present fire department members and to substitute social security for the retirement system of new members. Most of these administrators have been frank to say that they view this as a means of escaping from pension obligations which they claim are costly. The only thing which has thwarted them is the presence of the exclusion clause. If the exclusion clause were removed, our unions would be powerless to defend themselves against this maneuver which at best would create a double standard of benefits for employees who perform the same duties and who are exposed to the same hazards. There is no justification for having the Federal Government give municipal administrators the tools through which they might escape their obligation to employees who have so faithfully served their communities. For this reason, the exclusion clause should be strengthened rather than weakened or eliminated. SUPPORTING STATEMENT NO. 4B-DECLARATION OF CONGRESS It has clearly been the purpose of Congress that the extension of social security to State and municipal employees shall not result in the impairment of State or local retirement systems. Unfortunately, this congressional declaration has no legal weight or effect on those administrators who are subject to the pressure inherent in most municipal budgets. This declaration is all the more meaningless in the case of firefighters and policemen because their retirement systems are far more costly than those of other State and municipal employees. The only practical way that Congress can protect fire and police department retirement systems from impairment caused by social security is to strengthen the exclusion clause so that social security cannot be extended to firefighters or policemen who are covered by such systems. SUPPORTING STATEMENT NO. 5-RETIREMENT PROBLEMS OF FIREFIGHTERS AND POLICEMEN DIFFERENT THAN THAT OF OTHER STATE AND MUNICIPAL EMPLOYEES Retirement systems were adopted for firefighters and policemen long before they were established for other State and municipal employees. They were developed on a pay as you go basis because funding pension systems was not an accepted practice in those days. As a result, the cost of such plans continues to mount with each passing year. In addition, the retirement requirement of firefighters and policemen are of necessity much more liberal than that of other State and muincipal employees. This again means that the fire and police department plans impose a much greater cost on the municipal employer than does the system of other public employees. Since there is such a significant difference in costs between these two types of retirement systems, the experience of other State and municipal employees to whom social security has been extended, does not serve as a useful basis upon which to judge what would happen if social security were extended to firefighters and policemen. Therefore the problem of the firefighters and policemen must be evaluated on the basis of the demonstrated attitude of municipal administrators and on the basis of the experience which firefighters and policemen have had where social security has already been extended to or forced upon them. The point has been made abundently clear that firefighters and policemen have needs peculiar unto themselves. These needs, their best interests and that of the communities require and demand that the exclusion clause be continued and strengthened. ARKANSAS MEDICAL SOCIETY, HON. HARRY F. BYRD, Chairman, Senate Finance Committee, DEAR SENATOR BYRD: Attached is a resolution concerning H.R. 6675 which was adopted by the Arkansas Medical Society at its recent annual session. The members of this society respectfully request your consideration and support of their position on these proposed changes in H.R. 6675. Very truly yours, Enclosure. PAUL C. SCHAEFER, Executive Vice President. RESOLUTION Whereas House bill 6675 has passed the House of Representatives in the Congress of the United States and is now pending before the Senate; and Whereas House bill 6675 provides for a hospital program financed through the social security system, a federally administered medical insurance program and various other health care amendments to the old age and survivors insurance program; and Whereas the medical profession strongly advocates that the hospital and medical care program should be directed toward those people who are over 65 who need help, that the administration of such program be by the several States rather than federally administered, and that the maximum use be made of private carriers and voluntary health insurance on a prepayment principle; and Whereas the medical profession strongly opposes a payroll tax on the working man to pay for free health care for those who are not in need; and Whereas, the medical profession believes that every person should receive the best medical care regardless of his ability to pay: Now, therefore, be it Resolved, That the Arkansas Medical Society strongly advocates that House bill 6675 be amended to provide for: 1. Medical care for those over 65 who are in need of help; 2. The program being administered by the States rather than the Federal Government; and 3. Maximum use being made of private carriers and the voluntary health insurance on a prepayment principle; and, be it further Resolved, That a copy of this resolution be transmitted to all of the members of the Arkansas congressional delegation. Senator HARRY S. BYRD, NATIONAL ASSOCIATION FOR RETARDED CHILDREN, Chairman, Committee on Finance, New York, N.Y., May 5, 1965. DEAR SENATOR BYRD: On behalf of the Association for Retarded Children I would like to express to you our support of H.R. 6675 with special reference to the so-called child health amendments which, through various specific provisions, will promote prevention of mental retardation as well as better service to the retarded. There is also included provision for the training of personnel to perform services to crippled and mentally retarded children, an area which has received relatively little Federal support to date. We also wish to support enthusiastically the amendment to title XVII providing for funds to the States for the implementation of the mental retardation planning, which is now going forward. You will recall that assistance and encouragement to the States to develop planning with respect to the prevention and amelioration of mental retardation in children and adults were initiated approximately 1 year after a comparable effort was initiated in relation to mental illness. One of the most important byproducts of this relatively brief effort to date has been to develop in