ture budget, is considerably less than that of any other age group. It is understandable that it should be. Also, I will add that these people over 65 have greater assets than any other age group and that is understandable. Most of them have been saving for their entire lives. You see, what I am getting at is this: We are concerned about those who have not been able to get ahead or to have the standard of living that the rest have. But let us pay some attention to the success story in this country, where 85 percent of our people are doing all right, and then, based on an understanding of success, see what we can do to meet the other group, instead of moving in, changing the whole system as I suggest this would do, to change the whole system which has produced the success in order to, and I say a vain hope, I think, to try to meet the problems of the 10 or 15 percent.

Secretary FREEMAN. I will be happy to submit this but might I just add that I think if we followed your general orientation here, Congressman, it would mean that old-age assistance, aid to dependent children, and other programs should not be applicable or in operation.

Mr. CURTIS. No. Where did you gain the thought that I said that? Secretary FREEMAN. In this instance you were talking about aid to dependent children and relating it to education as if these were identical.

Mr. CURTIS. No, I was relating to the fact that you were talking about the means tests. I said that aid to dependent children is based on a means test and I think it is-it has to be and it should be, but I, too, was trying to point out that the aid to the children could be the same in certain categories, the one that the Government assists by a means test to try to determine what group it is that needs assistance. Secretary FREEMAN. Of course old-age insurance does not have any

means test.

Mr. CURTIS. What doesn't?

Secretary FREEMAN. The old-age insurance program does not have any means test.

Mr. CURTIS. It has a type of one, a work clause?

Secretary FREEMAN. Yes, between 65 and 72, as I recall, you can have only so much outside income.

Mr. CURTIS. Well, if they earn more than that it is analogous to what is a means test. There is a means test applied to it. (The following material was received by the committee:)

SUPPLEMENTAL INFORMATION

INCOME OF RURAL AND URBAN AGED

The most detailed recent information on the income position of the aged in the United States is that contained in publications of the 1960 Census of Population. In 1959 the average (median) income of rural families in which the head was 65 or over in 1960 was $2,227, about $1,400 less than the income of urban families in the same category (table 1). Almost half (46 percent) of all older rural families had incomes of less than $2,000, compared with only a fourth of older urban families. Only 25 percent of rural aged families had incomes of $4,000 or more compared with 46 percent of urban families. There were only minor income differences between rural-farm and rural-nonfarm families. The average incomes of older rural-farm and rural-nonfarm families were only 61 percent as high as the incomes of the average older urban family.

TABLE 1.-Income in 1959 of families with family head 65 years old and over and of unrelated individuals 65 and over by urban-rural residence, United States, 1960

1 Figures are rounded to nearest thousand without adjustment to group totals. Source: U.S. Bureau of the Census, "U.S. Census of Population: 1960 Detailed Characteristics." U.S. Summary PC (1)-1D.

Family income includes the contributions of all members of the family. But there were about 900,000 rural aged who were not members of families, most of whom (88 percent) were living in rural nonfarm areas. Aged rural men had incomes averaging $944 in 1959, compared with $720 for older rural women. Among the rural aged half (53 percent) of the men and 69 percent of the women not living in families had incomes of less than $1,000.

There are no satisfactory estimates of differences in living costs between urban and rural areas. However, even if the Bureau of Labor Statistics budget for a retired couple ($2,500) is reduced by 20 percent, to account for possible differences in costs of living between rural and urban areas, then 46 percent of all rural aged families had incomes insufficient to meet this modest standard. Further, 63 percent of all rural aged individuals not living with families had incomes of less than $1,000, well below the BLS budget of $1,800 for an elderly retired person.

EXPENDITURES OF RURAL AND URBAN AGED

Until information from the 1960-61 consumer expenditure survey on the expenditures of the rural nonfarm and rural farm population becomes available, comparisons of rural and urban expenditures can be made only for farm operator families in 1955 and for urban families in 1960.

The average consumption expenditures of farm families with heads 65 years old and over were $1,948 in 1955, compared with expenditures of $3,242 for comparable urban families in 1960 (table 2). The goods and services bought in 1955 would have cost elderly farm families $2,153 in 1960 because of changes in price levels.

TABLE 2.—Expenditures of older and younger urban families, 1960, and farmoperator families, 1955

The difference in the dollar expenditures of farm and urban elderly families does not provide an exact measure of the difference in their levels of living since environmental conditions give rise to disparate needs and since unmeasured differences in price levels exist. One widely used indication of the comparative level of well-being provided by these expenditures is the proportion of the total spent for food. The pressure to provide the absolute essentials of life decreases as income rises and the proportion of expenditures for food traditionally decreases. Even though farm families obtain about 40 percent of their food from their own farms, elderly farm families spent a larger proportion of their total expenditures for food than do elderly urban families (29.3 percent compared to 26.8 percent).

Medical care, which is also an essential of life today, also takes a larger proportion of the spending of elderly farm families (11.5 percent) than of elderly urban families (9.6 percent). Despite their lower per capita incomes, per capita expenditures for medical care are greater for farm families with heads over 65 years of age than among younger farm families. As a result, medical care expenditures among elderly farm families were 47 percent higher than in families with heads under 65.

Unpublished data from the survey of farmers' expenditures in 1955 show that 44 percent of the 937,000 farm operator families in which the head was 65 years old or over had total family living expenditures of less than $1,500 in 1955, and that 81 percent had total expenditures of less than $3,000. Medical care expenditures averaged $435 for older farm families with total expenditures of $3,000 or more, compared with an average of $175 for families with total expenditures below $3,000. Only one in five of the older farm families with lower expenditures reported any type of health insurance. Even among the 177,000 older farm families with total family living expenditures of $3,000 or more, only 55 percent reported payments for some type of health insurance.

