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354 

SOCIAL  SECURITY  AMENDMENTS  OF  1971 

kmrce  center,  mm  HEARINGS 

BEFORE  THE 

COMMITTEE  ON  FINANCE 
UNITED  STATES  SENATE 

NINETY-SECOND  CONGRESS 

FIRST  AND  SECOND  SESSIONS 
ON 

H.R.  1 

TO  AMEND  THE  SOCIAL  SECURITY  ACT  TO  INCREASE  BEN- 
EFITS AND  IMPROVE  ELIGIBILITY  AND  COMPUTATION 
METHODS  UNDER  THE  OASDI  PROGRAM,  TO  MAKE  IM- 
PROVEMENTS IN  THE  MEDICARE,  MEDICAID,  AND  MATER- 
NAL AND  CHILD  HEALTH  PROGRAMS  WITH  EMPHASIS  ON 
IMPROVEMENTS  IN  THEIR  OPERATING  EFFECTIVENESS, 
TO  REPLACE  THE  EXISTING  FEDERAL-STATE  PUBLIC 
ASSISTANCE  PROGRAMS  WITH  A  FEDERAL  PROGRAM  OF 
ADULT  ASSISTANCE  AND  A  FEDERAL  PROGRAM  OF  BENE- 
FITS TO  LOW-INCOME  FAMILIES  WITH  CHILDREN  WITH 
INCENTIVES  AND  REQUIREMENTS  FOR  EMPLOYMENT  AND 
TRAINING  TO  IMPROVE  THE  CAPACITY  FOR  EMPLOYMENT 
OF   MEMBERS    OF    SUCH    FAMILIES,    AND    FOR  OTHER 

PURPOSES 


JULY  27,  29 ;  AUGUST  2  AND  3, 1971,  AND 
JANUARY  20,  21,  24,  25,  26,  27,  28,  31 ;  FEBRUARY  1,  2,  3,  4,  7,  8,  AND  9,  1972 

PART  5  OF  6  PARTS  fefOffllQfjQfl 

Public  Witnesses 


(February  4,  7,  8,  and  9,  1972)£g 


Printed  for  the  use  of  the  Committee  on  Finance 


SOCIAL  SECURITY  AMENDMENTS  OF  1971 

^13  HEARINGS 

,  BEFORE  THE 

n      COMMITTEE  ON  FINANCE 
UNITED  STATES  SENATE 

NINETY-SECOND  CONGEESS 


FIRST  AND  SECOND  SESSIONS 
ON 


H.R.  1 


TO  AMEND  THE  SOCIAL  SECURITY  ACT  TO  INCREASE  BEN- 
EFITS AND  IMPROVE  ELIGIBILITY  AND  COMPUTATION 
METHODS  UNDER  THE  OASDI  PROGRAM,  TO  MAKE  IM- 
PROVEMENTS IN  THE  MEDICARE,  MEDICAID,  AND  MATER- 
NAL AND  CHILD  HEALTH  PROGRAMS  WITH  EMPHASIS  ON 
IMPROVEMENTS  IN  THEIR  OPERATING  EFFECTIVENESS, 
TO  REPLACE  THE  EXISTING  FEDERAL-STATE  PUBLIC 
ASSISTANCE  PROGRAMS  WITH  A  FEDERAL  PROGRAM  OF 
ADULT  ASSISTANCE  AND  A  FEDERAL  PROGRAM  OF  BENE- 
FITS TO  LOW-INCOME  FAMILIES  WITH  CHILDREN  WITH 
INCENTIVES  AND  REQUIREMENTS  FOR  EMPLOYMENT  AND 
TRAINING  TO  IMPROVE  THE  CAPACITY  FOR  EMPLOYMENT 
OF   MEMBERS    OF    SUCH    FAMILIES,    AND    FOR  OTHER 

PURPOSES 


JULY  27,  29 ;  AUGUST  2  AND  3, 1971,  AND 
JANUARY  20,  21,  24,  25,  26,  27,  28,  31 ;  FEBRUARY  1,  2,  3,  4,  7,  8,  AND  9,  1972 

  \ 

PART  5  OF  6  PARTS 


Public  Witnesses 
(February  4,  7,  8,  and  9,  1972) 


Printed  for  the  use  of  the  Committee  on  Finance 


U.S.  GOVERNMENT  PRINTING  OFFICE 
72-573  0  WASHINGTON  :  1972 


For  sale  by  the  Superintendent  of  Documents,  U.S.  Government  Printing  Offic' 
Washington,  D.C.,  20402  -  Price  $2.25 


COMMITTEE  OX  FINANCE 


RUSSELL  B.  L 
CLINTON  P.  ANDERSON,  New  Mexico 
HERMAN  E.  TALMADGE,  Georgia 
VANCE  HARTKE.  Indiana 
J.  W.  FULBRIGHT,  Arkansas 
ABRAHAM  RIBICOFF,  Connecticut 
FRED  R.  HARRIS,  Oklahoma 
HARRY  F.  BYRD.  Jr.,  Virginia 
GAYLORD  NELSON,  Wisconsin 

Tom  V. 


\G,  Louisiana,  Chairman 

WALLACE  F.  BENNETT,  Utah 
CARL  T.  CURTIS,  Nebraska 
JACK  MILLER,  Iowa 
LEN  B.  JORDAN,  Idaho 
PAUL  J.  FANNIN,  Arizona 
CLIFFORD  P.  HANSEN,  Wyoming 
ROBERT  P.  GRIFFIN,  Michigan 

,,  Chief  Counsel 


(ID 


CONTENTS 


Volume  1  Pages  1-734  Volume  4  Pages  1643-2247 

Volume  2  Pages  735-1203  Volume  5  Pages  2249-2757 

Volume  3  Pages  1205-1641  Volume  6  Pages  2759-3464 

Discussions  Between  Members  of  the  Committee  on  Finance  and  the  Witnesses 

Page 

Russell  B.  Long  (chairman)   1-3, 

27,  29,  48-51,  62,  71,  93,  94,  97,  107,  111-114,  117,  121,  123-125, 
127,  128,  135,  137,  142,  143,  148,  158,  159,  162-165,  174-186,  190, 
215,  221,  226,  228,  231,  235-239,  242,  248,  249,  251,  252,  257,  258, 
267-276,  280,  281,  302-309,  317,  325,  735-739,  743,  750,  756, 
757,  759,  770,  783,  792,  796,  797,  800,  801,  806,  810,  811,  822-831, 
833,  835-838,  844a-848,  860,  863-865,  867,  887,  889-896,  899, 
902,  903,  906-908,  917-919,  924-933,  943,  944,  968,  972,  974-988, 
1027,  1032,  1033,  1043,  1047,  1053,  1058-1062,  1064-1066,  1088, 
1092-1094,  1101,  1112-1116,  1208,  1209,  1212,  1224,  1236,  1240- 
1248,  1251,  1252,  1260,  1263-1266,  1291,  1292,  1298-1302,  1304, 
1307-1310,  1312,  1313,  1320,  1324-1330,  1344,  1377,  1381,  1392, 
1393,  1396,  1397,  1471,  1476,  1477,  1479,  1480,  1630-1633,  1637, 
1639,  1641,  1649-1656,  1660,  1670-1672,  1690,  1717-1720,  1727, 
1729,  1735,  1736,  1742,  1743,  1748,  1750,  1751,  1769-1771,  1775, 
1780,  1781,  1788,  1794,  1796-1799,  1831,  1832,  1868-1870,  1873, 
1876,  1878-1881,  1888,  1891,  1892,  1939,  1942,  1947,  1948,  1953- 
1959,  1998,  2014-2016,  2018,  2019,  2022,  2023,  2056,  2062,  2067, 
2068,  2072-2074,  2121,  2122,  2131-2136,  2138-2145,  2147,  2151, 
2152,  2157,  2170-2176,  2214,  2220-2225,  2234,  2236,  2239,  2249, 
2252,  2270-2272,  2383,  2386,  2393-2397,  2482,  2494,  2507-2509, 
2516,  2520-2522,  2527,  2528,  2552,  2553,  2581,  2599,  2603,  2605, 
2606,  2633,  2634,  2636,  2662-2664,  2667,  2668,  2670,  2697,  2757 

Clinton  P.  Anderson   50, 

187,  242,  258,  283,  770,  822,  893-896,  902,  903,  947,  1205,  1210, 
1215,  1220,  1224,  1401,  1486,  1510,  1511,  1514,  1522,  1692,  1700, 
1701,  1703,  1714,  1751,  1753,  1759-1760,  1769,  1921,  2051,  2137, 
2172,  2260,  2280,  2399,  2404,  2412,  2415,  2419,  2584,  2585,  2597 

Her  ma  n  E.  Talmadge   289- 

291,  1517,  1518,  1623,  1626,  1646,  1647,  1656,  1661-1668,  1827, 
1884-1886,  1952-1954,  1998,  2014,  2025,  2026,  2136,  2137,  2270- 
2272,  2288,  2289,  2292,  2302,  2335,  2338,  2340,  2354,  2356,  2359- 
2361,  2370-2373,  2382,  2511,  2513,  2516 

Abrahan  R  ibicoff   3-5, 

99,  103-107,  121,  124,  125,  148-159,  163,  164,  187-190,  202,  211, 
212,  214,  215,  231,  232,  736,  737,  806-811,  813,  818,  822,  827, 
829-833,  838,  844b,  943,  944,  951-954,  967,  968,  971,  972,  974,  986b, 
987,  1033-1035,  1051-1055,  1062,  1063,  1066,  1098-1101,  1107- 
1109,  1114,  1242,  1244,  1253-1255,  1257-1262,  1393-1395,  1401, 
1451-1456,  1645,  1646,  1656-1661,  1671,  1692,  1788-1790,  1794- 
1797,  1827,  1890-1893,  1895,  1896,  1898-1902,  1920,  1952,  2007, 
2010-2012,  2126-2131,  2141,  2145-2147,  2156,  2157,  2161-2167, 
2225-2227,  2386 

Fred  R.  Harris   165-174, 

2026,  2033,  2070-2073,  2338-2340,  2355,  2356,  2359-2361 

(in) 


IV 

Discussions  Between  Members  of  the  Committee  on  Finance  and  the 

Witnesses — Continued  Page 

Harry  F.  Byrd,  Jr   112-117, 

221-228,  267,  283-289,  291-294,  29&-302,  861,  869,  870,  971,  1471, 
1486,  1518,  1519,  1629,  1630,  1670,  1692,  1911-1918,  1950-1952, 
2061,  2070,  2168,  2169,  2419 

Gaylord  Nelson   117-121, 

236,  238,  240,  241,  834-836,  965-968,  988,  1106,  1107,  1643,  1794, 
2070,  2125,  2155-2157,  2277,  2608,  2635,  2636 

Wallace  F.  Bennett   27-29, 

50,  97,  98,  127,  128,  135-137,  142,  143,  736,  737,  757,  758,  770-772, 
968,  987,  1035,  1038,  1039,  1041,  1047,  1049-1051,  1065,  1095, 
1110,  1111,  1215,  1220,  1224,  1244,  1247-1253,  1304,  1305,  1307- 
1314,  1324,  1329,  1330,  1344,  1350,  1351,  1353,  1354,  1376, 
1395-1398,  1402,  1477-1479,  1511,  1514,  1518,  1519,  1656,  1714, 
1715,  1720,  1726,  1735,  1743,  1751,  1780,  1786-1788,  1902,  1948, 
1954,  1957,  1958,  2030,  2157,  2239,  2240,  2242,  2358,  2361,  2397- 
2402,  2404,  2416,  2418,  2419,  2425,  2439,  2516,  2518,  2522-2524, 
2565,  2566,  2573-2575,  2584,  2592,  2640 

Carl  T.  Curtis   50, 

51,  62,  71,  85-88,  235,  248,  251-267,  309-314,  742,  743,  758,  759, 
777,  778,  807,  809,  817-821,  860,  867,  868,  918,  919,  947-951,  968, 
971,  972,  974,  1094-1097,  1109-1112,  1296-1298,  1381,  1382, 
1392,  1397-1400,  1449-1451,  1480,  1481,  1510,  1514,  1523-1525, 
1656,  1692,  1701-1703,  1771,  1780,  1781,  1787,  1828-1830,1832, 
1833,  1876,  1882-1884,  1952,  2013,  2014,  2020,  2023-2025,  2030- 
2033,  2168,  2228,  2255,  2256,  2268,  2276-2278,  2394,  2395,  2402- 
2404,  2411,  2412,  2418,  2419,  2424-2426,  2524-2527,  2639,  2640, 
2649-2651,  2665 

Jack  Miller   93-98, 

232,  242,  243,  245-248,  259,  1046,  1055-1057,  1446-1449,  1887- 
1891 

Len  B.  Jordan   108, 

109,  111,  112,  159-161,  163-165,  814-817,  892,  893,  954-958, 
1035-1038,  1056,  1057,  1215,  1441,  1445,  1446,  1452,  1522,  1656, 
1795,  1796,  1902-1906,  1959,  2012,  2013,  2072,  2242,  2527,  2604, 
2634,  2635,  2640-2642,  2697 

Paul  J.  Fannin   143- 

148,  215-218,  220,  221,  744,  812-814,  868,  869,  895,  903,  920, 
921,  959-962,  1057,  1058,  1063,  1097,  1098,  1401,  1402,  1444, 
1481-1486,  1519-1522,  1668-1670,  1781,  1906-1911,  2016-2018, 
2054-2056,  2157-2161,  2228-2231,  2236,  2237,  2242-2244,  2256, 
2260,  2292,  2293,  2301,  2302,  2354,  2355,  2438,  2439 

Clifford  P.  Hansen   137- 

143,  212-215,  232,  234,  235,  258,  276-280,  302,  317-326,  811, 
833,  834,  919,  920,  962-964,  1058,  1115,  1215,  1255-1257,  1312, 
1324,  1325,  1348,  1444,  1514-1517,  1919-1921,  2016,  2026,  2070, 
2130-2132,  2136,  2137,  2144,  2154,  2155,  2163,  2231-2233,  2244, 
2299,  2300,  2302,  2352,  2651 

Robert  P.  Griffin   228,  1308,  1309,  1312,  1314,  1320 

Administration  Witnesses 

Hon.  Elliot  L.  Richardson,  Secretary  of  Health,  Education,  and  Welfare, 
accompanied  by: 

Hon.  John  G.  Veneman,  Under  Secretary; 

Hon.  Robert  M.  Ball,  Commissioner,  Social  Security  Administration; 
Hon.  Howard  Newman,  Commissioner,  Medical  Services  Administra- 
tion; and 

Hon.  Stephen  Kurzman,  Assistant  Secretary  for  Legislation        29,  187,  283 

Hon.  James  D.  Hodgson,  Secretary  of  Labor,  accompanied  by: 

Hon.  Malcom  R.  Lovell,  Assistant  Secretary  for  Manpower;  and 
Hon.  Jerome  M.  Rosow,  Assistant  Secretary  for  Policy,  Evaluation, 

and  Research  .  ---  128 

Public  Witnesses 

AFL-CIO,  Andrew  J.  Biemiller,  Legislative  Department;  accompanied  by: 

Bert  Seidman,  Department  of  Social  Security,  AFL-CIO   1790 


Volume  1  Pages  1-734  Volume  4   Pages  1643-2247 

Volume  2  Pages  735-1203  Volume  5  Pages  224^-2757 

Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Public  Witnesses — Continued 

Aid  to  Dependent  Children  Association  of  Lane  County,  Oreg.,  Lynda 

Wilt,  president,  accompanied  by :  Page 

Patricia  Ban,  Robin  Derringer,  and  Loretta  Daniel   2336 

American  Association  of  Foundations  for  Medical  Care,  F.  William  Dowda, 
M.D.,  secretary  and  member,  board  of  directors;  accompanied  by: 

James  Bryan,  consultant,  Washington  representative,  AAFMC   2511 

American  Association  of  Retired  Persons,  Peter  Hughes,  legislative  repre- 
sentative, accompanied  by : 

Robert  Sykes,  legislative  representative   750 

American  Civil  Liberties  Union,  James  H.  Heller,  chairman   2376 

American  Council  of  the  Blind,  Washington,  D.C.,  Durward  K.  McDaniel, 

national  representative   780 

American  Council  of  Medical  Staffs,  Jose  Garcia  Oiler,  M.D.;  accompanied 
by: 

Edward  S.  Hyman,  M.D.,  secretary,  ACMS   2683 

American  Dental  Association,  James  A.  A.  Catchings,  D.D.S.,  member, 
Council  on  Dental  Health;  past  president,  National  Dental  Association; 
accompanied  by: 

Hal  M.  Christensen,  director,  Washington  Office,  American  Dental 

Association   2415 

American  Dietetic  Association,  Frances  E.  Fisher;  accompanied  by: 

Lois  Earl,  nutritionist,  Washington,  D.C.,  member,  ADA   2589 

American  Federation  of  Government  Employees,  Clyde  M.  Webber;  ac- 
companied by : 

Stephen  A.  Koczak,  director  of  research   1751 

American  Federation  of  State,  County,  and  Municipal  Employees,  AFL- 

CIO,  Paul  J.  Minarchenko,  director  of  legislation   1767 

American  Foundation  for  the  Blind,  Washington,  D.C.,  Irvin  P.  Schloss, 

legislative  analyst   790 

American  Home  Economics  Association,  Thomas  M.  Brooks,  member  and 
dean,  School  of  Home  Economics,  Southern  Illinois  University,  Carbon- 
dale,  111.,  accompanied  by: 

Doris  Hansen,  executive  director,  American  Home  Economies  Asso- 
ciation  1637 

American  Hospital  Association,  Richard  M.  Loughery;  accompanied  by: 
Kenneth  Williamson,  deputy  director,  AHA,  and  director,  Washington 

Service  Bureau   2274 

American  Life  Convention,  John  S.  Pillsbury,  Jr.,  chairman  and  chief  ex- 
ecutive officer,  Northwestern  National  Life  Insurance  Co   740 

American  Mutual  Insurance  Alliance,  Andre  Maisonpierre.   2548 

American  Nurses'  Association,  Virginia  Stone,  chairman,  executive  com- 
mittee, Division  of  Geriatric  Nursing  Practice;  accompanied  by: 

Constance  Holleran,  director,  Governmental  Relations  Department, 

ANA   2421 

American  Physical  Therapy  Association,  Royce  P.  Noland,  Washington, 

D.C   2486 

American  Public  Welfare  Association,  George  K.  Wyman,  president;  ac- 
\    companied  by: 

