PRESIDENT'S HEALTH RECOMMENDATIONS AND RELATED MEASURES THURSDAY, APRIL 8, 1954 UNITED STATES SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, SUBCOMMITTEE ON HEALTH, The subcommittee met at 10:08 a. m., pursuant to recess, in room P-63 of the Capitol, Senator William A. Purtell (chairman of the subcommittee), presiding. Present: Senators Purtell, Goldwater, and Lehman. Also present: Roy E. James, staff director; Melvin W. Sneed and William G. Reidy, professional staff members. Senator PURTELL. The hearing will come to order. We are very happy this morning to have Members of Congress here to testify. We are particularly pleased to have my colleague, Hon. Charles E. Potter, Senator from the State of Michigan. Senator Potter. STATEMENT OF HON. CHARLES E. POTTER, A UNITED STATES SENATOR FROM THE STATE OF MICHIGAN Senator POTTER. Mr. Chairman, it is a pleasure for me to appear before such a distinguished committee, chairmanned by my able colleague from the great State of Connecticut. Mr. Chairman, I have a brief statement that I would like to make concerning the administration's proposed rehabilitation program. I heartily endorse the principle underlying the administration proposal with regard to vocational rehabilitation which, as I understand it, seeks a broadening and strengthening of the existing program. Today more than ever the conservation of our human resources is vitally necessary. The enemy against which we are arming at such enormous cost outnumbers us more than 5 to 1. How shortsighted not to avail ourselves of the latent talents of our physically handicapped or disabled citizens which, in almost countless instances, merely await an assist from the rehabilitation services to become productive. There is indeed no investment that can so surely translate a liability into an asset as that which returns a disabled person to work of a productive nature. We are currently paying out many tens of millions of dollars every year in public assistance to the disabled. For every person that is returned to economically useful work, a saving to the taxpayers of the cost of his public assistance payments, averaging some $600 a year, is realized, plus the income from taxes that his earnings would yield when placed on a job. All in all, it is conservatively estimated that for every dollar spent on rehabilitation, society receives a return in one form or another of $10. To the economic factors, of course, must be added the intangible but very real dividends flowing from the salvage of human values, the restoration of a feeling of self-respect, of usefulness to the community that comes to the rehabilitated person. From any angle it is important that we build a strong and effective rehabilitation program. I regret to say that there is some doubt in my mind that S. 2759 will accomplish this desirable end. It is natural that I should look to see what would appear to be the effects of the administration measure, as now written, upon the program in my own State of Michigan. So doing, I am disturbed at what I see. As I understand S. 2759, a new formula is proposed covering the distribution of Federal moneys for rehabilitation work to the respective States. The present formula, as your committee is undoubtedly aware, provides for distribution of Federal funds to each State on a basis consistent with the character and scope of the program being conducted in that State. If a State has a broad, comprehensive program, more Federal aid is allowed than if its program is restricted. In short, under present law, to the extent that each State has seen the need for rehabilitation work within its borders and has done something about it, to that same extent the Federal Government has participated. The proposed formula appears to abandon this principle which has worked so well, at least so far as my own State is concerned. Under S. 2759, the distribution of Federal funds to many States which have active, advanced programs will be sharply reduced from the levels presently existing except that these States are able to realize in a comparatively short period of time what amounts to a precipitate increase in their own spending on this work. Now, I strongly believe that there should be an increased emphasis on this vital conservation activity at all levels-Federal, State, and local. I believe that the history of the rehabilitation program in my State will show that this recognition has been manifest. In the year 1944, the State of Michigan spent only $87,240 in this work. In the following year, 1945, we approximately doubled our effort, spending $173,869. By 1948 we had doubled our outlays again with expenditures of $377,109. In the succeeding period, while we have not gone ahead as rapidly as I would have wished, we have maintained an average annual level of expenditures for rehabilitation of about $475,000, the actual amount for the current year of 1954 being $477,000. As I have said, I wish this record were even better, but I believe it is a good one and will compare favorably with that of most other States. That is why I wish to see nothing done that would cause a setback or disruption in the present effort. S. 2759, as I understand it, poses such a threat. The new formula for distribution of Federal money which the bill advances would confront Michigan with the requirement of boosting outlays for rehabilitation from the existing level of $477,000 annually to $910,942, a raise of 93 percent. Yet, at the same time, the incentive to put forth such an effort would be reduced, since