in which state licen.sure legislation is enacted. This "provisional" license 
must expire no later than two years after issuance or on June 30, 1972, which- 
ever is earlier. The salient stipulation of this waiver provision is the attendant 
educational requirement which provisional licensees seeking a permanent license 
must satisfy prior to acceptance to the licensure examination. The obvious purpose 
of this educational requirement is to upgrade the professional competence of 
"waivered"' administrators to satisfy the federally established minimum 

As a direct effect of the provisional waiver, numerous preparatory training 
programs have been designed across the nation. Most of these programs are 
based in higher education institutions. The development of preparatory 
programs along with state levied requirements for future education levels- 
necessary for entry into the profession and an increasing awareness among the 
nation's educators of the need for formal academic degree programs have stimu- 
lated the growth and proliferation of adult continuing education progranrs and 
associate, baccalaureate and masters degree programs. The continuing education 
requirement for license reregistration alone is responsible for the development of 
hundreds of workshops, institutes and seminars sponsored by higher education 
institution.s, professional .societies, trade associations and private organizations. 
The continuing education requirement as a condition of licensure rei'egistration 
adopted by most states is a unique development in established patterns of oc- 
cupational licensing. All of programs have been designed to upgrade the 
administrator's understanding and abilities as well as to advance his professional 
competence to levels hitherto unknown. The ultimate impact of these programs 
is the improvement of the patient care services provided to the nation's chroni- 
cally ill and aged infirm. 

The American College of Nursing Home Administrators strongly .shares the- 
concern of other leaders and organizations in the long-term health care field 
that to deliver such a debilitating blow, as is constituted by the "waiver pro-- 


vision," to a nascent licensing system that has transformed a difficult and 
disorganized situation into a relatively orderly process under severe time 
pressures, would not be in the interest of either the public or the profession. 
Passage of this provision would seriously reverse or undermine the strong 
movements in most states to develop essential education programs which until 
now have been virtually nonexistent. It must be emphasized that an iudividuars 
exposure to an administrative position alone is an insufficient measure of his 
ability to provide proper patient care. Education and demonstrated ability in 
addition to the successful passing of a specifically designed examination process 
also must be required. 

The College also must express its disappointment over the proposed termina- 
tion of the National Advisory Council. As it now stands the National Advisory 
Council is inactive and by law is due to terminate on December 31, 1971. To 
eliminate such an outstanding advisory body only a few months or weeks prior 
to its legallv established termination date would appear to be without real mean- 
ing and would only serve to cast doubt on the Council's past efforts and achieve- 
ments in laying the proper model groundwork upon which the states could con- 
struct their' licensure programs. In fact, the relative ease with which the states 
have implemented their licensure programs is due in large part to the intense 
and successful efforts of the Council. 

In light of the increased public security and the President's recent announce- 
ment of more stringent regulation of the nation's nursing homes with the attend- 
ant requirement for greater numbers of nursing home inspectors it would seem 
singularly appropriate to give serious consideration to commending, recogniz- 
ing and continuing the National Advisory Council. The Council by making avail- 
able the expert opinions of recognized national authorities could provide greatly 
needed assistance by formulating guidelines for the development and implemen- 
tation of a variety" of appropriate programs and by monitoring existing pro- 
grams to insure that these were being properly administered. It may be recalled 
that the Council provided excellent guidance from its beginning despite the total 
lack of experience or precedent upon which to base its efforts, and now that 
estaVilished expertise can once again be put to proper use. 

The American Parents Committee, Inc., 

Xew York\ N.Y., Februunj 1, 1972. 
Hon. Russell B. Long. 
Ch'timnnn. Senate Finance Committee, 
Senate Office Bmlding, 
Washington, D.C. 

position statement on h.r. 1 

De.\r Senator Long : Please include the following statement in the record of 
the hearing on H.R. 1. 

The American Parents Committee. Inc. is concerned about inadequate income 
and services to meet the needs of poor children and their families. We would 
support a sound federal floor for income to poor families. 

The so-called welfare "reform" bill. H.R. 1, however, seems to us to be inade- 
quate, inequitable and even more retrogressive than the present law as far as 
families and children are concerned. We, therefore, oppose Title IV of that bill, 
now before the Senate, even though it includes help for the "working poor," and 
provides more federal welfare funds to the states. Major problems in Title IV 

1. The inadequacy of federal payment levels, with no required state supple- 
ment and the likelihood that 90 percent of the grants of present recipients will 
be lower than they now are. Eligibility is not based on current need. 

2. The mandatoi-y work requirements for mothers of children over three. 

3. The provisions for inadequate and damaging child care with no guarantee 
of child care before a mother is required to work. 

4. The discriminatory provisions limiting the rights of needy children and 
families as compared to other families. Examples include what we believe to 
he unconstitutioiinl residency requirements, excessive penalties for failure to 
register or acrept work, inadequate work protection, third party payments, 
complex reporting procedures with excessive penalties for failure to file on 
time, renewal of applications "'de novo" every 24 months, required support by 


step-parents (not legal in 49 states), double standard for child support— federal 
liens and federal criminal sanctions against deserting fathers, etc. 

5 The complex dual administration of programs for families by the Depart- 
ments of Labor and HEW with eligibility determined by the employability status 
of family members. The creation of more clostly administration and more "red 

tape" for families. ^v. ,-...- i». 

We are aware of good proposals to improve H.R. 1, such as the RibicofiE 
Amendment, now before the Senate. Since we do not believe it possible for 
such improvements to survive the legislative process, we recommend that Title IV 
should be eliminated from the Senate bill. 

As an alternative, however, we believe that states should be required to 
maintain welfare payments at least at the 1971 levels and given federal fiscal 
relief for rising welfare costs. Such proposals are also now before the Senate. 
These measures are necessary until such time as a more equitable welfare re- 
form bill can be achieved. 

Title V Part of B of H.R. 1 establishes "New Social Services Provisions. 

We recommend that financing for all social services required for assistance re- 
lated individuals remain ou an open ended basis. We oppose the '•closed end" 
provision in Title V for all but family planning and child care services. 

We also urge maintenance of state fiscal effort for these programs so that 
federal funds will not merely sul)stitute for present state funds. 

We believe that the "statewideness" requirement for services should be main- 
tained rather than eliminated if people are to be equitably served. 

W^e endorse Senator Griffin's Amendment No. 411 which would provide for 
a National Adoption Information Exchange System. W^e also support the addi- 
tional federal funding for foster care and adoption services proposed under the 
Child Welfare Services section of Title IV of the Social Security Act. 
Respectfully yours, 

George J. Hecht, Chairman. 

American Speech and Hearing Association, 

Waahlngton, D.C., August 6, 1971. 
Senator Russell Long, 
Chairnidn, Senate Finance Committee, 
Senate Office Building, 
Washington, D.C. 

Dear Senator Long : The purpose of this letter is to express the viewpoints of 
the American Speech and Hearing A.ssociation to the Committee relative to H.R. 1 
Social Securitv Amendments of 1971. In particular, we wish to address our 
comments to Title II, Part C, Section 2.51 of the bill entitled "Physical Therapy 
Services and Other Therapy Services Under Medicare", as relevant to the serv- 
ices provided by speech pathologists and audiologists. 

As the Committee is fully aware, deliberations on the House version of 
H.R. 17550 in 1970 resulted in the Senate Finance Committee modifying the lim- 
itation on reimbursement for institutional health related services by changing 
the limitation from a "salary equivalent" to a "salary related" basis for physi- 
cal therapy services, and also extending the limitations to apply to other health 
related services provided in an institutional setting. We recognize that this lim- 
itation was deemed necessary by the Committee to control program expendi- 
tures for therapy services and services of other health related personnel. We 
commend the Committee on its recognition that health related services ren- 
dered on a "salary related" basis will provide the needed services to patients in 
the most efiicient and economical way. 

The House version of H.R. 1 would provide Medicare reimbursement to the 
provider of physical therapy and other health related services on a "reasonable 
salary payment basis" for the services. In es.sence, payment for the reasonable 
cost of speech pathology and audiology services may not exceed an amount equal 
to the .salary which would have been payable if the services had been performed 
in an employment relationship, plus the cost of such other expenses an individual 
not working as an employee might have, such as maintaining an office, travel 
time and expense, and similar costs. 

In the interest of providing services to the speech and hearing impaired citizens 
of our country, the American Speech and Hearing Association strongly urges 
Che Committee to maintain the provision that health related services be reim- 
bursed on a reasonable cost basis as specified in the House version. 


We believe that reimbursement for services must be sufficient to cover costs 
in order to achieve effective delivery of speech and hearing services. There are 
many patients in extended care facilities and home health care programs who 
have hearing or speech problems (such as loss of speech after a stroke). How- 
ever, a particular extended care facility or home health care program may be 
too .'^mall to justify the employment of a full-time speech pathologist or full-time 
audiologist to deliver services to a relatively small percentage of patients. It is, 
therefore, necessary for these smaller institutions to contract for the services 
of a speech pathologist and/or audiologist on a part-time basis. Reimbursement 
to the provider must be at a level sufficient to meet the costs in providing the 
service. Under contractural arrangements, overhead costs (e.g.. travel-time ex- 
penses, office maintenance, etc.) must be taken into account when determining 
costs of services. , , , , ^ ^ , , , 

The American Speech and Hearing Association would be glad to present these 
views to the Finance Committee when hearings are held on H.R. 1, and we re- 
quest that in addition to any such testimony, this letter be inserted as part of 
the report on the hearings. We know that you will give careful consideration to 
our concerns relative to Title II, Part C, Section 251 of the Social Security 
Amendments of 1971. We commend you on your diligent efforts to improve health 
care in our country. 

Sincerely, ^ 

Kenneth O. Johnson, Ph. D. 

Executive Secretary. 

Statement by Allan J. Winick, Partner, Arthur Andersen & Co. 

In general, I believe the Medicare Program has functioned very effectively 
since its inception in 1966. However, there are five problems in the administration 
of the Program that, hopefully, will be cured by Congress through H.R. 1. 

The first problem relates to the failure of the past legislation to provide for 
judicial review of Intermediary determinations of reimbursable cost. Although 
H.R. 1 has given further rights of appeal to providers of service in this area, 
it still does not allow full review by the courts. I believe H.R. 1 should be amended 
to provide that reimbursable cost determinations involving controversies in tne 
amount of $10,000 or more be appealable through the judicial process, in the 
same manner that Federal income tax controversies are handled. 

The second problem relates to unwarranted financial risks which providers 
of services must bear. Under present administrative procedures, a provider of 
service must receive a "report of eligibility" from the Social Security Adminis- 
tration through its Intermediary before it can bill the Intremediary for .services 
performed for a Medicare patient. In a great many cases, these reports are not 
received until after the patient has been discharged, and it is not luiusual for 
a provider to receive the reports several months, or several years, after the pa- 
tient has been discharged. 

From what I understand of the problem, there is very little more that either the 
Social Security Administration or the Intermediaries can do toward speeding 
up the issuance of the eligibility reports because of the technical processing 
problems involved. However, I do not believe that the provider of services should 
bear the financial risk of this delay and hope that a provision will be included in 
H.R. 1 to the effect that, if an Intermediary does not confirm eligibility of benefits 
to the provider Avithin ten days after a request has been furnished for such 
information from the Intermediary, then the provider, where it acted in good 
faith, should be allowed to bill and receive payment from the Program for the 
services rendered immediately. Further, where the Intermediary later informs 
the provider that benefits were not available, the provider should be required 
to refund the payments only in situations where the provider is able to collect 
for such services from the patient or other third party. 

Although there has been a simplification in this regard since the inception 
of tlie Medicare Program, providers of services are still required to hill certain 
services where a physinan is involved partly under Part A of the Program and 
partly under Part B. This expensive administrative procedure should be removed 
and all provider services should be allowed to be billed under Part A. 

Another problem relates to the complexity of the required cost reports under 
the Program. As the Program has progressed, the cost report requirements have 
become more and more complex, to a point that even the most sophisticated 


accountant has difficulty in preparing them. It might be helpful to the Com- 
mittee if they were furnished samples of the required reports to give them a 
first-hand impression of their complexity. Although the objective of this report- 
ing is to insure that the Medicare Program only pays for the costs attributable 
to Program beneficiaries, I think this end can be accomplished with a simplified 
reimbursement formula and reporting format which would reduce not only the 
cost of administering the Program to the provider, but also to the Intermediary 
and Federal government. As a step in solving this problem, I suggest that the 
Social Security Administration be instructed to develop a reimbursement formula 
which would he based on a per diem cost discounted to recognize the lower 
utilization of ancillary services by beneficiaries of the Program. Although there 
would be considerable debate as to how large the discount should be, I believe 
a realistic rate could be set based on an analysis of the thousands of Medicare 
reports filed during the initial years of the Program. 

The last problem I wish to comment about relates to the inadequate reimburse- 
ment to providers for capital facilities. As you know, the present law and regu- 
lations limit reimbursement to historical cost depreciation and even the option 
to claim accelerated depreciation, which was allowed in the original regulations, 
has been eliminated. Because of the significant effects of inflation, reimburse- 
ment for depreciation computed on an historical cost basis does not provide 
sufficient funds to replace the health care institutions' facilities and, just as 
importantly, results in a confiscation of the provider's capital since the Program 
is not paying for the fair value of the assets consumed in rendering service to 
Medicare patients. To assure the financial viability of our health care institu- 
tions. H.R. 1 should include a provision to require that providers be reimbursed 
for depreciation adjusted to recognize the increase in price levels since the 
related assets were acquired. 

Baroness Erlanger Hospital, 
T. C. Thompson Childbens Hospital, 

Chattanooga, Tenn., August 19, 1971. 
Re H.R. 1, The Social Security Amendments of 1971. 
Mr. Tom Vale, 

Chief Counsel for the Committee on Finance, 
Senate Office Building, Washington, D.C. 

Deab Mr. Vail : We note in Commerce Clearing House Medic-are /Medicaid 
Guide of August 13 that the Senate Finance Committee plans to resume hearings 
on H.R. 1 beginning Tuesday, September 21. We believe it is essential the appeals 
mechanism permits providers of health care, hospital, et al, to have access to 
the judicial system and we wish to make this a matter of record. 

E. B. Craig. Controller. 

Statement of the Chamber of Commerce of the United States, Submitted 
BY William P. McHenry, Jr., Economic Security Manager 

The National Chamber appreciates this opportunity to express its views on 
the Social Security and Medicare provisions of H.R. 1. We intend to testify 
separately on the welfare provisions contained in the House-approved bill. 

Our overall appraisal of the House bill is that it is an extraordinarily ex- 
pensive "package." As Table I shows, long-ranse average annual costs would 
be increased by $13.4 billion. The cumulative tax increase, over the next six 
years, amounts to $57 billion. Workers and employers would have to bear an op- 
pressive tax burden. 

After carefully studying the many provisions of this bill, we urge the Com- 
mittee to : 

(1) Reject the 5 percent benefit increase. The benefit level currently is well 
ahead of the rise in living costs. 

<2) Reject those provisions in the bill calling for nutomatic increases in bene- 
fits, automatic increases in the taxable wage base, and automatic increases in the 
amount of "exempt" earnings under the retirement test. 

(3) Reject the special minimum benefit based on presumed "years of coverage." 

(4) Reject the annual increment for delayed retirement. 


(5) Increase the amount of "exempt" earnings under the retirement test 
from $1,680 to $2,000 a year as a means of encouraging part-time employment 
bv elderly persons. 

(6) Reject the provision calling for additional "drop-out' years in the com- 
putation of benefits. 

(7) Retain the present 6 month "waiting period" for disability benefits. 

(8) Defer any extension of Medicare to the long-term disabled until the costs 
of the present program are under control. 

(9) Maintain the taxable wage base at $9,000 in 1972. 

If these modifications are made, benefit costs can be pared by a long-range 
average of $8.5 billion a year, with consequent reductions in tax rates on workers 
and employers in all future years. Furthermore, we believe it would be highly 
desirable to schedule future tax rate increases over the next 16 years— rather 
than 6 years — to avoid an unnecessary build-up in trust fund balances. 

The underlying reasons for the Chamber's recommendations are analyzed in 
subsequent sections. 

Talle I. — Lovg-range average annual costs for social security and medicare 
provisions in H.R. 1 ^ 

[In billions] 

Average an- 

Provision *»"«^ coaf ' 

5 percent benefit increase 33. 4 

Additional drop-out years (prospective) 1-^ 

Age 62 point for men (prospective) 0. 5 

Earnings test changes 1- ^ 

Widows benefits— 100 percent of PIA at 65 1- 3 

Special minimum benefit 0- ° 

Election of actuarial reduction changes 0. S 

■Combined earnings (prospective) !• 1 

Delayed retirement increment (prospective) 0.5 

5-month disability waiting period 0. 1 

Miscellaneous changes ^- z 

Medicare (HI) benefits for disabled 2.5 

Total 13. 4 

1 These estimates were developed bv Robert J. Myers. Professor of Actuarial Science. 
Temple University, and a member of tlie National Chamber's Social Security Committe«. 
From 1947 to 1970, Mr. Myers was the Chief Actuary, Social Security Administration, L.S. 
Department of H.E.W. , ^. ^ , ,<,-« u-m^ 

2 The "level-equivalent" annual costs are based on an estimated average 5650 billion 
taxable payroll for Social Security (OASDI) and $540 billion for Medicare (HI). With a 
$10,200 tax base, taxable payroll is estimated to be about $490 billion currently. 


For many years, the National Chamber has supported the concept of periodic 
Congressional examination of all aspects of Social Security, including benefit 
levels, to determine whether adjustments in the program are needed. 

It is apparent that, from time to time, changes in benefit amounts are required 
to assure that the great majority of elderly beneficiaries are not compelled to 
seek Old-Age Assistance for their ordinary expenses of living, and are not hurt 
by the effects of price inflation. 

Section 101 of H.R. 1 provides for a 5 percent across-the-board increase in 
benefits, effective in June 1972. Under the bill, about 27 million people would 
get higher benefits, and approximately $2.1 billion in additional payments would 
be made during fiscal year 1973. 

On a long-range basis, the average annual cost of this change is estimated to 
be ,?3.4 billion. 

In the past 21 months. Congress has increased benefits twice — by over 25 per- 
cent in the aggregate. The 1969 Amendments, effective in January 1970, raised 
benefits by 15 percent. This year's Amendments increased benefits by 10 percent, 
effective January 1&71. 

These two increases, plus five earlier ones, have more than off.set the effects 
of price inflation in the past 20 years. As Table II shows, cumulative benefit 
increases enacted by Congress have exceeded 100 percent. During this period 
of time, the cumulative increase in prices amounted to 59 percent. 






Price Index ' 


workers who 



price increase 

retired in 


equals ICO) 


1950 2 



$49.50 .. 























SO. 60 



The record sbows that Congress has maintained benefits well ahead of the rise 
in living costs. For this reason, the National Chamber sees no economic need for 
another benefit increase at this time, and we recommend that Section 101 be 
deleted from the bill. 



Month and year 

December 1950 _ - 

September 1952 

September 1954 --- 

January 1959 

January 1965 

February 1968 ..- 

January 1970 - -- - 

January 1971 138.6 59.1 399.70 101.3 

' Data from Bureau of Labor Statistics. 

2 Data for 1950-68 from Social Security Bulletin, Annual Statistical Supplement, 1969, table 13, p. 31. Data for 1970 
from House Ways and Means Committee, Social Security Amendments of 1969, Report 91-700, 91st Cong., 1st sess., p. 16. 

3 Estimate; based on 10 percent increased enacted under 1971 Social Security Amendments. 

Note. Since 1950. Congress has enacted 7 general benefit increases: 12.5 percent under the 1952 amendments (effective 
September 1952); 9 percent under the 1954 amendments (effective September 1954); 7.1 percent under the 1958 amend- 
ments (effective January 1959); 7.1 percent under the 1965 amendments (effective January 1965)' 13.1 percent under the 
1967 amendments (effective February 1968); 15.1 percent under the 1969 amendments (effective January 1970); and 10 
percent under the 1971 amendments (effective January 1971). 


Section 102 provides for future automatic increases in benefits and in the 
amount of "exempt" annual earnings under the retirement test. Benefit payments 
would be increased whenever the of living, as measured by the Consumer 
Price Index, increased by at least 3 percent in a year (or. if earlier, since the 
last previous benefit change). Any increase would be effective in January of the 
following year. 

However, the benefit escalator would not operate if a general benefit increase 
had become effective or had been enacted by Congress in the preceding year. This 
means, for example, that the proposed 5 percent benefit Increase (effective in 
June 1972) would preclude an automatic increase until January 1974. 

The bill does not include a provision to reduce benefits if the cost of living 
decreases in the future. 

The advocates of an automatic benefit escalator contend that this provision is 
needed because : 

( 1 ) It is uncertain that Congress will act to increase benefits when such action 
is needed because of a rise in the cost of living ; 

(2) A benefit escalator will "depoliticize" this aspect of the Social Security 

Evaluating Congressional Performance 

The record shows that Congress will act with regularly on Social Security. 
Over the past 20 years, the Senate Finance and House Ways and Means Commit- 
tees have held public hearings on Social Security no less than 15 times. As a result, 
benefit protection has been extended to most jobs ; benefits have been increased 
and made easier to get ; new kinds of benefits, such as payments for total disability 
and Medicare protection, have been added ; and payroll taxes on workers and 
employers have been substantially increased to pay for the many changes. 

Moreover, the facts demonstrate that benefit improvements, enacted by Con- 
gress, have surpassed the rise in living costs by a wide margin. Since 19-50, the 
seven benefit increases, on a cumulative basis, have amounted to 101 percent as 
compared with a 59 percent rise in the price level. Thus, benefits have risen 
about 70 percent more than the cost of living. 

It should be noted that the rise in benefit levels does not take into account the 


value of the many other changes made in the Social Security program by Congress 
during that 20-year interval. One of the most important changes, when measured 
by the dollar value to the elderly, was the enactment of Medicare. The Depart- 
ment of Health, Education, and Welfare has estimated that the value of the 
non-cash benefits available under the Medicare program is about $36 a month 
to each beneficiary. When this benefit value is added to the cash benefit amounts, 
as it certainly should be, it is evident that Congress has done much more than 
merely prevent aged beneficiaries from incurring any real loss in their aggregate 
benefit entitlement. 

Perhaps even more significant than the action of Congress over the last 20 
years is its performance since 1964. In the last 6 years. Congress has raised 
benefits on four occasions — in 1965, 1968, 1970 and 1971. These increases exceeded 
45 percent. 

Whatever may have been the case in the comparatively distant past, recent 
Congresses have been prompt to act to assure that benefits were not watered down 
as a consequence of the inflation to which the entire nation has been subjected. 
There is no valid basis for concluding that future Congresses will be less respon- 
sive to upward movement in the cost of living. 

Removing Social Security From Politics 

It has been asserted that substituting mechanical devices (i.e. benefit and 
wage base escalators) for the considered judgment of Congress would remove 
the issue of benefit increases designed to offset the effects of inflation from 
politics. This assertion gives rise to two questions : 

(1) Would such "depoliticization" actually occur? 

(2) Would "depoliticization" be desirable? 

The House and Senate debates on the Social Security Amendments of 1970 
(H.R. 17750) clearly indicate that the broad issue of benefit adequacy would 
not be "depoliticized." Those who supported the benefit escalator stated un- 
equivocally that the benefit escalator would not, and should not, preclude the 
need for further Congressional review of benefit levels. At most, the '•depoliticiza- 
tion"' would be of a limited nature. 

The desirability of even limited "depoliticization" is open to serious question. 
Would it be in the best interests of Social Security beneficiaries and the taxpay- 
ers who support the program? In a program as significant as Social Security, it 
is essential that the judgment of Congress be brought into play whenever changes 
are contemplated. In the final analysis, neither Social Security nor any other 
major governmental program which affects virtually the entire population, can 
be, or should be. removed from "politics," since to do so would remove it from 
any influence or control by the electorate. 

Inflationary Potential 

An automatic benefit escalator could, and almost certainly would, have wide 
ramifications. If this principle is established in Social Security, it inevitably 
will spread to many other public programs such as public assistance, unemploy- 
ment compensation, workmen's compen.sation, state and local retirement systems ; 
to private pension plans ; to negotiated wage settlements ; and, conceivably, to the 
entire wage structure. 

The potential adverse consequences of a cost-of-living benefit escalator were 
recognized by several members of the 1971 Advisory Council on Social Security. 
Mr. Gabriel Hauge, Chairman of the Board, Manufacturers Hanover Trust Com- 
pany, stated : 

"The Council's recommendation that Social Security cash benefit levels be 
automatically adjusted upward to keep pace with the cost of living, leaves me 
with deep concern, because such automatic adjustment would make the control 
of price inflation even more difficult than it already is. 

"One-eighth of the total population of the Nation, and fully 21 percent of the 
voting age population, receive retirement, survivors, or disability insurance 
benefits. To insulate so large a group from the cost of inflation with respect to 
their Social Security beneflts would .surely undermine the public's willingness to 
support the self-restraint and sometimes painful policies that are necessary to 
curb inflation. Of even more importance is the virtual certainty that the adoption 
of an 'escalator clause' for Social Security beneflt payments would give addi- 
tional support to the already insistent demands for inflation protection through 
escalation in a whole range of other private contracts. I do not see how we, as a 


Nation, can wage a successful battle against inflation by automatically adjusting^ 
to it."" 

In passing, it is interesting to note that the labor members of the Advisory 
Council did not place a high priority on an automatic benefit escalator. In fact, 
they conditioned their support for this provision on even further "substantial" 
benefit increases." 

We urge this Committee to reject an automatic benefit escalator for Social 
Security because it is unnecessary and unsound, and because it would have 
wide.spread adverse effects on other governmental and private programs. 

A cost of living escalator seems especially inappropriate at a time when the 
federal government is engaged in an unprecetlented peace-time program to halt 
inflation through wage and price controls. 


The automatic benefit escalator would be financed by automatic increases in 
the taxable wage base. Unlike last year's bill (H.R. 17550), an automatic in- 
crease in the tax base would take place only if there had been an automatic in- 
crease in benefits. 

In the future, the taxable wage base would be raised in proportion to the in- 
crease in the level of average wages of workers covered by Social Security. 
Under the automatic adjustment procedure, the Social Security Administration 
e.stimates that the taxable wage base would be SIO.SOO in 1974, $11,700 in 1976, 
$12,900 in 1978, $14,100 in 19S0. and ultimately rise to $26,100 in the early 1990's. 

We are opposed to an automatic wage base escalator for several reasons. First, 
the proposed financing is uncertain and inequitable. Second, Congressional tax- 
ing authority would be weakened. Finally, it would have an adverse effect on 
private pension plans integrated with Social Security. 

Uncertain Financing 

The wage base escalator is intended to fully finance any benefit costs that re- 
sult from future increases of the cost-of-living benefit provision. However, in 
order to be self-financing, it is necessary for the rate of increase in the earnings 
level to be about twice the rise in the price level — in other words, if prices rise 
3 percent a year, earnings will increase 6 percent a year. 

An examination of recent trends in earnings and prices leads us to the con- 
clusion that the automatic provision may be underfinanced. As Table III shows, 
between 1966 and 1970, the average increase in covered wages has been about 
6 percent a year. During the same period of time, the cost of living has ri.sen 
an average of 4.2 percent a year. Obviously, the earnings level has not risen twice 
as fast as prices. 

1 Mr. Range's statement was concurred in by three other Council members : Charles A. 
Siegfried. Vice Chairman of the Board and Chairman of the Executive Committee. Metro- 
politan Life Insurance Company : Robert C. Tvson, Director, former Chairman of the 
Finance Committee. United States Steel Corporation ; and Dwight L. VTilbur, M.D.. Past 
President. American Medical Association. See, Reports of the 1911 Advisory Council on 
Sofinl Securitii, 1971. p. l.'^.j. 

2 See. statement of Walter J. Burke, Secretarv-Treasurer. United Steelworkers of 
America : Burt Seidman. Director. Department of Social-Securitv. AFIj-CIO : and Joseph 
P. Tonelli. President-Secretary, International Brotherhood of Pulp. Sulphite and Paper 
Mill Workers of the United States and Canada. Reports of the 1971 Advisory Council on 
Social Security, 1971, pp. 128-29. 

II n percent) 

Increase over 

previous year 


Average wages 

in covered 


Cost of living 


4 4 



6 3 









6 2 


Average: 1966-70 




Continuation of present trends in wages and prices indicates that Congress 
almost certainly would have to step in and raise taxes further because the wage 
base escalator would not produce the required revenue over the long run. 

Weakens C(yngressional Taxing Authority 

Under the bill, the Secretary of Health, Education, and Welfare would be 
authorized to increase the taxable wage base — and hence the amount of taxes 
payable — to finance the automatic benefit escalator. These automatic increases 
would be based on the Secretary's determination of the extent to which average 
taxable wages of workers covered by Social Security have risen since 1972. The 

\Vhile these reporting procedures are intended to preserve some Congressional 
Secretary would be required to report (not later than August 15) each year to 
the House Ways and Means and Senate Finance Committees on the likelihood 
of "imminent action" under the automatic escalator provisions, 
responsibility and control over taxes, the Chamber is still opposed to such a 
provision. IVIuch of the public support for the Social Security program is based 
on the knowledge that the Congress carefully considers in public hearings and ex- 
ecutive sessions any proposals to revise or increase taxes on workers and em- 
ployers. If future tax increases are effected without this kind of responsible 
review, the confidence of both workers and employers in the program may be 
adversely affected. Whether taxpayers agree in every instance with the decisions 
of Congress is less significant than the fact that they have much more confidence 
in the judgment of responsible men than in decisions based on mechanical con- 

Inequitable Financing 

If the wage base escalator were to be adopted, it would mean that the added 
cost resulting from automatic increases in the amount of earnings taxed would 
not be shared by all workers and their employers. Rather, it would be financed 
by loading the added tax burden mainly on those workers who earn more than 
$10,200 a year — and their employers. 

This would be the first time in the history of Social Security that Congress 
financed a benefit change entirely through a wage base increase. On previous 
occasions, when Congress has raised benefits or made other program changes, 
the added costs were financed either by an increase in tax rates on all workers 
and their employers or by a combination of tax rate and wage base increases. 

We believe it is inequitable to finance such benefit increases solely through 
increases in the taxable wage base. 

Impact on Private Pensions 

Congress has not considered the potential impact of the automatic benefit and 
wage base escalator provisions on private pension plans which mesh their bene- 
fits with Social Security payments. 

Pension experts believe that the automatic provisions will create very serious 
problems for employers who integrate their pension plan benefits with the Social 
Security program. According to Edwin F. Boynton. Actuary, The Wyatt Com- 
pany, a nationally-known employee benefits consulting firm : 

". . . the automatic wage base adjustment and cost-of-living increases will 
create completely chaotic conditions when it comes to designing integrated 
pen.sion plans. If one stays with the present plan design, there will be a great 
deal of duplication of benefits on wage base earnings, which would result in 
higher and higher pension costs for the duplicate coverage." ' 

We recommend that this provision be deleted from the bill. However, if Con- 
gress decides to include an automatic benefit escalator in H.R. 1, then it should 
be financed by : 

(1) Using the '•actuarial surplus" generated by future increases in the level 
of taxable earnings, and 

(2) Obtaining any remaining funds, on a 50/.50 basis, from increases in tax 
rates and the taxable wage base. 


Section 103 of the bill provides for a special minimum payment for individ- 
uals who have ostensibly worked in covered employment at least 15 year.s. The 

» Social Security vs. Private Pensions, an address presented to the 24th Annual Confer- 
ence of the Council on Employee Benefits. New York Hilton Hotel, October S, 1970, p. 15. 


benefit would be equal to $5 multiplied by the number of "years of coverage," 
not in excess of 30 years. Thus, a person with 20 "years of coverage" would be 
eligible for $100 a month, while a person with 30 or more "years of coverage" 
would receive $150. ^ , . 

Approximately $30 million in additional benefits would be paid out during 
fiscal year 1973. However, the long-range average annual cost of this provision 
is sub.stantial— an estimated $800 million. 

This proposal is in direct conflict with one of the basic principles insisted 
upon bv past Congresses, approved by the National Chamber, endorsed by the 
AFL-Cio, and previously supported by the Department of Health, Education, 
and Welfare— that is, benefits should be wage-related. The principle of wage- 
relationship of benefits means that workers who earn more— and hence ex- 
perience greater job income loss — stand to get a larger benefit. 

The National Chamber opposes the special minimum benefit because it would 
seriously weaken this fundamental principle. 

As this Committee knows, from 1939 to 1950, there was a provision in the 
Social Security Act under which each worker's primary insurance amount was 
increased by 1 percent for each year of covered employment credited the worker. 
The purpose was to raise the level of benefits for long-term workers. Congress 
decided that this was not an appropriate method of providing retired workers 
with higher benefits. Accordingly, the provision was removed from the law in 
1950, and a new formula for computing benefits was adopted. 

The special minimum payment would not benefit all workers. Instead, it 
would apply initially to only a select group of individuals— some 300,000 

The Chamber's opposition to this proposal can best be summarized by refer- 
ence to the 1939 Report of this Committee on pending Social Security Amend- 
ments (H.R. 6635). In that Report, the Committee pointed out: 

"Since the objective of social insurance is to compensate for wage loss, it is 
imperative that benefits be reasonably related to the wages of the individual. 
This insures that the cost of the benefits will stay within reasonable limits and 
that the system will be flexible enough to meet the wide variations in earnings 
which exist." * 

We believe the following examples illustrate that Section 103 of H.R. 1 
would, if enacted, seriously weaken the principle of wage-related benefits. 
Exemple 1 shows that it is not necessary for a worker to actually have 
extremely long service under Social Security to qualify for a high benefit 
payment. Example 2 shows that Section 103 would discard the principle of 
payment of larger benefits to those workers who experience a greater job- 
income loss. 

Example 1: Worker A — 21 years of employment: average monthly earnings 
of $108. Retired at end 1966, at age 65, on a benefit of $68.50 a month. 

Section 103 provides that to obtain 14 "years of coverage" during 1937 to 
1950. a worker only needs total wage credits of $12,600. Thus, worker A with 
annual earnings of $2,600 in any five years between 1937 through 1950 would 
be credited with 14 years of coverage. Worker A goes to work for the Federal 
government in 1951, but works part-time in covered employment at $1,300 a 
year until the end of 1966 when he retires. Today, as a result of benefit increases 
enacted by Congres, this worker is getting $98.20 a month — 91 percent of his 
pre-retirement earnings. Under Section 103. his benefit would be raised to 
$150 a month — 39 percent more than he made on the job— despite the fact that 
he only had 21 years of regular employment. 

Eratnple 2: Worker A — 30 years of employment; average monthly earnings of 
$100. Worker B — 17 years of employment; average monthly earnings of $200. 
Both workers retired at the end of 1966. at age 65. Worker A's benefit was 
$63.20 a month ; Worker B's benefit was $89.90 per month because his average 
monthly earnings were 100 percent higher than Worker A's. 

T'nder present law. as a result of benefit increases enacted by Congress, 
Worker A is receiving $90.60 a month. Worker A had total wage credits of 
$16,600 during the 14-year period from 1937 through 1950. and his earnings 
were not less than 25 percent of the wage base in each year from 1951 through 

* Social Security Act Amendments of I9S9, Senate Report No. 734, 76th Congress, 1st 
Sess.. p. 10. 


1966.' Under Section 103, Worker A's benefit would be raised 65 percent to 
$150 a month since he had 30 "years of coverage." 

Under present law, Worker B receives $128.60 a month. Under H.R. 1, his 
benefit would be raised 5.1 percent, to $135.10 a month. Thus, despite the fact 
that Worker B's earnings loss was twice as great as AVorker A's, he would 
receive a much smaller benefit. This example shows how this proposal would 
undermine Social Security as a job-income loss program based on wage-related 

We recommend that Section 103 be deleted from this bill. 


Section 106 provides for an annual increase in benefits for those aged who 
continue working. The primai-y benefit would be increased one percent for each 
year of employment after age 65 and up to age 72. This provision would be effec- 
tive in 1972. on a prospective basis. 

An estimated $11 million in benefits would be paid out during the first year. 
On a long-range basis, the average annual cost of this provision is much higher — 
about $500 million. 

This proposal raises several issues for consideration : 

(1) Would an annual increment be a useful device in slowing down early 
retirement ? 

(2) Would it serv-e as an incentive to attract elderly persons back into the 
employment market? 

(3 ) Is a delayed retirement increment needed ? 

Early Retirement Trends 

Under existing law. a worker can retire at age 65 on a full benefit, or as early 
as age 62, on a permanently reduced benefit. At age 62. the actuarial reduction 
is 20 percent. The early retii-ement provisions were enacted in 1956 for women, 
and in 1901 for men. 

Presently, a very substantial number of retired-worker beneficiaries are re- 
ceiving reduced benefits. In March 1971. for example, about 46 percent of the 
13.5 million retired-worker beneficiaries had their benefits reduced because they 
chose to retire early. This compares with 2.2 percent and 16.3 percent of the 
beneficiaries who were receiving reduced benefits in December 1956 and December 

A study of new benefit awards for July-December 1968 indicates that these 
are a variety of reasons why male beneficiaries retire before age 65.'^ As Table 
IV shows. 54 percent of the men retired because of health — either a specific 
illness or disability, an accident or injury, or poor health in general. This is 
closelv followed by job-related reasons — that is, such things as job discontinua- 
tion or layoffs : 20 percent of the beneficiaries fell into this category. Finally, 
17 percent of the men wanted to retire before age 65. 

TdhJe IT. — Reasons cited hy male hencficiaries, aged 62-6ff, 
ed-iAuining early retirement 
Reason: ^-'^^^ 
Total ^"" 



Wanted to Retire ^Z 

General Retirement Age ^ 


Statistics on new retirement benefit awards indicate that a majority of work- 
ers retire before ase 65. For example, the proportion of reduced benefits awarded 
(as a percentage of all awards moving to payment status) has been about 60-62 
percent in recent years.* 

6 The maximum taxable base from 1951-66 was: $3,600, 1951-54; $4,200. 1955-58 ; 
$4 800. 1950-05 ; 1966. $6,600. The worker would receive credit for a year of coverage 
ba'sed on the followinc anniial earnintrs during this 16 year period : $900, 19ol-54 ; .51,0.50, 
195.5-58 ; $1 200. 1959-6.") : and $1.0.50. 1966. ^ rr, ^, ^ ,- ■ro 

<^V S Df'vnrtment of H.E.W.. Social Security Bulletin. September 1971. Table Q-5, p. 5S. 

7 Sfo' Virginia Reno. "Whv Men Stop Working at or Before Age 65 : Findings from the 
Survey of New Benefir-iaries." Social Security Bulletin. .Tune 1971. Table A. p. 5. 

« U S Departnjent of H.E.W., The Same, Septemebr 1971, Table Q-6, p. 59. 


These facts indicate that an annual increment for delayed retirement will 
probably Lave little, if any, appreciable effect on slowing down the large number 
of beneliciaries who retire at age 65 or earlier. 

Employment Incentive 

Most elderly persons are not working. In May 1970. the U.S. Department of 
Labor reported that about 16.1 million men and women. 65 years of age and 
over, were not in the labor force. Of the estimated 3.2 million elderly who were 
in the labor force, about 3.1 million were employed and U7,000 unemployed. Most 
of the employed group (86 percent) had jobs in non-agricultural industries.' 

Would an increased benefit serve as an incentive to encourage more persons 
65 and over to postpone retirement and continue working? 

There is no information in the House Ways and Means Committee report to 
indicate whether the 400,000 persons who are expected to qualify for higher 
benefits under this provision in the first year of operation are not now in the 
labor force. However, we doubt that a benefit increase of 1 percent per year 
is a strong enough inducement to persuade persons 65 and over to return to the 
labor force or to continue working. 

Data on the number of persons expected to qualify for benefits under the 
retirement test strongly suggests that most, if not all, of the 400,000 are already 
employed. The delayed retirement increment will not be an employment incentive, 
but just a device to raise benefits for people who are already working. Obviously, 
when these persons do retire, they will have no social need for larger benefits 
because they worked longer. 

Is It Needed? 

Existing law already contains two provisions which serve to encourage em- 
ployment among the elderly. 

The first is an automatic recomputation of benefits for those persons who con- 
tinue to work after age 65. If the person's earnings then exceed his previous pay, 
then the retirement benefit will be increased. Naturally, a recomputation never 
decreases the retirement benefit. 

The annual amount of "exempt" earnings under the retirement test also serves 
as a device to encourage employment by elderly persons. A 1963 study of the 
Social Security Administration indicates that quite often the key factor in 
determining how much work a "retired" beneficiary undertakes is the annual 
amount of "exempt" earnings — whether it is $1,200 as in 1963, or §1,680 as at 
present, or $2,000 as proposed in H.R. 1.'" 

More recent information from the 1968 Survey of Xew Beneficiaries confirms 
the earlier finding.s. According to the Social Security Administration : 

"The high concentration for all beneficiaries with payable awards (reduced 
and full) at earnings of $1,680 or less is further evidence that some recent 
awardees make a conscious effort to control the amount of their earnings to 
continue to receive all or part of their social security benefits . . . those who 
are self-employed can more easily control the amount of their woi-k. Many 
who work in highly seasonal occupations or industries may have actually earned 
as much as they could. 

"To the extent that earnings are controllable, workers could be expected to 
respond to an in the maximum amount of earnings allowed under the 
retirement test by earnings higher amounts with which to supplement their 
social .security benefits." " 

We recommend that the delayed retirement increment be deleted from the 
bill. The increase in the amount of "exempt" earnings to $2,000 a year and the 
elimination of the doUar-for-doUar benefit withholding provisions are far more 
likpjy to encourage beneficiaries to do additional work or take a job at higher 

" U.S. Department of Labor, Employment and Earnings, June 1971, Table A-3 A-17 and 
A-2.5. pp. 21-22. ?,1. 37-38. 

10 See Kennoth G. Sander, "The Retirement Test : Its Effect on Older Workers' Earnings," 
Sorinl Spciiritji Bullrtin. .Tune 196S. 

■I See Patience Lauriat and William Rabin, "Men Who Claim Benefits Before Age 65: 
fi2?'°S'i I"""™ the Survey of New Beneficiaries, 1968," Social Security Bulletin, November 
1970, p. 16. 



Social Security benefits are intended to provide regular casla payments to a 
worker when he has withdrawn from the labor force because of age or total 
and permanent disability. 

The so-called retirement test is the basis for determining whether a beneficiary 
has substantially retired from the labor force or is continuing to support himself 
bv working. 

Under present law. a beneficiary can earn $1.6S0 a year and still receive all 
his benefits; these are called "exempt earnings." For earnings between $1,680 
and .$2,880, one dollar in benefits is withheld for every two dollars of earnings. 
If a worker makes more than $2,880. one dollar in benefits is withheld for every 
dollar of earnings. 

H.R. 1 would make three changes in present law : 

(1) The annual amount of ''exempt" earnings would be increa.sed from .SI. 680 
to $2,000 in 1972 : 

(2) For earnings in excess of .$2,000 a year, one dollar of benefits would be 
withheld for every two dollars of job earnings : 

(3) The annual amount of "exempt" earnings would be auiomaticalln raised 
in the future as average taxable wages rise. 

We endorse the increase in the annual amount of "exempt" earnings from 
$1,680 to .$2,000. and the elimination of the dolIar-for-d..llar withholding pro- 
vision. These changes should help encourage part-time work among the relatively 
few elderlv persons who are able to do so. 

On tlie other hand, we are opposed to the automatic upward adjustment of the 
"exempt" earnings amount under the escalator provisions set forth in Section 
102. Revision of any element of the Social Security program should be made only 
after Congress has' evaluated the advisability of such a change, at the time the 
change is l.eing con.siderpd, and in the light of then existing conditions. 


Under present law. benefits payable to a worker, his dependents or survivT)rs. 
are based on his average monthly earnings record in covered employment. Tlie 
time span used in determining average monthly earnings is from 1051 up to the 
year in which tlie worker reaches age 65 (age 62 for women), becomes disabled, or 
dies. Five years of low or no earnings are eliminated in determining the worker's 
earnings record. This -'drop-out" raises the average and produces a higher 

Section 108 of H.R. 1 would provide an additional "drop-out" year for each 
15 "years of coverage", starting in 1972. A "year of coverage" would be defined 
as it would be under the so-called special minimum benefit — namely, on a 
premmptive. basis for the 14 year period from 19?.'7 to 19.50 and on a year-by-year 
basis from 1951 on. 

The Social Securitv Administration estimates that approximately $1* million 
in benefits would be paid out in the first year. On a long-range l)asis, however, 
the average annual cost would be substantial — about $1.2 billion. 

We are opposed to this provision because it represents a "back-door" approach 
to Increasing benefits. Furthermore, there is no need for another increase, back- 
door f>r otherwise, because benefits are substantially ahead of the rise in the 
of living. We recommend that Section 108 be deleted from the bill. 


Under present law. monthly benefits are payable to disabled workers under 
age 65 with long-term total disabilities. There is a six-month "waiting period" for 

Section 122 would reduce the "waiting period" from 6 months to 5 months, effec- 
tive .January 1. 1972. There would be no change in the definition of disability. 

An estimated $105 million in benefits would l»e paid out in the first year. On a 
long-range basis, the average annual cost would be approximately $100 million. 

We recommend that the present 6 month 'waiting period" be retained. The 
facts show that the Social Security Administration needs a substantial amount 
of time to process claims and to make a medical determination of disability. For 
March 1971, the median processing time for disability insurance awards was 98 


days. Since June 30, 19C8, median processing time, in calendar days, has risen 
26 percent.^ 

Furthermore, reduction in the "waiting period" tends to move the Social Secu- 
rity program in the direction of covering short-term disability— an area now 
served by private enterprise. In 1969, about 63 percent of all workers in private 
industry 'were protected against short-term disability under either voluntary or 
compulsory income maintenance programs. Anotlier 10 million employees in fed- 
eral state' and local government had protection against this risk through formal 
sick leave arrangements. Overall, about 66 percent of all wage and salary workers 
had coveage against short-term disability in 1969.^^ 


H.R. 1 proposes .shan^ increases in Medicare (Hospital Insurance) payroll 
taxes to correct the deficit in the present program, and to finance an expansion 
to cover the long-term disabled under age 6.5. Combined employer-employee pay- 
roll taxes would be increased from 1.2 percent in 1971 to 2.4 percent in 1972, and 
to 2.6 percent in 1977. Taxable wage base would be increased from $9,000 to 
$10,200 in 1972. In the future, additional tax money would probably be channeled 
into the program on a continuing basis via automatic increases in the taxable 
wage base beginning in 1974. 

Bising Costs of Medicare 

The latest cost estimates for Medicare (Ho.spital Insurance) show that the 
lirogram is still in serious financial diflaculty. Information submitted to the Fi- 
nance Committee by the Social Security Administration actuaries shows that the 
Hospital Insurance' Trust Fund will be exhausted in 1973. On a long-range basis 
(over the next 25 years), the "level-cosf of benefit-s, on a $9,000 wage base, is 
estimated to be 2.89 percent of taxable payroll. The "level-equivalenf of taxes 
works out to 1.54 percent — leaving a deficit of 1.35 percent. Thus, '"tax take" 
will need to be increased by SS percent to put the program on a self-sustaining 
basis over the next 25 years." 

Extension to the Disabled 

Section 201 would extend Medicare protection (Hospital Insurance and Sup- 
plementary Medical Insurance) to 1.5 million disabled Social Security and Rail- 
road Retirement beneficiaries. The covered group would include disabled workers 
under age 65, disabled widows and widowers between the ages of 50 and 65, and 
people IS and over who became disabled before age 22. 

Under tlie House bill, only the long-term disabled would be eligible for benefits ; 
in order to qualify, a person would have to be on the disability rolls for 25 con- 
secutive months. 

About $1.S billion in benefits would be paid during the first full year of opera- 
tion. On a "long-range"' ba.sis, the average annual cost of this expansion is esti- 
mated to be $2.5 billion. 


The first five years' experience with Medicare confirms our earlier conviction 
that it is virtually impossible to develop reliable long-range cost estimates for a 
program that pays for services. However, tlie facts show that the Medicare 
^Ho.spital Insurance) program must have more tax revenues immediately if it is 
going to meet its commitments. We are opposed to an increase in the taxable 
wage base, automatic or otherwise, to accomplish this objective. Instead, we 
recommend that Congress raise Ho.spital Insurance tax rates to provide an imme- 
diate solution to the revenue problem. A proposed schedule of tax rates for l)oth 
The Hospital Insurance program and Social Security cash benefits program is 
discussed in the section on Financing. 

'^ Hearings. Departments o/ Labor and Health, Education, and Welfare Appropriation ft 
for I'.nz, House Subcommittee on Appropriations. Part IV. 92nd Cong.. 1st Sess.. p. 852. 

" Sco Daniel N. Pricp. " Benefits for Short-term Sickness, 1948-69," Social Securitij 
Bulletin. .January 1071. p. 22. 

'■* The Social Security Administration submitted two cost estimates to the Finance Com- 
mittee. Under the first, which assumes a .$0,000 taxable wage base, the deficit is l.S^ per- 
cent of t.Txahle payroll. The second estimate, which assumes that the tax base will be 
automaticnlly increased to keep up to the general earnings level, shows a deficit ol' 0.62 
percent of taxable payroll. 


On the other hand, the continuing difficulties \\-ith the present program argue- 
against any proposed expansion at this time. No one knows whether the current 
actuarial cost estimates are any more reliable than earlier projections. For this- 
reason, we recommend that Congress defer any expansion until taxpayers can 
be assured that the costs of the present program are under control. 


H R. 1 would be financed bv increasing both the taxable wage base and tax 
rates. The tax base would be increased from ^9.000 to $10,200 in 1972. Combined 
tax rates on employers and employees would rise from 10.4 percent this year to 
10.8 percent in 1972, with steep increases over the next several years to a com- 
bined rate of 14.8 percent in 1977. Under present law. the combined employer-em- 
plovee rate is scheduled to 12.1 percent in 1987 and after. 

Table V compares Social Security and Medicare taxes, for both employees and 
employers, under present law with those proposed in H.R. 1. Maximum combined 
taxes are scheduled to rise, under present law. from $811 in 1971 to $936 in 1972, 
and eventually to $1,089. Under H.R. 1, on the other hand, the maximum com- 
bined tax will rise to $1,102 in 1972 and to significantly higher amounts later on 
as a result of the automatic wage ba.'se e.scalator. It is estimated that the maxi- 
mum combined tax will be $1,339 in 1975, S2.087 in 1980, $2,486 in 1985, and will 
eventually rise to $3,863. 

Taxatle Wage Base 

The Social Securitv Amendments enacted last March provided for an increase 
in the taxable wage base from $7,800 in 1971 to .$9,000. effective in 1972. When 
Congress raised the taxable wage base to $7,800 in 1968, it was about $1,000 above 
the median earnings of regularly employed male workers. Today, it is estimated 
that the $7,800 wage base is about $250 below median earnings of regularly em- 
ployed male workers. 

Median earnings of regularly employed male workers is a reasonable yardstick 
to use in considering whether or not a wage base change is nece.ssary. This guide- 
line will ensure that half of all regularly employed male workers have their 
total earnings protected under the pi-ogram. At the same time, it will allow the 
other half of the workers, who have some earnings not taxed, to use a greater 
proportion of their pay to save or spend, as they choose. 

As Table VI shows, the .$9,000 wage base under present law appears adequate 
for the next several years. Congress should not consider any cbange in the wage 
base for tax or benefit purposes until 1974. We recommend that the taxable wage- 
base be maintained at $9,000. 



Employee-employer tax rate ' 

(percent) Taxable wage base Maximum combined taxes - 

Year ' Present law H.R. 1 Present law H.R. 1 3 Present law H.R. 1 a 

1971 10 4 10.4 $7,800 $7,800 $811.20 $811.20 

1972 10 4 10 4 9 000 10,200 936.00 1,101.60 

1973""" " ll's 10.4 9 000 10,200 1.017.00 1,101.60 

1974 " H'S 10 4 9,000 10,800 1,017,00 1,166.40 

1975 "" ll'3 12.4 9,000 10,800 1,017.00 1,339.20 

1976 11 4 12.J 9 000 11.700 1.053.00 1,450.80- 

1977 114 14 8 9 000 11,700 1,053,00 1,731.60 

I978I79" 114 14.8 9,000 12,900 1,053.00 1,909.20 

1980 "' 119 14.8 9,000 14,100 1,071,00 2,086.80 

1985""" 11 9 14,8 9,000 16, SCO 1,071.00 2,486.40 

1990"" 12 1 14 8 9,000 21,900 1,089,00 3,241.20 

1995 121 14 8 9.000 26.100 1,089.00 3,682,80 

1 Combined employer-emoloyee tax rates for so;ial security and medicare (hospital insurance). 

• Maximum conbined taxes for both enployer and enployee. 