There is no evidence that the lower medical expenses of older farm families with low total expenditures for family living are due to their better health or to less need for medical care. In fact, relatively poorer health may be one reason for limited capacity for full-time work leading to lower incomes and therefore to lower expenditures.

HOME OWNERSHIP AND EQUITY IN HOMES

In 1960, 58 percent of all urban homes were owner-occupied, compared with 71 percent of all rural housing units. The 1960 Census of Housing does not contain detailed information on homeownership by age of family head, and by urbanrural residence, but it is a reasonable assumption that between 75 and 85 percent of rural aged own their own homes, a higher percentage than in urban areas. However, the median value of the housing unit was $12,900 in urban areas, compared with $8,300 in rural areas.

The Bureau of the Census estimates that about 88 percent of farm families in which the head was 65 years old or over owned their own homes in 1960. No estimate is available of the value of the farm dwelling unit. It is probable that the average unpaid debt of farmhouses was small. Judging from information on condition of the dwelling unit and on presence of facilities, the average value of the homes of the elderly on farms also is low. For example, only 50 percent of the homes of the farm elderly were in sound condition and contained all facilities, and 21 percent lacked running water.

Information on equity in the homes of persons 65 and over was obtained by the Survey Research Center of the University of Michigan for the United States. but data are not reported for rural-nonfarm or rural-farm aged. In the United States as a whole in 1960, 31 percent had an equity of $10,000 or more, 39 percent of the aged had an equity of between $5,000 and $9.999, and the remainder (30 percent) an equity of less than $5,000. In view of the generally lower values in rural areas, it is likely that a higher proportion of rural than of urban elderly had low equities in their homes.

At present, there is no comprehensive information on the asset and debt position of rural families. Information obtained in the consumer expenditure survey of 1960-61 deals with changes in the assets and debts of rural residents during the year, but data from the survey will not be available until the spring of 1964. Thus, it is not possible to give definite answers to questions concerning the relative asset-debt position of rural and urban aged. In the absence of such information on a national basis, results of a study in one State provide an illustration of the relative economic position of older rural and urban residents.

In 1959, the Kentucky Agricultural Experiment Station and the Economic Research Service of the U.S. Department of Agriculture cooperated in a study of the aged in Kentucky. Information was obtained from a sample of 627 persons 60 years old and over in a completely rural county (Casey) and from 609 persons 60 years old and over in an urban area (Lexington). ("Aging Patterns in a Rural and Urban Area of Kentucky," University of Kentucky Agricultural Experiment Station Bulletin 681. March 1963.) The study emphasizes comparisons of economic position of the males included in the study.

In 1959, the median money income of the rural men was $815 compared with a median of $2.256 for the urban men. Among older rural males, only 15 percent reported incomes of $2,000 or more, compared with 52 percent of older urban males.

Although a larger proportion of older rural (79 percent) than older urban (65 percent) men owned their own homes, a much larger proportion of urban than of rural homes were in good condition. Twothirds of the urban homes, but only 29 percent of the rural homes, were without major defects.

Older men included in the survey were asked to estimate the money value of the total property and assets that they (and their wives) owned. The average value of all property and assets (including the value of insurance policies and other intangible assets) owned by urban men was $9,393 compared with only $3,943 for rural aged. Further, almost half (49 percent) of the rural men had been forced to draw upon their savings during the year, compared with about a third (35 percent) of the urban men.

Some indication of the extent of health problems is the fact that among fully or partially retired men, twice as many rural (83 percent) as urban (40 percent) men gave reasons of poor health and inability to work as the major reason for their retirement. Among all older persons living in rural Casey County, 81 percent reported some type of health ailment, but among older urban residents, health ailments were reported by two-thirds of the older persons.

Only 21 percent of all persons 60 and over in Casey County were covered by any form of health insurance in 1959, compared with 52 percent of older persons in Lexington. Only 17 percent of the lower income rural residents-those with incomes of less than $1,000reported any form of health insurance.

The two most important problems reported by older persons were health and finances. Half the rural men and women who reported on their problems named health as one of the important ones, compared with 29 percent of older urban residents. About the same proportion of rural and urban aged (about one in four) reported finances as an important problem.

In the absence of results of similar studies in other States, it is not possible to determine how the situation of older rural and urban persons in Kentucky resembles that of older residents in other parts of the country.

The study does show, however, that on various measures of economic position older rural residents were in a much less favorable economic position than were older urban residents. The study shows also that compared with older urban persons, older rural residents less often had any form of health insurance and more often reported health ailments. In these two respects, at least, the circumstances of older persons in Kentucky are similar to that of older residents of the United States as a whole.

Secretary FREEMAN. It is quite an important semantic. May I read into what you have said you believe that a means test should be applied to old-age insurance?

Mr. CURTIS. I am trying to point out things, Mr. Secretary, not particularly arguing them although I am happy to argue that. I have felt that if it were a real insurance program as I would hope it would be that we would eliminate this work clause because it has other social effects which I think are very deleterious.

Secretary FREEMAN. You would not I take it-and I am just curious in the light of wanting to respond properly to the questions and understand what you have in mind-it would not be your position that we ought to submit in the old-age insurance program some kind of means test.

Mr. CURTIS. My point is that in this, unfortunately, we cannot afford to eliminate the work clause because of the high cost of the system if we did. But it remains that the people who are subjected to this $1,200 sliding up to the $1,500 limit, as far as they are concerned it is a means test. I think the use of the English language would suggest it is. I would hasten to say it is one of the aspects on which you gain the so-called social insurance by this but, nonetheless, it remains the Government saying to people who apply, "If you earn more than $1,200 you can't have this money."