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have had it a few years ago." There are hundreds of thousands of employees of business enterprise in America who have group health insurance policies. They are not excluded. Even the members of the medical profession who will provide the services under this bill, the doctors, dentists, and surgeons, will be eligible for coverage if they are 65 years old before January 1, 1968. Lawyers, engineers, scientists, administrators, corporation presidents, artists, teachers, the poor and the rich, are included under the broad and beneficent provisions of this bill. But Federal employees are not. Federal employees pay about 79 percent of the cost of their health insurance. In private industry, the major businesses pay 50 percent or more of the cost of health insurance plans, and in some cases the employer pays the entire cost. I cannot see the justification for this exclusion.

Mr. Chairman, I strongly urge the committee to consider favorably an amendment to remove this inequity and give coverage under this bill to those who have no other Federal health insurance. The number of people is small, about 20,000 people; the cost is very small in comparison with the bill's cost. These people share common characteristics: they are all old; they are almost all depending on Federal retirement annuities for their livelihood; they all share the common need for medical care in their old age. I hope Congress will recognize their need and will not allow this inequity to become the law of the land. (The amendment follows:)

AMENDMENT

Intended to be proposed by Mr. Yarborough to H.R. 6675, an act to provide a hospital insurance program for the aged under the Social Security Act with a supplementary health benefits program and an expanded program of medical assistance, to increase benefits under the old-age, survivors, and disability insurance system, to improve the Federal-State public assistance programs, and for other purposes, viz:

On page 109, lines 14-21, strike out section 103(b) (3) and insert a new section 103(b) (3) as follows:

"(3) upon the effective date of this Act is covered by a health benefits plan under the Federal Employees Health Benefits Act of 1959, as amended (5 U.S.C. 3001-3014)."

NATIONAL COUNCIL OF STATE SELF-INSURERS' ASSOCIATIONS,

New York, N.Y., May 7, 1965.

The National Council of State Self-Insurers Associations respectfully opposes the inclusion of proposed section 303 in H.R. 6675. This section deals with the payment of disability benefits under the social security law. This association would not oppose this section if provision was simultaneously made to offset all benefits payable under the State workmen's compensation laws against the benefits proposed to be paid under the social security law.

The members of this National Council are the Self-Insurer Associations in the States of California, Idaho, Maryland, Michigan, Montana, New Jersey, New York, Pennsylvania, and Utah. The members of individual State associations are associate members of the council.

The 300-odd corporations who are members of one or more of the State associations (and hence associate members of the National Council) all insure their liability under State workmen's compensation statutes and related laws. Practically all of the large multistate corporations doing business in the United States self-insure their workmen's compensation liability in one or more States and are members of one or more of the State Self-Insurer Associations. Our associate members include, inter alia, the major communication companies and systems, most of the major manufacturing companies, most of the large chemical companies, all of the large steel companies, all of the large automotive companies and all of the large oil companies. The companies which self-insure their workmen's compensation liability employ approximately 10 percent of the total of all persons employed in the United States who come under the protection of the State workmen's compensation laws.

Under the provisions of the present social security law, disability benefits under OASI are payable to a person only if the disability is expected to result in death or to be of a long, continued, and indefinite duration. Under this definition, only cases denominated, in the workmen's compensation field, as total disability cases, presently qualify for social security benefits. Under present

law, because of the repeal several years ago of the provision which provided for an offset of workmen's compensation benefit payments against social security benefit payments, this class of disabled persons now receives double benefits, which, in some cases, exceed the take-home pay of the injured person before his injury.

H.R. 6675 will broaden the class of persons who will be entitled to double benefits by providing for the payment of disability benefits under social security for a covered worker who is totally disabled for at least 6 calendar months, even though it is expected that he will recover in the foreseeable future. The effective waiting period for payments to be received under the new provisions would, therefore, be shortened to 6 months and, after 6 months, the employee would also be paid for the fifth month of disability.