many states greater cooperation and communication among the various agencies whose services are needed by the mentally retarded. One of the purposes of the proposed amendment to title XVII will be to permit this collaboration to be funded for 2 years at a very modest level during the first stages of putting the plans, so created, into effect. It will also permit some project type grants to the States to carry out interdepartmental studies, surveys, or demonstrations for which the planning process has revealed a need. H.R. 6675 will, we all know, go down in history as a bill for the health care of the aged. Nevertheless, we feel that its implications for the mentally retarded are most signficant and deserve the bipartisan support of your committee and of the Senate as a whole. Sincerely yours, ELIZABETH BOGGS Mrs. Fitzhugh W. Boggs, Chairman, Governmental Affairs Committee. CALIFORNIA STATE CHAMBER OF COMMERCE, Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, DEAR SENATOR BYRD: The board of directors of the California State Chamber of Commerce on April 23 unanimously voted its opposition to the payment of benefits for temporary disabilities under the social security disability insurance program and respectfully urges that section 303 be eliminated from H.R. 6675. The extension of benefits to claimants with temporary disabilities under section 303 would increase the duplication of benefits under social security and workmen's compensation and also increase duplication of benefits under employerfinanced group insurance plans and State-operated programs such as we have in California. Under section 303 many workers would receive, at other workers' expense, more income for staying home than they would by returning to work. Such a duplication of benefits would destroy the main incentive for an injured worker to be rehabilitated. We suggest that section 303 of H.R. 6675 is a harmful duplication of benefits and unwarranted expansion of the social security disabiilty program into fields already being served by well-established programs and should be eliminated. Thank you for your consideration. CLARK GALLOWAY, General Manager. Hon. HARRY F. BYRD, SOUTH CAROLINA RESTAURANT ASSOCIATION. Senate Office Building, Washington, D.C. DEAR SENATOR BYRD: As spokesman for the entire food service industry within our State, we of the South Carolina Restaurant Association go on record as unanimously opposed to section 313 (tax on tips) of H.R. 6675, the medicare bill, presently in the Senate Finance Committee. We urge you as a member of subject committee to assist in killing section 313 before the bill is released on the floor. Our major objections enumerated below are in harmony with national consensus : (a) Employee resentment with resulting effect on morale and consequent loss of employees accelerating the consistently acute shortage. (b) Withholding from paychecks, the only means possible, would reduce takehome pay and motivate demands for either higher salaries or to have employers to pay the additional taxes. (c) In addition to burdensome bookkeeping and related expense, it is reputed on good authority to take 13 percent of present profits already exceptionally low compared to investment. (d) It would make management of so-called private enterprise an agent of the Government for the purpose of controlling and reporting on funds never in its possession and over which it can only depend on employee integrity-a breeding area for even greater dishonesty. The National Restaurant Association's position for complete removal of subject section has our full endorsement. We will, however, concede a point as a last endeavor in that an alternate provision might treat tips as self-employment income. Your support of our position will be deeply appreciated by a great industry striving to survive on an exceptionally low rate of net profit. Most sincerely, AMOS W. BECK, President. ATLANTIC CITY, N.J., May 5, 1965. Senator HARRY F. BYRD, Committee on Finance, Senate Office Building, Washington, D.C. DEAR SENATOR BYRD: The following statement is submitted for inclusion in the record of the hearings on the social security bill, H.R. 6675. The statement concerns only that section of H.R. 6675 which provides for payment of specialized diagnostic services such as radiology and pathology on nonhospitalized patients in hospital outpatient departments. It is noted that this provision does not allow for payment for the same services, rendered to the same type of patient by specialists in private practice. This seems clearly inequitable at the onset and would have the following unfavorable results: 1. By paying for diagnostic medical services such as X-rays and pathology on nonhospitalized patients only in hospital outpatient departments and not in the offices of private specialists, this provision of H.R. 6675 would tend todestroy private medical practice in these specialties. 2. In this connection, the supplementary plan proposed by the House offers no redress. Under this plan, the beneficiary would pay the first $50 and $25 of the remainder, whereas under the base plan, he would pay only the first $20 and none of the remainder. Further, if admitted to the hospital, the $20 would, in effect, be refunded by being credited to his hospital account. Therefore, the beneficiary would clearly gain economically by getting X-ray studies under the base plan, as now constituted. 3. The specialized medical care in these fields is already in short supply. The increased demand for these services under medicare would deny to the elderly the opportunity of receiving from the thousands of private medical specialists appropriate examinations for their complaints. 4. By placing the entire job of providing such diagnostic medical services solely in hospital X-ray departments to the exclusion of private specialists, this provision of the proposed legislation would overburden the already strained facilities of the hospitals. It would direct a considerable effort of the hospital X-ray departments away from the care and diagnosis of hospitalized patients to handle the increased outpatient load. This would cause delay in providing such services for the hospitalized patients, which would in turn lengthen the period of hospitalization with resulting mounting hospital costs. 5. This provision has serious implications also for the future development of the important medical specialities of radiology and pathology. Even now, these fields are finding difficulty in recruiting trainees. The bill, by tending to elimi-nate the private practice of these specialties would further discourage young physicians from entering these fields. 