3 H.R. 1 calls for initial increase in the taxable wa?e base fron $9,000 to $10,200 in 1972. All su 
beginning with 1974, will be made in accordance with a fomula based on estimated increases in ave 
The Secretary of HEW, not the Congress, will deteniine how much to raise the taxable wage base. E 
taxable wage base from 1974 on obtained from Office of the Actuary, Social Security Administration. 

r2-573 — 72 — pt. 




base 2 

Median annual earnings 3 
Men Women 


base -■ 

Median annual earnings 3 
Men Women 


4, 800 
6, 600 

$4, 837 

$2, 706 



1970- - 






$7, 800 
7, 800 
10, 200 
10, 200 

$6, 820 

$3, 770 










1 Data for 1960-69 obtained from U.S. Department of Health, Education, and Welfare, Social Security Bulletin, annual 
statistical supplement, 1969, [able 36, p. 51, "Regularly Employed Workers" refers to 4-quarter v;age and salary workers 
covered by social security. 

"- H.R. 1 calls for an initial increase in the taxable wage base from $9,000 to $10,200 effective in 1972. All subsequent 
ncreases, beginning in 1974, will be made in accordance with estimated increases, as determined by the Secretary of 
HEW, in average taxable wages of v/orkers covered by social security; 1974-75 base estimated. 

3 Growth in median annual earnings estimated from 1970 through 1975. Projection based on average annual increase In 
earnings from 1970 through 1969. 

Tax Rate Increases 

As this Committee knows, the National Chamber has consistently supported 
maintaining the Social Security and Hospital Insurance programs on a self- 
sustaining basis solely from payroll taxes on covered workers and employers. 
We continue to support that fundamental principle. 

We think, however, that H.R. 1 is an extraordinarily expensive "package" 
because it proposes to add $13.4 billion in average long-range annual costs to the 
present program. It proposes an oppressive tax burden on workers and employers. 

In 1972, taxes on workers and employers would be increased $4.2 billion. As 
Table VII shows, the cumulative tax increase over the next six years would 
amount to $57 billion. 

The Finance Committee should substantially reduce the costs of H.R. 1 by 
eliminating the 5 percent benefit increase and the other provisions which we 
have noted. If modifications are made, long-range average annual benefit 
costs can be pared by $8.5 billion, with consequent reductions in tax rates. Fur- 
thermore, future tax rate increases should be scheduled over the next 16 years, 
rather than 6 years, to avoid an unnecessary build-up in the trust funds. 

Table VIII below, compares combined employer-employee Social Security and 
Medicare (HI) tax rates in H.R. 1 with the schedule reommended by the Na- 
tional Chambei'. Our recommendations would result in much lower taxes on 
workers and business in all future years. 

If the Finance Committee does not decide to reduce the costs of H.R. 1 in ac- 
cordance with our recommendations, it is still possible to ease the tax burden 
on workers and employers over the next several years. Future tax rate increases 
should be scheduled to maintain trust fund balances about equal to one-year's 
benefit payments. This would result in lower taxes on business and workers over 
the next 12 years. 


[In billions of dollars] 


Present law 





45.0 .... 



















Cumulative increase. 


' House Ways and Means Committee Social Security Amendments of 1971, Rpt. 92-231, 92d Cong., Isl sess., pp. 132 
and 143; and Social Security Administration, Office of the Actuary. 



[In percenti 

H.R. 1 benefits and modifications of H.R. 1 

of H.R. 1— 
H.R. 1 fax base tax base of 
Year of $10,200 $9,0002 Difference 

1971 10.4 10.4 

1972-74 10.8 10.4 +0.4 

1975-76 --- - 12.4 11.0 +1.4 

1977 14.8 11.0 +3.8 

1978-80 --- - -- 14.8 11.8 +3.0 

1981-83.... -- 14.8 12.6 +2.2 

1984-86 - - -- - 14.8 13.4 +1.4 

1987andafter 14.8 14.2 +.6 

• These tax schedules were developed by Robert J. Myers, professor of actuarial science. Temple University, and a 
member of the national chamber's social security co.mmittee. From 1947 to 1970, Mr. Myers was the chief actuary, Social 
Security Administration, U.S. Department of HEW. 

2 Modification of H.R. 1 eliminates $10,200 tax base, 5-percent benefit increase, 5 month "waiting period" for disability 
benehts, special minimum benefit based on "years of coverage," additional dropout years, delayed retirement increment 
and extension of hospital insurance benefits to disabled persons under age 65. ' 

Table IX compares the combined employer-employee Social Security and 
Medicare (HI) tax rates in H.R. 1 with an equivalent alternative schedule 
designed to finance the provisions of H.R. 1 as passed by the House. 



[Combined employer-employee ratesj 

H.R. 1 benefits— Tax base of $10,200 



1972 to 1974... 
1975 to 1976... 


1978 to 1980... 
1981 to 1983... 
1984 to 1986... 
1987 and after. 

H.R. 1 






10.4 . 


10.8 . 





+ 1.2 


' These tax schedules were developed by Robert J. Myers, professor of actuarial science. Temple University, Phila- 
delphia, Pa. 


The record shows that Congress has acted regularly on Social Security over the 
years and treated beneficiaries very fairly. Benefit.s are well ahead of the rise 
in living costs. There is no economic need for another today. 

Moreover, the facts clearly indicate that there is no real justification for auto- 
matic cost-of-living provisions, financed by automatic escalation in the taxable 
wage base. We think it would be particularly inappropriate to initiate such a 
provision at a time when the government is engaged in an unprecedented effort 
to halt inflation through wage and price controls. 

In conclusion, we believe that the House bill is an extraordinarily expensive 
package which proposes an oppressive tax burden on workers and employers. The 
Finance (Committee should make every effort to reduce the long-range costs of 
H.R. 1 in order to lower Social Security taxes tx> a reasonable level. 


Child Cake and Preschool Programs Commission, Office of Education, Santa 
Cruz County, Richard R. Fickel, Superintendent 



I. Summary of Principal Points. 
II. Introduction. 
III. Statement of Position. 

A. Purpose of H.R. 1. 

B. Standards for Day Care. 

C. The Ribicoff Amendment. 

D. Need for Community and Parental Involvement. 

E. Need for Comprehensive Services to Children. 

I. Summary of principal points 

A. H.R. 1 is oriented almost entirely to requiring AFDC recipients to regi-ster 
for work or training. 

B. Its provisions for child care are ill-defined and provide no guarantee of 

C. The Ribicoff Amendment would considerably ameliorate the harsh effects 
of H.R. I's work requirement on family life. 

D. It is critically important that child care programs .«hould spring from the 
community, with full family and community participation, and we urge that 
there be legislation to enable and assure this. 

E. "Without full child development services, we will pay dearly in children 
grown into unproductive adults, broken homes, and the huge future cost of 
delinquency, drug dependence, and mental illness. 

II. Introduction 

In September 1970, the Board of Supervisors of Santa Cruz County established 
an advisory Child Care and Pre.'-chool Programs Commi.<sion. The Commission 
works with the County Office of Education and has representation from 18 
agencies, teachers and parent groups. It grew out of the concentrated efforts of 
many people in the community, both lay and profes.sional, for the overall wel- 
fare of young children. Its original concerns were to coordinate the scattered 
programs for young children, to avoid waste and duplication, to provide common 
resources, and in general, to make the wisest use of public funds. 

As the Commission accumulated information on existing programs and on 
the unmet needs, it became clear that duplication was not the problem. The un- 
met need in our small county alone may be inferred from the fact that not more 
than iKK) places are available in the entire county in licensed day care, while 
the number of children of working mothers is estimated from census figures to 
be not less than 8.000. and perhaps a great deal higher. 

The Commission is deluged with requests for assistance in finding such care. 
We receive daily inquiries from groups and individuals anxious to start day 
care centers, from teachers willing and anxious to do the job. from students eager 
to begin a career with children. 

We have been increa.singly frustrated because the funds to put these elements- 
together have not been available. Many local centers exist only by the devoted 
work of underpaid teachers and volunteers. Several valuable programs have 
gone under in spite of loc-al concern and support. 

Santa Cruz County has made valiant efforts to .serve the child care needs of its 
working families. Local matching funds have been stretched to the utmost. All 
available State funds for children's centers, and also for compensatory pre- 
schools, and parent education are utilized by its school districts. Virtually the 
only open-ended funds for children that our Commission has found available are- 
Title IV-A Social Security funds, already being utilized by the County Depart- 
ment of Social Welfare. The of these funds is of limited by the eUgi- 
bility requirements, so that in practice, they serve mainly single-parent AFDC 
families in very low paying work or in training programs in limited fields. The 
great majority of working parents, including many intact families struggling to- 
maintain a decent standard of living, are not served at all. Even those able to 
I-ay the high cost of good child care cannot find acceptable .substitutes for a 
mother's care. 


///. statement of Position 

A. Purpose of H.R. 1. — Mr. Nixon states that ". . . day care centers to provide 
for the children of the poor so that their parents can leave the welfare rolls to 
go on the payrolls of the Nation, are already provided in H.R. 1." He goes on to 
say that ". . . child development centers are a duplication of these efforts." ' 

Clearly, the mothers now in need of day care services are not the same group as 
the welfare recipients, not now working, which the bill proposes to serve. By its 
own statement of purpose (Title XXI) H.R. 1 is to provide : 

". . . for members of needy families with children the manpower services, 
training, employment, child care, family planning, and related services which 
are necessary to train them, prepare them for employment, and otherwise 
assist them in securing and retaining regular employment and having the 
opportunity for advancement in employment, to the end that such families 
will be restored to self-supiwrting, independent, and useful roles in their 
communities ..." ( Sec. 2101, page 326) 
It goes on to require that : 

'•(a) Every individual who is determined by the Secretary of Health, 

Education, and Welfare to be a member of an eligible family and to be 

available for employment shall register with the Secretary of Labor for 

manpower services, training, and employment." (Sec. 2111, page 328) 

Exemptions are provided only for illness, incapacity, age, for children under 

16, and for mothers of children under three (or until 1974, under six). 

The stipulations for wages and working conditions (Sec. 2111) offer little 
protection and no guarantee that the job will suit the individual. Wages as low 
as three-quarters of the minimum wage would be permitted. 

Under this act, mothers who prefer to stay home and care for their young 
children will be required in many cases to leave them for unfulflUing, low-paid 
work. In what way would this strengthen family life and break the cycle of 
neglect and poverty? 
We take the stand that : 

H.R. 1 is oriented almost entirely to requiring AFDC recipients to 
register for work or training. 

B. Standards For Day Care. — H.R. 1 spells out few requirements as to the 
quality of the day care to be provided. (Pages 347-9) It states (Sec. 2133a) that 
the Secretary ". . . shall arrange for and purchase, from tvhatever sources may 
be araUable, all such necessary child care services . . ." (our emphasis) Fa- 
cilities developed through the act are given preference for funding, and for school- 
age children local educational agencies are given preference. In sec. 2134(a) it 
states that the Secretary shall establish ". . . standards assuring the quality 
of child care provided . . .", but these standards are nmchere spelled out. Nor 
are there provisions for local control, parent representation, or health and social 

services to children and families. 
We take the stand that : 

Its provisions for child care are ill-defined and provide no guarantee of 

C. The Rihicoff Amendment. — An amendment has been proposed which would 
improve H.R. 1 in several vital respects : 

1. Raising the family allowances (Sec. 2151, page 35). 

2. Eliminating the work requirement for mothers of children under 6 (Sec. 
2111. page 4). 

3. Establishing more reasonable and suitable working conditions and 
wages (Sec. 2111. pages 5-7). 

•1. Protecting the standards of the child care to be provided (Sec. 2134. 
pages 30-31). 
We take the stand that : 

The Rihicoff Amendment would considerably ameliorate the harsh effects 
of H.R. I's work requirement on family life. 

D. Xeed, for Community and Parental Involvement. — In its day-to-day work in 
the community, the Child Care and Programs Commission functions 
very much as a local Child Development Council, as envi.sioned in the national 
4C Program (Community Coordinated Child Care). It fosters active parental 
involvement in the planning of all programs for children. 

> Economic Opportunity Amendments of 1971 — Veto Message (H. Doc. No. 92-48), 


We take the stand that : 

It is critically important that child care programs should spring from 
the comminiity, with full family and community participation, and we 
urge that there be legislation to enable and assure this. 

E. yeed for L'otnprehensive Services to Children. — From the experience in 
surveying local needs, it is our conviction that no one type of program can best 
serve all children. Families need a choice of programs from which to pick 
those which are most congenial and helpful. 

Day care homes can provide a home-like environment for some children, par- 
ticularly for the very young. 

Children's centers can provide convenience and continuity for many children 
of school age. 

For some families, corporate day care at the work site can help to keep a 
mother close to her child. 

For others, a private nursery proves most congenial. 

Compensatory preschool programs help children, regardless of the work 
status of their families, by providing experiences often lacking in an environ- 
ment of poverty. 

Cooperative nursery schools offer a valuable educational supplement to a 
home of any income level, and assist all parents to gain in skills they need to 
help children grow into happy, productive adults. 

All settings can provide an integrated, humane, stimulating atmosphere, help- 
ing each child to grow into his own best self. 

Our own State Superintendent of Schools, Wilson Riles, has declared that 
a year of preschool education would be beneficial to all children and is an 
important goal for school districts to work toward.^ 

Comprehensive legislation on child development is needed to implement this 
Administration's "national commitment to providing all American children an 
opportunity for a healthful and stimulating development during the first five 
years of life".' 

We take the stand that : 

Without full child development services, we will pay dearly in children 
grown into unproductive adults, broken homes, and the huge future cost 
of delinquency, drug dependence, and mental illness. 

Statement of College of American Pathologists, Submitted by 
C. A. McWhorter, M.D. 

Ml*. Chairman and Members of the Committee : 

The College of American Pathologists appreciates this opportunity to submit 
a statement to the Senate Finance Committee on H.R. 1, the Social Security 
Amendments of 1971. 

The College of American Pathologists is a national society with a membership 
of more than .5.500 physicians certified by the American Board of Pathology. 
The membership of the College is composed entirely of physicians. 

This statement will generally concern itself with those sections of the legisla- 
tion which would affect the manner and method in which pathology is practiced, 
regardless of the setting, i.e.. hospital laboratory, independent laboratory, teach- 
ing institution, or the private practice of pathology by an individual pathologist. 
This approach is being taken because CAP membership is representative of all 
these areas. 


The College of American Pathologists can see the need for new approaches 
by the states to reduce the continuing increase in the cost of the Title XIX pro- 
gram. We agree generally with the portions of this section aimed at improving 
utilization of services r,nd reducing the length of stay in inpatient facilities. 

Many Health Mantenance Organizations (HMOs) are currently being funded 
on an experimental basis liy the IMedical Service Administration of the Depart- 

' T.Tsk Force Report on Early Child Education. Wilson Riles. November 1971. 
•Economic Opportunity Amendments of 1971 — Veto Message (H. Doc. No. 92-48). 



ment of HEW. HSMITA is also fundin.!; on an experimental basis many HMO 
and community-oriented group practice programs. 

The portion of the section which concerns us is the significant incentive of 
increased federal matching funds by 25%. up to a maximum of 95%. for states 
which contract with HMOs or similar organizations to provide services. 

The HMO concept, though not new in the country, is new in its wide avail- 
ability to the general public. The majority of these programs has been designed 
to meet the needs of a specific group of people, usually with similar employment 
or other common bond. To make available this benefit on a mixed population 
basis could, in our opinion, cause more harm than benefit. The reasons for our 
concern in this are : 

1. The ability of HMOs to produce the desired quality and quantity of 
medical care when applied to a heterogeneous group on a widespread basis 
has not yet been demonstrated. 

2. An immediate effort by state agencies either to organize, or cause to be 
organized. HMOs or similar organizations without the proper administra- 
tive detail being developed for delivery. 

3. A rush by groups to organize such services without the depth and the 
expertise of people knowledgeable in the administration of such programs. 

4. The possibility of the total health field not being able to produce the 
personnel, equipment, and expertise to meet the demand. 

5. The possibility of creating for Title XIX recipients another promise that 
cannot be delivered by state agencies. 

"We hope that Congress would delay action on this iwrtion of Section 207 until 
such time as measurable results have been carefully reviewed by both Congress 
and the Department of HEW to ascertain the benefits derived from, and prob- 
lems created by, the experiments currently being conducted. 


The recognition by Congress that the existing cost reimbursement mechanism 
has created some serious financing problems is to be applauded. For this forward 
look we agree with the intent of this section. 

We believe that the experimental approach to finding a more equitable and 
reasonable method of financing institutional care under Titles V, XVIII. and 
XIX is appropriate and logical. 

The experiments dealing with prospective reimbursement must be well- 
controlled and monitored to be of value. The Department of HEW .should be 
required to place these experimental programs within institutions that are 
involved in delivering inpatient services. In the past, the Department too often 
has assigned "experimental programs'' to large universities and 
ented firms. The results obtained have had little practical application. The con- 
cept of prospective reimbursement and other forms of payment must be well- 
tested before they are put into effect. 

The pathologist in the hospital setting is primarily providing services ordered 
for patients by the admitting physician and /or consultants on these patients. 
In such a role, the pathologists in effect has little immediate control over the 
quantity of laboratory tests ordered for the patient. In a payment system in 
which all laboratory services provided to the patient would be included in the 
per diem or all-inclusive rate, inequities would be created for the laboratory 
department. These inequities could arise, for example, if a patient were required 
to have certain tests performed on a daily basis over an extended period of 
time. (Electrolyte studies or blood gas tests on critically ill patients, which 
must be performed on at least a daily basis, wotild be an examine of such 
tests.) The hospital administration and /or the pathologist could not limit the 
performance of these tests, which are ordered by the attending physician and are 
medically necessary. tests might well use up a substantial portion of 
the institution's per diem rate. One result would be deficit payment to the 
institution for this type patient. Another result might be the concern expressed 
in the House Ways and Means Report, that institutions might reduce the qiuility, 
scope, and depth of certain necessary patient services to stay within a set per 
diem payment. 

The College of American Pathologists would like to re-emphasize that these 


experiments (1) must be well-controlled and monitored; (2) must be placed 
in institutions representative of present providers; and (3) must be of sufficient 
duration to be valid in their findings. 


The College of American Pathologists strongly objects to this further reduc- 
tion in the percentile figure for determination of the reasonable charge for 
physician services. ..... 

The proposed intent of P.L. 89-97 was to assist the elderly patient in the 
payment of his health care expenses. The original percentile figure used was 90 ; 
this was reduced by the 1967 Amendments to the 83rd percentile. This further 
reduction to the 75th percentile in federal liability increases again the payment 
that must be made from the limited means of the beneficiary. 

The College also questions the use of data compiled from IRS sources as a 
common denominator for determining allowable aggregate increases. 

The 40-60 ratio used in the example in the Ways and Means Report is not 
realistic when applied to a medical specialty medical field such as pathology. 

The expenses involved for a pathologist in the operation of his practice are 
considerably higher than for most other physicians. The diflEerential in operating 
expenses is caused by many factors, some of which are: 

1. Higher costs of necessary complex and sophisticated laboratory equip- 

2. Higher percentage of labor costs by virtue of a large number of pro- 
fessional personnel in good income brackets. 

3. Pathologist!?, regardless of their laboratory setting, must have, either 
physically on duty or available on a 24-hour basis, necessary trained per- 
sonnel for the conduct of emergency procedures. 

4. Federal and state requirements for licensed and/or professional 

5. Federal and state requirements for quality testing of tests performed 
under the direction and supervision of the pathologist. (Clinical Laboratory 
Improvement Act and Title XVIII). 

For these reasons, the College believes that if some formula were to be used 
in determining aggregate allowable increases, all factors (such as those men- 
tioned above) must be considered when dealing with allowable increases in 
pathologists' charges. 

The College of American Pathologists also must question the portion of this 
section dealing with reasonable charge levels for medical supplies, equipment, 
and services. If this section is intended to include services of laboratories, then 
we must object to including such medical services in this grouping. 

To assume that the quality of laboratory services cannot vary is erroneous. 
In the area of laboratory services, variation in cost is brought about by several 
factors, many of which are not immediately evident to the nonprofessional. 
These are : 

1. Volune of work done by a particular laboratory in a testing area. 

2. Sophistication and variation of equipment to do the testing. 

3. Level and number of professional personnel employed in the laboratory. 

4. Quality control methods used by the laboratory and frequency of 
checking on employee performance. 

There are laboratories today that are doing a high volume of work in 
specialty areas of testing. This type of laboratory rarely does emergency testing, 
and its workload is scheduled by the receipt of specimens forwarded to it by 
mail and/or messenger. These laboratories usually can offer a lower fee for 
their services. However, they do not provide the wide scope of tests and services 
which are necessary for proper diagnosis and treatment of the total patient. 
The ho.siutal laboratory or the general service independent laboratory must be 
staffed and operated to provide immediate ser^'ices in emergency cases. This 
emergency service causes delays in the performance of routine tests and requires 
a higher personnel load, which relates to an increase in the cost of providing 
services to the patient. 

Some of the high-volume laboratories may not exercise the quality control 
system, nor do they employ the necessary qualified personnel beyond minimums 
needed to meet standards. 

As an example of this. HEW has recently taken steps to withdraw, under the 
Clinical Laboratory Improvement Act, federal licensure of one portion of one 


such high-volume specialty laboratory. Medicare certification in this area is 
also being removed. 

The concern for cost reduction in the Medicare and Medicaid programs should 
not be the factor used to possibly create a lower level of quality. 


As mentioned earlier, the College is interested in the effect of HMOs on the 
health care delivery system. 

However. HMOs .serving various mixes of people have not been in existence 
long enousii to meet the test of adequacy. We support the proposal that experi- 
mentation in this area should be undertaken to determine the proper role and 
function of this vehicle in the system. 

h:MOs cannot be looked upon as the panacea for all the health delivery prob- 
lems of the nation. Rather, they should be looked upon as a part of a multi- 
faceted system which allows freedom of choice for both the government and the 


The College recognizes the problems that exist in administering the section 
of the present Title XVIII with regard to payment for teaching physicians. 

We also recognize the wide variation that exists in teaching arrangements in 
this country. 

The College must register opposition to the language of HR 1 which would 
place the reimbursement of teaching physicians under Part A hospital reim- 
bursement, if the patient is a non-private Medicare patient and the hospital 
does not meet the requirements outlined in the section. 

The education of the future physicians of this nation for the care of the 
patient under both Titles XTIII and XIX is essential for the continuation of 
these programs. The concept of a "salary equivalency" for supervisory physi- 
cians would make for an inequitable doulile standard for reimbursement of 
phy.sicians for patient services in teaching institutions. 

ina.smuch as the attending physician, including the pathologist, is equally re- 
sponsible for patient care in this setting, as in all other medical institutions, 
there should be no artificial differential for this group. The end result of care 
provided to the patient is the same, in that the patient has received the benefit 
of equal professional activities. 

Under the present proposal, hospital teaching staffs would be required to sub- 
sidize patient care under Titles XVIIT and XIX by this difference in reimburse- 
ment. In addition, in the opinion of CAP. the administrative problems involved 
in determining the "salary equivalency" and the distillation of this into an 
hourly rate would create a sea of chaos that would leave this area of reimburse- 
mont in a morass of papero'ork from which it could never recover. 

The proposed distinction between a non-private ^ledicare patient and a private 
Medicare patient also must be questioned. Are we reverting to the very situation 
which proponents of Medicare claimed existed prior to the passage of P.L. 89-97 — 
namely, two levels of service : one for paying patients and one for non-paying 
patients? The Ways and Means Committee in its report is aware of this problem 
(p. 96. *'2) when "it states that appropriate safeguards should be established to 
preclude fee-for-service payment on the basis of performance or token compliance 
with these private patient criteria. 

Are these administrative safeguards to be in the law? Are they to be in the 
form of Rules and Regulations promulgated by the Social Security Administra- 
tion? If we can assume that SSA will prepare procedures, the administra- 
tive nightmare that will follow will be beyond comprehension. The separation 
of patients into fee-for-service or cost-reimbur.sement classes is compounded fur- 
ther by the part of this section dealing with continuation of fee-for-service only 
for those institutions which, prior to 1966. liilled all patients and collected from 
a majority of them for professional services. 

Wliere does this leave the lai-ge teaching, charity, and municipal hospitals, 
which had legal barriers preventing such lullings? Many of the<e teaching hos- 
pitals have been able to improve the quality of their teaching staff with the advent 
of Medicare. The fee-for-service concept for the Medicare patient generated addi- 


tional income for these institutions. Tliis income was utilized to expand tiie budget 
portion for teaching salaries. By this means, the institution could attract highly 
qualified physicians to its staff. This practice in reality has benefited the patient 
to a great extent. 

Are they now to revert to their fiscal binds that existed prior to 1966? 

In conclusion, we must object to what we consider a backward step for health 



The College is in agreement with the intent of this section. The problem of 
dealing with the provider who flagrantly violates the law must be met. These 
Violators mu^t be found and punished so that the public will not suffer from 
their acts. 

However, the College does have some concern over certain portions of the 

1. Furnish excessive services to patients — The role of the pathologist is 
one of providing service to a patient who has been admitted by another physi- 
cian. The admitting physician alone, or in consultation with other physicians, 
determines the course of action to be followed in treating the patient. The 
pathologist cannot reasonably refuse to provide services ordered unless he can 
show that the service ordered would be medically harmful to the patient. If the 
program review team determines that there is excessive utilization of laboratory 
services in a particular, would the liability be placed on the physician order- 
ing ser\'ices, or on the pathologist providing the services? In light of the heavy 
incidence of malpractice suits today, many physicians are reluctant not to order 
certain services. 

We agree with the concept that physicians only should review the work of 
physicians embodied in the program review approach. 

2. Public disclosure of violators — We do not object to the disclosure aspect; 
however, we do have reservations regarding the timing of the disclosure. The 
language contained in HR 1. in our opinion, is not clear as to whether this public 
•disclosure would take place before or after a hearing by SSA, following action or 
recommendation by the appropriate program review team. Our opinion is that 
such public disclosure should take place only after all administrative and review 
proceedings have been exhausted. To accuse a provider publicly, prior to proper 
hearings, could do irreparable harm to the individual or institution involved. 


This section again brings to public attention the problem of state agencies in 
the payment of Title XIX benefits. 

The College cannot agree with the language of HR 1 in i)ermitting states to 
develop a reimbursement formula for inpatient care which differs from the Medi- 
care reimbursement formula. We believe that such an option will lead states into 
an area of program cost reduction that will create a two-level health system 
within an institution. It is reasonable to assume that the state will develop 
formulas which reduce its obligation to meet the costs of care rendered to Title 
XIX recipients. Who then will pick up the deficit? Certainly not Title XVIII, 
which can only pay for those costs which it deems reasonable for meeting the needs 
of their beneficiaries. The only group left then is the non-government-supported 
segment of the public. Through their third-party programs of their own funds, 
they will have to pick up the deficit. 

Where the states have been able to exercise options under Title XIX in the 
area of payment for services, they usually have cut payment to the point so 
that costs could not be met by the provider. We believe that the states again would 
reac'f to the next option by reducing payment to a point well below the reason- 
able and allowable level of Title XVIII. 


The College of American Pathologists is generally in agreement with the 
intent of this section. However, our concern is with the effect that implementation 
of this section might have on professional corporations, partnerships, and as- 


eociations, especially as it applies to independent laboratories. Implementation 
of this section should not interfere with existing legal and medically ethical 
mechanisms of payment. 



The College is in agreement with this forward step in bringing into the health 
system those persons who now are unable to lend their effort to meeting the health 
manpower shortage. We believe that the development of proficiency testing and 
equivalency factors will create career and job opportunities for persons whose 
only fault has been not having the necessary formal training and education to meet 
licensure requirements. 

The College again wishes to thank the Committee for the opportunity to sub- 
mit this written statement. We would request that this statement be made a part 
of the record of the Senate Finance Committee in its consideration of HR 1. 

If the Committee, or the staff of the Committee have questions concerning the 
statement, the College will make every effort to provide answers. 

College of American Pathologists, 

Washington, B.C., November 10, 1971. 
Hon. Russell B. Long, 
Chairman, Senate Finance Committee, 
U.S. Senate, Washington, D.C. 

Dear Senator Long: Enclosed is a statement of the College of American 
Pathologists indicating the attitude of the College toward peer review. 

The statement is not meant to support any one piece of legislation, but rather it 
points out the areas of concern to the College that we feel must be considered in 
any peer review legislation to be enacted by the Congress. 

The College requests that this statement be made a part of any hearings or 
record developed by your Committee in the consideration of HR 1, the Social 
^Security Amendments of 1971. 

For your information, I am enclosing brochures explaining the programs men- 
tioned in the statement. It is not intended that these be included in the record 
of any hearing. 

A copy of the statement and the brochures are being forwarded to each member 
of the Finance Committee. In addition, we are providing to the staff of the Com- 
mittee a supply of the statement and brochures. 

William J. Reals, M.D., 


Statement of College of American Pathologists 

Mr. Chairman and Members of the Committee : 

The College of American Pathologists appreciates this opportunity to submit a 
statement to the Senate Finance Committee on the subject of Peer Review- 

The College of American Pathologists is a national society with a membership of 
more than 5,500 physicians certified by the American Board of Pathology. The 
membership of the College is composed entirely of physicians. 

The College has a history for pioneering peer review programs in the field of 
laboratory medicine dating back to 1949. From the beginning, the aim of the Col- 
lege has been to establish, through these programs, peer review as an ongoing 
evaluation process. From those pioneer efforts, there has evolved a multiplicity 
of peer evaluation programs that has established CAP as a dominant national 
and worldwide force in quality evaluation in the field of laboratory medicine. 

Today there is a variety of quality programs offered through the College. 

1. Quality Evaluation Programs (QEP)— CAP Quality Evaluation Programs 
are proficiency testing systems designed to monitor a participant's laboratory 
results Ity comparing his results to the national mean, reference laboratories, 
and/or selected referee laboratories. The programs are designed to define the 
"state of the art" in laboratory medicine and to correct problems within the labo- 
ratory through generally accepted evaluation criteria. 

Today there are approximately 7.100 hospital and independent laboratories 


participating in the CAP Quality Evaluation Programs. The program has also 
been accepted in many foreign countries, including Japan, Australia, New Zea- 
land, and a majority of the nations in Western Europe. 

In addition to those areas mentioned above, the College's QEP is used by the 
Veterans' Administration in all of its hospitals. The College is also providing 
this service to Air Force hospitals. State health departments have contracted 
with the College for the provision of materials to be used in their testing pro- 
grams. The Center for Disease Control, the Federal Governmental agency which 
has the respon.sibility for regulating laboratories in interstate commerce under 
the Clinical Laboratory Improvement Act of 1967. has also approved tlae QEP 
in lieu of a laboratory's participating in their programs. Finally, the program 
has been approved by state agencies in forty-two states for proficiency testing 
under Medicare regulations and for some state licensure programs. 

2. Quality Assurance Service (QAS) — QAS has been designed specifically 
to assist laboratory personnel in solving the many problems arising from the 
challenge of total quality control. QAS not only uses a convenient and sophisti- 
cated computer program, but also provides a flexible personalized system for the 
medical laboratory and its director. The laboratory's director generates the input 
data on the basis of the specific constituent being analyzed, the method used for 
the assay, and the particular lot of quality control material utilized. This quality 
control input data is mailed on a weekly basis to the College's national computer 
center. Centralized data processing then applies standardized and specialized 
statistical procedures to all QAS participants for more meaningful comparisons 
of controlled data. Thus, the laboratory is provided vital information to make 
significant comparisons within the laboratory on a month-to-month basis. The 
laboratory also is provided .statistical information to compare its performance 
with other QAS subscribers on a state, regional, or a national basis. 

This program was initiated early in 1971 and already has more than 250 lab- 
oratories participating. 

3. Physicians Evaluation Program (PEP) — This program was created ap- 
proximately two years ago by the College. The program already has more than 
400 physician office laboratories participating. For some time the College has 
been working with other medical groups in an effort to gain widespread accept- 
ance of the PEP concept. These efforts recently resulted in the formation of a 
joint venture into this field by the CAP and the American Society of Internal 
Medicine (ASIM). The College believes that this approach will bring recogni- 
tion and acceptance by physicians who are concerned with offering quality office 
laboratory services. 

This program is similar in concept to the Quality Evaluation Program con- 
ducted for clinical and hospital laboratories, but is designed specifically to meet 
the needs of physician office laboratories. It offers to the physician with an office 
laboratory an inexpensive system for monitoring the capabilities of his office 
laboratory. It allows the physician to evaluate specific tests, reagents, and in- 
struments for accuracy and precision. The program also provides confidential 
data which compares the performance of the physician office laboratory to a 
peer group of participating physician office laboratories. The program provides 
facts which can assist the physician in the management of laboratory tech- 
nicians and per-sonnel in his office laboratory and will help him to attain and 
maintain high standards of patient care. 

4. Inspection and Accreditation Program (I & A) — This program reviews 
the total performance and function of both hospital and independent labora- 
tories throughout the country. Almost 1.000 laboratories have been accredited and 
200 are in the process of accreditation through this program. In this number, 
are approximately ISO laboratories involved in interstate commerce. In these 
la)>oratories. accreditation serves in lieu of federal licensure under the Clinical 
Laboratory Improvement Act. The Veteran-s' Administration also uses our I & A 
program in all of its hospitals. 

The two essential factors in all of these programs are voluntary participa- 
tion, and pathologists reviewing the professional competence of pathologists 
and other professionals in the f^eld of laboratory medicine. 

This background is jirovided to help establish for the Committee the concern 
of the College for quality performance, not only in the hospital-based and in- 
dependent laboratories, but also in the physician "office laboratories." 



The thrust of peer review must not be limited to inpatient hospital services 
received by recipients. Medical services know no boundary and the delivery 
and evaluation of the quality and necessity of these services should not be 
limited to any one setting. A major portion of the medical services provided to 
patients is offered in settings, other than hospitals, on an outpatient basi.s. 
which at times have little to offer in the way of quality assurance. 


The creation of a national advisory council to the Secretary in this area is 
essential to the success of the program. Proposed legislation calls for the estab- 
lishment of such a council to be composed entirely of physicians. The College is in 
agreement with this intent. However, we must strongly urge that these physi- 
cians must be physicians in active practice. In addition, we also strongly 
recommend that there must be adequate representation of the medical specialty 
di.sciplines, i.e., radiologists, pathologists, etc. on this council. 


Many times the efforts of national advisory bodies are in vain because of the 
lack of consultation from specialties within the fields that the council is at- 
tempting to serve. For this reason, the College strongly urges that national 
advisory panels representative of national medical specialty societies be estab- 
lished to advise and the national advisory council. The purpose of these 
panels would be to aid the council in the preparation of criteria of care and treat- 
ment as may be within their area of expertise. 


Any program that is national in scope must have the benefit of lines of 
communication to the local level. The College therefore agrees with propose 
legislation that there must be state and local advisory groups to assist in tht> 
carrying out of the intent of peer review programming. The concept of specialty 
advisory panels should also be carried out at the state and local level to assist 
these local groups in their deliberations. 


Special attention in any peer review program must be given to the provision 
Of laboratory services in the physician's office. The "office laboratory's" per- 
formance, equipment, proficiency testing, and quality control procedures must 
be monitored and evaluated. The '"office laboratory" should meet standards of 
performance of quality control established for hospitals and/or independent 
laboratories, on a voluntary l)asis, such as the PEP program of CAP/ASIM 
(see P. 3, or its equivalent) . 


Peer rerview must be allowed to be more than a review of the past medical 
services provided and the payments made for the.^e services. If peer review is 
onlv a forum for the airing of grievances and complaints against physician fev^s 
and the relevance of these fees to the services performed, then peer review should 
remain as a concept and not be enacted into legislation by the Congress. 

Peer review, as was mentioned earlier in this statement, must be an ongoing 
evaluation process. There must be professional incentive for the practitioner to 
participate in such programs. The main thrust of a successful peer review pro- 
gram must be one of educational and forward-looking programming. The history 
of peer review programs of the College bears this out. As more pathologists- 
participate in these voluntary programs, the results indicate a higher degree of 
professional achievement, better quality of the work performed, and a narrower 
allowable margin of error. 

The College believes that the reason for this is the professional pnde ot the 
participant. The participant pathologist knows that his work is being reviewed 
by ]>athologists and is being compared to the work of other pathologists. Quality 
assurance, quality iierformance, and quality achievement become his profes- 
sional goal. 


Testimony of Joax Foley, Representing the Committee on Income 


I am Joan Foley. I speak here today for the Committee on Income Maintenance; 
We are a Committee of American citizens from all walks of life who are inter- 
ested in the welfare of the American people as a whole and especially in the 
present system of welfare which was created over 30 years ago as a temporary 
measure and has not proven successful. 

Our Committee has been functioning for the last four years, has held three 
conferences, and has been instrumental in having numerous bills introduced in 
the House by Congressman William Fitts Ryan and Congressman Leonard Farb- 
stein. to wit : HR 13625. HR rm. HR 1634, HR 14773, and HR 4801. 

Tlie provisions which we feel must be included in a meaningful income main- 
tenance l)iU have been sent to all members of the House, the Senate, and to the 
Governors of every state and have received very favorable reactions from all. 
Based on the favorable support we have receivetl. not only from our legislators 
but also from the public as a whole, our Committee has adopted the following 
resolution : 


We believe that the time has come for this nation to end poverty, and realizing 
that present, inhumane welfare system has been a tragic failure for millions 
of families, our Committee has resolved ; 

1. Congress should enact during the present term a meaningful income main- 
tenance law. 

2. Such a law should include the following provisions : 

(a) Maintenance payments of at least $4,000 a year for a family of four, 
and payment of $2,500 for single persons as well as families, including senior 

(?/) Members of a family of an individual should be able to earn up to 
$8,000 a year on a i-liding scale and not forfeit maintenance payments. 

(c) Job requirement provisions should not be used to interfere with the 
bargaining efforts of a labor organization nor should they undercut the 
prevailing wage structure in a particular type of employment, nor should 
they undercut minimum wage standards. 

(d) Under no circumstances should a mother be required to be separated 
from her young children or face the prospect of losing maintenance pay- 

( e) Income maintenance legislation should be linked to a good job-training 
program and to a mnssive program to provide day care centers. 

(/) In the event that a i>erson cannot secure employment in the private 

sector of the economy, the federal government should be the "employer 

of last resort". 

No more imjiortant problem confronts Congress this year than the reform of 

the destructive welfare system. The Committee on Income Maintenance urges 

that income legislation be the first order of business before the current Congress. 

Very truly yours, 

Mrs. Bella Altshuler, Chairman. 
Mr. Frederick Norton, V ice-Chairman. 

[Compliments of Councilman Theodore S. Weiss] 

The Council 

November 16, 1071. 
Res. No. 644 

Resolution calling upon the Congress to enact a meaningful income maintenance 
program during the current term 

By Mr. Weiss, Mrs. Greitzer and Messrs. Silverman, Thompson. Friedland, 
Katzniiin, DiBlasi, Clingan, Sadowsky, Haber, Postel, Burden, Sharison and 
Mrs. Ryan — 

Whereas. 'J"he present welfare system has failed in its original purpose of 
attempting to maintain an adequate standard of living for the unemployed and 
their families, and is utterly unable to provide a decent standard of living for- 
the poor and the chronically unemployed ; and 


Whereas, It is inhumane, frequently forcing the separation of families and 
subjecting recipients to invasions of privacy and numerous other indignities; 

Whereas, It does not address the problems of the underemployed, the working 
poor and the near poor and fails to confront the overriding question of poverty 
itself: and 

Whereas, The continued existence of poverty in the United States is morally 
repugnant, incompatible with democratic ideals and unnecessary given America's 
great wealth and resources : now. therefore, be it 

Eesoived, That the Council of The City of New York calls upon the Congress 
of the United States to commit itself positively to ending poverty in the United 
States by enacting a meaningful income maintenance program during the cur- 
rent term ; and be it further 

Besolved, That such a program shall include the following provisions : 

1. An income floor of at least §4.000 per year for each family of four; 

2. Payment for single persons as well as families : 

3. Incentive pay on a sliding scale pex'mitting a family of four to work 
without losing benefits under this program, until the total family income 
reaches $8,000 per year : 

4. Classification of all benefits under this program and the conformance, 
with due process, of all administrative procedtires relating to benefits: 

5. Xo job requirements should ( a ) interfere with the rights or bargaining 
position of any labor organization or (b) undercut any prevailing wage rate 
in the particular industry or occupation : 

6. Any job requirement should guarantee each beneficiary any rights 
granted to or held by any other worker in the particular industry or oc- 
cupation, including, but not limited to, social security, unemployment com- 
pensation, union representation and collective bargaining, severance pay and 
seniority : 

7. Xo job requirement should force the separation of a mother from her 
young children by threatening her with the loss of maintenance payments ; 
and be it further 

Resolved, That any income maintenance legislation be linked to : 

1. Adoption as public policy the theory of the Federal government as the 
•'employer of last resort."' guaranteeing the right to a meaningful and pro- 
ductive job to any individual willing and able to work who cannot secure 
such employment in the private sector : 

2. The provision of a massive and free program of vocational training 
and day care centers for all those desiring these services; and be it further 

Eemlvcd. That copies of this resolution be transmitted immediately to the 
President of the United States and the oflicers, floor leaders, appropriate com- 
mittee chairmen and Xew York City members of each house of the Congress. 

Referred to the Committee on Finance. 

Community Service Society, 
New York, N.Y., February 3, 1972. 
Hon. Russell B. Long. 
Chairman. Senate Finance Comniiftee. 
Old Senate Office Building, Washington. D.C. 

Dear Senator Long: In the absence of an opportunity to apjiear before the- 
Senate Finance Committee, we are filing for the Finance Committee's considera- 
tion and inclusion in its record the Statement on H.R. 1 prepared by our citizen 
committees and professional staff expert in the subject matter of the bill. A 
copy was sent to you Xovember 3. 1071 by Elihu Schott. Mrs. David B. Magee. 
and" David W. Smith representing respectively our Committees on Aging, Family 
and Child Welfare, and Health. 

The first section is a discussion on how H.R. 1 approaches the three major ob- 
jectives of the bill: improvement of the nation's income security programs: 
reduction of the numbers dependent on public as.sistance: improvement in the 
administration of Medicare and Medicaid. It also includes comments on some 
of the bill's social services provisions and on public accountability. The second' 
part of the statement is an analysis of .selected provisions of the Inll. by title- 
and section. 


A summary highlighting the major points is attached, however, we com- 
mend the full'statement to you for study. 

Sincerely, „ ^ ^ 

Bernard C. Fisher. 

Highlights of Statement ox H.R. 1 


Endorse : 

—5% increase in benefit levels for OASDI beneficiaries. 

provision for automatic increases with increases in the cost of living. 

tying the level of increases in taxable earnings to the general level of covered 

— liberalization of the retirement test. 
Recommended : 

increase in the minimum benefits to $100 for an individual, .$150 for a couple. 

—exploration of the possibility of a variable retirement test formula permitting 

retention of a larger dollar earnings by those at the lower benefit levels. 
addition of two representatives of the public to the Trustees of the Trust 

Funds to assure that investment policies would not so strongly reflect the 

fiscal interests of the federal government. 


Endor-sed : 

— extension of Medicare to disabled social security beneficiaries. 

— modest addition of reimbursable medical expenditures. 

— removal of current barriers to use of health maintenance organizations by 
Medicare beneficiaries. 
Recommended : 

— extension of Medicare to early retirees. 

— inclusion of out-of-hospital prescription drugs as a reimbursable benefit. 

— retention of the current requirement for provision of social services in 
Extended Care Facilities. 


Opposed : 

— restrictions on eligibility 

by requiring assistance recipients with incomes in excess of the state's 

naedically indigent eligibility standard to "draw down" the excess to pay 

medical bills before they can become eligible. 

by not requiring the .states to make Medicaid available to the newly eligible 

under the income maintenance provisions of H.R. 1. 
— imposition of charges on Medicaid recipients 

by permitting states to levy nominal charges on non-mandatory services 

which it is noted include such expensive items as prescription drugs and 

dental care. 

by permitting states to impose deductible and co-payments on the medically 


by requiring states to impose a graduated premium fee on the medically 

— limitations on the scope of benefits 

by allowing the states to reduce the range of non-mandated services with- 
out being subject to the maintenance of financial effort now in force. 

by reduction in federal aid for certain types of institutional care after 

service is received for specified periods. 
— elimination of the equipment that all states have in effect a comprehensive 
Medicaid program by 1977. 

On the plus side : 

— optional provision of services in Intermediate Care Facilities. 

— inclusion of some provisions aimed at improving the quality of medical care 

for Medicaid recipients. 
— encouragements for the delivery of care through health maintenance 




Endorsed : 

creation of a federally financed and administered cash assistance program 

with a federally determined floor of assistance and nationally uniform eligi- 
bility conditions. 

—proposals that the program be administered by the Social Security Admin- 

Severely criticized : 

too low level of the proposed federal minimum which is below the poverty 

level and lower than the assistance level in many states. 
— I)erpetuatioii of the differential treatment of the aged compared to the dis- 
abled and blind who are permitted higher income disregards. 
Recommended as an offset to the low level of the federal minimum : 
—requiring the states to supplement at least up to their previous payments 
(including the cash value of the food stamp bonus) with federal participa- 
tion in the cost of such supplementation. 


Opposed : 

the grossly inadeiiuate federal minimum (below both the federal poverty 

level and the current assistance amounts in about half the states) and the 
failure to correct this by providing for a staged increase towards a more 
satisfactory living standard. 

— failure to require states to supplement the FAP payment at least up to 
their current payment levels. 

— exclusion of families headed by a full-time college or tmiversity student. 

—counting income received in the preceding nine months as a resource even 
though at the time of application a family had no income or inadequate 

including as a resource the income of a step-parent whether or not he has 

legal responsibility for the support of his wife's children. 

exclusion of FAP recipients from the food stamp program which, while an 

inferior substitute for an adequate cash payment, is needed as long as assist- 
ance grants are woefully inadequate. 

—perpetuation of the shocking discrimination against families with children 
with respect to level of the federal assistance payment (the minimum for a 
family of four is no more than the minimum for DAB couples and the dis- 
crepancv is even greater for large families) . 

— the stringent administration of eligibility conditions with such great em- 
phasis placed in the bill and by the House Ways and Means Committee on 
strict administration that it could well lead to harassment of applicants and 

On the plus side : 
— the provision of federally financed and administered cash assistance pro- 
gram with nationally uniform eligibility requirements for families with de- 
I)endent children. 
— inclusion of the "working poor" in the program. 

Recommended : 

— provision of a minimum guarantee for adequate cash assistance for needy 


Objectionable provisions applying to both the Assistance to the Needy Aged, 
Permanentlv Disabled and Blind (DAB) and to the Family Assistance Plan 
(FAP) : 
— failure to include single persons or childless couples under age 65 who are 

not disabled. 
— inclusion of a duration of residence requirement as a condition of eligibility 

for state supplementation. 
— failure to give the states the fiscal relief they need. (The "hold harmless" 

provisions and access to federal assumption of the costs of adminLstering 

state supplementation programs offer only partial fiscal relief. ) 

72-57'3 — 72 — ut. 6 11 



Opposed : 
tiie too low level of both the income disregard and the ceiling on deductible 

expenses in determining eligibility for FAP payments, 
—the imposition of a coercive requirement on mothers of young children 

without regard for a mother's right to decide whether her working is in 

the best interest of her children or whether suitable day care facilities are 

failure to create a permanent program of public jobs to provide employment 

when private employment is not available. 
setting the minimum wage level for a job a person may be required to take 

in private employment not covered by minimum wage laws at only 7.j% of 

the already low federal minimum wage level. 

Endorsed : 

— the objective of encouraging and facilitating self-support. 

the centralization of responsibility for administration and financing of the 

work program in the federal Department of Labor. 

Recommended : 

provision of an effective earnings incentive by increasing the amount of the 

income disregard and the ceiling on deductible expenses in determining 
eligibility for FAP payments. 

— making any requirement that mothers of young children accept work or 
training co'nditional on whether her working is in the best interests of 
her children and on availability of suitable child care arrangements. 

— specification of principles to assure quality of child care services under 
standards developed by HEW and covering services purchased or con- 
tracted for, including private profit-making enterprises. 

— inclusion of the definition of suitability of jobs or training a person is re- 
quired to accept. 


Endorsed : 

— the new provision for an increased appropriation for foster care and 
adoption with an absence in foster care of any limitation to cases in which a 
judicial determination has been made. 
— the provision for payments to allow for the additional costs resulting from 

the adoption of physically and mentally handicapped children. 
— the provisions which extend availability of family planning to the poor and 
Opposed : 

— the imposition of ceilings on appropriations for social services. 
Recommended : 
— open-ended financing of social services. 
— maintenance of state-wideness requirements. 


Recommendations to strengthen public accountability : 

— a requirement that rules and regulations which are not purely ministerial 
and which substantially affect the right of recipients to benefits and services 
be adopted only after publication and adequate public notice and opportunity 
for public hearing. 

— provision for a participatory role for recipients in responding to policies and 
regulations affecting their lives. 

— provision for local advisory committees in each state to evaluate the effec- 
tiveness of programs and services under each Title, membership to include 
representatives of those intended to benefit from the provisions of each Title. 

Statement on H.R. 1 — 1971 Social Security Amendments Submitted to the 
Senate Finance Committee by the Special Committee on H.R. 1, Com- 
munity Service Society of New York, N.Y. 

The 1971 amendments to the Sscial Security Act passed by the House of Rep- 
resentatives contain the most far-reaching changes in the nation's income mainte- 
nance system to be considered by the Congress at any one time since 1935 


when the Act was enacted. The Congress is to be congratulated on undertaking 
so major a legislative overhaul as that embodied in H.R. 1. This is a massive 
piece of legislation making significant changes in a wide range of social policies. 
We consider some desirable, some undesirable. Therefore, we do not find it 
useful at this stage to adopt a position for or against the Bill as a whole. Instead, 
we are commenting on the Bill by reference to its main objectives. 

Our concern is for the consequences of the proposed changes on the social and 
physical well-being of the citizens in our own community and throughout the 
nation. As a voluntary, nonsectarian social welfare agency, the Community 
Service Society since its founding in 1848 has been dedicated to strengthening 
family life and to the betterment of community life. Its Department of Public 
Affairs, through its citizen committees and staff, is that arm of the Society which 
engages in social and legislative action aimed at the improvement of community 
conditions, services and facilities. 

Our analysis and coniments on the Bill are the product of joint study by 
representatives of our Committees on Aging, Family and Child Welfare, and 
Health. These committees are concerned with the implementation of the Social 
Security Act and the related federal, state and Icjcal measures authorizing 
publicly funded and administered income support, health and social service 
programs. They have developed expertness in their respective fields. They have 
spoken over the years, both in support and in criticism of legislation and 
administrative actions affecting these programs. 

Our statement is presented in two parts. Part I discusses the main objectives 
of the Bill and how the major provisions would, in fact, implement these ob- 
jectives. In Part II we present a more detailed analysis, by titles and sections 
of the provisions discussed broadly in the first part of the statement and a 
few provisions of a more technical nature which are omitted from comment 
in Part I. 

Pakt I — Analysis of H.R. 1 Objectives and Implementing Provisions 

H.R. 1 appears to be directed to three main objectives. These are (1) improve- 
ment of tlie nation's income security programs, (2) reduction of the nmnbers 
dependent on public asssirance, and (3) improvement in the administration of 
those health programs with which the federal government is financially in- 
volved, namely, Medicare and Medicaid, and to a lesser extent. Maternal and 
Child Health Service. We also offer comments on the provi.sions of the Bill that 
affect the social services and public accountability. 

