benefits are based on the average monthly earnings of the man. There are about 10 million people that we would recompute for, and there are around 60,000 people that we will pick up who are not now eligible but who become eligible for benefits when you apply the same test of eligibility to men that now applies to women. This is a matter of making the two equal. The next chart in the cash-benefits area, Mr. Chairman, shows three things in the disability area. They are of less importance than these matters we have been talking about but that I believe are worth mentioning. DISABILITY PROTECTION • EXTENDS CHILDHOOD DISABILITY BENEFITS TO PEOPLE DISABLED AFTER REACHING AGE 18 AND BEFORE 22 • EXCEPTS THE BLIND FROM THE INSURED-STATUS REQUIREMENT OF RECENT ATTACHMENT TO COVERED WORK • INCREASES CEILING ON TOTAL BENEFITS PAYABLE TO A SOCIAL SECURITY DISABILITY BENEFICIARY WHO RECEIVES WORKMEN'S COMPENSATION Mr. BALL. First, as you know, today we pay benefits to an individual who was disabled in childhood and has had a continuous disability since childhood, when the parent who has been taking care of him retires or becomes disabled or dies. In other words, that individual, even though he may be 40 or 45, is treated as if he is a dependent child. The conditions are that he had to become disabled before age 18 and be continuously disabled thereafter. The proposal here is that if the individual were disabled between 18 and 22, that same provision should apply. The provision that he must have been disabled before age 18 is really a carryover from the days when social security benefits were paid only to children below 18, whereas today, as you know, children attending school can get benefits up to age 22. The next proposal embodies part of one of the very popular Senate bills. The proposal is to change the eligibility provisions for the blind under the disability program. There are a very large number of Senators who have co-sponsored a bill to do this. What the House did was to drop the test of covered work for 5 out of the 10 years immediately before disability for the blind and pay them benefits if they meet the fully insured test, the same as we do for a retired worker. Then there is a provision in the House bill which modifies the ceiling that applies under present law when an individual is getting both a disability benefit under social security and a workmen's compensation benefit. The present law says that we will reduce the social security benefit if the combined workmen's compensation and social security 47-530-70-pt. 1-3 disability benefit exceeds 80 percent of the worker's average current earnings. (The proposal does not change the definition of current earnings in the law, so that is a detail I don't think I need to get into.) The House bill changes the provision from 80 percent to 100 percent. The Administration did not propose that change. It is in the House bill. Finally, the last chart on cash benefits, Mr. Chairman, shows only two other changes that are worth mentioning (there are other minor ones). Just to remind you, under present law, if you receive your benefits before 65, those benefits are reduced on an actuarial basis so that approximately you will get the same amount during the whole period of your life expectancy as you would have if you got a full benefit at age 65. You get a lower monthly benefit amount, but you get it for longer. A person can of course be eligible for more than one type of benefit. OTHER IMPROVEMENTS IN SOCIAL SECURITY PROTECTION ACTUARIAL REDUCTION IN ONE BENEFIT NO LONGER NONCONTRIBUTORY WAGE CREDITS FOR MILITARY Mr. BALL. Under present law a working woman getting her own benefit on retirement may take it before 65 and get a reduced benefit. Then later on, or even at the same time, she may also be eligible for a reduced wife's benefit based on her husband's earnings-that is. for an additional amount based on her husband's earnings. Under present law, if she once has elected an actuarial reduction for any benefit, that reduction carries over to any other benefit she may qualify for. That carryover is eliminated: an actuarial reduction in one benefit would no longer affect the second benefit. The next proposal, for noncontributory wage credits for military service, is designed to fill out a provision in present law. You will remember that the Armed Forces are covered under social security on a regular contributory basis beginning in 1957. The Congress, in the 1967 amendments, increased the protection that the Armed Forces had by adding $100 a month free credits to what they had previously been credited with their basic pay. The Congress said $100 a month would roughly take the place of the wages-in-kind that the members of the armed forces get. But the additional credit started only in 1967. This new provision gives that $100 free credit from the time the contributory empulsory coverage was first established. This is a charge on the general revenues and not on social security. Here we have a summary chart on the cash-benefit proposals, gentlemen. This chart compares the average benefit paid to various categories of beneficiaries