Wilbur  J.  Schmidt,  chairman,  National  Council  of  State  Public  Welfare 

Administrators;  and 
Lloyd  E.  Rader,  director,  State  Department  of  Institutions,  Social 

and  Rehabilitative  Services,  Oklahoma   1643 

American  Speech  and  Hearing  Association,  Richard  J.  Dowling,  director, 
Governmental  Affairs ;  accompanied  by : 

Dr.  F.  T.  Spahr,  deputy  executive  secretary,  ASHA   2573 

American  Veterans  Committee,  F.  J.  Pepper,  M.D.,  vice  chairman   2288 

Area  Resources  Improvement  Council,  George  A.  Welch,  Benton  Harbor, 
Mich. ;  accompanied  by : 

J.  Howard  Edwards,  executive  director,  ARIC; 

Roger  Curry,  executive  vice  president,  Twin  Cities  Area  Chamber  of 
Commerce;  and 

Andy  Takacs,  director,  Government  and  Urban  Affairs,  Whirlpool 

Corp   1320 


VI 


Public  Witnesses — Continued 


Arkansas  Prosecuting  Attorneys  Association,  Samuel  A.  Weems,  prosecut-  Page 

ing  attorney  for  the  17th  Judicial  District,  legislative  chairman   835 

Association  of  American  Medical  Colleges'  Council  of  Teaching  Hospitals, 
Leonard  W.  Chronkhite,  Jr.,  M.D.,  chairman-elect;  accompanied  by: 
John  M.  Danielson,  director,  Department  of  Health  Services  and 

Teaching  Hospitals,  AAMC   2630 

Association  of  American  Physicians  and  Surgeons,  Thomas  G.  Dorrity, 
M.D.;  accompanied  by: 

Frank  K.  Woolley,  executive  director,  AAPS   2644 

Association 'of  State  and  Territorial  Health  Officers,  Hollis  S.  Ingraham, 

M.D   2383 

Banaszynski,  Thomas  J.,  president,  National  Federation  of  Student 
Social  Workers;  accompanied  by: 

Hector  Sanchez,  coordinator  of  education,  NFSSW   1867 

Beaver  County  Commissioners,  Hon.  James  E.  Ross,  chairman,  Beaver, 
Pa.;  accompanied  by: 

Cosmo  Morabito,  assistant  administrator,  Beaver  County  Hospital, 

Pa   2581 

Bellmon,  Hon.  Henry,  a  U.S.  Senator  from  the  State  of  Oklahoma   2019 

Benson,  Lucy  Wilson,  president,  League  of  Women  Voters  of  the  United 
States;  accompanied  by: 

Leonard,  Lesser,  consultant; 

Jack  T.  Conway,  president,  Common  Cause;  and 

Jack  Moskowitz,  consultant   1136 

Biemiller,  Andrew  J.,  director,  Legislative  Department,  AFL-CIO;  ac- 
companied by : 

Bert  Seidman,  director,  Department  of  Social  Security,  AFL-CIO   1790 

Biggs,  William  F.,  executive  officer,  Salt  Lake  Area  Community  Action  Pro- 
gram, Salt  Lake  City,  Utah;  accompanied  by: 

Bonnie  Hartley,  vice  president,  Utah  Welfare  Rights;  and 

Andrew  Gallegos,  Coalition  of  Spanish  Speaking  Organizations  of 

Utah   2358 

Blue  Cross  Association,  Bernard  R.  Tresnowski,  senior  vice  president  for 

Federal  programs   2744 

Brookings  Institution,  Joseph  A.  Pechman;  accompanied  by: 

Alice  M.  Rivlin   801 

Brooks,  Thomas  M.,  dean,  School  of  Home  Economics,  Southern  Illinois 
University,  Carbondale,  111.,  member,  American  Home  Economics  Asso- 
ciation; accompanied  by: 

Doris  Hansen,  executive  director,  American  Home  Economics  Associa- 
tion  1637 

Brown,  Mrs.  Donald,  national  board  member,  National  Council  of  Jewish 
Women;  accompanied  by: 

Mrs.  Bernard  Koteen,  chairman,  day  care  committee   1733 

Burk,   Mike,  legislative  advocate,  National  League  of  Senior  Citizens, 

Los  Angeles,  Calif   899 

California  Chamber  of  Commerce,  Roy  A.  Green,  Jr.,  director,  welfare 

department   1827 

Catchings,  James  A.  A.,  D.D.S.,  member,  Council  on  Dental  Health, 
American  Dental  Association;  past  president,  National  Dental  Associ- 
ation ;  accompanied  by : 

Hal  M.  Christensen,  director,  Washington  office,  American  Dental 

Association   2415 

Chamber  of  Commerce  of  the  United  States  of  America,  Seymour  L. 
Wolf bein ;  accompanied  by : 

Karl  T.  Schlotterbeck,  consultant  on  economic  security   1389 

Child  Welfare  League  of  America,  Joseph  H.  Reid;  accompanied  by: 

Jean  Rubin,  staff   2026 

Chiles,  Hon.  Lawton,  a  U.S.  Senator  from  the  State  of  Florida   2051 

Cohelan,  Jeffery,  executive  director,  Group  Health  Association  of  America; 
accompanied  by : 

W.  Palmer  Dearing,  M.D.,  medical  consultant,  GHAA   2390 

Cohen,  Hon.  Wilbur  J.,  former  Secretary  of  HEW,  dean,  School  of  Edu- 
cation, University  of  Michigan   2121 

Community  Council  of  Greater  New  York,  Rev.  Robert  P.  Kennedy,  chair- 
man, Task  Force  on  Adequate  Income  and  Services;  accompanied  by: 
Bernard  M.  Schiffman,  executive  director,  CCGNY;  and 
Jerry  A.  Shroder,  director  of  information  services,  CCGNY   1344 


vn 

Volume  1  Pages  1-734  Volume  4  Pages  1643-2247 

Volume  2   Pages  735-1203  Volume  5  Pages  2249-2757 

Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Public  Witnesses — Continued 

Conner,  Hon.  Louise  T.,  State  senator  from  Delaware;  accompanied  by:  Paf?e 

Arva  Jackson,  aide  to  Gov.  Russell  W.  Peterson  of  Delaware   2268 

Corcoran,  Rev.  Msgr.  Lawrence  J.,  secretary,  National  Conference  of 

Catholic  Charities   1727 

Cosgrove,  John  E.,  director,  social  development,  U.S.  Catholic  Conference.  1714 
Coughlin,  Rev.  Bernard  J.,  chairman,  Division  Cabinet  of  Social  Policy 

and  Action,  National  Association  of  Social  Workers,  Inc.;  accompanied 

by: 

Glen  Allison,  director,  Washington  Office,  NASW_   1690 

Council  for  the  Advancement  of  Psychological  Professions  and  Sciences 
(CAPPS),  Jack  G.  Wiggins,  psychologist,  member,  Board  of  Governors, 
Cleveland,  Ohio ;  accompanied  by : 

A..  Eugene  Shapiro,  diplomate,  clinical  psychology,  consultant  in 


psychology,  St.  Michael's  Hospital,  Newark,  N.J   2434 

Council  of  State  Chambers  of  Commerce,  Paul  P.  Henkel,  chairman, 
Social  Security  Committee,  accompanied  by: 

William  R.  Brown,  associate  research  director   754 

Cronkhite,  Leonard  W.,  Jr.,  M.D.,  chairman-elect,  Association  of  American 
Medical  Colleges'  Council  of  Teaching  Hospitals;  accompanied  by: 
John  M.  Danielson,  director,  Department  of  Health  Services  and 

Teaching  Hospitals,  AAMC   2630 

Dealaman,  Doris,  Freeholder,  Somerset  County,  N.J.,  chairman,  Welfare 
Committee  of  the  National  Association  of  Counties;  accompanied  by: 
Ellis  P.  Murphy,  director,  social  services,  Los  Angeles  County,  Calif., 

president,  National  Association  of  County  Welfare  Directors; 
David  Daniel,  director,  Public  AID,  Cook  County,  111.;  and 
Ralph  Tabor,  director,  Federal  Affairs,  National  Association  of  Coun- 
ties  1220 

Delta  Associates  International,  William  H.  Shaker   2299 

Dibble,  E.  T.,  management  systems  consultant,  Atlanta,  Ga   2370 

Dorrity,  Thomas  G.,  M.D.,  president,  Association  of  American  Physi- 
cians and  Surgeons;  accompanied  by: 

Frank  K.  Woolley,  executive  director,  A  APS   2644 

Dowda,  F.  William,  M.D.,  secretary  and  member,  board  of  directors, 
American  Association  of  Foundations  for  Medical  Care;  accompanied 
by: 

James  Bryan,  consultant,  Washington  representative,  AAFMC   2511 

Dowling,  Richard  J.,  director,  governmental  affairs,  American  Speech  and 
Hearing  Association;  accompanied  by: 

Dr.  F.  T.  Spahr,  deputy  executive  secretary,  ASHA   2573 

Duke  University  School  of  Law,  Clark  C.  Havighurst   2563 

Eagleton,  Hon.  Thomas  F.,  a  U.S.  Senator  from  the  State  of  Missouri   2249 

Edwards,  Ozzie,  National  Federation  of  Social  Service  Employees  and 

Affiliated  Organizations   2507 

Evans,  Hon.  Daniel  J.,  Governor  of  the  State  of  Washington   1939 

Ewing,    Margaret,   attorney,   national  health   and  environmental  law 
program,  University  of  California,  Los  Angeles;  accompanied  by: 

Harvey  Makadon,  health  law  project,  University  of  Pennsylvania 

Law  School   2702 

Federation  of  Protestant  Welfare  Agencies  of  New  York,  John  J.  Keppler; 
accompanied  by : 

Samuel  Felder,  consultant   1741 

Fisher,  Frances  E.,  American  Dietetic  Association;  accompanied  by: 

Lois  Earl,  nutritionist,  Washington,  D.C.,  member,  ADA   2589 

Freeman,  Roger  A.,  senior  fellow,  the  Hoover  Institution  on  War,  Revolu- 
tion, and  Peace,  Stanford  University,  California   1511 

Gaboury,  Fred,  cochairman,  National  Coordinating  Committee  for  Trade 

Union  Action  and  Democracy   1775 

Gaver,  Kenneth,  M.D.,  Department  of  Mental  Hygiene  and  Corrections, 
Columbus,  Ohio;  accompanied  by: 

Harry  C.  Schnibbe,  executive  director,  National  Association  of  State 

Mental  Health  Program  Directors,  Washington,  D.C   924 


VIII 


Public  Witnesses — Continued 


Gavin,  James  A.,  legislative  director,  National  Federation  of  Independent 

Business;  accompanied  by :  Page 

Thomas  Rae,  Washington,  D.C.,  staff   914 

Gibson,  Robert  W.,  M.D.,  medical  director,  the  Sheppard  and  Enoch 

Pratt  Hospital,  Towson,  Md   2408 

Gilligan,  Hon.  John  J.,  Governor,  State  of  Ohio;  accompanied  by: 

John  E.  Hansan,  director,  Department  of  Welfare,  Ohio   1101 

Goldwater,  Hon.  Barry,  a  U.S.  Senator  from  the  State  of  Arizona   1783 

Gravel,  Hon.  Mike,  a  U.S.  Senator  from  the  State  of  Alaska   2599 

Green,  Roy  A.,  Jr.,  director,  Welfare  Department,  California  Chamber  of 

Commerce   1827 

Group  Health  Association  of  America,  Jeffery  Cohelan;  accompanied  by: 

W.  Palmer  Dearing,  M.D.,  medical  consultant,  GHAA   2390 

Gurney,  Hon.  Edward  J.,  a  U.S.  Senator  from  the  State  of  Florida   797 

Harrell,  Edward  M.,  M.D.,  president,  Louisiana  State  Medical  Society; 

accompanied  by: 

Paul  Perret,  associate  secretary-treasurer,  LSMS   2663 

Havighurst,  Clark  C,  professor  of  law,  Duke  University  School  of  Law_  _  2563 
Health  and  Welfare  Council,  Chester  Shore,  chairman,  Committee  on 

Federal  Legislation   2289 

Heller,  James  H.,  chairman,  American  Civil  Liberties  Union   /376 

Henkel,  Paul  P.,  chairman,  Social  Security  Committee,  Council  of  State 
Chambers  of  Commerce ;  accompanied  by : 

William  R.  Brown,  associate  research  director   754 

Holmes,  Burton  C,  vice  chairman,  National  Association  of  Life  Under- 
writers Committee  on  Federal  Law  and  Legislation;  accompanied  by: 

Michael  Kerley,  staff  counsel,  NALU   906 

Hoover  Institution  on  War,  Revolution,  and  Peace,  Roger  A.  Freeman, 

senior  fellow,  Stanford  University,  Calif   1511 

Hughes,  Peter,  legislative  representative,  National  Retired  Teachers 
Association  and  the  American  Association  of  Retired  Persons,  accom- 
panied by: 

Robert  Sykes,  legislative  representative,  both  associations   750 

Ingraham,  Hollis  S.,  M.D.,  president,  Association  of  State  and  Territorial 

Health  Officers   2383 

Jordan,  Vernon  E.,  Jr.,  executive  director,  National  Urban  League   2210 

Kennedy,  Rev.  Robert  P.,  chairman,  Task  Force  on  Adequate  Income  and 
Services,  Community  Council  of  Greater  New  York;  accompanied  by: 
Bernard  M.  Schiffman,  executive  director,  CCGNY;  and 

Jerry  A.  Shroder,  director  of  Information  Services,  CCGNY   1344 

Keppler,  John  J.,  executive  vice  president,  Federation  of  Protestant  Wel- 
fare Agencies  of  New  York;  accompanied  by: 

Samuel  Felder,  consultant   6714 

Kessler,   Mrs.    Gladys,    Counsel,  Working   Mothers   United  for  Fair 

Taxation   1741 

Knack,  Lee  E.,  director  of  labor  relations,  Morrison- Knudsen  Co.  of  Boise, 

Idaho   1441 

Knebel,  James  D.,  executive  vice  president,  National  Association  of  Blue 
Shield  Plans;  accompanied  by: 

Lawrence   C.   Morris,  vice  president,   Planning  and  Programing, 

NABSP   2737 

Koch,  Hon.  Edward  I.,  a  Representative  in  Congress  from  the  State  of 

New  York   2606 

Kurfess,  Charles  F.,  speaker,  Ohio  House  of  Representatives,  in  behalf  of 
the  National  Legislative  Conference;  accompanied  by: 
Allen  Dines,  State  senator,  Colorado;  and 

Richard  S.  Hodes,  State  representative,  Florida   2252 

League  of  Women  Voters  of  the  United  States,  Lucy  Wilson  Benson,  presi- 
dent; accompanied  by: 

Leonard  Lesser,  consultant; 

Jack  T.  Conway,  president,  Common  Cause;  and 

Jack  Moskowitz,  consultant   1236 

Leopold,  Jonathan,  M.D.,  commissioner,  Department  of  Mental  Health, 
Montpelier,  Vt.;  and  Gaver,  Kenneth,  M.D.,  commissioner,  Department 
of  Mental  Hygiene  and  Corrections,  Columbus,  Ohio;  accompanied  by: 
Harry  C.  Schnibbe,  executive  director,  National  Association  of  State 

Mental  Health  Program  Directors,  Washington,  D.C   924 


IX 

Volume  1  Pages  1-734  Volume  4   Pages  1643-2247 

Volume  2  Pages  735-1203  Volume  5  Pages  2249-2757 

Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Public  Witnesses — Continued 

Page 

Liberty  Lobby,  Washington,  D.C.,  Warren  S.  Richardson   770 

Licht,  Hon.  Frank,  Governor,  State  of  Rhode  Island;  accompanied  by: 
John  J.  Affleck,  director,  Rhode  Island  Department  of  Social  and  Re- 
habilitative Services;  and 
Joseph  F.  Murray,  acting  administrator,  assistance  payments  program,  1027 
Life  Insurance  Association  of  America,  John  S.  Pillsbury,  Jr.,  chairman 
and  chief  executive  officer,  Northwestern  National  Life  Insurance 

Company   740 

Life  Insurers  Conference,  John  S.  Pillsbury,  Jr.,  chairman  and  chief  execu- 
tive officer,  Northwestern  National  Life  Insurance  Company   740 

Loughery,  Richard  M.,  administrator,  Washington  Hospital  Center,  on 
behalf  of  the  American  Hospital  Association;  accompanied  by: 

Kenneth  Williamson,  deputy  director,  AHA,  and  director,  Washing- 
ton Service  Bureau   2274 

Louisiana  Hospital  Association,  Warren  W.  Simonds,  president;  accom- 
panied by:  Charles  R.  Gage,  executive  director,  LHA   2516 

Louisiana  State  Medical  Society,  Edward  M.  Harrell;  accompanied  by: 

Paul  Perret,  associate  secretary-treasurer,  LSMS   2663 

McDaniel,  Durward  K.,  national  respresentative,  the  American  Council 

of  the  Blind,  Washington,  D.C   780 

McLean,  Mrs.  Elaine,  vice  president,  Washington  State  Welfare  Rights 

Organization   2239 

Maisonpierre,  Andre,  vice  president,  American  Mutual  Insurance  Alliance.  2548 

Management  Systems  Consultant,  E.  T.  Dibble,  Atlanta,  Ga   2370 

Meskill,  Hon.  Thomas  J.,  Governor  of  the  State  of  Connecticut   2007 

Michigan  University,  School  of  Education,  Hon.  Wilbur  J.  Cohen,  dean__  2121 
Minarchenko,  Paul  J.,  director  of  legislation,  American  Federation  of 

State,  County,  and  Municipal  Employees,  AFL-CIO   1767 

Mitchell,  Clarence,  director  of  the  Washington  Bureau  of  the  National 

Association  for  the  Advancement  of  Colored  People   2220 

Modlin,  E.  C,  president,  North  Carolina  Social  Services  Association; 
accompanied  by : 

Beverly  Heitman,  chairman,  H.R.  1  Task  Force  of  North  Carolina.  _  1700 
Montoya,  Hon.  Joseph  M.,  a  U.S.  Senator  from  the  State  of  New  Mexico.  1205 
Moore,  Florence,  executive  director,  National  Council  for  Homemaker- 
Home  Health  Aide  Services,  Inc.;  accompanied  by: 

Patricia  Gilroy,  executive  director,  Homemaker  Service  of  the  Na- 
tional Capital  Area,  Washington,  D.C   2491 

Morrison-Knudsen  Co.  of  Boise,  Idaho,  Lee  E.  Knack,  director  of  labor 

relations   1441 

Murphy,  Richard  E.,  assistant  to  the  general  president,  Service  Employees 
International  Union,  AFL-CIO;  accompanied  by: 

Paul  Quirk,  president,  local  509,  Boston,  Mass   1759 

Myers,  Robert  J.,  former  chief  actuary,  Social  Security  Administration. __  861 
Nagle,  John  F.,  chief,  Washington  office,  National  Federation  of  the  Blind.  775 
National  Association  of  Blue  Shield  Plans,  James  D.  Knebel;  accompanied 
by: 

Lawrence   C.   Morris,   vice   president,   planning   and  programing, 

NABSP   2737 

National  Association  for  Mental  Health,  Hilda  Robbins,  member,  Public 
Affairs  Committee;  president,  Pennsylvania  Mental  Health,  Inc.,  Fort 

Washington,  Pa  .__  2479 

National  Association  for  the  Advancement  of  Colored  People,  Clarence 

Mitchell,  director,  Washington  Bureau   2220 

National  Association  of  Counties,  Doris  Dealaman,  Freeholder,  Somerset 
County,  N.J.,  chairman,  Welfare  Committee;  accompanied  by: 

Ellis  P.  Murphy,  director,  social  services,  Los  Angeles  County,  Calif., 

president,  National  Association  of  County  Welfare  Directors; 
David  Daniel,  director,  public  aid,  Cook  County,  111. ;  and 
Ralph  Tabor,  director,  Federal  affairs,  National  Association  of  Coun- 
ties  1220 


X 

Public  Witnesses — Continued 


National  Association  of  Life  Underwriters  Committee  on  Federal  Law  and 

Legislation,  Burton  C.  Holmes,  CLU,  vice  chairman;  accompanied  by:  Pa&e 
Michale  Kerley,  staff  counsel,  NALU   906 

National  Association  of  Social  Workers,  Inc.,  Rev.  Bernard  J.  Coughlin, 
chairman,  Division  Cabinet  of  Social  Policy  and  Action;  accompanied 
by: 

Glen  Allison,  director,  Washington  Office,  NASW   1690 

National  Association  of  State  Mental  Health  Program  Directors,  Jonathan 
Leopold,  M.D.,  commissioner,  Department  of  Mental  Health,  State  of 
Vermont;  Kenneth  Gaver,  M.D.,  commissioner,  Department  of  Mental 
Hygiene  and  Corrections,  State  of  Ohio;  accompanied  by: 

Harry  C.  Schnibbe,  executive  director   924 

National  Conference  of  Catholic  Charities,  Rev.  Msgr.  Lawrence  J. 