A. improvement of the income security programs 

The nation currently applies two different principles in its income security 
policies : provision of social insurance benefits as a right to insured persons in 
the event of inability to earn because of old age. retirement, permanent dis- 
ability, death of a breadwinner and unemployment, and a system of assistance 
payments on the basis of demonstrated need in the individual case to those not 
covered by .social insurance or w^hose insurance payments are inadequate for 
their needs. The assistance system in turn is in two parts: a group of federally 
aided programs for needy aged, blind and disabled and for families with de- 
pendent children and a wholly state or state/local program for all other needy 
people. H.R. 1 deals with both insurance and assistance. 

L Amendments to the federal old-age, sxirv-ivors and disability insurance program 
This is probably the most satisfactory part of the Bill. We welcome those 
amendments in Title I of H.R. 1 which increase the role of social insurance in 
providing income .security by improving the level of benefits and liberalizing 
eligibility. In particular, we strongly support the 5% increase in benefit levels 
across the board. We are especially pleased that the Bill jirovides for auto- 
matic increases in the benefit levels with increases in the cost of living, as this 
will protect beneficiaries from erosion of the purchasing power of benefits as 
prices rise. The proposed increase in widows' and widowers' benefits from 821/^% 
to 100% of the deceased spouse's benefit is also a move in the right dire<'tion. We 
believe, however, that the proposed increases in the minimum benefits are too 
meager and that an increase to $100 an individual and $150 a couple would be 
desirable. As our detailed comments in Part II indicate, we are in general in 
favor of other amendments such as those that would imi)rove the benefit levels 
of persons long covered by the program or postitoning retirement beyond age 65. 


We vare glad to see some liberalization of the retirement test though we sug- 
gest exploration of the possibility of a variable formula permitting retention 
of larger dollar earnings by beneficiaries at the lower level benefit levels. 

We recognize that the liberalizations of the program will increase its costs 
and we are concerned about the increasingly heavy burden of the regressive 
wage and payroll taxes, especially on low income receivers. While we note with 
satisfaction the increase in the level of taxable earnings (both immediately and 
in the future by tying the level to increases in the general level of covered 
earnings), because this will involve tapping ever higher incomes and thus some- 
what reducing regressivity, we would hope that the Congress would explore other 
sources of funds. In that connection our own studies indicate that the invest- 
ment policies of the Fund Trustees have resulted in interest yields considerably 
less than could have been legally obtained and we suggest adding to the Trustees 
two representatives of the public to assure that investment policies would not 
so strongly reflect the fiscal interests of the federal government. 
2. Assistance for the needy aged, permanently disabled and Mind 

The changes which Title III would bring about represent a major step forward. 
We strongly favor the creation of a federally financed and administered pro- 
gram which would introduce a long-needed federally determined floor of assist- 
ance and uniform eligibility conditions for the nation as a whole. This is indeed 
a major advance. We also support the use of the Social Security Administration 
as the agency to administer the program, as proposed by the Ways and Means 
Committee. This agency has an outstanding reputation for administering social 
security in a manner which emphasizes the rights of beneficiaries, respects their 
dignity and at the same time protects the interests of the insurance funds. In 
the hands of i^uch an Administration there is good reason to exi>ect the kind of 
non-discretionary and objective determination of both eligibility and payments 
amounts to which the long-period dependency of the aged, the blind and the 
permanently disabled so obviously lends itself. 

We note, however, that the proposed level of the federal minimum is con- 
siderably below even the poverty level for aged individuals and slightly below 
this for aged couples. Although the Bill provides for a staged increase by 1975, 
it is to be expected that prices also will rise during this interval but the Bill does 
not require that the dollar minimum shall be automatically adjusted to increases 
in the cost of living. 

Given tlie relatively low level of the federal minimum and the fact that it is 
lower than many states are now paying, it is regrettable that the Bill does not 
require the states to supplement the federal payments up to at least their current 
level. While Section 509 puts considerable pressure on the states (on pain of 
losing federal reiml)ursement under Titles IV, V, XVI and XIX of the Social 
Security Act) to supplement up to the amounts recipients would have received 
in June 1971 together vpith the bonus value of food stamps which were provided 
or available, a state could avoid this pressure by passage of state legislation 
specifically prohibiting it from supplementing the fedei'al minimum. Given the 
present tendency of the states to lower their standards and cut welfare expendi- 
tures it seems likely that many will take advantage of this leeway. AVe urge 
amendment to require the states to supplement at least up to their pi*evious pay- 
ment levels (including the value of the food stamps bonus) and federal par- 
ticii>ation in the costs of such supplementation. 

Furthermore, although as we stated above, eligibility conditions are uniform 
geographically, it is unfortunate that the Bill would pei'petuate the differential 
treatment of the aged as compared with the blind and disabled who would be 
permitted more liberal disregards of earnings. We see no justification for this 
discrimination against the aged. 

3. The Family Assistance rian (FAR) 

Title TV of the Bill replaces the existing Aid to Families with Dependent Chil- 
dren (AFDC) program with a new assistance program for families with children, 
the main feature of which is provision of a federally financed and administered 
assistance payment with nationally uniform eligibility requirements. Adoption 
of this principle is a major step forward and one we have long urged. Our satis- 
faction is, however, greatly diminished by the way the Bill implements this policy. 

First, the federal minimum is far too low. and fails to reflect geographical 
differences in costs of living. The sum of $2400 for a family of four is well below 


even the meagre 1970 poverty line ($3968), and for larger families the payment 
is even more inadequate due to the setting of a maximum of $3600 to total pay- 
ments however large the family. The standard is even below the current assist- 
ance standards of about half the states and makes no provision for automatic 
adjustments in the dollar amount of the minimum with increases in the cost of 
living. We believe that the minimum guarantee should be substantially in- 
creased and that if, for financial reasons, it is initially set below the poverty 
level the Bill should provide for a staged increase toward a more satisfactory 
living standard as national income rises. 

Second, given the low level of the federal minimiim and its shortfall a.s of)m- 
pared with what many of the states are even now paying, it is unfortunate that 
the Bill does not mandate state supplementation up to at least current payment 
levels. For reasons we have already given, we do not believe that Sei^tion 509 is 
an adequate substitute for such a requirement. 

Third, while we regard food stamps as an inferior .substitute for an adequate 
cash payment and thus welcome the incorporation of the bonus value of food 
stamps in the basic federal cash payment, we believe it unfortunate, so long a>' 
the federal minimum falls so far short of even the current poverty standard and 
so long as state supplementation is so problematic, that recipients of FAP would 
not be permitted to buy or use food sitamps. 

Another new feature of FAP is the coverage of the working poor. The check 
to initiative and the inequity of denying assistance to those whose efforts at self- 
support yield them an income below assistance standards has long been appar- 
ent. While we welcome rectification of this injustice we also recognize that sup- 
plementation of earnings raises some difficult economic issues and in any case 
will greatly increase the numbers of P^'AP recipients. We would hope that, for the 
longer run, the Congress will continue to explore other ways of dealing with the 
problem of full-time earnings that are insufficient for family needs. 

In any case, families other than those with working mothers are assured sup- 
plementation only up to the level of the federal guarantee, for the supplemen- 
tary programs of the .states are permitted to exclude families with both parents 
present and not incapacitated, regardless of whether the male parent is em- 
ployed or unemployed. 

The two assistance programs introduced by H.R. 1 do indeed mark a major 
step forward by introducing the important principle of a federal minimum stand- 
ard, federally administered. But taken together and considered in the light of 
current needs in our public assistance programs and policie.s-, they have serious 
shortcomings over and above those to which we have drawTi attention when 
considering them individually. 

First, neither one provides assistance for single or childless adults under age 
65 who are not disabled. In addition, families headed by a full-time or univer- 
sity situdent are excluded. Quite apart from hardship to the families involved 
this last provision seems clearly inconsistent with the emi>hasis placed in Title IV 
on training as an aid to employability. 

Second, the combined programs perpetuate the shocking discrimination in 
our assistance jwlicies against families with children. As the Bill now stands, 
the federal minimum for a family of four is no more than the minimum for 
couples who are aged, blind or totally disabled, while for larger families the dis- 
crepancy is even more pronounced. And while we recognize that in the past, 
improvement in social 'pro\-i.sion for the needy has taken the form of gradual re- 
moval of one category after another from the total group in order to grant them 
more liberal treatment, we are concerned that the application of the policy in 
practice has tended to isolate what may be called a "discarded population" whose 
characteristics do not invoke popular sympathy, and on wh(mi public resentment 
about the rising costs of public assistance can be concentrated. Thus the Com- 
mittee on Ways and Means makes it clear that the Secretary of Health. Educa- 
tion and Welfare (HEW) is expected to provide a much more stringent ad- 
ministration of eligibility conditions for the FAP families than for the H.R. 1 
Title III adult categories: for the latter a declaration system for applications 
would not lie ruled out as it would be for the FAP population, nor would the veri- 
fication and other procedures be so rigorous. 

Third, both Titles would permit the states to establish duration of residence 
requirements as a condition of eligibility for state supplementary payments. Such 
a provision is not only socially undesirable but is also unconstitutional and we 
urge its removal. 


Fourth, the hnrden of assistance costs ou the states and localities is heavy and 
growing and is one of the reasons why reform is needed. The proposed "hold hami- 
less" provisions (wliereby the states are guaranteed that their expenditures on 
cash assistance payments will not exceed their total outlays for categorical cash 
assistance in calendar 1071) together with federal assumption of costs of ad- 
ministration of state supplementation (where a state agrees to federal adminis- 
tration) fall far short of giving the states the fiscal relief they need. Furthermore, 
the financial provisions of the Bill give least relative aid to those states which have 
heen most adequately meeting need in the past or have been caring for relatively 
hirse numbers of assistance recipients. We believe that nothing short of federal 
assumption of the costs of a.ssistance (including needed supplementation above 
the low federal minilmum) will meet the problem. 


It is obvious from many of the provisions of H.R. 1 and from the Reimrt of the 
Committee on Ways and Means that a major objective of the drafters of the Bill 
has been a reduction in the numbers of assistance recipients. The Bill proposes 
to achieve this residt in two ways: (1) by moving as many of the recipients as 
po.ssib!e into self-support and (2) by tightening eligibility requirements and their 

1. The Work Pr off ram 

Substitution of "Workfare" for "Welfare" is held by the Administration to be 
the heart of "welfare reform." We support the objective of the Opportunities for 
Families program (OFF), namely, encouraging and facilitating self-suppt)rt. 
Nor do we (piestion the propriety of requiring those who are clearly capable of 
self-support to accept appropriate training or suitable available work. But we 
have serious questions about the way these policies are applied in H.R. 1. 

We wish to make it clear that there are some features of OFF with which we 
are in agreement. The proposal to disregard some fraction of earnings in deter- 
mining W'hether a family is entitled to FAP payments will correct the present 
deterrent to earning whereby in most states earnings serve only to reduce the 
a.-isi.s-tance payment. But we suggest that a disregard higher than the proposed 
$720 per year plus one-third of additional earnings would provide a more effec- 
tive incentive to earn. Similarly, while we are glad to see that working mothers 
may deduct from their countable income for FAP purposes any charges they pay 
for child care services, we believe that the $2000 limit on this deduction (which 
covers also any iri'egular and student earnings) is too low in \'iew of current 
co.sts per child of day care and similar child care services. 

We are pleased too that the Bill recognizes one major weakness of current 
training programs, namely, the lack of available jobs for those whose training 
is completed, by providing for the creation of temporary public service jobs. 
However, the number of positions possible under the appropriation envisaged is 
insignificant in relation to the current number of unemployed job st'ekers whose 
numbers will be swelled by the newly trained OFF employables. A vastly greater 
work creation program will be necessary if the employment objectives of H.R. 1 
are to be attained. 

We also welcome the centralizing of responsibility for operation, administra- 
tion and financing of v\ork and training programs in the federal Dt'partment of 
Labor. In the past, diffused or .shared responsibility for administration and the 
refiuirement of state financial contributions have severely limited the effective- 
ness of work and training programs. 

Our objections to the OFF proposals relate mainly to two quesitions : (a) to 
whom should the pressure to accept work or training be applied and under what 
safeguards and (b) what kinds of jobs are people required to accept? 

n. To ii'hom should prrxxure to accept irork or training he applied and 
nnder what safeguards? 
The Bill .specifies that ;ill persons age 16 or over except those incai)acitated or 
of advanced age. or caring for a sick household member or for a child under three, 
or regularly attending school if under age 22 shall be required to register for. 
and accept if offered, work or training. We strongly question the social desira- 
bility of imiiosing this requirement on mothers of young children who, we believe, 
should have the right to decide whether it is in the best interests of their children 
that they should work. It is a further weakness of the proposal that no account 


is taken of the numbers of children in a family. We also find it particularly 
ironical that a woman with a husband in the home who is registered is not 
required herself to register, whereas the mother with no man to help share the 
burden of housekeeping and child care is required to do so. 

The Report of the Ways and Means Committee implies that a mother will be 
required to accept work or training only if suitable alternative child care 
arrangements are available to her. But no such explicit safeguard is written 
into the Bill and this should be rectified. At present day care and other organized 
arrangements for substitute care of children of working mothers are shockingly 
inadequate even for mothers who are currently working, let alone for the 
increased numbers of women workers that are expected to result from the OFF 
program. The Bill does provide HEW with funds for an expansion of day care 
services and additional resources would be available if other child care proposals 
currently before the Congress should be enacted. But it is questionable how far 
even these funds will go in filling the gap. 

It is presumably in recognition of this shortage that the Secretary of Labor 
who is given the "responsibility of purchasing such care for OFF families, is 
authorized to the extent he cannot utilize the facilities developed by HEW, to 
purchase or contract for child care services "from whatever sources may be 
avaihible" including public or private agencies "or other persons." The Report of 
the House Ways and Means Committee makes it clear that this includes private 
profit-making enterprises. We fear that this open-ended authority may lend itself 
ti) serious abuse. For although the Secretary of HEW is required to promulgate 
-standards assuring the quality of child care services (with the concurrence of the 
Secretary of Labor), no guiding principles are laid down in the Bill. We believe 
that if society assumes the responsibility of pressuring mothers to work it must 
also accept the re.sponsibility of defining standards of substitute child care. 

b. What kinds of jobs are people to be required to accept? 

It is of the utmost importance that the OFF program not be used as a weapon to 
force people to accept substandard jobs, or those that are in conflict with current 
national policies. We note that the Bill defines as unacceptable positions vacant 
a.s a result of a strike, lockout or other labor dispute and those where, as a con- 
dition of being employed, workers must join a company union or join or refrain 
from joining any bona fide labor organization. But. while the Bill specities that 
wages, hours and working conditions of acceptable jobs must not be contrary to 
or less than those prescribed by applicable federal, state or local law, we regret 
that for the jobs available in private employment that are not covered by mini- 
mum wage laws, the wage level is permitted to be only 15% of the already low 
federal minimum. Furthermore, although individuals may to participate 
in work or training programs "where good cause exists for failure to par 
ticipate."' "good cause" is not defined. 

There should be reference to the suitability of the job or training for the par- 
ticular registrant and reasonable standards defining suitability such as are pre- 
scribed for public service employment. 
,?. Tightening eligibility requirements and their administration 

The second prong of the effort to reduce the numbers on assistance involves 
a tightening of eligibility and administration. Reference has already been made 
to the exclusion from eligibility of families headed by a ful-time college or uni- 
versity student. The numbers of eligible persons will also be reduced by the re- 
quirement that drug abusers and alcoholics must be undergoing treatment at an 
approved institution: by the counting as a resource, income received in the pre- 
ceding nine months even though in the current (piarter a family has no or in- 
ade«inate income : and by including in resources, the income of a step-parent 
even though he has no legal liability for the support of his wife's children. We find 
the.«!e last two provisions especially objectionable. 

Even more important in keeping down the numbers of recipients are the di- 
rectives given in the Bill and elaborated in the Report of the House Ways and 
Means Committee for stringent administration. There is to be no declaration 
system for applications ; statements by applicants are to be rigorously checked : 
recipients must immediately report changes in circumstances and make quarterly 
reports on income, in both under pain of severe penalties and at the end of 
two years must reapply for benefits. We are "strict constructionists" in the sense 
that we do not believe in lax administration or the admission to benefits of 
not legally eligible. But we fear that the great emphasis placed in the Bill and 


by the House Committee on stringent administration will lead to harassment 
of applicants and recipients and may even discourage some needy persons from 


The main thrust of the health amendments In Title II is clearly to improve 
the operating effectiveness of Medicare, Medicaid and the Maternal and Child 
Health Services. With most of the specific proposals for containing the costs of 
health programs by limiting the charges of providers, introducing incentives for 
economical operation, improving administration by encouragement of the use 
of mechanized equipment, improving the delivery system and the like we have 
no quarrel, although we recognize that time alone will tell whether the specific 
changes will achieve their intended result. We suspect that for many years to 
come the Congress will be grappling with the problem of assuring an efficient 
and economical operation of our health services while at the same time protecting 

But Title II also contains some substantive changes m the programs and some 
of the cost-oriented amendments are likely to have adverse repercussions on the 
nature of the Medicare and Medicaid programs. 

1. Medicare 

We strongly support the extension of Medicare to disabled social security bene- 
ficiaries although we would hope that it would prove possible to reduce the two- 
year waiting period. We also urge inclusion of the early retirees, a group whose 
age and income levels make medical expenditures especially heavy and onerous. 

We are pleased that some modest additional reimbursable medical expendi- 
tures have been added but greatly regret the non-inclusion of the much more im- 
portant out-of-hospital prescription drugs among the reimbur.sable benefits and 
strongly urge their inclusion. As our more detailed comments in the following 
section make clear, we also welcome a number of other amendments which make 
it easier for certain categories of people to .secure supplementary medical insur- 
ance or entry to hospital. We believe that removal of current barriers to the 
use of Health Maintenance Organizations by Medicare beneficiaries is a step in 
the right direction. We hope, however, that the amendment removing the re- 
quirement for provision of social services in Extended Care Facilities will be 
eliminated. The patients in such institutions are likely to be persons for whom 
social ser\aces are of special significance. 

2. Medicaid 

The substantive changes proposed for IMedicaid are numerous and serious. 
While there are a few desirable liberalizations such as the optional provision 
of .service in an Intermediate Care Facility and. on a qualified basis, of care in 
institutions for the mentally retarded, inclusion of some provisions aiming at 
improvement of the quality of medcal care for ^Medicaid recipients and enr^our- 
ngements for the delivery of care through Health Maintenance Organizations 
(all of which nre discussed later in more detail), most of the changes are of 
a restrictive character. 

We are strongly opposed to the changes which would (a) restrict eligibility, 
(b) impose charges on recipients and (c) narrow the scope of covered .services. 

(a) Assistance recipients with total incomes in excess of the state's medically 
indigent eligibility standard (usually 133.3% of the current payment to AFDC 
families) will be required to draw down the excess to pay medical bills before 
they become eligible for ^Medicaid. Quite apart from the hardship involved, this 
provision undermines efforts in other parts of the Bill to encourage earning by 
permitting rfv-ip'ents to retain some fraction of their enrnings. We also urge 
eliminntion of the provision whereby .states are not required to make Medicaid 
available to persons or fnmilies ne^'ly eligible for assistance under the income 
maintenance sections of II. R. 1. By definition these are low income people whose 
a.'^sistance payments will be too low to leave any leeway for meeting the costs 
of nif'dical care. 

ih) We strongly oppose the imposition of charges on iledicaid recipients. Even 
the "nominal" charges for non-mandatory services which the Bill would permit 
states to levy on cash assistnnce recipients are objectionable, for the payments 
they re<'eive, even with state supplementation, will be barely, or not all. ade- 
quate for meeting recurrent basic needs and will leave no leeway for medical 
bills. It must not be forgotten that the non-mandatory benefits include such costly 


items as drugs, dental care and the like. For similar reasons we oppose both 
tlie proposal to require the states to impose on the medically needy a premium 
fee graduated by income and the permission granted them to impose deductible 
and co-payment requirements. 

Given the low income eligibility level for Medicaid in most of the states, 
eligible medically needy families will have no resources to cover the premium, 
while the co-payment and deductibles will deter many who should seek medical 
care from doing so. We are not impressed by the argument that such charges 
are necessary as a protection against overuse of health services. All evidence 
suggests that not overuse l)Ut undenise of health services is chai'acteristic of 
the poor and in any case the main determination of the volume of service to 
be received by a patient lies in the hands of the physician, not the ixitient. 

(c) The scope of medical benefits available under Medicaid is unfortunately 
narrowed by H.R. 1. The sitates would ho iiermitted to reduce the range of 
non-mandated services without being subject to the maintenance of financial 
effort requirements currently in force. Given the financial pressures luider which 
many states now operate, the consequence is likely to be a reduction of the 
benefits now available to the levels of those mandated. The scope of medical 
benefits is also likely to be restricted by the proposed reductions in federal aid 
for certain types of institutional care after service has been received for si)ecified 
periods. We recognize that the intent of these amendments is to discourage 
unnecessary hospital or institutional occupancy and to encourage movement of 
patients to less expensive forms of care when medically indicated. But given 
the acute shortage of nursing homes and other alternative facilities for care 
we fear that the main result of these proposals will be to deny needed institu- 
tional care to many poor people, or if states are unwilling to do this, to add to 
the financial burdens of already hard-pressed states which will have to provide 
this care without federal aid. 

We take particular exception to the proposed elimination of the requirement 
that states have in effect a comprehensive Medicaid program by 1977. The fate 
of tlie Medicaid program since 1965 has been a succession of reductions in 
benefits and coverage instead of the progressive expansion envisaged in the 
original legislation. This amendment is the final blow to the promise of an 
adequate program of health care for the poor and medically indigent. 


Several sections of H.R. 1 directly affect the social services and their financing 
and administration. We welcome the new si>ecific provision for appropriations 
for foster care and adoption. We are gratified that this additional federal aid 
for foster care will not he limited, as are the cash benefits under the family 
programs, to cases in which a judicial determination has been made, but will be 
available in respect of any child "for whom a public agency has responsibility." 
We are especially pleased that the adoption provisions include payments to 
allow for the additional costs resulting from adoption of physically or mentally 
handicapped children who are hard to place. 

We welcome, too, the provisions which aim to extend the availability of 
family planning services to the poor and the near-poor. Society has no right to 
criticize the extent of out-of-wedlock births and the large families of 
receiving public support, so long as it withholds from them the knowledge and 
the means of more responsible family planning. 

But we deplore the imi)osition of ceilings on aippropriations for all except the 
child care and family planning servines. Hitherto social services rendered to the 
federally-aided assistance categories have been subsumed xinder the Titles 
dealing with these groups and as such have l>een financed on an open-ended basis. 
We urge a return to the principle of open-ended financing and would additionally 
like to see removal of the closed-end grants now applicable to the Child Welfare 
Ser\ices under Title IV B of the Social Security Act. All these social services are 
almost everywhere inadequate in relation to the need for them and the imposi- 
tion of ceilings will only further check their expansion. It is true that, com- 
mendably. the Bill provides that part of the appropriation for services to assist- 
ance recipients is to be set aside for states development of social services 
falls below the national average per recipient but the sum envisaged is small 
(.?."0 million) and the real problem is that the national average is itself too low. 
It is evident, too, from the Report of the Ways and Means Committee, that the 


detailed spelling out of services for assistance recipients is intended as a restric- 
tive device and we would prefer a more general definition snch as is used in 
Title IV B or in the original Titles IV A and XVI of the Social Security Act. 

We are troubled too by the provision that would permit the Secretary of HEW 
to remove the statewidcnes requirement. I'nless the conditions of such abroga- 
tion are narrowly defined (e.g.. for the purpose of experiment or demonstration) 
anil time-limited, elimination of the statewideness requirement can lead to dis- 
criminatory treatment of populations in certain areas. 

•\Ve welcome the proposed separation of the administration of cash payments 
and of services. But we fear that the differing financial arrangements applying 
to the S(x>ial services (according to whether they are rendered under one Title o 
Section or another) will foster a fragmentation of what should properly be a 
unified .'^ervice system and will greatly add to the administrative burdens of the 
states. we have always stressed the importance of simplified administration 
we look with apprehension to the vast responsibilities given to the Secretary of 
Labor in connection with the provision of a Avide range of social services for the 
OFF families. The interposition of a second federal agency administering social 
services will greatly complicate and confuse administration at the local level and 
foster divided responsibility. In addition, the freedom given t/> the Secretary of 
Labor who has hitherto had no involvement in the administration, operation or 
supervi-slon of social services to select his local administrative agencies, in- 
cluding profit-making agencies, we believe, is fraught with danger and may 
threaten established policies. 


The Bill provides in numerous sections for the Secretary of Labor or HEW 
alone or in conjunction to adopt regulations that will establish standards, as 
for child care, or prescribe requirements, as for filing applications, or in.stitute 
criteria, as for determining a disabeld person's ability to engage in activity. 

It is clear that the rules and regulations to lie adopted to implement the vari- 
ous Titles will be of critical importance, frequently of greater significance in their 
impact on the recipient than the language of the sections being implemented. 
Nevertheless, there is no provision for public hearings prior to their adoption. 
We submit that the opportunity for an exchange of views and through public 
analy.sis of issues which is exercised in committee hearings and floor debate 
prior to Congressional action on proposed legislation is equally es.sential in the 
administrative system. The Bill should include a requirement that rules and 
regulations which are not purely ministerial and which substantially affect the 
right of recipients to benefits and services be adopted only after publication of 
the proposed rules and regulations and adequate public notes and opportunity 
for public hearing. 

Another instance of failure to provide for public accountability is the absence 
of a participatory role for recipients in responding to the policies and regulations 
of the programs which directly affect their lives in such vital matters as their 
subsistence level, training, employment, child care and medical or other services. 
Even the provision establishing local committees to evaluate the effectiveness of 
manpower and training programs specifies as members representatives of labor, 
business, the general public and units of local government, thereby representing 
everyone except the persons most affected, the families registered for the OFF 
program. We recommend that the Bill provide for the appointment of local ad- 
visorj' committees in each state to evaluate the effectiveness of the programs and 
services offered under each Title and that the committees include in their member- 
ship representatives of those intended to benefit from the provisions of each Title. 

Part IT — Analysis of Selected Provisions by Title and Section 


(amending title n of the social security act) 
S!rr. 101 . Inrreaxc in rnxh hcncfdn of 5 percent 

Provides an across-the-board of 59^ in social security cash 
benefits effective June 1972. 

We support the projiosed 5% increase in cash benefits effective at the earliest 
possible date. .January 1072 if this be feasible. Additionally we recommend a .$100 


monthly minimum for an individual and $150 for a couple, thus raising henefits 
for the' low level regular and the special age-72 beneficiary. We recommend that 
general revenues be applied to pay the additional cost of this proposed minimum. 
There are good reasons to increase the minimum. 

The proposed minimum monthly benefits are $74 for the retired individual and 
mi for a couple, or, put in annual terms. §888 and .«1332 respectively. For the 
special age-72 beneficiary the monthly payment would be $50.80 for a single per- 
srtn and $76.20 for a coui)le or $009.60 and $914.40 per year, respectively. 

How well these payments cover minimum living needs may be judged by com- 
parison with two standards: ' (a) the lower budget level in the Spring of 1970 
for persons and couples 65 and over for urban United States and (b) the 1970 
poverty level for nonfarm persons and couples 65 and over — both adjusted upward 
l)v a 5% annual inflation factor, compounded through 1972. 

" The cash benefits for the retired worker at the minimum level would be close 
to $1200 less than the estimated 1972 nonfarm poverty level of $2052 and over 
fiSQO heloiv the lowest budget of $1714 for an aged individual liviug in an urban 
area of the U.S. at the same time. Special benefits to age-72 individuals would 
be even further below the poverty and budget levels. 

A couple aged 65 and over with the minimum social security cash benefit would 
be more than $1200 loiver than the 1972 poverty level of $2589 for a retired 
r-ouple and nearly $1800 less than the lowest budget of $3122 for an urban 65-and- 
over two-member family. Couples receiving special age-72 benefits fall even 
further below the standards. 

Tlie i)roposal to raise minimum monthly cash benefits to $100 for an individual 
and $150 for a couple will narrow but not close the gap between benefits and low 
budget or poverty levels. 

The recommendation that general revenues be tapped for this increase is 
financially justifiable because, in lieu of a higher cash benefit minimum, old age 
.assistance which is financed out of general revenue would likely be used as a 
supplement. Administrative costs would be cut down, too. with beneficiaries 
receiving checks under one, rather than two programs, each with its own criteria 
for eligibility. 

Sec. 102. Automatic increase in henefits, contribution, and benefit base, and 
earnings test 

Provides an automatic, once-a-year increase in cash benefits, provided 
that the Consumer Price Index has increased by at least 3% and that 
legislation increasing benefits had neither been enacted nor become effec- 
tive in the preceding year. 

Provides a parallel automatic increase in the contribution and benefit 
base, according to the rise in average covered wages, if wage levels had 
gone up sufliciently. 

Also provides a comparable automatic increase in the exempt amount 
under the retirement test. 
We support automatic cost of living adjustments to cash benefits, recognizing 
tliat this does not improve the economic status of older persons but merely serves 
to avoid further deterioration. We believe that such an adjustment sb.ould he 
linked to an inerease in minimum benefits, as before discussed. We note with 
approval that the Congress may take interim action l)efore the .Tanuary 1974 
effective date of this provision as well as sul)sequent action to increase general 

Tnereasing the wage base subject to FICA tax bv the same ).ercentage that 
lienefits are raised will assist in the program's financing. Furthermore, automati- 
callv raising the retirement test with the rise in averaging taxable wages at the 
same time the CPI adjustment takes place is an advantage in the proposed 

' Thp two stanflnrrls fliffpr siffniflcfintlv. Thf Rprinj: 1070 lowpr hiulirpt IpvpI is .Sir...:) for 
«infflo persons- %2^?.2 for r-oiiplps f rpsppotivplv $1714 and .S3122 for 1972 iisinir ^'^r .as the 
inflation factor compoiinrtpd thronch 1972.) Thp 1970 povprty levpl is .^ISCl for single 
pprsons and .'S2?.4S for ooiiplps ( rpsppotivPlv S20.">2 and .?2r)S9 as updated.) 


Sec. JOS. Special minimtnn cash benefit for persons tvith a substantial employ- 
ment record 

Provides a special minimum for persons who worked 15 years or more 
under social security, sucli minimum to be computed at $5 times the 
number of years of covered employment up to a top limit of 30 years or 
We approve this provision. However, we question the non-application of a 
price rise adjustment to this benetit. 

Sec. lOJf and Sec. 113. Survivors' benefits 

Provides in Sec. 104 an increase in cash benefits to ^\-ido\\-Si and 
widowers from the current 82.5% of the deceased spouse's benefit to 
100% of the amount the deceased spouse would receive if living. Survi- 
vors' benefits applied for before age 65 would be actuarially reduced. 

Provides in Sec. 113 payment of reduced benefits to widowers at 
age GO as is now done for widows at age 60. 

We support the increase in cash l)enefits to dependent widows and widowers. 
We, however, favor a no-penalty provision for the widow or widower of an 
early retiree, and recommend that the widow or widower receive 100 percent 
of the benefit the retired worker would have received at age 65. 

We "favor the option given to 60 year old widowers to receive decreased sur- 
vivor benefits, an option already given to widows. 

Sec. 105 and Sec. H2. Financing 

Provides in Sec. 105 an increase in the annual taxable earnings base 
from .$7800 to $10,200 effective January 1972. 

Provides in Sec. 142 new schedules of tax rates for OASDI and 
Medicare for the self-employed and for employees and employers. For 
the latter, the combined rate would increase from the current 10.4% 
to 10.8% in 1972, to 12.4% in 1975 and to 14.8% in 1977. 

We approve the rise in the taxable earnings base to $10,200 effective in January 
1972. This tends to decrease the regressivity of the tax. 

We withhold approval of the proposed changes in the tax rates. We believe 
that tax rates should be reexamined subsequent to a change in the investment 
policy of the Trust Funds. 

We strongly recommend that the interest rate pattern of the Trust Funds 
be altered with the objective of raising the interest income. The need for liquid- 
ity and safety of Fund monies is acknowiedged, but the income of the Funds 
(notably the Old-Age and Survivors Trust Fund and the Disability Insurance 
Trust Fund which together totaled .$40.3 billion as of April 1971) could be 
substantially raised within legal investment limits. 

Setting the investment policy of the Fuuds, within the framework legislated 
by the Congress, Is a three-man Board of Trustees. Managing Trustee is the 
Secretary of the Treausry ; others are the Secretaries of Labor and of Health, 
Education, and Welfare. Official records^ indicate that investment practice has 
favored the government to a significant degree through what is tantamount 
to loans at low interest rates. 

For fiscal 1971, the overall Interest rate was less than 4.8% for the Trust 

As of April 30, 1971 It is significant that 42.9% or $17.3 billion of the OASDI 
Trust Funds was invested at 4.75% or lower interest rates; 26.4% at 3.875% or 
less; 13.4% at 2.75% or less. These investments were accumulated over a i>eriod 
of time. However, the 1970 rate on 3-5 year U.S. Government securities was 7.3% ; 
in 1969 it was 6.85%. In fact, in every year beginning with 1966 the 3-5 year rate 
was over 5%. Long-term U.S. Government bonds moved steadily upward and 
beginning with 1966 never fell below 4.66%, reaching a high of 6.99% in June 

Most of the OASDI Trust Funds are invested in special issues — $27 billion 

- IVirtlolio of OASDI Trust Funds, Com/rexRlniinl Record. .Time 2.";. 1071, p. H.5S1". 
Interost ratps on govcrnrnpnt securltios 1065-1971, Federal Reserve Bulletin. June 1971, 
pp. A3;i, A34. 


out of $40 3 billion or G7%. Reinvestment would have no immediate or direct 
impact on the market. They could be redeemed at par with accrued interest and 
could be refunded immediately into higher yielding issues. 

This recommendation in respect to investment policy is generally m accord 
with the recommendations of the 1971 Advisory Council on Social Security. We 
concur too, in the Council's recommendation that the present three-man Board 
of Trustees be increased to five and include two nongovernment members rei)re- 
sentinc the public interest. 
Sec. 106. Increased benefits for persons reiiring after aye 65 

Provides granting to the late retiree an increase of 1% in annual bene- 
fits, prorated at 1/12 of one percent monthly, for each year (or month) 
after age 65 in which benefits are unclaimed because of continued employ- 
ment. Does not provide increased benefits to dependents and survivors. 
We view this to be a positive first step to provide increased benefits for con- 
tinued participation in the labor force. However, the annual increase of only 
1% seems overly modest. For example, a person retiring at age 67.5 years would 
receive monthlv cash benefits 2.5% higher than he would have received at 65. 
Moreover, during the post-65 period the worker would not have received bene- 
fits and he and his employer would each have contributed the FIOA tax. 

Sec. 107, Sec. 108 and Sec. 110. Benefit computatiotial methods 

Provides in Sec. 107 an age-62 computation point for men (rather than 
age 65) as is now the case for women. 

Provides in Sec. lOS additional drop-out year.s— one additional year of 
low earnings, in addition to the five years provided under current law, for 
each 15 years of covered work. 

Provides in Sec. 110 the computation of benefits based on the combined 
earnings of a working couple, each of whom had at least 20 years of 
covered earnings after marriage. Applicable only if higher benefits would 
We support the proposed liberalizing changes in methods of benefit computa- 
tion. But we offer recommendations for further improvement. 

We suggest that the elimination of the differential between men and women in 
computing average wage be made applicable to current as well as future bene- 
ficiaries. The Bill applies the new provision to men first eligible to entitlement 
in January 1972. (Sec. 107) 

Permitting an additional year of earnings dropout for each 15 years of covered 
employment is supported because it leads to a higher average wage and 
therefore greater benefits. However, we urge consideration and study of the 
disregard of income earned many years ago in average wage calculation in order 
to raise the average wage used for benefit computation figures. Average taxable 
wages per worker, for example, in 1956 were only 58% as great as those in 1969. 
(Sec. 108) 
Sec. 111. Retirement test 

Provides a liberalization of the retirement test for persons between 
ages 65 and 72. Allowable earnings limit increased from $1680 annually 
to $2000 with a 50% offset against benefits for earnings in excess of 
$2000. In respect to the latter, current law provides that $1 shall be 
deducted from benefits for each $2 earned between $1680 and $2880 
and that for each $1 of earnings above $2880 there is a loss of $1 in 
benefits. On a monthly basis, provides no loss in benefits for earnings 
below $166.67 as contrasted with $140 as of now. 

We strongly favor liberalizing the retirement test. 

We support raising the allowable annual earnings limit to $2000 or $2200, 
but we do not believe that this kind of adjustment truly joins the issue. 

What we seriously question is the equity of a uniform retirement test and 
of a monthly exemption. We propose that a workable alternative and a variable 
formula be developed to avoid the unfortunate effects of a uniform retirement 
test on total income of beneficiaries at different benefit levels. Further, we recom- 
mend the replacement of the monthly retirement test with a quarterly retirement 


First, as to the uniform test : ^. . ^.v, u « • 

The effect of a uniform test is the forfeiture of cash benefits by the beneficiary 
of smaller monthly benefits at a significantly lower level of total income than 
the beneficiary of benefits in the middle and upper beneh^t range. 

For example under the current retirement test, a $100 a month (.$1200 a 
ve-ir) beneficiary forfeits all cash benefits when his total earnings are $3500. 
The beneficiary of $200 a month ($2400 a year) does not lose all cash benefits 
until an earnings level approaching $5000 is reached and a $300 a month ($3600 
a year) beneficiary would lose his entire social security payments only when 
he has earned close to $6000. . , . , ^. 

The figures can also be viewed in percentage terms. Under current legislation 
a $100 a month beneficiary with annual earnings of .$3000 forfeits 00% of his 
benefits • a $200 a month beneficiary with the same earnings loses 30% of his bene- 
fits and a $300 a month beneficiary also earning .$3000 has an offset of only 20% 
a-^ainst his benefits. At an earnings level of $3500 the $100 a month beneficiary 
has lost 100% of cash benefits, the $200 a month beneficiary only 50.8% and the 
$300 a month recipient only 33.8%,. 

H.R. 1 liberalizes the retirement test, but retains the differential percentage 
loss. Under H.R. 1 a $100 a month beneficiary loses 41.6%, of benefits with earn- 
ings of $3000; a $200 a month recipient with the same earnings loses 20.8%, 
and a $300 a month recipient loses 13.8%, of benefits. 

The income tax does not remove the inequity brought about by the uniform 
lest. Since social security cash benefits are not taxed, each beneficiary with, for 
example $3,000 of earned income and using the tax tables, will have the same 
tax liability. The social .security beneficiary at the upper level of cash benefits 
will not pay any more in tax dollars than the social security beneficiary at the 
lowest end. 

Since the beneficiary of lower monthly social security cash payments was, for 
the most part, the lower income level earner his poor economic status is perpetu- 
ated in his older age years. 

We propose that a flexible retirement test, related to the amount of social se- 
curity benefits, replace the uniform test in a way which will not r)enalize the 
beneficiary of higher benefits. However, it should permit the beneficiary at the 
lower end of the scale to retain a larger proportion of his benefits than he can 

Second, as to the monthly computation : 

The retirement test, both today and in the proposed legislation, is applied on 
a monthly basis. Regardless of the amount of annual earned income no beneficiary a social security payment for any month in which his income falls below 
$140 (current legislation) or $167 (H.R.I). 

The monthly test creates two problems: one of equity and the other of ad- 
ministration. A quarterly test will minimize situations such as the following : a 
retired school teacher serving as a substitute forfeits all benefits for the month 
in which she has earned over $167 ; however, in the next month or two she may 
earn nothing or less than $167. On a quarterly basis .she would not be penalized, 
for each quarter would allow earnings of $500 before benefits would be wath- 
held. Another illu.stration is the case of a consultant working for one month 
and earning a fee of $10,000. He may still collect all benefits for 11 months, with 
no forfeiture except for the one month during which his earnings were $10,000. 
Administratively the quarterly method is feasible and has an advantage over 
the current monthly reporting schedule. The Social Security Administration could 
readily pick up quarterly earnings figures from the quarterly reports on FIAC 
taxes submitted by the employer and showing both his share and the employee's 
share. :Monthly earnings data rely on the reports of the social security benefici- 
ary. It would likely be more accurate and certainly more prompt and simpler if 
PICA records were substituted for beneficiaries' reports data. 

Bee. 122. Eligibility 

Reduces the waiting period for benefits for disabled workers, disabled 
widows and disabled dependent widowers from six to five months. 

We support this provision which is reported to affect nearly one million 




A. Provisions relating to Medicare (amending title XVIII of the Social 

Security Act) 

Sec. 201. Eligibility for coverage extended to dii^abiUty beneficiaries 

Extends eligibility for hospital insurance and supplementary medical 
insurance to a social security disability beneficiary two years after 
entitlement to disability benefits. Coverage extended to disabled work- 
ers entitled to social security or railroad retirement benefits, disabled 
widows and disabled dependent widowers between ages 50-05, and i)er- 
sons aged 18 and older receiving benefits because of disablement prii^r 
to age 22. Effective July 1, 1972. 

We favor this proposed liberalization of eligibility. 
Sec. 202. Extension of hospital insurance benefits to uninsured individuals 
Extends eligibility for enrollment for hospital insurance on a monthly 
premium basis to a person who has attained age (lo, is either a resident 
citizen or a lawfully admitted resident alien, and is not otherwise quali- 
fied for coverage. Initial monthly premium of .$31 to rise as hospital costs 

We support the principle of enrollment on a monthly premium basis of {lersons 
otherwise ineligible for hospital insurance coverage. However, we question the 
utility of this proposal because of the size of the premium covering the full cost 
of protection. 

xVdditionally, we urge that Medicare coverage be phased in for the early retiree, 
that is, the beneficiary between the ages of 62 and (35. A person taking early 
retirement — for whatever reason — not only receives actuarially reduced social 
security cash benefits but may very well have no health insurance protection. 
At least three reasons account for the lack of health insurance coverage for the 
early retiree. 

Many i>ersons claiming benefits at age 62 have been out of work for 
several months and, therefore, have no employer-financed coverage. Inten- 
sifying the unemployment problems is the major reason for the unem- 
ployment : illness. In its Survey of Ne7v Beneficiaries, published in 1971, the 
Social Security Administration found that "Health is the most important 
reason described by over h.alf the group, whether they stopped working at 
age 62 or more than three years earlier." So, large numbers of those taking 
early retirement are unemployed and in poor health and have been both 
unemployed and in poor health for some time. 

Even those employed just prior to early retirement are unlikely to be 
covered by the extension of their health insurance into retirement. 

Finally, many early retirees, with their small cash benefits, are unable to 
pay for private health insurance coverage. 
We recognize the benefits of health care coverage for early retirees. We 
recognize, too, that costs are a factor. Therefore, we suggest phased-in coverage. 

Sec. 203. Setting supplementary medical insurance premium 

Directs the Secretary of HEW * to determine a premium as of Decem- 
l>er of each year estimated to be necessary so that the aggregate pre- 
miums for the 12-month period beginning July 1 in the succeeding 
year will equal one-half of the total benefits and administrative costs 
of the supplementary medical insurance program. However, the premium 
generally would increase only if monthly social security cash benefits 
had increased since the last increase in the premium and would rise 
b.v no more than the percent increase in such benefits across the board. 

We support the reasonableness of the proposed basis for increasing the supple- 
mentary medical insurance premium charges. We particularly favor the provision 
that, beginning with fiscal 1973, no increased premium may be charged unless 
there has been an increase in social security cash benefits, either as the result of 
the enactment of legislation raising the benefit level or as a result of the auto- 
matic cost of living benefit rise. 

^ In subsequent sections, HEW Is substituted for Secretary of HEW. 


Sec. 204. Deductible 

Increases the annual deductible for supplementary medical insurance 
(Part B) from $50 to $60. 
We regret the apparent need to increase the deductible for Part B of Title 
XVIII, but we do not oppose this change. However, we believe this should be 
accompanied by a change in present law with respect to the deductible for hos- 
pital insurance (Part A of Title XVIII). This now is $60 for each benefit period 
and is scheduled to go to $68 January 1, 1972 reflecting the increase in hospital 
costs. Since a patient may be admitted to and discharged from a hospital several 
times a year, he could be required to pay the deductible five times, totaling $300 
a year as of now and $340 as of January 1,. 1972. The payment of even two or 
three deductibles a vear causes financial hardship to many. We, therefore, recom- 
mend the benefit period in respect to the deductible for Part A be defined as one 
year, which is the period used for computation of the deductible under Part B. 

Sec. 20.5. Benefits and coinsurance 

Increases from 60 to 120 days the lifetime reserve under which the 
beneficiary pays one-half of the deductible for hospital inpatient care. 
Shortens from' 60 to 30 days the period in a .spell of illness when coinsur- 
ance is not imposed for hospital inpatient care. 
Benefits, that is to say the coverage of specified services for a specified dura- 
tion or a specified volume under Parts A and B, are largely unchanged * in H.R. 1 
except as they are affected by changes in provisions in respect to coinsurance or 
deductibles. We view the increase in the lifetime reserve for hospital inpatient 
care as a highly desirable liberalizing feature of the Bill. This may well be a 
trade off. compensating in part for the shortening from 60 to 30 days the period 
in a spell of illness when coinsurance is not imposed for hospital inpatient care. 
We rather regret this tightening measure, but we recognize that vast numbers will 
still be covered since the average hospital stay of Medicare patients is only 12.8 
days and 91% of the discharges from hospitals — other than psychiatric or tuber- 
culosis — represent stays of fewer than 30 days. 

There is, however, a serious omission from the benefits. The cost of out-of -hos- 
pital prescription drugs is a serious financial burden to the elderly and the fed- 
eral social insurance program provides a feasible and efficient mechanism to 
alleviate the problem. We urge the inclusion of such a program under Part A of 
Medicare.^ We recommend a $1 co-payment per prescription or refill by the bene- 
ficiary, with payment of the balance to be made by the Social Security Adminis- 
tration to the vendor. At the same time we suggest that HEW undertake further 
study of a just and effective method of utilization conrol. 
Sec. 206. Automatic enrollment in supplementary medical insurance 

Provides automatic enrollment under Part B for individuals entitled 
to hospital insurance benefits. 

We favor this proposal but that the new social security beneficiary be 
informed of the reason for a deduction from his monthly cash benefit check. 
An insertion, for several months running, in the envelope with his check would 
appear a satisfactory way of informing the retired worker of the fact and cost of 
his coverage, and of his option to withdraw from part B coverage. 

Discussed below are certain .specifics directed to Medicare cost controls that 
affect large numbers of persons or embody broad principles — Sections 221-A, 226, 
228, 234 and 236. 
Sec. 221. Limitation on federal participation for capital ewpendittires 

Authorizes withholding or reducing reimbursement amounts to pro- 
viders of service under Medicare (Title XVIII and also Titles V and 
XIX) for defined costs related to certain capital expenditures that are 
inconsistent with state or local health facility planning. For this purpose, 
capital expenditures are defined as expenditures for plant and equip- 

* There are modest chanpes \n respect to physical and other therapy services (Sec. 251), 
coverage of supplies related to colostomies (Sec. 2.'»2), coverage of ptosis bars (Sec. 25.S), 
hospitalization for a noncovered dental procedure (Sec. 256), prosthetic lenses furnished by 
optometrist (Sec. 264). 

'' Available on request is a detailed fact sheet and outline of a proposed program. 


ment in excess of ?100,000 ; which change bed capacity ; or substantially 
change services. 

We strongly endorse the provision that capital expenditures as here defined 
would be reimbursed only when such outlays are consistent with state or local 
plans. Mushroom expansion without regard to overall needs is wasteful. 

Sec. 222. Plan for prospective reinihurscment ; experiments and demonstration 
projects to develop incentives for econo)ny 

Authorizes HEW to develop and engage in experiments and demon- 
stration projects designed to determine the advantages and flisad- 
vantages of various alternative methods of prospective reimbursement 
to hospitals, extended care facilities and other providers of services 
under Title XVIII (applicable also to Title V and XIX). 

Clearly, the present system of provider reimbursement on the basis of "reason- 
sonable costs" carries little incentive for efficiency. We support the authorization 
for HEW to develop ways of testing the efficacy of the alternative whereby rates 
are set in advance of the period to which they are applicable. We inject a word 
of caution of about the possibility of lowering the quality of care and .some es- 
calation in costs. Advance rate setting may result in losses to providers when 
costs rise above those anticipated : the temptation to cut corners and reduce 
service is a real threat. Contrariwise, prospective rates can be e.scalated to avoid 
an unfavorable spread between the actual and estimated costs. 

In respect to experiments with various reimbursement methods designed to 
increase efficiency and economy : We support this provision and particularly wel- 
come its linkage to community wide peer, medical and utilization review mech- 
anisms designed to assure that health services meet professional standards and 
that medically necessary services are given in the most appropriate and eco- 
nomical setting. 

There is no provision for adoption into practice of effective experiments — an 
oversight that should be corrected. 

Sec. 223. Limitations on coverage of costs 

Provides authority to set cost limits for certain classes of providers in 
various service areas on a prospective rather than a retrospective basis. 
Requires public notice to beneficiaries of changes beyond reimbursable 

We support the requirement that providers be informed in advance of the 
approved reimbursable limits and that beneficiaries be advised of the nature and 
amount of extra charges. We would add to this a I'equirement for disclosure by 
the financial intermediary to both public bodies and the consumer of reimbursable 
costs in the locality for standardized services and procedures. In our view, this 
additional measure of public accountability is important. 

8ec. 224. Limits on prevailing charge levels 

Limits increases in physicians' charges through June 1972 for fee 
scales up to the 75th percentile of prevailing charges ; after fiscal 1973 
provides that physicians' fees may be increased only to the extent justi- 
fied by economic changes ; provides that charges deemed reasonable 
for medical supplies, equipment and services may not exceed the lowest 
level at which such items, comparable in quality, are widely available in 
a given community. 

We recognize the need for setting limits on prevailing charge levels and concur 
as to the need for continuing study and attention to this thorny question. We 
note that the Bill authorizes HEW to develop "appropriate economic index 
data" as a basis for adjusting fees, but that the House Ways and Means Com- 
mittee is fairly specific in its report on the items to be considered for such an 
index computation. We urge that such study be both sophisticated and objective 
as a means of providing a fee structure that is fair, defensible and supportable. 

Sec. 226. Payments to health maintenance organizations 

Adds a new section to Title XVIII providing for payments to health 
maintenance organizations. 

W^e support the encouragement given to the development of health maintenance 
organizations as one acceptable, alternative mechanism through which patients 

72-573^72— pt. 6 12 


eligible for Medicare could elect to have all covered care, except emergency 

service, provided. 

Sec. 228. Advance approval of extended care and home health services 

Provides authorization to establish periods of time for which a patient 
is presumed eligible for extended care and home health services on certi- 
fication by the patient's physician. 
We are in agreement with this provision. The establishment of specific post- 
hospital time periods during which there is presumptive need for such services 
should encourage transfer to less costly types of care and should decrease the 
number of cases in which benefits are retroactively denied. 

Sec. 23.'/. Institutional planning 

Requires that participating health facilities have a written plan re- 
flecting an operating and capital expenditures budget. 
We welcome the inclusion of this requirement which is clearly tied to other 
Sections, e.g., Sec. 221 and Sec. 222. 
Sec. 236. Prohibition against reassignment of claims 

Prohibits Part B Medicare payments being made to anyone other than 
a patient, his physician or other person providing the service (with lim- 
ited exceptions). 
We support this provision which seeks to close a loophole in the existing law 
and control undesirable collection practices that have resulted in inflated claims 
and escalated costs and beclouded the determination of reasonable limits. 

Sec. 265. Deletes requirement for social service in extended care facilities 
Prohibits HEW from requiring an extended care facility to furnish 
medical social services. 

• We are not persuaded by the arguments put forward in the report of the House 
Ways and Means Committee to support this Section which would nullify the 
HEW regulation requiring the furnishing of medical social services as a condi- 
tion of participation for extended care facilities under Medicare. We urge the 
removal of this Section from the Bill and review of the regulations by HEW to 
determine their fairness in the light of experience to date. 

Sec. 269. Requirements for nursing home administrators 

Permits states to provide a permanent waiver from any licensure 
requirements for persons who served as nursing home administrators 
for the three-year period preceding the year the .state established a 
licensure program. 