even that spending. level, could it be attained, would not mean the receipt of Federal money at the present rate. There would, in fact, be a reduction of some 24 percent in these funds, or a drop from $991,000 at present to $754,400. I cannot but believe that the administration did not intend any such shock to existing programs as the authors of this bill would apparently risk. I fully appreciate that the matter of the most equitable distribution of Federal funds to the States to aid the many joint programs that are in operation is a question upon which there can be room for honest differing opinions. There is precedent for distribution based on the relative economic status of each State. There is precedent for distribution of funds based on relative population of the respective States. Distribution of Federal funds for public assistance, under the socialsecurity program, is based on number of cases and means a Federal share up to as much as 75 percent of total costs. I would not profess to attempt to say what division is the most equitable to use in the sharing of costs of rehabilitation programs as between State and Federal participation; but I do say this: When a program has been established and is in operation over a period of years, as has been the case with the rehabilitational work, any proposed changes should be scrutinized with the utmost care to see to it that existing activities are not impaired. Our problem here might be different if we were just beginning a rehabilitation establishment; but that it not the case. We are not starting from scratch. We face a practical condition, one in which we have many State programs actively and successfully functioning. In no instance should we hazard a State operation through drastic revision of the basis upon which it is now receiving Federal support. It is appreciated that S. 2759 does provide for a transition period before the full effects of the new proposed method of sharing costs will be felt, and during which it is proposed that State funds be raised to compensate for declining Federal funds; but I suggest that there are very few, if any, States that can accomplish an increase so great as Michigan is called upon to realize, nearly a doubling of their outlays, in the short space of 2 years time. In fact, the demand is even more drastic than this. In order for Michigan to continue to receive the same amount of Federal funds as at present the State participation would have to increase by some 250 percent. Mr. Chairman, in the bill which I have introduced, in an effort to avoid what seems to me to be an injustice for States in the position of my own, I have stipulated the use of the year ending June 30, 1953, as a base year below which level of distribution Federal funds to any State would not be allowed to drop. This bill, S. 3039, is not offered as the last word on the subject. The committee may well wish to combine some of the features which are contained in the administration measure with the provision covering funds distribution contained in my bill, or it may well be that upon further study still more practicable and equitable solutions may present themselves. 46293-54-pt. 2-15 My interest is in a principle, not a given terminology. I wish to see existing programs sustained. I think it would be tragic if the great progress in rehabilitation services which many States, including my own, have made in the past dozen years or so, should be threatened. Over a term of years I would certainly hope to see increasing sums of State money made available for this vital humanitarian work, and I think they will be made available. I am sure that the citizens of my State would fall in with a wise, carefully adjusted method looking to greater State participation in this field, on a carefully graduated scale; but the drastic approach contemplated in S. 2759 would, I fear, result in discouragement and resentment at State levels that could only react unfavorably for those who so greatly need the type of aid that this work affords. I hope that the committee will seriously consider the inclusion in any bill it may report of a minimum standard or level of Federal participation in this field not less than that now in effect. I appreciate the opportunity to appear and present my views before this committee, sir. Senator PURTELL. Senator, at this time we will make a part of the record your bill, S. 3039, and also we will have the reports from the Bureau of the Budget and from the Department of Health, Education, and Welfare become a part of the record. (The bill referred to, S. 3039, and the reports thereon from the Department of Health, Education, and Welfare and the Bureau of the Budget are as follows:) [S. 3039, 83d Cong., 2d sess.] A BILL To amend the grant provisions of the Vocational Rehabilitation Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Vocational Rehabilitation Act, as amended by the Vocational Rehabilitation Act Amendments of 1943, is further amended as follows: (a) Section 3 (a) of such Act is amended by striking out all matter prior to clause (1) thereof and inserting in lieu of such stricken matter the following: "SEC. 3. (a) Allotments and payments hereunder to each State shall be made with respect to the State's vocational rehabilitation expenditures limited as follows:". (b) Section 2 (a) of such Act is further amended by striking out the phrase "one-half of" in clause (2) and in clause (3) thereof respectively. (c) Section 3 (b) of such Act is amended to read as follows: "(b) Funds