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agreement with respect to services furnished, and shall certify such amount to the Managing Trustee of the Federal Old-Age and Survivors Insurance Trust Fund, except that such amount shall, prior to certification, be reduced or increased, as the case may be, by any sum by which the Secretary finds that the amount paid to the provider of services for any prior period was greater or less than the amount which should have been paid to it for such period. The Managing Trustee prior to audit or settlement by the General Accounting Office, shall make payment from the Federal Old-Age and Survivors Insurance Trust Fund, at the time or times fixed by the Secretary, in accordance with such certification.

"Nondisclosure of Information

"(e) Information concerning an individual, obtained from him or from any physician, dentist, nurse, hospital, nursing home, or other person pursuant to or as a result of the administration of this section, shall be held confidential (except for statistical purposes) and shall not be disclosed or be open to public inspection in any manner revealing the identity of the individual or other person from whom the information was obtained or to whom the information pertains, except as may be necessary for the proper administration of this section. Any person who shall violate any provision of this subsection shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine not exceeding $1,000 or by imprisonment not exceeding one year, or both.

"Medical and Hospital Services Under Workmen's Compensation

"(f) The provisions of subsection (a) shall not be applicable to any services which an individual required by reason of any injury, disease, or disability on account of which such services are being received or the cost thereof paid for, or upon application therefor would be received or paid for, under a workmen's compensation law or plan of the United States or of any State, unless equitable reimbursement to the Federal Old-Age and Survivors Insurance Fund for the payments hereunder with respect to such services have been made or assured pursuant to agreements or working arrangements negotiated between the Secretary and the appropriate public agency. Notwithstanding the above sentence, if (1) the individual's entitlement to receive such services (or to have the cost thereof paid for) under such a workmen's compensation law or plan is in doubt when such services are required, (2) the cost of such services is otherwise payable from the Federal Old-Age and Survivors Insurance Trust Fund pursuant to this section, and (3) the individual makes an appropriate application under such workmen's compensation law or plan and agrees, in the event that be is subsequently determined to be entitled to receive such services (or to have the cost thereof paid for) under such law, to reimburse the Federal Old-Age and Survivors Insurance Trust Fund in the amount of any loss it might suffer through its payment for such services, then the cost of such services may be paid from such Trust Fund in accordance with this section. In any case in which the cost of services is paid from the Federal Old-Age and Survivors Insurance Trust Fund pursuant to the immediately preceding sentence, or is paid from such Trust Fund with respect to any such injury, disease, or disability for which no reimbursement to such Trust Fund has been made or assured pursuant to the first sentence of this subsection, the United States shall, unless not permitted under the law of the applicable State (other than the District of Columbia) be subrogated to all rights of such individual, or of the provider of services to which payments under this section with respect to such services are made, to be paid or reimbursed pursuant to such workmen's compensation law or plan for such payments. All amounts recovered pursuant to this subsection shall be deposited in the Treasury of the United States to the credit of the Federal Old-Age and Survivors Insurance Trust Fund.

"Regulations and Functions of Advisory Council "(g) All regulations specifically authorized by this section shall be prescribed by the Secretary. In administering this section, the Secretary shall consult with a National Advisory Health Council consisting of the Commissioner of Social Security, who shall serve as Chairman ex officio, and eight members appointed by the Secretary. Four of the eight appointed members shall be persons who are outstanding in fields pertaining to hospitals and health activities, and the other four members shall be appointed to represent the consumers of hos

pital, nursing home, and surgical services and shall be persons familiar with the need for such services by eligible groups. Each appointed member shall hold office for a term of four years, except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and the terms of office of the members first taking office shall expire, as described by the Secretary at the time of appointment, two at the end of the first year, two at the end of the second year, two at the end of the third year, and two at the end of the fourth year after the date of appointment. appointed member shall not be eligible to serve continuously for more than two terms but shall be eligible for reappointment if he has not served immediately preceding his reappointment. The Council is authorized to appoint such special advisory and technical committees as may be useful in carrying out its functions. Appointed Council members and members of advisory or technical committees, while serving on business of the Council, shall receive compensation at rates fixed by the Secretary, but not exceeding $50 per day, and shall also be entitled to receive an allowance for actual and necessary travel, and subsistence expenses while so serving away from their places of residence. The Council shall meet as fre quently as the Secretary deems necessary, but not less than one each year. Upon request by three or more members it shall be the duty of the Secretary to call a meeting of the Council.