Corcoran,  secretary   1727 

National  Coordinating  Committee  for  Trade  Union  Action  and  Democracy, 

Fred  Gaboury,  cochairman   1775 

National  Council  for  Homemaker-Home  Health  Aide  Services,  Inc., 
Florence  Moore;  accompanied  by: 

Patricia  Gilroy,  executive  director,  Homemaker  Service  of  the  Na- 
tional Capital  Area,  Washington,  D.C   2491 

National  Council  of  Jewish  Women,  Mrs.  Donald  Brown,  national  board 
member;  accompanied  by: 

Mrs.  Bernard  Koteen,  chairman,  Day  Care  Committee   1733 

National  Federation  of  Independent  Business,  James  A.  Gavin,  legislative 
director;  accompanied  by: 

Thomas  Rae,  Washington,  D.C,  staff   914 

National  Federation  of  the  Blind,  John  F.  Nagle,  chief,  Washington  office--  775 
National  Federation  of  Social  Service  Employees  and  Affiliated  Organi- 
zations, Ozzie  Edwards   2507 

National  Federation  of  Student  Social  Workers,  Thomas  J.  Banaszynski; 
accompanied  by: 

Hector  Sanchez,  coordinator  of  education,  NFSSW   1867 

National   health  and  environmental  law  program,    Margaret  Ewing, 
University  of  California,  Los  Angeles;  accompanied  by: 
Harvey  Makadon,  health  law  project,  University  of  Pennsylvania 

Law  School   2702 

National  League  of  Senior  Citizens,  Mike  Burk,  legislative  advcoate, 

Los  Angeles,  Calif  __  899 

National  Legislative  Conference,  Charles  F.  Kurfess,  speaker,  Ohio 
House  of  Representatives;  accompanied  by: 
Allen  Dines,  State  senator,  Colorado;  and 

Richard  S.  Hodes,  State  representative,  Florida   2252 

National  Medical  Association,  Emerson  Walden,  M.D.;  accompanied  by: 
Drs.  John  Chissell,  Erman  Edgecomb,  John  A.  Kenney,  Jr.;  and 

Loy  Kirkpatrick,  counsel   2636 

National  Retired  Teachers  Association,  Peter  Hughes,  legislative  represent- 
ative; accompanied  by: 

Robert  Sykes,  legislative  representative    750 

National  Urban  League,  Vernon  E.  Jordan,  Jr.,  executive  director   2210 

National  Welfare  Rights  Organization,  George  A.  Wiley,  executive  director; 
accompanied  by: 

Beulah  Sanders,  national  chairman,  NWRO   2059 

New  York  State  Civil  Service  Employees  Association,  Theodore  C.  Wenzl, 

president   2234 

New  York  State  Legislature,  Hon.  Henry  A.  Wise,  former  member   1626 

Nixon,  Allen,  president-elect,  Southern  States  Industrial  Council;  accom- 
panied by: 

Anthony  Harrigan,  executive  vice  president  --  1620 

Noland,  Royce  P.,  executive  director,  American  Physical  Therapy  Associa- 
tion, Washington,  D.C   2486 

North  Carolina  Social  Services  Association.  E.  C.  Modlin,  president; 
accompanied  by: 

Beverly  Heitman,  chairman,  H.R.  1  Task  Force  of  North  Carolina —  1700 
Northwestern  National  Life  Insurance  Co.,  John  S.  Pillsbury,  Jr.,  chairman 

and  chief  executive  officer   740 


XI 


Volume  3  Pages  1205-1641  Volume  6   Pages  2759-3464 

Public  Witnesses — Continued 

Obey,  Hon.  David  R.,  a  Representative  in  Congress  from  the  State  of  Pare 
Wisconsin   1212 

Oglivie,  Hon.  Richard  B.,  Governor,  State  of  Illinois;  accompanied  by: 

Edward  T.  Weaver,  director,  Illinois  Department  of  Public  Aid   1043 

Oiler,  Jose  Garcia,  M.D.,  president,  American  Council  of  Medical  Staffs; 
accompanied  by: 

Edward  S.  Hyman,  M.D.,  secretary,  AC  MS   2683 

Pechman,  Joseph  A.;  accompanied  by: 

Alice  M.  Rivlin,  Brookings  Institution   801 

Pepper,  F.  J.,  M.D.,  vice  chairman,  American  Veterans  Committee   2288 

Percy,  Hon.  Charles  H.,  a  U.S.  Senator  from  Illinois   1377 

Pillsbury,  John  S.,  Jr.,  chairman  and  chief  executive  officer,  Northwestern 
National  Life  Insurance  Co.,  on  behalf  of  American  Life  Convention, 
Life  Insurance  Association  of  America,  and  Life  Insurers  Conference, 
accompanied  by: 

Richard  Minck,  actuary,  Life  Insurance  Association  of  America   740 

Public  Services  Committee,  P.  Richard  Stoesser,  chairman,  Board  of 
Commissioners,  Midland  County,  Mich;  accompanied  by: 
R.  Jerry  Bennett,  chairman,  Board  of  Commissioners;  and 

H.  M.  Meredith,  county  social  services  director   1303 

Reagan,  Hon.  Ronald,  Governor  of  the  State  of  California;  accompanied 
by: 

Robert  Carieson,  director  of  social  welfare   1873 

Reid,  Joseph  H.,  executive  director,  Child  Welfare  League  of  America; 
accompanied  by: 

Jean  Rubin,  staff   2026 

Richardson,  Warren  S.,  general  counsel,  Liberty  Lobby,  Washington,  D.C_  770 
Robbins,  Hilda,  member,  Public  Affairs  Committee,  National  Association 
for  Mental  Health;  president,  Pennsylvania  Mental  Health,  Inc.,  Fort 

Washington,  Pa   2479 

Rockefeller,  Hon.  Nelson  A.,  Governor  of  the  State  of  New  York;  accom- 
panied by: 

Barry  Van  Lare,  executive  deputy  commissioner,  Department  of 

Social  Services,  New  York  State   2144 

Ross,  Hon.  James  E.,  chairman,  Beaver  County  Commissioners,  Beaver, 
Pa.;  accompanied  by: 

Cosmo  Morabito,  assistant  administrator,  Beaver  County  Hospital, 

Pa   2581 

Salt  Lake  area  community  action  program,  William  F.  Biggs,  Salt  Lake 
City,  Utah;  accompanied  by: 

Bonnie  Hartley,  vice  president,  Utah  Welfare  Rights;  and 
Andrew  Gallegos,  Coalition  of  Spanish  Speaking   Organizations  of 

Utah  .   2358 

Sargent,  Hon.  Francis,  Governor  of  Massachusetts;  accompanied  by: 
Leonard  Hausman;  and 

Edward  Moscovitch,  economists    942 

Schloss,  Irvin  P.,  legislative  analyst,  American  Foundation  for  the  Blind, 

Washington,  D.C   790 

Service  Employees  International  Union,  AFL-CIO,  Richard  E.  Murphy, 
assistant  to  the  general  president;  accompanied  by: 

Paul  Quirk,  president,  local  509,  Boston,  Mass   1759 

Shaker,  William  H.,  Delta  Associates  International   2299 

Sheppard  and  Enoch  Pratt  Hospital,  Robert  W.  Gibson,  Towson,  Md   2408 

Shore,  Chester,  chairman,  Committee  on  Federal  Legislation,  Health  and 

Welfare  Council  of  the  National  Capital  area    2289 

Simonds,  Warren  W.,  president,  Louisiana  Hospital  Association;  accom- 
panied by : 

Charles  R.  Gage,  executive  director,  LHA   2516 

Smith,  Hon.  Preston,  Governor,  State  of  Texas;  accompanied  by: 

Raymond  Vowell,  commissioner  of  public  welfare,  and 

Ed  Powers   1088 

Smith,  Richard  S.,  welfare  supervisor,  Prince  Georges  County,  Md., 

Department  of  Social  Sciences   887 


xn 


Public  Witnesses — Continued 

Page 

Social  Security  Administration,  Robert  J.  Myers,  former  chief  actuary   861 

Southern  Illinois  Univers^,  Carbondale,  111.,  Thomas  M.  Brooks,  dean, 
School  of  Home  Economics,  member,  American  Home  Economics 
Association;  accompanied  by: 

Doris  Hansen,  executive  director,  American  Home  Economics  As- 
sociation  1637 

Southern  States  Industrial  Council,  Allen  Nixon,  president-elect;  accom- 
panied by : 

Anthony  Harrigan,  executive  vice  president   1620 

Stoesser,  P.  Richard,  chairman,  Public  Services  Committee,  Board  of 
Commissioners,  Midland  County,  Mich.;  accompanied  by: 
R.  Jerry  Bennett,  chairman,  Board  of  Commissioners;  and 

H.  M.  Meredith,  County  Social  Services  Director   1303 

Stone,  Virginia,  chairman,  Executive  Committee,  Division  of  Geriatric 
Nursing  Practice,  American  Nurses'  Association;  accompanied  by: 
Constance  Holleran,  director,  Governmental  Relations  Department, 

ANA_-   2421 

Thompson,  William,  stated  clerk,  United  Presbyterian  Church,  U.S.A.; 
accompanied  by: 

Dorothy  Height,  vice  president,  National  Council  of  Churches  of 

Christ  in  the  U.S.A.;  and 
Hobart  Burch,  general  secretary  for  health  and  welfare,  United  Church 

of  Christ  Board  for  Homeland  Ministries   1472 

Tresnowski,  Bernard  R.,  senior  vice  president  for  Federal  programs,  Blue 

Cross  Association   2744 

Trister,  Michael  B.,  Washington  Research  Project  Action  Council;  ac- 
companied by: 

Nancy  Duff  Levy   2352 

Ullmann,  Hon.  Al,  a  Representative  in  Congress  from  the  State  of  Oregon.  1292 
United  Presbyterian  Church,  U.S.A.,  William  Thompson,  stated  clerk; 
accompanied  by: 

Dorothy  Height,  vice  president,  National  Council  of  Churches  of 

Christ  in  the  U.S.A.;  and 
Hobart  Burch,  general  secretary  for  health  and  welfare,  United  Church 

of  Christ  Board  for  Homeland  Ministries   1472 

U.S.  Catholic  Conference,  John  E.  Cosgrove,  director,  social  development.  1714 
Walden,  Emerson,  M.D.,  president,  National  Medical  Association;  ac- 
companied by: 

Drs.  John  Chissell,  Erman  Edgecomb,  John  A.  Kenney,  Jr.;  and  Loy 

Kirkpatrick,  counsel   2636 

Washington  Hospital  Center,  Richard  M.  Loughery,  administrator,  on 
behalf  of  the  American  Hospital  Association;  accompanied  by: 

Kenneth  Williamson,  deputy  director,  AHA,  and  director,  Wash- 
ington Service  Bureau   2274 

Washington  Research  Project  Action  Council,  Michael  B.  Trister;  accom- 
panied by: 

Nancy  Duff  Levy   2352 

Washington  State  Welfare  Rights  Organization,  Mrs.  Elaine  McLean, 

vice  president   2239 

Webber,  Clyde  M.,  executive  vice  president,  American  Federation  of 
Government  Employees;  accompanied  by: 

Stephen  A.  Koczak,  director  of  research   1751 

Weems,  Samuel  A.,  prosecuting  attorney,  17th  Judicial  District,  State  of 
Arkansas,  legislative  chairman  of  the  Arkansas  Prosecuting  Attorneys 

Association   835 

Welch,  George  A.,  Area  Resources  Improvement  Council,  Benton  Harbor, 
Mich.;  accompanied  by: 

J.  Howard  Edwards,  executive  director,  ARIC; 

Roger  Curry,  executive  vice  president,  Twin  Cities  Area  Chamber  of 
Commerce;  and 

Andy  Takacs,  director,  government  and  urban  affairs,  Whirlpool  Corp.  1320 
Wenzl,  Theodore  C,  president,  New  York  State  Civil  Service  Employees 

Association.   2234 


XIII 


Public  Witnesses — Continued 

Wiggins,  Jack  G.,  psychologist,  Cleveland,  Ohio,  member,  Board  of 
Governors,  Council  for  the  Advancement  of  Psychological  Professions 
and  Sciences  (CAPPS),  and  executive  committee;  accompanied  by: 

A.  Eugene  Shapiro,  diplomate,  clinical  psychology,  consultant  in  Pȣe 

psychology,  St.  Michael's  Hospital,  Newark,  N.J   2434 

Wiley,  George  A.,  executive  director,  National  Welfare  Rights  Organiza- 
tion; accompanied  by: 

Beulah  Sanders,  national  chairman,  NWRO   2059 

Wilt,  Lynda,  president,  Aid  to  Dependent  Children  Association  of  Lane 
County,  Oreg. ;  accompanied  by : 
Patricia  Ban; 
Robin  Derringer;  and 

Loretta  Daniel   2336 

Wise,  Hon.  Henry  A.,  former  member  of  the  New  York  State  Legislature _  _  1626 
Wolfbein,  Seymour  L.,  Chamber  of  Commerce  of  the  United  States  of 
America;  accompanied  by: 

Karl  T.  Schlotterbeck,  consultant  on  economic  security   1389 

Working  Mothers  United  for  Fair  Taxation,  Mrs.  Gladys  Kessler   1746 

Wyman,  George  K.,  president,  American  Public  Welfare  Association; 
accompanied  by: 

Wilbur  J.  Schmidt,  chairman,  National  Council  of  State  Public  Welfare 

Administrators;  and 
Lloyd  E.  Rader,  director,  State  Department  of  Institutions,  Social  and 

Rehabilitative  Services,  Oklahoma   1643 

Communications 

Abzug,  Hon.  Bella  S.,  U..S  Representative  from  New  York   2778 

Acuff,  Charles  E.,  president,  National  Association  of  Coordinators  of  State 

Programs  for  the  Mentally  Retarded,  Inc   3318 

AFL-CIO,  Andrew  J.  Biemiller,  director,  Department  of  Legislation   1825 

Agnes,  Sister  Mary,  O.P.,  administrator,  Holy  Family  Hospital   2983 

Air  Line  Pilots  Association,  International,  Capt.  Paul  Metcalf,  chairman, 

Committee  on  Discrimination  in  Pilot  Employment   3360 

Alabama  State  Agency  for  Social  Security,  Edna  M.  Reeves,  director   3323 

Allied  Pilots  Association,  Martin  C.  Seham,  general  counsel   3445 

American   Association   of   Bioanalysts,    Bernard   Diamond,  chairman, 

Government  and  Professional  Relations  Council   3406 

American  Association  of  Blood  Banks   3297 

American  Association  of  Dental  Schools,  John  J.  Solley,  D.D.S.,  president-  2993 
American  Association  of  University  Women,  Mrs.  Sherman  Ross,  chairman, 

legislative  program  committee   3447 

American  Bar  Association,  Milton  M.  Carrow,  chairman,  section  of  admin- 
istrative law   2857 

American  Chiropractic  Association  and  International  Chiropractors  Asso- 
ciation, Dr.  John  L.  Simons,  president,  American  Chiropractic  Associa- 
tion; and  Dr.  William  S.  Day,  president,  International  Chiropractors 

Association   2857 

American  Clinical  Laboratory  Association,  James  L.  Johnson,  president   3426 

American  Life  Convention,  Life  Insurance  Association  of  America,  William 
B.  Harman,  Jr.,  general  counsel,  ALC,  and  Kenneth  L.  Kimble,  vice 

president  and  general  counsel,  LIAA   749 

American  College  of  Nursing  Home  Administrators,  Donovan  J.  Perkins, 

D.P.A.,  president   2860 

American  Insurance  Association,  T.  Lawrence  Jones,  president   2558 

American  Medical  Association   3242 

American  Nurses  Association,  Inc.: 