We urge the deletion of this Section which would appear to permit admin- 
istrators who could not meet licensure requirements to return to or remain in 
practice. We believe that the device of licensure upgrades service by upgrading 
administration. The public interest should be protected rather than private, 
vested interests which would seem to profit by this proposed permanent waiver. 

B. Provisions relating to medicaid {amending title XIX of the Social 
Security Act) 

Sec. 207(a) (v). Incentives for states to emphasise comprehensive health care 

1. Increase in federal reimbursement : 

Provides that States in contract with Health Maintenance Organiza- 
ions (HMOs)" or other comprehensive health care facilities would 
receive 2% increase (up to 95%) in federal reimbursement percentage 
under the Medicaid program. 

We strongly favor prepayment over the fee-for-service method of financing 
health care. We support the intent of encouraging new patterns for the delivery 
of health care and believe that the quality of health service can be significantly 

" All IIMO is an orRanization that offers to an enrolled population, a comprehensive 
system of health service, including preventive, ambulatory, hospital and related care on a 
capitation reimbursement basis. 


improved under a program providing comprehensive coverage. We do not l>elieve 
that there are sufficient safeguards in H.R. 1 to assure that improved patient 
care will necessarily result. We think that the Bill should stipulate that HMOs, 
or other comprehensive health organizations, that are formed in keeping with 
the Bill's provisions, must be under public or private non-i)rotit auspices. 

2. Decrease in federal reimbursement : 

Provides that the federal medical assistance percentage would be 
decreased by one-third after the tirst 60 days of care, in any fiscal year, 
in a general or tuberculosis hospital or a skilled nursing home, imless 
the state establishes that it has an effective iitilization review program. 

For inpatient care in a mental hospital, federal reimbursement would 
be decreased by one-third after 90 days except that it may be extended 
for 30 days if the state can show that the patient will benefit therapeuti- 
cally from such care. No federal reimbursement would be provided after 
365 days care in a mental hospital. 

We believe every effort should be made to use less costly facilities than 
hospitals when such care is appropriate and adequate to an individual patient's 
needs. We think, however, that some of the assumptions about need for hospital- 
ization and length of stay on which the reductions are based do not give full 
weight to the fact that Medicaid covers persons under 65 as well as over 65 
and that not all patients irrespective of age and condition require treatment of 
only short duration in '"acute" hospitals. Moreover, the lack of facilities to 
provide different levels of care poses a major problem, especially for those who 
may need something less than full hospital care but who do need institutional 
care until well enough to be cared for at home. We are concerned that as n 
result of these amendments, appropriate and adequate health ser\-ices may be 
denied those persons who are most vulnerable. 

3. Computing reasonable reimbursement between skilled nunsing homes 
and intermediate care facilities ( ICFs). 

Authorizes HEW to compute a resonable co-st differential reimburse- 
ment between skilled nursing homes and ICFs. 

The apparent purpose of this amendment is to assure that care in an ICF re- 
sults in decreased costs to the Medicaid program. We support the measure as 
being administratively sound. 

Sec. 20S{a). Cost-sharing 

Permits states to imjwse a nominal cost-sharing charge on cash 
assistance recipients for non-mandatory services under the Medicaid 
program. Requires states to impose on those not receiving cash assistance 
an enrollment fee premium or similar charge related to income, and per- 
mits co-payment provisions not related to income. 

In addition to our basic objections to the imposition of charges on Medicaid 
recipients as stated in Part I, we believe the costs of administering these pro- 
posals would be prohibitive and that patient .services would be unnecessarily 
delayed in the course of establishing eligibility for care. 

Sec. 209{c) and (d). Determination of jiay^nents 

Sec. 209{(:) denies Medicaid coverage to those in receipt of cash assist- 
ance whose incomes are in excess of the medical assistance level estab- 
lished by the state. Sec. 209(d) permits states to deny Medicaid coverage 
to those per.sons who would be newly eligible for cash assistance under 
the income maintenance sections of H.R. 1. If a state to provide 
Medicaid it would be required that recipients' incomes not be in excess 
of the state's medical assistance level. 

We strongly object to both these proposals. Currently, states that have a Medi- 
caid program are required to provide care under Medicaid for all recipients of assistance. We believe these amendments strike at the basic purpose for 
which the Medicaid program was enacted, that is. to assure a program of 
health care for persons in financial need. Sec. 209 {d) is ominous since it gives 
tacit approval to states to deny health care to needy families and at the same 
time releases the federal government from any responsibility for reimbursement 
to the states which so act, for health care payments for their needy families. 


Sec. 221 (a). Limitation on federal participation for capital expenditures 

Prohibits use of fuuds appropriated undei- the Social Security Act to 
support unnecessary capital expenditures ; provides that reimbursement 
under such titles would support state health planning activities. 
We are in full support of this provision. It takes into account that state and 
local health planning agancies have primary responsibility for determining the 
need for health facilities for given geographic areas and provides that capital 
expenditures under Title XIX of the Social Security Act would be related to the 
priorities established by the health planning agencies. 
Sec. 222 (a) (1). Plan for prospective reimb ursemcnt 

Authorities HEW to develop and engage in experiments and demon- 
stration projects designed to determine the advantages and disadvan- 
tages of various alternative methods of prospective reimbursement to 
hospitals, extended care facilities, and other providers of service under 
Title XIX in order to stimulate more efficient health care and thereby 
reduce costs, without adversely affecting the quality of services. 
We favor this proposal in the belief that more effective patient care, more 
efficient use of health personnel and a decrease in medical costs could result 
from this kind of experimentation. There is no provision, however, that those ex- 
periments found effective might l)e authorized to be continued ; we believe this 
oversight in H.R. 1 should be corrected. 
Sec. 231. Deductions in care and services 

Permits states to reduce the scope and extent of health services 
which are optional under Medicaid. 

Currently, states may not reduce the level of their expenditures for their 
Medicaid program in successive years. We ohject to this amendment because 
it would permit the states that choose to do so, to deny or diminish the availabil- 
ity of vital health services which are defined, under the Medicaid statute, as op- 
tional. We believe the optional services are necessary components of adequate 
health care and should not be withdrawn. 
Sec. 23.5 (a). Payments to states for claims processing and information retrieval 


Makes federal matching under this provision available to states for 
developing and in.stituting mechanized claims systems at 90% and 75% 
for operation of such systems. 

We support this proposal because it should encourage rapid development of 
mechanized collection and retrieval systems to the end that the Medicaid reim- 
bursement and related operations would be more efficiently administered. 

Sec. 236 (b). Prohibition against reassignment of claims 

Prohibits Medicaid payments to anyone other than the patient, his 
physician or other service provider unless the provider is required as a 
condition of employment to turn over his fees to his employers. 

"We fully support this provision which would outlaw the use of fee collection 
agents by providers of services under Medicaid. 

Sec. 239 (a) and (b). Use of state health agency 

Sec. 239(a) requires states to provide that the state health agency, 
or other appropriate state medical agency, have responsibility for es- 
tablishing and maintaining health standards for institutions In which 
Medicaid recipients may receive care or services. Section 239 (b) re- 
(piires that the state health agency or other appropriate state medical 
agency, be given responsibility for establishing a plan for the review by 
professional health personnel of the quality and appropriateness of care 
and services furnished to Medicaid recipients. 

We fully support both of these amendments. The first should assure at least 
basic standards for the quality of care provided to Medicaid recipients. The 
second provision sen.sibly makes use of an existing mechanism to provide a serv- 
ice for the Medicaid program ; the quality of care under Medicaid should be im- 
proved by this provision. 


Sec. 240. Relationship hetwcen medicaid and compreJiensive health care programs 
Provides that states may enter into contracts with organizations that 
agree to provide care and services in excess of those offered under the 
state plan at no increase in costs. 
We question tliis proposal in the absence of an acceptable minimum standard 
throughout a state. However, we see as desirable, experimentation that likely 
would enlphai^ize preventive care and early treatment in order to contain costs, 
and on this basis support the proposal. 
Sec. 254 (a) (1) and (a) (2). Inclusion of care in intermediate care facility 

Sec. 25/f{a) (i) provides, as an optional service, care in an Interme- 
diate Care Facility (ICF) as an additional benefit under Medicaid. 
Sec. 2J4(fl) (i) provides that services in a public institution for men- 
tally retarded persons would qualify for Medicaid coverage, if the 
primary purpose is to provide health or rehabilitation services, and 
if the patient is receiving active care. 
Currently federal reimbursement for care in an ICF is not available under 
the Medicakl program. Each of these provisions, in our view, would be desirable 
additional elective benefits for Medicaid recipients. 

Sec. 255 (a). Coverage prior to application 

Requires states to provide coverage for care and services furnished 
in or after the third month prior to application for Medicaid. 

Under present law, a state may at its own option, cover the cost of health 
care provided to an otherwise qualified recipient for the thx-ee months prior to his 
application for Medicaid. We favor this amendment as being both sound and 

Title III — Assistance for the Aged, Blind and Disabled 

(Xew Title XX of the Social Security Act) 

Sec. 2002 and Sec. 2803. Administration 

Sec. 2002 provides that eligible aged, blind and disabled individuals 
shall be paid benefits by HEW. -Sec. 2003 provides that HEW make ar- 
rangements to carry out the assigned functions, including arrange- 
ments for determination of blindness and disability similar to those 
in effect in determining eligibility for social security disability benefits. 

Although the Bill does not so specify the report of the Ways and Means Com- 
mittee recommends that responsibility for administering the program of cash 
benefits to the needy aged, blind and disabled shall be assigned to the Social 
Security Administration (SSA). We welcome this recommendation. Persons re- 
ceiving benefits under this program for the most part comprise a relatively 
stable group, similar to the OASDI beneficiaries. We believe that the SSA's 
long experience in administration of payment programs would enable it to ad- 
minister this new program efficiently and humanely. 

Services to the needy aged, blind and disabled would continue to be provided 
through federal-state financing and be administered by the states. Those in 
need of services would have contact with the local social services unit of the 
state administration. In our view, the administration both of the cash payments 
and services for this group of persons should be simplified and flexible because 
they are limited in ability to respond to complicated procedures by the very 
nature of their eligibility. 
Sec. 2011 (b). Cash assistance; amount of benefits 

Prescribes the amounts payable in 1973. 1974 and 1975 to individuals, 
with or without an eligible spouse, non-excluded resources are 
not more than $1500. The Bill does not require that the couple be living 

The Bill provides cash assistance in the amount of .*?l."r)0 for a single person 
and $2,349 for a couple. These amounts are increased to $1800 and $2400 resi>ec- 
tively by 1975 and are to remain at that level thereafter. The level of assistance 
pi'ojected in the Bill is inadequate as evidenced by the fact that the poverty level 
as determined by the 1970 Census is $1861 for an aged individual and $2,348 for 


an aged couple; due to the inflationary foctor this level had Increased approx- 
imately ')% by 1971 and unquestionably will be even higher by 1975. The Bill 
should be amended to provide a level of assistance adequate to meet basic need. 
Sec 2072(1)) (3), Sec. 2016 and Title V, Sec. 509. Exclusions from income; 
optional ■■^tatc 'supplementation; state supplementary payments during transi- 
tional period 

See. 2012(h) [3) provides for exclusions from income: $Sr> of earn- 
ings plus one-half of the balance for the blind and disabled and $60 of 
earnings plus one-third of the balance for the aged. .Sec. 2016 permits 
.states to supplement the federal payment. Sec. 509 of Title V requires 
the states to make supplementary payments to maintain their payment 
level of June 1971 plus the bonus value of food stamps unless they 
modify that level by affirmative legislative action to the contrary prior 
to July 1972. 
Eligibility conditions for assistance would be uniform nationally. However, 
blind and disabled persons would receive more liberal income deductions than 
the aged and therefore the amount of assistance granted the different groups 
would not be uniform. The difference in disregards among the three categories 
should be corrected. Further inequities would result from the optional provision 
for state supplementation. We believe that neetly persons should receive an ade- 
quate level of assistance to meet need. Therefore, the states should be required 
to supplement the federal payment at least to the current payment levels. 

Sec. 2031(a) (2) .—Protective payments 

Authorizes payments of the benefit to a i>erson other than the individ- 
ual or his spouse (including an appropriate public or private agency) 
if HEW deems it appropriate. 
Assistance payments may be made to a third party (including an appropriate 
public or private agency) who is interested in or concerned with the w^elfare of 
the receipent. if HEW deems this to be appropriate. While it is believed that this 
leeway may be in the best interest of an aged, blind or disabled recipient, the 
regulations and procedures governing determination of appropriateness should 
safeguard against excessive use of this provision. The conditions under which 
these i>ayments would be ordered should be included in the Bill. 
Sec. 2011(c) and Sec. 2031(e). Application process — period for determination of 
henefits ; application, and fui-nishing of information 

Sec. 2011(c) i)rovides that eligibility for and the amoimt of benefits 
shall be determined for each quarter of a calendar year and shall be 
redetermined at such time or times as may be provided by HEW. 

Sec. 2031(e) directs HEW to prescribe requirements for filing applica- 
tions, suspending or terminating assistance, furnishing data and report- 
ing changes in circumstances and specifics the penalties for non-com- 
pliance by the applicant or recipient. 

In our .iudgment the current annual redetermination is preferable to a quarterly 
review of eligibility and should be retained, especially in view of the relatively 
.'••table circumstances of this group of recipients. We favor the simple declarative 
<""rm for determining eligibility over extensive investigations and recommend that 
the Bin jirovide for its u-e. 

We further recommend that the Bill allow for flexible application of the 
requirements for reiiorting changes in circumstances with diie consideration for 
the hardshiu which rigid application of penalties would impose on the very old 
and seriously disalHed. 


(New Title XX of the Social Security Act) 

Sec. 2111. 2112. 211-'/. Operation of manpoirer programs; employable mothers; 
child rare and other supportive services 

1. Operation of manpower programs 

Sec. 211.'i requires the Secretary of Labor to develop an employability 
T''an describing the manpower services, training and employment needed 
t"" enab'p each individual to become self-sui>porting and secure and re- 
ta'n employment and opportunities for advancement. 


Several of the employment iirovisions must be rhansed to make them truly 
efrective in helping persons achieve self-support. There must be a suffioient num- 
ber of jobs, paying adequate wages and meeting acceptable working conditions. 
It is not realistic to mandate employment but fail to provide satisfactory training 
programs and sufficient work opportunities. 

The I?ill creates pulilic service jobs paying at least the federal minimum wage. 
to supplement other employment opportunities but these are few in number and 
tempornry. Federal reimbursement will not extend for more than three years of 
an individual's employment in a puldic service employment program. After that 
jieriod a person must either be hired by the agency or terminated. Permanent 
jiublic .service jobs should be created to the extent needed to meet mandated em- 
ployment requirements. 

The Bill requires that wages for the public service jobs shall be at least 
at the federal minimum but permits wages in private employment, which a 
needy per.son could be required to take, at 7.5% of the federal minimum. The 
Bill "should require that all mandated employment shall be at least at the 
federal minimum wage level ; that conditions of work shall be of accpptal)le 
standard ; and that the job a person is required to take shall be suitable to the 
person, with suitability defined with re.spect to such matters as a person's 
prior training and experience and the distance of work from his home. 

2. Employable mothers: child care and other supportive services 
Sec. 2/J7 includes as an individual who shall be considered available 
for employment, a mother of a child three years old or, until Julv 1. 
1074. six years okl. 

Sec- 2112 provides that the Secretary of Labor shall m^ikf' pro- 
vision for the furnishing of child care services, in such cases and for so 
long as he deems appropriate for the individuals registered for em- 
ployment or training who need such services to participate in the pro- 
gram through such public or private facilities as may be available or 
After 1974. mothers of children over three years would be required to 
accept employment or training ( there is a husband in the home who 
is registered) whether or not suitable child care services are available. Con- 
siderable hardship to children could be caused if despite the authorization 
to the Secretary of Labor to make provision for such .services suitable child 
care is not available. Furthermore, the requirement that a mother of young 
vhildren shall be considered available for employment removes from her 
the right to determine if it is in the best interest of her child for her to 
work or remain at home ; that decision should he based on the needs of a par- 
ticular family, including the availability of suitable care for the children. 

Sec. 213 'i. Child care standards : development of facilities 

Directs the Secretary of HEW to establish standards a.ssuring quality 
of child care services with the concurrence of the Secretary of Labor: 
to i>rescribe .schedules to determine thf extent to which families must pay 
the costs : and to coordinate child ^are services under Title XXI of 
the Social Security Act with other child care and social .service 
Authorization of funds for child care .services is provided but^ in an insuffi- 
cient amount to meet the need and should be increased. HEW would be re- 
quired to set standards of care. Setting and overseeing standards of care is 
particularly important since the Bill permits contracts for day care with 
Iirofit-making as well as with public and nonprofit agencies. Adequate day 
care, not now defined, should be defined in the Bill and the standards set 
should be in line with these definitions. This is essentia! if mothers of young 
children are to be compelled to accept work or training. 

See. 2152 (a) and (h) and Sec. 2152(d). Ca.fJi axsi.'itayiec: elipihilitu for and 
amount of henefifM ; period for determination of henefif.'^ 

1. Eligibility for and amount of benefits 

Sec. 2152 (a) and (6) prescribe benefits for eligible families at the 
rate of .$S00 per year for each of the first two members, plus .>';400 
for eaeh of the next three, plus .$.S00 for each of the next two members, 
plus $200 for the next member, to a maximum of $?,(]0G. reduci-d by 


non-excludable income; no benefit is payable of under $10 per month. 

Resources may not exceed $1500. 
The nationwide minimum standard of payment for needy families with children 
would not be adequate. The payment levels — for example, $2400 annually for 
a family of four per.sons— is less than even the poverty level of $3968 for a 
fauiilv of four determined by the 1970 Census. And since no family could receive 
more than $3600 regardless of the number of family members, large families would 
be even further below this poverty line. Therefore, substantial increases in pay- 
ment levels must be made if persons are to have an adequate level of existence — 
particularly since this Bill would freeze the federal payment at this level for the 
live years' duration of the Bill. 

2. Period for determination of benefits 

Sec. 2152 (d) provides that payment of benefits shall be made on the 
basis of HEW's estimate of the family's income for the current quarter 
after taking into account income from the three preceding quarters 
and modifications for changes of circumstances. 

The federal payment should be computed according to a family's current need. 
II.R. 1. however, provides that the portion of a family's income during the niiie 
months preceding application for the FAP payment in excess of the payment level 
(including excludable income) would be deducted from benefits otherwise due at 
the time of application. In the case of .such excess income, a family would not 
receive even the inadequate federal payment. This provision should be changed. 
Only need at the time of application should determine eligibility and amount of 
payment ; it should not be assumed that persons have saved money from a prior 

Sec. 2153(1)). Work incentives ; income disregard 

Enumerates the items to be excluded in determining the income of a 
family such as a student's earnings ; irregular income limited to $30 a 
quarter if earned or $60 a quarter if unearned : earned income used to 
pay the cost of child care as prescribed by HEW ; $720 plus one-third of 
the remainder of earned income. The total exclusions of the first three 
cannot exceed $2000 for a family of four, up to maximum of $3000. 

To encourage persons to work, the Bill provides that some income from earnings 
be retained and disregarded in computing eligibility for benefits. Out of earned 
income. $720 per year plus one-third of the excess earned would be excluded. Thus, 
payment to four-person families in which there is a working member would be 
made only if the allowable income is $4140 or less. Although child care costs are 
deductible, the total of these costs, irregular earnings and student earnings could 
not exceed $2000. 

Work expenses such as transportation and taxes are not excluded in deter- 
mining a family's income. Therefore, if these costs are higher than the retained 
income, a working family could find itself with less money at its disposal than if 
no member were employed. To provide a true work incentive, the Bill must i)ermit 
retention of a larger share of earnings. Furthermore, the ceiling on income ex- 
clusions i^hould be removed, particularly since these include the cost of child care 
services. If, for example, the cost of day care absorbed the total allowance for 
excluded income, a school child working irregularly would not be i>ermitted to 
retain any of his earnings. 

Sec. 2155 and Sec. 2156(b) (2). Exclusions from corcrayc; mccninrf of family 
and child ,• exclusions from .ntate supplemenlation 

1. Meaning of family and child. 

Sec. 2155 defines those who qualify as family members and, therefore, 
are eligible for benefits under the family programs, as two or more 
related persons living together in the United States, at least one of 
whom is a citizen or alien lawfully admitted for permanent residence, 
and with at least one child dependent on one of the others. It expressly 
excludes families headed by full-time college students. 

By definition, federal payments would not be made to needy single adults or 
childless couples who are not aged, blind or disabled nor to needy families 
headed by a full-time college student. Persons in these groups would be with- 
out access to public assistance except in those states which made provision for 


their aid without benefit of federal reimbursement. A basic level of financial 
assistance should be made for all needy persons and the Bill amended to include 
these excluded groups in the federal system of income maintenance. 

2. Exclusions from .state .supplementation. 

Sec. 2156(h) (2) permits states to deny benefits to families with both 
parents pre.sent and neither parent incapacitated, regardless of whether 
the father is employed or unemployed. 

There are exclusions within the groups eligible to receive FAP or OFF pay- 
ments which we believe should be removed. States are permitted to exclude from 
supplementation of FAP or OFF payments, families in which both parents are 
present and neither is incapacitated regardless of whether the male parent 
is employed or unemployed. It should be required that the states include all 
needy families in their supplementary programs. 

Sec. 21')5((l). Forced responsibility of step-parent; income arid resources of 
n on-con tribti t ing ind ividual 

Excludes income and resources not available to other family members 
if it is derived from a family member other than a parent or a spouse 
of a parent. 

The income and resources of a parent's spouse living with the family v/ould be 
included in determining the family's eligibility for benefits even though the 
spouse does not have legal responsibility for the children and may have his 
own children elsewhere to support. This can result in needy children being 
denied assistance and thus penalized because of a parent's marriage. This pro- 
vision should be changed so that the spouse's resources would not be included 
on behalf of those persons in the family for whom he does not have legal re- 

Sec. 2156 and Title V. Sec. 509. Uniformity in amounts of assi-^tance ; optional 
state supplementation; state supplementary payments during transitional 

Sec. 2156 permits the states to make cash payments to supplement the 
federal payments and requires that the supplementary program respect 
the federal earnings disregard provisions. The states are not required to 
include families with a male parent present in their supplementary pro- 
gram. Sec. 509 requires the states to make supplementary payments to 
maintain their payment level of June 1971 plus the bonus value of 
food stamps unless they modify that level by affirmative legislative ac- 
tion to the contrary prior to July 1972. 

We are in full support of the provision for uniformity in the amount of federal 
payments based on uniform f'onditions for determining eligibility. The level of 
payments, however, is inadequate. Moreover, .since supplementation is optional 
with the states and they are permitted to exclude certain groups from their 
supplementation program, if any, there would be inequalities in the amount of 
assistance among needy families with children in the various states. All persons 
should have a rig'lit to an adequate level of assistance which .should not leave 
them in poverty. "We believe the states should be required to supplement the in- 
adequate federal payment at least to their current payment levels. 

Sec. 2111{a) (2) (A) and Title V. Sec. 529. Indirect payments; vendor payments 

1. Indirect payment of benefits 

Sec. 2171 (a) (2) (A) permits payment to any person other than a 
family member (including an appropriate public or private agency) if 
IIEAV finds that the family member to whom benefits are payable has 
such inability to manage funds that making payment to him will be 
contrary to the welfare of the children in the family. 

Payments may be made to non-family members if it is found that the payments 
are not being used in the best interests of the family. The Bill should state the 
criteria for finding the family incapable of managing its own affairs and the con- 
ditions under w-hich such third party payments may be ordered. 

2. Vendor payments under the AFDC program 

Sec. 529 of Title V effective immediately upon enactment authorizes 
the states to provide for non-recurring special needs which cost J?50 or 
more by payment directly to the person furnishing the item. 


This provision immediately applicable to the current AFDC program, permits 
states to pay the provider directly for goods or services costing $50 or more. This 
method of payment is contrary to the premise that needy families have a right to 
manage their own affairs, including making purchases and handling money, in the 
absence of proof that they are unable to do so. 

Sec. 2171(0). Hearings and review 

Requires notice and opportunity for hearings for anyone who dis- 
agrees with a determination with respect to eligibility for or amount 
of payments, if requested within thirty days. Final determination by 
HEW after a hearing would be subject to judiical review, except that 
HEWs findings as to faces shall be conclusive. 

The Bill fails to specify certain fundamental standards for the conduct of hear- 
ings when a recipient challenges administrative decisions, such as adequate notice 
of the reasons for the initial determination. In providing that findings of fact are 
not subject to judicial review, the Bill does not add the necessary protection 
against arbitrary findings — that they must be supported by a clear preponderance 
of the evidence. Furthermore, the Bill should x-equire that a recipient -shall re- 
ceive benefits pending the final decision. 

Sec. 2152 {e) and Sec. 2171 (e). Application and biennial reapplication process 
See. 2152(e) prohibits benefits being paid a family for more than 
twenty four consecutive months except on the basis of a new application 
filed and processed as though it were the family's initial application for 

Sec. 2171(e) directs HEW to establish requirements for filing appli- 
cations, su.spension or termination of benefits, furnishing data and re- 
porting changes in circumstances necessary to determine eiigibility. 
Each family .shall be required to submit a report within thirty days after 
the end of the quarter to determine eligibility for benefits payable for 
that quarter or be subject to penalty. 

The Bill .should prescribe a simplified method for determining eligibility for 
benefits both in the initial application and the biennial reapplication process. 
Tlic Rill requires families to make quarterly reports of income and exjTenses 
within thirty days, under autimiatic penalty. It requires a family to file the 
ui'W application to be treated as if it were an initial application despite the 
accumulated data of twenty-four consecutive months. We believe that the em- 
jthasis in the Bill on investigation, furnishing evidentiary materials and fre- 
qiient routine reporting to substantiate eligibility for benefits, is costly and 
unnecessary in most cases and would impose needless hardships on families. 
Flexibility in the application and reapplication process should be permitted 
while at the same time assuring that benefits are paid only to eligible persons. 
We recommend provision be made for the use of the simple declarative statement 
where appropriate, a method now in in many states. 

Sec. 2102. 21')1. 2156. etc. Adminiftfratinn ; mnltipie section.^ 

This Bill would necessitate a complicated administration requiring continuing 
contact among several federal, state and local agencies. Locally, there would 
need to be a tremendous increase in the state and local oflaces for providing cash 
assistance, services and employment. 

The FAP program and the payments to OFF recipients would be administered 
l>y IIEV/. Other agencies would be involved to provide information to e.stablish 
eiigibility. If n^quested, HEW would administer a state's supplementary pro- 
gram and Mt^dicaid eligibility. As an inducement, the state would pay HEW 
tlu> amount of the supplemental payments and be relieved of responsibility for 
the administrative costs. 

The OFF program of training, work and employment would be administered 
Ity tilt' Department of Laltor including such supportive services as day care. 
This can be done by direct federal administration or through contacts with state 
and local agencies. 

Xearly all recipients would be required to have contact with many agencies. 
-Vmong the local oflices with which a head of a needy family may have to deal 
could be that of HEW administering payments and of the Department of Labor, 
and jiossibly with a day care center or some other <>ffice rendering a service 
Wiacy the states would continue to administer the social service programs under 


the present federal-state matching arrangements the recipient requiring service 
u'oulcl need to have contact also with local service units of state administration. 
It is to be hoped that procedures will be devised to minimize and coordinate the 
multiplicity of agency contracts necessitated by this Bill. 


( A>nendinff Titles IV and XI of the Social Security Act) 

Sec. 511. Definition of services 

Sec. .511(a) lists twelve services for individuals in a family receiving 
assistance to needy families with children, which the state plan may 
include in its service program. These are : family planning including 
medical services, child care, services to unmarried girls who are preg- 
nant or have children, protective services, homemaker services, nutri- 
tion services, educational services, emergency services in coimection 
with a crisis or urgent need, services to assist in training or employment, 
assistance in locating housing, services to abusers of drugs or alcohol, 
information and referral services. 

Sec. 511(b) lists eight services for aged, blind or disabled persons re- 
ceiving a.ssistance under Title XX or other needy aged, blind or disabled 
persons which state plan may include in its service program. These are : 
protective services, homemaker services, nutrition services, assistance in 
locating housing, emergency services in connection with a crisis or urgent 
need, services to assist individuals to engage in training or employment, 
services to abusers of drugs or alcohol, infonuaticm and referral services. 

States shoiild be encouraged to develop those service programs which would 
I'-est meet their local needs. Specifying in the Bill the services to be offered limits 
the variety and scope of the states' programs. We prefer the broad statement 
of the for which .services are to be provided now in the law to an 
enumeration of specific services. However, if the states are to be limited to the 
services enumerated in the Bill, that list should be enlarged to include all the 
services that may be required to achieve the puri>oses of the Act. 

Sec. 512. Authorization and allotment of appropriations for services 

Authorizes an ai)propriation of a maximum of .$800 million for pay- 
ment to states for training of personnel, for .services to the aged, blind 
and disabled and for services for any individual receiving assistance 
to needy families with children. 
Although the program of matching grants to states for services to needy fam- 
ilies and needy aged, blind and disabled persons would be continued, the Bill 
makes an important and, we believe, undesirable change. For the first time, a 
limit would be placed on the amount of money to be appropriatefl for services 
(except family planning and child care services which would be funded differ- 
ently) to these groups of eligible persons. Under current law, there is a ceiling 
on appropriations for child welfare services to non-recipients of cash assistance 
but appropriations for services otherwise are open-ended. The federal govern- 
ment matclies what the states spend. 

We urge that the Bill be amended to restore open-ended appropriations, thereb.v 
encouraging, not discouraging, the states to develop the preventive, supportive 
and rehabilitative .services which are needed. Furthermore, the financial plight 
of .so many states and the lack of sufficient services is reason for giving con- 
sideration to the possibility of federal assumption of the of services. 

Sec. 513. Adoption and foster care ."ervices under child welfare services prorjram 
Authorizes $1.50 million for the year ending June 1972 rising to .$200 
million for the year ending .Tune 30, 1076 for payments for foster care 
(including medical care not available under any other state plan) for 
a child for whom a public agency has responsibility and for payments 
to a per.son adopting a handicapped child. Payments ma.v be made to 
any agency, institution or peri^on if the care meets standards prescribed 
by HEW. 

' For flisci)«;<lon of Spc. 50f> — Stnto supplementarv pavinents durincr tr.insition poriod. 
sep pp. 47 and 54. 

For discnsslon of Sec. .520 — P.iympnt nndtT AFDC prosram for nonrpctirrhiff sppolal 
needs, see page 55. 


The large numbers of children who are in need of foster care make it partic- 
ularly necessary for their protection that the Bill define the standards of care 
required with respect to quality of care, health and safety. Because of the dif- 
ficulty in finding good foster care for children, we commend the inclusion of 
funds for the cost of locating such resources. 

Payments to a person adopting a physically or mentally handicapped child 
(based on financial ability to meet the medical and other remedial needs of the 
child) should expedite placement of hard-to-place children, especially those re- 
quiring costly medical care. 

With resi)ect to both the foster care and adoption programs, we believe the Bill 
should provide an open-ended not a close-ended appropriation. 

Sec. 522. Stateicidcness not reqxilred for services 

Permits HEW to make exceptions to the requirement that the plan for 
social services should be in effect in all political jurisdictions of the state. 
(Amends Title I, IV, X, XIV. XVI) 
Although grants to states would continue to be based on an accepted state plan, 
the plan no longer would have to be enforced throughout the state. We consider 
this an unfortunate change in the law. It could result in imeveness within a state 
depending on the locality of the regular, continuing services offered and uneven- 
ness in their delivery. 

Cook County Department of Public Aid, 

Chicago, III., February 1, 1912. 
Hon. Russell B. Long, 
Chairman, Committee on Finance, U.S. Senate, Washington, D.C. 

Dear Mr. Chairman : Please find enclosed the statement I would like to present 
to you and your committee in your consideration of H.R. 1. Thank you for this 
opportunity to express my views. I know they may be somewhat narrow in 
scope as my view of the welfare problem is from my position in a local couiity 
department of public aid and the problems I see may not be as widespread as I 
think. However, my conversation with employees in welfare departments in other 
counties and states has convinced me that the problems about which I speak are 
serious enough to merit the attention of your committee. After all is said and 
done, the success or failure of any legislation your Committee and the Congress 
as a whole may pass will depend on how succes.sfully the local county depart- 
ments of public aid can implement such legislation. 
Very truly yours, 

Wilbur A. Wedeb, MASW, 

Research Analyst IT. 

It is my belief that during all the discussion that has centered around wel- 
fare reform during these past several years one vitally important part of the 
welfare problem has been almost totally ignored. That is the administration 
organization that will implement any welfare reform legislation which may be 
passed. We must ask ourselves whether or not we have an administrative 
organization that can implement welfare reform. At present, I firmly believe 
that we do not. I do not know the problems that might be inherent in the ad- 
ministrative organization at the National or State level so my comments will 
be limited to the lo<'al (county) level of welfare administration. First, I would 
like to enmnerate some of the problems and then state what I think are possible 

One of the greatest problems is the perceived lack of direction from State 
and HEW officials. Xew i)olicieK are not presented to the caseworker in a manner 
which will help the caseworker understand the new policies. County officials 
are reluctant to set policy guidelines that may later be changed or completely 
revoked by the State. Consequently, many issues go unresolved with the case- 
worker not knowing what he should do in a particular situation. This leads to 
a state of confusion on the part of employees and to "buclqiassing" by officials 
at both the State and County level. There is a general feeling that no one in a 
position of authority is willing to accept the responsibility for making a decision 
or once he does, he does not want to b^ held accountable for it. Consequentlv. 
many programs have failed due to the fact that no one was willing to decide 
what to do at crucial points in its implementation. 


A second problem is the development and training of staff. A bachelor's 
degree alone is not sufficient to make a person a caseworker. Yet, little training 
is given to the new worker and even less is given to those who are promoted 
through the system to the position of supervisors and higher. The result is 
that we have people in supervisory and administx-ative positions who were 
excellent caseworkers but know nothing about supervising other workers or how 
to handle the administrative part of their job. Contributing to the sui)ervisors' 
problems is the lack of employee performance standards. There are no standards 
set by which a supervisor can evaluate employees performance. This leads to 
numerous problems between administrative and supervisory staff and casework 
staff. Also adding to the problems is the high turnover rate. (See Table). Al- 
though the turnover rate has been reduced considerably in the last two years, 
an annual turnover rate of 45.3% is extremely large. It creates a lack of con- 
tinuity in the work as a new worker is always ha^^ing to be trained. Also, the 
turnover rate can be expected to rise again once the economy improves and 
other jobs are available. 







Total . . 





CW. .' 



Non-C W -. 



1 Turnover ratss are computed by dividing the total annual terminations for all reasons by the monthly average of staff 
on duty during the year an i multiplying by 100. 
- Turnover rates are based on figures from the Cook County Department of Public Aid, Chicago, III. 

A third problem is one of understaffiug. HEW recommended a weighted caseload 
of 180 cases. At present, we are working under a theoretical caseload of 300 
weighted cases but in actuality each caseworker had a caseload of about 600 
\\eighted cases or more than 3 times the recommended workload. As long as 
this degree of understaffing continues it is difficult to see how the caseworker is 
going to have time to do much besides seeing that each recipient receives his or 
her check each month. 

These are the major problems I think we must resolve in our own administra- 
tive organization before we can even begin to think we can successfully imple- 
ment welfare reforms. It should be possible to create a welfare administrative 
organization which can implement welfare reforms. 

First, we must have people in the top ix»sitions who are willing to accept respon- 
sibility for their actions, who are willing to make decisions, and who are willing 
to be held accountable for the decisions they make. In other words, we must have 
responsible people who can be held accountable for the success or failure of those 
programs which are their responsibility. 

Second, it should be mandatory for all states to provide adequate training pro- 
grams for employees at all levels. This should go a long way towards improving 
our administration of whatever welfare system we may have. 

Third, uniform employees performance standards should be established and 
maintained for all positions in the welfare administrative organizjition. An em- 
jiloyee should know what is expected of him while his supervisor net'ds a fair and 
impartial standard by which to measure his performance. 

Fourth, there must be adequate staffing so that an employee does not constantly 
labor under an overwhelming burden of paperwork, continual crisis, and a sense 
of never catching uji with all that must be done. 

Finally, if the preceeding four recommendations are implemented we may be 
able to reduce the turnover rate among caseworkers to a more reasonable level. 
A stable work force could be much more efficient than one which is constantly 

Once we have created a viable welfare administrative organization, then I be- 
lieve we can .seriously consider implementing any welfare reform legislation 
which Congress may pass. 

Wilbur A. Weder, MASW. 
Research Analyst II, Department of Public Aid. 


Council of Jewish Federations and Welfare Funds, Inc., 

Netv York, N.Y., January 21, 1972. 
Senator Russell B. Long, 

Chairman, Finance Committee, U.S. Seriate, Senate Office Building, Washington, 
Dear Senator Long: In lieu of requesting the opportunity to present oral 
testimony at the hearing of the Finance Committee, I am submitting herewith 
the recommendations on Welfare Reform and Social Security adopted at our 
General Assembly. I trust that you will bring this to the attention of the mem- 
bers of the Committee for their consideration in drafting your Committee's re- 
port to the Senate, and that it will be entered into the record of the hearing. 
Verv truly yours, 

Mas M. Fisher. 

II. Welfare Reform and Social Security 

The welfare system of America is grossly inadequate. The welfare reform 
measure passed by the House of Representatives would make a basic desired 
change in providing a federally financed national floor, but the legislation falls 
.seriously .short of a number of minimum requirements. The corrections should 
be made by the Senate, and then retained in the final action by the entire 

The most important changes required to enable persons with the potentials 
for independence to become self-supporting, and to enable others — aged, sick, 
handicapped — to live in decency and dignity, include : 

1. The Federal requirement that no state will lower its standard of assistance, 
with the provision of Federal funds to share in supplemental state payments 
above the Federal floor, in order to assure maintenance of standards. 

2. Work training and placement provisions that will include : 

(a) The right of mothers of school-age children to have the option of out- 
side employment or to remain in their homes to care for their children, so 
that the best interests of the children may be served. 

(b) Federal income standards in work programs, consistent with stand- 
ards for others in the population, that will avoid exploitation of the poor. 

(c) Assurance of post-training employment, including employment in pub- 
lic service. 

(d) Allowance of greater earnings with less reduction of benefits for per- 
sons on public assistance to provide greater work incentives. 

3. Protection of the legal rights of recipients of assistance. 

4. A higher Federal floor for assistance, with Federal payments to be stepped 
up to the "poverty level" within a few years, to match the realities of living 

5. Broader coverage of persons in need, to include childless couples and single 

6. Provisions to keep families intact, to replace provisions that encourage 

7. Increases in Social Security payments to bring them to the minimum of the 
"poverty level" for recipients. 

8. Maintenance and expansion of the Food Stamp Program until assistance 
standards reach an adequate level. 

9. Provision for research and development, to help assure accurate assessment 
of the pi-ograms and their results, so that further planning, revisions, and financ- 
ing can be based upon the required facts. 

Until such time as these necessary federal programs are enacted and imple- 
mented, the states must take actions to improve their welfare programs, many of 
which now exist at deplorably low levels. 

We urgently call upon the Congress, with the strongest leadership of the 
President, to enact speedily the essential legislation. 

Council of Planning Affiliates. 

Seattle, Wash., Decembers, 1971. 
Hon. Russell Long. 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Long : The Social Security Amendments of 1971, HR-1, should 
receive the benefit of full and public hearings so that a wide spectrum of re- 


cipients and consumers, interested groups, and national organizations can be 
beard. We ask your as.sistance in seeking sufficient opportunity for such hearings. 

After carefui study of the issues in this legislation, the Board has taken note 
of the favorable features and principles in HR-1. and sugge.sts guidelines for 
welfare reform we consider to be of highest priority. We urge your support of 
our position which you will find enclosed. 

The Council of Planning Affiliates is an organization whose membership is 
made up of ISO jtublic and private agencies and groups in the King County area 
concerned with health and welfare and recreation. 

Thank you for your consideration. 

David Colwell. President. 

Council of Planning Affiliates, 

Seattle, Wash. 
To : COPA agencies and other intere.sted organizations. 
From : David Colwell, President. 

Subject: Favorable Features of HR-1 and some Guidelines on Welfare 
Reform (1). 


We believe that many of the provisions of HR-1 which relate to ^ledicaid, the 
Family Assistance Plan and social services will have a negative impact on the 
people they are designed to help, are administratively iiifeasible, and reflect 
unsound social policy. These criticisms have been clearly and extensively voiced 
by the National Association of Social Workers, the Urban League, the Center 
on Social Welfare Policy and Law of Columbia University, the National Welfare 
Rights Organization, the Community Service Society of New York, and numerous 
other organization and individuals. In general, we must agree with criti- 
cisms and believe that it is probably best that those features of the bill, subject 
to such criticism, be deleted entirely, rather than pass in their present form. 

Nevertheless, HR-1 has a number of sound provisions, especially which 
relate to Social Security, and we believe it would be unwLse to lose sight of these 
po.sitive features of the legislation. The current draft of HR-1 has been so widely 
criticized that the positive features of this omnibus bill tend to be overlooked. 
Thus, to oppose the etitire bill places one in the position of opposing provisions 
long believed to be desirable by the social welfare community. 

So as not to lose sight of some of these desirable provisions in HR-1, we cite 
them below and offer our support. 

(1) Approved by the COPA Board November 23. 1971. 

favorable fe:atures of the social security (oasdhi) provisions in HR-1 

1. The bill provides for an automatic increase in future Social Security bene- 
fits in anv year in which the Consumer Price Index rises 3% or more. 

2. Authorizes a 5% increase in Social Security (OASDI) benefits effective 
.June 1972. This would go to about 27.4 million people and cost $2.1 bil- 
lion for the first year. 

3. Increases widows benefits to 100% of the amount their deceased husbands 
would have received had they lived. This provides 3.4 million people with .$764 
million more in benefits the first year. 

4. Establishes a special minimum benefit for people who have worked 15 or 
more years under Social Security. This would result in increased benefits costing 
$39 million for about 300,000 beneficiaries the first year. 

5. Increases the amount of money a retired person may earn without losing 
benefits from $1680 to $2000 a year and permits a beneficiary to retain half of 
all earnings above $2000 beginning in the 1972 tax year. This change would cost 
$484 million for the first year, increase benefits for 700,000 people, and provide 
benefits for 390,000 more who were not eligible. 

6. Reduces the waiting period for disability coverage from six to five months 
affecting 950,000 people at an annual cost of $105 million. 

*7. Increases the wage base against which payroll taxes are levied from $7800 
to $10,200 beginning January 1, 1972. (We question the wisdom of increasing the 

•The starred Items indicate our disagreement with the method of Implementation as 
spelled out In the bill. 


tax rate, payable by both employer and employees, to 5.4% in 1972-73, 6.2% 
in 197i5-7G and 7. 4% from 1977 on.) 

8. Extends the Medicare program to about 1.5 million disabled people after 
they have been entitled to disability Ijenefits for two years. 


1. Repeals the pre.sent program of aid to the aged (OAA), the blind (AB), 
and disabled (APTD) and .substitutes a new completely federalizetl plan admin- 
istered by tlie Social Security Administi-ation. 

*2. Establishes a federally guaranteed national minimum level of benefits 
below wliich families w'ith children cannot fall. 

*3. Provides wage supplementation for low income families with dependent 

*4. Increases federal responsibility for low income families with dependent 

*5. Establishes a public service employment program. 

*6. Expands provision for day care. 

7. Expands provisions for family planning services. 

*8. Expands provisions for vocational training and rehabilitation. 

9. Provides for the disregard of specified earnings and for work incentives. 


We believe the following principles are of the highest priority in amending 
HR-1 and/or in developing other welfare reform legislation. 

1. Complete federalization of public assistance \\-ith a poverty level guarantee 
for each i^erson receiving assistance (now .$3940 for a family of four). 

2. Pending federalization of public assistance, the assurance that no client will 
receive less in mouy gi-ants and services than he is now receiving. 

3. Pending federalization, the requirement that states which now pay more 
than the federal guarantee, supplement the federal payment up to the current 
assistance standards. 

4. Pending federalization, the provision of federal incentives to states to 
supplement payments to reach or exceed the prevailing poverty level. 

5. A return to the principles incorporated in the 19t>.'!) Social Security Amend- 
ments which provides the possibility of a comprehensive medical care program 
for low income families under Medicaid. 

«. Yearly adjustments in assistance payments to reflect changes in the Con- 
sumer Price Index. 

7. Establishment of need as the sole criterion eligibility for public assistance. 

8. Implementation of an affidavit system for determining need. 

9. Establishment of the principle of voluntary choice of manpower training for 
public assistance recipients. 

10. Use of the federal minimum wage as a criterion of acceptable employment. 

11. An open-ended federal apijropriation for social service. 

12. Expansion of funds for program development, research and evaluation. 

13. Expansion of maniK>wer, day care and public service employment programs 
beyond leveU- that are proposed in HR-1. 

14. Improved accountability through unified administrative responsibility in 
one federal agency. 

15. Establishment of case finding as a legal responsibility of public assistance. 

16. Investigation of alternate means of meeting the income deficit of the 
poverty population, including, for example, family allowances, demogrants for 
the agetl, use of income disregards, and various forms of the negative income tax, 
ongoing large scale public works programs with the government being the 
employer of first resort. 

17. Withholding non-welfare funds for those States who fail to meet specified 
assistance standards. 

The COPA Board wishes to express its gratitude for the assistance to staff 
of Professors Rino Patti and Ron Dear of the Legislative Committee. 

•The starred items Indicate our disagreement with the method of implementation as 
spelled out In the bill. 


Proposed Policy Statement Prepared for Board of Directors, Denver Chamber 
OF Commerce, by Task Force on Social Security, National Affairs Commit- 
tee, Metro Public Affairs Department 



Glenn M. Walker, Managing Partner, Harris, Kerr, Forster & Company, Den- 


R. Bruce Shelton, Manager, Metro Public Affairs Department, Denver Chamber 
of Commerce. 

Retirement and 8urvivors Benefits 

Lee C. Ashley, Senior Vice President, First National Bank of Denver. 
Roy Erickson, President, Erickson Memorial Company, Denver. 

Disability Benefits 

K. S. Mitchell, Management Control OflBcer, Denver Board of Water Commis- 

Maintenance of Health, and Medical Care 

James O. Shetterly, Vice President, Capitol Life Insurance Co., Denver. 
John DeHaan, Assistant Director, Bethesda Mental Health Center, Denver. 

Technical Assistance 

John Henderson, Deputy Regional Commissioner. 

Richard E. Mueser, Program Evaluation Officer, U.S. Department of Health, 
Education and Welfare, Denver. 


Proposed Policy Declarations 

Retirement. Survivors and Disability Benefits. 



Retirement Benefits. 

Disability Benefits. 


:Maintenaiice of Health, and Medical Care. 


Health Care System. 

Health Insurance. 

Cost Control. 


Supplemental Recommendations 

Retirement, Survivors and Disability Benefits. 



Retirement Benefits. 

Maintenance of Health, and Medical Care. 


Health Care System. 

Health Insurance. 

Cost Control. 


Proposed Policy Declarations on Retirement, Subvivors and Disability 


policy declaration i 

That the retirement, survivorship and disability benefits provisions continue 
to provide a "floor of protection," rather than fully adequate retirement benefits. 

72-573 — T2 


Private retirement and disability benefit plans should be encouraged to pro- 
vide benetits additional to tliose provided under social security. 


Compulsory coverage of all residents of the United States is recommended. 


Retirement Benefits 

Benefits should be paid as a ma tter-of -right without the eligible individual 
having to provide indigence. 

Benefits should continue to be paid in cash. 

For purposes of computing the "primary insurance amount" (amount of bene- 
fit), the average monthly wage should be based on fifteen years for both men 
and women to age 65, with actuarially reduced benefits available at age 60. 

Measures to encourage voluntary continuation of income production beyond 
retirement age are desirable. 

Benefits should increase/decrease with changes in the national consumer price 
index, adjusted annually. 

The lump-sum death benefit should be increased to a new fixed amount equal 
to that required for a modest funeral and thereafter adjusted annually accord- 
ing to the increase/decrease of the consumer price index. 

The amount of benefits should l)e gradually moved toward an actuarially 
computed amount based upon contributions by the individual. Minimum pay- 
ments should be continued for those with inadequate coverage. 


DisahiUty benefits 

Disability benefits should be available at any age. 

Benefits should increase/decrease with changes in the national consumer price 
index, adjusted annually, and should be based on the individual's current con- 
tribution level. 

A graduated scale of income recovery, adjusted to a reasonable level for size 
of family, should be allowed before complete loss of benefits occurs. 



The primary source of funds should continue to be the individual and his 

Contributions for employees should continue on a 50-50 employer/employee 

Self employed and all other residents should contribute on an individual basis 
at a reduced rate. 

The taxable income base should be established at a $10,000 maximum effective 
January 1, 1972 with increases/decreases annually based on the consumer price 

The tax rate should be adjusted not more frequently than biannually. 

Federal and/or State welfare funds should be used to pay that portion of 
qualified benefits above the actuarial computation of benefits based on the in- 
dividual's contributions to the fund. 

Income tax treatment of Social Security taxes and benefits should continue 
on the present basis. 

Financing .should be on a current cost basis with trust funds maintained at a 
minimum of one year's expenditures. 



Provision should be made for independent audit, efficiency of administration 
and the continued use of a public advisory council. 

Investment of trust funds should be made at reasonable rates of return with 
maturity dates consistent with the needs of the fund. 

Advisory and Management Boards and Councils should include presidentially 
appointed members outside of government, subject to confirmation by the Senate. 


Proposed Policy Dect^arations on Maintenance of Health and Medical 


policy declaration i 

The Nation's goal for health care should he to assure access to adequate care 
for every American regardless of income. 


Health care system 

The Nation's health care system needs to be overhauled. Stronger elements 
of our present system (whetlier profit-making, private non-profit or jiulilic) 
should be retained and improved, and combined with additional elements to 
make a comprehensive new system which would include, in addition to improved 
treatment facilities, a strong educational program for maintenance of health 
and prevention of disease. 

Such a new system should make maximum use of the private sector and 
judicious use of government funds. 

To assure availability throughout the Nation of manpower adequate for 
delivery of health care, the government should continue and improve programs 
of loans and other financial incentive for training and use of professional person- 
nel, and at the same time create new programs to train and place in service 
such nonprofessional personnel as are capable of providing the supportive serv- 
ices needed in modern health care, and whose services would permit a more 
efiicient employment of professional skills. 


Health insurance 

The Nation should make comprehensive health insurance coverage (including 
catastrophe coverage) available to all Americans at tlie earliest date consistent 
with the availability of an adequate health care system. Action to improve the 
organization and delivery of health care should be taken concurrently with action 
to improve health care benefits. 

Comprehensive private health insurance plans, qualified under national stand- 
ards of benefits, should be encouraged through tax deduction incentive applicable 
to individual as well as to group plans. 


Cost control 

Control of cost in the health care system should be based as much as possible 
on self-regulating economic factors, with health care facilities and insurance 
plans so designed as to encourage health care in the least expensive manner 
and with insurance plans requiring co-payments where feasible. In addition, 
periodic professional review of hospital utilization and physicians' services 
should be available, and community planning should be used to discourage costly 
duplication of facilities. 



Payment of premiums for health insurance coverage should be the responsi- 
bility of the individual citizen. Employer participation should be permitted and 

The cost of coverage for those unable to pay should be met by contributions 
from welfare funds, graded by income and family size, to pay that portion the 
individual could not meet, witii financially able persons required to pay the full 

Supplemental Recommendations on Retirement, Sitevivobs and 
Disability Benefits 

1. Private retirement plans should be encouraged to supplement retirement 
benefits of social security. To encourage such plans. 

a. Tax treatment should not discriminate between employer plans and 
individual plans. A reasonable tax deduction for 10 percent of gross earnings 
should be allowed for investment in qualified plans. 


I). Qualified plans should be those in which the individual obtains a non- 
forfeitable vested interest payable only at retirement age or upon disability 
and should be legally protected from creditors. 

c. Tax deductions should not be allowed for that portion of any plan not 
meeting the definition in sub-paragraph b. 

