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As one example, we are attempting to work with the States now to implement a medicaid information system. This would go a long way in terms of at least providing us with some knowledge of where and for what all those dollars are going. In some States, indeed, it is very difficult for them to indicate what the dollars are being spent for.

With that system we would have effective utilization review reports and we would also have effective management reports on a monthly and quarterly basis. That is essential to implementing any of the recommendations that are in this GAO report.

Mr. SHRIVER. To save time, would you prepare for me HEW's reponse to this report, including actions taken or planned to implement the report's recommendations which pertain to HEW?

Dr. WEIKEL. SRS, SSA and HEW are in the process of reviewing the GAO survey and preparing a response. We will be happy to provide you with a copy of that response as soon as it is available.

FEDERAL COST OF CHILD SUPPORT ENFORCEMENT

Mr. SHRIVER. On page 3 of your statement you indicate that it's costing more to administer the new child support enforcement program than is being brought in from collections from parents. Is that correct?

Mr. WORTMAN. I will have Mr. Hays address that.

Mr. HAYS. It is true that in the period of fiscal year 1977 we do estimate, again based upon estimates provided by the States, that there will be a net Federal cost of approximately $1.7 million.

However, I should point out that there is a savings to the States of approximately $127 million, so the program is immediately cost effective to the States, but as the result of some of the financial provisions in the statute, such as the 75 percent Federal reimbursement, the incentives payments to the families and the incentive payments to the political subdivisions, the net result is that the program is not immediately cost effective to the Federal Government.

We would hope that by fiscal year 1978 we would show some net Federal savings as a result of the child support program.

Mr. SHRIVER. You say half of the increase for State and local administration is for the child support enforcement program. What is the other half?

Mr. WORTMAN. The other half would be primarily salaries for staff to address problem error rates. The eligibility worker is the key person in this, and many State administrators are expanding their staffs in order to get their error rates down.

HEALTH BLOCK GRANTS

Mr. SHRIVER. Concerning the proposal for the consolidation of medicaid and 15 other health programs, the 1977 request, while it is $400 million over the 1976 funding level, it's a decrease of over $800 million from the amounts required in 1977 to maintain all activities within the block grants at their 1976 program levels, assuming no funding increases for the categorical grant programs.

Would you say that is correct?

Dr. WEIKEL. That is, I think, roughly correct. You say about $400 million.

Mr. SHRIVER. The shortfall is $800 million. Do you expect the States to fill that shortfall?

Dr. WEIKEL. Well, first of all, one of the concepts behind the block grant proposal is that there is some overlap between the medicaid program and categorical health grants like, the neighborhood mental health centers and community health centers. Those problems are also covered under the medicaid program. Because of lack of systematic control, we have not been able to pinpoint that duplication very well. We believe that some of those dollars will wash out of the system by eliminating some of the duplication and overlap at the State level.

The second reason is that in the health financing programs in gencral, we have been wrestling with the whole question of cost control. We see an industry today that in 1977 will have $6 billion new dollars put into it from medicaid and medicare. We don't know any regulatory controls that are presently in place or that we could design, or hope to design, that could control the rate of inflation in medical care costs until we reduce the total number of dollars that are flowing into that industry, and that is really one of the concepts behind the block grant. We believe we must control the number of dollars going in and, therefore, the President's proposal is a $500 million increase each year. Now that will essentially cut in half, the rate of increase that has been going on.

The medicaid program alone has been increasing in Federal dollars a billion a year and a billion of State dollars. That is done very intentionally as one attempt to control the rising costs of the inflation in health care costs.

DISTRIBUTION OF MEDICAID FUNDS

Mr. SHRIVER. The health consolidation plan would distribute the funds among States according to the poverty population of each State. It would seem that medicaid funds would be distributed pretty much that wav already-maybe not.

Dr. WEIKEL. No. The principal engine driving the distribution of the medicaid funds at the present time is the average per capita income of the State, and not the number of low-income citizens.

Mr. SHRIVER. Do you anticipate much change in the amounts received?

Dr. WEIKEL. It varies. The President's proposal provides protection so that no State will receive less dollars than they are receiving in 1976. And the formula that he proposes for distribution of the funds also provides a phasein, so that no State would get more than a 10-percent change during the first few years of the program. It is really not until about 1981 that we begin to see reductions. We have the total distribution of the dollars that we would be happy to submit for the record. In the case of your own State, as an example, they are presently receiving $71 million this year. They would receive $78 million

Mr. SHRIVER. You might put that chart in the record. [The chart follows:]

FY1982

FY1983

FY1984

FY1985

FY1986

Distribution of Medicaid Funds der Block Gant Proposal--Fiscal Years 1976-1986

(collars in millions)

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* Puerto Rico, Virgin Islands, Guam, Am. Samoa, Trust Territories

Mr. SHRIVER. Would you expect a decrease in the amount of paperwork required from State and local governments under the consolidation plan?

Dr. WEIKEL. Absolutely. One of the second major thrusts behind the whole block grant proposal in the health care area is to remove some of the redtape of the Federal level. Essentially, this would be backing the Federal Government out of the development of regulations and turning that function over to the States. You would remove one level of government out of the process. The amount of paperwork would be significantly reduced.

CHILD DAY-CARE STAFFING RATIOS

Mr. SHRIVER. Just one final question. It gets back to this child daycare services under title XX of the Social Security Act, but I want to get it straight as to where in the law the child/supervisor ratios are mandated.

I think I have located in the law the staffing standards imposed with respect to such care in the case of children aged 10 to 14: "shall require at least one adult for each 20 children." And in the case of school-age children under the age of 10: "shall require at least one adult for each 15 children." That is in the law, isn't it?

Mr. SUZUKI. Yes. The current law gave the Secretary some options to permit more children, up to the 15 and 20 figure. As soon as the Secretary received that authority, he relaxed the standards. It had been 1 to 10, and he expanded it to 1 to 20 and 1 to 15. And below that age level, you will find specifies that will go 1 to 7, 1 to 5, at various age levels.

Mr. SHRIVER. Where is that?

Mr. SUZUKI. That is provided for in the law.

Mr. SHRIVER. I haven't found it yet.

Mr. SUZUKI. I am not sure what you looking at.

Mr. SHRIVER. I'm looking at Public Law 93-647, January 4, 1975. Mr. SUZUKI. The law does not carry the specifics. The law says the 1968 standards are now in law. And so you have to go to the child care 1968 standards themselves to find the actual ratios. In other words, it makes it statutory by reference.

Mr. SHRIVER. I see. I am on the Budget Committee. It was pretty close the other day when they tried to get a waiver on that bill to postpone those requirements.

Mr. WORTMAN. We would like to see the Federal day care standards continue to be postponed until October, or wiped out entirely.

TECHNICAL ASSISTANCE

Mr. FLOOD. Mr. Roybal.

Mr. ROYBAL. We have been told by the States that the reason for the high error rate in deciding who should receive public assistance is due to the Federal regulations. You indicate that you give technical assistance to States to interpret the regulations. How many people work full time in the area?

Mr. NORTON. No staff members work full time in technical assistance, as all are also involved in other functions. At least 20 profes

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