Constance  Holleran,  director  Government  relations   2434 

Eileen  M.  Jacobi,  R.N.,  Ed.  D.,  executive  director   3240 

American  Nursing  Home  Association  of  the  Medicare  and  Medicaid 

Programs,  John  K.  Pickens   2528 

American  Optometric  Association   2994 

American  Parents  Committee,  Inc.,  George  J.  Hecht,  chairman   2861 

American  Pharmaceutical  Association   3292 

American  Podiatry  Association,  Ernest  M.  Weiner,  D.P.M.,  president   3305 


XIV 


Communications — Continued 

Page 

American  Public  Health  Association   3364 

American  Society  of  Medical  Technologists   3259 

American  Speech  and  Hearing  Association,  Kenneth  O.  Johnson,  Ph.  D., 

executive  secretary   2862 

Andersen,  Arthur  &  Co.,  Allan  J.  Winick,  partner   2863 

Annunzio,  Hon.  Frank,  U.S.  Representative  from  Illinois   2781 

Anti-Defamation  League  of  B'nai  B'rith,   David  A.   Brody,  director, 

Washington  office   3094 

Armstrong,  A.  W.,  business  office  manager,  Overlake  Memorial  Hospital- _  2976 

Arthur  Young  &  Co.,  Washington,  D.C   2374 

Associated  General  Contractors  of  America,  William  E.  Dunn,  executive 

director   3235 

Association  of  American  Physicians  and  Surgeons,  Walter  R.  Buerger, 

M.D.,  secretary-treasurer   3390 

Association  of  Children  and  Youth  Project  Directors,  Fred  Seligman,  M.D., 

M.P.H.,  chairman   3288 

Baker,  Gerald  W.,  administrator,  Willapa  Harbor  Hospital   2979 

Ballard,  John  H.,  executive  director,  Welfare  Council  of  Metropolitan 

Chicago   3253 

Baroness  Erlanger  Hospital,  E.  B.  Craig,  controller,  T.  C.  Thompson 

Children's  Hospital   2864 

Beilenson,  Hon.  Anthony  C,  U.S.  State  senator  from  California   2810 

Bennett,  R.  Jerry,  chairman,  Board  of  Commissioners   1319 

Benson,  Lucy  Wilson,  president,  League  of  Women  Voters  of  the  United 

States   1268 

Bentley,  C.  D.,  administrator,  the  Valley  Memorial  Hospital   2980 

Bernadette,  Sister  Mary,  administrator,  Saint  Margaret's  Hospital   3098 

Bernardin,  Most  Rev.  Joseph  L.,  general  secretary,  U.S.  Catholic  Con- 
ference  1726,  3447 

Biaggi,  Hon.  Mario,  U.S.  Representative  from  New  York   2782 

Biemiller,  Andrew  J.,  director,  Department  of  Legislation,  AFL-CIO   1825 

Bigelow,  John,  executive  vice  president,   Washington  State  Hospital 

Association   2985 

Bird,  Robert  J.,  Bird  &  Tansill   3274 

Blackburn,  Clark  W.,  general  director,  Family  Service  Association  of 

America   3294 

Blair,  F.  E.,  executive  director,  Ohio  Valley  General  Hospital  Association.  2967 

Bliss,  Paul  S.,  administrator,  Seattle  General  Hospital   2979 

Blomquist,  Paul,  administrator,  Grays  Harbor  Community  Hospital   2978 

Boucher,  Anne  Carey,  chairman,  Maryland  Commission  on  the  Status  of 

Women,  Department  of  Employment  and  Social  Services   2940 

Boyer,  John  C,  business  manager,  Mount  Carmel  Hospital   2976 

Boynton,  Alice,  consultant,  United  Low  Income,  Inc   3258 

Brighton- Allston  Community  Health  Corp.,  Robert  A.  England,  president.  3098 

Bristor,  Delos  J.,  hospital  administrator,  Coulee  General  Hospital   2985 

Brody,  David  A.,  director,  Washington  Office,  Anti-Defamation  League 

of  B'nai  B'rith   3094 

Bromberg,   Michael  D.,  director,  Washington  Bureau,  Federation  of 

American  Hospitals   2928 

Brown,  Hon.  Garry,  U.S.  Representative  from  Michigan   2785 

Buck,  Arthur  L.,  state  representative,  National  Legislative  Conference 

Task  Force  on  Human  Resources   2855 

Buck,  Hon.  Arthur  L.,  U.S.  State  Representative  from  Wyoming   2991 

Buerger,  Walter  R.,  M.D.,  secretary-treasurer,  Association  of  American 

Physicians  and  Surgeons   3390 

Bumpers,  Hon.  Dale,  Governor  of  Arkansas   844a 

Buonopane,  Pat,  East  Boston  Neighborhood  Health  Committee,  Boston, 

Mass   3097 

Burk,  Mike,  legislative  advocate,  National  League  of  Senior  Citizens   905 

Burns,  Hon.  John  A.,  Governor  of  Hawaii   2799 

Cahill,  Hon.  William  T.,  Governor  of  New  Jersey   2799 

Carkulis,  Theodore,  State  of  Montana,  Department  of  Public  Welfare   3441 

Carlton,  Robert  A.,  chairman,  Monroe  County  Coalition  for  Welfare 

Justice   3410 

Carney,  Hon.  Charles  J.,  U.S.  Representative  from  Ohio  —  2786 

Carrow,  Milton  M.,  chairman,  Section  of  Administrative  Law,  American 

Bar  Association   2857 


XV 


Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Communications — Continued 

Page 

Carter,  Hon.  Jimmy,  Governor  of  the  State  of  Georgia   1999 

Cascade  Valley  Hospital,  Allen  K.  Remington,  administrator   2979 

Central  Memorial  Hospital,  Clarence  M.  Pritchard,  administrator   2982 

Chamber  of  Commerce  of  the  United  States,  William  P.,  McHenry,  Jr., 

economic  security  manager                                                            1428,  2864 

Child  Care  and  Preschool  Programs  Commission,  Office  of  Education, 

Santa  Cruz  County,  Calif.,  Richard  R.  Fickel,  superintendent   2878 

Chisholm,  Hon.  Shirley,  U.S.  Representative  from  New  York   2787 

Church,  Hon.  Frank,  U.S.  Senator  from  Idaho   2761 

Cimino,  Bonnie,  welfare  chairman,  League  of  Women  Voters  of  Columbia, 

S.C   1276 

Coalition  of  Independent  Health  Professions  on  Peer  Review  Systems   3363 

College  of  American  Pathologists,  Dr.  C.  A.  McWhorter   2880 

Colwell,  David,  president,  Council  of  Planning  Affiliates   2920 

Committee  on  Income  Maintenance,  Joan  Foley   2888 

Community  Service  Society,  Bernard  C.  Fisher   2889 

Community  Service  Society,  representing  the  Committee  on  Aging,  Com- 
mittee on  Family  and  Child  Welfare,  Committee  on  Health  in  the 

Department  of  Public  Affairs   2997 

Cook  County  Department  of  Public  Aid   1234,  2918 

Cornelius,  Dorothy,  A.,  R.N.,  executive  director,  Ohio  Nurses  Association..  2965 
Coon,  Dr.  Robert  W.,  National  Committee  for  Careers  in  Medical  Tech- 
nology  3032 

Coulee  General  Hospital,  Delos  J.  Bristor,  hospital  administrator   2985 

Council  of  Jewish  Federations  and  Welfare  Funds,  Inc.,  Max  M.  Fisher__  2920 

Council  of  Planning  Affiliates,  David  Colwell,  president   2920 

Council  of  State  Governments,  William  L.  Frederick,  director,  eastern 

office   3156 

Craig,  E.  B.,  controller,  T.  C.  Thompson  Children's  Hospital,  Baroness 

Erlanger  Hospital   2864 

Cruikshank,  Nelson  H.,  president,  National  Council  of  Senior  Citizens   2964 

Dailey,  J.  A.,  administrator,  Walla  Walla  General  Hospital   2982 

Daniel,  David  L.,  director,  Cook  County  Department  of  Public  Aid   1234 

Davey,  Mrs.  Elizabeth,  member,  board  of  directors,  League  of  Women 

Voters  of  Michigan   1278 

Davis,  James  A.,  president,  board  of  trustees,  Ferry  County  Memorial 

Hospital   2974 

Davis,  Leon  J.,  president,  National  Union  of  Hospital  and  Nursing  Home 

Employees,  RWDSU,  AFL-CIO   2987 

Day,  Dr.  William  S.,  president,  International  Chiropractors  Association.  _  2857 
Dayton  General  Hospital,  Fred  Schreck,  chairman  of  board,  and  Cecil 

Mackliet,  secretary   2982 

Deaconess  Hospital,  Harry  C.  Wheeler,  administrator   2976 

Dechant,  Tony  T.,  president,  National  Farmers  Union   2964 

Department  of  Church  in  Society  of  the  Christian  Church  (Disciples  of 

Christ),  Indianapolis,  Ind   1507 

Department  of  Employment  and  Social  Services,  Anne  Carey  Boucher, 

chairman,  Maryland  Commission  on  the  Status  of  Women   2940 

Department  of  Health  and  Hospitals,  Dr.  Rowland  L.  Mindlin,  director, 

maternal  and  child  health   2992 

Department  of  Health,  Section  of  Hospitals  and  Medical  Facilities,  Verne 

A.  Pangborn,  director   3130 

Department  of  Justice,  State  of  California,  Evelle  J.  Younger,  attorney 

general   3159 

Diamond,  Bernard,  chairman,   Government  and  Professional  Relations 

Council,  American  Association  of  Bioanalysts   3406 

Dimmick,  William  A.,  president,  Health  and  Welfare  Planning  Council  of 

Memphis-Shelby  County,  Tenn   3217 

Doctors  Hospital,  Seattle,  Wash.,  Dr.  S.  A.  Tucker,  director   2975 

Dolan,  Merrilee,  chairone,  Task  Force  on  Women  in  Poverty,  National 

Organization  for  Women   3284 

Doss,  Lawrence  P.,  president,  New  Detroit,  Inc   3232 


XVI 


Communications — Continued 

Page 

Drinan,  Hon.  Robert  F.,  U.S.  Representative  from  Massachusetts   2788 

Dunn,  William  E.,  executive  director,  the  Associated  General  Contractors 

of  America   3235 

East  Boston  Health  Center,  Dr.  James  O.  Taylor,  medical  director,  staff.  3098 
East   Boston   Neighborhood   Health   Committee,   Boston,    Mass.,  Pat 

Buonopane...   3097 

Educational  Testing  Service,  Princeton,  N.J.,  National  Committee  for 

Careers  in  the  Medical  Laboratory   3023 

Eid,  Elmer  O.,  administrator,  Memorial  Hospital,  Inc   2987 

Egan,  Hon.  William  A.,  Governor  of  Alaska   2002 

Eilberg,  Hon.  Joshua,  U.S.  Representative  from  Pennsylvania   2789 

Elliott,  John  Doyle,  secretary,  Townsend  Foundation   3384 

England,    Robert  A.,  president,   Brighton- Allston   Community  Health 

Corp   3098 

Episcopal  Community   Services,   diocese  of  Pennsylvania,   Charles  L. 

Ritchie,  Jr.,  president,  board  of  council   3321 

Erickson,  Robert  J.,  counsel,  Kaiser  Foundation  Health  Plan,  Inc   3448 

Evergreen  General  Hospital,  F.  A.  Gray,  administrator   2984 

Everson,  Miss  Mary  Lou,  Department  of  Social  and  Health  Services, 

Economics  Services  Division   1960 

Eye  and  Ear  Clinic  Inc.,  P.S.,  Wenatchee,  Wash   2975 

Family  Service  Association  of  America,  Clark  W.  Blackburn,  general 

director   3294 

Federal  Register,  vol.  36,  No.  40 — February  27,  1971,  Safeguarding  Infor- 
mation  489 

Federation  of  American  Hospitals,  Michael  D.  Bromberg,  director,  Wash- 
ington Bureau   2928 

Federation  of  Protestant  Welfare  Agencies,  Inc.,  John  J.  Keppler,  execu- 
tive vice  president   1745 

Ferry  County  Memorial  Hospital,  James  A.  Davis,  president,  board  of 

trustees   2974 

Fickel,  Richard  R.,  superintendent,  Child  Care  and  Preschool  Programs 

Commission,  Office  of  Education,  Santa  Cruz  County,  Calif   2878 

Fineman,  Hon.  Herbert,  U.S.  State  Representative  from  Pennsylvania   2848 

First  Church  of  Christ,  Scientist,  Boston,  Mass.,  H.  Dickinson  Rathbun, 

manager   3446 

Fisher,  Bernard  C,  Community  Service  Society   2889 

Fisher,  Max  M.,  Council  of  Jewish  Federations  and  Welfare  Funds,  Inc   2920 

Foley,  Joan,  representing  the  Committee  on  Income  Maintenance   2888 

Fox,  Thomas  P.,  chief  clerk  of  the  assembly,  Wisconsin  Legislature   2854 

Fraser,  Hon.  Donald  M.,  U.S.  Representative  from  Minnesota   2790 

Frederick,  William  L.,  director,  eastern  office,  the  Council  of  State  Govern- 
ments  3156 

Gamble,  Howard  M.,  administrator,  Okanogan-Douglas  County  Hospital..  2985 

Garrett,  Roberta  M.,  R.N.,  administrator,  Metaline  Falls,  Wash   2974 

Garrett,  Roberta  M.,  R.N.,  administrator,  Public  Hospital  District  No.  2, 

Pend  Oreille  County,  Wash   2974 

General  Hospital  of  Everett,  Stephen  C.  Saunders,  president,  board  of 

trustees   2981 

Giaimo,  Hon.  Robert  N.,  U.S.  Representative  from  Connecticut   2790 

Good  Samaritan  Hospital  and  Rehabilitation  Center,  David  K.  Hamry, 

administrator   2984 

Gottlieb,  Donna,  Brighton,  Mass   3100 

Gould,  Dr.  John  H.,  coordinator,  M.I.C.-C.  &  Y.  programs,  St.  Elizabeths 

Hospital   3102 

Grasso,  Hon.  Ella  T.,  U.S.  Representative  from  Connecticut   2793 

Gray,  F.  A.,  administrator,  Evergreen  General  Hospital   2984 

Gray,  Mrs.  Robert,  Jr.,  president,  League  of  Women  Voters,  Ripon,  Wis__  1288 

Grays  Harbor  Community  Hospital,  Paul  Blomquist,  administrator   2978 

Gronvold,  Martin  N.,  executive  director,  North  Dakota  Old  Age  and 

Survivor  Insurance  System,  and  the  social  security  contribution  fund__  3327 
Gross,  H.  William,  D.D.S.,  president,  Lehigh  Valley  Committee  Against 

Health  Fraud,  Inc   3105 

Hall,  Hon.  David,  Governor  of  Oklahoma   1652 

Hamilton,  Hon.  Lee  H.,  U.S.  Representative  from  Indiana   2792 


xvn 


Volume  2  Pages  735-1203  Volume  5  Pages  2249-2757 

Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Communications — Continued 

Hamry,  David  H.,  administrator,  Good  Samaritan  Hospital  and  Rehabili-  Page 

tation  Center   2984 

Handbook  of  Public  Assistance  Administration,  Eligibility   2987 

Hanson,  Robert  A.,  administrator,  the  Riverton  Hospital   2987 

Harman,  William  B.,  Jr.,  general  counsel,  American  Life  Convention,  and 

Kenneth  L.  Kimble,  vice  president  and  general  counsel,  Life  Insurance 

Association  of  America   749 

Hawkins,  Paul  M.,  Washington  counsel,  Health  Insurance  Association  of 

America   2725 

Health  and  Welfare  Planning  Council  of  Memphis-Shelby  County,  Tenn., 

William  A.  Dimmick,  president   3217 

Health  Insurance  Association  of  America,  Paul  M.  Hawkins,  Washington 

counsel   2725 

Heap,  Irene  C   2930 

Hecht,  George  J.,  chairman,  the  American  Parents  Committee,  Inc   2861 

Helsel,  Elsie  D.,  Ph.D.,  Washington  representative,  United  Cerebral  Palsy 

Association,  Inc   3329 

Heitman,  Sister  M.  Clara,  O.S.F.,  administrator,  St.  Mary's  Hospital, 

Nebraska  Citv,  Nebr   3137 

HEW,  John  G.  Veneman,  Under  Secretary   972,  1309 

Holleran,  Constance,  director,  Government  relations,  American  Nurses' 

Association,  Inc   2434 

Holman,  Steve   2990,  3094 

Holy  Family  Hospital,  Sister  Mary  Agnes,  O.P.,  administrator,  and  James 

J.  Murray,  assistant  administrator,  fiscal  services   2983 

Hopkins,  Joe,  administrator,  Mark  E.  Reed  Memorial  Hospital,  Inc   2978 

Hospital  Association  of  Rhode  Island,   Wade  C.  Johnson,  executive 

director   3461 

Hriczlev,  Sister  Mary  Caroline,  staff  nurse,  Laboure*  Center  Visiting  Nurse 

Service,  Sisters  of  Charity   3098 

Huber,  W.  L.,  executive  vice  president,  Tacoma  General  Hospital   2974 

Hudon,  Sister  Margaret,  administrator,  St.  Joseph  Hospital   2984 

Huegli,  Richard  F.,  executive  vice  president,  United  Community  Services 

of  Metropolitan  Detroit   3375 

Huesers,  Robert  E.,  administrator,  Puget  Sound  Hospital   2983 

Hunt,  Max  L.,  administrator,  Yakima  Valley  Memorial  Hospital   2981 

International  Society  of  Clinical  Laboratory  Technologists,  Keith  Knudson, 

president   3456 

Irvis,  Hon.  K.  Leroy,  majority  leader,  Pennsylvania  House  of  Representa- 
tives  2850 

Island  Hospital,  Ray  W.  Nierman,  comptroller   2975 

Jacobi,  Eileen  M.,  R.N.,  Ed.  D.,  executive  director,  American  Nurses' 

Association,  Inc   3240 

Javits,  Hon.  Jacob  K.,  a  U.S.  Senator  from  the  State  of  New  York   2763 

Johnson,  James  L.,  president,  American  Clinical  Laboratory  Association,.  3426 
Johnson,  Kenneth  O.,  Ph.  D.,  executive  secretary,  American  Speech  and 

,    Hearing  Association   2862 

Johnson,  Wade  C,  executive  director,  Hospital  Association  of  Rhode 

Island   3461 

Jones,  T.  Lawrence,  president,  American  Insurance  Association   2558 

Kaiser  Foundation  Health  Plan,  Inc.,  Robert  J.  Erickson,  counsel   3448 

Kemper  Insurance,  Wash.,  D.C.,  Steven  H.  Lesnik,  Washington  manager, 

corporate  relations   3459 

Keough,  Sister  Mary,  administrator,  St.  John's  Hospital,  Longview,  Wash.  9752 
Keppler,  John  J.,  executive  vice  president,  Federation  of  Protestant  Welfare 