made available each fiscal year for Federal grants shall be allotted among the States with approved plans for vocational rehabilitation by the Secretary of Health, Education, and Welfare, the allotment to each State to consist of: "(1) An amount equal to the total of 100 per centum of such State's expenditures for administrative, guidance, and placement services in the base year and 50 per centum of the expenditures for rehabilitation services enumerated in section 3 (a) in the base year: Provided, That beginning in 1957 such amount shall be 66% per centum of such State's base year expenditures: Provided further, That in the case of any State whose rehabilitation expenditures are less than its base year expenditures, such amount shall be reduced proportionally. "(2) From the balance of the Federal grant for the current year, after deducting the total of amounts determined under clause (1), an additional amount shall be allotted to each State whose rehabilitation expenditures for the current year exceed its rehabilitation expenditures for its base year. Such amount for each such State shall be the same proportion of such balance as its population bears to the total population of all States entitled to additional amounts: Provided, That in no event shall any such additional amount for any State exceed 50 per centum of the excess of the State's rehabilitation expenditures for the current year over its rehabilitation expenditures for the base year. The Secretary shall, at or before the beginning of the fiscal year, furnish each State an estimate of its allotment and thereafter advise it of any revisions in estimates made to adjust estimated allotments on the basis of rehabilitation expenditures actually made. From the sums made available for grants, the Secretary of the Treasury shall pay to each State which has an approved plan for vocational rehabilitation, for each quarter or other shorter payment period, such portion of the State's allotment as the Secretary of Health, Education, and Welfare shall determine and certify to the Secretary of the Treasury. "In the case of any State whose vocational rehabilitation of the blind is administered by the State blind commission or other agency which provides assistance and services to the adult blind, the estimates, allotments, and payments hereunder shall be separately made with respect to such vocational rehabilitation and vocational rehabilitation administered by the State board. The amounts available to each such agency shall be determined by the application of the ratio established in making the determination of the allotments in section (c) (b) (1)." (d) Section 10 of such Act is amended by adding the following at the end thereof: (c) 'Base year' means the fiscal year ending June 30, 1953; “(d) ‘Rehabilitation expenditures' means expenditures described in section 3 (a) of this Act; "(e) 'Current year' means the fiscal year for which the appropriation and allotments in question are made; and "(f) Grant fund' means, with respect to any fiscal year, the total amount available for payment to States under this Act." DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Hon. H. ALEXANDER SMITH, Chairman, Committee on Labor and Public Welfare, United States Senate, Washington 25, D. C. March 30, 1954. DEAR MR. CHAIRMAN: This letter is in response to your request of March 4, 1954, for a report on S. 3039, a bill "To amend the grant provisions of the vocational Rehabilitation Act." The bill would change the present matching provisions of the Vocational Rehabilitation Act (Public Law 113, 78th Cong., 29 U. S. C., secs. 31-41) and provide for a system of allotting the annual Federal appropriation among the States. For the fiscal years 1955 and 1956 an initial allotment of Federal funds would be made to each State equal to 100 percent of the State's expenditures for administration, guidance, and placement services and 50 percent of its expenditures for rehabilitation services enumerated in section 3 (a) of the Vocational Rehabilitation Act (e. g., medical examinations, surgery, hospitalization, and training) during the fiscal year ending June 30, 1953, defined as the "base year." Beginning in fiscal 1957 the initial allotment to each State would be 66% percent of the State's "base year" expenditures. By way of a matching requirement for this initial allotment, each State would have to show similar expenditures during the current year at least equal to its base year expenditures. If its current year expenditures were less, its allotment would be reduced proportionately. After deduction of these initial allotments from the Federal appropriation for any fiscal year, the balance would be allotted on a population basis among those States whose current-year expenditures exceed their base-year expenditures. This supplemental allotment would be matched on a 50-50 basis. The bill would direct the Secretary of Health, Education, and Welfare to estimate State allotments at the beginning of the fiscal year and to advise the States of any revisions made to adjust estimated allotments in accordance with actual current year expenditures. In any State having a separate agency providing rehabilitation services for the blind the allotment would be divided between this and the general vocational rehabilitation agency on some basis not readily determinable from the language of the bill. Both S. 3039 and corresponding provisions of S. 2759 (which contains the recommendations of the administration for improvement of the Vocational Re |