If the aforesaid provisions are enacted into law, individuals of any age now receiving workmen's compensation benefits under State programs for temporary total disabilities, which last 6 months or more, would also be entitled to receive disability benefits under the social security program. Thus the number of persons who would be able to receive double benefits would be enormously increased. If the principle embodied in the law is carried to its all-too-likely conclusion, the ultimate result could be to transform workmen's compensation into a Federal program and possibly impel the States to repeal their own laws in this area. This result is the ultimate stated objective of some spokesmen for the social security program. The tactic employed to effect this stated objective has not, at any time, been a direct frontal assault, but, rather, gradual encroachment into the workmen's compensation field by means of seemingly minor amendments to the social security law, allegedly improvements therein.

One of the damaging side-effects of these provisions could be the destruction of the incentive for instituting and maintaining industrial safety programs, a trend which could quickly reverse the great downswing in industrial accidents that has occurred in the past 50 years. In the absence of a direct relationship between accidents, costs, and premiums, employers without safety programs and those whose employment is more hazardous would pay no more than employers who have instituted safety programs or whose employment is less hazardous. The anticipated reaction to such a situation is obvious and it could have been an extremely detrimental effect on working conditions throughout the Nation.

An equally serious result of the enactment of these provisions would be that individuals would lose all incentive to return to work or rehabilitate themselves, since the combination of workmen's compensation and social security benefits could, in many cases, give them more than their take-home pay when employed. For example, a married man with two children, earning $5,000 per year, would have a net income after taxes of $4,488. However, assuming maximum workmen's compensation benefits of $60 per week, the same man would receive total tax free benefits of $6.201.60 if the provisions to which objection is made were enacted as part of H.R. 6675 and said person became temporarily totally disabled. It is not likely that such person could be induced to return to work, when able, if his return to gainful employment would immediately result in the reduction of his net income by over $1,700 per annum.

This could, of course, increase, year after year, the class of tax eaters who had been taxpayers. In New York, for example, of those persons classified as temporary disability cases of more than 6 months' duration, 80 percent return to work within a year. How many of this 80 percent will ever return if they can, by continuing their disability, receive more in net income than they would if they return to gainful employment and again became taxpayers?

It seems somewhat ironic, on the one hand, to have the Federal and State Governments spend millions of dollars annually on rehabilitation programs (coupled with the splendid work being done by the President's Committee for the Employment of the Handicapped) and, on the other hand, to have the social security system continue to erode all incentive to return to work.

The House Ways and Means Committee report recommends the passage of the provisions objected to in their current form. It suggests a review of possible duplication between the State workmen's compensation programs and the Federal social security disability program, as well as the effect of costs to employers, after 1966. However, if these proposed provisions are not eliminated now, the possibility of their being removed later seems remote.

For years we have urged the restoration of the offset for workmen's compensation payments against social security only to be met with the adamant re

fusal of the Social Security Administration to favorably consider the proposal. It is much more likely, therefore, that the States will be forced to cut back their workmen's compensation programs to avoid duplication and overpayment, a result which is both morally and financially wrong.

This association opposes the inclusion in H.R. 6675 of the provisions contained in section 303 thereof and urges that said section be eliminated from the bill.

Respectfully submitted.

JAMES J. REGAN, Secretary.

STATEMENT BY THOMAS B. LAWRENCE, WASHINGTON COUNSEL OF THE NATIONAL LICENSED BEVERAGE ASSOCIATION, RE SECTION 313 oF H.R. 6675

Mr. Chairman and members of the committee, the representations herein are made in behalf of the National Licensed Beverage Association. The members of this association are located in 30 States and the District of Columbia. There are approximately 40,000 members consisting of restaurant, tavern, barcafe and cabaret owners, and small independently owned hotels.

Our members are small businessmen. We provide food, beverages, and sometimes entertainment for public and private gatherings. Most of our restaurant and tavern operators have employees who receive tips. There are many problems that our members would encounter should section 313 of H.R. 6675 be enacted into law.

We have been told that withholding taxes on tips from wages would not create a significant imposition and that no responsibility would attach to the employer. We are likewise told that any problems we have in understanding the proposed law will be cleared by the IRS regulations.

However, these assurances of lack of problems do not eliminate the objections which we have to this approach of providing additional social security benefits for tip employees.

We cannot undertake additional obligations. Our members, being laymen, cannot comprehend the complexity of the Internal Revenue Code. They are required to obtain professional advice from lawyers and accountants. They must have this advice from professionals for not only what is actually expected of them initially, but thereafter, in the attempt to comply with these requirements as long as they remain in business. Most of our members are small family businesses and cannot afford additional expense of this type.