6. This provision of the bill would further, deprive both the beneficiaries and the referring physicians from free choice in the selection of diagnostic medical specialists. It seems obvious that the possibility of such an inequitable and harmful situation arising should be avoided. This can readily be done without changingTM the purpose, cost, or basic administration of the proposed legislation. The bill need only be changed to the extent of providing payment in the base plan for these specialized medical diagnostic services of radiology and pathology to eligible, nonhospitalized beneficiaries either in the hospital outpatient departments or in the offices of private diagnostic specialists in these fields. Respectfully submitted. Hon. HARRY F. BYRD, LEONARD S. ELLENBOGAN, M.D. WASHINGTON, D.C., May 6, 1965. Chairman, Committee on Finance, U.S. Senate, Washington, D.C. DEAR CHAIRMAN BYRD: In considering the proposals of H.R. 6675, or other health programs, there should be concern with economic feasibility, as much as with "actuarial soundness" or "actuarial balance." According to Dorrance C. Bronson's "Concepts of Actuarial Soundness" there is no agreement on the very meaning of "actuarial soundness," although we know it has to do with conditions of "funds" or "reserves." Man, however, is the "forgotten man" when how much is spent, rather than how well it is spent, dominates the discussion. The economist's main concern is not with money but with what money buys; that is, he asks for the best health results at a given cost or the least cost for given health results. He wants to know what is being paid for, why it costs so much, and how to get it at less cost. In actuarial parlance, every benefit to a human being is a cost to a fund but in economic language every benefit has a cost we want to minimize. (We also want to place its burden on those best able to bear it, not necessarily the sick and the disabled.) Economy means not merely fore seeing the future, as in a crystal ball or an actuarial report, but shaping the future to get the most from limited resources. On February 25, Budget Director Kermit Gordon stated before the Joint Economic Committee that "in response to President Johnson's unrelenting pressure for greater efficiency in Government operations, Federal managers are more cost conscious today than at any time in recent memory." He held up the Defense Department as a model, saying: "The cost reduction spirit has caught on in nondefense agencies." But the cost concept dominating discussion on "medicare" is not the same concept. I wrote Health, Education, and Welfare Secretary Celebrezze that I had "not seen any evidence that 'cost consciousness' as above understood has found any place in the thinking" of his Department. Dr. John W. Cashman, Acting Chief, Division of Community Health Services, Public Health Service, replied that "the Secretary is fully aware of the importance of measuring the economic benefits of specific health programs against economic costs of engaging in such programs." He referred to some "pioneer" studies under Public Health Service auspices. These are good beginnings but I can testify that, at least in the Social Security Administration, study along this line has not been encouraged. In the Social Security Administration I was instructed to prepare a summary analysis of findings of the University of Michigan study on hospital economics (directed by Mr. Walter J. McNerney, who testified on May 5 before your committee). This was in connection with "mapping out a statistical and research program for the proposed medicare bill." One of the themes to which special attention was to be given was "ways in which an evaluation of reasonability of costs were arrived at." Because of absence of guidance about the meaning of "reasonable cost" I proceeded to a study of health economics with a view to discovering what this meant. I stated in my report that evidence in the Michigan study, and provided through it, showed there is very little "reasonability" in the actual practice of "Cost Finding for Hospitals" (the title of an accounting handbook recommended by the American Hospital Association). I wrote: "To get 'reasonability' an economic analysis of the subject is required; it is not enough to assume that existing accounting handbooks are adequate." In the "Report of the Advisory Council on Social Security, 1955," "The Status of the Social Security Program and Recommendations for Its Improvement," the subject of costs other than costs to a fund entity gets less than a page's treatment. This is section 6 of part II (pp. 42-43), "Payments on the Basis of Reasonable Cost." This ends on the following note: "Payments on a reasonable cost basis would be in line with the recommendations of many expert groups, including the American Hospital Association. The established practices of most Blue Cross plans are generally in line with this recommendation." But some, including Dr. Robert S. Morison, director for medical and natural sciences of the Rockefeller Foundation, are critical of prevailing cost studies which are nothing but extrapolations of existing trends. If they are right, we cannot assume current practice represents "reasonable cost." The printed record of the House Ways and Means Committee hearings on H.R. 3920, King-Anderson bill, "Medical Care for the Aged" (pt. 5, p. 2497), contains my letter to the Continental Casualty Co., asking for "light on the economic principles whereby hospitals price the services they provide." The Ways and Means Committee did not consider this question, but a representative of this company testified before the Subcommittee on Health of the Elderly, Special Committee on Aging of the Senate, on April 27, 1964, that they were not qualified to discuss "the cost of health care itself" (including hospital services); they only considered "the cost of the insurance process; administrative and marketing costs, costs of paying benefits, and a risk charge or profit." In no other economic field would anyone get away with concern only for the marketing of goods to the neglect of their improved production. "A new science of health economics is taking shape, which must prove itself able to operate at the economic planning level. It must rise above cliches if it is going to assist the medical profession to put its house in order, using some of the methods proved effective by other primary industries" (Journal of Public Health, October 1964, "The Health Industry," by James S. McKenziePollock, M.D., D.P.H.). In other words, the cost reduction goal is just as applicable to the "health industry" as to any other. |