programmatic knowledge needed to evaluate and implement major policy and program options; and (2) to develop the methodology and technical knowledge necessary to improve Federal, State, and local administration and delivery of services for the public assistance programs. The 1977 request of $9,200,000 remains at the 1975 and 1976 levels. The 1977 research and evaluation thrust will reflect a continuing emphasis on improvement of the management of the public assistance programs. A major effort in 1977, following preliminary investigation in 1976, will be to conduct comprehensive management studies in all the public assistance programs with the goal of reducing potentially disallowable costs and promoting effective and efficient administration. In addition, evaluation of the newly enacted title XX, social services program and title IV-D, child support enforcement program will be initiated. SUMMARY In summary, Mr. Chairman, we are requesting $18,022,200,000 for the 1977 public assistance programs-an increase of $1,029,283,000 over the 1976 revised estimate. Mr. Chairman, this concludes my statement. We will be glad to answer any questions the commitee may have. CONSOLIDATED BUDGET Mr. WORTMAN. Mr. Chairman and members of the committee, the consolidated budget for public assistance includes funds for maintenance assistance, medical assistance, social services, State and local training, child welfare services, and public assistance research and evaluation activities. The total amount requested in the 1977 budget is $18.022,200,000, which is $1,029,283,000 over our revised 1976 estimate of $16,992,917,000. The above amount is based primarily on an analysis of States' August 1975, estimates. MAINTENANCE ASSISTANCE Our request for maintenance assistance for 1977 is $6,215 million, which includes $5,455,020,000 for payments to aid to families with dependent children (AFDC) and $695 million for State and local administration. The balance of the request, $64,980,000, is for emergency assistance, support of the adult categories for Guam, Puerto Rico, and the Virgin Islands, and for assistance to repatriated U.S. national. Costs for the child support enforcement program are included in the maintenance assistance programs. Funds requested for the AFDC program are based upon the States' estimates of August 1975, adjusted downward by $220 million to reflect application of the Federal regulations to disallow expenditures associated with ineligibility over the tolerance level of 3 percent and Overpayment rates in excess of 5 percent. The 1977 AFDC estimates reflect a slight decrease in average monthly number of recipients from 11.5 million in 1976 to 11.3 million in 1977, based on improved economic conditions. The average monthly payment per recipient is estimated to increase from $70 in 1976 to $77 in 1977. Mr. Chairman, we are continuing to stress improved management of the AFDC program, particularly aimed at correcting errors in the caseload. At the same time, we are looking very closely at the growing costs of State and local administration. We are carrying out a study of States' policies and procedures for determination of eligibility, and we are monitoring States' allocation plans and systems for accounting for costs. MEDICAID This request includes $9,292 million for medical assistance, administration, training and special medicaid research and demonstration projects. This request is $1,108,285,000 above our revised 1976 estimated requirements and represents an increase of about 1312 percent above the 1976 program cost level. The increase represents a little over $990 million resulting from increased prices and just under $140 million due to increased recipients. A small decrease of about $25 million, related to utilization, is expected as a result of some States' beginning to cut back on benefits or in eligibility. In view of widespread charges of fraud and abuse associated with the medicaid program, I want to assure you, Mr. Chairman, that SRS is working closely with the States to effect improved overall State program management. A primary thrust has been the establishment of improved automated claims processing and information retrieval systems. Five States currently have approved systems in place, 17 States are in the process of installing approved systems, and 10 additional States have submitted planning documents requesting development funding. These 32 States represent 76 percent of the national title XIX base. Our financial management staff have been supplied financial review guides and are monitoring States' activities to insure that claims for Federal reimbursement are made in accordance with Federal law, regulations and the State plan. The medicaid eligibility quality control system is being implemented, together with the utilization control program, and more recently with resources provided in 1976 the provision of technical assistance and improved monitoring of States' systems to detect fraud and abuse by providers. On fraud and abuse within the medicaid. program and the AFDC program, in response to the request of this committee last year, we provided a few weeks ago statements on program integrity in both those programs. SOCIAL SERVICES Our request for social services is $2,400 million, an increase of $141,904,000 above our 1976 program cost estimate. This increase reflects an increase in the number of States moving toward full utilization of their allocation, within the $2.5 billion ceiling, resulting from the wider latitude and flexibility provided states under title XX to determine types of services and to whom such services will be provided. STATE AND LOCAL TRAINING The 1977 request for State and local training is $60 million, an increase of $6,844,000 above the 1976 program level. Appropriation language has been requested to cap expenditures for this activity at the level of $60 million. The 1977 estimate is based on States' August 1975, estimates. The increase reflects the need for training and retraining of title XX agency personnel to assume the new responsibilities mandated by the Social Services amendments of 1974. Also, training opportunities have been expanded to include provider agency personnel, thus increasing the number of persons eligible for training under the the provisions of title XX. CHILD WELFARE SERVICES The 1977 request is $46 million, a reduction of $6,500,000 from the 1976 appropriation. Due to the small share provided in Federal support to the States' efforts for children, estimated at $691 million in 1977, we do not believe this reduction in Federal funding will significantly alter the number or quality of services rendered. RESEARCH AND EVALUATION The 1977 request of $9.2 million remains at the 1975 and 1976 levels. The thrust of SRS's research and evaluation activities will