percent Federal participation, has occurred in aid to families with dependent children.

1 Includes only additional amount estimated to be required under title XIX of the Social Security Act established by the Social Security Amendments of 1965; balance that may be expended under this title is included as part of the amounts estimated for grants to be made under titles I, IV, X, XIV, and XVI.

INTRODUCTION

This budget request is for grants to States for carrying out the public assistance titles of the Social Security Act:

Title I: Old-Age Assistance; and Medical Assistance for the Aged.
Title IV: Aid and Services to Needy Families with Children.

Title X: Aid to the Blind.

Title XIV: Aid to the Permanently and Totally Disabled.

Title XVI: Aid to the Aged, Blind or Disabled, or for such Aid and Medical Assistance for the Aged.

Title XIX: Medical Assistance Program.

The appropriation request of $3,746,400,000 for 1967 is $143,400.000 more than the $3.222,000,000 appropriated for 1966 plus the proposed supplemental request of $381,000,000 for 1966. Excluding the amount of $26,025.000 used from the 1966 estimate to complete requirements for 1965, and allowing for an increase of $475,000 in the estimated amount of collections and adjustments for prior years in 1967, the amount of the increase from 1966 to 1967 is $169,900.000. Of the total rise between 1966 and 1967, $68,600,000 is attributable to a net increase for the Social Security Amendments of 1965 which will be in effect for the full year 1967 compared with half of 1966, and $101,300.000 is for increases in expenditures for assistance payments and for the cost of administration, services, and training.

DESCRIPTION OF 1965 AMENDMENTS

Each amendment is described briefly below: table A, which follows on the next page, shows the amount of the additional funds required for each amendment in 1966 and 1967.

1. Formula change to provide increased Federal financial participation in assistance payments

Effective January 1, 1966, the Federal share of assistance payments for OAA, AB, APTD. and AABD (title XVI) is raised from twenty-nine thirty-fifths of the first $35 to thirty-one thirty-sevenths of the first $37 of the average monthly payment per recipient, and the maximum average monthly payment in which there is Federal financial participation is raised from $70 to $75. For AFDC, the Federal share is raised from fourteen-seventeenths of the first $17 to fivesixths of the first $18, and the maximum average payment is increased from $30 to $32.

Under this liberalized formula, the increase in the Federal share of assistance payments in the adult categories will average about $2.50 per recipient per month and in aid to families with dependent children, about $1.25 per recipient. For all programs combined, the estimated additional Federal funds required for the last 6 months of the fiscal year 1966 is $75 million and for the full year 1967 is $150 million. Detail by program is shown in table A.

2. Federal financial participation in assistance payments to aged individuals with tuberculosis or mental illness

Assistance payments to patients in public mental and tuberculosis hospitals, who hitherto have not been eligible for assistance payments under the Federal act, may now be included in the States' claims for Federal funds. This change is designed to facilitate the application of new treatment methods such as short-term therapy in the patient's own home, in special sections of general hospitals, in specialized mental hospitals, and in community mental health

centers.

[In millions]

4. Net cost of new legislation..

1 12 months for AFDC.

The estimated additional Federal funds required to finance assistance payments during the last 6 months of the fiscal year 1966 is $35.6 million and for the full year 1967, is $72 million. In addition, $1.4 million in 1966, and $3.0 million in 1967, will be needed to determine eligibility for financial assistance and to provide the necessary social services.

3. Earned income exempted from consideration in determining need for aid to families with dependent children and aid to the permanently and totally disabled and increase in amount exempted in the old-age assistance

In order to encourage older persons to continue in employment, a 1962 amendment permitted States to exempt the first $10 of earned income and one-half of additional earnings within a total of $50 per month. The 1965 amendment raised the exemptions permitted to $20 a month and one-half the remainder within a total of $80 of earned income effective October 1, 1965.

As an incentive to rehabilitation in those situations where it is feasible, the same exemption is permitted in determining need of recipients of aid to the permanently and totally disabled, also effective October 1, 1965.

Effective July 1, 1965, in determining need for aid to families with dependent children, States may disregard up to $50 per month of earned income for each child under the age of 18 years in the same home, within a maximum of $150 of disregarded income for a family. This amendment will remove the discentive to work that exists when all these earnings are considered in order to reduce the amount of the assistance payment.

The estimated additional Federal funds required to finance these amendments in the fiscal year 1966 is $2.8 million and for 1967, the estimate is $13 million. 4. Federal participation in both OAA and MAA payments made to an individual in the same month

To facilitate the necessary movement of ill aged persons to and from medical institutions without financial loss to the State, the prohibition against Federal financial participation in MAA payments made in behalf of an aged person who also receives an OAA payment in the same month is removed, effective July 1. 1965.

The additional Federal funds required to finance this change are estimated at $2 million each for the fiscal years 1966 and 1967.