1. It is recommended that all U.S. residents be compulsorily covered by the 
Social Security Act. Such extension would add substantial protection for those 
who move from one segment of business activity, e.g., employee or self-employed 
to another segment, e.g.. investing. It is likely that many of these persons will 
qualify for some benefits but may not have paid a fair share into the fund unless 
covered fully for their activities in all segments of business activity. 


1. Encouragement of the production of income beyond normal retirement age is 
considered essential for the following reasons : 

a. Since retirement benefits are intended as a floor-of -protection additional 
sources of income are required to maintain a reasonable standard of living 
and to reduce the risk of such persons being added to public welfare rolls. 

b. The unfairness of the present system of penalizing a worker beyond 
retirement age but not an investor. 

c. Continuation of activity can result in benefit to the individual's physical 
and financial welfare, thus benefiting the individual, his or her family and 
reducing the cost of welfare and health care. 

d. The costs of social security vary greatly depending upon the relative size 
of the retired population. INIeasures to reverse the trend toward early 
retirement at age 60 could significantly reduce the cost of the program. 

It is therefore recommended that a $3,000 annual income limitation (now 
imposed only on wage earners and self-employed) be maintained for early 
retirees but removed completely at age 65. The limitation should be adjusted 
annually by the consumer price index. 

It is further recommended that social security taxes be applied to all income 
under the $10,000 maximum to age 65 ; thereafter, no social security taxes should 
be payable. 


1. Self-employed and other individuals covered by social security should con- 
tinue to enjoy payment of the tax at a reduced rate because their payments are 
made with after-tax dollars whereas 50 percent of employees' contributions are 
tax deductible by their employers. 

Minority viewpoint. — Considerable emphasis was placed upon allowing an 
income tax deduction for all contributions, without discrimination, accompanied 
by an equal contribution rate by all persons. Such a plan could be an acceptable 

2. Individuals newly covered under the proposals should not be entitled to 
full coverage or minimum coverage provisions of existing law, but would be 
entitled to an actuarial percentage thereof depending upon their contributions 
to the plan prior to retirement. To do otherwise would continue to dilute the 
equity of those who have paid into the plan for many years. 

3. The value of compensation other than cash should be taxable as a part of 
the $10,000 taxable base. Reference is made to housing, meals or any other 
non-cash compensation received. Industries where this type of compensation is 
common are farms, ranches, and hotels as well as household employment. 

Supplemental Recommendations on Maintenance of Health, and 

Medical Cake 

1. Access to adequate care should be provided in a manner that maximizes the 
advantage of individual freedom of choice and of flexibility to adjust to changing 

2. There should be a national program educating all Americas on ways to main- 


tain good health, including prevention of disease, the content of proper nutri- 
tion and the role of mental responsibility for illness. 

3. In assuring access to health services for all Americans, the federal gov- 
ernment should not provide such care directly, purchase health insurance pro- 
tection for everyone, nor initiate a federalized national health insurance system. 


1. The health care system should deliver comprehensive care, including health 
maintenance, primary, specialty, restorative and health-related services in ex- 
tended care facilities. 

2. To develop more and better health manpower, the following activities are 
encouraged : 

(c) Para-medical personnel such as physicians' assistants or other non- 
professionals should be utilized to the fullest extent possible. 

(ft) University, community and junior college, and technical school edu- 
cational programs should be developed, improved and expanded to provide 
more and better medical personnel. 

(c) To provide services in areas of manpower or service shortage, the 
federal government should provide loans to students for costs of education 
in the health field, with the provision that such loans would be forgiven if 
such persons provide services in some area of shortage. 

(d) Effort should be made to increase training in all aspects of the health 
care industry of such persons as minority groups, women, the financially 
disadvantaged, etc. 

(e) Eliminate those portions of state licensing of many levels and types of 
medical personnel which are severely restrictive or unnecessary. Licensing 
for basic certification should be retained where necessary. 

3. Guidance and assistance should be sought from the business community and 
university health education centers in developing better systems for delivery 
of health care. 

4. Area-wide health care planning councils should be established and ade- 
quately staffed with competent personnel. The business community should sup- 
port and participate in the w^ork of such councils. 

5. Care must be used to avoid the inflation and disappointment that may be 
caused by promising sservice that the system is not prepared to deliver (this 
result was seen with Medicare). 


1. National standards of benefits should be established to provide adequate 
insurance to all individuals and groups, including catastrophe insurance. 

2. Employees should maintain their right to bargain with their employer for 
coverages in excess of the minimum reequirements. 

3. Any employer-employee group plan should be required to meet the national 
standards as a test for deductibility of the cost thereof for income tax purposes. 

4. Persons not covered by employer-employee groups could purchase insurance 
through provider organizations such as Blue Cross, Blue Shield, Kaiser, group 
practice plans, etc. 

~K Medicare and Medicaid should be phased out : the federal government should 
not provide insurance. 


1. Area-wide health care cost control councils should be established and ade- 
quately staffed with competent personnel. The business community should sup- 
port and participate in the work of such councils with primary motivation and 
responsibility provided by the medical profession. 

2. These area-wide councils should establish acceptable charge rates for hos- 
r>itals, doctors and other medical service groups on a prospective rather than 
on a retroactive cost-plus basis. 

3. Hospitals, doctors and other medical service groups should accept estab- 
lished prospective rates as payment in full for individuals covered by an approved 
insurance plan. 

4. Patients shorild be able to contract for medical services from hospitals, 
doctors and others not participating in the plan; however, the patient would be 
resp<m:?ible for payment extra fees, if any. 


5. Hospitals, doctors and other providers, as a condition for participation in 
the plan, should be restricted to fee and service schedule maximums as deter- 
mineed by the area-wide coimcil. 

6. Doctors and others engaged in providing medical services of any kind should 
be required to subscribe to a conflict of interest code prohibiting investment in 
any hospital or related facility, drug supplier or other provider of services or 
supplies with whom he did business. ( See similar Code of Ethics provision of the 
American Institute of Certified Public Accountants) . 

7. All hospitals, extended care and nursing home facilities should be required 
to adopt uniform accounting practices, financial reporting and cost finding sys- 
tems. Data related to the appropriateness of such items as hospital ^dmissions, 
duration of stay and treatment provided should be made available to the area- 
wide council. 


1. All employers, public and private, should be required to provide all their 
employees a health plan meeting national minimum standards. Payment of the 
premiums for such insurance would be determined by employer/employee 

2. Welfare plans of the federal government should include provisions for 
payment of the health insurance premium for persons unable to pay. Primary 
responsibility for payment should remain with the individual, however, with 
premium contributions by the government graded by income and family size. 
Financially able persons would be required to pay the full premium. 

3. Insurance carriers should be allowed to charge increased premiums for dis- 
abled, elderly or others to whom health in.surance is not now available ; how^ever, 
such surcharge must be reasonable. 

4. All pei-sons should be allowed an income tax deduction for reasonable 
health insurance premiums actually paid, without discrimination among em- 
ployees, self-employed or others. 

Statement by Michael D. Buombero, Director, Washington Bureau, 
Federation of American Hospitals 

Mr. Chairman, and Members of the Committee, my name is Michael D. 
Bromberg, Director of the Washington Bureau of the Federation of American 
Hospitals. I would like to take this opportunity to present the views of our 
organization on H.R. 1. 

The Federation of American Hospitals is a national non-profit association 
representing more than 550 investor-owned (proprietary) hospitals through 
its members and affiliated state organizations. Our member hospitals range 
from small rural facilities to large urban and suburban investor-owned com- 
prehensive medical care institutions. There are presently more than 1,000 acute 
care short term investor-owned hospitals in the United States representing 
approximately 20% of the non-government hospitals. Our facilities comprise 
more than 67,000 beds located in 41 states and the territory of Puerto Rico. 
Member facilities include facilities owned by practitioners; groups of busi- 
nessmen and community leaders and multiple hospital corporations. 

Th(» Federation was privileged to appear before this Committee on two 
previous occasions to discuss proposed amendments to the Medicare and Medi- 
caid programs. During those previous appearances we submitted testimony to- 
gether with a number of recommendations for amendments to the Title XVIII 
and XIX programs as well as to previous versions of H.R. 1. Our positions on 
H.R. 1 have been made known to the Committee before. We would like to take 
this opportunity to concentrate on two of the sections of H.R. 1 which we 
believe to be most important and to present our views on catastrophic health 
insurance and in particular the proposal sponsored by the distinguished Chair- 
man of this Committee. 

determination of medicaid reasonable costs (SEC. 232) 

Section 232 of H.R. 1 authorizes the states to develop their own standards 
and guidelines for determining the reasonable cost of in patient hospital services 
under Medicaid and maternal and child health programs. This provision would 
change the position of Administration legal counsel and the courts that the 


reasonable cost provisions of the Title XVIII and XIX programs shonld be 
tletennined in the same manner. 

While Section 232 restates the Congressional intent of preventing hospitals 
or their private patients from subsidizing in-patient costs of Medicaid patients 
and vice versa, the delegation of the authority to interpret costs to the states 
can only bring about confusion and a lack of revenue predictability which in 
turn is likely to produce higher charges for noncovered patients. 

In addition to these pressures on facilities there will be budgeting pressures 
on the states which will tempt the states, as they have been tempted before, to 
adopt arbitrary and unreasonable cost control regulations in order to reduce 
their own heavy fiscal burden under the Title XIX program. These pressures 
have already induced several states to attempt to impose some type of freeze 
on Medicaid charges which court decisions have held to be in viohition of federal 

We urge the Committee to delete Section 232 and prevent a return to the sit- 
uation which existed prior to the adoption of existing regulations where 
reasonable costs were interpreted in some cases to be lower than actual costs. 

Adoption of Section 232 would be inconsistent with what appears to be 
increasing support for substituting a federal program for the present Title XIX 
program. We support the suggestion recently made by the Chariman of this 
Committee for federal funding of the basic health benefits for the poor under 
Medicaid. The Federation favors elimination of Medicaid and adoption of a 
federal health insurance system for the poor financed out of .general revenues. 
Passage of Section 232 would in our opinion delay that kind of system by 
granting reimbursement powers to the states. 


:\Ir. Chairman, no issue has caused more frustration to the providers of health 
care under the Title XVIII program than the absence of adequate administra- 
tive or .iudicial review procedures. We have urged this Committee before to cor- 
rect this situation and we now emphasize our belief that something must be 
done to bring the basic elements of due proce.'^s to bear on the administration 
of the Medicare program. The Title XVIII program remains a unique exception 
to the basic principle that a party with a grievance .shall have recourse to some 
impartial source. 

Section 243 of H. R. 1 establishes a provider reimbursement review board with 
authority to hear controversies in excess of $10,000. While the Federation is 
certainly not satisfied with the scope or extent of this provision, we do believe 
that the concept of an administrative appeal board is a step in the right direction. 
We urge the Committee to strengthen the language of Section 243 by substituting 
for that provision one based upon the Senate version of H. R. 17550 reported 
by this Committee in December of 1970. Section 243 of H. R. 1 is deficient in 
several respects. Among the more important deficiencies are the absence of a 
provision allowing class actions and a limitation on the scope of the board's 
jurisdiction to "items and services" which could be construed to omit such im- 
portant areas as depreciation and interest. 

In addition to these changes we urge the Committee to add to the provider 
reimbursement review board section authorization for judicial review. The 
confiicting interpretations of the Title XVIII program by intermediaries has 
created an atmosphere of uncertainty — an atmosphere which is certainly not 
conducive to eflBcient management or fiscal predictability. The ever present dan- 
ger of a new interpretation of a regulation set forth in an intermediary letter 
that would be applied retroactively can wipe out all efforts to achieve efficient 
and effective management forecasts of operations. We strongly recommend the 
estalilishment of procedures under which providers may .^eek administrative relief 
as well as the right to judicial review under the Title XVIII program. 


The Federation is pleased to comment on S. 1376 introduced by Chairman Long. 
We support the concept of catastrophic health insurance for all Americans as a 
part of a broader national health insurance system which we hope the 
will approve as soon as possible. In the meantime we applaud the efforts of the 
Chairman of the Committee and others in the Senate to obtain approval for a 
catastrophic health insurance system as part of a stop gap mea.sure prior to the 


enactment of national health insurance. We do, however, wish to emphasize 
that a catastrophic insurance program should not be considered as a substitute 
for a complete national health insurance program and we hope to have the op- 
portunity to present our views on that subject to this Committee in the near 

The Federation supports the concept of catastrophic health insurance for all 
Americans as a federally-financed part of any national health insurance system. 
Such a program could be administered and financed through payroll taxes similar 
to the Title XVIII program. 

We differ with the Administration's proposal to include catastrophic coverage 
as part of the required employer health insurance coverage for two reasons. First, 
this would increase the cost of the employee's insurance premium, placing too 
great a burden on employers. Second, the area of catastrophic or extraordinary 
illness insurance is properly one for the federal government to undertake as a 
basic priority for the protection of all Americans. 

A catastrophic insurance program should, in our opinion, go far beyond the 
benefits now provided by the Title XVIII program. Once the deductible under this 
major medical type of coverage is met, we believe that all illness-related expenses 
should be covered. This would include cost of prescription drugs, in-patient and 
out-patient psychiatric care, dental care, long term chronic illness care in nursing 
homes and all other illness-related care. None of the bills presently before this 
Committee would provide complete catastrophic protection and this, we believe, 
should be a high priority goal of the federally financed part of any national 
health system. 

With respect to the various proposals for deductibles, the Federation favors a 
deductible based on 60 days in a hospital or medical bills or out-of-pocket in- 
stitutional bills totaling $2,000 during a calendar year. Once those levels are 
reached, the federal government through the catastrophic protection program, 
would pay for 80% of all illness-related expenses incurred during the calendar 
year. We believe that deductible features mentioned above should apply on a 
family basis without regard to the number of persons in the family and without 
regard to the family's income. While there are strong arguments in favor of tying 
the deductible under a catastrophic program to the amount of income earned by a 
family, such a formula might well increase administrative costs. 

In this case, we believe that any family, regardless of its income, which must 
meet the cost of 60 days in a medical care institution or medical bills totaling 
$2,000, has reached a point under which it should be protected from other 
financially burdensome health costs as a matter of right. Therefore, we support a 
Medicare-type approach to the catastrophic program under which every American 
M'ill be entitled to protection from extraordinary health care costs as a matter of 
right and without being subjected to a means test. 

We thank you for this opportunity to present our supplemental views on H.R. 1. 

Silver Spring, Md., January 27, 1972. 
Hon. Russell B. Long, 
Chairman, Senate Finance Committee, 
'New Senate Office Building, Washington, D.C. 

Dear U.S. Senators : Your S.S Laws 223 (d) 1 and 3 deny that my fifteen (15) 
year brain tumor existed prior to brain surgery : therefore, I was supposed to 
have worked while growing it. I resent being discriminated against and murdered 
by these laws which is confirmed by Appeals Council Director of Social Security 
Administration as a result of my letter to Hon. .John D. Brlichman, (see photo- 
copies of each letter attached) . 

Also note the Appeals Council Director states : "there would appear to be no 
basis on which the claim could be pursued under existing law". Obviously, this 
is also taxation without representation. 

Only Sadists w^ould require a person to work while growing a brain tumor ; 
and Murderers would deny Disability Benefits to those who survive brain 
surjrery once and may undergo it again. Read attached Medical Reports, proof. 

T have a Constitutional Right that Justice be done, and I request the same. 
Respectfully yours, 

Mrs. Irene C. Heap. 


Silver Spring, Md., July l-'t, 1971. 
Hon. John D. Erlichman, 

Director Assistant to the President for Domestic Affairs, 
The White House, Washington, D.C. 

Dear Mr. Erlichman: The attached Laws 223 (d) 1 & 3 deny the existence 
of all these disabling diseases that can be proven by major surgery or autopsies 

I send you Medical proof of same. 

I'm eligible for Old Age Benefits of Social Security if I live, but am denied 
Disability as per Law 223(d) 3 that denied my 15 yr. Brain Tumor ever existed 
prior to brain surgery — so I'm being murdered by this asinine law. 

Please, Sir, repeal the Laws 223 (d) 1 & 3 and help all us disabled. 

Thank you. 

Respectfully yours, 

Mrs. Irene C. Heap. 
P.S. Lack of respect for laws and also poverty could be overcome by this 

quick solution. 

[From the Washington Post, p. 23, Apr. 26. 1971] 

Failure To Help Disabled 

Social Security disability laws have always violated the Constitution because 
they discriminate against disabled people. Ignorance of the medical profession 
doesn't give Congress the right — despite the recommendations of the Depart- 
ment of HEW — to enact laws that exclude some diseases and impairments from 
disability benefits. Rhetoric doesn't pay bills: now is the time for complete 
revision 'of the so-called "disability laws" to make them equitable for all citizens. 

Because the brain, lungs and nerves do not grow outside the body, the present 
disability laws exclude many people with black lung, brown lung, multiple 
sclerosis' epilepsy, cancer, and brain tumor found by emergency surgery which 
machines couldn't detect. Because these diseases or impairments are not 
medically determinable in one year's time but result in disablement and death, 
and because some disabled can't prove their disablement for prior years due 
to statute of limitations under Section 6501 of the Internal Revenue Code, Con- 
gress discriminates against the disabled in more ways than one. 

Obviously, if there are no earnings credited for 10 years or more for the above 
excluded disabled people, they are indeed disabled, and should receive disability 
benefits immediatley. Congress should be pressured into prompt reform of these 
inequitable laws. 

Irene C. Heap, Silver Spring. 

Department of Health, Education, and Welfare, 

Social Security Administration, 
Washington, D.C, September 2. 1971. 
Mrs. Irene C. Heap, 
Silver Spring, Md. 

Dear Mrs. Heap : Mr. Ball has asked us to write you regarding your letter to 
Mr. Ehrlichman, since the Appeals Council issued the last decision on your 
disability insurance claim. 

Your correspondence indicates that you do not understand why your claim did 
not succeed under the prevailing law. The record shows that your applications 
were properly considered and that your rights were .iuslly determined in 
the Appeals Council's decision of July 3. 196S. Although the claim was studied 
nt all administrative levels of adjudication, no medical evidence was found to 
show that you met the disability requirement when you were insured for dis- 
ability purposes. 

Tlie file in your case has been closed for about 3 years, and the reasons for 
denial have been explained in official determinations and in replies to many 
letters from you and from others who inquired in your behalf. The file reflects you last met the earnings requirement for a disability insured status in 
September 19.5.S — almost 18 years ago — and there would appear to be no basis 
on which the claim could be pursued under existing law. 
Sincerely yours, 

H. Dale Cook, Dirrrtor. 


Silver Spring, Md., Matj 7, 1968. 
Re Irene C. Heap. 
Mr. J. Ambrose Kiley, 
Attorney, 8700 Georgia Ave., 
Silver Spring, Md. 

Dear Mr. Kiust: Concerning the date of origin of Mrs. Heap's meningioma, 
it may be said that the sphenoid ridge meningioma which I removed in April, 
190.") had been present for many years before the first convulsive seizure. It is 
possible, as I have stated in previous correspondence to Mrs. Heap, herself, that 
the fainting episodes which began in 1953 were a symptom of the meningioma. 
The same might be said for the convulsive attack which occurred in 1956. The 
date of origin of this tumor can never be stated with certainty. I should feel it 
possible that the tumor might have been present for as long as 15 years before 
it was finally removed. 
Very truly yours, 

' John T. Lord, M.D. 

Silver Spring, Md., August 1, 1969. 
To Whom It May Concern : 

This is to confirm that Mrs. Irene Heap has had brain surgery for a Meningi- 
oma. This kind of growth tends to be recurrent. Periodic re-evaluation by vari- 
ous diagnostic modes — skull x-ray, brain scan. etc. is medically indicated. 

Morris Perry, M.D. 

Washington. D.C, October 6, 1961. 

This is to certify that Mrs. Irene C. Heap was first seen for neurological con- 
sultation on June 17, 1964 while a patient at Holy Cross Hospital. She had 
complaints and symptoms and examination findings consistent with central 
nervous system disease of undetermined etiology. The possibility of a brain 
tumor as opposed to a degenerative disease was considered. Six^eial tests were 
obtained, but failed to reveal the presence of a tumor. Her clinical picture looked 
more like a degenerative process and treatment was administered along these 
lines. The patient was examined again in early March of 1965. at w^hich time it 
was noted that she was having increasing difficulty in ambulation. In early April 
of 1965 the patient was admitted to Holy Cross Hospital where she was ad- 
mitted in a comatose state. The patient had extensive neurologic testing done 
during this hospitalization and a brain tumor, a meningioma, was removed. 

Marvin C. Korengold, M.D. 

Silver Spring, Md., Novetnber 27, 1967. 
To Whom It May Concern: 

Supplementing September 1965 report in regard to Mrs. Irene C. Heap. 

Please be advised that in 1964 while she was a patient in Holy Cross Hospital 
undergoing tests in search of a brain tumor, she had one of her dizzy spells while 
enroute from the bed to the bathroom which was located in her bedroom and 
she fell to the floor. As a result of this fall, I ordered a wheel chair placed by her 
bed and forbid her to walk. 

On April 5, 1965, at her home, she had a dizzy spell in her bathroom and fell 
backwards into the bathtub, hitting the back of her head, a terrific blow. She 
called my office, and one of my nurses, Mm. Royer answered the phone and told 
me, Mrs. Heap had fallen and hit the back of her head and wanted me to come 
to her home. I went to Mrs. Heap's home and then made arrangement at Holy 
Cross Hospital for admission that same day. She had the brain tumor surgery 
by Dr. John Lord the following day. 
Very truly yours, 

Morris Perry, M.D. 

Testimony by the Lutheran Council in the U.S.A., Prepared by the Division 

of Welfare Services 

opening statement 

This statement is submitted by the Lutheran Council in the U.S.A. before 
the United States Senate Committee on Finance as it gives consideration to the 
matter of legislation dealing with welfare reform. The testimony is based on posi- 


tion statements adopted by the Lutheran Council and dealing with "The Role 
of Government in Social Welfare" and the "Elimination of Poverty." 

The Lutheran Council in the U.S.A., organized in 1966, is a council of three 
participating Lutheran church bodies, namely, The American Lutheran Church, 
Lutheran Church in America, and The Lutheran Church-Missouri Synod. Among 
its functions as stated in the Constitution is the following ; 
"To represent the interests of the Council before . . . 
2. The national government . . ." 


There is critical and urgent need for early legislative action to bring about 
genuine reform of the public welfare system in this country. Congress has been 
involved in debate of issues in welfare reform for over two years. In the mean- 
time, millions of our fellow Americans daily experience the grinding pain of 
poverty and remain deprived of that which in justice is due them. Moreover, the 
rising costs of the present system are producing fiscal crises in states and local 
governments which are confronted with the costs of welfare and other essential 
community services. 

The attacks on the present welfare system are increasing in number and in- 
tensity. Many groups in our society, each prompted by its own unique motives, 
are demanding legislative action. Recipients of welfare benefits are calling for 
higher benefits and changes in administrative procedures : social welfare person- 
nel are hoping to achieve a system which is truly helpful to people ; public officials 
view with concern the mounting costs ; and citizens view with dismay the rise 
in taxes. 

It is important to bear in mind as we strive to achieve change that the social 
welfare system is not to be blamed for producing poverty any more than the 
health services delivery system is to be blamed for producing illness and disease. 
The public welfare system may not be as effective as we would like in alleviating 
poverty or helping the poor able to do so to get off the welfare rolls but the causes 
of poverty are not to be found in the public welfare program. Nor. are the causes 
of poverty to be found solely in the individual who is poor. Without neglecting 
the factors contributing to poverty which do lie within the individual's capacity 
to control, it is becoming increasingly accepted that there are factors in the 
social system which create poverty. 

We wish to underscore this point because as we debate this issue of what is 
appropriate legislation in welfare reform, we should keep the focus on just that — 
reform of the welfare program. It must be the basic purpose of the welfare pro- 
gram to alleviate the needs of the impoverished in our society. 

There are many casual factors producing poverty, all of which must be at- 
tacked — inflation, unemployment, illness, inadequate education, racial discrimi- 
nation. It is a multi-faceted and complex problem, not responsive to simplistic 
explanations or superficial measures. 

In summary, we urge the Congress as it debates the various proposals dealing 
with welfare reform, to focus on the objective of achieving the allleviation of 
the grinding pain of poverty in a way that is genuinely helpful to the poor. Cer- 
tainly Congress will be dealing with critical causes related to poverty in other 
legislation, such as health services, education, housing, employment. Here we are 
dealing with the issue of how best to reform the welfare program and achieve a 
just and workable income distribution program. 

Lutheran churches are presently maintaining many social service programs 
across the country, including services to children and families, the aging, the 
sick, and others. These agencies report to us their judgment that poverty so very 
often results from inadequate education, illness, racial discrimination, and 
unemployment which arise and persist in society. 


As a contribution to this legislative process, we submit the following comments 
and observations in testimony on possible legislation which may be developed 
by Congress in this critically important area. We suggest the inclusion of the 
following principles in any legislation dealing with welfare reform. 
/. Elimination of the categories in the present social assistance program ana 
establishment of the single criterion of need 

Out of all the nation's poor, the federal government has .selected for assistance 
only those who meet certain defined eligibility requirements in specifically named 


categories — the aged over 65 (Old Age Assistance), the blind (Aid to the Blind), 
the disabled (Aid to the Permanently and Totally Disabled), and children (Aid 
to Families with Dependent Children). Some states and local governmental units 
have developed programs of general assistance but this meets only a fraction of 
the needs of the nation's poor. 

^Yhat is the morality of the standard by which our government selects cer- 
tain groups as being more worthy than others of public support? What possible 
justification can there be for determining that a poor person 65 years of age or 
older is to be helped rather than the one who is 62, or 60? Blindness is a tragic 
handicap. But on what basis is it determined that a blind person is to be helped 
rather than one who is handicapped in some other manner? 

In the legislation now before Congress, the persons in the so-called adult cate- 
gories — aged over 65, blind or disabled, are to be covered by a single program. 
This is a step toward the goal we propose, namely, the elimination of categories. 
But it is removed from the so-called family programs which in turn are to be 
divided, one to be administered by the Department of Labor and the other by 
the Department of Health, Education, and Welfare. Such fragmenting of in- 
come maintenance programs poses serious administrative and program problems. 
Especially to be regretted is the continued favored treatment with respect to 
financial benefits for the adult person as over against children. The benefits for 
adults should not be reduced. Rather the benefits for children should be sub- 
stantially increased. 

A recent study by the U.S. Department of Health, Education, and Welfare 
reports that there are over 4 million persons under 65 living in poverty but not 
eligible for benefits under present programs of public assistance. Among these are 
2 million persons in families without children and 2.3 million .single persons. 
These people are fellow citizens in our American community. We urge that 
they be given the same recognition and support presently given to other special 

We also note that in the proposed legLslation, in the .section dealing with state 
supplementation, the federal government would be bound to recognize a residency 
requirement if a state imposes such a restriction. There are many reasons for 
eliminating such residency requirements. The major proportion of funds is com- 
ing from federal sources and all signs point to an increase of such federal par- 
ticipation. Moreover, the United States Supreme Court has found such residency 
requirements unconstitutional restrictions on the right to travel and in violation 
of the equal protection clause. 

2. Provision for incentives in moving off public assistance for those for whom 
this is possible 

Every study which is made of the poor who receive public assistance reports 
their readiness, even eagerness, to participate in plans for adequate self-mainte- 
nance and their desire to be self-directing and independent. 

It must not be overlooked, however, that virtually the entire total load 
of persons in the federally assisted programs are children (55.5%). mothers 
(18.6%). blind and disabled (9.4%), aged (15.6%,). This entire group makes up 
99.1% of the total as of April 1971 with the remainder, 0.9%, being able bodied 
fjithers. When we speak of moving people off of public assistance, we must keep 
in mind that these are the people on the rolls — children, mothers, aged, blind and 

The largest group of adults of working age are the 2.5 million mothers who are 
lieads of families, most of them with no able-bodied male at home. According to 
a study recently released by the U.S. Department of Health, Education and Wel- 
fare, 14% of these mothers are presently at work, and another 7% are in work 
training programs. Another 35% would be potential employees if job training, 
job.s. and day care facilities for children were available. Some 4% to 5% of 
mothers have some employment potential but require social rehabilitation serv- 
ices. The remaining welfare mothers may not be considered as employable be- 
cause they have small children at home, have major physical or mental in- 
capacities or other barriers to work. 

Tlie same study reports that the average welfare family has been on the rolls 
for only 23 months. At any given time, about two-thirds of all welfare families 
(AFDC) will have been receiving assistance for less than three years. Only 7.3% 
have been on welfare for 10 years or more. 

Although every provision should be made to assure persons moving off welfare 
rolls, it must be honestly faced that there will remain manv for whom this is 


not possible. These will be the aged, the disabled and handicapped, and mothers 
with sole responsibility for small children. 

If working poor are included, and as we stipulate later in this testimony, we 
urge that this be done, a new set of circumstances arises presenting quite different 
.social statistics. 

3. Inclusion of the working poor with exemption of graduated levels of earned 
income and careful attention given to protection against inadequate wages 

A major breakthrough in the public assistance program is a possibility in the 
welfare legislation now before Congress. For the first time, we may now develop 
legislation which would include provision for including the working poor. When 
this was first propo.sed. many found it quite unacceptable ; but when they studied 
the matter and came to see its benefits to individuals and families, it was found 
a growing number of people have given it their support. 

The proposal is based on the recognition that there are many in American so- 
ciety who, though employed, have incomes insufficient to maintain levels of health 
and decency. Moreover, it also recognizes that persons now on welfare could be 
encouraged and assisted in getting off public assistance if they were allowed to 
take employment and keep portions of earned income. A double social benefit is 
thus achieved by including provision for working poor in the public assistance 

If those presently employed, though with inadequate incomes, were included, 
the family could be encouraged and assisted to remain together. Quite the op- 
posite is true in the present program with its incentive to the father to quit his 
work and desert his family. The family would be assisted in securing essential 
needs — food, housing, clothing and other requisites. This would he a real contribu- 
tion toward breaking the cycle of poverty since studies report that the greatest 
single cause of poverty is poverty. With the opportunity to secure tliese essential 
needs, the likelihood of children breaking out of the cycle of poverty is greatly 
increased. It hardly seems necessary to underscore that the family headed by a 
father working full time at low income may be just as needy as one headed by a 

Another social value of including the working poor is the benefit derived for 
those presently on welfare. With this provision, those now on the rolls would be 
encouraged to seek employment and increase earnings which they could retain. 
With such encouragement, the individual and society would both benefit. For 
as persons are able to work their way off welfare rolls, the financial and social 
costs to the community are materially reduced. 

-J. Provision of a iasic floor of financial benefit hy the federal government at 
an adequate level for health and decency 

We approve the provision in proposed legislation which for the first time in 
the nation's history establishes the principle of a basic floor of income main- 
tenance assumed by the federal government. The mobility of our people and the 
varied economic resources among the regions of the nation place upon the 
federal government an inescapable responsibility for leadership here, to provide 
the necessary resources. We believe the federal government should use its broad 
taxing power to bring about a greater degree of equity among the states in 
providing income maintenance and social welfare services. 

All Americans are citizens of this nation and none should be denied or limited 
in their struggle to realize their full potential because of the circumstances of 
birth or residence in a particular geographical area. 

Though we have taken no specific position with respect to the amount of grant 
to persons on public assistance, there are some observatioons we would like to 
make related to the issue. 

(a) It would seem that this nation should establish a grant amount not below 
the figure which the government has already established as a poverty level, 
adjusted periodically to the cost of living. The proposed legislation establishes 
the practice of tying social security benefits to cost of living but welfare pay- 
ments are frozen for five years. 

(&) We urge Congress to correct the discrepancy in grant amounts in the 
so-called adult category and that which is proposed for the family programs. 

(c) We urge Congress to eliminate the ceiling on grants to families. lender 
the proposed legislation, the maximum amount any family could receive would 
be $3600, regardless of size. There is no reason why a public assistance program 
should impose an arbitrary cut off on the number of people to receive benefits in 


a family. Every child in the family has needs, whether he is first in the family 
or the sixth or ninth. To include all members of a family would be both equitable 
and inexpensive since only 4% of all AFDC families have more than eight 

(d) Existent benefit levels should not be reduced by new legislation. While it 
is true that the benefit level in a number of states is presently below that set 
forth in the proposed legislation and the recipients in those states would secure 
an increase, it is also true that benefits in many states are already above levels 
set forth in some proposed legislation. However, the legislation leaves it optional 
with the states whether they decide to grant this differential or not. It is not 
likely that many states would elect to provide this supplement voluntarily. It 
would seem the only just solution would be to require states to grant this sup- 
plement of federal payments if their present benefits have achieved this level, 
but with federal participation in such supplementation. 

5. Development of effective job training programs and related services, such as 
day care centers, homemaker services, family planning, health maintenance, 
and vocational counselling 

It is in the best interests of the recipient as well as society that those persons 
on welfare for whom it is possible should be assisted in leaving the rolls. 

We note with approval that the proposed legislation does provide for certain 
child care and related supportive services, manpower services, job training 
and employment programs. The development of effective programs in those areas 
would materially assist many persons to find employment. 

We wish to make some comments on certain key matters. 

(a) The proposed legislation provides that an individual would not be required 
to accept employment if wages and other employment conditions are contrary 
to those prescribed by applicable federal, state or local law or less favorable than 
those prevailing for similar work in the locality, or the wages are Ipss than 
an hourly rate of three-fourths of the federal minimum wage under present law. 

There is no equity in requiring a person simply because he is a public assistance 
beneficiary to accept employment at a lower figure than others in the community 
or less than the Federal minimum wage. This provision should be stricken. 

(&) Provision should be made to require that job traning and employment serv- 
ices be related to the true job situation. Persons should be trained and referred 
to jobs which offer opportunity for service, growth, development and related to 
the skills and qualifications of the recipient. 

(c) The day care programs which are projected in the proposed legislation 
should be available in adequate number and of such quality as to be truly growth 
programs for children and not merely custodial facilities. 

Children should not be delivered to inadequate day care programs to meet a re- 
quirement that mothers train for or accept employment to which they may be 
referred. This would be not only prejudicial to the best interests of children but 
poor social policy ; for we would not be adequately preparing children for whole- 
some, resiK)nsible adulthood. 

id) It may well be that the social and financial costs of the mother w-orking 
and placing children in day care would outweigh those of a mother remaining at 
home to care for children. The work and training programs for mothers with 
small children should be developed on a voluntary basis. 

6". Assurance that a mother with sole responsihility for her children will not he 
required to accept employment against her own best judgment as to thai 
which is hcst for the tvelfare of the children 

The proposed legislation provides that an individual is considered to be avail- 
able for work unless such a person, among other conditions, is the mother or 
other relative caring for a child under age 6 and this age drops to 3 beginning 
July 1974. 

Mothers have no more critical and urgent responsibility than to do all that 
is within their power to assure the development and growth of their children. 
Our society has long recognized the fundamental rights of mothers to make their 
own decisions as to how this responsibility can be best fulfilled. Provision has 
been made by society to deal with those special situations where mothers neglect, 
or do not adequately provide for, the proper care of their children. 

Recognizing the validity of these appropriate safeguards, we believe that a 
mother should be permitted free choice in the decision as to what is in the best 
interests of her pre-school children ; that is, whether she should take employment 


or remain at home. We are aware of the argument that many mothers are al- 
ready employed and that mothers receiving public assistance should not be given 
si)e(ial privilege. But these mothers are employed by their own choice and our 
position is that mothers on public assistance should be given this same oppor- 
tunity for free choice. 

7. Protection against po-fsible abuse of mandating employment hy forcing ac- 
ceptance of jobs which offer no constructive opportunity for development or 
which are not consistent with the worker's abilities 

We believe firmly that a person should work to support himself and his family, 
should he have the capability of doing so. This principle of responsibility of one's 
own support is appropriately firmly imbedded in the social system of our country. 
This is substantiated by every study dealing with this area of concern which re- 
port that persons do want to be self maintaining and self-directing and resist 
accepting things done for them unless the situation is so compelling that they 
must accept assistance from others. 

The fact tliat a person is unemployed and receiving social welfare benefits does 
not provide justification for mandating employment which offers no constructive 
opportunity for development. 


In conclusion, we affirm the need of this nation to rise to new heights of moral 
commitment to the well being of all its citizens. People are the nation's most 
precious resource and their welfare must be our first priority. All Americans 
wherever they live in this land, whatever their circumstances of birth, their so- 
cial situation — children, the poor, the handicapped, the deprived, the aged — all 
should be enabled to walk in dignity, peace, and hope as responsible participat- 
ing members of our national community. 

Our society faces a stern challenge in this struggle of the poor to achieve re- 
lease and freedom from their pain. Will it be possible for a free, pluralistic soci- 
ety operating within the framework of democratic institutions to mobilize the 
necessary resources and implement a total national effort in the elimination of 

(The above testimony was prepared by the Division of Welfare Services, Lu- 
theran Council in the U.S.A., 315 Park Avenue South, New York, N.Y. 10010. 
For further information, write Dr. Henry J. Whiting, Secretary for Social Re- 
search and Planning, at the above address.) 

PocATELLO, Idaho, 

August 23, 1971. 
Hon. Len B. Jordan, 
Senator, U.S. Senate, 
Washington, B.C. 

Dear Senator Jordan : You will recall our long-standing correspondence relat- 
ing to many aspects of the human services, particularly program, manpower, and 
training aspects. Frankly, the privilege of communicating with you has been one 
of the most rewarding aspects of my professional experiences in Idaho. And so, an 
opportunity has again developed to bring to yovir attention an area of concern 
relating to the delivery of health services that you may want to explore. 

The National Association of Social Workers has recently emphasized with its 
membership our collective concern over recent action of the House of Repre- 
sentatives (HR 1) relating to a reduction of service standards in Medicare reg- 
ulations through not requiring medical social work services in extended care 
facilities. The proposed deletion of these services suggests a lack of understand- 
ing of the broad goals of social services in a medical facility. Adoption of this 
reduction in standards would have the most serious long-range consequences for 
our senior citizens, particularly as the country may well be on the threshold of 
providing a more comprehensive system of health care to its citizens and par- 
ticularly the elderly. 

^ly concern in this regard is generated not only from my broad professional 
orientation but, more specifically, relates to part-time medical social work con- 
sultation I have provided up until about a year ago to one of our local convales- 
cent homes. Our agreement was that I would spend up to one hour a week 
providing social work services to the convalescent home as required by Medicare 


regulations. These services were provided over a period of about two years. When 
the Comprehensive Mental Health Program in this area became operational, I 
urged the director of the convalescent home to consider a contractual arrange- 
ment with that public service as provided for in their program. Subsequently the 
arrangement was included. The opportunity provided me sufficient experience to 
begin to appreciate the very real need for social work services as provided for 
by Medicare regulations. I came to recognize not only the need and opportunity 
for these services, but also the promise as well as the problems in implementing 
a part-time service of this nature. 

More si>ecifically, I submit the following comments, observations, and sug- 
gestions for your consideration : 

1. Social work practice concerns itself with the social well-being of the client 
or patient in his real life situation. Economic, family, community, vocational, and 
psychological factors all enter the situation. The needs of the elderly in our 
changing society are as pressing as the young or middle aged. 

2. Health, illness, and the aging process encompass — not only medical but 
social and economic components. Illness and old age effect people in different 
ways and are of particular consequence to the person, the family, and the com- 
munity. Accordingly, any system for the delivery of medical services should not 
divide up the person or patient ; the well-being of the whole person needs con- 
sideration for whatever treatment or rehabilitation are necessary. These health 
facts were recognized many years ago when medical social work services were 
first initiated in the Massachusett's General Hospital around the turn of the 
century by Dr. Richard Cabot. Since then the demand for social work services in 
medical facilities, public or private, has grown steadily. 

3. The care attempted in an extended facility is comprehensive including recre- 
ation, physical therapy, and a variety of medical services to meet the needs of the 
individual, and the requirement for the provision of social work services as 
part of this total treatment picture becomes apparent if the service is indeed 
considered to be comprehensive, i.e., maximum fulfillment ar functioning of the 
individual patient while in the facility. 

4. Regarding my own exi)eriences and the job to be done, the director and I 
decided that social work helps might typically include : 

(a) An interview with the significant family members of the patient 
shortly following admission so that there could be an understanding of the 
background of the life experiences of the patient, the attitudes of the rela- 
tives toward the patient and his illness, and an active enlistment of the 
family to cooperate with the convalescent home staff for the maximum well- 
being of the patient. 

(ft) Bringing community agencies into the picture as necessary as for 
example, financial assistance and vocational rehabilitation for the patient 
and/or his family. 

(c) Casework services with the patient to provide him an opportunity to 
talk about his feelings regarding his illness, stay at the convalescent home, 
and to enlist his cooperation with the staff for his benefit. This frequently 
meant, of course, dealing with negative feelings about another patient, a 
family member or a staff member. 

(d) Case conferences or consultations with the nurses and aides directed 
toward a specific understanding of the particular patient and a more gen- 
eralized review of the relationship between social and environmental factors 
and the patient's well-being. 

(e) Coordination of the psycho-social aspects with the physician of the 

5. With the general and specific observations above in mind, it was increasingly 
obvious to me that the primary limitation related mainly to the severe limitation 
in time provided for these services. The director desired that I si>end more than 
one hour per week. However, such services are expensive, so my time was neces- 
sarily limited for a financial reason. Perhaps our dilemma in this regard suggests 
one of the reasons for the proposal to delete social work services from Medicare 
standards. This is to say that there has never really been sufficient allocation of 
funds to implement the Medicare regulations. All of the medical social work con- 
sultations that I know of in Idaho and the Intermountain area have been on a 
very part-time ba.sis, as in my ease. Perhaps in some of the very largest facilities 
in large urban areas, social workers have functioned on a full-time basis. In 
short, the sound philo.sophy and program required by Medicare regulations may 


have really never had a chance to be implemented because of the funding limita- 
tion and, Very likely, the shortage of available, qualified personnel in the area 
of the extended care facility. , . , , 

The above are some of the factors that I respectfully submit which have con- 
vinced me that there is a pressing need in extended care facilities for qualified 
medical social work services. There is no rationale to exempt these services in a 
modern extended care facility any more than there is from other medical facilities 
as has increasingly been recognized since the day of Dr. Cabot. On the basis of my 
own experience, I am certain that the requirement is fully justified and frankly, 
is a "must" if the elderly (and often not so elderly) patients in our extended care 
facilities are to receive the high level of health care we in America strive for. It 
seems to me that the problem, rather, is in program implementation. With plan- 
nini,', financial, and manpower resources, this aspect can be resolved. I would 
welcome an opportunity to further correspond with you as for example, citing 
specific case situations typifying convalescent care medical social services or any 
way you suggest. 


T. Russell Mager, ACSW. 

PocATELLO, Idaho, 
Septemher 2Jt, J 971. 
Hon. Len B. Jordan. 
Senator, U.S. Senate, 
Washington, B.C. 

Dear Senator Jordan : Your concerns and activities in the broad area of human 
services was again reflected in your letter of September 2, 1971 with respect to 
the matter of furnishing of social work services in extended care facilities as I 
reviewed in my letter of August 23, 1971. In particular, I appreciated your 
thoughtf ulness "in sending me a copy of the excerpt from the House Ways and 
Means Committee report on H.R. 1. This was my first opportunity to be appraised 
of the reasons of the Committee in recommending deletion of these services 
now required under Medicare. With these specifics, I respectfully submit the 
following by way of additional comments for your consideration and the 
Senate Finance Committee. 

The Committee seems to make two points in justifying their recommendation 
to delete the requirement for social work services. In the first place, they say 
that these services "represent a substantial cost to the extended care facility 
which cannot be justified by the value derived by its total patient population." 
Rather than repeating myself, I refer you and the Senate Finance Committee to 
my letter of August 23, 1971 in which my comments are primarily addressed to 
this objection of the Committee. In this letter I attempted to trace the history, 
philosophy, and operation of social services in medical facilities within the broad 
framework of concept of treating "the total person." 

It is the second point of the Committee mentioned above that I would like to 
address myself to in this letter. The Committee does not understand the rationale 
for requiring social work services in an extended care facility when the same 
services are not required in the higher level of hospital care. Although this ra- 
tionale seems plausible enough, I suggest that a closer scrutiny would reveal that 
social work services are much more urgently needed in an extended care fa- 
cility than in a hospital. This in no way diminishes the need in a ho.spital as the 
historj- and our experience clearly indicates, and as I pointed out in my earlier 
letter. However, if one reflects on the social and psychological needs of an in- 
dividual with a chronic and/or progressively worsening condition as are typically 
found in extended care facilities, I think it becomes evident that the services of 
a trained social worker are as pressing in this phase of our medical delivery 
system as actual medical and nursing services. The feelings of the extended care 
facility patient about his illness, the attitudes of his family, his financial situa- 
tion, and the attitudes of the staff toward the patient are all areas of critical 
importance which the medical/social worker has a particular knowledge of and 
ability to deal in a professionally expert way with. This is a different situation 
than the psycho-social needs of a patient in a general medical ho.spital who typi- 
cally will only be in the hospital a very brief period of time. Again, I don't 
diminish the needs of services in the hospital because as far as I'm concerned, 
these services should be required in hospitals as well. However, I only question 
the rationale of the Committee in drawing the conclusion that social work serv- 

72-573 — 72— pt. 6 14 


ices need not be required in the extended care facility because this has been a 
••l)rogressively lower level of care." 

It is hoped that the above will provide some much-needed clarifying informa- 
tion on the report of the House Ways and Means Committee report for the fur- 
ther information of yourself and the Senate Finance Committee. 


T. Russell Mager. ACSW. 

Department of Employment and Social Services, 

Maryland Commission on the Status of Women, 

Baltimore, Md., February 1, 1912. 
The Hon. Russell B. Long, Chairman, 
Senate Finance Committee, 
Senate Office Building, 
Washington, D.C. 

Dear Senator Long : At its January meeting the Maryland Commission on the 
Status of Women adopted the enclosed resolution on the welfare provisions of 
H.R. 1. 

We urge you to work for legislation which incorporates our suggested proposals. 
Respectfully yours, 

Anne Carey Boucher, Chairman. 
Enclosure as stated. 

REvSOlution on The Welfare Provisions of HR 1 

Among Maryland's 224,000 current public assistance recipients there are: 
40,000 aged, blind and disabled 
1,600 employable males 
140,000 children 
43,000 mothers 
Thus, women and children constitute more than 80 percent of the State's desti- 
tute who are supported by public funds. 

The condition of these women and children is a matter of great concern to 
the Maryland Commission on the Status of Women— a concern which prompted 
the Commission to study current proposals pending before the Congress on this 
subject and to arrive at the following conclusions : 

1. Assisted families should be maintained at a level no lower than the federally 
defined poverty level. This nation's children have a right to adequate levels of 
nutrition, clothing and shelter to enable them to achieve normal growth and 

2. Mothers who are needed in the home should not be required to work. 

3. Those who are required to work should have the safeguard at licensed child 
care arrangements. They should not be required to accept employment for less 
than the federally established minimum wage or without the same fringe benefits 
as other employees in the same employment. They should not be required to 
accept any employment which threatens their health and safety. 

4. Those working, whose income is less than the federally defined poverty level, 
should receive assistance so they are not penalized for working l)y having less 
income than those who qualify for public assistance because they cannot work. 

~>. Benefits now provided in each State should become the floor below which 
the new levels cannot go. States should be required to supplement the Federal 
payment up to present levels with the aid of Federal matching funds equal to 
one-third of such State costs. 

HR 1 

The Maryland Commission on the Status of Women believes that HR 1, the 
measure which has been passed I)y the U.S. House of Representatives and is 
now pending before the Senate, fails to meet these objectives. It would provide 
a family of four only .$2,400 on which to live for a full year — without the food 
stami)s which they now receive. 

It would require mothers of children as young as three years old to go to work. 

It would permit mothers to be forced into menial jobs paying as little as $1.20 
an hour on pain of losing pul)lic assistance. 

It provides no protection against the forced placement of preschool children 
in unsati.sfactory and/or unsafe care arrangements. 


It would result in benefit reductions for millions of recipients throughout the 



The proposal which appears to come closest to the Commission's objectives is 
that sponsored by Senator Abraham Kibicoff, Amendment No. 559 to HR 1. This 
measure was introduced with tJie support of 14 governors, including Maryland's 
Governor Marvin Mandel. 

It would move over a four-year period toward complete Federal financing of 
all assistance programs, including the program for single persons and childless 
couples, which is now funded entirely by the States and localities. 

Most importantly, payments during that period would begin at $3,000 for a 
family of four and would progress until, in the fifth year, they reach the poverty 

In the interim, however, recipients would be protected against any reduction 
in present benefits. 

Mothers with pre-school children would not be required to work, and those who 
are required to do so would not be compelled to accept employment paying less 
than the Federal Minimum Wage or jeopardizing their health or safety ; now 
therefore be it 

Resolved, That the Commission on the Status of Women supports, through 
all means available to it. Federal legislation which will enable families on public 
assistance as well as those working families whose earnings are less than the 
federally defined working level, to maintain a living standard no lower than the 
federally defined poverty level ; will exempt mothers with responsibility for pre- 
school children from a requirement to work outside their homes ; will assure that 
those who are required to work will receive at least the federal minimum wage for 
employment which does not jeopardize their health and safety ; will assure sat- 
isfactory child care arrangements. 

Adopted : January 19, 1972. 

Statement of the National Assembly fob Social Policy and Development, 
Inc. — Forum on Social Issues and Policies^ 

joint statement on welfare proposals in the 92D congress 

This joint statement on the principles which we believe should govern any 
action for public welfare "reform" represents the view of those who have signed 
it in behalf of their organizations or as individuals engaged in the social wel- 
fare field. It has been deveoped and circulated for signature through the Forum 
on Social Issues and Policies of The National Assembly for Social Policy and De- 
velopment. The Forum is an instrument for such voluntary pooling of viewpoint 
and permits those of like mind to speak with one voice to Congres on their com- 
mon concerns. 

These recommendations are based on a Statement on Goals of Public Welfare 
Reform adopted by Forum members in June, 1969 setting forth seven principles 
against which subsequent proposals for welfare reform might be evaluated and 
on the statement submitted to the 91st Congress with respect to then pending leg- 
islation incorporationg the proposed Family Assistance Plan. 

The proposals now before the Congress are complex and incorporate drastic 
changes in the present public welfare system of the country. We wish to affirm 
our beliefs in adequate, humanistic and comprehensive protections against the 
hazards of poverty and insecurity created by modern society. In any changes of 
policy the needs, interests and dignity of all those receiving benefits and services 

1 The Forum on Social Issues and Policies functions as an independent group of social 
welfare organizations and individuals concerned with social policv, under the auspices of 
The National Assembly for Social Policy and Development, for the purposes of: d) 
exchanging views on pending social welfare policy issues, (2) identifying areas of common 
viewpoint on such issues and (?,) cooperating on joint statements on specific issues at the 
option of each signatory organization and individual. This statement on pending pro- 
posals of welfare reform is the result of such process and reflects the judgments of those 
organizations and individuals listed as its sponsors. 

This statement will be submitted to the Senate Finance Committee in connection with 
Its hearings on HR 1 beginning on .January 20. 1972 in lieu of oral testimonv by Mr. Philip 
Bernstein, Chairman of the Forum on Social Issues and Policies of The National Assembly. 


should be the paramount consideration and should not be sacrificed to current 
pressures of expediency. 

We deplore any effort to make the present victims of societal maladaptation 
the scapegoats for the very failures that victimize them. We wish to re-affirm our 
special concern for the well-being of children on whose healthy development, 
nurture, and inclusion in the mainstream of a potentially bountiful society the 
future of our country depends. All measures for family income assurance and 
related social services (including child vrelfare and child care) must keep this 
concern for their welfare as their central point of focus. 

In light of these goals it is recommended that pending proposals be eval- 
uated in terms of the following principles to which the undersigned subscribe : 

1. Structural reform i^ no substitute for adequacy of financing sufficient to im- 

prove the situation of all those who depend upon it. 
Comment. — Pending proposals add substantially to the Federal financial 
investment in aid to low income people, especially in terms of broadened coverage 
and fiscal relief to the states. On the other hand they do nothing to improve the 
financial situation of 90% of present AFDC recipients living in the forty-five 
states now paying benefits above the proposed Federal floor. (HR 1 proposes 
a Federal payment of $2400 for a family of four with no food stamps and no 
mandated supplementation.) Unless the Federal role and financing is strength- 
ened, there is serious danger that the situation of many will be seriously worsened 
by the division of the program into two separate components, with no Federal 
participation above the floor. 