An entire new area of recordkeeping and reporting is added to the existing problems. There must be a limit to the extension of these problems. It is believed that the proponents of laws and regulations in this field too often adopt the easy solution of avoiding their problems and adding to ours. They assume that we can and will procure whatever advice we need and that we can and will be able to absorb the cost.

It is suggested that the burden of collecting and enforcing be placed in the hands of the Government where it rightfully belongs and not be shoved upon our members.

An important factor in the suggested approach to the extension of social security coverage to our tip employees is that the employer will be compelled to inquire into the transactions between the waiter and the customer for the Internal Revenue Service. In the past, this was a matter between the customer and the waiter, who operated as an independent contractor. If the waiter gave good service, he received a gratuity. If his service was poor, he might receive nothing. Should section 313 become law, employers would become an interested party in the transactions between customers and employees.

It is submitted, and there is much evidence before this committee, that the employees do not favor the meddling of their bosses in their business.

To treat the waiter, waitress, busboy, etc., in this area as an employee rather than an independent contractor, will create a rash of problems. It would create personnel complications and difficulties between employer and employee. A few of these problems may be carefully considered:

The employer is at a loss as to what to do if some of his employees file statements with him while others do not.

The employer is at a loss as to what to do should he suspect that some of his employees understate tip income while others overstate it.

The employer may feel compelled to discharge a valuable employee whom he suspects does not make an accurate report to him of tip income.

The employer would most certainly be embroiled in controversies between IRS and his employees over the accuracy of their reports of tip earnings.

The employer may be challenged by a discharged employee who could state that the employer's reports did not reflect the amounts of money withheld by the employer for the purpose of this law.

As stated before, employees would be reluctant to report tip earnings, particularly if these earnings are in a handsome amount. They feel that employers may reduce the wages should the tips be substantial.

Employees rarely compare tip income with each other, much less make it known to the boss. Certainly, if the Government experiences difficulty in obtaining accurate statements from employees as to tip earnings, this difficulty would be compounded should the burden be imposed on employers.

Should an employee's paycheck be less than he customarily receives, he will be dissatisfied. His expenses are geared to the wages he receives. It is believed that a large number of employees will seek new employment rather than tolerate the intrusion of the employer in their private affairs.

These are but some of the problems which may be expected if section 313 is enacted into law. We sincerely request that this committee give careful attention to the many potential problems which are inherent to this approach.

An imperfect solution to the problem should not be adopted. There are other possibilities. If the employee desires additional coverage which will provide further security in retirement, the law should make this possible. Employees could certainly include tip earnings as self-employment income. This could be accomplished without involving the employer and all of the problems which would accompany section 313 of the proposed bill.

The members of the National Licensed Beverage Association have full confidence that the committee will give careful attention and study to the difficulties inherent in section 313 of H.R. 6675.

STATEMENT OF HON. CLAUDE PEPPER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Chairman, I deeply appreciate this opportunity to testify on behalf of S. 1125, which is identical with my bill, H.R. 2465, amending the Social Security Act. I am grateful for the opportunity to urge your serious and sympathetic consideration of this proposed legislation because it affects so significantly the lives and happiness of many thousands of our older citizens in my State and in every State of the Union.

I understand that we cannot accomplish in a single year everything that should be done to meet the needs of our older citizens. We are all immensely proud of the progress we have made this year in the effort to bring more adequate hospital and medical care to our retired citizens. But I do not think this great achievement need bar us from proper consideration of a problem that. although it affects only a relative few among our older citizens, affects them overwhelmingly in the last years of their lives.

It is difficult to appreciate at first glance the enormous importance to the people of the provisions of our social security law which reduce the benefits of a widow who remarries after the death of a spouse who was a social security annuitant. The sums the new couple loses are in the $20 to $30 a month range. And this does not appear to be a large sum in a society where the average wage of a production worker in manufacturing is well above $100 a week. But the people with whom I am concerned here today do not share in this general economic prosperity. Indeed, many of them would meet the technical definition of poverty stricken, even without the loss of this $20 to $30 a month.