“Utilization of Private Nonprofit Organizations “(h) (1) The Secretary may utilize, to the extent provided herein, the services of private nonprofit organizations exempt from Federal income taxation under section 501 of the Internal Revenue Code which (A) represent qualified providers of hospital, nursing home, or surgical services, or (B) operate voluntary insurance plans under which agreements, similar to those provided for under subsection (d), are made with hospitals, nursing homes, and physicians for defraying the cost of services. Such organizations shall be utilized by the Secretary to the extent that he can make satisfactory agreements with them and to the extent he determines that such utilization will contribute to the effective and economical administration of this section. Such agreements shall not delegate (A) his functions relating to determinations as to whether the costs of hospital, nursing home, and surgical services furnished an individual may be paid for out of the Federal Old-Age and Survivors Insurance Trust Fund under this section and the amount of such payment, and (B) his functions relating to the making of regulations.

“(2) An agreement under paragraph (1) shall provide for payment from the Federal Old-Age and Survivors Insurance Trust Fund to the organization of the amounts paid out by such organization to hospitals, nursing homes, physicians, and dentists, under this section and of the cost of administration determined by the Secretary to be necessary and proper for carrying out such organization's functions under its agreement pursuant to this subsection. Such payments to any organizaiton shall be made either in advance on the basis of estimates by the Secretary or as reimbursement, as may be agreed upon by the organization and the Secretary, and adjustments may be made in subsequent payments on account of overpayments or underpayments previously made to the organization under this subsection. Such payments shall be made by the Managing Trustee of the Trust Fund on certification by the Secretary and at such time or times as the Secretary may specify and shall be made prior to audit or settlement by the General Accounting Office.

“(3) An agreement under paragraph (1) with any organization may require any of its officers or employees certifying payments or disbursing funds pursuant to the agreement, or otherwise participating in its performance, to give surety bond to the United States in such amount as the Secretary may deem necessary, and may provide for the payment of the cost of such bond from the Federal Old-Age and Survivors Insurance Trust Fund.

"Certifying and Disbursing Officers (i) (1) No individual designated by the Secretary pursuant to an agreement under this section, as a certifying officer shall, in the absence of gross negligence ur intent to defraud the United States, be liable with respect to any payments certified by him under this section.

“(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payment by him

under this section if it was based upon a voucher signed by a certifying officer designated as provided in paragraph (1).

“Adjustments in Cash Benefits "(j) For purposes of section 204, any payment under this section to any hospital, nursing home, physician, or dentist, with respect to hospital, nursing home, or surgical services furnished an individual shall be regarded as a payment to such individual.”

(b) The amendments made by subsection (a) shall be effective on the first day of the twelfth calendar month after the month in which this Act is enacted.

(c) Notwithstanding the provisions of section 226(a)(2) of the Social Security Act, as amended by this Act, and subsection (b) of this section, applications filed under such section 226 which would otherwise be valid shall, subject to regulations of the Secretary, be considered valid even though filed more than three months prior to the effective date of this Act, but not if filed prior to the first day of the fourth calendar month after the month in which this Act is enacted.

TITLE II-AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954

CHANGES IN Tax SCHEDULES

SELF-EMPLOYMENT INCOME TAX

SEC. 201. (a) Section 1401 of the Internal Revenue Code of 1954 (relating to rate of tax on self-employment income) is amended to read as follows: "SEC. 1401, RATE OF TAX.