2. The level of minimum income assurances should be adequate in relationship 

to cost of living estimates 
Comment. — The basic floor proposed by HR 1 falls far short even of the official 
poverty standard (let alone the lowest standard of the Bureau of Labor 
Statistics.) The Federal floor should be raised immediately to the official poverty 
level and means provided to advance toward a more realistic standard as 
defined by the Department of Labor's lower living standard. 

3. Any transitional stages must be such as to (a) strengthen Federal standards^ 

(b) protect the higher level of payment while raising the lower, and (c> 

maintain the level of state expenditure necessary to achieve these ends 

Comment. — HR 1 contains no provisions projecting a plan for future upward 

adjustment protection of present standards, or an increasing assumption of 

Federal responsibility toward a level of adequacy. We recommend the addition 

of such provisions. 

If. Benefits in kind and services extended to those aided by the plan should not 
be used to reduce assistance levels 
Comment. — HR 1 assumes a major reduction in public assistance by work, 
training and rehabilitation requirements supported by provision of day care 
and other supportive services. We strongly support the extension of these serv- 
ices on a voluntary basis but believe that mothers should be permitted to exercise 
their own judgment as to whether their children's best interest requires their 
presence in the home. Rehabilitative and other services cannot fulfill their proper 
function if they are imposed under threat of reduction or discontinuance of 
essential aid. Similarly child welfare services, including those related to parental 
support, should be administered in the best interest of the child under existing 
provisions of state law. 

5. Welfare reform should be such as to move toicard greater inclusiveness and 
aicay from categorical distinctions 

Comment.— UR 1 improves the present .situation for needy families bv including with both parents in the home insofar as the basic Federal benefit is con- 
cerned. However, failure to make provisions for maintaining the present level 
of benefits and the virtual separation of voluntary state supplementation fiom 
the Federal program makes continued differential treatment inevitable. 

It also makes no provision for childless couples and single individuals. This 
should be added. 

Moreover, it perpetuates (and intensifies) present disparities of aid as between 
the adult categories and children. We do not find the adult standard too high 
but the children's standard too low. 


The fragmented administration provided by these proposals is a major danger 
to responsible .administration and a probable source of hardship and confusion 
to the potential or actual beneficiary. 

6. Lal>or standards should he protected 

Comment. — Entitlement to welfare payments should not be used to deprive 
children of needed adult care and supervision nor should they be used to depress 
wage and other labor standards. Therefore, no mother or other adult with pri- 
mary responsibility for the care of ,a child or children should be required to take 
a job against her own best judgment of her children's need and no job should 
be regarded as mandatory which involves unsuitable conditions, a labor dispute, 
or pays less than the Federal minimum wage or the prevailing wage, if higher. 

7. The legal and constitutional rights of recipients should be fully protected 
Comment. — We see great dangers for the coercive and discriminatory appli- 
cation of the requirements of this bill which condition Federal aid on mandatory 
work requirements for mothers, mandatory work registration and assignment 
for those already working full time, mandatory vocational rehabilitation, a Fed- 
eral liability on deserting fathers beyond the application of state laws and the 
placing of a lien on all future Federal payments to such fathers, an unlimited 
authority for third party payments. ,and a mandatory obligation to repay interim 
benefits received pending the outcome of a fair hearing which is adverse to 
the person appealing. We recommend the deletion or modification of all 

S. No improvements in the public v:elfare system should be such as to reduce 
the effectiveness of measures to prevent need or obscure the urgency of steps 
for their improvement 
Comment. — It would be a tragedy if this or any other welfare measure served 
to dull the sense of urgency that should lead to strengthening and extending 
those basic measures of economic and social reform that prevent poverty before 
it occurs. Supplementation of full-time wages points up the need for a higher 
minimum wage; new provisions for training and child care, the need for expan- 
sion of the job market ; higher old age assistance ; the need for more adequate 
social security benefits ; rising medicaid rolls, the need for universally available 
and rationally organized health services. These and other basic social reforms 
are the way to reduce the ultimate cost of welfare and are, therefore, relevant 
to this bill. 



American Jewish Committee, Bertram H. Gold, Executive Vice President. 

American Parents Committee, Inc., George J. Hecht, Chairman. 

Board of Social Ministry, Lutheran Church in America, Refus Cuthbertson, 
Associate Secretary. 

Child Welfare League of America, Inc., Joseph H. Reid, Executive Director. 

Day Care and Child Development Council of America, Inc., Robert L. Bender. 
Associate Director. 

Council of Jewish Federations and Welfare Funds, Philip Bernstein, Executive 

Family Service Association of America, Clark W. Blackburn, General Director. 

Florence Crifetenton Association of America, Inc., Mary Louise Allen, Execu- 
tive Director. 

National Board, Young Women's Christian Association, Mrs. Robert W. Clay- 
ton, President. 

National Council of Churches of Christ in the U.S.A., John McDowell, Director 
for Social Welfare. 

National Council for Homemaker-Home Health Aide Services, Inc, Mrs. Flor- 
ence Moore. Executive Director. 

National Conference on Social Welfare National Board, Joe R. Hoffer, Execu- 
tive Secretary. 

National Federation of Settlements and Neighborhood Centers, Margaret 
Berry, Executive Director. 

Travelers Aid Association of America, A. D. Bell, Jr., President. 


United Church of Christ Board for Homeland Ministries, Hobart A. Burch, 
General Secretary (Health and Welfare). 

Women's International League for Peace and Freedom, Rosalie Riechman, 
Legislative Representative. 

Texas United Community Services, Warren B. Goodman, Executive Director. 

Wisconsin Welfare Council, A. Rowland Todd, Executive Director. 

Public AYelfare Committee, Welfare Federation (Cleveland, Ohio), Richard 
E. Streeter, Chairman. 

Welfare Recipient Advisory Council (Honolulu, Hawaii), Lena K. Reverio, 
I'roject Director, Lyn Hemmings, Project Director. 

Community Services Council of Brevard County (Merritt Island, Florida), 
Kenneth M. Storandt, Executive Director. 

Public Issues Committee, Family Service of the Cincinnati Area, Julien E. 
Benjamin, M.D., Chairman. 

Depai-tmeut of Employment and Social Services (Baltimore, Maryland), 
Rita C. Davidson, Secretary. 

Young Women's Christian Association of Roanoke Valley, Virginia, Gladys 
I. Mason, President, Board of Director. 

Young Women's Christian Association of Lockport, New York, Mrs. Howard 
C. Loomis, Executive Director. 

Young Women's Christian Association of Columbus, Ohio, Jean M. Hodil, 
Executive Director. 

Greater Hartford Community Council, Mrs. R. Leonard Keniler, Chairman, 
Public Affairs Committee. 

Lehigh Valley Community Council (Bethlehem, Pa.), Lillian M. Ribble, 
Planning Director, Francis J. Cosgrove, Executive Director. 

Commimity Service Society (New York) Committee on Family and Child 
Welfare, Mrs. David B. Magee for the Committee. 


Mrs. Florence Moore. Executive Director, National Council for Honiemaker- 
Home-Health Aide Services. 

Mrs. J. Cabell Johnson, Trustee, The National Assembly for Social Policy 
and Development, Inc. 

rMs. DeLeslei Allen, Trustee, The National Assembly for Social Policy 
and Development, Inc. 

Mrs. Lois Whitman, Community Activities Dept, National Council of Jewish 

Mrs. Mary G. Walsh, Program Consultant, National Council for Homemaker- 
Home Health Aide Services. 

Mary E. Blake, Director of Consultation and Field Service. National Federa- 
tion of Settlements and Neighborhood Center. 

Richard J. Bargans, Director of Personnel, National Federation of Settlements 
and Neighborhood Centers. 

Ned Goldberg, Director of Development, National Federation of Settlements 
and Neighborhood Centers. 

John F. Larberg, Senior Staff Consultant, The National Assembly for Social 
Policy and Development. 

Joseph Reid, Executive Director, Child Welfare League of America, Inc. 

Ms. Patricia Rennet, Day Care Consultant, The Salvation Army. 

Mrs. Anita P. Robb, Social Welfare Secretary, The Salvation Army Central 

Mrs. H. Edmund Lunken, Board Member, The National Assembly for Social 
Policy and Development, Inc. 

Hobart A. Burch, General Secretary (Health and Welfare), United Church of 
Christ Board for Homeland Ministries. 

Eli E. Cohen, Executive Secretary, National Committee on Employment of 

Gordon A. Bingham, Social Work Consultant. The Salvation Army. 

Edgar B. Porter, Associate Director. National Association of Hearing and 
Speech Agencies. 

Edith M. Lerrigo, Executive Director. National Board. YWCA. 

Nina M. Kbinoy. Secretary. Family Service Association of America. 

Mrs. Elizabeth F. Trimble, Regional Representative. Family Service Associa- 
tion of America. 


Ellen P. Manser, Specialist, Family Development, Family Service Association 

of America. ^ ., « • » • ^■ 

W. Keitli Daugherty, Assistant General Director, Family Service Association 

of America. , ^, ., , o. • ,x- i • 

Mrs. Richard L. Ottinger, Social worker. Family and Child Services, ^\ashing- 

John M. Palmer, Executive Secretary. Community Services Council of Cal- 
houn Co.. Inc.. Anniston. Alabama. 

Gerard J. Cernv, Executive Director. Rome (N.Y.) Umted Fund. 

Gwendolyn Kim. Community Social AVorker, Legal Services Project. Waianae, 

Hawaii. „ , ^ .. o. 

George N. Moorhead. A.ssociate Director, Health, Health and Community Serv- 
ice Council of Hawaii, Honolulu, Hawaii. 

George Orahoda, Associate Director, Research, Health and Community Serv- 
ice Council of Hawaii, Honolulu. Hawaii. 

Charles R. McCudden. Associate Director. Health Facilities, Health and Com- 
munitv Service Council of Hawaii. Honolulu. Hawaii. 

Hiroshi Minami. Executive Director. Health and Community Service Council 
of Hawaii, Honolulu, Hawaii. 

Edward Estes. Associate Director, Planning, Health and Community Service 
Council of Hawaii, Honolulu, Hawaii. 

Jley Er, Information and Referral Director. Health and Community Service 
Council of Hawaii. Honolulu, Hawaii. 

Henry H. Welch, Ph.D., Executive Director. Metropolitan Council for Com- 
munitv Service. Denver, Colorado. 

Mrs'. W. June Abrams, Staff Associate, Association Greater Wilmington Neigh- 
borhood Centers. 

Fern M. Colborn. Commissioner, Fayette County Redevelopment Authority, 
Mill River, Pa. 

Marianna Jessen. Bureau of Indian Affairs. Washington. D.C. 

Robert Z. Green. Director, Center for Urban Affairs, Michigan State University. 

.Tohn T. McDowell. Director, Forsyth County Dept. of Social Services, Winston- 
Salem. N.C. 

Corrine M. Callahan. Executive Secretary, New York State Welfare Con- 
ference, Inc. 

Edward L. Peterson, Executive Director, United Fund of Wayne Co., Rich- 
mond. Indiana. 

Phyllis J. Day, Special Projects Coordinator, United Community Services, 
Jackson, Michigan. 

Frederick F. Oemy, Executive Director, Greater Utica Community Chest and 
Planning Council. 

Kenneth M. Storandt. Executive Director, Community Services Council of 
Brevard County, Merritt Island, Florida. 

Dr. Mildred Fairchild Woodbury. YWCA. Philadelphia Metropolitan Board 
(Formerly Director), Dept. of Social Work, Bryn Mawr College. 

Joseph G. Mroz, Executive Director, Wilmington Senior Citizens Center, Wil- 
mington Del. 

Raleigh C. Hobson, Director, Social Services Administration of Dept. of Em- 
ployment and Social Services. Baltimore, Maryland. 

Sodelle Berger. Chairman. Evansville Friends of Welfare Rights. Evansville. 

Joseph J. Dunne, Executive Director, The Community Council, Evansville, Ind. 

Norman V. Lourie, Executive Deputy Secretary. Penn. Dept. of Public Wel- 
fare. Harrisburg. Pa. 

John W. McGowan. Executive Director, Health and Welfare Council of Pulaski 
Co.. Little Rock. Ark. 

Wayne Vasey. Professor, University of Michigan School of Social Work. 

Ellen Winston. Social Welfare Consultant. 

Robert L. Popper, White Plains, New York. 

Linda Glazer, Executive Director, United Community Services of Johnson 
County, Iowa. 

Myron E. Wegman, Dean, School of Public Health University of Michigan. 

.Tames A. Forde, Schenectady. New York. 

Wilbur J. Cohen, Dean. School of Education. University of Michigan. 

Philip Booth. Associate Professor. School of Social Work, University of 


Harleigb B. Trecker, Prof, of Social Work, School of Social Work, Univ. of 
Conn., Greater Hartford Campus. 

Mitchell 1. Ginsberg, Dean, Columbia University School of Social Work. 

Erna H. Bowman, Senior Caseworker, Member of Advocacy Com. Family 
Service Agency, Rochester, N.Y. 

Kenneth C. Boyd, Executive Director, Family and Children Services, Daven- 
port, Iowa. 

A. Rowland Todd, Executive Director, Wisconsin Welfare Council. 

Lawrence K. Koseki, Associate Director, Social Service, Health and Community 
Services Council of Hawaii. 

Norman Van Klompenburg, President, S.D. Chapter, National Association of 
Social Workers. 

Patricia R. Conrad, Social Worker Public Welfare Board of North Dakota. 

Margaret B. Dolan, Prof, and Head, Dept. of P.H. Nursing, University of N.C., 
Scliool of Public Health. 

Hugo Adam Bedau, Prof, of Philosophy, Tufts University. Medford, Mass 

Mary M. Coleman, Staff Member, Family Service Association of America. 

Thomas Raflferty, Staff Member. Family Service Association of America. 

Alice S. Adler, Staff Member, Family Service Association of America. 

Therese Skarsten, Staff Member, Family Service Association of America. 

Peg Manning, Staff Member Family Service Association of America. 

Alice S. Adler, Staff Member, Family Service Association of America. 

Emily Bradshaw, Staff Member, Family Service Association of America. 

Mark D. Feldman, Staff Member, Family Service Association of America. 

Diedrich J. Tietjen, Staff Member. Family Service Association of America. 

Marcel Kovarsky, Staff Member. Family Service Association of America. 

June Thompson, Staff Member, Family Service Association of America. 

Alice McCarthy, Staff Member, Family Service Association of America. 

Marcia Kovarsky, Staff Member Family Service Association of America. 

Marian Emery, Mary, Staff Member. Family Service Association of America. 

Margaret Mangold. Staff Member. Family Service Association of America. 

Patrick V. Riley, Staff Member, Family Service Association of America. 

Bette Ryan, Staff Member, Family Service Association of America. 

Mary Ann Jones. Staff Member. Family Service Association of America. 

Pauline Cohen, Staff Member. Family Service Association of America. 

Goldie Kleiner. Staff Member. Family Service Association of America. 

Walter L. Smart, Associate Director, National Federation of Settlements and 
Neighborhood Centers. 

Mrs. C. Kitty Dozhier, Health and Welfare Council of Pulaski County, Little 
Rock. Arkansas. 

Mrs. Jean K. Post, Secretary to Regional Representative of South East. Fam- 
ily Service Association of America. 

Statement of the National Association of Manufacturers on Title IV of 

H.R. 1 

The National Association of Manufacturers appreciates this opportunity to ex- 
l)ress its views on the important matter of welfare reform, as embodied in Title 
IV of H.R. 1. NAM is a voluntary association of business concerns of all sizes, 
located in every state, and operating in all areas of industrial activity. 

This statement is centered on Title IV because the so-called welfare crisis in- 
volves primarily the Aid to Families of Dependent Children program. The As- 
sociation will also comment on Social Security and medicare. 

We have specific comments on such details of Title IV as eligibility, work re- 
fiuirements. work incentives and administrative safeguards. However, we first 
want to put welfare reform into a broader context. 

We are not starting from scratch to design a welfare program for needy fam- 
ilies. The nation is faced with the consequences of permitting the AFDC program 
to continue for almost forthy years without fundamental re-evaluation of its 
applical)ility to contemporary problems. This mistake has been tragic in human 
terms and has severely strained fiscal resources. Therefore, we approach the Title 
IV i»roposal from two points of view : (1) that of intergovernmental relations and 
respon.sibilities within I he federal system; and (2) that of welfare reform re- 



Our preference is for private sector solutions to social problems where pos- 
sible, and for state-local solutions where government must be involved. But the 
size of the public assistance caseload and forty years of dependence on the pub- 
lic sector for its operation appear to rule out the possibility of a return to vol- 
untary, private-sector financing. 

If public assistance has become ingrained as a government function, where in 
our federal system does responsibility for it fall? There are actually three major 
aspects to welfare and public assistance programs — income maintenance, admin- 
istration, and the provision of social .services. The differences among them tend 
to be obscured by the discussion of costs and the question of who should finance 
the program. 

It is a basic concept of public finance that the level of government providing 
the funds should have control over, and responsibility for, the way they are spent. 
The present AFDC program is a flagrant violation of this principle. The states 
determine the level of benefits and the federal government is required to provide 
financing on a matching basis. The federal share of public assistance payments 
for the current fiscal year was estimated in the 1972 Budget at 57 percent of 
total program costs. Specifically with respect to AFDC, the federal share is 
more than SO percent of the payments to families in some states, with the median 
at 59 percent. In addition, the federal government pays 75 percent of the cost of 
soical services — also on an open-ended basis — and about half of the administrative 
costs. The extent of the federal government's heavy financial commitment to these 
programs is not widely recognized. At the same time, the Congress has no oppor- 
tunity to review benefit levels or even to evaluate the effectiveness of the program. 
A recent survey by HEW's Social and Rehabilitation Services showed errors — 
approximating"$56o million a year — mostly identified as the consequence of an 
inadequate quality control system and the absence of effective federal sanctions. 

In addition to the lack of any real control over the accelerating costs of AFDC. 
under the present system widely differing benefit levels contribute to distortions 
in the labor markets, to serious rural and urban area dislocations, and social un- 
rest. Along with many opponents of Title IV. we are concerned about the extension 
of government aid to the so-called working poor. However, to reduce the wide 
disparities in benefit levels between the states and. at the same time, deny aid 
to the working poor could lead to a complete disintegration of labor markets in 
certain states. The objective, of course, is to bring these people, many of whom 
accept welfare as a way of life, into the labor force and the productive economy— 
not to make support programs competitive with work. We are not certain what 
the precise effect of H.R. 1 would be on the labor markets and worker motiva- 
tion — although the evidence in hand is not unfavorable and certainly does not 
tend to confirm the dire predictions of the most zealous opponents of Title IV. 

We particularly approve the attempt in this legislation to bring social .service 
costs, as well as income maintenance costs, under some sort of control. We believe 
that the actual administration of social services should be in the hands of .state- 
local agencies. 


We support the basic work-oriented approach of Title IV, although we are 
well aware that it is not a cure-all. Both its more ardent proponents and its more 
zealous detractors appear to us to be expecting — or fearing — much more from 
this legislation than is realistic whether from the point of view of the beneficiary 
or the taxpayer. For example, although we have a great distaste for the concept 
of a flat-benefit guaranteed income, we feel there has been too much attention 
to semantics in this case. Right now. in fact, we have 54 "guaranteed income" 
plans and virtually everyone agrees that they do not work. Title IV requires 
welfare recipients to accept certain re.sponsibilities to society at large — including 
the critical work requirement and retraining provisions — and in this .sense it is 
not, in our opinion, a guaranteed income plan. In our view Title IV is neither 
an over-all solution to the problems of poverty nor a great give-away. It is an 
attempt to get some feasible national standards for assistance, to establish incen- 
tives for self-improvement, and to institute some more effective control over the 
financing and administration of these programs. 

Members of this Committee have expressed considerable concern about the 
possibilitv that the work incentive might prove ineffective, or even a disincentive, 


under certain circumstances and in certain localities if existing statutes relating 
to public housing, medicaid and other welfare-type programs were unchanged. 
However, it is well to remember that such results would obtain not from the 
structure of Title IV itself, but from the operation of exLsting categorical aid 
programs. It may well be impractical to restructure all these programs at once 
but it would not be impossible to do so to bring them in line with the basic goal 
of work-oriented welfare reform. 

Because the goal is to bring a portion of the population into full participation 
in the economy, the basic economic facts cannot be ignored. We have the following 
recommendations to make with respect to four aspects of the bill with important 
economic implications — the work incentive, the wages to be accepted by bene- 
ficiaries, the* eligibility of strikers for benefits and the importance of private 
sector employment. 


1. The ^Vork Incentive. — A great deal of the discussion of this bill is confused 
by comparison with the present situation under a number of federal-state pro- 
grams. This is particularly true of the work incentive, which is a crucial aspect 
of the reform. Although the AFDC program was originally designed to provide 
temporary assistance to families, it has long since become a support program. 
That is the source of much of our dis.satisfaction with it and much of our concern 
with the "'welfare subculture" which has developed in its wake. Congress tried 
to remedy this, particularly by the establishment of the Work Incentive Train- 
ing program. However, in many states the combination of limited work incentive 
and lax administration made this ineffective. The recent establishment of a 
federal work requirement in H.R. 10604 was a step to correct this situation. 
However, the WIN experience up to now does not give us a satisfactory basis 
for evaluating the work incentive in H.R. 1. 

Obviously we cannot undo the AFDC experience, which will affect the motiva- 
tion to work of those who have been brought up under it. Although Title IV 
gives us a place to start to redirect our efforts, it does not guarantee that the 
work incentive will be effective for all those able to work now receiving AFDC 

We feel that there has been an unfortunate over-use of the concept of "tax 
rate" in reference to the reduction of benefits as earnings increase. After all, 
the purpose of Title IV is not to provide continuing support for families but to 
give them an incentive to become self-supporting. We believe that the impor- 
tant aspect of the incentive is that a family should always have more income as 
its own efforts increase. The basic formula for providing benefits under Title IV 
appears to meet this requirement in principle, although some exceptions will 
undoubtedly arise. Under the circumstances — and particularly in light of the 
nagging matter of cost constraint — we feel that the formula presently incor- 
porated in the legislation should be tried for an adequate period before any 
attempt is made to modify the incentive. 

2. Eliffihility Requirements mid the Problem of Strikes. — As the legisla- 
tion now stands, participants in long strikes could become eligible for benefits. 
The extent to which strikers have been availing themselves of public assistance 
has been brought to the public's awareness by the General Electric strike of 
1969-70 and the 1970 General Motors strike, as well as by the International Tele- 
phone and Telegraph Corporation's court challenge of welfare payments to 
strikers in Massachusetts. The cost to the states is reflected in the fact that 
more then ten states are joining the International Telephone and Telegraph 
Corporation in asking the Supreme Court to re-hear that case. 

However, much more is at stake than money. Public subsidy of strikers di- 
rectly diminishes the deterrent to strike, thus increasing the number of strikes 
and their duration. Requiring taxpayers, including industry, to finance strikes — 
although indirectly — means that they are made to subsidize an economic weapon 
that is u.sed against them. Public welfare funds should be used for the funda- 
mental purix)se for which they are appropriated and not to subsidize one side 
in an economic dispute. 

The use of public funds to support strikers involves the government directly 
in labor disputes, contrary to our labor laws and their intent. Therefore, we 
urge amendment of the definition of eligibility so that strikers and their families 
will be barred from receiving benefits under this program. 

3. Wage Scales in Private Sector Jobs. — In its present form, H.R. 1 would 
permit an individual to reject employment if the wage offered is below that locally 


prevailing for similar work or less than 75 percent of the federal minimum 
wage for private employment and the full federal minimum for public service. 
Many jobs — an estimated 5.5 million — are not presently covered by federal mini- 
mum wage legislation. This provision, if unchanged, would extend the federal 
minimuni wage legislation as a standard for wage payments without debate as 
to its effect on the economy or job opportunities for low-skilled people. 

We support using the standard of "prevailing local rates for similar work," 
but are equally strongly opposed to use of the federal minimum as a standard 
for payment unless the job involved is already covered by federal wage-and- 
hour legislation. Our opposition is twofold. First, we believe that the minimum 
wage legislation and its possible extension should be debated in its own right 
and not "blanketed-in" in the name of welfare reform. Our second objection is 
the practical one that this level of payment will be self-defeating in that it will 
reduce the number of job opportunities available to the beneficiary population. 

There is general agreement that the present AFDC crisis reflects the break- 
up of families whether by separation, desertion, divorce or illegitimacy. This 
social crisis has not occurred in isolation. It represents, in particular, a rejection 
of low-level jobs even by those who cannot do more productive work. This atti- 
tude has been supported in many areas by high benefits that compete with wages 
for those lower skilled jobs. The payment standard in this bill attempts to remedy 
this by arbitrary wage rates. This does not, however, solve the problem. Indeed, 
it may aggravate it. 

What is needed is skill improvement: in many cases the very experience of 
holding a job is itself the best way to achieve that. Setting an artificial cost 
barrier will prevent many of these people from getting that first crucial job. The 
important thing is to replace welfare with work opportunity but there is no 
economic justification for an additional subsidy of paying a welfare recipient 
more than the economic value of his work. 

4. Transitional Function of Public Service Employment. — ^The legislation an- 
ticipates 200.000 public service jobs in the first year, with incentives to the em- 
ploying state and local governments to make this employment transitional. This 
incentive takes the form of a reduced federal contribution to the of such 
employment for each year the beneficiary holds one of these jobs. In order to 
strengthen this incentive, we recommend that the federal share be reduced more 
rapidly than is now contemplated and that it finally disappear entirely instead 
of continuing at a 25 percent rate after the fourth year. 

One of the safeguards written into the bill, with respect to keeping this .shel- 
tered employment temporary, is the requirement that the employee's record be 
reviewed every six months to see whether he can go on to other work. It seems 
to us, that, with the many administrative problems relating to the implementa- 
tion of the entire reform program, it would jusit not be feasible to have an effec- 
tive review for a caseload of this size on a six-month basis at the beginning of 
the program. We suggest, therefore, that the first review be made after 12 
months and be thorough and on the basis of objectives guidelines. From the 
beginning of the second year of operation, presumably July 1, 1974, the semi- 
annual review should become effective. 


Appropriate administration is crucial to the success of this welfare reform pro- 
gram. The range of decisions formerly left to caseworkers — many of whom are 
not professionals — and the consequent overly permissive interpretation of rules 
has contributed to the explosion of the AFDC caseloads and specifically to the 
problems of WIN. We are, therefore, very pleased that the administrative pro- 
visions of H.R. 1 give promise of more uniform and stricter enforcement. The 
requirements for proving eligibility, the stronger penalty for parents who desert 
their families, and the requirement for reapplication after being on the rolls for 
two years, are examples of steps in the right direction. So is the wording of the 
provision that permits an individual to reject employment or training only if 
other opportunities are available to him, as well as within his demonstrated 
capacity. ^ . , 

Although H.R. 1 provides for checking on eligibility and for use of social se- 
curity numbers to monitor family incomes, it is apparent that there is a general 
concern about fraud because, in the present program, there is considerable op- 
portunity for fraud, and there have been numerous documented instances to vali- 


date that concern. It is important to the acceptance and subsequent success of 
this program that the public be reassured on this matter. We are, therefore, 
suggesting that the experience of New York State with an Inspector-General be 
monitored with a view to adapting this type of independent office to the family 

The separation of the caseload so that employables are handled in a work- 
oriented atmosphere, for which the Department of Labor is responsible, is also a 
desirable innovation. We recognize that the mere separation of the caseload 
will not of itself obviate the need to emphasize constantly that the goal is employ- 
ment and training for employment and not merely support. Setting up this 
program will take some time. Because of the possibility that executive reorga- 
nization would place both the Opportunities for Families Program and 
the Family Assistance Program in the same Department of Human Affairs, we 
believe that the legislation should be written to assure the continued separation 
of the caseloads under that circumstance. 


The size and rapid growth of the AFDC caseload make welfare reform a na- 
tional priority. Major problems of the present program stem from the wide 
variation in benefits among states and the fact that the financing formula 
is a flagrant violation of the principle that the level of government primarily 
respon.sible for funding a program should have control over, and responsibility 
for, the way the funds are spent. 

The specific work incentive and work requirement principles in Title IV of 
H.R. 1 merit serious attention of Congress with a view to early enactment. We 
particularly approve the attempt to bring social service costs under control 
but believe that the actual administration of necessary services should be in 
the hands of state-local agencies. 

We believe this legislation would be strengthened by the following changes : 

1. Denial of benefits to strikers and their families. 

2. Use of local prevailing wages, rather than the federal minimum, or per- 
centage of it. as the standard for acceptable pay rates for Opportunities for 
Families beneficiaries. 

3. Recognition of the transitional function of public service jobs by a faster 
reduction and eventual pha.sing out of the federal contribution to state-local 

4. Consideration of adoption of the "Inspector-General" approach to checking 
on the administration of eligibility requirements and such related issues as 
search for deserting parents. 

5. Assurance that the Opportunities for Families Program and Family Assist- 
ance Program caseloads will be administered separately even if the Depart- 
ment of Labor and HEW are eventually merged into a Department of Human 
Affairs as the result of executive reorganization. 

Welfare reform is not without risks. However, the risks of not changing course 
are certainly greater. If we are fully aware that a new approach will need 
modification based on experience, we should avoid raising unrealistic expecta- 
tions and be able to assuage unrealistic fears. 

Statement of Carl C. McCraven, National Executive Board Member, National 
Association for the Advancement of Colored People (NAACP), and Chair- 
man, Health Committee, Southern California NAACP 

I appreciate the opportunity afforded me by the Senate Finance Committee, 
its Chairman, Senator Long, and the staff to express my views on the amend- 
ments to the Medicare and Medicaid programs contained in H.R. 1, Social Securitv 
Amendments Bill of 1971. 

My brief remarks are based upon the following assumptions : 

1. All American citizens have a right to equal access to health care services 
without regards to race, religion, economic status or locality. 

2. Adequate health care is es.sential to young Americans in order for them 
to develop into self-sufficient citizens. This is particularly true for the poor 
who must look forward to earning at an early age if they are to escape the 
conditions of poverty in which thev were born. 


3. Good health care at an early age diminishes the likelihood of chronic 
health problems in middle age. 

4. A condition of good health for American citizens is a national goal and 
the use of federal resources to bring it about a national policy. 

The Medicaid history of the past year in California has raised serious ques- 
tions as to whether these goals are, in fact, still national policy. 

Preventive, comprehensive care, the basis upon which good health is achieved, 
was the original purpose of Title XIX of the Social Security Act. Instead of 
working toward that goal, California and, it appears, certain portions of this bill 
are devoted to returning us to sick care rather than health care. Sick care always 
has been expensive but for the poor it is tragic as well as expensive. The poor 
are sicker than the non-poor. They will I'emaiu sicker — and poor — until early 
preventive and educational health supervision breaks the cycle. The Califoi-nia 
cutbacks have removed all semblances of comprehensive care, ham-stringing the 
ghetto physicians and discouraging the poor from even attempting to enter the 
health system. In our concern we have become intimately acquainted with the 
effects on every level of the program reductions. Tliis experience has caused us 
to have some very explicit concerns about certain portions of H.R. 1. I will dis- 
cuss those portions, not intending that my lack of discussion of other provisions 
of the bill should indicate agreement or disagreement with them. 

Section 230 of the bill would repeal that portion of the Medicaid law which 
recpiires that the states make efforts to provide comprehensive medical services to 
all the needy by July 1, 1977. That section, 1903(e), expresses the basis of the 
intent of Congress when the law was made. Its repeal would give federal sanctions 
to states wishing to be relieved of the responsibility of working toward that goal. 

Sfction 208. dealing with cost sharing under Medicaid, extends cost sharing 
lirovisions while, in fact, we ought to be reducing or eliminating such provisions. 
Over the past year there have been constant attempts by state and federal gov- 
ernment to solve the problem of porvider misuse and other basic problems within 
our health care system by abridging the lights of the poor to health care. This is 
both unfair and shortsighted. The old saying, "throwing the baby out with the 
bath water." seems to best describe our state and federal policies on our health 
care problems. The mother of small children ought not be put in the position of 
deciding between physician visits and other fundamental necessities. Or indeed, 
between which of her children needs most to see a physician. Either supporters 
of this provision have never been poor or they have short memories. Let me re- 
mind you, a dollar a few days after payday is a lot of money when you are poor. 

Furthermore, there is much evidence to refute the allegations that over- 
utilization, which cost sharing is supposed to curtail, even exists. Except for the 
initial visit, the physician makes the decisions for subsequent visits and choice 
of treatment. 

I am informed that utilization experiences of O.E.O. health programs have 
been documented in studies that show neighborhood health center enroUees aver- 
age 4 to 5 visits to a physician each year, which is about the same as the national 
average. Further, although the national physician visit rate is 4.2 visits per year, 
the current Medicaid rate in California, without financial participation from 
the recipient, is 2.0 per beneficiary. The XAACP units for which I speak urge 
that Section 208 be amended to eliminate all cost sharing provisions under 

Section 209, restricting eligibility and imposing a spend down requirement on 
families, involves complex differences in eligibility levels between states and 
the various programs for financial aid. Without discussing these technicalities 
I will simply state that Section 209 establishes a federally enforced Medicaid 
cutback and perpetuates bui'eaucratic hai-assment of the medically needy and 
needs to be re-drafted to insure that all medically needy receive Medicaid and 
that "medically needy only" categories not be reduced. 

Section 205. cost sharing for Medicare recipients, is unfair to our senior citi- 
zens, especially those who are poor. Wouldn't it be much better to institute in- 
vestigations of misuse and, in the process, weed out unscrupulous providers, 
thereby aiding the elderly as well as reducing possible misuse of federal funds? 

Section 231 allows the states to reduce or terminate services or programs not 
required as part of the basic five services of Medicaid without approval or review 
by HEW. One non-required benefit is drugs. Our experience in California with 
cutbacks in the allowable drug formulary has shown the folly of such thinking. 
A special investigating committee of California As.semblymen headed by Assem- 


blyman Goi-don Duffy investigated the effects of tlie cutbacks early in 1071. 
Tbey received a mountain of documentation of problems caused by forcing physi- 
cians to try to provide medical care ^^•ithout drugs. We feel that Section 231 
should be repealed. Making the recipient pay the price for states' mismanage- 
ment of health care delivery further erodes the goal of comprehensive care. 

The use of the HMO concept lias, in general, indicated that it is a progressive 
step in the direction of reorganization of the delivery system, a necessity if we 
are to improve our level of health care. I have one major point to make about 
HMO's as they relate to Medicaid and Medicare. The poor people v^ho utilize 
the services of HMO's will be highly dependent on their .services for all of their 
medical needs. Since economy of operation is one of tlie purposes for founding 
HMO's, there exists a potential for underprovision of services. A built-in prob- 
lem not unlike our present problem becomes apparent ; the poor could be made 
to pay the price by again being denied neces.sary or high-level care. Consumer 
safeguards must be included to insure that the people who depend on services 
will be served comprehensively. There should be more explicit provisions in 
H.R. 1 for the complete range of high quality services. Among tliem should lie : 

(a) Full time staffs for the basic specialties with minimum physician/enroUee 

(&) Only Board certified or eligible surgeons should perfoi-m surgery. 

(c) HMO's should be required to refer patients to outside specialists when 

(d) Consumers and individuals representing c-onsumer groups must be pro- 
vided an opportunity to participate in decision-making in their health care pro- 
grams through representation on governing boards and by the establishment 
of grievance hearings. 

Thank you, Gentlemen. 

Statement by National Council of Senior Citizens. Submitted by 
Nelson H. Cruikshank, President 



Cash benefits. 

25% Increase Needed. 

A "Floor of Protection". 

General Revenue Financing. 

Short of Bold Reform. 

Major Improvements Needed. 
Health Care. 

Recommendations of the White House Conference on Aging. 

Reform of Medicare and Medicaid. 

•'Reasonable Cost" and "Reasonable Charge". 

Cost Control. 

The Delivery System. 

Essentials of Reform. 

Transferring Part B to Part A of Medicare. 

Exclusion of Chiropractic. 

Coverage for the Disabled. 

Long Term Care. 

Catastrophic Health Insurance. 

The "Adult Categories". 
Attachment "A". 


Cash benefits 

Supports Recemmendations of 1971 White House Conference on Aging for an 
immediate 25% increase in Social Security. 

Recommends introduction of general revenue financing reaching, eventually, 
one-third of the cost of the program. 

Supports automatic cost of living adjustments, when Congress fails to act; 
higher minimum for workers with long coverage ; increased benefits for workers 
able to postpone retirement ; 100% widow or widowers' benefit ; improved early 
retirement benefits ; additional drop out years for benefit calculation ; liberaliza- 


tion of the retirement test from $1,680 to $2,000; improvement in method of 
computing benefits when workmen's compensation payments are involved. 

Recommends changing from 20 years to 10 the period which a divorced wife 
must have been married to her former husband to be eligible for a wife's benefit. 

Health care 

Supports recounnendations of 1971 White House Conference on Aging in sup- 
port of the principles of the Kennedy-Harris National Health Security bill. 

Recommends reformed Medicare-Medicaid system in a federally administered 
program covering all residents aged 65 or over without coinsurance or deductibles 
or premiums. Physicians and providers fees would be predetermined and all 
would need to agree to accept the program payment as full payment for a given 
covered service. Incentives would be included to choose comprehensive prepaid 
group practice with the program providing for consumer representation and 
public accountability at all levels. 

Reaffirms support for proposal to merge Part B of Medicare with the Govern- 
ment-financed Part A (Hospital Insurance) thus freeing the elderly of the burden 
of spiralling premiums for doctor bill insurance. 

Proposes immediate HEW development of a program of coordinated, continu- 
ous, comprehensive medical and social services for the aged for transmission to 
Congress to enactment within two years. 

Supports provision in H.R. 1 to require the Secretary of HEW to conduct a 
study on the desirability of covering chiropractic services under Medicare. Em- 
phasizes this should be done by a competent, recognized, scientific group wholly 
independent of the medical profession as such. 

Supports the need for extending Medicare coverage to di.sabled Social Security 
beneficiaries under age 65. 

Rejects proposals for so-called catastrophic health in.surance. 


Supports Ribicoff amendment to H.R. 1. 

Urges that States — with the aid of Federal matching grants — make supple- 
mental payments to bring all welfare payments up to current levels. 

Urges no mother with small children be required to work unless child care 
centers are easily accessible. 

Asks protection for State and Local Government employees who currently 
administer welfare programs. 

Supports provisions of H.R. 1 applying to adult categories with eligibility sys- 
tem which respects the dignity of the individual. 

Supports authorization of $1.2 billion for 300.000 public service jobs as against 
$300 million proposed under H.R. 1 and urges these jobs pay no less than the 
federal minimum wage. 

Mr. Chairman and Members of the Senate Finance Committee : 

As President of the National Council of Senior Citizens, largest group of 
organized older peoples clubs in America. I welcome this opportunity to present 
our views on H.R. 1. 

Some distinguished Committee Members may remember me from the days when 
I appeared before the Senate Finance Committee as Director of the AFL-CIO 
Social Security Department. You may recall that I served on Statutory Ad- 
visory Councils on Social Security in the 1948-49 period, the 1958-59 period and 
in 1964. 

Perhaps, I should also add that I have served on the Health Insurance Bene- 
fits Advisory Council (HIBAC) since it was set up under the Social Security 
Amendments of 1965 to advise the Secretary of HEW with respect to the Medi- 
care program. 

My statement is directed to all aspects of H.R. 1, including Social Security 
cash benefits, health care and the welfare provisions of this legislation. 

In saying this. I should point out that the National Council of Senior Citizens 
soeks a better life for all Americans — the young and middle-aged as well as the 
elderly. Our organization is not just a special interest group for the retirement 

I will begin with Social Security cash benefits. 


26% increase needed 

The National Council of Senior Citizens strongly supports the recommenda- 
tion of delegates to the 1971 White House Conference on Aging for an immediate 


25% Social Security increase as a first step toward achieving the Bureau of 
Labor Statistics' intermediate budget for a retired couple amounting to $4,500 a 
year as of Spring, 1970 (also recommended by delegates to the White House Con- 
ference on Aging) . 

I need not remind the Committee that nearly 5,000,000 men and women aged 
G5 or over are impoverished and millions more — 2,000,000 more at the very least — 
are very, very, close to the poverty line. We all know some elderly men and 
women who are perhaps financially well off but rarely do we see the hardship 
and suffering of the millions of the elderly who are the poorest of the U.S. poor. 
The elderly do not parade their poverty. As a matter of pride, they do their best 
to hide it. 

Xor need I remind the Committee that men and women age 65 or over repre- 
sent more than 10 per cent of the population. 

We all feel the impact of the steady rise in consumer prices — and there is 
little indication this rise will be slowed substantially with the present inadequate 
control machinery — but the elderly, living on fixed incomes, are hit harder than 
any other group by the continuous shrinkage of their purchasing power that has 
gone on month after month, year after year without letup. 

The stark fact is that more and more low income elderly are being overwhelmed 
by the ever rising tide of inflation. During the 1960's and on into the 1970's, 
the aged poor increased while all other categories of the poor declined. 

As the Senate Special Committee on Aging has often pointed out, there is a 
widening gap between what the elderly receive in retirement and what they were 
able to earn on the job. The average Social Security benefit of a couple retiring 
in 1950 met half the Bureau of Labor Statistics budget cost then, but subse- 
quently dropped to a third of that cost, according to findings made by a task force 
of experts for the Senate Special Committee on Aging. 

Mr. Chairman and Members of this Committee, we all know this is a matter 
of national priorities. I respectfully submit that a nation that can budget the 
astronomici.1 total of $78 billion for arms and defense — as President Nixon re- 
quested foi fiscal '7.3 — can afford to provide a minimum level of comfort and secu- 
rity for the millions of elderly Americans in need of help. 

A ''floor of protection" 

We hear a good bit of talk these days about the original intention of the 
Social Security program having been to provide a "basic floor of protection" for 
workers when they reach their retirement years. According to this theory bene- 
fits are to be held to a low figure and are to be supplemented by such things as 
savings, life insurance, home ownership, private pensions, etc. 

Whatever the original theory may or may not have been this notion has now 
been proven to be illusory. The study of private pensions conducted by the Senate 
Special Committee on Aging sho\^s that only a minority of workers, and these 
among the most favored in other respects, are in fact recipients of pensions in 

Pension programs are too often characterized by high eligibility requirements, 
are payable only to those with extremely long terms of service in one industry or 
for one employer and in most cases make no provision for survivors. 

The burdens of family finance during workers" earning years are so heavy that 
the possibility of having substantial savings is remote. Perhaps home ownership 
has proven, more than any other factor, a bitter disappointment in planning for 
economic security. The homes that were suitable for raising their families are 
totally unsuited for retirement. Many of them are in the decaying urban centers 
where property values are rapidly declining. Worst of all, property taxes have 
risen so rapidly in recent years that the home which was designed as a haven 
of security in old age has become an economic liability. 

Regardless of any theories to the contrary about floors of protection, the stark 
fact is that today most people depend upon Social Security — and Social Security 
alone — for protection in their retirement years. We cannot escape the fact that if 
we are to do anything meaningful about poverty among older people in America 
we must make massive improvements in the cash benefit provisions of the Social 
Security system. 

General revenue financing 

Nor was it the intention of the framers of the Social Security Act that it 
always rely exclusively on the regressive payroll tax for financing. Early in 
the history of the Social Security Act, Social Security experts foresaw the 


need for augmenting the Social Security tax with a substantial amount of 
Federal general revenue. 

As a matter of fact, even v\-ithout the use of greater Federal general funds, 
it is possible for Congress to raise the level of Social Security 20 i>er cent now 
if it accepts the rising earnings actuarial assumptions relating to the Social 
Security trust fund recommended by the prestigious 1971 Advisory Council on 
Social Security which published its report last April. 

Dr. Arthur "s. Flemming, newly named Consultant to the President on prob- 
lems of aging and Chairman of the 1971 White House Conference on Aging, 
headed this Advisory Council on Social Security. 

It is interesting to note that the 1971 Advisory Council chose to recommend 
a substantial contribution from Federal general revenues to meet much of the 
cost of the Medicare program. However, only a minority of its members recom- 
mended allocation of Federal general revenue to help finance the Social Security 
cash benefits program. 

Mr. Chairman and Committee members, whether or not Congress agrees with 
the rising earnings actuarial assumptions relating to the Social Security trust 
fund recommended by the Advisory Council, there are compelling reasons for 
a large allocation of Federal general revenues for the Social Security cash 
benefits program. As you are aware, full-rate benefits were paid all covered 
workers in the early days of the Social Security program as if they had contrib- 
uted to it all their working years. Today's workers are still paying this cost 
which amounts to an estimated one-third of the cost of the Social Security 

The National Council of Senior Citizens urges that, as a matter of equity, 
general revenues be used to lift this burden from the backs of today's workers. 
One-third of the cost of Social Security program should, in fairness, come 
ultimately from Federal general revenues. 

Social Security is a great national resource, benefiting the nation as a whole 
as well as individual Social Security recipients. It is proper and reasonable that 
the nation as a whole share in the cost of the program through allocation of 
substantial Federal general revenue to support it. 

Social Security, as you are aware, is the main support of older people — the 
chief bulwark against poverty in later years — but it offers very inadequate pro- 
tection for millions of beneficiaries. 

Short of hold reform 

H.R. 1 would improve the Social Security program but, unfortunately, this 
proposal falls far short of the bold reform that would make Social Security a 
truly viable method of assuring present and future retirees an adequate share 
of the economic abundance they helped create for the majority of our people. 

Specifically. H.R. 1 would provide a higher minimum income for workers with 
long coverage under the Social Security system, increased benefits for workers 
able to postpone retirement, a long needed raise in the widow's Social Security 
benefit to make it equal to the primary benefit, improved early retirement benefits 
for workers retiring in the future, additional dropout years for the purpose of 
improving benefits for all workers and it would raise, from $1,680 to $2,000 a 
year, the amount of Social Security recipient may earn without reduction of 

The National Council of Senior Citizens supports these provisions of H.R. 1 
with the reservation, however, that the age-62 computation of Social Security 
benefits for men also apply to hundreds of thousands who have been eased out 
of the labor force prematurely during the current business depression. 

H.R. 1 also includes desirable innovative features such as automatic adjust- 
ment of benefits in line with increases in the cost of living and automatic 
adjustment of wage base taxes credited for Social Security benefits. 

The National Council considers the provision for an automatic cost-of-living 
adjustment a great improvement over earlier proposals in that it takes effect 
only in case the Congress fails to enact needed increases. There is thus hope 
that future increases will not be limited to mere increases in the cost of living 
but will take account of rising standards of living. The National Council, while 
wholeheartedly endorsing the principle of automatic adjustment, urges that 
such adjustment be pegged to a higher benefit level and to a higher wage 

This is where H.R. 1 falls short of what is needed to make Social Security 
fulfill its goal, namely, replacement of income lost due to retirement, disability 
or death. 

72-573 — 72 — pt. 6 15 


I consider H.R. 1 essentially a 'patcbwork' program that does not come to 
grips with the main issue — an adequate income when working years are over. 

The 5 percent Social Security increase proposed under H.R. 1 is another in- 
stance of 'patchwork' with the patch not covering the gap it should cover. H.R. 
1 fails to provide for an increase in benefit levels preceding automatic adjustment 
of future benefits to price increases. 

Under H.R. 1 as passed by the House, just as many beneficiaries will remain 
just as poor as they now are. They are trapped by a guarantee of poverty. Their 
financial condition may get worse — indeed, it is likely to as advanced age and 
deteriorating health deplete whatever resources they may have in addition to 
their benefits. They are literally frozen into poverty. 

Furthermore, by not raising the wage base significantly, H.R. 1 fails to 
assure future retirees benefits reasonably related to their previous earnings — 
failing, at the same time, to provide more income for the system or to reduce 
the regressivity of the tax. 
Major improvements needed 

The National Council of Senior Citizens urges that the Senate, building upon 
the many desirable features of H.R. 1, take this opportunity to make major 
improvements that are long overdue. 

Without a substantial Social Security increase, the elderly will be made to 
bear an unreasonable and unfair share of the cost of economic crisis. 

Already, the elderly have waited more than six months for action on Social 
Security legislation — H.R. 1 was approved by the House of Representatives last 
July — while Congress was voting a whopping $8 billion in tax cuts for business 
and corporations. 

Must the aged always be forgotten whenever there is an economic crisis? 
Because they do not riot or threaten violence, will they continue to be forgotten 
and abandoned? 

Speaking for the 3,000,000 members of the National Council of Senior Citizens, 
I respectfully call upon the Administration and Congress to face up to the misery 
and suffering of millions of older Americans and do something about it. 

This will require a reordering of national priorities. It is a development that 
is long overdue. 

In the summary at the beginning of this statement I have listed those elements 
of H.R. 1 which the National Council of Senior Citizens supports together with 
our additional recommendations. 

There is an additional change in the cash benefit program of Social Secui'ity 
which is not included in H.R. 1 but which, in our view, is required and desirable 
as a matter of simple equity, namely changing from 20 years to 10 the period 
which a divorced wife must have been married to her former husband to be 
eligible for a wife's benefit. 


Recommendations of the White House Conference on Aging 

One doesn't need to be a health specialist to be able to detail the evidence of 
the chaotic state of present health care marked by both fragmentation and 
wasteful duplication of services, with overemphasis on costly hospitalization 
and incentives for unnecessary services. 

It is easy, therefore, to understand why the delegates to the recent White 
House Conference on Aging urged priority consideration for the establishment 
of a comprehensive national health security program, financed through social 
security and general revenues, which would include the aged as well as the rest of 
the population. 

The delegates to the White House Conference were prohibited by conference 
rules from identifying their support of specific legislative proposals by using the 
names of authors of bills or the bill numbers. Nevertheless, they came out strongly 
in support of the principles of the Kennedy-Harris National Health Security 
bill (S-3) when describing the kind of program they consider necessary to meet 
the health needs of all Americans. 

It is significant that these delegates, the majority appointed by their Governor 
and cleared by the White House, representing all states and from all walks of 
life, indicated no support whatsoever for the Administration's health proposal 
which accepts the inevitability of the present "non-system" and merely pumps 
in more dollars without disturbing the status quo. 


The White House Conference delegates urged that National Health Security 
be financed through wage and payroll taxes and contributions from Federal 
general revenues, ensuring that health care expenses would be a shared respon- 
sibility of the government, employers, and individuals. They insisted there should 
be no deductibles, copayments or coinsurance. 

The delegates felt that the Government should assume responsibility for as- 
suring an adequate supply of health manpower and essential facilities and for 
improving the organization and delivery of services. 

In contrast, the Administration would set up two types of health insurance, 
providing a bonanza for the insurance industry which — as our experience with 
Medicare shows — has performed poorly while profiting richly. The Admini- 
stration's health proposal perpetuates invidious distinctions in health care 
based on income and falls far short of universal coverage. The Administration's 
proposal relies heavily on deductibles and coinsurance — made no more palata- 
ble in actual practice by the euphemism of "cost sharing." This would in- 
evitably cause the patient to postpone needed care. 

The delegates to the White House Conference on Aging realized there might 
be some delay in Congress enacting National Health Security. However, they 
also recognized the desperate health needs of older Americans and so they 
called for an expansion of Medicare and Medicaid benefits until such time as 
a National Health Security program is enacted. 

The White House Conference Report recommended new benefits including, at 
a minimum. Medicare coverage of out-of-hospital drugs. Medicare coverage 
of care for the eyes, ears, teeth and feet (including eyeglasses, hearing aids, 
dentures, etc.) ; and improved services for long term care and expanded and 
broadened services in the home and for other alternatives to institutional 

Such expansion of Medicare, the White House Conference Report said, should 
include elemination of deductibles, coinsurance and copayments, and all pro- 
visions discriminatory to the mentally ill. It recommended the same age for 
eligibility for Medicare as for Social Security cash benefits. To achieve this 
expansion, the report called for greatly expanded use of general revenue 
financing for the Medicare program. 

