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DEPOSITt

UNITED STATES OF AMERIC

Social Security in Review

PROGRAM OPERATIONS

OASDI Benefits

THE TAX Adjustment Act of 1966 (Public Law 89-368) provides monthly payments of $35 under the old-age, survivors, disability, and health insurance (OASDHI) program to certain noninsured persons aged 72 or over; an eligible woman married to a man who qualifies receives a monthly payment of $17.50. These special benefits for the noninsured are reduced by the amount of any government pension, other than workmen's or veteran's compensation, that the individual or his spouse are receiving or are eligible to receive. In addition, the benefits are not payable to persons receiving cash payments under public assistance or to persons residing outside the 50 States and the District of Columbia. Expenditures for these benefits are made originally from the old-age and survivors insurance trust fund, but the trust fund will bear only the cost represented by the relatively small amount of these benefits paid to persons with 3 or more quarters of coverage. The remaining costs will be financed from general revenues.

About 505,000 benefits were awarded in October, the first month for which the special benefits are payable; at the end of the month, 451,000 benefits were in current-payment status. Of this total, over 99 percent (449,000) will be financed from the general fund of the Treasury.

A record number of monthly benefits (nearly 760,000) was awarded in October, and almost 93,000 lump-sum death payments were made during the month; the combined total of 852,000 awards was 229,000 greater than the previous record set in May of this year.

Monthly benefits under the program were going, at the end of October, to almost 22.5

million persons-538,000 more than at the end of September. The 21-million mark had been reached 9 months earlier, in January 1966. The $1,621 million being paid in monthly benefits at the end of October was $23 million higher than the monthly rate for September.

About 15.3 million men and women aged 65 or over were receiving monthly benefits at October's close-almost 1.2 million more than the number a year earlier. The aged beneficiaries made up more than two-thirds of all persons receiving monthly benefits, about the same proportion represented by aged beneficiaries in October 1965. Most of these beneficiaries-69 percent-were receiving old-age (retired-worker) benefits. About 3 percent were receiving the special benefits for the noninsured aged 72 and over, and fewer than 1/2 of 1 percent were receiving parent's, mother's, or disabled child's benefits. The others (28 percent) were almost equally divided between those receiving wife's or husband's benefits and those getting widow's or widower's benefits.

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Health Insurance Benefits

In October, more than 372,000 hospital admission notices were received by the Social Security Administration for aged individuals covered under the health insurance program. This number was about 25,000 hospital admission notices fewer than the September figure and brought the total of such notices since the beginning of the program in July 1966 to more than 1,696,000. Almost 16,000 notices indicating the start of care for home health services, as provided under the hospital insurance part of the program, were received in October. About 71,000 such notices have been received since July.

Under the medical insurance program, almost 700,000 queries from intermediaries were received in October. These were requests for a check of the central records of the Social Security Administration to verify if the person being billed was entitled to benefits and if the $50 deductible had been satisfied. The number of such inquiries has been increasing recently and is a rough indicator of the number of claims being made by the aged. In the first 3 months of the program, about 900,000 such inquiries were received by the Social Security Administration.

The health insurance program makes possible the payment of emergency hospital services for beneficiaries admitted to nonparticipating hospitals. These hospitals have not met all of the requirements to become certified as participating hospitals and may be used by beneficiaries to provide emergency services only. As of midOctober, 2,500 such claims had been received with over 80 percent coming from Social Security Administration district offices located in the Southern States.

PUBLIC INCOME-MAINTENANCE PAYMENTS REFLECT OASDHI GROWTH

October payments under public income-maintenance programs were $24 million higher than the September total as the second quarter of health insurance benefits under OASDHI began. October also saw the introduction under that program of the special benefits to uninsured persons aged 72 and over. The amount of unemployment insurance benefits paid during the month ($101 mil

lion) was the lowest monthly total in a deca The average weekly number of beneficiaries a the total amount paid out were 21 percent bel the figures for October 1966.

