SUGGESTED AMENDMENT TO PRESERVE STATE WORKMEN'S COMPENSATION BY RESTORING THE OFFSET Amend title II of the Social Security Act by inserting after section 223 the following new section: "SEC. 224. (a) if— "(1) any individual (hereinafter in this section referred to as 'primary benficiary') is entitled to a disability insurance benefit for any month or any individual is entitled to a monthly insurance benefit under subsection (b), (c), or (d) of section 202 for any month on the basis of the wages and self-employment income of an individual entitled to disability insurance benefits, and "(2) it is determined that a periodic benefit is payable for such month to the primary beneficiary or to any other individual, under a workmen's compensation or occupational disease law of the United States or of a State, on account of a physical or mental impairment of the primary beneficiary, then the total of the benefits referred to in paragraph (1) shall be reduced (but not below zero) by an amount equal to such periodic benefit or benefits for such month. "(b) If any periodic benefit referred to in subsection (a) (2) is determined to be payable on other than a monthly basis (excluding a benefit payable in a lump sum unless it is a commutation of, or a substitute for, periodic payments), reduction of the benefits under this section shall be made at such time or times and in such amounts as the Secretary finds will approximate, as nearly as practicable, the reduction prescribed in subsection (a). "(c) In order to assure that the purposes of this section will be carried out, the Secretary may, as a condition to certification for payment of any monthly insurance benefit payable to an individual under this title (if it appears to him that such individual or any other individual may be eligible for a periodic benefit which would give rise to a reduction under this section), requires adequate assurance of reimbursement to the Federal Disability Insurance Trust Fund in case periodic benefits, with respect to which such a reduction should be made, become payable and such reduction is not made. "(d) The reductions provided by this section shall not apply in any case where the primary beneficiary is entitled to disability insurance benefits on the basis of an application filed before the date of the enactment of this subsection." Amend next to the last sentence of section 203 (a) of such act by striking out "after any deductions under this section and after any deductions under section 222 (b)" and inserting in lieu thereof "after any deductions under this section, after any deductions under section 222(b), and after any reduction under section 224". Amend section 203 (i) of such act to read as follows: "CIRCUMSTANCES UNDER WHICH DEDUCTIONS AND REDUCTIONS NOT REQUIRED "(i) In the case of any individual "(1) deductions by reason of the provisions of subsection (b), (c), (g), or (h) of this section, or the provisions of section 222(b), and "(2) any reduction by reason of the provisions of section 224. shall, notwithstanding such provisions, be made with respect to the benefits to which such individual is entitled only to the extent that such deductions and reduction reduce the total amount which would otherwise be paid, on the basis of the same wages and self-employment income, to such individual and the other individuals living in the same household." Amend section 215 (g) of such act by striking out "section 203 (a)" and inserting in lieu thereof "section 203 (a) and 224". Senator LONG. Senator Anderson? Senator ANDERSON. I have tried to find out where your figures are. Where are your figures on this overlap? Mr. DORSETT. On the exhibits attached to the statement. Senator ANDERSON. The Social Security Administration testified it runs about 2 percent. Do you agree with that? Mr. DORSETT. No, sir, we think it is higher than 2 percent, and with your permission may I Senator ANDERSON. Do you have figures to show that? Mr. KALMYKow. Mr. Chairman Senator ANDERSON. Do you have figures on it? Mr. KALMYKOW. We estimate it is between 42,000 and 47,000 of our compensation cases. Senator ANDERSON. Just let me have that again, 42,000 and what? Mr. KALMYKOW. 47,000, that is conservative. Senator ANDERSON. Insurance cases? Mr. KALMYKOW. Workmen's compensation cases. Mr. KALMYKOW. That is right, would have under this new definition. And that represents compensation payments to us of between $250 million and $300 million, that we will have to pay in these cases. Senator ANDERSON. I surely wish you would have some figures because I don't believe you do have. Mr. KALMYKOW. These figures are based on the amount that our rating organization, the National Council on Compensation Insurance has to represent cases where total disability extends over a period of 6 months or more. They have to have those records for rate computations. Senator ANDERSON. Secretary Celebrezze testified, About 2 percent of the total number of disability beneficiaries that we have now would be eligible for both workmen's compensation and social security disability benefits. That is a vast difference from yours. Mr. KALMYKOW. He compared that figure to the total social security benefit claimants. It is recognized that occupational injuries are much lesser in number than disabilities not connected with employment, so one could have a hundred percent disabilities due to employment covered and yet compared to total social security payments this would be a limited percentage of that figure. In other words, the important figure as far as the effect on compensation is how much of the total is affected, of the workmen's compensation total is affected, by these duplicate payments and not the percentage of total social security payments. Senator ANDERSON. I understand that. But it is pretty hard to believe Mr. KALMYKOW. As a matter of fact to indicate Senator ANDERSON. Did the figure you used a moment ago come from the National Council on Compensation Insurance? Mr. KALMYKOW. No, sir. Senator ANDERSON. What did you refer to with the figures on the National Council on Compensation Insurance? us. Mr. KALMYKOW. We based our estimate on figures they supplied to Senator ANDERSON. That is just what I asked you and you said no. Did the figures come from the National Council on Compensation Insurance! Mr. KALMYKOW. Yes. Mr. DORSETT. All companies subscribe to them. Senator ANDERSON. I will have to find out where they got their figures. Mr. KALMYKOW. Their report is from all member companies that write workmen's compensation throughout the country so they are in position to know what