Agencies,  Inc   1745 

Kinnarney,  Sister  Eileen,  administrator,  Laboure  Center  Sisters  of  Charity.  _  3099 

Kludt,  John  W.,  administrator,  St.  Luke's  General  Hopital   2977 

Knack,  Lee  E.,  director  of  labor  relations,  Morrison-Knudsen  Co.,  Boise, 

Idaho  1   1463 

Knebel,  James  D.,  executive  vice  president,  National  Association  of  Blue 

Shield  Plans   2740 


XVIH 


Communications — Continued 


Knudson,  Keith,  president,  International  Society  of  Clinical  Laboratory  Page 

Technologists   3456 

Koretz,  Sidney   3277 

Kowal,  John,  president,  Planetarium  Neighborhood  Council   3361 

Laboure  Center  Sisters  of  Charity: 

Sister  Eileen  Kinnarney,  administrator   3099 

Sister  Sheila  O'Friel,  director,  Home  Management  Department   3099 

Laboure  Center  Visiting  Nurse  Service,  Sisters  of  Charity,  Sister  Mary 

Caroline  Hriczlev,  staff  nurse   3098 

Lampson,  Charles  L.,  administrator,  Tri-County  Hospital  Association   2980 

Landis,  Mrs.  Evelyn,  member,  board  of  directors,  League  of  Women  Voters 

of  Louisiana   1282 

League  of  Women  Voters  of: 

Boston   1274 

Columbia,  S.C   1276 

Connecticut   1285 

Illinois   1289 

Louisiana   1282 

Massachusetts   1275 

Michigan   1278 

Nebraska   1283 

New  Jersey   1287 

New  York  Area,  Greater   1290 

Northfield,  Minn   1273 

Ohio   1274 

Ripon,  Wis   1288 

South  Carolina   1290 

South  Dakota   1272 

United  States   1268 

Wyoming   1291 

Lebel,  Sister  Louise,  administrator,  Providence  Hospital   2981 

Lehigh  Valley  Committee  Against  Health  Fraud,  Inc.,  Dr.  H.  William 

Gross,  president   3105 

Lesnik,  Steven  H.,  Washington  manager,  corporate  relations,  Kemper 

Insurance   3459 

Lev,  S.  Nathan,  president,  South  Jersey  Chamber  of  Commerce   2856 

Licht,  Hon.  Frank,  Governor  of  Rhode  Island   1035 

Los  Angeles  Countv  Department  of  Public  Social  Services,  Ellis  P.  Murphy, 

director   1232 

Lowenthal,  Martin  D.,  director,  Social  Welfare  Regional  Research  In- 
stitute, Boston  College   3311 

Lowenthal,  Martin,  Ph.  D.,  director,  Social  Welfare  Regional  Research 

Institute,  Institute  of  Human  Sciences,  Boston  College   3311 

Lucey,  Hon.  Patrick  J.,  Governor  of  Wisconsin   2803 

Lutheran  Council  in  the  U.S.A.,  Division  of  Welfare  Services   2932 

Lynch,  Mrs.  Charles,  president;  and  Mrs.  Campbell  L.  Searle,  welfare 

chairman,  League  of  Women  Voters  of  Massachusetts   1275 

McCraven,  Carl  C.,  national  executive  board  member,  National  Association 
for  the  Advancement  of  Colored  People,  and  chairman,  Health  Com- 
mittee, Southern  California  NAACP   2950 

McHenry,  William  P.,  Jr.,  economic  security  manager,  Chamber  of  Com- 
merce of  the  United  States   1428,  2864 

Mclnnes,  Sister  Catherine,  administrator,  St.  Joseph's  Hospital   2977 

Mclntyre,  Hon.  Thomas  J.,  U.S.  Senator  from  New  Hampshire   2764 

McKay  Hospital,  Soap  Lake,  Wash.,  Gertrude  M.,  Philips,  administrator.  _  2977 

Mc  Whorter,  Dr.  C.  A.,  College  of  American  Pathologists  _   2880 

Mackliet,  Cecil,  secretary,  Dayton  General  Hospital   2982 

MacMillin,  Frederick  N   3328 

Mager,  T.  Russell,  ACSW                                                              2937,  2939 

Magnuson,  Warren  G.,  a  U.S.  Senator  from  the  State  of  Washington   3428 

Mark  E.  Reed  Memorial  Hospital,  Inc.,  Joe  Hopkins,  administrator   2978 

Markus,  Glenn,  Education  and  Public  Welfare  Division,  Congressional 

Research  Service,  the  Library  of  Congress   2782 

Martin,  Rose  G.,  executive  director,  National  Association  for  Practical 

Nurse  Education  and  Service,  Inc   3096 


XIX 


Volume  2  Pages  735-1203  Volume  5  Pages  2249-2757 

Volume  3  Pages  1205-1641  Volume  6  Pages  2759-3464 

Communications — Continued 

Page 

Maxwell,  Mrs.  Wm.,  president,  League  of  Women  Voters  of  Wyoming___  1291 

Memorial  Hospital,  Inc.,  Elmer  O.  Eid,  administrator   2987 

Memorial  Hospital,  M.  L.  Traylor,  administrator   2980 

Menashe,  S.,  Oregon  Physicians'  Service   2967 

Metaline  Falls,  Wash.,  Roberta  M.  Garrett,  R.N.,  administrator   2974 

Metcalf,  Capt.  Paul,  chairman,  Committee  on  Discrimination  in  Pilot 

Employment,  Air  Line  Pilots  Association,  International   3360 

Meyerhoff,  Gordon  R.,  M.D.,  Long  Island,  N.Y   3452 

Michaelian,  Edwin  G.,  county  executive,  Westchester  bounty,  N.Y   1229 

Michigan  State  Employees  Association,  Lawrence  Piche,  president   3100 

Mindlin,  Dr.  Rowland  L.,  director,  maternal  and  child  health,  Depart- 
ment of  Health  and  Hospitals   2992 

Minshall,  Hon.  William  E.,  U.S.  Representative  from  Ohio   2994 

Missouri  Federation  of  the  Blind,  Inc.,  G.  Arthur  Stewart   2252 

Mondale,  Hon.  Walter,  U.S.  Senator  from  Minnesota   2766 

Monroe  County  Coalition  for  Welfare  Justice,  Robert  A.  Carlton,  chair- 
man  3410 

Montana  Department  of  Public  Welfare,  Theodore  Carkulis   3441 

Montoya,  Hon.  Joseph  M.,  a  U.S.  Senator  from  the  State  of  New  Mexico.-  1207 

Moore,  Alta  E.,  director,  Wisconsin  Department  of  Employee  Trust  Funds.  3327 
Morrison-Knudsen  Co.,  Boise,  Idaho,  Lee  E.  Knack,  director  of  labor 

relations   1463 

Moss,  Hon.  Frank  E.,  U.S.  Senator  from  Utah   2771 

Mount  Carmel  Hospital,  John  C.  Boyer,  business  manager   2976 

Moxon,  Mrs.  Robert  K.,  president,  League  of  Women  Voters  of  South 

Carolina..   1290 

Murphv,  Ellis  P.,  Director  of  the  Los  Angeles  Countv  Department  of 

Public  Social  Services   1232 

Murphy,  Richard  E..  Assistant  to  the  General  President,  Service  Employees 

International  Union   1764 

Murray,  James  J.,  assistant  administrator,  fiscal  services,  Holy  Family 

Hospital   2983 

Myers,  Robert  J.,  former  Chief  Actuary,  Social  Security  Administration. _  880 
National  Assembly  for  Social  Policy  and  Development,  Inc. — Forum  on 

Social  Issues  and  Policies   2941 

National  Association  for  Practical  Nurse  Education  and  Service,  Inc., 

Rose  G.  Martin,  executive  director   3096 

National  Association  for  Retarded  Children   3255 

National  Association  for  the  Advancement  of  Colored  People,  Carl  C. 

McCraven,  national  executive  board  member   2950 

National  Association  of  Blue  Shield  Plans,  James  D.  Knebel,  executive 

vice  president   2740 

National  Association  of  Coordinators  of  State  Programs  for  the  Mentally 

Retarded,  Inc.,  Charles  E.  Acuff,  president   3318 

National  Association  of  Counties,  Ralph  L.  Tabor,  director,  Federal  Affairs.  1229 

National  Association  of  Independent  Insurers   3103 

National  Association  of  Manufacturers   2946,  3334 

National  Association  of  Retail  Druggists,  William  E.  Woods,  Washington 

representative  and  associate  general  counsel    3227 

National  Association  of  Social  Workers,  Inc.,  Panhandle-South  Plains,  Tex., 

Frank  B.  Reyes,  president    3409 

National  Committee  for  Careers  in  the  Medical  Laboratory,  Educational 

Testing  Service,  Princeton,  N.J   3023 

National  Committee  for  Careers  in  the  Medical  Technology,  Dr.  Robert  W. 

Coon   3032 

National  Conference  of  Catholic  Bishops,  Washington,  D.C.,  Most  Rev. 

Joseph  L.  Bernardin,  general  secretary  .   1726,  3447 

National  Council  of  Senior  Citizens,  Nelson  H.  Cruikshank,  president   2952 

National  Farmers  Union,  Tony  T.  Dechant,  president   2964 

National  Federation  of  Settlements  and  Neighborhood  Centers,  Walter  L. 

Smart,  executive  director   3217 


XX 


Communications — Continued 

Page 

National  Grange,  Washington,  D.C.,  John  W.  Scott,  Master   3441 

National  League  for  Nursing,  Council  of  Home  Health  Agencies  and  Com- 
munity Health  Services   3309 

National  League  of  Cities  and  the  U.S.  Conference  of  Mayors   2809 

National  League  of  Senior  Citizens,  Mike  Burk,  legislative  advocate   905 

National  Legislative  Conference  Task  Force  on  Human  Resources,  Arthur 

L.  Buck,  State  representative   2856 

National  Organization  for  Women,  Merrilee  Dolan,  chairone,  Task  Force 

on  Women  in  Poverty   3284 

National  Union  of  Hospital  and  Nursing  Home  Employees,  RWDSU, 

AFL-CIO,  Leon  J.  Davis,  president   2987 

New  Detroit,  Inc.,  Lynn  A.  Townsend,  chairman,  and  Lawrence  P.  Doss, 

president   3232 

New  York  State  Department  of  Social  Services,  George  K.  Wyman, 

commissioner   1662 

New  York  Women's  Bar  Association   3308 

Nierman,  Ray  W.,  controller,  Island  Hospital   2975 

Nixon,  Allen,  president,  E.  C.  Barton  &  Co   1623 

North  Dakota  Medical  Association,  Vernon  E.  Wagner   3217 

North  Dakota  Old  Age  and  Survivor  Insurance  System,  and  the  social 

security  contribution  fund,  Martin  N.  Gronvold,  excutive  director   3327 

Nugent,  William  P.,  senate  chief  clerk,  senate  chamber,  Wisconsin  Legisla- 
ture  2854 

Ogilvie,  Richard  B.,  Governor  of  Illinois   1086 

O'Hara,  Hon.  James  G.,  U.S.  Representative  from  Michigan   2794 

Ohio  Nurses  Association,  Dorothy  A.  Cornelius,  R.N.,  executive  director   2965 

Ohio  Valley  General  Hospital  Association,  F.  E.  Blair,  executive  director   2966 

Okanogan-Douglas  County  Hospital,  Howard  M.  Bamble,  administrator.  _  2985 

Oregon  Physicians'  Service,  S.  Menashe   2967 

Ormsby,  Ross  R.,  president,  Rubber  Manufacturers  Association   2968 

Outlook-appraisal  of  current  trends  in  business  and  finance   2769 

Overtake  Memorial  Hospital,  A.  W.  Armstrong,  business  office  manager.  _  2976 
Pangborn,  Verne  A.,  director,  Department  of  Health,  Section  of  Hospitals 

and  Medical  Facilities   3130 

Pearson,  Sister  Virginia,  administrator,  St.  Helen  Hospital   2986 

Pennsylvania  Department  of  Public  Welfare,  Helene  Wohlgemuth   2588 

Pepper,  Hon.  Claude,  U.S.  Representative  from  Florida   2796 

Perkins,  Donovan  J.,  D.P.A.,  president,  American  College  of  Nursing  Home 

Administrators   2860 

Pharmaceutical  Manufacturers  Association,  Washington,  D.C.,  C.  Joseph 

Stetler   3453 

Philips,  Gertrude  M.,  administrator,  McKay  Hospital,  Soap  Lake,  Wash., 

McKay  Memorial  Hospital   2974 

Physician's  Forum,  Inc.,  New  York,  N.Y.,  Victor  W.  Sidel,  M.D.,  chair- 
man  3451 

Piche,  Lawrence,  president,  Michigan  State  Employees  Association   3100 

Pickens,  John  K.,  American  Nursing  Home  Association  of  the  Medicare 

and  Medicaid  Programs   2528 

Planetarium  Neighborhood  Council,  John  Kowal,  president   3361 

Pritchard,  Clarence  M.,  Central  Memorial  Hospital,  administrator   2982 

Providence  Hospital,  Sister  Louise  Lebel,  administrator   2981 

Public  Hospital  District  No.  2,  Pend  Oreille  County,  Wash.,  Roberta  M. 

Garrett,  R.N   2974 

Puget  Sound  Hospital,  Robert  E.  Huesers,  administrator   2983 

Railsback,  Hon.  Tom,  U.S.  Representative  from  Illinois   2796 

Rathbun,  H.  Dickinson,   manager,  First  Church  of  Christ,  Scientist, 

Boston,  Mass   3446 

Reals,  William  J.,  president,  College  of  American  Pathologists   2885 

Reeves,  Edna  M.,  director,  State  Agency  for  Social  Security,  Alabama   3323 

Reitzer,  William  G   3235 

Remington,  Allen  K.,  administrator,  Cascade  Valley  Hospital   2979 

Reyes,  Frank  B.,  president,  National  Association  of  Social  Workers,  Inc., 

Panhandle-South  Plains,  Tex   3409 

Richardson,  Elliot  L.,  Secretary,  HEW                                              1119,  2629 


XXI 


Volume  3   Pages  1205-1641  Volume  6  Pages  2759-3464 

Communications — Continued 

Page 

Riechman,  Rosalie   3383 

Ritchie,  Charles  L.,  Jr.,  president,  Board  of  Council,  Episcopal  Community 

Services  Diocese  of  Pennsylvania   3321 

Riverton  Hospital,  Robert  A.  Hanson,  administrator   2987 

Rose,  Paul  S.,  chairman,  Division  of  Family  Services   2369 

Rosenthal,  Hon.  Benjamin  S.,  U.S.  Representative  from  New  York   2797 

Ross,  Austin,  administrator,  Virginia  Mason  Hospital   2982 

Ross,  Mrs.  Sherman,  chairman,  legislative  program  committee,  American 

Association  of  University  Women   3447 

Rubber  Manufacturers  Association,  Ross  R.  Ormsby,  president   2968 

Saint  Margaret's  Hospital,  Sister  Mary  Bernadette,  administrator   3098 

Sargent,  Hon.  Francis,  Governor  of  Massachusetts   1010 

Saris,  Ruth,  president,  League  of  Women  Voters  of  Boston   1274 

Saunders,  Stephen  C,  president,  board  of  trustees,  General  Hospital  of 

Everett   2981 

Schmidt,  Wilbur  J.,  secretary,  Wisconsin  Department  of  Health  and  Social 

Services   3463 

Schreck,  Fred,  chairman  of  board,  Dayton  General  Hospital   2982 

Scott,  John  W.,  Master,  National  Grange,  Washington,  D.C   3441 

Seattle  General  Hospital,  Paul  S.  Bliss,  administrator   2979 

Seattle  Urban  League,  Seattle,  Wash   3428 

Seham,  Martin  C,  general  counsel,  Allied  Pilots  Association   3445 

Seigman,  Mrs.  Carole,  human  resources  chairman,  League  of  Women 

Voters  of  Nebraska   1283 

Seligman,  Fred,  M.D.,  M.P.H.,  chairman,  Association  of  Children  and 

Youth  Project  Directors   3288 

Service  Employees  International  Union,  Richard  E.  Murphy,  assistant 

to  the  general  president   1764 

Shapp,  Hon.  Milton  J.,  Governor  of  Pennsylvania   2807 

Sidel,  Victor  W.,  M.D.,  chairman,  Physician's  Forum,  New  York,  N.Y   3451 

Sims,  Mrs.  Ruth,  League  of  Women  Voters  of  Connecticut   1285 

Simons,  Dr.  John  L.,  president,  American  Chiropractic  Association   2857 

Smart,  Walter  L.,  executive  director,  National  Federation  of  Settlements 

and  Neighborhood  Centers   3217 

Smiley,  Jon  D.,  administrator,  Stevens  Memorial  Hospital   2986 

Social  Welfare  Regional  Research  Institute,  Boston  College,  Martin  D. 