"In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows:

“(1) in the case of any taxable year beginning after December 31, 1958, and before January 1, 1960, the tax shall be equal to 334 percent of the amount of the self-employment income for such taxable year;

(2) in the case of any taxable year beginning after December 31, 1959, and before January 1, 1963, the tax shall be equal to 478 percent of the amount of the self-employment income for such taxable year;

“(3) in the case of any taxable year beginning after December 31, 1962, and before January 1, 1966, the tax shall be equal to 55 percent of the amount of the self-employment income for such taxable year;

“(4) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1969, the tax shall be equal to 6% percent of the amount of the self-employment income for such taxable year; and

(5) in the case of any taxable year beginning after December 31, 1968, the tax shall be equal to 748 percent of the amount of the self-employment income for such taxable year."

TAX ON EMPLOYEES

(b) Section 3101 of such Code (relating to rate of tax on employees under the Federal Insurance Contributions Act) is amended to read as follows: "SEC. 3101. RATE OF TAX.

"In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121(a)) received by him with respect to employment (as defined in section 3121 (b))

"(1) with respect to wages received during the calendar year 1959, the rate shall be 242 percent;

(2) with respect to wages received during the calendar years 1960 to 1962, both inclusive, the rate shall be 344 percent;

“(3) with respect to wages received during the calendar years 1963 to 1965, both inclusive, the rate shall be 334 percent;

"(4) with respect to wages received during the calendar years 1966 to 1968, both inclusive, the rate shall be 444 percent; and

(5) with respect to wages received after December 31, 1968, the rate shall be 494 percent."

TAX ON EMPLOYERS

(C) Section 3111 of such Code (relating to rate of tax on employers under the Federal Insurance Contributions Act) is amended to read as follows: “SEC. 3111. RATE OF TAX.

"In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121 (b))

"(1) with respect to wages paid during the calendar year 1959, the rate shall be 212 percent;

"(2) with respect to wages paid during the calendar years 1960 to 1962, both inclusive, the rate shall be 314 percent;

“(3) with respect to wages paid during the calendar years 1963 to 1965, both inclusive, the rate shall be 334 percent;

“(4) with respect to wages paid during the calendar years 1966 to 1968, both inclusive, the rate shall be 444 percent; and

“(5) with respect to wages paid after December 31, 1968, the rate shall be 434 percent."

CHAIRMAN WILBUR D. MILLS, DEMOCRAT OF ARKANSAS, COMMITTEE ON WAYS AND

MEANS, HOUSE OF REPRESENTATIVES, ANNOUNCES PUBLIC HEARINGS TO BEGIN July 7, 1959, ON SEVERAL LEGISLATIVE PROPOSALS Now PENDING BEFORE THE COMMITTEE

The Honorable Wilbur D. Mills, Democrat of Arkansas, Chairman, Committee on Ways and Means, House of Representatives, today announced that the committee has scheduled public hearings to begin on July 7, 1959, on several different legislative proposals now pending before the committee. These proposals are as follows:

(1) H.R. 5, by the Honorable Hale Boggs of Louisiana, the Foreign Investment Incentive Act of 1959 ;

(2) H.R. 4700, by the Honorable Aime J. Forand of Rhode Island, to amend the Social Security Act to provide insurance for the cost of hospital, nursing home and surgical services for persons eligible for old-age and survivors insurance benefits;

(3) H.R. 7361, by the Honorable Richard M. Simpson of Pennsylvania, to amend the Internal Revenue Code of 1954 so as to provide for nonrecognition of gain or loss upon certain distributions of stock made pursuant to orders enforcing the antitrust laws; and

(4) H.R. 7924, by the Honorable James B. Utt, to amend the Internal Revenue Code to allow a deduction from the gross estate for the value of property passing to children,

The hearings will also include testimony on related alternative proposals on the four specific matters listed above which witnesses may desire to bring to the attention of the committee. This testimony, however, must be limited to the substantive areas covered by the four bills,

It is anticipated that the lead-off witnesses with regard to each of these sev. eral proposals will be from the interested Government agencies and departments. The hearings will begin on July 7, 1959. The precise dates set aside for each of the several proposals will be determined after all requests are received and after it is determined how much time is available to the committee for this purpose.