the experience is and make appropriate rates to cover that. Senator ANDERSON. They are very competent people and they estimate, do they, that between 42,000 and 47,000 cases would represent duplicate payments in this definition put into the law? Mr. KALMYKOW. That is correct. Senator ANDERSON. How many is it now without this definition? Mr. KALMYKow. Well, it is a little difficult to say. They contemplate approximately half that figure. That is a rough estimate at the present time. Senator ANDERSON. You mean the inclusion of the new language would double the number of cases? Mr. KALMYKOW. That is correct. To indicate how conservative this figure is, there is a publication of the Social Security Administration in the October 1964 issue of the Social Security Bulletin that estimates long-term workmen's compensation cases at 75,000 for the year 1963. So, that shows how conservative our estimate is. We aren't certain how they compiled that figure but we do want to cite it to indicae that our figure is a conservative one. Senator ANDERSON. Wouldn't there be those duplicate payments then in those cases without the passage of this legislation? What does this language do to that? Mr. KALMYKOW. No. These are the cases that refer to 6 months and more of total disability. This is equivalent to, 75,000 persons is equivalent to, the cases that would come under this new definition of 6 months and more. Senator ANDERSON. You have a 6 months and more language now, don't you, in the law? Mr. KALMYKOW. Not as far as the definition of disability is concerned. That is merely a waiting period provision. Senator ANDERSON. Well, your definition of disability is very strict now. It must be something resulting in death or be permanent? Mr. KALMYKow. That is right. Senator ANDERSON. It is pretty hard for a doctor to decide whether it would be permanent or not, isn't it? Mr. KALMYKOw. We have that every day, because Senator ANDERSON. I find myself in a strange position. I sympathize with a great deal of what you said about section 303 generally and I think there ought to be a limitation on what could be paid. What would your reaction be to an 85 percent limitation on what could be paid? Mr. DORSETT. I am a liberal by nature. But I am afraid, Senator Anderson, if you do that you are going to destroy the incentive in the 50 States to upgrade their State workmen's compensation benefitsthere has been great progress made, as you well know, in increasing benefits to the injured workmen. I am afraid if you do that you are going to discourage these States from doing anything at all about increasing benefits and that is the danger I see in this. As an old hand who helped administer a law in my native North Carolina for 10 years, I don't want to see anything done that will discourage the people not only in North Carolina but New Mexico, Louisiana, Delaware, and wherever, from increasing the benefits under worymen's compensation, because I think in 50 years that system has stood the test, and has performed marvelously. Senator ANDERSON. The figures you got from the National Council on Compensation Insurance are in your report here, are they? Mr. KALMYKOW. Yes, they are incorporated on pages 4 and 5. Senator ANDERSON. Pages 4 and 5 don't have any numbers in them on cases, do they? Mr. KEATING. The top of page 5. Mr. KALMYKоw. Top of page 5. Senator ANDERSON. That is an estimate. Mr. KEATING. That is right. Senator ANDERSON. The national council gave the facts. Mr. KEATING. That is stated as an estimate, that is right. I have been hoping to get some figures on this for a long time because there must be some available statistics on it. Mr. KALMYKOw. The reason we say it is an estimate is because it does not include any partial disability cases that may be held to constitute total disability by the Social Security Administration. It includes only the cases where total disability has exceeded a period of 6 months or more. It includes, of course, partial disability cases which, subsequent to the period of total disability may become partial and some permanent condition may continue, but all these are cases where according to records total disability has exceeded 6 months or more. Senator WILLIAMS. Mr. Dorsett, in line with the questioning of Senator Anderson, when the Secretary was before the committee I requested that they furnish to our committee a report similar to what you have done here showing their estimates as to how these figures would be, and I am advised by the staff as yet they have not been able to get those figures together but they will be submitting them to the committee and, Mr. Chairman, I would like to ask that they be printed at this point in the record also and I am asking Mr. Dorsett if when they are printed if there is a difference between their estimates and your estimates as included here today and you wish to comment further that you would do so. Because I understand this is--both of you have to take some estimates into consideration, certain factors but they should be reasonably close when you finally get down to the figures, and they may be. Mr. DORSETT. We will be glad to comment and whatever other pleasure of this committee it is. (The information referred to follows:) (The Commissioner of Social Security subsequently submitted the following material on this subject. This information was not received in sufficient time to allow the American Insurance Association to submit comments thereon before the hearings were sent to press.) The table previously submitted by the Administration, which appears on page 151 of part 1, is reprinted here for comparative purposes: Concurrent payment of workmen's compensation and disability benefits under social security system [Updated table on the basis of H.R. 6675 from Chamber of Commerce of the United States publication "You Can Help End the Threat to the State Workmen's Compensation System"] 1 Compensation benefits as of September 1964 based upon a worker with a wife and 2 children. Social security benefits based upon average family monthly benefit of $194 in June 1964, recomputed to $195 (or $45 weekly) on the basis of the provisions of H.R. 6675. ? Average weekly wage (in employment covered by unemployment insurance for calendar year 1963) less Federal income and social security taxes (4 deductions) computed under current withholding schedules. After deducting 1⁄2 of OASDI disability benefit under Colorado's offset provision. Figures not available-varies in each State. Source: Social Security Administration, Department of Health, Education, and Welfare, Apr. 29, 1965. |