what average wage you take into consideration. Some of them have used the manufacturing wage which is higher than the level in general employment. Our figures are based on people who are actually hurt in compensation cases, their actual wages at the time of injury, we keep very close track of that for rating in our own payment purposes. Senator ANDERSON. I hope we can get the two figures together and see what they look like. Mr. KEATING. Mr. Chairman, can we furnish those figures for the record? Senator LONG. Yes. Congress H.R. 6675. Mrs. ELIZABETH B. SPRINGER, Chief Clerk, Committee on Finance, New Senate Office Building, U.S. Senate, Washington, D.C. AMERICAN INSURANCE ASSOCIATION, DEAR MRS. SPRINGER: Pursuant to the request of the members of the Committee on Finance at the time of our appearance, I am pleased to enclose an up-to-date table which indicates a comparison between average take-home pay in each State and the maximum weekly workmen's compensation benefit for total disability payable in that State. I may say that a number of States are presently still considering workmen's compensation benefit legislation but have not yet taken final action with respect thereto. The enclosed table also includes the full average weekly wage for each State as reported to the National Council on Compensation Insurance with respect to actual workmen's compensation claims paid by member companies. This data is furnished twice a year to the National Council in connection with their ratemaking functions. I may add that bulletin No. 212, revised 1964 by the U.S. Department of Labor, pages 36-37, which I understand was referred to by some of the members of the committee makes reference to workmen's compensation benefit levels as of 1963. There have been a number of increases since that time. The comparison is to full average weekly wage with no reference to income tax or social security deductions. In some States that have additional payments for dependents the full allowance of such payment is not indicated. The average weekly wage used is in some instances somewhat higher then that earned by the average workmen's compensation claimant. It may tend to reflect wages of production workers in manufacturing which are somewhat higher. The estimate as to the area of overlap furnished to us by the National Council on Compensation Insurance was based on figures of actual claims paid member companies classified by type of disability reported to the National Council for ratemaking purposes. To these were applied established percentages reflecting duration of disability. Consideration was also given to a special study made by one large carrier of workmen's compensation insurance made particularly for these hearings. I trust this gives you the information requested. I have tried to rush this material to you because of the time limitations which you have indicated were in effect. Sincerely yours, Enclosure. ANDREW KALMYKOW, Counsel. (The figures referred to follow :) Ratio of workmen's compensation benefits to weekly take-home pay 1 Based upon wages of employees to whom compensation paid, July, 1964, National Council on Con. pensation Insurance. 2 Average weekly wages less Federal income and social security taxes (4 deductions). 3 As of May 1965. Includes maximum allowance for temporary total disability for worker with a wife and two children. (Illinois, Iowa, Michigan, New York, and Vermont reflect benefit increases contained in blils that have passed their legislatures.) Includes additional allowance for dependents. Figures not available to National Council on Compensation Insurance for monopolistic State fund. Source: Production workers in manufacturing, 1960 statistical supplement, Monthly Labor Review, pp. 33-35 (U.S. Department of Labor). • Figures not available, varies in each State. Senator DOUGLAS. Mr. Chairman, may we ask the Bureau of Labor Statistics to furnish this tabulation as close to the present date as possible? Senator LONG. I will ask the staff to see if they can get that. (The following was later received for the record :) Ratio of maximum weekly benefit for temporary total disability to average weekly wages, by State 1 The percentages in this column are found by dividing the maximum weekly benefit for a worker, his wife, and two dependent children by the average weekly wage. The 1963 benefit is divided by the 1962 average weekly wage, as the wage data for 1963 were not available when the ratios were computed. Mr. KALMYKOW. A good many of the figures we have mentioned are attached to the statement we have submitted. A lot of those figures are in here. Senator DOUGLAS. I want to congratulate you on having as your counsel former Senator Keating. We miss him and you are brilliantly represented by him. Mr. DORSETT. We think so, too, Senator Douglas. Mr. KEATING. Thank you very much. Senator CURTIS. Mr. Chairman, I want to say we are glad you are here and we have a special greeting to Senator Keating. Isn't it true that this section 303 does not need to be necessarily a part of this bill dealing with hospital and medical care; isn't that correct? Mr. KALMYKOW. Yes; it has no integral part in that scheme. Senator CURTIS. While I am not in favor of this bill, I am anxious to see to it if the Congress is to pass a bill that it be as good a bill as possible. It is a giganticundertaking. The amount of money that will come in under it, the number of people to receive benefits, to start immediately will be a very sizable undertaking. Therefore, I think the Congress should do the best job of legislating it can, and it seems to me that this section 303 without determining its merits necessarily, it will be well to delete it and take it up at a later time as a separate item rather than to give it limited attention now in the many complex provisions of its program. Would you agree with that? Mr. KALMYKOW. I certainly do. I think, as I indicated before, it is