Lowenthal,  director   3311 

Solley,  John  J.,  D.D.S.,  president,  American  Association  of  Dental  Schools.  2993 
Southern   California  NAACP,   Carl   C.   McCraven,   chairman,  Health 

Committee   2950 

South  Jersey  Chamber  of  Commerce,  S.  Nathan  Lev,  president   2856 

St.  Elizabeths  Hospital,  Dr.  John  H.  Gould,  coordinator,  M.I.C.-C.&  Y. 

programs   3102 

St.  Helen  Hospital,  Sister  Virginia  Pearson,  administrator   2986 

St.  John's  Hospital,  Longview,  Wash.,  Sister  Mary  Keough,  administrator.  2975 

St.  Joseph's  Hospital,  Sister  Catherine  Mclnnes,  administrator   2977 

St.  Joseph  Hospital,  Sister  Margaret  Hudon,  administrator   2984 

St.  Luke's  General  Hospital,  John  W.  Kludt,  administrator   2977 

St.  Mary's  Hospital,  Nebraska  City,  Nebr.,  Sister  M.  Clara  Heitman, 

administrator   3137 

Stetler,  C.  Joseph,  Pharmaceutical  Manufacturers  Association,  Washing- 
ton, D.C   3453 

Stevens,  Hon.  Ted,  U.S.  Senator  from  Alaska   2772 

Stevens  Memorial  Hospital,  Jon  D.  Smiley,  administrator   2986 

Stewart,  G.  Arthur,  Missouri  Federation  of  the  Blind,  Inc   2252 

Stokes,  Hon.  Louis,  U.S.  Representative  from  Ohio   2798 

Tabor,   Ralph  L.,   director,   Federal  affairs,   National  Association  of 

Counties   1229 

Tacoma  General  Hospital,  W.  L.  Huber,  executive  vice  president   2974 

Taylor,  Dr.  James  O.,  medical  director,  staff,  East  Boston  Health  Center.  3098 


XXII 


Communications — Continued 

Page 

Tennessee  Conference  on  Social  Welfare   3227 

Thompson,  Rosemary   2968 

Townsend  Foundation,  John  Doyle  Elliott,  secretary   3384 

Townsend,  Lynn  A.,  chairman,  New  Detroit,  Inc   3232 

Traylor,  M.  L.,  administrator,  Memorial  Hospital   2980 

Tri-County  Hospital  Association,  Charles  L.  Lampson,  administrator   2980 

Tri-State  Memorial  Hospital,  Inc.,  W.  J.  Yeats,  administrator   2977 

Tucker,  Dr.  S.  A.,  director,  the  Doctors  Hospital,  Seattle,  Wash   2975 

United  Cerebral  Palsy  Association,  Inc.,  Elsie  D.  Helsel,  Ph.  D.,  Washing-  Page 

ton  representative   3329 

United  Community  Services  of  Metropolitan  Detroit,  Richard  F.  Huegli, 

executive  vice  president   3375 

United  Low  Income,  Inc.,  Alice  Boynton,  consultant   3258 

Valley  Memorial  Hospital,  C.  D.  Bentle}r,  administrator   2980 

Veneman,  Hon.  John  G.,  Under  Secretary,  HEW   838,  972,  1309 

Virginia  Mason  Hospital,  Austin  Ross,  administrator   2982 

Wagner,  Cory  don,  Tacoma,  Wash   2975 

Wagner,  Vernon  EL,  North  Dakota  Medical  Association   3217 

Wallace,  Jim   2969 

Walla  Walla  General  Hospital,  J.  A.  Dailey,  administrator   2982 

Warren,  Janice  T.,  welfare  chairman,  League  of  Women  Voters  of  Ohio___  1274 
Washington  State  Hospital  Association,  John  Bigelow,  executive  vice 

president   2985 

Weder,  Wilbur  A.,  MASW   2918 

Weiner,  Ernest  M.,  D.P.M.,  president,  American  Podiatry  Association   3305 

Welfare  Council  of  Metropolitan  Chicago,  John  H.  Ballard,  executive 

director   3253 

Wheeler,  Harry  C,  administrator,  Deaconess  Hospital   2976 

Whittet,  Jean,  director,  public  policy,  YWCA  National  Board   3384 

Willapa  Harbor  Hospital,  Gerald  W.  Baker,  administrator   2979 

Williams,  Hon.  Harrison,  U.S.  Senator  from  New  Jersey   2774 

Winick,  Allan  J.,  partner,  Arthur  Andersen  &  Co   2863 

Wisconsin  Department  of  Employee  Trust  Funds,  Alta  E.  Moore,  director.  _  3327 
Wisconsin  Department  of  Health  and  Social  Services,  Wilbur  J.  Schmidt, 

secretary   3463 

Wohlgemuth,  Helene,  Pennsylvania  Department  of  Public  Welfare   2588 

Woods,  William  E.,  Washington  representative  and  associate  general 

counsel,  National  Association  of  Retail  Druggists   322  7 

Wyman,  George  K.,  commissioner,  Department  of  Social  Services,  State 

of  New  York   1662 

Yakima  Valley  Memorial  Hospital,  Max  L.  Hunt,  administrator   2981 

Yeats,  W.  J.,  administrator,  Tri-State  Memorial  Hospital,  Inc   2977 

Younger,  Evelle  J.,  Attorney  General,  State  of  California   3159 

YWCA  National  Board,  Jean  Whittet,  director,  public  policy   3384 

Additional  Information 

Material  submitted  for  the  record  by  the  Departments  of  Health,  Education, 
and  Welfare,  and  Labor: 

Article  entitled  "Poverty  Increases  by  1.2  Million  in  1970,"  from  the 

Bureau  of  Census  publication,  Consumer  Income   202 

Assumptions  used  in  caseload  projections   314 

Eligible  persons  under  H.R.  1  compared  with  projections  under  H.R. 

16311  (91st  Congress)   85 

Federal  outlays  benefiting  the  poor   190 

Fraud,  report  on  disposition  of  public  assistance  cases  involving  ques- 
tions of,  fiscal  year  1970   99 

Indians,  summary  of  relationships  of  H.R.  1  to — Briefing  memorandum, 

HEW   218 

Number  of  employees  required  for  income  maintenance  under  H.R.  1_  _  290 

Questions  submitted  for  Secretary  Hodgson  by  Senator  Ribicoff   125 

Surplus  commodity  program,  issue  paper  on   277 

Work  incentives  in  H.R.  1 — Comparison  of  benefits  available  for 
selected  income-tested  programs  under  H.R.  1  and  current  law — 

tables   72 

Desertion  in  AFDC  families   88 

Work  incentives  in  H.R.  1,  note  on   109 


XXIII 


Volume  3  Pages  1205-1641  Volume  6  Pages  2759-3464 

Additional  Information — Continued 

Material  submitted  for  the  record  by  the  Departments  of  Health,  Educa- 
tion, and  Welfare,  and  Labor — Continued  Page 

Confidentiality  of  welfare  case  file  information   838 

Material  relative  to  amendment  559   969ff,  975ff 

Changes  in  food  stamp  program   972 

Distribution  of  payments  and  coverage  in  1977  under  amendment 

No.  559  to  H.R.  1,  table   986a 

Discussion  of  poverty  line  ;'„_  986b 

Views  of  the  Department  of  Health,  Education,  and  Welfare  on  the 

testimony  of  Samuel  A.  Weems,  prosecuting  attorney  for  the  17th 

Judicial  District  of  the  State  of  Arkansas   1117 

Work  programs  in  Michigan   1309 

HEW  policy  on  work  relief  programs  under  public  assistance   1309a 

Income  maintenance  experiments   Gl 

Federal  employment  of  certain  State  and  local  employees  in  the 

administration  of  programs  created  by  H.R.  1   HI 

HEW  status  report  on  implementation  of  the  recently  enacted  New 

York  State  work  related  requirements  for  welfare  recipients   II 

Articles,  pamphlets,  reports,  etc.: 

Poverty  Increases  by  1.2  Million  in  1970   202 

Committee  on  Finance  press  release  announcing  hearings  on  Social 

Security  and  Welfare   738 

The  Future  of  Social  Security — Is  It  in  Conflict  With  Private  Pension 

Plans?  by  Robert  J.  Myers,  FSA   874 

Where  Will  the  Pending  Social  Security  Amendments  Take  the  Pro- 
gram? by  Robert  J.  Myers   881 

Welfare  Cheating  Ring  Uncovered   896 

Developments  in  Dealing  With  Questions  of  Recipient  Fraud  in  Public 

Assistance,  1951-67   1137 

Occupational  Characteristics  of- Urban  Workers   1429 

An  Idaho  Solution  Is  Offered  in  the  District  of  Columbia  to  a  Problem 

on  Welfare   1463 

Essentials  of  Public  Welfare — A  Statement  of  Principles   1684 

The  Cost  Impact  of  H.R.  1  on  the  State  of  California   1836 

Welfare:  Separating  Myth  and  Fact   1909 

Welfare  Maze  Traps  a  Proud  Mother   2142 

Incentives  for  Independence   2191 

Eligibility  and  Payments  to  Individuals — Part  IV  of  the  Handbook  of 

Public  Assistance   856 

Increasing  State  Fiscal  Relief  Through  Welfare  Reform   994 

Psychiatric  Services  and  Medical  Utilization  in  a  Prepaid  Health  Plan 

Setting   2445 

Testing  of  Alternatives  to  AFDC,  excerpt  from  Senate  Report  91-1431, 

report  to  accompany  H.R.  17550   2132 

A  New  Look  at  the  Visiting  Nurse   2430 

Psychiatric  Services  and  Medical  Utilization  in  a  Prepaid  Health  Plan 

Setting  '  2245 

Recipient  Fraud  Incidence  Study — Conducted  by  the  Fraud  Review 

Panel  for  the  State  of  California: 

Part  I:  Study  and  Findings   3161 

Part  2:  Recommendations   3186 

Financing  Health  Maintenance,  Care  and  Delivery,  NAM  position 

paper   3342 

Federal  regulations: 

Safeguarding  information   855 

Application,  determination  of  eligibility  and  furnishing  assistance — 

Public  assistance  programs  ^   891 

Expiration  of  community  work  and  training  program   1306 

Selected  tables  and  charts: 

Total  Federal  welfare  costs   10 

Federal  involvement  in  day-care,  fiscal  year  1971   22 


XXIV 


Additional  Information — Continued 


Selected  tables  and  charts — Continued 

Social  security  contribution  rates,  present  law,  H.R.  17550  as  reported  Page 

by  the  Finance  Committee,  and  H.R.  1   47 

"Williams  Charts,"  updated,  current  law  (1971)  benefits  potentially 
available  to  4-person  female-headed  families  in: 

Phoenix,  Ariz   52 

Wilmington,  Del   58 

Chicago,  111   54 

New  York  City   55 

"Williams  Charts,"  updated,  H.R.  1  benefits  potentially  available  to 
4-person  female-headed  families  in: 

Phoenix,  Ariz   57 

Wilmington,  Del   58 

Chicago,  111   59 

New  York  City   60 

Tables  taken  from  the  June  1970  committee  print  entitled  "H.R.  16311, 
the  Family  Assistance  Act  of  1970,  Revised  and  Resubmitted  to  the 
Committee  on  Finance": 

Current  law  (1970)  benefits  potentially  available  to  4-person 
female-headed  families  in: 

Phoenix,  Ariz   63 

Wilmington,  Del   64 

Chicago,  111   65 

New  York  City   66 

H.R.  16311  benefits  potentially  available  to  4-person  female- 
headed  families  in: 

Phoenix,  Ariz   67 

Wilmington,  Del   68 

Chicago,  111   69 

New  York  City   70 

HEW  charts,  current  law  (1971)  benefits  potentially  available  to 
4-person  female-headed  families  in: 

Phoenix,  Ariz   75 

Wilmington,  Del   76 

Chicago,  111   77 

New  York  City   78 

HEW  charts,  H.R.  1  benefits  potentially  available  to  4-person  female- 
headed  families  in: 

Phoenix,  Ariz   80 

Wilmington,  Del   81 

Chicago,  111   82 

New  York  City   83 

Projected  eligibles  under  the  family  programs  in  H.R.  1  and  H.R. 

16311  (91st  Congress),  fiscal  year  1973   85 

Annual  break-even  incomes  under  H.R.  1  and  H.R.  16311   86 

Number  of  children  receiving  AFDC  money  payments  by  status  of 

father,  1940  to  date   90 

AFDC  families  by  status  of  father,  1969   91 

AFDC  families  by  whereabouts  of  father,  1969   91 

AFDC  families  in  which  father  is  absent  because  of  divorce,  sepa- 
ration, or  desertion,  by  time  father  last  left  home,  1969   92 

Proportion  of  population  receiving  welfare  under  current  law  and 
proportion  of  population  eligible  for  benefits  under  H.R.  1  by  State, 

fiscal  year  1973   93 

Family  benefit  schedule   110 

Persons  below  the  poverty  level  by  family  status  and  sex  and  race 

of  head   204 

Negro  persons  below  the  poverty  level  by  family  status   206 

Persons  below  the  poverty  level  in  1970,  by  family  status  and  sex  and 

race  of  head   206 

Selected  characteristics  of  families  below  the  poverty  level  in  1970   207 

Families  and  unrelated  individuals  below  the  poverty  level  in  1970, 

by  type  of  residence,  region,  and  race   208 

Weighted  average  thresholds  at  the  poverty  level  in  1970  by  size  of 

family  and  sex  of  head,  by  farm-nonfarm  residence   208 

Size  of  income  deficit  for  families  and  unrelated  individuals  below  the 

poverty  level  in  1970,  by  sex  and  race  of  head   209 


XXV 


Additional  Information — Continued 

Selected  tables  and  charts — Continued 

Distribution  of  poor  families  and  unrelated  individuals  and  aggregate  Paffe 
income  deficit,  1970,  1969,  and  1959   209 

Persons  below  the  near-poverty  level  in  1970  by  family  status  and  sex 

and  race  of  head   210 

Benefit  levels  and  tax  rates — Payments  and  caseloads   229 

Breakdown  of  19.4  million  FAP-OFP  eligibles   238 

Characteristics  of  persons  covered  by  the  $6,500  welfare  reform  plan.  239 

Estimates  of  costs  and  eligible  recipients  under  alternative  plans : 

$720  disregard   244 

$360  disregard   244 

$0  disregard   245 

Employment  figures  for  the  Department  of  Health,  Education,  and 

Welfare   250 

Comparison  of  welfare  reform  costs  estimates   250 

Relation  of  supplements  to  straight  time  hourly  earnings  in  24  indus- 
tries, 1969   255 

Total  full-time  permanent  employment,  Department  of  Health,  Educa- 
tion, and  Welfare,  and  Social  Security  Administration,  1962-1972 
(est.)   289 

Federal  costs  of  welfare  program   295 

Public  assistance  caseload  charts   316ff 

Medicaid,  work  disincentive  in  HEW  charts   325 

Contribution  of  pension  fund  saving  to  the  economic  growth  of  the 

United  States   749 

Employer  contributions  for  OASDI  and  private  pension-deferral 

profit  sharing  plans   758 

How  the  employee-employer  maximum  annual  tax  is  allocated  to  old 

age  (OASI),  disability  (D.I.),  and  hospital  (H.I.)  trusts   767 

Comparison  of  accumulated  employer-employee  maximum  social 
security  taxes  (for  old  age  and  survivor  benefits  only)  with  the 
maximum  monthly  social  security  benefit  (PI A)  obtainable   768 

Accumulated   employer-employee   maximum   social   security  taxes 

allocated  for  disability  and  hospital  insurance   768 

Comparison  of  accumulated  maximum  OASI  taxes  with  maximum  ex- 
pected lifetime  OASI  benefits   769 

Basic  allowances,  break-even  points,  and  level  at  which  present  income 
tax  schedule  applies  under  a  proposed  negative  income  tax  with  a: 

High  basic  allowance   816 

Low  basic  allowance   816 

AFDC  families  by  status  of  father,  1969   824 

Number  of  children  receiving  AFDC  money  payments  by  status  of 

father,  June  of  selected  years,  1940  to  date   824a 

Estimated  progress  of  OASI  trust  fund  and  DI  trust  fund  combined 
under  H.R.  1  as  passed  by  House  using  tax  schedule  in  H.R.  1  and 
alternative  tax  schedule  proposed  by  Robert  J.  Myers,  1972-80   866 

Number  of  welfare  recipients  under  current  law  and  number  of  persons 
eligible  for  benefits  under  Ribicoff  amendment,  bv  State,  fiscal  year 
1973   969 

Proportion  of  population  receiving  welfare  under  current  law  and 
proportion  of  population  eligible  for  benefits  under  Ribicoff  amend- 
ment, by  State,  fiscal  year  1973   970 

Ribicoff  amendment  No.  559   971 

Projected  potential  maintenance  payments  under  Ribicoff  amend- 
ment and  under  current  law,  fiscal  years  1973-77   971 

The  food  stamp  program — monthly  coupon  allotments  and  purchase 
requirements  (effective  Jan.  26,'  1972),  48  States  and  District  of 
Columbia   973 

Number  of  welfare  recipients  under  current  law,  and  number  of  persons 
eligible  for  benefits  under  H.R.  1  and  Ribicoff  amendment  No.  559, 
by  State,  fiscal  year  1973   975 

Proportion  of  population  receiving  welfare  under  current  law  and  pro- 
portion of  population  eligible  for  benefits  under  H.R.  1  and  Ribicoff 
amendment  No.  559,  by  State,  fiscal  year  1973   977 


XXVI 


Additional  Information — Continued 


Selected  tables  and  charts — Continued 

Projected  recipients  under  current  law,  persons  eligible  for  Federal 

payments  under  H.R.  1,  and  persons  eligible  for  State  supplementary  Page 

payments  only,  fiscal  years  1973-77   981-982 

Potential  fiscal  year  1973  costs  of  assistance  provisions: 

Under  H.R.  1   983 

Under  Ribicoff  amendment  No.  559   984 

Projected  potential  maintenance  payments  under  H.R.  1,  under  current 

law,  and  Ribicoff  amendment  No.  559,  fiscal  years  1973-77   985-986 

Distribution  of  payments  and  coverage  in  1977  under  amendment 

No.  559  to  H.  R"  1   986a 

Work  incentives  under  alternative  welfare  reform  plans   991 

Fiscal  relief  under  the  Ribicoff-Sargent  Plan — State  spending  under 

alternative  welfare  plans   992 

Cost  of  alternative  plans   993 

Comparison  of  House  bill  with  $3,000,  50  percent  plan,  fiscal  year 

1973   1007 

Comparison  of  State  expenditure  under  various  welfare  plans  for  fiscal 

1973   1008 

Increased  benefits  to  the  States  by  moving  from  the  House  bill  to  the 

$3,000,  50  percent  plan   1009 

Earned  income  and  Federal  assistance  benefits  for  families  of: 

Two  to  eight— H.R.  1   1293 

Four  and  eight  under  H.R.  1   1294 

Long  range  average  annual  costs  for  social  security  and  medicare  pro- 
visions in  H.R.  1   1415 

Rise  in  the  cost  of  living  compared  with  benefit  increases  approved  by 

Congress,  December  1950  to  January  1971   1416 

Comparison  of  increases  in  average  wages  and  cost  of  living   1418 

Reasons  cited  by  male  beneficiaries,  aged  62-64,  explaining  early  retire- 
ment  1421 