5. Improvement of medical care

The amendments establish a new title XIX, Grants to States for Medical Assistance Programs. The purpose of this title is to make medical services for the needy more generally available through liberalizing the Federal law permitting Federal financial participation in payments to medical vendors. At this time nearly all States make vendor payments for some items of medical care for at least some of the needy under titles I, IV, X, XIV, and XVI. Effective January 1, 1966, States have the option of claiming Federal financial participation in vendor medical payments under the new title XIX or under the other public assistance titles.

States wishing to take advantage of the more liberal Federal participation in vendor payments available under title XIX must first provide medical assistance of the same amount, duration, and scope for all persons receiving money payments under titles I, IV, X, XIV, and XVI. Having done this, the States may extend their programs to include medical assistance to the "medically needy;" that is, those persons who would come within the various categories of assistance were it not for the fact that they have income and resources sufficient to meet their needs for maintenance; and also children who would not come within the category of aid to families with dependent children even if their income and resources fail to meet their maintenance needs. If a State provides medical services to the medically needy the determination of financial eligibility must be on a basis that is comparable among the aged, blind, disabled, and families with children. Furthermore, the scope, amount, and duration of medical assistance available to each of these groups must be the same.

Under current programs, the scope, amount, and duration of medical assistance available to recipients of money payments generally is greater in the programs of old-age assistance, aid to the blind, and aid to the permanently and totally disabled than in the program of aid to families with dependent children. Most States now have programs of medical assistance for the aged, authorized under titles I or XVI, under which the aged who are medically needy receive assistance. Comparable provision of medical assistance to the medically needy among the blind, disabled, and families with children does not now exist in most States.

In order to have a plan approved under title XIX, therefore, most States will have to provide more medical assistance to recipients of aid to families with dependent children; and if they continue to provide medical assistance to the medically needy among the aged, they will have to make comparable provisions for the blind, the disabled, and families with children.

The alternative of attaining "comparability and equality" by limiting medical assistance to recipients of money payments under titles I, IV, X, XIV, and XVI and reducing those services to the level prevailing in aid to the families with dependent children is not practicable in light of another requirement included in the Social Security Amendments of 1965. Under this requirement, the additional Federal funds a State can receive under the public assistance titles, as amended, will be limited to the amount by which total expenditures from Federal, State, and local funds have increased, when both Federal and total expenditures are compared with a base period.

The estimated additional Federal funds required under this amendment for the last 6 months of the fiscal year 1966 are estimated at $115 million, of which $105 million is for vendor medical payments and $10 million is for administration and training. For 1967, the estimates are $220 million and $20 million, respectively.

Under title XIX, costs of personal services, travel and other closely related expenditures for skilled professional medical personnel, including physicians, medical administrators, medical social work personnel, and clerical staff directly associated with the professional staff, are subject to 75 percent Federal financial participation. The amounts estimated will be required to raise the rate of Federal financial participation in such costs from the 50 to 75 percent for staff who are currently employed and to employ the additional staff that will be required (some at the 75 percent rate, others at the 50 percent rate) to expand program coverage and services and to improve administration of medical assistance.

PROVISIONS FOR DETERMINING THE FEDERAL SHARE OF ASSISTANCE PAYMENTS Grants to States for public assistance are available to the States under six titles of the Social Security Act:

Title I: Old-Age Assistance and Medical Assistance for the Aged.
Title IV: Aid and Services to Needy Families With Children.

Title X: Aid to the Blind.

Title XIV: Aid to the Permanently and Totally Disabled.

Title XVI: Aid to the Aged, Blind or Disabled, or for such Aid and Medical Assistance for the Aged.

Title XIX: Medical Assistance Program.

The Federal share of money payments to recipients and of the combined total of money payments and direct agency payments to medical vendors (vendor medical payments) is computed in two parts. The Federal share of the first $37 of the average monthly payment per recipient in the categories for adults is thirty-one thirty-sevenths; and of the first $18 per recipient of aid to families with dependent children it is five-sixths. The Federal share of the balance of the average monthly payment up to a maximum of $75 per recipient in the categories for adults and $32 per recipient in aid to families with dependent children varies according to the per capita income of the States, and ranges from 50 to 65 percent.

For recipients of old-age assistance under title I and the aged, blind and disabled under title XVI, there is additional Federal participation based on up to $15 per recipient of the average vendor medical payment.

For medical assistance for the aged under titles I or XVI, or medical assistance programs under title XIX, Federal participation is a percentage of the total amount of vendor medical payments made by the States. The percentage varies according to per capita income of the States and ranges from 50 to 80 percent for medical assistance for the aged and from 50 to 83 percent under title XIX.

PROVISIONS FOR DETERMINING THE FEDERAL SHARE OF ADMINISTRATION, SERVICES,

AND TRAINING

The Federal share is 75 percent of: (1) the cost of providing preventive and rehabilitative services that are specified by the Secretary of Health, Education, and Welfare: (2) the salaries of professional medical personnel and supporting staff employed in the administration of medical assistance programs under title