Charts-Continued Contribution rates for employers and employees_. Estimated progress of the cash-benefits trust funds__ Estimated progress of the hospital insurance trust fund___ Financing social security cash benefits_ Financing hospital insurance benefits Page Additional payments in first 12 months and number of people affected Value of benefits since 1954 under the law in effect since 1954 and under an assumed automatic adjustment system-- Value of benefits since 1940 under the increases enacted since 1940 and under an assumed automatic adjustment system___ Value of benefits since 1950 under the increases enacted since 1950 and under an assumed automatic adjustment system-Idaho State fund requirements for nursing home payments-Comparison under present plan and under H.R. 17550 for fiscal year 1972__. Information supplied by the Department at the request of Committee members: Establishment of directives for States to emphasize outpatient care Utilization review requirements applicable to physicians, hospitals, Administrative costs of Senator Long's drug amendment. actuaries for the projected long-range costs of the medicare and 135 Report on status of hospitals and extended care facilities with deficiencies 149 Number of welfare recipients involved in health care training programs 156 Effect of invalid marriages and divorces on eligibility for social security benefits___. 165 Task Force on Prescription Drugs-Fourth Interim Report-Quality and 101 Communications American Psychiatric Association, statement of Robert W. Gibson, M.D__ 650 man 161 Blue Cross Association, George Heitler, vice president, legal counsel, and corporate secretary, letter to the chairman__ 782 Córdova, Hon. Jorge L., Resident Commissioner of Puerto Rico, letter to the chairman__ 408 653 Cunningham, Lloyd G. Lafayette Day Nurseries, Inc., statement__. Gibson, Robert W., M.D., statement on behalf of the American Psychiatric Hathaway, Hon. Stan, Governor, State of Wyoming, letter to Hon. Clifford 98 650 115 782 Lafayette Day Nurseries, Inc., Lafayette, La., statement of Lloyd G. 653 Leopold, Dr. Jonathan, commissioner of mental health, Montpelier, Vt., letter to the chairman__. 549 National Association of Private Psychiatric Hospitals, statement of Robert 650 Tiemann, Hon. Norbert T., Governor, State of Nebraska, letter to Hon. 94 Text of H.R. 17550 Appendix A (Part 1) Appendix B (Part 1) Questions propounded in writing to the Department of Health, Education, and Welfare, by Senators Gore and Miller___ Page 167 325 SOCIAL SECURITY AMENDMENTS OF 1970 MONDAY, SEPTEMBER 14, 1970 U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C. The committee met, pursuant to notice, at 10 a.m., in room 221, New Senate Office Building, Senator Russell Long (chairman) presiding, President: Senators Long, Anderson, Talmadge, and Williams of Delaware. The CHAIRMAN. This hearing will now be in order. The Committee on Finance today begins receiving testimony from public witnesses on H.R. 17550, the Social Security Amendments of 1970. The committee had the benefit of the administration testimony on this measure on June 17 and July 14 and 15. We heard from the administration at that time in order to expedite the business of the committee and the Senate while the Department of Health, Education, and Welfare was working on revisions to the welfare expansion bill on which we have just concluded public hearings. H.R. 17550 provides for a 5-percent, across-the-board social security benefit increase effective January 1970. It also modifies the cash benefit social security programs in several respects. A major provision requiring careful discussion and consideration authorizes the Secretary of Health, Education, and Welfare to increase social security benefits whenever he determines that the cost of living has increased by 3 percent. A companion provision calls for automatic increases in the amount of wages, taxed every 2 years and thus, higher social security tax, based on the Secretary's determination of the extent as to which the average wages have risen since 1971. The committee will want to look most carefully at this provision since it may involve a delegation of the taxing power vested in Congress under the Constitution. The House bill also increases immediately medicare taxes by a staggering 77 percent over the next 25 years, in order to raise the $200 billion plus that will be needed to make up the projected 25-year deficit in the program. This proposed increase would be on top of the medicare tax, increase approved by Congress in 1967. A medicare deficit of this magnitude should not have occurred if the program had been operated on an aggressive hard-headed, business-like basis, and if Congress had been asked promptly to close the gaps in that program which now loom so large. The Finance Committee has held a series of legislative oversight hearings over the last year to examine the problems in the medicaremedicaid programs and we have published a detailed report including recommendations for strengthening the two programs. Some of these recommendations have already been incorporated by the House in their bill which we are considering today. We will, during the course of these hearings and in subsequent considerations be looking for ways of controlling excessive costs under medicare and medicaid. If we are successful in our efforts then hopefully we may not need to increase medicare taxes as sharply as the House bill proposes. This morning we will be pleased to have as our first witness a gentleman