Social  security  and  medicare  taxes — present  law  compared  with 

House-passed  social  security  bill  (H.R.  1)   1425 

Comparison  of  social  security  taxable  wage  base  with  median  annual 

earnings  of  "regularly  employed  workers,"  1960-75   1425 

Social  security  and  medicare  tax  take,  present  law  compared  with 

H.R.  1,  1971-77   1426 

Schedule  of  social  security  and  medicare  (HI)  tax  rates  for  H.R.  1  and 

modifications  thereof   1427 

Schedule  of  social  security  and  medicare  (HI)  tax  rates  for  H.R.  1  and 

equivalent  alternative   1427 

Employed  persons  in  the  United  States,  by  major  occupational  group 

and  color,  1970  annual  averages   1430 

Employed  persons  in  the  central  cities  and  suburban  rings  of  all 

SMSA's  and  the  20  largest  SMSA's,  by  major  occupation  group 

and  color,  1970  annual  average   1431 

Employed  persons  in  the  20  largest  SMSA's,  their  central  cities,  and 

their  suburban  rings,  by  occupation,  1960  and  1970   1433 

Unemployment  rates  by  occupation  for  all  SMSA's,  their  central 

cities,  and  their  suburban  rings,  by  occupation  and  color,  1970 

annual  averages  -  1434 

Total  employment  by  occupation  for  the  20  largest  SMSA's,  their 

central  cities,  and  their  suburban  rings,  1970  annual  averages   1436 

Definitional  changes  in  the  20  largest  standard  metropolitan  statistical 

areas,  1960-70   1438 

Number  of  employee  annuitants  and  survivor  annuitants  on  the 

retirement  roll  as  of  June  30,  1970,  by  monthly  rates  of  annuity.  __  1757 
Welfare  payments  in  the  Ribicoff-Javits  amendments  for  a  family 

of  4   1816 

Total  income  after  social  security  and  income  taxes  for  a  family  of  4 

under  the  Ribicoff -J  avits  amendments   1817 

Aid  to  families  with  dependent  children;  regular  caseload  in  selected 

States,  July  1967- July  1971  (July  1967=100)   1941 

Disability  assistance  caseload  index,  in  selected  States,  July  1967- 

July  1971  (July  1967=100)   1943 

Agencies  providing  assistance  and  services  to  families  under  H.R.  1__  1944 


XXVII 


Volume  3  Pages  1205-1641   Volume  6  Pages  2759-3464 

Additional  Information — Continued 

Selected  tables  and  charts — Continued 

Demands  on  State  revenue  increase  faster  than  revenue  growth  in  Page 
times  of  recession,  State  of  Washington,  fiscal  years  1968  and  1971__  1947 
Employability  status  of  public  assistance  grant  recipients,  Washington 

State,  December  1971   1949 

Estimated  effects  of  H.R.  1  in  Washington  State,  fiscal  1973   1963 

Comparison  of  adult  and  family  cases  and  assistance  expenditures 
under  current  law  with  those  under  H.R.  1,  fiscal  1973,  all  programs, 

total   1964 

Comparison  of  estimated  adult  cases  and  expenditures  under  current 
law  with  those  under  H.R.  1,  fiscal  1973: 

All  adult  programs,  total   1966 

Old  age  assistance   1967 

Aid  to  blind   1968 

Comparison  of  estimated  aid  to  families  with  dependent  children  cases 
and  expenditures  under  current  law  with  those  under  H.R.  1,  fiscal 
1973: 

All  family  programs,  total   1970 

Aid  to  families  with  dependent  children — Regular   1971 

Aid  to  families  with  dependent  children — Unemployed  father.  __  1972 

Typical  example  of  work  incentive  under  H.R.  1   2094 

Disposition  of  persons  required  to  report  to  the  New  York  State 

Employment  Service,  September  1971   2186 

Persons  placed  in  jobs  during  September  1971,  subsequent  dependency 

status,  September  1,  1971-December  31,  1971,  New  York  State___  2187 
Total  expenditures  for  medical  assistance,  and  welfare  expenditures, 

fiscal  year  1971   2261 

Appendixes 

Appendix  A — Volume  1 

Geographical  variations  in  costs  of  living  as  measured  by  currently  avail- 
able BLS  data   327 

Appendix  B — Volume  1 

Material  related  to  H.R.  1 — Work  and  training  provisions — Prepared  by 
the  staff  of  the  Committee  on  Finance   341 

Appendix  C — Volume  1 

Material  related  to  H.R.  1 — Welfare  programs  for  families — Prepared  by 
the  staff  of  the  Committee  on  Finance   417 

Appendix  D — Volume  1 

"The  Effect  of  Three  Income  Maintenance  Programs  on  Work  Effort,"  a 
report  prepared  for  the  Chamber  of  Commerce  of  the  United  States  of 
America — Prepared  by  Alfred  and  Dorothy  Telia   493 

Appendix  E — Volume  1 

Responses  of  the  Department  of  Labor  to  questions  of  Senator  Abraham 

RibicofT     533 

Appendix  F — Volume  2 

Views  of  the  Department  of  Health,  Education,  and  Welfare  on  the  testi- 
mony of  Samuel  A.  Weems,  prosecuting  attorney  for  the  17th  Judicial 
District  of  Arkansas   1117 


XXVIII 

Appendix  G — Volume  4 

Income    Maintenance    Experiments — Material    requested    by    Senator  Page 
Abraham  Ribicoff  on  January  28,  1972,  during  hearings  on  H.R.  1   G-l 

Appendix  H — Volume  4 

Federal  Employment  of  Certain  State  and  Local  Employees  in  the  Admin- 
istration of  Programs  Created  by  H.R.  1 — Proposed  amendment 
reflecting  the  views  of  the  Department  of  Health,  Education,  and 
Welfare  and  the  U.S.  Civil  Service  Commission   H-l 

Appendix  I — Volume  4 

Department  of  Health,  Education,  and  Welfare,  status  report  on  imple- 
mentation of  recently  enacted  New  York  State  work  related  requirements 
for  welfare  recipients   1-1 


SOCIAL  SECURITY  AMENDMENTS  OF  1971 


FRIDAY,  FEBRUARY  4,  1972 

U.S.  Senate, 
Committee  on  Finance, 

Washington,  D.C. 

The  committee  met,  pursuant  to  recess,  at  10  a.m.,  in  room  2221,  New 
Senate  Office  Building,  Senator  Russell  B.  Long  (chairman)  presiding. 

Present:  Senators  Long,  Anderson,  Talmadge,  Harris,  Byrd  of 
Virginia,  Nelson,  Bennett,  Curtis,  Jordan  of  Idaho,  Fannin,  and 
Hansen. 

Also  present :  Senator  Hatfield. 

The  Chairman.  The  committee  will  come  to  order. 

We  are  pleased  to  have  with  us  as  the  first  witness  this  morning  the 
Senator  from  Missouri,  the  Honorable  Thomas  F.  Eagleton. 

Senator  Eagleton.  Thank  you,  Mr.  Chairman. 

The  Chairman.  Senator  Eagleton,  we  are  pleased  to  have  your  views 
on  this  welfare  bill. 

STATEMENT  OF  HON.  THOMAS  F.  EAGLETON,  A  U.S.  SENATOR  FROM 
THE  STATE  OF  MISSOURI 

Senator  Eagleton.  Mr.  Chairman,  I  appreciate  the  opportunity  to 
appear  before  the  Committee  on  Finance  today.  Although  there  are 
many  sections  of  H.R.  1  that  are  vitally  important  to  older  Americans, 
I  am  going  to  confine  my  remarks  to  title  III,  which  would  establish 
a  new  program  of  assistance  to  the  aged,  blind,  and  disabled. 

Today  nearly  5  million  persons  65  and  over  live  on  incomes  below 
the  official  poverty  line.  Forty-seven  percent  of  all  single  or  widowed 
elderly  people  live  in  poverty. 

Naturally,  those  who  were  poor  during  their  working  years  remain 
poor  in  old  age.  But  many  others  fall  into  the  poverty  category  for  the 
first  time  after  retirement — when  their  savings  have  been  depleted  and 
they  must  live  on  inadequate  social  security  benefits. 

The  very  fact  that  one- fourth  of  our  older  citizens  live  in  this  con- 
dition testifies  to  the  failure  of  our  present  public  assistance  programs. 

In  fewer  than  20  States  does  old  age  assistance  provide  an  elderly 
person  as  much  as  $150  per  month  to  purchase  the  necessities  of  life — 
food,  shelter,  clothing,  medical  care.  As  of  July  1,  1971,  nine  States, 
including  my  own,  gave  that  person  less  than  $100  per  month. 

Moreover,  old  age  assistance  programs  reach  only  half  of  the 
elderly  poor.  There  are  at  least  2  million  persons  who  would  be  eligible 
for  assistance  but,  for  a  variety  of  reasons,  do  not  receive  it. 

Many  of  the  problems  our  society  faces  are  complex  and  not  suscep- 
tible of  easy  solution.  But  poverty  among  the  elderly  is  really  not  one 
of  them. 


(2249) 


2250 


We  can — and  I  believe  we  should,  at  the  earliest  possible  date — 
assure  even'  older  American  a  minimum  level  of  income.  Furthermore, 
we  should  provide  this  assistance  in  a  way  that  is  not  destructive  of  the 
dignity  and  self-respect  of  the  individual. 

I  am  hopeful  that  ultimately  social  security  coverage  will  be  so 
universal  and  benefits  sufficiently  adequate  that  the  need  for  supple- 
mental assistance  will  be  greatly  diminished,  if  not  obliterated. 

But  for  the  immediate  future,  I  believe  the  objectives  I  have  stated 
can  best  be  achieved  through  the  Federal  financing  and  Federal  admin- 
istration of  a  national  floor  of  income  for  the  aged,  blind,  and  disabled 
with  uniform  eligibility  and  payment  standards. 

There  are  a  number  of  ways  in  which  title  III  could  and  should  be 
improved.  I  have  introduced  two  amendments  for  the  consideration  of 
the  committee  which  I  would  like  to  describe  very  briefly. 

First,  as  passed  by  the  House  of  Representatives,  the  floor  of  income 
in  the  adult  assistance  program,  to  be  phased  in  over  a  3-year  period, 
would  never  reach  official  poverty  levels.  By  the  third  year  of  the  pro- 
gram— originally  fiscal  19?5,  now  fiscal  1976 — benefits  would  approxi- 
mate only  1970  poverty  levels. 

The  amendment  I  have  proposed  would  set  the  initial  income  floor 
at  $150  for  an  individual  and  $200  for  a  couple,  thus  eliminating  the 
3-year  phase-in.  In  addition,  it  would  provide  for  annual  cost-of-living 
adjustments  in  those  benefit  levels. 

Because  there  is  considerable  doubt  as  to  the  adequacy  of  the  poverty 
thresholds  as  a  measure  of  income  need,  my  amendment  would  direct 
the  Secretary  of  Health,  Education,  and  Welfare  to  conduct  a  study 
to  determine  the  amounts  of  income  required  to  provide  for  the  basic 
needs  of  the  aged,  and  submit  to  Congress  his  recommendations  for  ap- 
propriate adjustments  in  the  benefit  levels  under  the  adult  assistance 
program. 

Second,  as  we  make  the  transition  from  the  many  diverse  State  pro- 
grams to  one  uniform  Federal  program,  I  believe  it  is  essential  that  we 
guarantee  that  no  current  recipient  of  assistance  will  be  adversely  af- 
fected. The  transitional  provisions  and  fiscal  incentives  now  in  H.R.  1 
cannot  provide  that  guarantee. 

All  or  some  recipients  in  at  least  30  States  would  receive  less  assist- 
ance under  the  new  federal  program  than  they  now  receive  unless  the 
Federal  benefit  were  supplemented  by  the  State. 

In  Missouri,  my  State,  those  recipients  who  have  no  other  income 
would  benefit  substantially  from  the  new  Federal  program.  But  many 
of  those  who  have  a  small  social  security  benefit  or  other  income  would 
receive  less,  unless  the  State  provided  supplementary  payments. 

Under  title  III,  as  now  written,  such  supplementation  is  optional. 
Xo  Federal  matching  funds  are  provided  for  supplementary  pay- 
ments. A  State  would  only  be  guaranteed  that  its  supplementary  pay- 
ments for  both  adults  and  families  would  cost  it  no  more  than  its 
expenditures  for  the  same  purposes  in  calendar  1971. 

Section  509  of  the  bill  would  prevent  any  automatic  reduction  in 
assistance  at  the  time  of  the  transition,  by  providing  for  maintenance 
of  assistance  levels  until  a  State  took  affirmative  action  to  reduce  or 
stop  its  supplementary  payments. 

Xo  doubt  many — perhaps  even  most — States  would  voluntarily  con- 
tinue their  supplementary  payments.  But  given  the  fiscal  pressures  on 


2251 


State  governments  and  the  lack  of  real  fiscal  relief  in  H.R.  1, 1  do  not 
believe  we  should  assume  that,  with  those  options,  no  State  will  act  to 
reduce  or  discontinue  its  supplementary  payments. 

In  addition  to  the  need  for  supplementation,  there  may  be  questions 
as  to  the  continued  eligibility  of  some  recipients.  For  instance,  in  cer- 
tain States  the  blind  have  traditionally  been  permitted  income  and  re- 
sources in  excess  of  what  would  be  allowable  under  the  new  program. 
A  blind  couple  in  Missouri  with  savings  totaling  $3,000  apparently 
would  have  to  dispose  of  half  of  their  savings  in  order  to  become  eli- 
gible for  the  Federal  benefit  and/or  State  supplementation. 

I  believe  that  no  aged,  blind,  or  disabled  person  who  now  relies  upon 
public  assistance  should  be  subjected  to  uncertainties  and  anxieties 
about  what  will  happen  to  that  assistance  either  at  the  time  of  the 
transition  to  the  new  program  or  at  some  time  in  the  future  when  a 
•  State  government  may  change  its  policy. 

My  second  amendment,  therefore,  would  guarantee  the  continued 
eligibility  for  assistance,  and  maintenance  of  assistance  levels,  for  all 
those  receiving  aid  to  the  aged,  blind,  and  disabled  under  an  approved 
State  plan  at  the  time  of  the  transition  to  the  Federal  program. 

It  would,  in  effect,  "grandfather"  all  such  persons  into  the  new  pro- 
gram. The  States  would  be  required  to  provide  the  supplementary  pay- 
ments necessary  to  maintain  the  level  of  assistance  those  people  had 
been  receiving.  The  supplementary  payments  would  be  administered  by 
the  Federal  Government,  and  the  Federal  Government  would  con- 
tribute 30  percent  of  their  cost. 

Finally,  Mr.  Chairman,  I  would  like  to  bring  to  the  committee's  at- 
tention a  matter  that  is  of  great  significance  to  the  blind  people  of  my 
State.  Since  1921,  Missouri  has  had  a  State  blind  pension  program 
which  encourages  rehabilitation  and  self-reliance  by  a  liberal  disre- 
garding of  income  and  resources. 

Because  this  program  did  not  meet  requirements  of  Federal  law, 
Missouri  did  not  receive  Federal  funds  for  aid  to  the  blind  prior  to 
1950.  At  that  time,  a  special  temporary  exemption  was  written  into  the 
Social  Security  Act,  which  permitted  approval  of  State  plans  for  aid 
to  the  blind  in  Missouri  and  in  Pennsylvania — which  has  a  similar 
blind  pension  program — on  the  condition  that  Federal  payments  would 
be  made  only  with  respect  to  assistance  rendered  to  the  needy  blind. 
This  temporary  exemption  was  extended  on  two  occasions  and  was 
finally  made  permanent  in  1962. 

As  a  result  of  this  exemption,  Missouri  has  had  since  1951,  dual  pro- 
grams for  the  blind :  The  Federal-State  aid  to  the  blind  program,  and 
also  a  wholly  State-financed  blind  pension  program  for  those  persons 
who,  because  of  their  income  or  resources,  are  not  eligible  for  aid  to 
the  blind. 

The  blind  people  of  Missouri  are  understandably  proud  of  their 
blind  pension  program.  They  have  worked  diligently  over  the  years 
to  maintain  it,  and  they  do  not  want  it  to  be  jeopardized  in  any  way 
by  federalization  of  the  adult  categories. 

If  the  committee  approves  the  establishment  of  a  Federal  adult  as- 
sistance program,  I  join  with  the  American  Council  of  the  Blind  and 
the  Missouri  Federation  of  the  Blind  in  urging  that  language  be  in- 
cluded in  title  III,  which  will  exempt  the  blind  pension  programs  of 
Missouri  and  Pennsylvania  from  any  Federal  requirement  or  regula- 


2252 


tion  that  might  be  imposed  on  other  cash  payments  made  by  those 
States  as  "supplementary  payments." 

There  are  other  modifications  that  might  be  made  in  title  III.  For 
instance,  it  seems  to  me  that  the  allowable  resources  for  a  married 
couple  should  be  somewhat  greater  than  for  a  single  person. 

Mr.  Chairman,  I  want  to  conclude  my  statement  by  urging  in  the 
strongest  possible  terms  that  this  committee  give  its  approval  to  the 
kind  of  program  that  can  alleviate  the  poverty  among  those  of  our 
fellow  citizens  who,  because  of  age  or  disability,  can  no  longer  pro- 
vide for  themselves.  Thank  you,  Mr.  Chairman. 

The  Chairman.  Thank  you  very  much,  Senator  Eagleton. 

Senator  Eagleton.  Thank  you  so  much. 

(The  committee  subsequently  received  the  following  communication 
relevant  to  the  preceding  testimony :) 

Missouri  Federation  of  the  Blind,  Inc., 

February  1,  1912. 

Senator  Russell  Long, 

Senator  From  Louisiana,  Chairman,  Senate  Finance  Committee,  Senate  Office 
Building,  Washington,  D.C. 

Dear  Friend  :  I  received  a  copy  of  your  press  release  concerning  hearings  on 
H.R.  1.  The  blind  of  Missouri  were  overjoyed  when  you  expressed  your  feelings 
ahout  the  welfare  program.  The  blind  of  Missouri  have  always  protected  the 
ambitious  and  industrious  blind  so  that  they  lose  no  benefits  until  they  become 
entirely  self  supporting. 

Our  program  in  Missouri  since  its  origination  has  always  been  a  flat  rate  pen- 
sion and  has  never  been  based  exclusively  on  need.  When  it  originated  in  1922, 
we  had  a  figure  of  $600  exempt  earnings  and  $25  a  month  pension.  We  have  fought 
hard  to  maintain  the  major  principles  of  our  program  through  the  years  and  feel 
that  we  were  successful.  However,  H.R.  1  as  it  stands  now,  would  wipe  it  out. 

We  are  happy  that  Senator  Eagleton,  with  the  cooperation  of  Senator  Syming- 
ton has  prepared  amendments  and  introduced  them  in  the  Senate  in  our  behalf, 
and  we  hope  that  your  Committee  will  consider  them  fairly  and  be  able  to  whole- 
heartedly support  them. 

We  thank  you  for  your  sincere  interest  and  intelligent  approach  to  the  wel- 
fare problem  and  we  hope  for  many  more  years  of  your  leadership  in  the 
United  States  Senate. 
Your  friend, 

G.  Arthur  Stewart. 

The  Chairman.  In  view  of  the  heavy  list  of  witnesses  I  am  going  to 
suggest  to  all  members  wherever  possible  we  submit  our  questions  in 
writing  and  submit  them  to  the  witnesses. 