such a departure from the present concepts of what the Social Security Act is intended to cover that I think it might be well to give the matter considerable study before taking such an important step. Senator CURTIS. That is all, Mr. Chairman. Senator DOUGLAS. Mr. Chairman, if I may ask, but wouldn't that leave this overlap existing in cases of permanent total disability? Mr. KALMYKOw. Yes, it would. At least it would extend itSenator DOUGLAS. You are ready to do that? Mr. KALMYKOW. Well, as we indicated before, we would prefer to see the offset restored, but if there is a desire for further study in this area, we certainly would like to see no extension of that principle. Senator LONG. Thank you very much, sir. Dr. DORSETT. Thank you. Senator LONG. In compliance with a previous request of the Committee the Department of Health, Education, and Welfare has submitted a memorandum on the operation of the "pass on" provision. I believe it would be helpful to insert that memorandum in the record today since the subject has been discussed. (The memorandum referred to follows:) OPERATION OF "PASS ON" PROVISION The "maintenance of State effort" or "pass on" provision contained in title IV of H.R. 6675 is basically intended to assure that States do not receive additional Federal funds under the bill while at the same time reducing their expenditure of State or local funds. The new formulas for Federal participation in assistance payments, the expended medical care program, and the elimination of restrictions on aged mental and tuberculosis patients makes available approximately $425 million a year in additional Federal funds on the basis of existing State and local expenditure. In addition, about $600 million a year of hospital care and other medical services for public assistance recipients would be met through the social insurance system, rather than through Federal-State public assistance payments. The pass on provision works this way. Assume that a State's total expenditure for public assistance have been $100 million-$50 million of Federal funds and $50 million of State funds. Under the bill, the new formulas might entitled this State to $60 million in Federal funds on the basis of its $50 million of State fund expenditure if these were exactly maintained; this would be an increase of $10 million in Federal funds. If the State's total expenditures rose to $110 million-an increase of $10 million-the State would be entitled to the full $60 million from the Federal Government since it was maintaining its $50 million. If the State's total expenditures only rose $5 million-to $105 million—then the State would receive $55 million in Federal funds even though the new matching basis might have entitled the State to $58 million of Federal funds, since the "pass on" provision requires that the increase in Federal funds cannot be more than the increase in total expenditures-$5 million. In any event, to receive more from the Federal Government than the $50 million previously received, the State would have to fully maintain its $50 million State fund expenditure. Assume that a State had been spending $11 million, divided equally between Federal and State funds and that it continued to spend this amount in the future. Even though the new matching formulas might indicate a larger Federal share than 50 percent (or $50 million), this would not result because the State would still have to put up the $50 million that it had previously. In other words, there can be no increase in Federal funds if there is no increase in total expenditures, and likewise the increase in Federal funds cannot exceed the increase in total expenditure. Assume that another State had been spending $100 million, divided equally between Federal and State funds. In this State, however, because of the availability of the new hospital insurance program, the increase of OASDI benefits, et cetera, both the total expenditure and the Federal and State expenditures all dropped, instead of increasing. The total dropped from $100 to $90 million, and then under the new matching formulas the State's share decreased from $50 million to $43 million and the Federal share decreased from $50 million to $47 million. In this instance, although the proportion of the Federal funds would be higher than under present law, there would be no adjustment made under the "pass on" provision since the Federal participation would be lower in dollars than for the earlier period. Senator LONG. The next witness will be Mr. James A. Flynn, New York Shipping Association. STATEMENT OF JAMES A. FLYNN, COUNSEL, NEW YORK SHIPPING ASSOCIATION, INC. Mr. FLYNN. Mr. Chairman and members of the committee, my name is James A. Flynn. I am with the firm of Lorenz, Finn & Giardino as counsel to the New York Shipping Association. My remarks will also be addressed to section 303 of H.R. 6675, and in many respects will parallel those that Mr. Dorsett who preceded me stated. We are concerned that if section 303 is enacted into law, it will result in further extension of the area of duplication of benefits which has been subject to question just a few minutes ago. In the time allotted, I would like to summarize the reasons set forth at greater length in my written statement why our New York Shipping Association opposes section 303 in its present form. It is our view that this very important and very drastic increase or change in Social Security Act was unwisely inserted into the medicare program. We feel it is a subject properly of a separate bill. It was inserted without advance notice or hearings of any kind, and without an opportunity for those who were vitally interested in the problem to be heard, as the Senate has given us the opportunity to be heard now. We think that if enacted it will seriously endanger the effectiveness of State and Federal workmen's compensation laws which have been successfully developed over the past 50 years. |