Mr. Knox. You never were more mistaken in your entire life than you were when you made that statement as far as I am concerned. Secretary RIBICOFF. That is as far as you are concerned, and this is my opinion, sir.

Mr. KNOX. I think that that is a direct backhanded slap at the Congress of the United States after they have enacted the enabling legislation for the States to participate under the Kerr-Mills Act. Secretary RIBICOFF. It is not.

Mr. KNOX. Because that is not my feeling.

Secretary RIBICOFF. I did not say it was your feeling. I said that much of the opposition usually comes from those who are not part of the working force. You will find that the average workingman in America is glad to pay his social security taxes.

Mr. Knox. I am not saying they are not glad to pay it, but I think that there should be some limitations as to what his responsibilities are as far as the aged people of this Nation are concerned. There is one other question relative to this hospital bill under social security and that is the limits.

Are there any limits on the cost of the hospital that should be attached to the social security program? Such as wards, semiprivate, and private rooms?

Secretary RIBICOFF. The limitation is a four- or two-bed ward unless the illness is of such a nature that it requires a private room. A person may be so critically ill that he has to be by himself. Outside of that, it would be semiprivate or ward care.

Mr. KNOX. That would be pretty much the same as a hospitalization policy that you would purchase from any insurance company or supposedly from Blue Cross. Have you any figures on the numbers of people that have income that is termed as nonearned income that would not apply to this program of social security today?

Secretary RIBICOFF. Whoever is eligible under OASI is covered. Now, many people are not covered by social security at all in America.

Mr. KNOX. The ones that would still be eligible for participation but are not covered.

Secretary RIBICOFF. You could only participate if you were eligible for social security.

Mr. KNOX. That is true, but there is a segment of our population that is not covered because of the fact that they do not have earned income.

Secretary RIBICOFF. I do not have the figure offhand, but I will supply it for the record, sir.

(Figures referred to follow :)

OASDI COVERAGE

Coverage status under OASDI of persons in paid employment in the United States, March 1961

The 1960 Social Security Amendments extended coverage to about 30,000 additional workers in the United States, effective mostly in January 1961. This additional coverage is reflected fully in this table. 1. Sources.-The major source of data is information from the current population survey of the Bureau of the Census, as presented in the Bureau of Labor Statistics' Monthly Report on the Labor Force. The figure for total paid employment is keyed to the total of persons aged 14 and over in paid employment in the United States (including Alaska and Hawaii) and the Armed Forces overseas.

2. Coverage concepts.-Covered includes workers eligible for coverage on an elective basis for whom coverage has not been arranged; namely, some employees of nonprofit organizations and State and local governments and ministers. The extent of coverage in effect for those groups is shown below:

Coverage in effect

3. Coverage group.-The coverage groups are groups of workers classified according to the provision of the social security law which relates to the group. A worker with more than 1 job during the survey week is included in the coverage group of his major employment or self-employment.

WAGE AND SALARY WORKERS

Nonagricultural industry and commerce.-Not covered are newsboys under age 18.

Farm. Not covered are persons who do not receive $150 from 1 farm employer during the year or work for pay on a time basis for 20 days or more for 1 farm employer during the year.

Railroad.-All workers covered by the railroad retirement system are, in effect, jointly covered under

OASDI.

Nonprofit organizations.-Not covered are interns, members of religious orders, student nurses, students employed by colleges or universities which they regularly attend and certain other small groups employed by nonprofit organizations. All persons eligible for coverage are classified as covered. (See note 2.)

Domestic service.-Not covered are persons not receiving $50 or more in a calendar quarter from at least 1 household employer.

Federal civilian.-Not covered are persons under Federal Government retirement systems.

Armed Forces. All members of the Armed Forces are covered under OASDI.

State and local government.-Not covered are policemen and firemen under retirement systems, except in specified States where coverage is permitted by law. All State and local employees eligible for coverage are classified as covered. (See note 2.)