be toward continuing to improve the management of public assistance programs. Following preliminary efforts in 1976 the major efforts in 1977 will be to conduct comprehensive management studies in all public assistance programs with the goal of reducing potentially disallowable costs and promoting effective and efficient administration. SUMMARY In summary, we are requesting $18,022,200,000 for the 1977 public assistance programs. Mr. Chairman, this concludes my statement. My associates and I will be happy to answer your questions. GROWTH OF PUBLIC ASSISTANCE PROGRAMS Mr. FLOOD. Recently you remember you were here testifying on a $2 billion supplemental for public assistance for 1976. Now, the 1977 budget shows an increase of a billion. Why do these welfare programs keep on increasing and increasing so much year after year? Why? Mr. WORTMAN. A large share at program level, in going from 1976 program level to 1977, is in medicaid, where continued inflation is cranked into the budget, not as high as the prior year, but a continuing problem. Dr. WEIKEL. The increase in medicaid is 12 percent over last year, just for increase in prices. Last year we were using a factor that amounted to 1012 percent. But certainly as you look at the medicaid budget increase, a very large portion-$994 million-of the approximately $1.1 billion increase is due to price inflation. Mr. FLOOD. $994 million? Mr. WEIKEL. Yes, sir. Mr. FLOOD. Well, shouldn't this whole welfare system be overhauled? Whatever happened to all those welfare reform proposals—a whole litany of them. What happened to them? Mr. WORTMAN. I can remember some of those going back to my days in the Office of Economic Opportunity, where some of the studies of the negative income tax proposals were done, which resulted in certain experiments that came before this committee for major funding, if I recall correctly. And more recently, the income supplement program, which we in HEW had developed. This has all led at this point in time to a major proposal, that the President has made in his state of the Union message, that would set up broad authorities, within limits established by Congress, so that some of that kind of reform could get going. EMERGENCY ASSISTANCE SUPPLEMENTAL Mr. FLOOD. You remember you supplied us all this additional information for the hearing record on the supplemental budget request. Mr. WORTMAN. Yes, sir. PRIOR YEARS' CLAIMS Mr. FLOOD. You indicated in there that the increase in emergency assistance would be mainly due to the claims of prior years. Suppose you explain that a little bit further. Some of these claims you have there go back to 1972. Mr. WORTMAN. In emergency assistance? Mr. FLOOD. That is right; back to 1972. Mr. WORTMAN. Anna Perkins, our Budget Officer. Mr. FLOOD. You said mainly due to the prior year claims. Miss PERKINS. That was true for our emergency assistance activity. Mr. FLOOD. That is what I am talking about. Miss PERKINS. Most of that was because of prior year activity where the States had come in with their final expenditure reports for 1975 and we paid those in 1976. Mr. FLOOD. What about these that go back to 1972 ? Miss PERKINS. We have had a few of those pending. Mr. WORTMAN. Our biggest problem on old claims, focus has been on those under titles IV-A and VI of the social services. There we have had claims going back to as far as 1970, 1971, and still have unresolved claims of $1.3 billion. Mr. FLOOD. Back to 1971, $1.3 billion? Mr. WORTMAN. Accumulated over time, under the old titles IV-A and VI-are currently what we would call deferred claims in the system, from the States, of $1.3 billion, and some of the key issues in those claims are embodied in a court suit which 14 States have brought against the U.S. Government. Mr. FLOOD. What is the status of the suit? Mr. ORTMAN. The judge has told our counsel that he hopes to have a decision by the end of April. Mr. FLOOD. Is this in a Federal district court? Mr. WORTMAN. Yes, sir. Mr. FLOOD. Where? Mr. WORTMAN. In Washington, D.C. MEDICAID INCREASES AND DECREASES Mr. FLOOD. You also provided for us as a result of the supplemental hearing, a list of increases and decreases in the medicaid program. Mr. WORTMAN. Yes, sir. Mr. FLOOD. This list showed that most States are increasing, and relatively few are reducing any services. Do you have any idea at all what the increase is going to cost us next year? Mr. WORTMAN. To be very frank with the committee, if there was any area right now in terms of trends that might be developing-and Dr. Weikel will speak to this that leaves us with a bit of uncertainty, that is the efforts going on in the States to curb their medicaid services package. Mr. FLOOD. How has this been reflected in your medicaid estimates? Mr. WORTMAN. At this point in time, we have only identified about $25 million that would be shown as a reduction in the estimates due to cutbacks in State programs. Mr. FLOOD. Very few reductions in the States. Mr. WORTMAN. I would like for Dr. Weikel to comment on that. We are a little unclear as to how far this will go. New York State right now has a major effort that the commissioner of welfare, Mr. Berger, has under consideration with us, relating to reductions in the medicaid program in that State. Dr. WEIKEL. If one looks at the whole medicaid program there are approximately 20 States that have implemented some reductions in their program. A number of the States initially announced much more dramatic cuts in their programs than they ultimately implemented. As an example, in 11 states that we have data on, where they have actually cut their program, the program cuts amount to about 1.8 percent of their total program. We do not have sufficient data at this point to make the cost calculation on the other nine States. But as Mr. Wortman stated, we have information that the State of New York has announced a program, which they requested that our regional office approve, that would result in a cut of $400 million in the medicaid program. Now, whether all that actually gets implemented is still open to question. The State of Massachusetts also has announced quite drastic cutsa 30-percent reduction in physician and provider reimbursement, as an example. So there are significant cuts that States have announced that they will implement, but they have not yet moved to implement most of them. So it is still a relatively hazy picture. We have a number of States where there have been increases in the programs. And it is difficult 1977 MEDICAID INCREASE Mr. FLOOD. Can you estimate what the costs differences are going to be next year. Do you have a ball park figure as a result of what you are talking about? Dr. WEIKEL. We believe the best estimate in Federal dollars is about a billion dollar increase in the medicaid program. 70-159 O-76-2 |