Reform of medicare and medicaid 

Reform of the health care system for the Medicaid segment of the popula- 
tion most in need of medical care — cannot wait until the system is restructured 
for the total population. Recommended changes in Medicare-Medicaid could 
help pave the way for a reformed health care system for the total population. 

H.R. 1 recognizes this concept including the provision to extend Medicare 
to i>ersons entitled to disability monthly cash benefits under Social Security 
and Railroad Retirement programs after they have been entitled to disability 
benefits for two years. 

The National Council of Senior Citizens calls on the Senate Finance Com- 
mittee to support the recommendations of the White House Conference on 
Aging by adopting certain principles for the reform of Medicare-Medicaid 
which are compatible with National Health Security. We suggest these prin- 
ciples from our members' day to day experience with Medicare-Medicaid. They 
know what a blessing the Medicare program has been ; they also know its 

What has Medicare accomplished and where has it fallen short? 

It has succeeded brilliantly in these major areas : 

Most of America's 20 million older persons have been relieved of a major 
part of the crushing cost of medical care and the dread fear of financial 
catastrophe resulting from an acute illness. 

Complexities that could have thwarted the Medicare program have been 
overcome. However, it must be noted that Medicare procedures still seem un- 
necessarily complex to the ordinary beneficiary. 

Medicare has not lived up to expectations in these respects : 

Preventing a dangerously rapid increase in the cost of medical services. 
Hastening changes in the health delivery system that are necessary to 
improve the quality of care. 

Meeting the needs for long-term care on the part of the very old and the 
chronically ill. 

The reasons for these shortcomings are many and complex. 


"Reasonable cost" atid "reasonable change" 

First, \\ respect to the rising costs, much has been said about the failure 
of early Medicare planners to anticipate these increases. I submit that the mis- 
takes that were made were not so much in the areas of utilization and estimates 
of need but in the basic concept incorporated in the Medicare law, namely, that 
the limit of liability under an insurance scheme could rest on the notion of 
"reasonable cost" and "reasonable charge." 

Five years experience has shown that many of the so-called "reasonable costs" 
under Medicare Part A (hospital insurance) are simply cost-plus operations of 
an uncontrolled and unplanned hospital industry. The "reasonable charge" 
approach under Medicare Part B (doctor insurance) opened the way for charges 
often having little relationship to past practices as no one really knew what 
customary charges were. 

The result was in all too many instances "reasonable charge" in practice be- 
came all the charge the traffic icould bear. 

Many providers followed the long established practice of considering the fact 
of a patient's being insured a factor in his ability to pay, and proceeded to add 
charges above the allowable amounts. After two years experience, the Social 
Security Agency finally got around to limiting the allowable amounts payable 
under Medicare but the net result in all too many cases was a decrease in the 
proportion of the total cost of medical care covered by the program. As if this 
weren't bad enough, the decrease in the coverage was accompanied by steadily 
rising premiums. 

In 1965 the public and the Congress relied mainly on two factors to limit the 
liability assimied by the Medicare program. 

Self restraint on the part of the medical professions, and 

Controls exercised by Medicare insurance carriers and intermediaries. 

Both proved woefully inadequate. 

I am citing these well-known facts not in criticism of the program itself or 
even of the providers many of whom have done a conscientious job of carrying out 
the basic purposes of the program. 

What seems to me most important is the lesson to be drawn, namely, that it 
is not possible simply to provide a method of payment that will greatly increase 
the effective demand for a limited supply of health services without also pro- 
viding some control over the economic processes and without taking major steps 
to increase the supply. 

Cost Control 

H.R. 1 as passed by the House approaches this very vital matter of cost con- 
trol, but falls far short of meeting the need in this area. 

The limits established by the bill on provider costs I'ecognized as reasonable and 
the limits on prevailing charge levels, and the provision for termination of pay- 
ments to suppliers of services who abuse the Medicare or Medicaid programs are 
desirable steps in the direction of needed control. However, no real relief from 
escalating physician fees under Medicare Part B will be provided beneficiaries 
. so long as physicians are permitted to charge patients through the direct billing 
method amounts above those established under the law as reasonable. 

The National Council of Senior Citizens supports the encouragement to the 
development of Health Maintenance Organization contemplated in H.R. 1. It is 
hoped that when the measure becomes operative there would be some agreement 
as to what an "HMO" is. 

The National Council of Senior Citizens also strongly supports the proposal in 
House-passed H.R. 1 that would authorize the Secretary to establish periods 
for which a patient would be presumed to be eligible for benefits in an extended 
care facility or for home health sei^vices. We hope this would eliminate the 
retroactive denial of benefits that have proven such a tremendous burden on 
elderly people and which have given rise to more complaints about the Medicare 
program than any other feature. 

The Delivery System 

Let me turn now to the second major short-fall of the Medicare program — its 
failure to make basic changes in the health care delivery system. It is hardly fair 
to refer to this as a "failure" because the program never attempted to alter the 
system and it didn't try simply because the law specifically forbade it to do so. 

Back in the days when Medicare was being formulated, all of us — the pro- 


ponents of the plan and our representatives in Congress — were constantly 
assuring the medical profession, the hospitals and indeed the public that we were 
not altering the system in any way at all. We were simply providing a method of 
payment for health services within the existing system. I'm convinced the public 
as well as health care providers wanted, even demanded such assurances in 1965. 

But times have changed. Public opinion has changed. In the light of our present 
experience, not only with Medicare, but with Medicaid, and with a multitude of 
private health insurance schemes, the public is now convinced that there must be 
some major alterations in our health care system. The demands of the public in 
the 1970s in this respect are just the reverse of what they were in the early 

The consciously accepted limitations of the program also apply to the third 
major area of the public's dissatisfaction with Medicare, namely, the lack of 
provision for long-term care of the very old and chronically ill. Back in 19fi.j we 
were attempting no more than to provide for the elderly the protection available 
to the great majority of people still in their working years. Medicare was modelled 
on Blue Cross and Blue Shield, and these plans were deficient in the area of 
long-term care. Here, too, public attitudes have changed. 

Mr. Chairman, my remarks thus far have made clear, I trust, that the Na- 
tional Council of Senior Citizens has strnog reasons for believing that National 
Health Security is the only answer to the health crisis with which we are 
faced. Bui the National Council is also realistic enough to recognize that Congress 
may have to take some time to develop such a comprehensive health care program 
for the total population. 

Essentials of Reform 

We therefore offer for your consideration the essentials of of a reformed 
Medicare-Medieaid system which — if not actually paving the way for National 
Health Security— would at least assure that health care suppliere do not con- 
tinue on divergent paths. We are cautious about any claims of "paving the way" 
or "providing valuable experience" because we understand that a health program 
limited to onlv part of the population — and indeed the most vulnerable part — 
cannot possibly have the financial leverage for reform and restructuring which 
is basic to National Health Security. 

In essence, our plan would merge Medicare-Medieaid in a Federally admin- 
istered program covering all residents age 65 or older, all other Social Security 
beneficiaries, and the adult categories, the aged, blind and disabled receive cash 

o C'Ci af'o nop 

Benefits now provided under Medicare would be expanded and payable with- 
out coinsurance or deductibles. In-patient hospital services— regardless of prior 
hospitalization— would be coveerd for up to 120 days without limit if furnished 
in a nursing home owned by or affiliated with a hospital or comprehensive health 
service organization. Outpatient prescribed drugs would be covered on a com- 
preliensive basis if furnished through a health service orgainzation. Otherwise, 
coverage would be limited to drugs needed for maintenance therapy or especially 
costly drug therapy. , , .^ ^ ^ u 

Under the proposed program, services would be covered only if performed by a 
qualified "participating" provider who would have to agree to accept the program 
pavment as full payment for a given covered service. _ . 

Particiatiug phvsicians who chose to be remunerated on a fee-for-service basis 
would have their fees predetermined by the agency. Institutional providers would 
be paid on a prospectively aproved budget basis. Thus, the beneficiaries would 
be assured that they will not be billed for any covered services. At the same 
time, cost controls are built into the system. _ 

Incentives would be included for both providers and beneficiaries to choose 
comprehensive prepaid group practice with its emphasis on preventive care 
and reduction of institutional care. v, ^.i. 

The new program, whether administered through new channels or by the 
Social Security Administration, would provide for consumer representation and 
public accountability at all levels. 

Such a program, we know, will be an expensive one, concentrating as it does 
on the high risk groups. Without knowing the exact size of the price tag, certain 
financing principles can be agreed on at the start. 

Federal general revenues should finance 100 per cent of the costs for bene- 
ficiaries other than those eligible for social security benefits. Social Security 


beneficiaries sliould not liave to pay any premiums. Some portion of the cost of 
their coverage should be borne out of Federal general revenues with the re- 
mainder financed by a payroll tax. The payroll tax should be the .same for em- 
ployers and employees. 

These, in brief, are the principle.s for reforming Medicare-Medicaid that the 
National Council of Senior Citizens advocates. 

The National Council, from its day-to-day knowledge of the problems that older 
people encounter with these programs as well as its experience in trying to fill 
gaps in protection, is well qualified to speak to the problem and to the principles 
for solution. Nothing short of National Health Security for the total population 
can have the financial leverage needed to restructure the Nation's health care 

We believe, however, our proposal deserves consideration as a first step in 

Transferr'nig part B io part A of medicare 

The National Council of Senior Citizens has long been a supporter of the 
proposal to merge Part B of Medicare with Part A (which is solely government 
financed) to free the elderly of spiralling premium costs. 

There appears to be a strange mixture of rhetoric and fiscal legerdermain in 
the Administration proposals in this area. 

You will recall that a year ago at this time the Pre.sident's health message to 
Congress suggested a severe cut in Medicare hospital benefits — down to the first 
12 or 13 days of hospitalization instead of the present 60 days. 

This cutback was coupled with an Administration proposal to eliminate the 
premium charge for optional Medicare (Part B) doctor insurance now amounting 
to $5.60 monthly and due to rise to $5.80 next July. 

Fortunately, the House saw this as trading a horse for a rabbit. 

In none of the President's subsequent public appearances did he make any 
further reference to eliminating the Part B premium until his address at the 
close of the White House Conference. No Administration bill was introduced last 
year to effect this change. 

The President again raised the subject in his State of the Union message — but 
again he failed to say how he planned to eliminate the Part B premiiun pay- 
ments, and no such Administration bill has yet been introduced in 1972. 

Moreover, there is no provision in the health section of the budget message to 
finance this much-needed change. 

Novi' the Administration is again proposing that the old folks' premium pay- 
ments to the Part B program will be eliminated. This is all to the good, but the 
proposal includes the provision that the contribution from general revenues which 
now matches the premium payment would also be eliminated. 

Benefits payments and administrative costs for fiscal '72 are running at an 
annual rate of $2.5 billion. Premiums and government contributions total about 
$2.6 billion leaving a very slight surplus to add to the already skimpy reserves. 

The obvious conclusion is that if matching funds from general revenues are to 
be abandoned the loss must be made up either by raiding one or more of the 
other trust funds, or by increasing the payroll tax. 

It is not possible to transfer monies from any of the other three trust funds 
without jeopardizing the solvency of the programs or foregoing much needed 
increases in benefits. 

This is why we refer to the proposal as fiscal legerdermain. Combining Medi- 
care Parts A and B and eliminating the direct premium payments in this way 
would be of no real benefit to the elderly. They would still be paying the cost — 
either through loss of important cash benefits, reduction of hospital benefits or 
tlirough additional taxes born by younger members of their family who are still 
workimr. All of these alternatives are completely unacceptable to the members 
of the National Council of Senior Citizens. 

Exclusion of chiropractic 

While on the suliject of proposed Medicare changes, I would like to refer again 
to the position of the National Council of Senior Citizens against including Chiro- 
practic as a reimbursable service under the program. We note with some dismay 
the spate of bills that have been introduced in support of this proposal, and 
we are aware of the very vigorous efforts of this group to ol)tain this change in 
the Medicare law. The Chiropractors have even mounted considerable lobbying 


<'fforts at the annual conventions of the National Council of Senior Citizens. But 
they did not succeed in persuading our delegates that Chiropractic would be of 
advantage if added as a Medicare service. In fact, they are convinced it would 
represent another serious health hazard. I, and one of the Vice Presidents of the 
National Council, served on the ad hoc committee on private practitioners set un 
hv HEW in response to a Congressional mandate in 19G9 to study this and other 
proposals. We went into this matter thoroughly and objectively. We made the 
findings of this group available to our delegates and found them wholly in 
support. Since that time I've been accused of being "brainwashed" by the AMA. 
I leave it to the members of this Committee who have known me for many years 
to judge the plausibility of such a charge ! 

While our position on tliis issue is well known and a matter of record we sup- 
port the provision in H.R. 1 which would require the Secretary of HEW to con- 
duct a study of the desirability of covering chiropractors' services under Medi- 
care and t() report to the Congress within 2 years. We believe this provision 
would be strengthened by adding the requirement that the study be made by 
some independent scientific group with recognized competence in the field of 
science, wholly independent of the medical profession as such. 

Coverage for the disabled 

As to the need for extending Medicare coverage to disabled Social Security 
beneficiaries under age 65, we submit that a disabled person, like a retired per- 
son, incurs high health costs at the same time individual income drops. 

In fact, hospital and medical costs per person for the disabled are two to three 
times higher even than for the aged. Moreover, the proportion of severely dis- 
abled persons with any form of health insurance is lower than the proportion of 
the aged who had health insurance protection l)efore the enactment of Medicare. 

Members of the National Council of Senior Citizens consider the proposal to 
extend Medicare coverage to the disabled under age 65 fair, reasonable and fully 
justified by their needs. 

Long-term care 

One of the most serious health problems facing today's elderly is the problem 
of long-tenn care. 

The absence of a program of coordinated, continuous and comprehensive medi- 
cal and social services — for the aged and those persons suffering from long-term 
chronic illness — is a grave national problem for which a solution must be found. 

The lack of such a program has produced fragmented and uneven care and 
services, hardships and deprivation, inefficiencies and spiralling costs and a 
sliortage of proper facilities capable of providing the differing levels and kinds 
of care and services required by this growing segment of the population. 

Pi-esent public programs for long-term health care are divided among medical 
facilities, construction programs, housing programs, public assistance programs 
and programs specifically for the aged. Each, however, is addressed to only a 
facet of the problem. There is no coordination with respect to various kinds and 
levels of care required by different persons or the relative need for facilities of 
several types. 

Existing medical care and related institutional programs are not in themselves 
efficient mechanisms for dealing with all long-term care problems. This fact — 
coupled with the shortage of appropriate facilities — has resulted in much im- 
proper and wasteful use of acute care facilities. 

The Congress should call on the Secretary of Health, Education, and Welfare 
to develop a program of coordinated, continuous, comprehensive medical and so- 
cial services for the aged and those persons suffering from chronic illness which 
will include a uniform benefit package guaranteeing the full range of services 
needed for both ambulatory and institutional care. Attachment A lists these 

High priority should be given to the development and financing of non-medical 
services to make it possible for the chronically ill to live independently, thus 
saving vast amounts now spent on institutional care. 

The Secretary of Health, Education, and Welfare together with the Secretary 
of Housing and Urban Development should be directed l)y Congress to conduct 
a joint study of the need for appropriate facilities of various kinds required 
l.y such a program and of equitable means of meeting both the capital and operat- 
ing costs. 


We believe it should be possible for the Secretaries of both agencies to develop 
and transmit to Congress not later than two years after passage of the Act a 
consistent and coordinated program to meet the long-term care needs of older 

Mr. Chairman, we believe that legislative proposals to get this program under 
way should be enacted as quickly as possible. Some work in this area has al- 
ready been undertaken and further studies can be initiated immediately — with- 
out waiting for final enactment of National Health Security. Our hope is that 
the resulting long-term care program can be meshed quickly and easily into the 
National Health Security program. 

Our current long-term care system is in such a mess that it can be described 
as a national scandal. We urge the Congress to move quickly to correct long-term 
case abuses, stop the commercial exploitation of the elderly sick and to begin to 
provide some peace of mind for all those who dread the approach of the days 
when they may need long term care. 

Catastrophic health insurance 

The bill introduced by Senator Russell Long, (D., La.) Chairman of the Sen- 
ate Finance Committee, proposing catastrophic healtli insurance, would exclude 
the aged entirely, leaving them to Medicare. 

However, other bills before Congress include the aged and we are so fearful 
of the consequences of the efforts to enact catastrophic coverage as a means of 
heading off comprehensive National Health Security, we wish to express our 
views on this matter. 

One of the catastrophic coverage bills would eliminate Medicare and Medicaid 
for the aged. 

We urge this Committee to recognize that catastrophic coverage is no sub- 
stitute for comprehensive health coverage — though the inclusion of a realistic 
proposal against catastrophic health costs deserves serious consideration as 
part of a national health security program. 

Any undue emphasis on catastrophic coverage right now would almost cer- 
tainly undermine efforts now underway to give new emphasis to primary care and 
ambulatory services. The overwhelming emphasis on major illness would most 
certainly distort the allocation of national health care resources — turning them 
increasingly toward hospitalization and other institutional treatment and away 
from prevention, home care, and other neglected aspects of health care. 

Experts in health care economics who do not come from the vested interests 
in the field tell us that national insurance limited to catastrophic coverage 
would accelerate the current inflation of health care costs. 

We have had suflScient experience in the years of Medicare to realize that 
unscrupulous providers will raise their prices on the excuse that the family 
or individual will become eligible for catastrophic benefits. The net result 
would probably be a further boost in charges for all aspects of health care. 

All the catastrophic coverage plans being produced share the fundamental 
idea that insurance should take over only after a family has shelled out hun- 
dreds or even thousands of dollars for medical expenses. Most people would be 
terribly disillusioned with the coverage — and the problems of providing a realistic 
national Health Security Program will have been made immensely more difficult. 

Mr. Chairman and other distinguished Committee members, the next portion 
of my statement deals with welfare. 

The welfare program has grown like Topsy ever since the Great Depression of 
the 1930's when President Franklin D. Roosevelt and Congress put it into 
operation to meet the frightening poverty of that day. A major overhauling of 
the welfare system is long overdue. 

H.R. 1 proposes replacing uneven and too often completely inadequate Federal- 
State aid to families having dependent children with a Federally financed basic 
family benefit amounting to $2,400 for a family of four. For the first time, the 
Federal government would underwrite the needs of the working poor. 

The basic amount of $2,400 for a family of four proposed under H.R. 1 is 
unrealistic. It is far too low to support a decent level of living in most com- 
munities of the nation. 

The National Council of Senior Citizens sees an urgent need for an im- 
mediate guarantee of at least $3,000 a year for a family of four, as sought in 


the Ribicoff amendment to H.R. 1, and we insist this basic income be raised 
substantially as quickly as our economic situation will permit. 

The National Council of Senior Citizens welcomes the statement by Senator 
Abraham Ribicoff (D., Conn.), author of the Ribicoff amendment, at the open- 
ing of the Senate Finance Committee hearing on H.R. 1. 

The Senator stated the RibicofE amendment would set an initial payment level 
of $3,000 a year for a family of four with payment levels increasing each year 
so that, bv i976, no welfare recipient — whether a family with children, a single 
person or childless couple — would receive less than the poverty level adjusted an- 
nually for raises in living costs. 

Under this amendment. States and local governments would pay a decreasing 
percentage of their calendar 1971 costs each year until 1976 when the welfare 
program would be financed entirely with Federal funds. 

Even a basic benefit of $3,000 would be less than the amount now paid by some 

States. .... 

We insist that no assistance recipient receive less after welfare reform than 
he now receives. Therefore, we urge that H.R. 1 be amended to require that 
States, with the aid of Federal matching grants make supplemental payments 
to bring welfare payments up to at least the level of current payments including 
food stamps. 

The National Council of Senior Citizens also insists that H.R. 1 be improved 
with respect to work requirements. 

No welfare recipient should be required to take a job paying less than the 
Federal minimum wage. 

Further, the National Council insists no mother with small children be re- 
quired to work, unless there are easily accessible child care centers for her 
children while she is on the job. 

H.R. 1 recognizes the need for additional child care programs in order to create 
new opportunities for those who want to work but the Ribicoff amendment is 
more realistic in terms of existing need. 

The Amendment would increase the authorization for child care programs to 
$1.5 billion, plus $100 million for construction and $25 million for training 
personnel. It would write into law Federal minimum standards for child care 
programs and protect mothers with children under three years from a require- 
ment to work. ^ , , , . 

Also, the National Council of Senior Citizens asks that H.R. 1 be amended to 
provide protection for State and local employees who currently administer 
welfare programs and who — in the absence of specific provision to the con- 
trary—could lose all job rights when the Federal government takes over full 
administration responsibility for public welfare. 

The "adult categories" 

Of special importance to our membership is the provision of H.R. 1 for a 100 
per cent Federal takeover of public assistance for the blind, disabled and those 

age 65 or over. -^^^ ^, j. 

The National Council of Senior Citizens strongly supports H.R. 1 s guarantee 
that older people and other handicapped adults— regardless of where they live- 
will be assured a basic income. The record is all too clear, however, that, when 
the level of income support is left to the States, many needy individuals fare 
badly. . 

We support the provisions of H.R. 1 that would, over a two-year period, pro- 
vide an annual income floor of $1,800 for an individual and $2,400 for a couple. 
Here. too. H.R. 1 should be amended to require that States now paying larger 
amounts continue to supplement the basic Federal guarantee. 

Furthermore, we hope that improvements in Social Security benefits would 
greatly reduce the number whose incomes are so low they qualify under the 
means test of the new welfare program. 

The National Council believes that the aged, blind and disabled should be 
entitled to a reasonable minimum of comfort and security as a matter of right — 
not as beggars pleading for a handout. 

Our older citizens have contributed from their earnings toward a retirement 
pension in the form of Social Security benefits. They should not in their later 
rears be forced to pass a means test and live as wards of the State. 

Yet. this is what may happen if H.R. 1 is enacted as now written. 

With Federal assumption of the administration and financing of welfare for 
the blind, disabled and aged there .should be set up a system for determining 
eligibility and calculating the level of assistance in a manner that respects the 
dignity of the individual. 


The goal of H.R. 1 is to provide incentives for welfare recipients to find jobs. 
If there is to be any real progress toward this goal, there must be job opportu- 
nities. The National Council strongly supports a provision of the RibicofE amend- 
ment to authorize $1.2 billion for 300,000 public service jobs as against the $300 
million proposed under H.R. 1. 

These jobs should pay no less than the Federal minimum wage. 

This is a reasonable approach to the job problem of those welfare recipients 
who are employable. 

While most welfare recipients are unable to work, there are undoubtedly many 
able-bodied recipients ready and willing to work if they can find jobs. However, 
to expect them to locate jobs, in the private sector in the midst of an economic 
depression, is unrealistic. 

Getting able-bodied welfare recipients into jobs and off the welfare rolls re- 
quires intelligent planning and concern for welfare job seekers. It cannot be done 
with mirrors. 

Attachment A 



1. Service Categories to 6e included: 

Health Maintenance. 
Long Term, 

2. Setting for Services: 

a. Ambulatory services: Physicians' ^ and dentists' oflSces ; Ambulatory care 
centers (including community mental health centers) ; Organized outpatient 
and emergency departments of health care institutions 

b. Institutional services: Hospital facilities (including use of community 
"day" hospitals) ; Extended care facilities; Nursing Home facilities. 

c. nealth services in the home. 

3. Scope of Services: 

The following services should be provided when medically indicated and 
properly ordered as appropriate to diagnosis, level of cai-e, and setting. 

Physicians' services, Dentists' services. Podiatrists' services. Optometrists' 
services and glasses. Nursing service. X-ray, laboratory and other diagnostic 
procedures, Physical occupational, and speech therapy. Mental health serv- 
ices, Drugs and drug supplies. Appliances and medical equipment, Medical 
social service, Home health aides, home maintenance services, Medically re- 
lated homemaker services. Dietary and food supplements. 

Supple jrENT to Statement by Nelson H. Cruiksiiank, President, National 
Council of Senior Citizens 

The National Council of Senior Citizens sees grave danger in a provision of 
H.R. 1 — under the measure's Section 267 — that nursing homes in rural areas be 
exempted from the Medicare requirement that such establishments have at least 
one full time registered nurse on the staff. 

Needless to say, without a registered nurse, a nursing home cannot provide 
.skilled nursing care and, if this provision should be enacted, Federal funds 
would be used to finance sub-standard care in rural nursing homes. 

This the National Council of Senior Citizens strongly opposes. 

National Farmers Union 
Washington, D.C., August 3, 1971. 
Hon. Russell B. Long, 
Chairman, Senate Finance Committee, 
Waxhington, B.C. 

Dear Mr. CiiAiRitAN : I am writing to express the views of National Farmers 
Union on certain asi)ects of H.R. 1, particularly on the social security provisions 

1 Including M.D.'s and Doctors of Osteopathy. 


of the bill. I request that this letter be made a part of the published record of 
hearings currently underway on H.R. 1. 

At Farmers Union's February 24-27, 1971, National Convention, our delegates 
adopted the following policy statement on social security : 

"We urge early enactment by the 92nd Congress of social security amendments 
to be retroactive to Jan. 1, 1971. The social security amendments should include 
provision for: (1) increase of the minimum monthly paymentsto individuals to 
$100 ; (2) automatic increases in benefits thereafter tied to cost-of-living increases 
of one percent or more; (3) increased earnings of up to $3,000 without loss of 
social security benefits; (4) increased widow's benefit's to 100 percent of the 
amonut to which the husband has been entitled." 

We are pleased that Congress enacted legislation earlier this year providing 
improvements in social security along the lines called for in this policy state- 
ment. However, the increases in benefit levels did not go far enough — particu- 
larly in light of continuing inflation that erodes the already-inadequate benefits. 

H.R. 1 would increase the minimum monthly payment for individuals from 
$70.40 to $74.00. 

I strongly urge that your committee increase the minimum monthly payment 
to individuals at least to $100 per month. The $3.60 per month increase in the 
House-passed bill is woefully inadequate. Today about 40 percent of all the Ameri- 
can people over 6-5 live in rural areas, and our older rural people are often poor. 
Many older persons have been forced out of farming due to low farm prices and 
ever-escalating costs of production. These older persons who are forced off the 
farm would benefit greatly from a higher floor under Social Security payments. 

For farmers, a substantial increase in minimum benefits is especially crucial 
in light of a provision written into H.R. 1 by the House Ways and Means 
Committee. The bill provides, for people who have worked for 15 or more years 
under social security, that benefits would be equal to $5 multiplied by the number 
of years coverage under the social security program, up to a maximum of 30 
years. Thus, the highest minimum benefit under this provision would be $150 
for a person who had 30 or more years of coverage. 

This provision would move social security benefits upward for many people, 
and Farmers Union is very reluctant to question any measure that would increase 
benefits. At the same time, we are concerned about the effect of this approach on 
benefits to farmers. Farmers became eligible for social security coverage for the 
first time in 1955, and therefore no farmer could have more than 17 years of 
coverage as of January 1972 when the bill is designed to become effective. The 
highest minimum benefit for which any farmer could qualify in 1972 under such 
a provision is therefore $85 per month. 

Unlike this provision for increases based upon years of coverage, a $100 floor 
under benefits of all social security recipients will not discriminate against 
farmers and others who came into the social security system in more recent 
years. I therefore urge your Committee to adopt a payment floor of at least $100 
for all recipients as an alternative or addition to such a years-of-eoverage 
provision. Or, I urge your Committee to restructure the years-of-coverage provi- 
sion to allow special minimum benefits to those who came under social security 
later, so as not to discriminate against farmers and others that are caught 
through no fault of their own in such a situation. 

Tony T. Dechant, President. 

Ohio Xurses Association. 
Columhus, Ohio, March 8, 1911. 
Hon. William B. Saxbe, 
V.8. Senate, 
Senate Office Building, 
Washington, B.C. 

Dear Senator Saxbe: The Ohio Nurses Association is an organization of reg- 
istered professional nurses and serves as the offifia] voice for the nursing profes- 
sion in Ohio. Its nre to foster high standards of nursing practice, to 
promote the professional and educational growth of nurses, and to promote the 
welfare of nurses to the end that all people may have better nursing en re. 

OXA has received a copy of S. 892 from your Columbus office and we have 
discussed the bill with Mrs. Carolyn Peterson at your Washington office. In our 


telephone conversation with Mrs. Peterson we indicated that ONA would com- 
uninicate our concerns to you. 

Some of our reasons for opposing your biU are : 

1. OXA believes that the nur.sing care provided to eligible persons under Medi- 
care and Medicaid programs should be of high quality. It is unfair to waivered 
licensed practical nurses and to their patients to exi>ect them to assume the com- 
plex functions of a charge nurse. The Ohio Nursing and Rest Home Law and 
Kegulations illustrate the complex nature of the nursing care provided in a 
nursing home giving skilled nursing care. The regulations state, "Skilled nursing 
care means those procedures commonly employed in providing for the physical, 
emotional and rehabilitation needs of the ill or otherwise incapacitated which re- 
quire technical skills and knowledge beyond that which the untrained person 
posseses, including ivithout limitation (emphasis added) procedures such as 
irrigations, catheterizations, application of dressings, and supervision of special 
diets ; objective observation of changes in patient condition as a means of ana- 
lyzing and detennining nursing care required and the need for further medical 
diagnosis and treatment; special procedures contributing to rehabilitation; ad- 
ministration of medication by any method ordered by a physician such as hypo- 
dermically, rectally, or orally; and carrying out other treatments prescribed by 
the physician which involve a like level of complexity in skill in administration." 
If passed. S. 892 would permit waivered licens^ed practical nurses to be in charge 
of "skilled nursing care", as defined above, in Ohio nursing homes. 

2. OXA seriously doubts that there are not enough qualified nurses to serve 
on all shifts in nursing homes in Ohio. In 1970 the Ohio State Board of Nursing 
renewed 5S,3S5 licenses for profes.sional nurses and 24,841 practical nurses (in- 
cluding those waivered) renewed their licenses as of January 1, 1971. There are 
959 nursing homes in Ohio ; ONA would be interested in knowing the names and 
locations of the "at least 200 nursing homes" that are unable to employ qualified 
nurses. We would appreciate the opportunity to learn the reasons why these 
nursing homes are having staffing problems and assist them with solutions. Our 
organization does not believe lowering nursing care standards is the answer. 

3. In your introductory remarks you said, "The proposal I am offering would 
provide a testing mechanism within HEW to determine which of these 'waivered' 
nurses are competent to serve as charge nurses. In my State of Ohio alone, there 
are 10,000 waivered practical nurses ; half of whom have even passed the State 
Board." Your statement is incorrect. The State of Ohio has waivered 15,246 
LPN's. There have been two waiver periods in Ohio. During the 1956 waiver 
period 11,242 pi'actical nurses received their license by waiver. Of these, only 
1,920 passed the State Board examination. So far during the 1968-70 waiver 
period 3,730 nongraduates of approved schools have received their licenses by 
pasing the State Board examination. 

4. The frustrations of poor working conditions aggravated by continuation of 
low standards and lack of recognition for sound academic preparation will only 
drive away qualified persons now .serving in nursing homes. Sufficient qualified 
candidates will never be attracted to careers in nursing homes if opportunities 
for truly satisfying and rewarding experiences cannot be found. 

ONA believes that under proper direction and supervision, waivered licensed 
practical nurses can devote their full time to the direct nursing needs of patients 
and will not be frustrated by responsibilities beyond their preparation and 
patients in Title XVIII and Title XIX nursing homes will receive competent 
nursing care. 

The Ohio Nurses Association would appreciate the opportunity to meet with 
you at your Columbus office as soon as possible. 

Dorothy A. Cornelius. R.N., 

Executive Director. 

Ohio Valley General Hospital Association. 

Wheeling, W. Va., August 2, 1911. 
Hf)n. Robert H. Mollohan, 
House of Representatives, 
Washington, D.C. 

Dear Mr. Mollohan : The original INIedicare-Medicaid legislation provided 
for hospitals to be reimbursed their "reasonable cost" for care rendered under 


the programs. "Reasonable cost" was determined by regulation at the Federal 

Currently pending House Ways and Means Committee H.R. 1 specifies that a 
State shall now define "reasonable cost" under Medicaid, so long as reimburse- 
ment does not exceed "reasonable cost" as defined by Social Security Administra- 
tion for purposes of Title XVIII (Medicare). 

It appears this is specifically designed to allow a State to reduce an already 
inadequate reimbursement for Medicaid. Hospitals in West Virginia are dissatis- 
fied wtih the current Medicaid reimbursement. Many feel they are placing their 
hospitals' total assets in jeopardy by participating in the program. 

Inasmuch as provider participation under Medicaid is tied, by law, to partici- 
pation under Medicare both programs would be placed in jeopardy should hos- 
pitals not accept a State's decision to reduce Medicaid reimbursement. Such a 
decision would have serious repercussions on the health and welfare of the aged 
and indigent of West Virginia, however, it would preserve the system for those 
with the ability to pay. 

We urge your support in correcting this amendment. H.R. 1 should be amended 
to enable improvement in reimbursement rather than a potential reduction in 
reimbursement or placing ceilings on reimbursement. 
Very truly yours, 

F. E. Blair, 
Executive Director. 

Oregon Physicians' Service, 
Portland, 0?-eg., August 9, 1911. 

Re Professional Service Review Organizations. 
Hon. Robert W. Pack wood, 
U.S. Senate, 
Senate Building, 
Washington, D.C. 

Dear Senator Packwood: We are deeply interested in the concept of "Peer 
Review," the idea of having practicing physicians manage the medical review of 
a health care payment system. This has been an integi-al part of the OPS-Blue 
Shield for many years. In fact, the Blue Shield Plans in the Pacific Northwest 
are probably the nation's oldest examples of the process. 

In this connection, we have compared Senator Bennett's proposal for "Profes- 
sional Service Review Organizations" with Section 222 of the House-passed 
version of H.R. 1 and we believe Section 222 has a distinctly better approach. 

While Senator Bennett is certainly on the right track, it seems to us that the 
PSRO structure may be too rigid to fit local conditions across the country. Also, 
it will need a huge administrative framework to cope with the volume of paper 
work, largely duplicating the administrative programs already established by 
carriers and' government agencies for medical claims review and payment. Sec- 
tion 222, on the other hand, permits flexibility, experimentation and development 
of local approaches. Here in Oregon, for example, PSRO would duplicate or 
replace much of our existing medical review structure. Under Section 222, 
however, our system might be expanded, developed further or tried in other 


We would like to discuss this whole area of health care utilization and cost 
control with you in greater detail. It is becoming a major legislative subject and 
you will want to know the local situation. 

We hope you can visit our office while you are in Oregon during the summer 
recess to see what we are doing in the field and review our results. If this can 
fit into your schedule, please let us know what time will be convenient. 

If you should need background information on a national level, we would ap- 
preciate your talking to Mr. Hugh E. DeFazio, Jr., of the W^ashington, D.C, Blue 
Shield office. 

Cordially yours, 

S. Menashe. 



Office of the PbesideNx, 
New York, N.Y., Seijtember 30, 1972. 
Hon. Elliot S. Richardson, 

Secretary of Health, Education, and Welfare, Department of Health, Education, 
and Welfare, Washington, B.C. 
Dear Mr. Secretary : We very much appreciate the opportunity which we had 
to review with you the objectives of the Administration's Welfare Reform Pro- 
gram at the Juiie, 1971 meeting of the Board of Directors of our organization. 

Since that time, we have had a further opportunity to review this matter, and 
I wish to advise that the Rubber Industry is well aware of the flaws and in- 
equities now existing in the current system. Consequently, the Rubber Industry 
fully supports the Administration's goal in achieving welfare reform through 
the enactment of H.R. 1. 

We believe that it is vitally important to the welfare of our nation to achieve 
a Welfare Reform Program by the enactment of H.R. 1 in the current session of 


Ross R. Obmsby. 

Rubber Manufacturers Association, 

Office of the President, 
Neiv York, N.Y., January 28, 1912. 
Hon. Russell Long, 
Chairman, Committee on Finance, U.S. Senate, Washington, D.G. 

Dear Mr. Chairman : The Rubber Manufacturers Association and its member 
companies are aware of the current hearings of your committee on H.R. 1. 

Enclosed for the record of these hearings is a copy of a letter sent to HEW 
Secretary Elliot Richardson expressing the support of the Board of Directors 
of this association for the welfare reform provisions of H.R. 1. 

Ross R. Okmsbt. 

Washington, D.C, January 17, 1971. 
Re H.R. Bill. No. 1. To eliminate limitation from the Social Security law on 
outside earnings. 

Hon. Russell B. Long, 

Chairman, Senate Finance Committee, Neic Senate Office Building, 

Washington, D.C. 

Dear Mb. Chaieman : This letter is written to you to urge you to consider 
favorably the above Bill — A Senior Citizen sixty-five (65) or over, has a limited 
time to live at best. When he has no outside income and is forced to go 
to work, he is paying into the fund and pays his withholding taxes — so he is 
contributing. More often than not, the only money he has coming into him or 
her, is the small Social Security Benefit each month, and with the high prices 
and continuing raising of rents, utilities, etc. not to include bus fare, and in 
general, expenses to survive and be fit to work. $1680 or $2,000 a year is below 
the poverty level .... 

It seems only fair to let a person 65 or older, keep what he may be able to earn 
without being penalized and, having his benefits taken away from him or her. 

Why can't we encourage people to work, and not go on welfare? 

So, please vote favorably for the above bill, in order that those Senior Citizens 
who must work, and have no other outside income, can survive. Otherwise, we 
may have mass suicides — and our welfare list will most certainly increase 

Thank you for reading this letter, and vour consideration of this all-important 
benefit to those who need it. 

Rosemary Thompson. 



Bakersfield, Calif., August 2, 1971. 

Hon. Russell B. Long, 
U.S. Senate, 
Washington, D.C. 

Dear Senator Long : On July 10, 1971 I received your reply to my letter 
of June 24, 1971 which voiced my objection to the Family Assistance Plan 
now before the Senate Finance Committee. In your letter you indicated you 
would be glad to receive a written statement of my views for inclusion in 
the printed volume of hearings on the entire measure I greatly appreciate 
this opportunity and am forwarding the attached proposal for consideration. 

Except for the enforcement of mandatory abortions I am quite confident 
the proposal is logical and workable and would provide a last chance for 
the Free Enterprise System to solve the problems of poverty and unemloy- 

It may be well to point out I am writing as an individual and do not rep- 
resent any group of people or political party. I am not seeking publicity, a 
job, or any favor. This proposal is submitted without obligation and the ideas 
proposed are yours to pursue or use at your own discretion. 
Respectfully yours, 

Jim Wallace. 

A Workable Plan for the Elimination of Welfare in the United States 

Based upon ttco prime -factors — 

A. The majority of welfare recipients can work but will never be able 

to compete in a free enterprise labor market. 

B. The government cannot afford vast public works programs where the 

entire expense is borne by the taxpayer. 

Subject to five criteria for feasihility — 

A. Adequate Wage 

B. Taxpayer Savings 

C. Public Acceptance 

D. Preservation of the Free Enterprise System 

E. Incentive System — for Employer, Enrollee and Taxpayer 

Designed to — 

A. Provide full employment without inflation 

B. Lower Taxes 

C. Lower the cost of goods and services 

D. Abolish or consolidate the myriads of federally funded job training 


E. Provide a base income above the poverty level 

F. Restore free enterprise 

G. Eliminate the degradation of welfare 

five basic provisions 

/. Guaranteed employment 

Either through subsidized jobs in private sector or Government work 

//. Guaranteed minimum base wage 

Government work project — minimum guarantee — $3,324 per year. 
Subsidized job in private enterprise — minimum guarantee — $4,032 per 

HI. Auxiliary aide 

S^™,^*^*?"^^^ 1 Allowances or subsidies based 

Health insurance ^i^.j.^. ^^ ^^^ available 

Housing allowance ^^ ^^^ ^^^^^^^ ^^^^.^ ^^^ ^^^ 

cnua care connected with welfare. 

Transportation J 


IV. Enrollee fringe 'benefits 

Training credits based upon satisfactory work effort. 

V. Sanctions 

If the enrollee refused to participate without good cause, he/she would be 
removed from employment and become ineligible for any assistance or aide 
for one year anywhere in the United States. His/her family would be placed 
in protective custody and vendor payments. 



/. Initial application for aide 
A. Check for eligibility. 

//. Referral to icork evaluation unit 

A. Complete medical examination. 

B. Work history evaluation. 

C. Work sampling. 

D. Testing. 

E. Identification of all barriers to employment — mental, social, domestic, 

///. Totally disabled 

A. Place on social security. 
IV. Sheltered workshop 

A. For those unemployable but needing activity therapy. 
V. Orientation 

A. For those employable. 

B. Would cover such things as— How to find a job; What employers 
expect ; Why work ; Community resources ; Interviewing techniques ; Money 
management and family planning. 


VI. Government work projects 

A. Mandatory 60-day trial run before assignment to subsidized job in 
private sector. 

B. Primary purpose would be to check for enrollee dependability and 
capability in a work situation. 

C. Also a temporary holding area for those in transition between sub- 
sidized jobs in the private sector. 

D. Pay — $1.65 per hour. 

VII. Subsidized employment in the private sector 

A. Maximum reimbursement — 50 percent — exact amount to be determined 
by the characteristics of enrollee and the vocational skills that could be 

B. Subsidation would be permanent in that employer could retain the 
enrollee as long as he desired but the percent of Government reimbursement 
would be reviewed once a year. 

C. Minimum enrollee wage would be $2 per hour. 

D. Participating employers would not be subject to "extra help" provi- 
sions but the number of subsidized enrollees could not constitute more than 
5 percent of the employer's work force. 

E. If a regular employee quits or is laid off by the employer, he must be 
replaced by another unsubsidized employee — or lay off the subsidized 


Human nature is such that those unaccustomed to the work ethic will seldom 
stay employed if it is possible to revert back to "free money". Very few jobs are 
continually pleasant with no stress or strain. As long as welfare is available the 
temptation to quit or deliberately mess up and get fired is too great. By eliminat- 
ing welfare for the employable and substituting guaranteed work, the basic evil 
of the system is removed. One of the fallacies of past and current programs for 
the low income or disadvantaged is the assumption that all they need is a few 
extra training dollars, counseling, a short vocational training course and 
"Eureka" — a permanently rehabilitated person. The truth is that most will' 
never be able to function adequately without help. Their whole life style and 
orientation to living would have to be changed. This would take years and for 
many will never occur. 

Many have been recycled through numerous training programs and are satu- 
rated with orientation and counseling. You don't train fish or seals by just 
talk, you have to bribe them. With people it is the same principle; not talk, 
counseling, or rhetoric; but jobs and money, which for them, only subsidized 
employment would produce. 


Past social legislation dealing with vocational training for welfare recipi- 
ents has always stressed work experience in government agencies. This was par- 
ticularly true of the Community Work and Training Program, Title V. and the cur- 
rent Work Incentive Program (WIN). Basically this has been a good resource 
and has provided tangible results. However, there are some basic dangers in rely- 
ing too extensively on government agencies for vocational training. Only a se- 
lected few are capable of providing meaningful training. Many first-line super- 
visors are too lax since it is free help and costs them nothing. Busy work is often 
substituted for training with absenteeism and enrollee morale a problem. In addi- 
tion, many government agencies are inundated with free help from the multitude 
of programs that now exist. These programs have saturated the agencies far 
beyond their supervisory and training capacities. Government agencies offer only 
a limited scope of training and since there is no pressure to produce, most en- 
rollees gain the wrong idea of the world of work. 

While it would be wrong to advocate the abandonment of Governmental agen- 
cies for training, their use should be limited and consist mostly as a holding 
agency until a job is secured in the private sector. 

72-573—72 — pt. 6 16 



The total cost of public works programs vast enough to absorb all the unem- 
ployed is prohibitive. While the cost of subsidized jobs for all would also be great, 
the money would be received directly by the employers and lower the cost of 
•^oods and services. Subsidized jobs would also have the effect of insuring a 
minimum wage sufficient to feed ones family without forcing many small firms 

into bankruptcy. ., , ^ ,. . ,. ,.j * 

Guaranteed jobs would also make it possible to eliminate or consolidate 
the myraid of Federally Funded Job Training Programs. While many of these 
programs have had some success the average cost per success is around $10,000 
per person. Guaranteed jobs would cost half that even if it meant a full 50 per 
cent reimbursement rate for each one. 


There is a difference between subsidized employment in the private sector and 
on-the-job training as it now exists. Subsidized employment does not bind the 
employer to a permanent hire, is not subject to time limits and avoids the ex- 
tensive paperwork now associated with formal on-the-job training contracts. On- 
the-job training has various weaknesses. Only one out of ten employers are able 
to provide adequate training. In essence the government is buying a job. Since 
the employers and enrollee are aware of this situation, both easily become dis- 
satisfied. The enrollee complains of a lack of training, meanial duties, employer 
prejudice, etc. The employer becomes frightened at the prospect of having to 
keep the enrollee after the contract ends and immediately begins to look for 
an excuse to fire him. While some employers try to camoufiage the situation by 
keeping the enrollee four or five months after the completion of the contract, the 
vast majority quit or are discharged within six months. Subsidized employment 
with no prerequisite of hire and time limit would greatly relieve the pressure 
both to the employer and enrollee. It is only through this less threatening at- 
mosphere that real progress can be made. 

While subsidized employment may appear to be biased toward the employer, 
certain safeguards could avoid abuse. Employers showing a large percentage of 
enrollees entering unsubsidized employment would get preference of assignment. 
Those showing no movement would be used only as a last resort. Through the 
cooperation of the Chamber of Commerce, Labor Unions, Better Business Bu- 
reau, and other civic and citizen groups, positive results could be obtained. 

Enrollee job-hopping between subsidized employment could be substantially 
reduced by adding "training credits." Enrollees completing 6 months of an as- 
signment with a good performance rating would receive a percentage of their 
earnings as a cash bonus for training. They could use these training credits only 
for entry in a trade school, community college, night school, etc. If they leave 
prior to completion of 6 months for any reason other than entry on a full-time 
job, or a lack of work discharge by the employer, they would lose all credits. 
Thus the enrollee would be able to "earn" job training rather than the "dole 
system" used now. 

Employer participation to subsidzed employment would be limited to those 
jobs with a starting rate of $2.00 per hour, thus avoiding cheap help. 

The principle of subsidized employment is much more equitable than on-the-job 
training. The enrollee is not led to believe he is entering trade school type train- 
ing of which the employer cannot produce. The employer is not harassed with 
compliance to training curriculums and is free to provide the vocational orien- 
tations he normally gives new hires and regular employees. Since the enrollee 
is told he has a job and not a pure training assignment, there is a better relation- 
ship with the employer and a greater willingness by the enrollee to become work 

Many employers with on-the-job training contracts have reported instances 
where enrollees have refused to do work because they could not see the direct con- 
nection between what they were told to do and training. This has soured many 
employers on on-the-job training contracts and they refuse to sign another. 

Under subsidized employment, the enrollee is not cemented to a job he may 
dislike, and through the accumulation of "training credits" can make his own 
vocational choice. He has the assurance he has "earned" it and is more careful 
and thoughtful concerning his selection. 


Subsidized employment is far superior to wage supplementation as proposed 
by the Family Assistance Plan. In general, wage supplementation is a bottom- 
less pit and unfair. Women on welfare now have wage supplementation and even 
though many have full-time jobs, are still on welfare. Often they are working 
beside someone who has the same size family, receiving the same wage and they 
are not receiving welfare. This creates bitter feelings and causes serious morale 
problems. It perpetuates the narcotic effect of welfare orientation and depend- 
ence. This has spawned generations of welfare recipients. 

Subsidized employment would also provide the flexibility needed to conform 
with human nature. Many low income or disadvantaged are not used to a steady 
diet of work and must be gradually trained to accept this fate. Unemployment 
Insurance Coverage would provide this flexibility. At the end of each year of 
subsidized employment, the enrollee would be given the option of drawing his 
Unemployment Insurance Benefits while attempting to find an unsubsidized job. 
As he/she would be subject to the rules of the U.I. code, they could be disquali- 
fied for an inadequate job search. 

If the 5 percent participation limit placed on employers did not produce enough 
jobs, then the percentage could be increased to the level necessary to provide full 


During the 35 year history of the U.S. Employment Service, a great deal of 
debate has occurred concerning its effectiveness and purpose. While it must be 
admitted that considerable good has been accomplished, it has nat fullfilled its 
purpose. No matter how many times the name is changed (Department of Em- 
ployment, Department of Human Resources Development, etc.) the public still 
refers to it as "the Unemployment OflSce." So far it has lived up to that name. 90 
per cent of the unemployed coming to the Employment Service Sections of the 
U.S. Employment Service are looking for a job, not advice, counseling, testing, 
conversation, or sympathy. For 35 years only 10 to 15 per cent have been able to 
secure jobs and of these, many were low pay, temporary, or part-time jobs. It is a 
wonder that the U.S. Employment Service still has any friends. The fact that 
the U.S. Employment Service has been only partially effective is not the fault of 
its employees since they could not manufacture jobs. 

Guaranteed jobs would convert the U.S. Employment Service to a house of em- 
ployment rather than a house of unemployment or sympathy. 


A great part of the current welfare problem lies in the fact that nearly all wel- 
fare recipients have large families. Only a fraction of the problem can be blamed 
on ignorance as most have had family planning information and access to pro- 
fessional medical assistance through use of their medical cards. The basic prob- 
lem is the current welfare system which encourages large families by raising the 
grant each time a new child is born. By proper utilization of auxiliary aids in 
the areas of Commodities, Health Insurance, Housing Allowance, Child Care and 
Transportation, the need to pay cash grants based on the size of the family is 

While on a subsidized job in the private sector or on a government work project, 
all would be treated alike. The single man would get the same pay as the one with 
ten children. While the one with ten children would get greater assistance through 
commodities, health insurance, etc., he would get no extra money, thus eliminat- 
ing one of the desires to have more children. To be really effective, however, 
mandatory abortions should be required on any mother becoming pregnant with 
her fourth child. 


Two prime misconceptions play a commanding part in the feasibility of elimi- 
nating poverty and unemployment. These are (1) "The United States is the 
richest country in the World" and (2) "Why work unless you have a good job." 

The facts are that the U.S. is hopelessly in debt and if the trend isn't reduced, 
will soon be unable to pay even the interest on the national debt. This state- 
ment, common among poverty pressure groups and politicians, gives the poor 
the false conception that the U.S. Government could put everyone on a govern- 
ment payroll at .$10,000 per year and not miss the money. The second miscon- 
ception of "Whv Work unless you get a Good Job" is equally devastating. 


Admittedly, the top 20 per cent have jobs with high pay and excellent working 
conditions but the majority still work extremely hard at low pay. Many a small 
business man, service station attendant, salesperson, etc., still work 50 to 60 
hours per week under gruelling pressure. 

When many welfare recipients try a job, find any pressure, they Immediately 
quit as they feel they are being taken advantage of. Television is also largely 
responsible as they advertise affluence in a very subtle way. Most programs show 
a $50,000 home, with the man a lawyer, doctor, business executive, two cars, one 
a Cadillac, another a sports car, a maid, etc. This gives the poor a wrong impres- 
sion of the avei'age man and helps develop a negative attitude of "Why work 
unless I get what they get". 

In order to effectively right the Avrong and tell it like it is, a mass educa- 
tion program must be instituted to again applaud the dignity of work based 
upon a just wage rather than riches. 

Republic, Wash. 
Senator Waeeen G. Magnuson, 
Senate Office Building, 
Washington, B.C. 

Strongly urge you to oppose Section 232 of H.R. 1, Social Security Amendment 
of 1971. 

James A. Davis, 
President, Board of Trustees, Ferry County Memorial Hospital. 

Tacoma, Wash. 
Senator AVakren G. Magnuson, 
Washington, D.C. 

Tacoma General Hospital opposed to Section 232 of H.R. 1, the Social Security 
Amendments of 1971. Permission to State to define reasonable costs of hospitals 
under maternal and child health programs a great disadvantage to hospitals 
in Washington. Respectfully request careful consideration. 

Tacoma Genekax, Hospital, 


Executive Vice President. 

Ephbata, Wash. 
Senator Warren G. Magnuson 
Senate Office Building, 
Washington, D.C. 

