SOCIAL SECURITY AMENDMENTS OF 1970 TUESDAY, SEPTEMBER 15, 1970 U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C. The committee met, pursuant to recess, at 10 a.m., in room 2221, New Senate Office Building, Senator Russell B. Long (chairman) presiding. Present: Senators Long, Anderson, Talmadge, Williams of Delaware, and Bennett. The CHAIRMAN. Good morning. The hearing will come to order. The first witness scheduled is Senator John Sparkman, the senior Senator from Alabama. Is Senator Sparkman here? If not, then, we will call the next witness, Mr. Andrew Biemiller, director. Legislative Department, AFL-CIO. Mr. Biemiller, we are happy to see you here. There will be more of our members along as the hearing progresses. Mr. Biemiller, I am glad to see you have recovered from your illness. Mr. BIEMILLER. Thank you, Mr. Chairman. I am back on my feet, and I think I am in pretty good shape. Mr. Chairman, I am accompanied by Bert Siedman, Director of the Social Security Department. The CHAIRMAN. If you do not mind, Mr. Biemiller, Senator Sparkman has just arrived and I will ask you, if you would, to yield your seat. STATEMENT OF HON. JOHN J. SPARKMAN, U.S. SENATOR FROM THE STATE OF ALABAMA Senator SPARKMAN. Good morning, Mr. Chairman. Thank you very much. I am sorry to be late, but I had constituents in my office, and you know what that means. Mr. Chairman, I appreciate very much the opportunity to testify on my amendment, which is No. 807, to H.R. 17550. That amendment addressed itself to what I believe is an unfortunate provision of section 225 of the bill. As you know, section 225 is intended to provide incentives under the medicaid programs to the several States to provide outpatient care, intermediate care, and home care in preference to skilled nursing home care. Certainly, I am in sympathy with the basic purpose of the sec tion, because I agree that wherever possible patients should be removed from skilled nursing homes into one of these other three less intensive types of care, that is to say, outpatient care, intermediate care, or care by family members in the home. This will not only mean a savings in funds, but many times the patient himself will be happier under some kind of program of care other than the intensive care provided in a skilled nursing home. However, under the provisions of section 225, no exception is made for those patients who need skilled nursing home care for extended periods of time. As you know, under the bill, the Federal medical assistance percentages will be decreased by 3313 percent in any year after a patient has received care as an inpatient in a skilled nursing home for as much as 90 days. Mr. Chairman, it seems to me that this provision is entirely unrealistic. Although there may be patients in skilled nursing homes who could be treated elsewhere, on the average, patients who enter skilled nursing homes are not candidates for substantial rehabilitation. The statistics will bear this out. Seven out of 10 patients who enter a skilled nursing home in the United States are 74 years of age or older. Nearly half of them need assistance in walking. Twenty-five percent of them cannot walk at all. Half of them are confused mentally most of the time. The average length of stay in a skilled nursing home in the United States is in excess of 2 years. It is sad, but true, that in most instances the skilled nursing home is the last home the patient knows. Under my amendment, Mr. Chairman and members of the committee, the basic purpose of section 225 will be retained. That is, if the section is changed in accordance with my amendment, wherever it can be shown by the medical review provisions of the law that a patient in a skilled nursing home can be adequately cared for under a less intensive program of care, the funds applicable to that patient would be reduced as provided in the bill. However, my amendment would provide that where, pursuant to the medical review, it is determined that the patient needs continued skilled nursing home care for a period longer than 90 days, that patient could continue to receive the care that he needs without any reduction of funds. Mr. Chairman, if my amendment is not adopted, a few States may be able to provide the funds necessary to finance a program of longterm care that is needed by its citizens. Not many States will be able to do that, however, and the result will be that skilled nursing homes will not be able to continue operating and skilled care will not be available to those of our citizens who need it. I have strongly supported the provision of intermediate care facilities throughout the country. It is a service that is needed, and those facilities that have been built and operated have done and are doing a good job of providing this kind of care for our people. On the other hand, I know that so many of our citizens, especially our senior citizens, need a more intensive type of care, and they need it on a long-term basis. I hope that the committee will amend section 225 in accordance with my amendment. Thank you very much. The CHAIRMAN. Thank you. Senator Sparkman, what do you think of changing the House provision, section 225, to exempt from the cutback States which can show they have effective medical audit and utilization review programs? Senator SPARKMAN. I do not know, because I do not know what is implied in that. I do not know what it would call for. I provide in my amendment that this would be extended only to those who show up on the medical review that they need continued skilled nursing care. In other words, it is not a cover-all by any means. I have supported the--I have recognized all along that we need more intermediate-care homes. Just 2 years ago, I believe it was, I introduced an amendment to a housing bill that we were considering to allow FHA to insure intermediate home facilities just as in the past we have been able to insure loans to regular nursing homes. Now, that program has not been in effect long enough to let this develop. I introduced the original bill amendment that permitted FHA to insure nursing homes. Of course, there is a program under Hill-Burton whereby some of them are built. But, I believe, the record will showI do not know; I have not seen any figures, but I think the record will show-that more of them in recent years have been under FHA insurance than the other way. They have not had time for this intermediate program to get developed to the extent that nursing homes do have the facilities there in which to transfer them over to intermediate care; so, in some instances, nursing homes are terribly burdened because if they keep the person on they have to keep them in a skilled nursing home facility. What my amendment would do would be to say that where the medical review shows that this person should continue to receive skilled nursing care, then, the penalty ought not to apply. The CHAIRMAN. Thank you very much. Senators, are there any questions? Senator TALMADGE. Senator Sparkman, I want to congratulate you on your amendment and your testimony. I concur with your remarks. I think what we need to do is tighten up on the utilization review to prevent people from going