today to what they would get next January under this bill. It reflects not only the 5-percent across-the-board increase, but the other provisions also. AVERAGE CASH BENEFITS UNDER PRESENT LAW AND PROPOSAL RETIRED WORKERS AGED COUPLES AGED WIDOWS WIDOWS WITH 2 CHILDREN DISABLED WORKERS DISABLED WORKERS $0 January 1971 25 50 75 100 125 150 175 200 225 250 275 300 325 MONTHLY CASH BENEFIT AMOUNT Mr. BALL. For instance, male retired workers would have their benefits recomputed to take account of the new age-62 provision so the average benefit for all retired workers-men and womenis estimated to go from $118 to $129. Benefits for couples will go from $199 to $218 on the average, and for aged widows, who will have a very substantial increase because of the 100-percent provision, the average would go from $102 to $123. You see the comparable figures on the chart for other benefit categories. MAJOR MEDICARE PROVISIONS HR 17550 1. Contributions to the long-range solution of rising medical costs 2. Additional provisions for program control 3. Improvements in Medicare protection Mr. BALL. If I could turn now to the proposals in the medicare area, the second part of the presentation. I have divided the proposals in the medicare area into three groups. The first group consists of rather long-range and fundamental proposals, which we think over time will contribute to a solution of the very, very serious problem of the longrange increase in medical costs. Secondly, we have a grouping of additional provisions that are aimed at a variety of problems that we and you have discovered in reviewing the operation of the program. And then there are some improvements in medicare protection in the bill. Although not of a major kind, and, although without significant costs, they are nevertheless worth commenting on, I believe. CONTRIBUTIONS TO THE SOLUTION 1 Tie Federal participation in capital expenditures 2 Move from cost reimbursement to prospective rates 3 Limitations on recognition of physician fee increases 4 Health maintenance organization option Mr. BALL. First then, the four major proposals in the bill that we believe will make a significant contribution over the long run to a solution of this problem of rising medical costs. The four are: First, to have the medicare, medicaid, and maternal and child health programs back the efforts throughout the country that are being made in the area of planning. The second proposal, as Secretary Black indicated, is to move from a cost reimbursement retroactively adjusted toward prospective rate setting. The bill also has in it some limitations on the recognition of future physician fee increases. And then finally, as Secretary Black mentioned, the very important option for beneficiaries to take their protection through a health maintenance organization. I should like to go into each one of those now in somewhat more detail. The first one relates to health facility planning. HEALTH FACILITY PLANNING 1. In 1967 Senate adopted a provision to coordinate 2. HR. 17550 provides authority to withhold or reduce reimbursement to providers for capital expenditures inconsistent with State or local health plans Mr. BALL. The significance of planning, as the committee so well knows, is that although in many parts of the country there are serious shortages of hospitals or nursing home facilities, in other places there is overbuilding. There is always the danger of duplication of facilities of having large standby costs that everybody has to pay for-if there is unstructured growth of health care facilities. It is not only additional beds that we are concerned about. Sometimes a major new service may be instituted in a hospital even though other hospitals in the community already provide enough of that kind of service. The point has been made many times that if you build additional hospital beds they are almost bound to be filled in the future. One of the best ways to control costs, then, is to control facility building and the extension of services. Now, against that general background, in 1967, the Senate Finance Committee_recommended, and the Senate adopted, a proposal-I remember Senator Curtis and myself discussing this in executive session, for example-you adopted a proposal that would have gotten rid of one of the worst features of the medicare, medicaid and maternal and child health programs in relation to facility planning, but it was dropped in conference so it is not part of the law. At the present time, we are still required to pay depreciation, we are required to pay interest on loans, and we are required, in a profitmaking facility on which we are making payments may have been built in defiance of good planning and in defiance of the planning recommendations of a local or an areawide, or State-planning body. So your proposal at that time was that we would not reimburse for depreciation, interest and so on in that kind of a situation. Now, H.R. 17550 has put back in this same kind of provision, althought it is spelled out in considerably more detail. Also there is a way in which, if the Secretary finds after consultation with an advisory |