SELF-EMPLOYED

Farm operators.-Not covered are farm operators who have net income of less than $400 a year and who have not sufficient gross income to qualify for coverage under the "option provisions" that permit farmers to report 33 of their gross income as net earnings. Covered includes farm landlords covered under the “material participation" provisions.

Nonfarm-Not covered are persons with net income from self-employment of less than $400 a year and selfemployed doctors of medicine.

Ministers.-Most ministers are not actually self-employed persons but are shown this way because they are covered as self-employed persons under the social security law. All ministers eligible for coverage, i.e., all who have not taken a vow of poverty, are classified as covered. (See note 2.)

Bureau of Old-Age and Survivors Insurance, Division of Program Analysis, Coverage and Disability Planning Branch June 1961.

Mr. KNOX. There is one other question relative to Federal employees and some State employees that are not covered under social security.

Secretary RIBICOFF. Yes. The Federal and State employees have programs that are comparable to this so they would have the coverage in their own programs.

Mr. KNOX. I understand that they would have the coverage, but, however, they would not make any contribution to the program.

Secretary RIBICOFF. And they will not get any benefits out of this program, either.

Mr. KNOX. That is true, but still the Federal Government and the State governments are all contributing toward their programs, are they not?

Secretary RIBICOFF. That is right.

Mr. KNOX. So they are not carrying their own?

Secretary RIBICOFF. They are carrying their own individual problems because they have a separate fund of their own. You have about 17.75 million people over 65 at the present time. One-quarter million would be beneficiaries under the Federal Government staff retirement system and would be eligible for health benefits under that plan.

The States would be contributing whether their legislatures or the Federal Government picked up the entire cost or it was a contributory system. Each State has its own type of system and they would have their own health program because they do not contribute under social security.

Mr. KNOX. I fully understand that there are some States that have enacted the enabling legislation in order to participate under social security and other States who have not, and, of course, you have this vast amount of people that the Federal Government employs where they pay only a percentage of their hospitalization program, and it is immediately effective if it is needed.

Secretary RIBICOFF. That is absolutely true, but this proposal is under the social security system, and it only applies to people under it. The Federal Government has its own plan and the State government or local government, if it has not come under social security, may have its own plan. Presumably they will take care of themselves under their own plans.

Each governmental agency has a right to take care of its own people, and we are proposing to take care of only those under social security.

Mr. KNOX. I might comment very favorably upon a statement which you made relative to the certification of hospitals before they would be able to participate. We have had many problems with hospitals that were known as private hospitals that were used extensively in giving hospital care, but they lacked all of the standardg that hospitals should have in order to care for people that need hospitalization, and I believe Mr. Cohen is well aware of what happened in the city of Detroit as far as some of the hospitals we had there, and the type of care which the patient received.

Is that not true, Mr. Cohen? I believe that is all, Mr. Chairman. The CHAIRMAN. Mr. Betts.

Mr. BETTS. Mr. Secretary, I want to make an observation. I hope all the discussion about the position of AMA and socialized medicine will not obscure the fact that there are other issues.

Mr. Knox went into some of them. I am particularly interested in letters I get from small businessmen about a constant increase in the payroll tax. As I recall, the payroll tax of employers has been increased twice this year. Is that not correct?

Secretary RIBICOFF. That is correct. The rates were raised and the imposition of the ultimate rate was moved up from 1969 to 1968.

Mr. BETTS. Do you have any figures that you can give us as to what the total payroll tax on employers would be if this went into

effect?

As I recall, your proposal

Secretary RIBICOFF. One-quarter of 1 percent additional for employers.

Mr. BETTS. And you are increasing it?

Secretary RIBICOFF. It will be one-quarter of 1 percent on the first $5,200 of each worker's annual earnings.

Mr. BETTS. What is his total payroll tax if this went into effect? Secretary RIBICOFF. If this went into effect, it would be 3% percent between 1963 and 1965.

Mr. BETTS. As I recall, that goes up again each year until 1969; is that correct?