McKay Memorial Hospital is vigorously opposed to section 232 of H.R. 1, pro- 
posed social security amendment permitting the State to define "reasonable 
cost" for reimbursement under Medicare would cause severe financial hardships 
to hospitals already under stress caused by the new restrictive rulings of F.D.P.A. 
We urge you to assist this hospital and all hospitals in this State by working 
for deletion of section 232. 

Gertrude M. Philips, 
Administrator, McKay Hospital, Soap Lake, Wash. 

Metaline Falls, Wash., NovemJ)er S, 1911. 
Hon. Senator Warren G. Magnuson, 
Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson: The Commissioners of Public Hospital District 
No. 2 of Pend Oreille County and myself respectfully request that you oppose 
section 232 of H.R. 1, the Social Security Amendments of 1971. 
Thank you for your assistance now and in the past. 
Sincerely yours, 

(Mes.) Roberta M. Garrett, R.N., 



Wenatchee, Wash. 
Senator Warren G. Magnuson, 
Washington, B.C. 

We would like to make known our opposition to section 232 of H.R. 1, the 
Social Security Amendment of 1971. Past experience provides a basis for reluc- 
tance to having such controls placed in the hands of the state authorities. 

Eye and Ear Clinic Inc., P.S. 

LoNGViEW, Wash. 
Senator Warren G. IMagnuson, 
Old Senate Office Building, 
Washington, B.C. 

I am opposed to section 232 of H.R. 1. This is a disastrous step backwards 
which will result in higher hospital costs. 

Sister ISIary Keough, 
Administrator, St. Johns Hospital. 

Seattle, Wash. 
Senator Warren Magnuson, 
Washington, D.C. 

We urge you to oppose section 232 of H.R. 1, the Social Security amendments 
of 197L Permitting the States to define "reasonable costs"' for reimbursements 
to hospital would be very costly to the hospitals. An example is what the State 
of Washington is already doing with the past limit, deductibles and participa- 
tion. The region 10 oflSce of HEW assisted in having an unilateral decision by 
the State of Washington on May 1, 1971 reversed October 1, 1971 in regard 
to the Medicaid patients participation percentage. 

We ask you to oppose section 232 of H.R. 1, social security amendments of 1971. 

The Doctors Hospital, Seattle, 
S. A. Tucker, MD., Director. 

Tacoma, Wash., November 24, 1971. 
Hon. Warren G. Magnuson, 
Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : I am writing you regarding H.R. 1 which is the 
Social Security Amendments Bill of 1971 and which includes one important 
change which is extremely distressing to all of the hospitals vmder the Ameri- 
can Hospital Association, including Tacoma's leading hospital, Tacoma General 
Hospital, with which I have been connected for many years. 

I believe it would be a great mistake to alter the present situation which 
assures hospitals that charges which are made for Medicaid will continue 
to follow and remain equal with the Medicare formula as I understand they 
do at the present time. The effect of Section 232 of H.R. 1 will be to eliminate 
the present standard for payment and leave it to the determination of each 
state as to what their interpretation of "reasonable costs" thereafter should be. 

It is believed that such a change would undoubtedly mean that hospitals would 
receive inadequate reimbursement to cover their actual costs and needs. 
Yours truly, 

Corydon Wagner. 

Island Hospital, 
Aanacortes, Wash., November 17, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

:\rY Dear Senator : I would like for you to know of our opposition to Section 
232 of HR-1 of the Social Security Amendment of 1971. 

To allow the states to define "reasonable costs" for reimbursement of hospitals 
under Medicaid and Maternal and Child Health Programs could work a hardship 


on the hospitals of our nation. We do not make this statement lightly. The experi- 
ence we have had in our own state leads us to this conclusion. 


Ray W. Niebman, Controller. 

0\t:blake Memorial Hospital, 
Bellevue, Wash., November 11, 1971. 
Senator Wakren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Senator Magnuson : May I take this opportunity to express to you my opposi- 
tion to Section 232 of HR 1, the Social Security Amendments of 1971. Section 232 
would permit states to define "reasonable cost" for reimbursement of hospitals un- 
der Medicaid and Maternal and Child Health Programs. 

It is a sad observation that passage of this Section would undonbtably mean 
reduced medical benefits to welfare patients. In view of the State of Washington's 
efforts to reduce its role in the maintenance of a welfare program in the face 
of increasingly difficult economic conditions and the fact that people whether em- 
ployed or not require adequate health care, I urge you to oppose this measure. 

A. W. Armstrong, Business Office Manager. 

Mount Carmel Hospital, 
Colville, Wash., Noveinbcr 12, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : I strongly oppose Section 282 of H.R. 1. the Social 
Security Amendments of 1971. 

Only a hospital can determine "reasonable cost." To allow a state to permit 
their own "reasonable cost" would be a disaster. A state would adjust its Public 
Assistance Budget to the point of reducing "reasonable cost" and, in effect, that 
would create higher cost to the hospital and to the taxpayer. 

There are more than enough restrictions and regulations, not to mention all 
the new ones that will be effective January 1 ,1972. 
I repeat, I oppose Section 232 of HR 1. 

John C. Boyer, Business Manager. 

Deaconess Hospital, 
Spokane, Wash., November 15, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson: After reading the proposals contained in Section 
2f?2 of H.R. 1, the Social Security Amendments Bill of 1971, as they pertain to 
the determination of "reasonable cost", I would like to tell you what I think 
about it. 

In the event that this Amendment and Section were to pass, it would return the 
determination for establishment of a reimbursable program to the individual 
state welfare departments. The experience that we had here in the State of 
Washington was that less than 50% of the cost of hospital care of indigent 
persons was paid for under the program which existed prior to Medicaid. Under 
the Medicaid program, we are receiving approximately 80% of our cost, which 
while not entirely satisfactory, is certainly a great improvement over the old 

With the increasing percentage of income received by hospitals coming from 
state and federal sources, it is evident that we cannot continue to operate on a 
break-even basis if we are to regress in the manner indicated above. 

Anything you could do to see that Section 232 of H.R. 1 does not would be 

Sincerely yours, 

Harry C. Wheeler, Administrator. 


St. Lukes, General Hospital, 
Bellingham, Wash., November 11, 1911. 
Hon. Warren G. Magnuson, 
U.S. Senate Building, 
Washington, D.C. 

Dear Senator Magnuson : You are probably aware of tbe alarm with whicb 
the health care field views Section 232 of HR 1 which is now under consideration. 
I share this view and so do the members of our Board of Trustees and Medical 

The reason is very simple. The states In the past have shown little regard for 
equity of payment to vendors of health services. This is not to say those opposing 
Section 232 "feel they have a license to exploit the public, but there is no .iusti- 
fication in not being paid recognized costs. The state of Washington has probably 
been as good as most but the Department of Public Assistance has traditionally 
totally disregarded vendor needs and seemingly have little sympathy for the fact 
that any underpayments by them must be paid for by other sick people. 

I am confident that you are aware of the situation. I sincerely hope that you 
do not support giving the states a free hand in determining "reasonable costs" 
in this matter. The state has clearly demonstrated in the past that it could 
care less about the problems of the hospitals. When the rules were released from 
Washington on payment for Title XIX recipients the Department of Social and 
Health Services immediately took advantage of it in Olympia and this has been 
the pattern through the years. We plead for your support against this aspect of 
Section 232 in HR 1. 

Sincerely yours, 

John W. Kludt, Administrator. 

St. Joseph's Hospital, 
Bellingham, Wash., November 12, 1911. 
Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson: This is to register a strong protest against Sec- 
tion 232 of H.R. 1, the Social Security Amendments of 1971. For each state to 
define "reasonable cost" for reimbursement of hospitals under Medicaid and 
Maternal and Child Health Programs would be unrealistic and unfair. 

We urge you to vote against Section 232 of H.R. I and to do everything in 
your power to defeat it. 
Sincerely yours, 

Sister Catherine McInnes, 


Tri-State Memorial Hospital, Inc., 

ClarJcston, Wash., November 4, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson: I am writing to urge your outspoken opposition 
to Section 232 of H.R. 1. This Section appears to be a massive step backward 
if its intent is to refer back to the various states the prerogative of defining 
reasonable cost for reimbursement to hospitals caring for patients under the 
Medicaid Program. 

Surely you are aware of Washington's long history of inequities to hospi- 
tals prior to the initiation of Titles XVIII and XIX when hospitals were at the 
mercy of budgetary leavings of the State Department of Public Assistance. 
Health care for the medically indigent has long been an unsuccessful dilemma 
when left to the discretion of the Welfare Departments of the separate state. 
Significant improvement in equality and standardization seemed apparent under 
the original concept of Title XIX. To pass the responsibility back to the states 
now is not the solution, it's the problem. 

We respectfully and urgently urge you to strive for national uniformity in 
seeking a .iust solution to the problem of providing health care to the nation's 
economically disadvantaged. 


Tbank you for your consideration and efforts on this matter which is of 
prime importance, particularly to rural community hospitals. 

Sincerely yours, ^ j_ ^^^^^^ 


Grays Harbor Community Hospital, 

Aberdeen, Wash., Novemler 2, 1971. 
Hon. Warren Magnuson, 
Old Senate Office Building, 
Washington, B.C. 

Dear Senator: Your support is earnestly requested in opposing Section 232 
of HR 1, relative to reimbursement of hospitals, under the Medicaid and 
Maternal and Child Health Programs. 

Interpretation of certain provisions by local State authorities are becoming 
unreasonable and can only lead to additional complications. The term "reason- 
able co^it", as provided in the bill at the present time, will have no limits, 
based on past experience. 
Best regards, 

Paul Blomquist, Administrator. 

Mark E. Reed Memorial Hospital, Inc., 

McCleary, Wash., November 4, 1971. 
Senator "Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : I am writing to you in opposition to Section 232 
of HRl (Social Security Amendment of 1971). I am sure that you are aware 
that this section would permit states to define reasonable costs in reimburse- 
ment of hospitals under Medicaid and Maternal and Child Health Programs. 

As president of the Southwest Washington Hospital Council, I speak for all 
our member hospitals in stating that our long experience has taught us that 
this section would be used to put hospitals in the position of subsidizing these 
programs. Hospitals have been "under fire" from all sides because of increasing 
costs, this type of legislation will make our position that much more difficult. 
Hospitals have demonstrated their ability to provide the high quality care 
expected by our patients. Government should demonstrate their ability to ade- 
quately fund the programs they legislate. 

I hope I can rely on your support in opposing Section 232 of HRl. 

Joe Hopkins, Administrator. 

McKay Memorial Hospital, 
Soap Lake, Wash., November 4, 1971. 
Hon. Russell D. Long, 
Senate Finance Committee, 
Old Senate Office Building, Washington, D.C. 

Dear Senator Long : McKay Memorial Hospital strongly urges elimination of 
Section 232 of HR-1. 

As a small non-profit hospital, operating on a cost to charges basis, we would 
be seriously hurt by the financial hardships that would result from giving 
Washington State Department of Public Assistance the freedom to put our 
services on a free schedule. What they choose to call "reasonable cost" would 
deal a staggering blow to our charge structure. The resulting "charity cases" 
would mean additional hospital costs charged to paying patients who are al- 
ready burdened by high costs of hospitalization. 

Hospitals cannot afford this restrictive legislation. Please come to our aid 
by deleting Section No. 232 before this bill goes to the Senate. 

Gertrude M. Philps, Administrator. 


AViLLAPA Harbor Hospital, 
Sotcth Bend, Wash., Novetnber 2, 1971. 
Hon. Warren G. Magnuson, 
U.S. Senator, Washington, D.C. 

Dear Senator Magnuson : Section 232 of H.R. 1. the Social Security Amend- 
ments bill of 1971 contains provisions harmful to hospitals. The section would 
permit states to determine "reasonable cost" under Medicaid and the Maternal 
and Child Health Programs. 

All too often, "reasonable cost" to states means the amount of pa.vment the.v 
choose to make rather than the real costs hospitals must incur in order to provide 
needy patients with good care. At South Bend and Ilwaco, Washington we pro- 
vide care first and seek payment second. This policy is necessary to be sure no one 
comes to harm. 

"Reasonable cost," defined at Olympia, begins with the theory that standards be 
established covering length of stay by diagnosis, deductibles, and participation 
payment by patients. These people would not be eligible for care if they had any- 
thing to pay with and each diagnosis is peculiar to the person to whom it is at- 
tached. Standards on length of stay ignore the individual in favor of the 

To sum up, if payment is allowed to be defined by states, it will likely be less 
than Medicare and private patients because states (State of Washington) have 
never used the opportunity to do otherwise. 

Our small community hospitals are financially anemic now, but required to give 
complete service to all. Please consider this fact when you consider section 232 
of H.R. 1, Social Security Amendments bill of 1971. 
Yours truly, 

Gerald W. Baker, Administrator. 

Seattle General Hospital, 
Seattle, Wash., November 3, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, Washington, D.C. 

Dear Senator Magnuson : The Senate Finance Committee is about to consider 
HR-1, the Social Security Amendments Bill of 1971. 

We wish to call your attention to Section 232 and ask that you seek its deletion 
from the bill. 

The impact of Section 232. if enacted into law, is to permit .state government to 
define the "reasonable cost" for reimbursement of hospitals providing service to 
Medicaid and Maternal and Child Health Programs. This release from the federal 
Medicare criteria for reimbursement is very apt to create a diminished payment 
practice to us for care of these patients. The problems of state finance are such 
that regulatory bodies will undoubtedly opt for less money to health care pro- 
viders including hospitals. We are currently coping with this tactic as it relates 
to public assistance patients and a recent regulation establishing an arbitrary 
maximum period of hospitalization. 

We ask that you support the present policy of requiring that Medicaid and 
Maternal Health and Infant care payment standards be equivalent to those ap- 
plied under the Medicare reimbursement formula. Section 232 would eliminate 
this requirement. 

Very truly yours, 

Paul S. Bliss, Administrator. 

Cascade Valley Hospital. 
Arlington, Wash., November 4, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson": This hospital would appreciate a negative vote on 
Section 232 of HR 1, the Social Security Amendments of 1071. Experience indi- 
cates that the State of Wa.shington will disadvantage district owned hospitals 
through the Medicaid system. It is our belief that local taxpayers are paying 
their fare share for health in the community and should not be burdened with 
an unfair Social Security amendment. 

Allen K. Remington, Administrator. 


Memorial Hospital, 
Odessa, Wasli., Novemher 3, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : I am writing to express my strong objection to 
Section 232 of H.R. 1, the Social Security Amendments of 1971. The commissioners 
of this hospital district concur in this objection. 

Hospitals in the State of Washington were forced to subsidize the State's pro- 
gram of medical care for indigent persons for many years. It was only with the 
advent of Federal intervention that we were finally to recover our actual cost 
on these programs. If these Federal requirements are removed, and the State is 
allowed to again determine "reasonable cost" it is certain that hospitals will 
again be forced to provide care at rates which bear no relationship to our cost 
of providing such care. The deficit between our cost and what we are paid by 
the State will then have to be added to the bill of the private patient instead of 
being equitably distributed among all tax payers in the State. The gross injustice 
of this situation is readily apparent. 

I respectfully request that you favorably consider our position in this matter. 
Thank you. 


M. L. Traylor, Administrator. 

Tri-County Hospital Association, 

Deer Park, Wash., November 4, 1971. 
Senator Warren G. Magntjson, 
■Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : It has come to my attention that H.R. 1 in Section 
232 would permit states to define "reasonable cost" for reimbursement to hos- 
pitals under Medicaid and Maternal and Child Health Programs. 

I do not believe that individual states should have this authority and am 
opposed to Section 2.32. 

I do not believe this to be in the best interest of patient, those who pay for the 
services or those rendering the services. 

As long as the Federal Government is contributing to these programs they 
should assure the providers that the same guide lines are being used in es- 
tablishing payments to all the providers. 

Failure to do this will bring forth a multitude of provider reimbursement 
programs and I am sure in many cases will place an additional financial burden 
•upon the privately paying patient. 

We all know the providers have to have so much funds in order to stay in 
operation and to provide health care. This must come from those who use the 
providers facilities and if some do not carry their full share then others must 
carry more than their full share. Unfortunately this usually always ends up 
being the private pay patient. 

Your efforts in providing fair and equable health care legislation is greatly 

Sincerely yours, 

Chables L. Lampson, Administrator. 

The Valley Memorial Hospital, 
Sunnyside, Wash., November Jf, 1971. 
Re HR 1. 

Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator : As a concerned Administrator of a hospital I am writing 
to express my opposition to section 232 of HR 1 which will permit the State to 
set "reasonable costs" for care of Medicaid patients. 

It is no secret that our legislature considers the payment of care for Medi- 
caid patients to have one of the lesser priorities when it comes to budgeting and 
the result has always been insuflBcient funds to cover costs. 


Title 19 changed this, in that it made the states use the same criteria as Title 
18 in arriving at costs. . 

To allow the states to set their own criteria would again make care of the 
indigent a political football. , , ^, 

Don't take this step backward, don't let the purchaser of care also be the 

judge as to what will be paid. Rather let the Federal government retain this 

judgmental position. Vote to exclude this from HR 1 please. 

Sincerely, ^ , . . ^ ^ 

C. D. Bentley, Administrator. 

Yakima Valley Memorial Hospital, 

Yakima, Wash., November 4, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : We are writing to register the stronger possible 
opposition to Section 232 of HR 1. The Social Security Amendments of 1971. As 
you know, it has only been since the advent of Medicare and Medicaid that 
Washington hospitals" have received reasonable cost for the care of indigent 
patients. We believe that the proposed amendment authorizing states to estab- 
lish their own standards of payment for Medicaid patients' care would soon result 
in financial disaster to our hospital. 

We respectfully recommend that the provisions under section 232 be deleted 
from the bill in question. 

Thanking you for your consideration, I am 

Sincerely yours, , , . 

Max L. Hunt, Administrator. 

Providence Hospital, 
Everett, Wash., November 2, 1911. 
Senator Warren G. Magnuson, 
U.S. Senate Building, 
Washington, D.C. 

Dear Senator Magnuson : Providence Hospital, Everett, Washington, is op- 
posed to Section 232 of HR-1. the Social Security amendment of 1971, which 
permits the States to define "reasonable cost" for reimbursement under Medi- 
caid. . . . ^ , J 

Our past experience with the State Department of Public Assistance leads 

us to believe that Section 232 would work to our disadvantage. 


Sister Louise Lebel, Administrator. 

General Hospital of Everett, 
Everett, Wash., November 3, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : Our hospital Board is most concerned with Section 
232 of H.R. 1 in which it would permit each state to determine "reasonable cost" 
for reimbursement of hospitals under Medicaid and Maternal and Child Health 

We have fared badly in dealing with the state in the past. Now they want to 
pay hospitals less than they are required to pay them under the Medicare for- 

Somewhere along the way a fair and equitable method of payment must be 
found. Section 232 of H.R. 1 is not the answer. . c, *■■ 

Your support is solicited and very much appreciated in the defeat of Section 

Sincerely, ^ 

Stephen C. Saunders, President, Board of Trustees. 


Dayton General Hospital, 
Dayton, Wash., November 4^ Idtl. 
Senator Warren G. Magnuson, 
Old Seuatc Office Building, 
Washington, D.C. 

Dear Senator Magnuson : May we express our opposition to Sect. 232 of 
HR-1. the Social Security Amendments of 1971. 

We understand Sect. 232 would allow the state to define "reasonable costs", 
for re-imbursements to hospitals for care provided patients under Medicaid and 
Maternal & Child Health Programs. Our experience up to 1967 and the passage 
of Title XIX in our state, indicates that arbitrary definitions of cost of care by 
our State Welfare Program was much below the cost of care. The hospital pro- 
viding care of Welfare recipients did so in most cases, knowing that a financial 
deficit would result. There was no alternative, other than by State Legislative 
Action to re-coup these losses. With the advent of Medicaid, a more reasonable 
re-imbursement program was established. With the passing of Sect. 232, the 
Medicaid Program could revert to a re-imbursement program that would be 
impossible for hospitals in this state to live with. 
We urge your opposition to Sect. 232 of HB-1. 

Feed Scheeck, Chairman of Board. 
Cecil Mackliet, Secretary. 

Virginia Mason Hospital, 
Seattle, Wash., November 8, 1911. 
Hon. Warren G. Magnuson, 
TJ.S. Senate, 
Washington, D.C. 

Dear Senator : We are very concerned with Section 232 of HR 1 which would 
provide the individual state with the authority to determine reasonable costs 
for care provided patients under Medicaid. Historically we have seen repeated 
instances where a state with financial problems will immediately trim expenses 
and benefits of programs such as Medicaid if given the opportunity to do so. 
This is inevitably accomplished at the expense of the providor of health care 
as well as the beneficiary. 

We believe that failure to delete this section (Section 232) \\all significantly 
jeopardize hospital reimbursement programs. Further there is also a need to 
standardize reimbursement programs between states and this section of course 
moves in the opposite direction. For these reasons we would urge you to do every- 
thing possible to delete Section 232 from HR 1. 

Austin Ross, Administrator. 

Central Memorial Hospital, 
Toppenish, Wash., November 4, 1911. 
Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Sir : Please place Central Memorial Hospital and myself, as their admin- 
istrator, on record as opposing Section 232 of HR 1, the Social Security Amend- 
ments of 1971. 

Very truly yours, 

Clarence M. Pritchard, Administrator. 

Walla Walla General Hospital, 
Walla Walla, Wash., November 2, 1911. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : We to advise that we are definitely opposed to 
Section 232 of HR 1. regarding Social Security Amendments of 1971 and would 
appreciate your doing all in your power to defeat it. 


From experience it appears that our good State of Washington will probably 
take advantage of Section 232 to the disadvantage of hospitals. 
Thank you. 

Sincerely yours, 

J. A. Dailet, Administrator. 

Holy Family Hospital, 
Spokane, Wash., November 5, 1911. 
Hon. Wareen G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : We would like to go on record as opposing Section 
232 of HR 1, the Social Security Amendments of 1971. 

As you know, this section permits states to define reasonable cost for reimburse- 
ment of hospitals under Medicaid and related programs. 

We feel that in the State of Washington hospitals are already being subjected 
to unreasonable deductions as determined by the Department of Welfare. At a 
time when hospitals are being criticized for the high increase in costs, we feel 
that this would only accelerate charges to the patients. 

We kindly request that you do what you can to delete this portion of the bill 
when it comes up for discussion and vote. 
Sincerely yours, 

Sister Mary Agnes, O.P., Administrator. 

James J. Murray, Assistant Administrator/Fiscal Services. 

Pttget Sound Hospital, 
Tacoma, Wash., November S, 1971. 

Re H.R. 1, Social Security Amendments of 1971. 
Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.C. 

Dear Senator Magnuson : We would like to bring to your attention the serious 
implications of Section 232 of HR 1, the Social Security Amendments of 1971 and 
express how strongly we oppose this amendment. 

Section 232 would permit states to determine "reasonable cost" under Medicaid 
and the Maternal and Child Health programs. Under this Section, standards for 
payment for these patients could be different from those for Medicare patients. 
Payments could not exceed the amount which would be allowed under the 
Medicare formula but could and probably would be less. 

Prior to Medicaid, most states paid hospitals for care of the indigent on the 
basis of what was left in their budgets after all other budget needs had been met, 
and the amount rarely was sufficient to defray hospital costs. Only since the ad- 
vent of Medicare and Medicaid have hospitals received iiayment for the reason- 
able cost of these services. Now the governors of the states have asked Congress 
to let them establish their own standards of payment for Medicaid patient care. 
They want to pay the hospitals less than they are required to pay them under 
the Medicare formula. 

Some hospitals believe erroneously that they would fare as well with Medicaid 
reimbursement levels in the hands of the states ; however, past programs prove 
the contrary. Medicare and Medicaid patients represent a substantial part of a 
hospital's patient load, and further restrictions on payments for the care of these 
patients might well affect the survival of many institutions. We feel that the pro- 
visions of Section 232 is a most serious challenge to the future of our hospital 

We request that you recognize the seriousness of this problem and the possible 
effect of this amendment on our hospitals. We recommend that the provisions of 
Section 232 be deleted from the bill. 
Yours truly, 

Robert E. Huesers, Administrator. 



Kirkland, Wash., November 4, 1971. 
Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, D.G. 

Dear Senator Magnuson : Again I am writing you of my concern about legis- 
lation which would permit the states to define "reasonable cost" for hospital care 
under Medicaid and Maternal and Child Health programs. I refer to the proposed 
Section 232 of H.R. 1. I urge you to work for a change in this section to allow 
H.E.W. to make the definition. 

Hospitals in Washington state know from long hard experience that "cost" 
to the Division of Public Assistance bears little relation to accepted accounting 
principles. I am sure you require no explanation of this system of inadequate 
appropriations and varying reimbursement formulae developed here in lieu of 
cost finding. 

I will appreciate your help in improving this Medicaid legislation. 
Cordially yours, 

F. A. Gray, Administrator.^ 

St. Joseph Hospital, 
Tacoma, Wash., November 10, 1911.. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washingtoti, D.G. 

My Dear Senator Magnuson : May I take this opportunity to express my cob^ 
cern over Section 232 of HR 1. 

Experience tells me this is not the way to develop "reasonable costs" in this- 
state. I solicit your vote in opposition to Section 232. 
Please give it your serious consideration. 
Very truly yours, 

Sister Margaret Hudon, Administrator.. 

Good Samaritan Hospital and Rehabilitation Center, 

Fuyallup, Wash., November 3, 1971^ 
Senator Warren G. Magnuson, 
Old Seriate Office Building, 
Washington, B.C. 

Dear Senator Magnuson : Since I understand that the Congress may adjourn; 
this session by Thanksgiving and before that time will likely vote on the Social 
Security amendments of 1971 (H.R. 1), I would like to again mention the very 
real concern that I and my Board members have regarding Section 232 of this bill. 

Section 232, as you no doubt know, deals with the definition of "reasonable 
cost" by the State for reimbursement purposes regarding Medicaid and Maternal 
and Child Health Programs. At the present time, the States have had to adhere 
to Medicare standards insofar as determination of reasonable costs go. In Wash- 
ington, we are sure that passage of Section 232 would mean the State would 
set a reasonable cost level well below that of Medicare particularly in view of the 
State's financial problems. This would be an extremely deplorable situation 
for our hospital financially. Medicare does not reimburse us in full— they dis- 
count the bill by 10-20% and this means the private patients get stuck paying the 
difference for both Medicare and Medicaid patients — if a hospital served no one 
other than Medicare patients, they would be financially insolvent. If the State 
was allowed, as it would be in Section 232. to set reasonable costs at amounts 
still lower than Medicare, the hospitals would have no recourse but to continue 
passing the cost of these exorbitant discounts on to their private patients, 
and we feel the private patient is already picking up too large a burden. Another 
unfortunate result, if the hospitals are forced to absorb further costs of care, 
would he that two levels of standards of care might eventually exist, one for the 
non-Medicaid patient and another for the Medicaid patient. This would not be ta 
the liking of the patients, the Government, or the hospitals. 

AVe urge you to do what you can to have Section 232 deleted from H.R. 1. 

David K. Hamry, Administrator. 


Okanogan-Douglas County Hospital, 

Breivster, Wash., XuvenLher !). 1071. 
Senator Wakren G. Magnuson, 
Old Senate Offlce Building, 
Washington, D.U. 

Dear Senator Magnuson : I respectfully request your review of Section 232 
of H.R. 1 of the Social Security Amendments of 1971. 

This section appears to permit states to define "reasonable costs"' for reimburse- 
ments to hospitals under Medicaid and Maternal and Child Health Programs. 

This hospital, as well as others in our State, does not feel that the state has 

been reasonable in the defining of care and/or handling of funds under i)resent 

programs, without being given further jurisdiction, with appropriated funds. 

Your opposition to Section 232 will be gratefully appreciated by this Hospital 

District and its patrons. 

Respectfully yours, 

Howard M. Gamble, Administrator. 

Coulee General Hospital, 
Grand Coulee, Wash., November 1, 1971. 
Senator Warren G. Magnuson, 
U.S. Senate, 
Washington, B.C. 

Dear Senator Magnuson : The subject is Section 232 of H.R. 1, Social Se- 
curity Amendments Bill of 1971. 

Please do all possible to eliminate Section 2.32 and its intent. Allowing the 
various states to determine "reasonable cost" would be disasterous to the finan- 
cial condition of all hospitals. 

Enactment of Section 232 would indeed harm the Coulee General Hospital. 

We are now — and when I say we I mean the Coulee General Hospital and the 
surrounding hospitals that I know of in eastern Washington — are seriously 
harmed by the arbitrary and capricious manner in which the Division of Public 
Assistance of the Department of Social and Health Sciences renders a final 
decision as to what we will be paid for skilled nursing care patients under the 
Welfare program. We at Coulee General Hospital, in fact, are losing $4.00 a day 
on the care of each and every medically indigent case. This is a very good ex- 
ample of what Section 232 would do to us in the acute care hospital phase of 
patient care. 


Delos J. Bristor, Hospital Administrator. 

Washington State Hospital Association, 

Seattle, Wash., November 1, 1971. 
Hon. Warren G. Magnuson, 
Old Senate Office Building, 
Washington, B.C. 

Deiar Senator : I am writing concerning Section 232 of H.R. 1, Social Security 
Amendments Bill of 1971, now before the Senate Finance Committee. 

This section would permit states to determine "reasonable cost" under Medicaid 
and the Maternal and Child Health Programs for reimbursement of hospitals. 
Under this section, standards for payment for these patients could be different 
from those for Medicare patients ; payment could not exceed the amount which 
would be allowed under the Medicare formula, but could — and almost surely 
would — be less. 

Hospitals are seriously concerned about their future, if such a program is 
authorized by the Congress. 

As you know, before Medicaid, most states paid hospitals on the basis of what 
was left in their budgets after all other needs had been met and the amount 
was insufficient to defray hospital costs. Medicare and Medicaid brought the 
payment of reasonable costs for the care patients being cared for under these 

Now, with state government finances at a low ebb, governors are asking Con- 
gress to permit them to establish their own standards of payment. It is clear 


that they want to pay less for Medicaid patients than they are required to pay 
for patients under the Medicare program. 

If Section 232 remains in the bill it will mark a long step backward. 

Hospitals have a very real fear that, if payments are reduced, the survival 
of voluntary hospitals may be at stake. Hospitals simply cannot carry the finan- 
cial load for welfare health care programs. 

The hospitals of the state will be most appreciative if you will do all within 
your power to amend H.R. 1, as it is now written, to delete Section 232 and to 
insure that hospitals continue to receive reasonable payment — as determined 
at the national level and not at the state level. 

John Bigelow, Executive Vice President. 

Stevens Memorial Hospital, 
Edmonds, Wash., November 2, 1911. 
Hon. Warren G. Magnuson, 
U.S. Senator, 
Washington, B.C. 

Dear Senator Magnuson : It has been brought to my attention that the states 
are attempting to amend H.R. 1 of Social Security Amendment Bill of 1971. 
Section 232, in such a way that it would i3ermit the states to determine what 
is reasonable cost under Medicaid in the Maternal and Child Health Programs. 

This Section's standards for payment for these patients could be different 
from those for Medicare patients. Payments could not exceed the amount that 
would be allowed for the Medicare formula and probably would be less. 

Hospitals for many years have suffered from the arbitrary decisions made 
by the individual states as to the reimbursement for the medical care those 
patients who seek the state's aid in caring for their medical needs. 

In this time of criticisms of hospitals and their charges, the revised reimburse- 
ment under Section 232 of H.R. 1 would give the public an indication that perhaps 
hospitals are really charging more than is absolutely necessary. 

I, for one, representing a hospital district here in your legislative district 
would say that throughout each and every year, the hospitals walk a very fine 
line between breaking even and losing money. As you know, hospitals have no 
other source to look to other than patient charges for funds to continue services 
much needed by the many communities. 

It would seem a bit regressive then, to allow states to cut the payment to the 
hospitals and base theirs on a different formula than that of the present formula 
required under the Medicare law of 196G. 

I would appreciate it very much if you would lend your support to the hos- 
pitals' argument that change under Section 232 of H.R. 1 not be allowed. 

Thank you for your interest and consideration. 

Jon D. Smiley, Administrator. 

St. Helen Hospital, 
Chehalis, Wash., November 2, 1971. 
Senator Warren G. Magnuson, 
Old Senate Office Building, 
Washington, B.C. 

Dear Senator Magnuson : Section 232 of HR 1, now in the Senate Finance Com- 
mittee, is very bad for Washington hospitals. Past experience has proven that 
if the level of payment for the care of indigent patients is left to the determina- 
tion of Washington State, hospitals will not be paid even their reasonable costs. 
When the *;tate does not pay its fair share, as was consistently the case before 
the pas>age of the Medicare Law, hospitals have no recourse except to pass on 
this deficit to private patients. 

If Section 232 passes, it will be a disastrous step backwards for our hospitals. 
I earnestly urge you to use your influence to defeat Section 232 of HR 1. 
Sincerely yours. 

Sister Virginia Pearson, Administrator. 


Memouial Hospital, Inc., 
PuUiiian, Wash., November 2, 1911. 
Senatcir Wakkkn G. Maomson. 
Oiil Soititc Office liiiildiii!/. 
Wttsliilir/tOll. D.C. 

Dear Senator Magxuso.x : We ask that you take a position to oppose Section 
2:V2 of HR 1. the Social Security Amendmeuts of 1971. Section 282 \you1c1 permit 
states to define "reasonable cost" for reimbursement of hospitals under INIedicaid 
and Maternal and Child Health Programs. The disadvantage to the individual 
hospitals are many because of the iiiconsLstency of many of the states in their 
definition to "'reasonable cost". 

As you know, hospitals have been in a quandary as to the multitude of cost re- 
imbursement programs e.stablished over the past several years. In my opinion, 
this would be another step in complicating the forms of reimb'n'sement and 
would without question allow the states an addtional arbitrary tool to u-e in 
determining, not by law bi;t by self-determination, what is or is not a "rea.scn- 
able cost". 


Elmer O. Eid. Administrator. 

The Riverton Hospital, 
Seattle, Was}t.,Noveml}er 2, 1971. 
Senator Warren G. Magnusox. 
01(1 S(nate Office Buihliiiff. 
Wushinyton. B.C. 

Dear Sexator Magxusox : I would like to go on record as being opposed to 
Section 2o2 of HR 1, the Social Security Amendments of 1971. 

Section 232 would permit states to define "reasonable cost" for reimburse- 
ment to hospitals under Medicaid and Maternal and Child Health Programs. 

This approach has proved very unsatisfactory in the past in the State of 
Washington and we urge you to use every effort to see that Section 232 of HR 1 
does not pass. 


Robert A. Haxsox. Administrator. 

Stateiiext of Leox J. Davis. Presidext, Natioxal Uxiox of Hospital axd 
XuRsixG Home Employees, RWDSU. AFL-CIO 

February 10, 1972. 
To : Hearings on Social Security Amendments — H.R. 1. 

Committee ox Fixaxce, 
U.S. Sexate. 


I am Leon .1. Davis, President of the National Union of Hospital and Nursing 
Home Employees. RWDSU. AFL-CIO, and President of the union's largest local. 
Local 1199 in New York City. Our union represents over 70,000 hospital workers 
in ten states. Tlie greatest concentrations of members are in New York City, 
Connecticut. New .Jersey, Baltimore. Philadelphia and Charleston. South Caro- 
lina. The union represents many different categories of hospital workers includ- 
ing service and maintenance workers, clerical workers, technical workers, and 
certain professionals such as psychologists, social workers, and licensed prac- 
tical nurses. We also represent 6,000 pharmacists and drug store workers. We 
do not represent physicians or administrative personnel. 

Local 1199 in New York City is the oldest and largest local of the National 
Union. It has collective bargaining agreements covering workers in more than 
forty voluntary (private, nonprofit) hospitals in New York City. These hospitals 
comprise about two-thirds of the city's voluntary hospital beds. They include a 
wide variety of hospitals, including community liospitals in both middle-class 
and ghetto neighljorhoods. teaching hospitals and medical school liospital centers. 

r2-573 — 72— pt. 6- 



We oppose the way in which the social security amendments are being re- 
viewed by Congress. Our opposition is based upon the patchquilt approach to 
solving our nation's enormous and complex social problem. We feel that each 
title of this kaleidoscope bill should be introduced as separate legislation. This 
would enable public testimony and congressional review to scrutinize each bill 
on its own mei-its. The importance of needed social welfare reform warrants 
individual and close attention. The final product should not be compromised. 

As a health union, we will limit our remarks to the strengths and weaknesses 
of the medicare and medicaid provisions of title II. 

{A) Medicare 

1. Extetided EligiMUty. — Health Insurance under Title XVIII, would be ex- 
tended to those receiving disability benefits for two years, and hospital insur- 
ance would be offered to the uninsured for payment of full premium costs (ini- 
tially estimated at $31 monthly). This measure would aid the 1.5 million long 
term disabled, and allow the 350 thousand uninsured over 65 to voluntarily pur- 
chase hospital insurance. The latter raises some skepticism since the premium 
cost would be prohibitive to the majority of the uninsured. 

Extending coverage to the disabled is certainly a step in the right direction. 
However, we are opposed to the two-year waiting period before becoming eligible 
for Medicare benefits. 

Instead, we would favor a six-month waiting period, which would coincide 
with the six-month waiting period for disability payments under Social Security. 

Medicare was originally intended to serve the elderly who have chronic dis- 
eases requiring long term care, as would be the case with the disabled, who 
require long term rehabilitation services. Yet services under Medicare, as aptly 
pointed out by Dr. Paul Spear of the Physicians Forum, would best fit the needs 
of a healthy under 65 adult population, not those for whom the program was 
intended. This deficiency is totally ignored by H.R. 1. 

2. Part "5" (Medical) Premiums and EligiMUty. — Supplementary Medical 
Insurance (SMI) premium increases would be tied in directly with increases 
in Social Security. Considering that SMI premiums having increased 87% in 
the past five years, totally disproportionate to the meager increases in Social 
Security, this is a positive feature of H.R. 1. 

Another positive feature is that H.R. 1 would automatically enroll bene- 
ficiaries into SMI. Up to now, many of those eligible, w^ere not aware, or did not 
see the importance of subscribing to SMI. This would also have the advantage 
of eliminating the penalties imposed on those subscribers who do not enroll in 
SMI during the specified time period. 

3. Deductibles and Co-payments and Cut-offs. — H.R. 1 would increase SMI 
deductibles from $50.00 to $60.00. But even more cruel to those on fixed incomes 
would be the increased hospitalization co-payments. 

Present law provides for full in-patient hospital coverage (minus an initial 
$68.00 deductible) for 60 days. H.R. 1 reduces this to 30 days, after which the 
patient would pay according to the following schedule. 

31st thru 60th day $7. 50 

61st thru 90th day 15.00 

Additional "lifetime reserve" 120 days 30. 00 

These additional economic barriers to medical care would be most burdensome 
to the most poor among the disabled and the elderly. It is our view that all 
deductibles and co-payments should be eliminated. 

The only positive feature of this section is that the number of lifetime reserve 
days would be increased from 60-120 days. 

Ji. H.R. 1 Eliminates the Requirements that Extended Care Facilities Pro- 
vide Social Services. — And that a skilled nursing home have at least one full 
time registered nurse. These provisions serve to downgrade the quality of medi- 
cal care and ignore the loneliness and despair of those confined to these 

(B) Medicaid 

1. Reduction of Services and Scope of Medicaid (Title XIX). — Presently 
medicaid has a "maintenance of effort" clause, which requires that a state 
maintain its aggregate expenditures to its share of Medicaid costs. Under H.R. 1. 


this would apply only to the six mandatory health care services (in-patient 
hospital services; out-patient hospital services; x-ray and lab; skilled nursing 
homes ; physicians' services ; and home health services). 

States would now be permitted to reduce or eliminate "optional" services, 
such as medication, dental care, eye glasses, etc. 

Presently, under section 1908(E) of title 19, States are required to demonstrate 
they are making efforts in the direction of liberalizing eligibility requirements, 
and in broadening the scope of services in Medicaid. H.R. 1 repeals this require- 
ment, thus legalizing the tragic cutbacks in services, and the narrowing of 
eligibility that has already taken place in New York and other states. 

in addition, H.R. 1 reimbursement revisions would reduce payments by one- 
third to skilled nursing homes and General or TB hospitals after the first sixty 
days, and mental hospitals after ninety days. We see no justification for this 
provision. . ^ „ ^ 

2. Deductibles and Co-payments.— H.R. 1 would require states to collect 
premium payments graduated by income, from the medically indigent who are 
not receiving public assistance. In addition, states are permitted to impose 
deductibles and co-payments, not skewed to income. 

For those receiving public assistance, states would be permitted to charge a 
co-payment and/or deductible for optional services (drugs, hearing aids, etc.). 
For basic coverage, public assistance families with earnings would be required 
to pay a deductible based upon income. 

Once again, we see the use of coinsurance and deductibles as a means of 
restricting access to needed health care. Even as a devise to reduce program 
costs, cost-sharing features have proven to be ineffective. This was recently 
documented in hearings conducted by New York State Assemblyman Peter Berle. 
These hearings, which were designed to measure the eflScacy of a recent New 
York State law that imposed a 20% coinsurance on Medicaid recipients, revealed 
that it was more costly to collect the 20%. Because collection was administratively 
impractical, many doctors and hospitals waive the co-payment charge. 

.3. Eligibility. — Present law requires a state to provide Medicaid to all public 
assistance recipients. With the inclusion of the welfare reform measure (FAP) 
in this bill, the state would be required to cover only those whose income falls 
below state income limits. It is our belief that states should not determine levels of 
eligibility. Some states, such as Alaska and Arizona, to this day, do not provide 
a medical aid program for the poor. The disparity in Title XIX benefits from 
state to state can be largely reduced if full financial responsibility was assumed 
at the federal level, with the program administered on a regional basis. 


Both Medicaid and Medicare in H.R. 1 include numerous provisions aimed at 
controlling costs and experimentation with physician peer review. Of particular 
note is the Health Maintenance Organization (HMO) option provided for 
recipients of Medicaid and Medicare benefits. An HMO is generally conceived 
as some form of comprehensive pre-paid group practice. However, the definition 
of HMO is vague, as defined by HEW. It really does not have to be comprehensive, 
nor doevs it have to be a group, nor does reimbursement have to be on a capitation 
basis. Nonetheless, it has the potential of improving the delivery of health care, 
and it does begin to explore reimbursement methods other than the costly 
"reasonable" and "customary", fee-for-service system. Alternatives to the costly 
"reasonable" and "customary" fee-for-service system must be found. In New 
York we have observed the ease in which physicians increase their reimbursement 
profiles by simply requesting an increase from Blue Shield. If capitation pay- 
ments are not used, physicians should be reimbursed on an established schedule 
basis. For example, relative value scales have been used with some success in 
California and New York. 


Improvements in the availability and access to health care to the elderly and 
the poor are far and few between in H.R. 1. The Medicaid and Medicare section 
is a step backward that would reduce health services and increase deductibles 
and co-payments for those who can least afford it, and in Medicaid, eligibility 
would be tightened. 

H.R. 1 emphasizes prudent fiscal management, but demonstrates lack or 
sensitivity to the health needs of the medically indigent. This measure will 
prevent the poor and the elderly from receiving adequate medical care. Mso, 
decreased federal participation will place a heavy burden on already strained 


budgets. If passed, H.R. 1 will only exacerbate our present health care crisis 
by using the same categorical programs that would continue to fragment the 
American i)eople into different health classes with different health benefits. 


In the IDGG Comprehensive Health Planning Act, Congress articulated the 
principle "that fulhllment of our nation;il purpose depends on promoting and 
assuring the highest level of health attainable for every person"' and the com- 
mitment "to assure comprehensive health services of high quulity for every 
person". Six years later, we still have not been able to fultill this promise. 

For many years, the 1,500 members of the Retired Members Division of our 
union has criticized the inadequacies of Medicare and Medicaid, and has called 
for a universal and comprehensive health plan for all. And just last month, the 
White House Conference on Aging called for "priority consideration" for Con- 
gressional passage of a "comprehensive national health security program which 
would include the aged as well as the rest of the population." The fact is, that 
Medicare and Medicaid, with or without the amendments being considered by this 
committee, falls woefully short of these goals. 

The following is a "Statement of Principles on Health Care", which was sub- 
mitted by the Local 1199 Executive Council, and the Local 1199 Health Care 
Committee to 300 participants attending our Annual Health Care Conference last 
June. The statement was unanimously adopted, and in closing, I would like to 
submit it for your consideration. 

"We need a national policy committed to the principal that every American 
is entitled— as a matter of right — to the best health care that our nation's 
skill and technology can command. We need a delivery s^ystem that assures 
the availability of health services to all citizens. 
Such a system must include : 

A. Universal and Comprehensive Coverage. — Health care must be a matter 
of right, not privilege. There must be one systenn for all. Everyone must be 
entitled to care regardless of race, income, sex, age, religion, or any of the 
barriers that now create inequalities. Comprehensive care siiould include doctors, 
hospitals, medication, dental care, mental health care, nursing home and conva- 
lescent care and home health services. These services and facilities should be 
used to emphasize health maintenance, and prevent illness as well as to treat 

B. Equitable Financiny. — Health care should be removed from the profit- 
making arena and financed by the federal government from general revenues. 

C. Sound Organization. — To develop a national system for the delivery of 
health care it is necessary to : 

1. Create an organized service in which the providers of medical care work 
together with government and the community for common objectives. 

2. Establish neighltorhood medical facilities and community medical centers 
easily accessible to the people they serve and controlled by duly elected com- 
munity boards. 

3. Encourage the develoi)ment of comprehensive group medical and dental 
practice with effective consumer participation. 

4. Finance a recruitment and training program to meet health manpower 
needs and support medical and health research requirements. 

We realize that the problem of the nation's health goes beyond what can be 
done to improve the delivery of medical care. To assure good health also means 
to provide decent food and housing, clean air and pure water. 

We l)elieve that our nation has the material and human resources required to 
fulfill these essential objectives. We believe that a national health budget must 
be adopted that makes the delivery of health care a matter of top priority. 

Vancouver, Wash., February 1, 1912. 
Hon. WiLBER D. Mills, 
U.S. House of Representatives, 
Washington, B.C. 

Dear Representative Mills : I would like to voice my support for your bill 
HR 1 and especially for Senator Ribicoff's amendment pertaining to it which 
extends benefits to single and childless people as well. 


In this flay and age it seems quite impractical to continue governmental sui>- 
iiort through taxation subsidation of large families and tinaucial peniilty from 
refraining from them. It would seem much more equitable to encourage smaller 
families or at least to extend no advantage to families with larger families. It 
seems, in fact, that a reward should be in order for having less children and 
a progressive penalty be instituted for having more children. 

We must move toward stabilization of our population in order to preserve 
the remaining resources this country possesses. If we do not anticipate the 
problems of providing for a geometrically accelerating population we may soon 
have few resources with which to support them with. This would result in a 
durastic decline in the quality of life we can provide each citizen. 

I would appreciate inclusion of this letter in the record now under review 
by the Senate Finance Committee. 

Steve Holman. 

Statement Prepared by State Representative Arthur L. Buck, Wyoming, 
National Legislative Conference Task Force on HujrAN Resoi^rces 

enactment of h.r. 1 

It is the consensus that it might be better to defer eTiactment until pilot pro- 
grams in a few states, both sparsely and heavily populated, to determine merits 
of the program before adoption nationally. 

There was general concurrence with the statement of objectives for true welfare 
reform outlined l)y Chairman Russell Long: 

1. It must discourage family breakup and foster family unity ; 

2. It must prevent cheating and dishonesty and when this fails, detect 
it and deal firmly with it ; 

3. It must reward efforts at self-help rather than rewarding idleness 
among the employable; and 

4. It must provide adequate child care services for children of low-income 
working mothers and mothers on welfare. 

Since there is considerable variation among the states in welfare volume and 
extent of services, some latitude should be left to the several states in admin- 
istration of the program. (Only 3% of Wyoming's population, approximately 
8.0W persons, are on welfare.) 

national minimum INCOJFE STANDARnS 

In view of inflationary developments, there is an obvious need for u))ward 
adjustment, at least to the level of that proposed in H.R. 1. (Wyoming presently 
allows .$104 monthly for individuals and $178 for couples.) 


States should have federal relief in the proposed program of national cover- 
age in deference to the new residence requirement as determined by the courts. 
At least the states should have no additional liability. 


Incentives should be retained. (The first $30 and one-third of additional income 
are permitted in Wyoming.) 


Should be determined by the individual state, dejiending on nature of relief 
rolls and availability of opportunity. (In Wyoming, opportunity is limited, botli 
in the private and public sector. Retraining, also expensive, is essential in many 


Federal Resulations as a rule are not flexible enough to meet requirements 
of individual states. (Wyoming has no large urban areas which may be eligiide 
for impact programs.) 



Is needed at low income level when pay of parent does not compensate for 
cost of child's day care which in many cases is inadequate and not socially to 
best interest of the child. (Child care centers in Wyoming at present are inade- 
quately regulated.) 


Procedures should be implemented by, in addition to interview, validation of 
statements involving checking with various federal social security and tax infor- 
mation sources. 

In addition, a deserting parent would be obligated to the United States for the 
amount of any federal payment made to his family less any amount that he 
actually contributes by court order or otherwise to his family. 


Administration should be left to the states without the involvement of the 
Labor Department. Local agencies are more familiar with recipient needs in 
relation to actual working conditions and pay scales. (Employment is frequently 
limited to a short work week so that the employee does not qualify under exist- 
ing statutes.) 


The concept of an "open-ended" appropriation should be restored, eliminating 
the ceilings as provided in H.R. 1. 

Department of Health and Hospitals, 

Boston, ilass., February 1, 1972. 
Hon. Gayxord Nelson, 
U.S. Senate, 
Washington, D.C. 

Dear Senator Nelson : I would like to go on record in support of S. 2135, a 
bill to amend Title V of the Social Security Act concerning special project grants, 
introduced June 23, 1971. 

As Director of Maternal and Child Health in the City of Boston Department 
of Health and Hospitals, I have Intimate knowledge of the importance of these 
projects to the health of the poor children and mothers in Boston. The deleter- 
ious effect on their medical care that they would suffer if the projects were to 
be phased out or substantially reduced in scope before adequate replacement 
mechanisms were actually functioning would be irrevocable. 

There are five Maternity and Infant Care Projects in Boston. They are oper- 
ated in conjunction with five hospitals which together account for about 90 per- 
cent of the deliveries in this city. During the fiscal year ending June 30, 1971, 
the projects provided more than 12,000 prenatal visits to 1,869 women living in 
low income neighborhoods of the city. This is 17 percent of all of the women who 
had babies during that year. 

Boston City Hospital is the major health provider to the poor of this City. 
The Department of Health and Hospitals is the grantee for funds which enable 
it to operate Maternity and Infant Care satellite units in three locations, with 
Boston City Hospital as their back-up. In 1971 (calendar year) there were 
1,223 women who received their care in these three units ; they accounted for 
slightly more than half of all deliveries at City Hospital. It is noteworthy that 
the provisional figure for the infant mortality rate in Boston in 3970 is 21.7 
deaths i)er 1,000 live births, a 14 percent drop from the rate for the three year 
period, prior to the establishment of these projects. We expect the rate in 1971 
will be even lower. Not only is prenatal care reaching a substantial number of 
the i)oor women in Boston within the neighborhoods where they live, but also 
the care they are receiving is having a salutary effect on the infant mortality 

It is more difficult to find objectives, statistical evidence of the impact of the 
Children and Youth Projects. We have not performed the analyses done else- 
where which document deductions in hospitalization rates, increased immuniza- 


tion levels, and improvements in other parameters of child health. However, 
there is no reason to think that our experience will be any different from those 
that have been studied and reported. Children and Youth Projects in Boston 
are operated by four grantees with funds that come through the State Depart- 
ment of Public Health and a fifth with funds that come to the grantee (Massa- 
chusetts General Hospital) directly from the Maternal and Child Health Service 
in Washington. At the end of fiscal 1971, there were more than 22,000 children 
registered in the Projects operated by the first four above. These are all in 
facilities located in poverty areas of the City. We have evidence that more than 
80 percent of the registrants in a center live within a mile of it. Children who 
previously had only episodic care, for which they had to travel long distances 
and wait in hospital clinics and emergency rooms, are now being reached with 
comprehensive ambulatory medical care in their own neighborhoods. 

The acceptance of these services by the populations to whom it is directed 
may be typified by the experience of the Harvard Street N