GROWTH IN MEDICAL ASSISTANCE PROGRAMS

The numbers of persons receiving money pa ments under the public assistance programs we virtually unchanged from September to Octob The downward trend in the number receiving a to families with dependent children because an unemployed parent continued, however.

The decline of 15,000 in the number of indivi uals for whom medical vendor payments we made under medical assistance for the aged flected largely the discontinuance of Michiga program; that State initiated a medical assistan program under title XIX of the Social Securi Act during the month. Thirteen of the 26 Sta with the newer medical assistance programs ported a total of 787,000 recipients in whose beha payments were made to medical vendors in Oct ber; payments in these States represented abo half of all expenditures reported.

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National Health Expenditures, 1950-65

In 1965, government was the source of slightly more than one-fourth of all national health expenditures. The government share of health expenditures has remained about the same during the past decade. Beginning with 1966, public spending for all health purposes will probably represent a growing proportion of total health expenditures—primarily because of the new programs of health insurance for the aged, medical assistance, and the expanded maternal and child health services. The full effect of the major new programs will not be visible until 1967 when the health insurance program for the aged will have operated for a full year, when medical assistance will have been implemented by a large number of States, and when other new public programs will be in operation.

It is too early to predict the impact of the new legislation on the distribution of the health dollar, by object of expenditure. Other factors such as advances in medical technology, changes in the organization of medical care services, and increased prices will also: affect the distribution. The emphasis of the major new programs. however, is on personal health services.

THE NATION EXPENDED in 1965 $40.8 billion or 6 percent of the gross national product for health services and supplies, health research, and medical facilities construction. Per capita expenditures reached $209, increasing 7 percent from the previous year. Expenditures for health services and supplies accounted for 91.5 percent of the total, with the balance spent for research and medical facilities construction. Slightly less than three-fourths of all expenditures were private expenditures. Within the private sector, consumers either directly or through insurance

* Mrs. Hanft, formerly on the staff of the Office of Research and Statistics, is now with the Office of Economic Opportunity. She was assisted in the gathering of the data for this article by Alice Rarig.

1 For a detailed description of the definitions used in this series, as well as the methodology and the major sources of data, see Louis S. Reed and Ruth S. Hanft, "National Health Expenditures, 1940-64," Social Security Bulletin, January 1966.

by RUTH S. HANFT*

made 69 percent of all health expenditures, philanthropy accounted for 3.6 percent, and the balance came from other private sources, primarily industrial in-plant health services and funds for construction. Federal funds accounted for 12.9 percent of all expenditures from public funds, and State and local funds for 12.2 percent.

EXPENDITURES IN 1965

Source of Funds

In 1965, private funds were the source of $30.5 billion in national health expenditures, and public funds provided $10.2 billion. Private funds paid for 78 percent of the expenditures for health services and supplies, 11 percent of those for research, and 68 percent of those for medical facilities construction. Of total private health expenditures, more than 95 percent was spent for health services and supplies and less than 5 percent for research and construction.

The nature of the expenditures of the private sector for various health purposes differs markedly from that of the public sector (table 1 and chart 1). About 28 cents of the private dollar was spent for hospital care and 48 cents of the public dollar went for this purpose. In contrast, almost 40 cents of the private dollar was expended for the services of private practitioners but only 6 cents of the public dollar. Medical research continued to be a major expenditure of the public sector; it accounted for 13 percent of all public expenditures but only 2 of 1 percent of private expenditures.

Consumers.-Consumers spent $28.1 billion in 1965 for health purposes and were responsible for almost 69 percent of total expenditures. Consumer expenditures in this series are exclusively for personal health services ($26.8 billion) and insurance service ($1.2 billion), although payments for hospital care by consumers account

indirectly for a substantial portion of the accumulated funds of hospitals that are used for construction or modernization of facilities.

Consumer payments include direct out-of

pocket payments and private health insu payments. Slightly less than one-third or billion of all consumer expenditures repres health insurance payments, and $18.1 b

Distribution of private and public expenditures, by object of expenditure, 1950 and 19651

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