Secretary RIBICOFF. 1963-65, then another one 1966-67, and then in 1968.

Mr. BETTS. In 1968 what will his total payroll tax be, including this?

Secretary RIBICOFF. The total payroll tax, including this in 1968 would be 48 percent.

Mr. BETTS. I mentioned that because there has been some concern, especially among small businessmen, and I am hopeful that there will be some discussion about it from witnesses.

Secretary RIBICOFF. There should be, but I would tell my small business friends who ask me this question, "Yes, this is true, your payroll tax would go up, but otherwise, since you will be taking care of the problem through public assistance, your sales tax and your State corporate tax would be going up in your State to take care of the problems of the medically indigent, and for the Federal share, your Federal income tax would go up. Basically the point I made at the beginning still prevails. In one way or another this bill is going to be paid, and while it is true that this plan will increase the employer's payroll tax one-quarter of 1 percent, to the extent that you paid medical expenses out of this fund you do not pay it out of general or State or Federal revenues.

Mr. BETTS. Of course, but under social security he is paying it whether it is used or not, because he may be paying for a payroll of a hundred and maybe only 10 people ever use it, whereas if he were paying it in general taxes for welfare it would be based on those who were in need. He would pay only for those in need; is that not correct?

Secretary RIBICOFF. All I can say is that this averages out, and I do not think that you are going to be able to prevail very long in the States against whether you are going to draw the line on $1,500 income or $1,600 or $2,000.

I think the pressures eventually are going to be pushing in every State against what is medical indigency. Once you have all these

medical cures and medical care, and you have longevity and our people are getting older, and require this care, the pressures will be against the taxpayer to pay the bill and the same small or big businessman is going to pay it one way or another.

Mr. BETTS. In other words, you say the answer to small business is he gets caught whether he pays it under social security or general

taxation.

Secretary RIBICOFF. It is not a question of getting caught. I think Congress has established the fact that they are going to take care of the health problems of people who need health care and now the question comes: How are we going to pay for it?

Are we going to pay for that out of general revenues, or are we going to pay for it under social security? It is not, in my opinion, a question of social security or nothing, but of social security or general

revenues.

Mr. BETTS. I am glad to have your views and I will tell the small businessmen what you said and I will tell you what their reply is. Secretary RIBICOFF. I will tell you that no matter what it is, he is going to kick.

Mr. BETTS. I think another question is whether we want this administered by a sprawling Federal bureaucracy, or back at the local level. I suspect in the last analysis a lot of the decisions are going

to be made back home.

Suppose a person goes to a hospital, someone must determine whether or not it is actually necessary for him to go there and whether or not the hospital charge is reasonable.

Secretary RIBICOFF. I would say whether the person needs hospital care will be determined only by one person-nobody in Washingtonby the man's own doctor.

In other words, the only one who is the judge of whether someone goes into a hospital is the man's own physician. When Dr. Brown certifies that John Jones needs to go to the hospital, then he goes. The Government does not determine who goes into that hospital.

Mr. BETTS. If the doctor does not want to make a house call he certifies the man should go to the hospital. Is that correct?

Secretary RIBICOFF. I am sure you are not implying that the doctors will not do the right thing. I am assuming that doctors are going to certify into hospitals only patients who need hospitalization.

Mr. BETTS. Frankly, I understand that the way hospitals are operated now people are encouraged to go to hospitals. I do not know whether it is doctors or not who are responsible for this.

Secretary RIBICOFF. Of course, this bill also provides that each hospital will set up its own utilization committee composed of doctors who make sure that the hospitals are not being overutilized and people are not being sent to hospitals that do not have to be, and being kept in hospitals who do not have to be.

We are not going to certify to this. each hospital will set up on its own. do it.

This is a utilization plan that We are not telling them how to

Mr. BETTS. In other words, the doctor says that the patient has to go to the hospital, that is it?

Secretary RIBICOFF. That is right, he goes in.