into intensive care nursing homes who should not be there, rather than cutting them off after they are admitted. I have been in many of these nursing homes, and the type patients that you described are what I have seen from time to time, people who are frequently completely helpless, and it would be grossly unfair to throw them out and make them objects of charity. Senator SPARKMAN. Well, thank you. Thank you very much, Mr. Chairman, and gentlemen. The CHAIRMAN. Thank you very much, Senator Sparkman. Next we will hear from Mr. Andrew J. Biemiller. We thank you, Mr. Biemmiller, for your courtesy and kindness to our colleague, Senator Sparkman, who, I believe, is one of your most cooperative associates in trying to do things that you believe to be for the good of the rank-and-file people of this country. STATEMENT OF ANDREW J. BIEMILLER, DIRECTOR, LEGISLATIVE Mr. BIEMILLER. Correct, and an old friend from my House days. We will incorporate in the record the statement that I have here, because I do not think you hope to read all of it. Mr. BIEMILLER. I would appreciate it, if you would incorporate the entire statement and the appendages. Mr. Chairman, I am accompanied by Mr. Bert Seidman, who is director of the department of social security, AFL-CIO. Mr. Chairman, the AFL-CIO was disappointed with the social security bill passed by the House of Representatives. The provisions relating to the OASDHI program fall far short of making a major impact on the economic problems faced by social security beneficiaries. We vigorously oppose those provisions of the bill that would cut back the coverage and services under the medicaid program. Let me turn first to needed improvements in the OASDHI program. I am sure all members of the committee will agree that benefit levels are not adequate. The issue is: How much of a benefit increase is needed? Certainly, the 5-percent across-the-board increase in the House bill is totally inadequate. A recent study by the Social Security Administration showed that 44 percent of the social security beneficiaries were poor, another 11 percent near poor. The poverty standard devised by the Social Security Administration and used in the study was $2,020 for a couple and $1,600 for a single person. The respective figures for near poor were $2,690 and $1,900. We know of no other reputable agency or expert who has defined what income makes one poor or near poor with lower figures. The average social security benefit payments today are for a couple, $198 a month, and for an individual, $117 a month. Both are well below these poverty standards. Of course, many receive benefits far below these amounts. In our testimony before the House Ways and Means Committee in 1969 in support of S. 1300 and H.R. 14430, we urged a 20-percent increase for 1970 followed by an additional 20 percent in 2 years. In urging these two steps of 20 percent, we envisioned a major improvement in the real income and standard of living of our senior citizens. Current inflation has made this goal impossible since the 15-percent increase is supplemented only by the 5 percent in the House bill. We urge passage of an immediate 10-percent increase and an additional 20 percent effective January 1, 1972. In addition to the 5-percent benefit increase, the House bill would automatically adjust benefits annually if there were a 3-percent increase in the cost of living over the previous year. We feel major improvements must be made in the benefit structure. A cost-of-living escalator should not be adopted unless it is clear public policy that there will be periodic increases in benefits in addition to those related to rising living costs. A cost-of-living escalator will not solve the poverty problems of the elderly; only a major increase in cash benefits will. The only solution to poverty among the aged is adequate benefits. We support the provision of the House bill that would increase the amount of the social security benefit payment to widows. This proposal would probably do more to alleviate poverty among the aged, per dollar of cost, than any other change that could be made in the law. The House bill computes benefits for men on working years up to 62 instead of 65, the same as it is for women. This is a worthy proposal and should be enacted into law. The House bill raises the present exempt amount of earnings from $1,680 to $2,000. Benefits would be reduced $1 for each $2 of earnings in excess of the exempt amount of $2,000. The exempt amount would be adjusted automatically in accordance with increases in covered earnings. The proposed change is largely an adjustment for the increase in wages since the present earnings exemption was adopted, and we do not oppose it. However, we believe it would be preferable to put some limit on the $1 and $2 exemption above $3,000. We were disappointed in that H.R. 17550 did not include a substantial increase in the minimum benefit. We urge a first-step benefit increase to $90 a month and a second-step increase in 2 years to $120. Most beneficiaries receiving minimum benefits are poor, some far below the poverty level. If we are to end poverty among the elderly, we must make major strides toward the provision of an adequate income based on social security benefits. The House bill leaves untouched the problems that arise from the growing problem of involuntary early retirement and disability. Presently, more than half the men and women who apply for social security benefits are retiring before age 65 and suffering an actuarial reduction in benefits. We urge a number of improvements to deal with the interrelated problems of old age, disability and unemployment which are reflected in what is largely forced retirement. A less than full actuarial reduction, an occupational definition of disability for workers after age 50 to 55, and additional dropout years in the computation of the average wage to better reflect current earnings, would provide additional protection against unemployment, illness, and low earnings. A major shortcoming in the medicare law is the lack of reimbursement for prescription drugs. Per capita drug expendiutres for the aged are more than 3 times the per capita outlays for drugs purchased by those under 65. Studies show that about 80 percent of the costs of these prescription drugs have to be paid for out of pocket for the elderly. The problem has been studied numerous times by expert bodies all of which invariably recommend coverage. Mr. Chairman, there is no further need for study; only a need for action. We are particularly distressed that the House did not include the disabled under medicare. Disabled social security beneficiaries use 7 times as much hospital care as does the general population and 3 times as much of physicians' services. The problem of severely restricted income that the disabled beneficiary faces is the very same as that of the retired elderly person. There is a clear and urgent need for coverage of the disabled under medicare. The premium for medicare's supplemental medical insurance program, originally $3 per month, was increased from $4 to $5.30 ($10.60 for a couple) on July 1-nearly an 80 percent increase in 4 years. |