What most of these couples receive is exceedingly meager. A widow of a social security annuitant currently receives an average of only $67.85 a month and at most only $80 a month. The loss of $20 to $30 from this tiny sum as the price of remarriage makes the decision to remarry or not a major financial decision instead of simply a human decision based upon affection and a desire for companionship in her remaining years.

The Social Security Administration has acknowledged that the change in our social security law embodied in S. 1125 would involve additional costs that would be "very small, even negligible" in terms of the entire system. The major objection is that a couple involving a widow who remarried under the provi

sions of this proposed legislation would receive greater combined benefits than a couple in which no remarriage was involved.

This inequality in benefits is acknowledged. But in my opinion it would not result in a significant inequity under our social security system. To those retired persons fortunate enough to retain their spouses, the limited amount of their social security benefits is an ever-present fact of life and often a source of legitimate discontent. But these couples are not forced to face the acute agony of choice that is required by our present law of those who wish to remarry after having lost a spouse.

It is this agony of decision-or the no less painful acceptance of an alliance not countenanced by our social conventions and ethical standards-that, in my opinion, gives the situation of these couples its special character justifying special treatment under the law.

I do not believe we have a right to require our elder citizens to pay this price in real sacrifice of their living standards or be forced to live along for the rest of their lives. I do not believe those social security annuitants who have been fortunate enough not to lose a spouse want us to deny this relief to the less fortunate in this regard.

There is increasing understanding, I believe, of the special character of this problem and of the need for appropriate and prompt relief. I have been informed by the Library of Congress that between January 1 and April 15 of this year a total of 42 bills of identical or similar nature have been introduced in the House and Senate to deal with this problem.

I am especially happy that bills identical to my H.R. 2465 have been introduced by Senator Hartke and Senator Moss and by the following Members of the House of Representatives: Melvin R. Laird, Sam Gibbons, Thaddeus J. Dulski, James Kee, Robert E. Sweeney, Charles H. Wilson, Tim Lee Carter, John E. Fogarty, Augustus F. Hawkins, Abraham J. Multer, Herbert Tenzer, E. S. Johnny Walker, Robert L. Sikes, Leonard Farbstein, Roman C. Pucinski, John J. Duncan, Thomas P. O'Neill, James C. Corman, William T. Murphy, Arnold Olsen, Thomas C. McGrath, Ralph J. Rivers, Henry Helstoski, D. R. Matthews, John V. Tunney, Chet Holifield, Spark M. Matsunaga, Philip J. Philbin, William D. Ford, Michael A. Feighan, John R. Hansen, Ken W. Dyal, John A. Race, and Jonathan B. Bingham.

I am also very gratified to report that numerous other Members of the Congress have told me that they will support this legislation when it comes to the floor.

I cannot urge you too strongly to give favorable consideration to this legislation in the interest of these retired citizens who deserve all the peace and happiness we can give them in the twilight of their lives.

A STATEMENT BY WILLIAM VROMAN, PRESIDENT, YOUNG CITIZENS COUNCIL A YOUNG TAXPAYER'S VIEW OF H.R. 6675

My name is William Vroman. My residence is 823 West Lincoln Highway in De Kalb, Ill. I hold the office of president of and am testifying for the Young Citizens Council. It was incorporated in Illinois during February 1965. Our first corporate meeting was held on April 28, 1965. Prof. F. G. Dickinson is our adviser and mentor.

The goal of the Young Citizens Council is to help in the nonpartisan struggle to educate the American people to the implications of shifting the tax burden every payday to the young, and especially to help in the struggle to freeze social security taxes on the young. I am age 25 and have the viewpoint of a young man. Since our formation we have received publicity and mail from as far away as Massachusetts, New York, Nebraska, and Tennessee. We are now corresponding to start chapters in those States. Contributions to our financial base have come from the very wealthy and the very poor, from the very young, and the very old.

We do not, gentlemen, wish to appear selfish in our concern for the young. We fully acknowledge the plight of other groups of our population. But we feel that the young have been taken to the cleaners as a group to pay for the windfall benefits to the rich old.

As an example, please look at table 1 on page 252 of the report of the Committee on Ways and Means. Table 1 shows the burden which has been shifted right

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