It has tentatively been decided that the order of the hearings will be as follows:

(1) H.R. 5, beginning July 7 and not to exceed 3 days;
(2) H.R. 7924, July 10, and not to exceed 1 day;
(3) H.R. 4700, beginning July 13, and not to exceed 5 days; and
(4) H.R. 7361, beginning July 20, and not to exceed 2 days.

It is absolutely essential that persons who may be interested in appearing and testifying should submit their request to Mr. Leo H. Irwin, Chief Counsel, Committee on Ways and Means, 1102 New House Office Building. Washington 25, D.C., as soon as possible and in any event not later than July 1, 1959.

The chairman emphasized that the Committee on Ways and Means has a very heavy legislative schedule, and for this reason the hearings have been limited as to subjects and duration. With the limited time available, it will be necessary for all persons and groups with similar interests designate one spokesman

to represent them at the public hearings. The time allotted each witness will
be determined by the number of witnesses requesting to be heard on each
subject.
It is essential that all persons requesting to appear and testify indicate:

Important:
(1) the general subject and tenor of their testimony;
(2) the amount of time required for their direct testimony; and

(3) the name and address of the witness who will present the testimony for the organization or group concerned, in order for the staff to allot time

and to properly arrange a schedule for the hearings. All persons who desire to do so may submit a written statement in lieu of a personal appearance. Such statements will be considered by the committee and also printed in the record of the hearings. It is requested that persons who submit such statements in lieu of a personal appearance do so by not later than July 21, 1959. A minimum of three copies of such statements should be submitted.

In accordance with the rules of the committee, persons who are scheduled to be heard are requested to submit 60 copies of their prepared statement to the chief counsel 24 hours in advance of their scheduled appearance. If a witness desires to also make available copies of his statement to the press and interested public, an additional 50 copies should be submitted by the date of his appearance.

Persons who submit a written statement for the record in lieu of an appearance may also provide an additional 50 copies of such statement if they desire it to be made available to the press and the public.

The CHAIRMAN. In addition, permit the Chair to advise, because of the great number to be heard and the limited time within which to hear witnesses, we will have to insist that each witness conclude his testimony in the time that has been allocated to that witness according to the calendar which is before us. And of course all statements will be carried in full in the record in the event any part of the statement is not given in the oral presentation.

This morning we are very pleased to have with us Hon. Arthur S. Flemming, Secretary of Health, Education, and Welfare.

Mr. Flemming, we are very pleased to hear you today. We appreciate you have taken time from your busy schedule to come to the committee. You are recognized, sir, to proceed in your own way.

STATEMENT OF HON. ARTHUR S. FLEMMING, SECRETARY OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY ELLIOT L. RICHARDSON, ASSISTANT SECRETARY (FOR LEGISLATION); WILLIAM L. MITCHELL, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION; AND MRS. IDA C. MERRIAM, DIRECTOR, DIVISION OF PROGRAM RESEARCH

Secretary FLEMMING. Mr. Chairman, members of the committee, first of all may I express to you my appreciation for the opportunity to present the views of the Department of Health, Education, and Welfare on H.R. 4700, a bill to amend the Social Security Act and the Internal Revenue Code so as to provide insurance against the costs of hospital, nursing home, and surgical service for persons eligible for old-age and survivors insurance benefits, and for other purposes.

In the introduction to the report which we submitted on April 2 of this year to this committee on the subject of “Hospitalization Insurance for OASDI Beneficiaries,” we included the following observations:

There is general agreement that a problem does exist. The rising cost of medical care, and particularly of hospital care, over the past decade has been

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