who appeared before us many times on behalf of the Social Security Administration. In view of the fact that the Senate is in session at this moment, and that a quorum call is going on in the Senate, because it had to quit for lack of a quorum on Friday, I am going to move that this committee stand in recess for the next 5 minutes at which time we will then proceed to hear from the witness who we had anticipated hearing from, Mr. Robert J. Myers. Thank you. (Short recess.) The CHAIRMAN. Mr. Myers, the testimony we expect to take here this morning is, in the judgment of the chairman of this committee, exceedingly important, and you are a man who is as well qualified as anyone to tell us why the program that we have is costing so much money, and what the prospects are for trying to keep these programs within their estimates for the future. Ordinarily, we don't conduct committee hearings while the Senate is in session. But in view of the late day in the session, and the desire of Congress to act on this bill before Congress adjourns we are conducting this hearing while the Senate is in session. There is another vote that will be taking place in the Senate within just a few moments and, therefore, I believe it would be best to wait until we have at least the possibility of a quorum present here in this committee and for that reason I am going to wait until 11 o'clock to call Mr. Myers. I would like to have Senators who are concerned about the cost of social security and public welfare here, Mr. Myers, and about the only way that I know to improve the possibility that they will is to postpone this hearing for a few more minutes until the Senate is through voting on the amendments that are presently pending. (Short recess.) The CHAIRMAN. The Chair will now call this meeting to order and call Mr. Robert Myers as a witness. Mr. Myers, we are pleased to have you here today and we appreciate your making yourself available to the committee to discuss the costs in this bill. Will you proceed in your own way, sir? STATEMENT OF ROBERT J. MYERS, FORMER CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION Mr. MYERS. Thank you, Mr. Chairman. As you know, I was Chief Actuary of the Social Security Administration for a number of years, and I am now an independent consulting actuary and also, beginning in September, professor of actuarial science at Temple University. Of course, the testimony I am giving is on my own behalf and not on behalf of Temple University. I am appearing today primarily to make myself available to you for any questions about the cost estimates, since I was responsible for them up through the passage of the bill in the House. Also, I want to point out a few provisions in the bill and make a few suggestions for changes in the program that I think will improve its administration and public understanding and at the same time provide better benefit protection. On the whole, I very strongly favor and support the bill that the administration introduced last fall, and when I say favor the bill, I mean that I believe that the bill, as presented, was just right. It was neither too much nor too little in terms of either benefit expansion or costs. This is unlike some people who say they support a proposal, meaning they are in favor of at least that much and are really in favor of much more. When the bill was presented by the administration last fall it was in very close actuarial balance. The action that the Congress took last December of providing a 15-percent benefit increase across the board was soundly financed, but it did use up the portion of the actuarial surplus that was going to be available to finance the other benefit proposals in the administration bill. Accordingly, I think there is some question of whether all the benefits proposed in the bill now should be enacted. In other words, when you have a certain amount of money and you go to two stores, then if you spend more at the first store than you planned, you should reexamine whether you ought to cut down your spending at the second store. In effect, what has been done is to increase the cost of the program by adopting all the benefit liberalizations proposed by the administration last fall and, as a result, the financing has had to be increased. The CHAIRMAN. Mr. Myers, I would appreciate it if you would take time to make it clear to us what you are thinking. As I understand it, you are saying that you think the bill that originally came before the House was a package that you would be strongly in favor of. But, in view of the fact that there have been a number of things added to it, if I understand you, you think we ought to reconsider some of the benefits. Is that right or wrong? Mr. MYERS. Yes; that is correct, Mr. Chairman. The CHAIRMAN. I take it then that you feel looking at the bill responsibly, from a cost point of view, that we might be well advised to reconsider some of the benefits in this bill. Mr. MYERS. Yes; Mr. Chairman, that was my viewpoint. The CHAIRMAN. Yes. Mr. MYERS. And, in particular, in my testimony, I point out that the proposal to give a 100-percent widow's benefit at age 65 is very meritorious in many ways, but it does create certain inequities and anomalies, such as the widow in some instances receiving more than her husband would have received if he had survived her. The CHAIRMAN. What is that going to mean if we pass the equal rights amendment? Mr. MYERS. Well, it would seem to me that The CHAIRMAN. It would mean both of them would get it at 62; doesn't it? |