The  next  witness  is  the  Honorable  Phillip  Burton  of  California.  Is 
he  here  ?  He  does  not  respond. 

The  next  witness  will  be  the  Honorable  Allen  Dines,  State  senator 
from  Colorado;  and  Hon.  Charles  F.  Kurfess,  Speaker,  Ohio  House 
of  Kepresentatives,  in  behalf  of  the  National  Legislative  Conference. 

STATEMENT  OF  CHARLES  F.  KURFESS,  SPEAKER,  OHIO  HOUSE  OF 
REPRESENTATIVES,  ACCOMPANIED  BY  ALLEN  DINES,  STATE 
SENATOR,  COLORADO;  AND  RICHARD  S.  HODES,  STATE  REPRE- 
SENTATIVE, FLORIDA,  IN  BEHALF  OF  NATIONAL  LEGISLATIVE 
CONFERENCE 

Mr.  Kurfess.  Mr.  Chairman,  I  am  Speaker  Kurfess  of  Ohio.  To  my 
immediate  right  is  State  Senator  Dines  of  Colorado ;  and  further  to  his 
right  is  Representative  Richard  Hodes  of  the  State  of  Florida. 


2253 


Mr.  Chairman,  we  appreciate  very  much  the  opportunity  to  testify 
before  the  committee  this  morning.  We  are  here  representing  the  Na- 
tional Legislative  Conference  to  discuss  the  welfare  reform  legislation 
which  you  now  have  under  consideration. 

We  three  here  at  the  table  are  State  legislators  and  will  be  present- 
ing this  testimony.  We  are  members  of  the  Human  Resources  Task 
Force  of  the  Intergovernmental  Relations  Committee  of  the  National 
Legislative  Conference.  Other  task  force  members  are  here  and  seated 
behind  us  and  I  think  you  have  a  list  of  these  members  before  you. 

While  there  are  many  aspects  and  details  of  H.R.  1  which  we  are 
concerned  with,  this  morning  we  will  focus  our  attention  in  basically 
five  areas. 

First  of  all,  the  area  of  national  uniformity  and  the  States^  role. 
Outlining  those  elements  of  a  welfare  and  related  services  program 
that  can  have  national  uniformitv  and  those  elements  that  require  a 
State  role  or  options  to  deal  with  area  and  State  variations  and  be 
administratively  workable. 

Secondly,  we  will  present  suggested  amendments  to  the  bill  to  im- 
prove the  services  programs  contemplated  and  including  specific  ex- 
amples of  States'  efforts  to  provide  public  service  employment  and  a 
specific  example  of  a  State's  effort  to  provide  comprehensive,  one-stop 
social  service  delivery  system. 

Third,  in  the  area  of  child  support  we  will  present  suggestions  to 
improve  the  ability  of  States  to  enforce  child  support  payments  by 
fathers  or  responsible  relatives. 

In  the  area  of  medicaid  financing  we  will  suggest  changes  in  the 
medicaid  provisions  to  increase  rather  than  decrease  the  Federal 
participation  in  the  cost  of  medicaid,  as  I  am  sure  this  committee  is 
aware  of  the  impact  that  medicaid  has  had  on  some  States'  resources. 

And  finally,  in  the  area  of  fiscal  relief  we  would  suggest  some 
changes  in  these  provisions  to  make  more  equitable  between  the  States 
the  fiscal  relief  and  to  allow  among  the  States  for  the  variations  in  the 
cost  of  living  increases. 

With  regard  to  our  analysis  of  what  we  feel  are  the  variations  that 
should  be  made  with  regard  to  Federal  and  State  roles  in  defining  so- 
cial problems  and  solutions,  with  regard  to  this  bill,  we  have  really 
looked  at  the  bill  and  asked  ourselves  two  questions,  and  we  would 
draw  your  attention  to  them. 

First,  what  should  or  can  be  the  extent  of  the  national  definition  of 
the  problem  that  we  will  be  dealing  with,  and  what  can  be  determined 
and  defined  only  or  at  least  best  on  a  State-by- State  basis. 

And,  secondly,  what  should  be  or  can  be  the  extent  of  the  national 
prescription  of  a  solution  to  the  problem  requiring  national  uni- 
formity, and  in  what  areas  should  be  or  must  we  rely  on  the  State-by- 
State  solution  of  the  outcome  of  the  problems  not  requiring  national 
uniformity. 

Some  of  the  nationwide  variations  which  we  feel  must  be  taken  into 
consideration  are  the  characteristics  of  the  unemployed,  who  are  the 
present  welfare  recipients  and  the  low  income  people ;  we  should  rec- 
ognize the  variation  and  average  income  levels,  wages  and  cost  of  liv- 
ing among  the  various  regions  of  the  Nation  and  States;  in  fact,  some 
of  these  variations  are  within  the  States  themselves. 


72-573— 72— pt.  5  3 


2254 


We  should  recognize  the  differences  in  educational,  social  or  occupa- 
tional skill  levels  of  welfare  and  low-income  individuals  in  an  area 
or  State.  We  should  recognize  the  present  extent  and  organization 
for  delivery  of  public  human  services  in  the  various  States  which  do 
vary  from  State  to  State,  the  availability  of  private  employment  or 
potential  public  service  employment,  and  the  location  and  mobility 
of  the  unemployed  in  relation  to  present  or  potentially  available 
private  or  public  jobs. 

We  would  like  to  point  out  that  in  the  areas  that  there  is  flexibility 
now  in  Federal  legislation  to  deal  with  State  and  area  differences. 
This  flexibility  is  often  provided  only  to  the  Federal  administering 
agency  of  these  programs  and  not  to  State  officials. 

Therefore,  we  would  ask  that  statutory  flexibility  to  deal  with  State 
and  area  variations  instead  be  explicitly  provided  at  the  State  level. 

In  dealing  with  the  cash  assistance  program  standards  and  policies, 
we  see  the  need  for  the  Federal  Government  to  establish  the  minimum 
standards  for  cash  assistance  which  would  be  fully  federally  financed 
and  applied  throughout  the  country. 

It  also  appears  that  we  should  have  some  uniform  national  policy 
with  regard  to  liens  on  recipients'  property  in  the  amount  of  allow- 
able resources  in  determining  eligibility. 

However,  it  is  also  essential  that  we  recognize  the  variations  in  the 
income  levels,  wages  and  cost  of  living  between  the  States  and  within 
areas  of  the  States.  We,  therefore,  suggest  variations  in  the  supple- 
mentary payments  provision  to  provide  States  the  option  of  continu- 
ing the  practice  now  in  a  number  of  institutional  and  community 
care  payments. 

In  addition,  States  which  now  provide  the  same  payment  for  an 
individual,  whether  living  as  an  individual  or  with  their  spouse  as  a 
couple  under  the  old  age  assistance  program,  should  have  the  option 
to  continue  such  a  practice. 

We  believe  that  national  uniformity  in  the  establishment  of  a  uni- 
form definition  of  employability  is  reasonable.  Present  loss  provision 
regarding  that  amount  of  income  which  may  be  disregarded  in  deter- 
mining eligibility  for  assistance  payments  has  seen  the  gross  income 
of  families  still  receiving  some  payment  rise  to  such  levels  that  the 
entire  program  of  providing  work  incentives  for  low-income  people 
has  suffered. 

Thus  we  propose  that  the  States  have  the  option  to  apply  some 
limitation  on  the  gross  income  of  eligible  families  at  which  point 
they  would  no  longer  be  eligible  for  State  supplementary  assistance. 

Among  the  options  we  feel  should  be  available  to  States  is  flexibility 
in  the  use  of  a  State's  supplementary  payment  program,  provide 
incentives  for  welfare  recipients  to  relocate  near  available  employ- 
ment. In  some  cases  this  may  mean  providing  incentives  to  move  to 
more  rural  areas  with  lower  costs  of  living,  especially  for  housing 
and  where  employment  opportunities  may  exist. 

The  key  questions  which  must  be  dealt  with  in  determining  the  divi- 
sion of  responsibility  between  the  Federal  and  State  Governments 
for  administering  cash  assistance  and  manpower,  social  rehabilitation, 
child  care  and  other  related  services,  include  what  arrangements  can 
provide  the  most  responsiveness  to  the  needs  of  the  people  served; 
what  arrangements  can  provide  the  most  efficient  administration,  in- 


2255 


eluding  the  use  of  the  newest  administrative  procedures  and  tech- 
nology; what  arrangements  can  provide  the  most  effective  link  and 
interrelationship  among  related  services. 

While  persistent  arguments  have  been  made  for  the  desirability 
of  Federal  administration  of  cash  assistance  programs,  continued 
State  participation  in  financing  the  supplementary  payments,  in  our 
judgment,  makes  it  essential  that  States  have  the  option  to  administer 
the  cash  assistance  program  if  they  desire  without  the  financial  penal- 
ties which  their  exercise  of  such  an  option  proposes  in  H.E.  1. 

These  same  differences  then  between  the  requirements  of  national 
uniformity  and  options  to  the  State  exist  throughout,  in  our  judg- 
ment, your  considerations  of  the  bill. 

At  this  point  I  would  draw  your  attention  to  page  2  of  the  printed 
material  I  think  you  have  before  you,  which  is  basically  an  outline 
of  the  proposed  Federal- State  division  of  responsibility  in  welfare 
reform  legislation  which  we  can  submit  to  you  providing,  in  our 
judgment,  those  areas  where  national  uniformity  is  probably  required 
and  also  in  those  areas  in  which  we  think  the  State  has  a  responsibility 
and  a  role  and  variable  options  must  be  made  available  to  the  States. 

Senator  Curtis.  Mr.  Chairman,  may  I  ask  a  question  at  that  point  ? 

Mr.  Kurfess.  Yes,  Senator. 

Senator  Curtis.  Referring  to  that  third  page  on  the  left-hand  side, 
"Federal  financed  national  minimum  payment  standard,"  would  you 
elaborate  on  that,  as  to  just  what  you  mean  ? 

Mr.  Kurfess.  I  think  what  we  are  suggesting  here  is  a  recognition 
that  essentially  the  cash  assistance  payment  program  in  some  respects 
has  become  a  national,  legitimate  national,  concern.  This  is  because 
of  the  mobility  of  the  population,  which  I  am  sure  has  been  pointed 
out  to  the  committee  on  many  occasions.  It  is  because  of  some  court 
decisions  which  have  removed  residence  requirements,  and  in  order 
that,  we  feel,  there  should  be  rightfully  a  decision  made  at  the  national 
level  on  what  minimum  income  should  be  assured. 

Senator  Curtis.  But  it  says  Federal  financing. 

Mr.  Kurfess.  Yes. 

Senator  Curtis.  Are  you  recommending  that  the  minimum  stand- 
ard payment  which  a  State  might  well  choose  not  to  supplement 
should  be  totally  federally  financed  ? 

Mr.  Kurfess.  If  it  is — yes,  if  it  is  a  minimum  established  at  the 
Federal  level  for  a  nationwide  import,  yes. 

Senator  Curtis.  Well,  what  I  am  getting  at  is,  are  you  recommenc- 
ing that  this  burden  be  taken  away  from  the  States  and  placed  entirely 
on  the  Federal  Government? 

Mr.  Kurfess.  Well,  I  would  suggest,  Senator,  in  some  respect  that 
this  burden  is  already  by  Congress'  option  with  the  Federal  Govern- 
ment, because  much  of — and  this  varies  from  State  to  State,  but  in  our 
State,  for  instance,  half  of  the  payments  now  are  federally  financed. 

Senator  Curtis.  Yes,  and  what  I  want  to  know  is,  are  you  recom- 
mending that  the  Federal  Government  finance  it  all  ? 

Mr.  Kurfess.  Only  up  to  whatever  minimum  the  Congress  would 
establish. 

What  we  are  really  suggesting  here  is  that  this  is  a  national  policy 
question. 


2256 


Senator  Curtis.  Well,  sure,  it  is  of  national  concern,  it  always  has 
been,  and  there  is  no  State  that  doesn't  get  50-percent  matching  now 
and  some  of  them  get  considerably  more,  but  I  gather  that  what  this 
recommendation  means  is  that  the  burden  would  become  totally 
Federal. 

Senator  Fannin.  Would  the  Senator  yield  ? 
Senator  'Curtis.  Yes ;  I  am  through. 

Senator  Fannin.  I  wTould  just  like  to  ask  the  witness,  you  would 
require  that  the  Federal  Government  take  the  full  load  of  medicaid, 
for  instance? 

Mr.  Kurfess.  This  will  be  commented  on  a  little  bit  later  in  our  pres- 
entation, if  we  might,  Senator. 
Senator  Curtis.  That  is  all. 

Mr.  Kurfess.  At  this  point,  if  I  might,  members  of  the  committee, 
in  drawing  your  attention  to  it,  I  think  it  is  page  3  probably  which 
you  have  before  you,  which  is  basically  the  outline,  as  I  indicated,  of 
our  judgment  as  to  what  aspects  should  be  determined  by  national 
determination  and  have  uniformity  across  the  Nation,  in  those  areas 
in  which  the  States  should  have  the  primary  role  and  responsibility 
and  certainly  options  available  to  them,  I  draw  your  attention  to  that 
and  ask  Senator  Dines,  if  he  would,  to  continue  the  presentation  on 
behalf  of  the  committee. 

Mr.  Dines.  Members  of  the  committee,  if  I  may  respond  also  to 
Senator  Curtis'  question,  I  think  the  answer  is,  from  my  standpoint, 
at  least,  is  yes,  that  we  would  recommend  to  you  a  minimum  level  of 
assistance  to  be  totally  funded  by  the  Federal  Government  at  what- 
ever minimum  you  gentlemen  care  to  set  that  would  apply  nation- 
wide. After  that  we  would  like  to  see  options  with  the  States  to  sup- 
plement that  minimum. 

I  think  we  would  also  like  to  see  some  Federal  participation  in  the 
supplementary  payments  at  least  up  to  the  current  levels  that  the 
States  are  paying.  There  are  some  further  problems  with  cost-of-living 
increases,  for  example,  that  may  be  required  henceforth,  and  our 
position  would  be  that  we  would  like  to  see  Federal  participation  in 
those  reasonable  supplements  to  the  minimum  national  standard.  We 
don't  advocate  an  open-ended  appropriation  whereby  you  would  have 
no  control  at  all  on  what  the  States  did  with  your  money;  that  is  not 
our  intention. 

If  I  may,  on  this  page,  discuss  several  of  these  items,  because  this 
is  really  the  key  to  our  interest  in  the  bill  and  our  contribution,  if 
any,  to  your  consideration  of  it.  We  think  that  there  are,  as  Speaker 
Kurfess  has  mentioned,  a  number  of  items  that  ought  to  be  uniform 
and  a  number  that  ought  to  vary  from  State  to  State,  and  be  permitted 
to  vary.  We  have  divided  this  into  three  categories.  You  will  notice 
the  first  items  at  the  top  of  that  page  deal  with  cash  assistance  program 
standards  and  policies,  and  I  think  we  have  adequately  covered  the 
two  items  on  the  uniform  column. 

The  State  options  which  we  would  recommend  deal  with  intrastate 
variations  in  the  amount  of  the  supplementary  payment  as,  for  exam- 
ple, wherein  some  States  a  payment  supplement  for  shelter  is  much 
more  expensive  in  some  parts  of  the  State  than  in  others.  If  this  were 
to  be  established  at  the  Federal  level  on  a  uniform  basis  it  would  be 


2257 


impossible,  in  our  view,  at  least,  to  take  into  account  those  local  vari- 
ations. 

The  second  item  also  covers  not  only  shelter  but  covers  institutional 
and  community  care  payments,  where  a  person  may  be  placed  in  a 
boarding  home  situation  or  a  community  facility  that  is  not  especially 
health  oriented,  and  the  actual  cost  of  that  payment  may  have  to  be 
part  of  the  supplement  that  a  State  provides,  and  will  vary  not  only 
from  State  to  State  and  region  to  region  within  a  State,  but  will  vary 
with  the  particular  boarding  home  the  person  is  placed  in. 

The  third  item  has  already  been  mentioned  and  that  involves  States 
where  the  policy  has  been  adopted  to  pay  an  individual  a  given  amount 
of  money  as  a  standard,  and  to  pay  a  couple  not  a  reduced  amount  but 
exactly  double  the  amount  that  an  individual  would  get. 

In  my  own  State  of  Colorado  that  has  been  the  policy  for  at  least 
35  years,  I  believe,  and  we  would  be  hard  pressed  if  the  Federal  Gov- 
ernment were  to  refuse  to  participate  in  that  local  policy  of  long 
standing. 

I  think  there  are  other  illustrations  of  that  where  that  will  be  very 
important  to  the  States. 

The  next  heading  then  is  in  work  requirements  and  incentives,  a 
very  important  part  of  the  bill,  and  one  which  we  think  can  be  uni- 
formly applied  insofar  as  a  definition  of  employability  is  concerned, 
although  that  term  is  hard  to  apply  even  if  you  can  define  it  in  stat- 
ute, but  the  definition  ought  to  be  uniform. 

The  minimum  wage  at  which  a  recipient  must  accept  employment 
as  a  condition  of  eligibility,  we  can  understand  that  that  might  well 
be  a  uniform  proposition,  and  indeed  in  H.R.  1 1  think  it  does  specify 
that  a  person  must  accept  employment  if  the  job  offers  a  salary  of 
three-quarters  of  the  national  minimum  wage,  so  this  is  an  incorrect 
wav  of  applying  a  national  minimum  wage,  and  that  can  be  uniform. 

There  are  also  uniform  disregards  of  income  on  the  national  mini- 
mum payment  standards.  This  leads  us  into  an  awkward  position,  how- 
ever, which  I  would  like  to  mention  because  as  the  bill  is  now  written 
the  income  disregards  are  credited  in  reduction  of  the  Federal  payment 
and  not  at  all  in  reduction  of  the  State  supplement.  We  don't  feel  that 
that  is  equitable,  and  would  like  to  see  you  consider  applying  those  pay- 
ments, some  of  our  members  think  that  they  ought  to  be  applied  en- 
tirely to  the  State  supplement  first,  but  even  if  that  wrere  further  than 
you  wished  to  go  or  felt  you  could  go,  we  think  there  is  real  merit  in 
the  suggestion  that  they  be  applied  proportionately  to  the  State  and 
the  Federal  payments. 

A  third  possibility,  which  may  be  even  more  acceptable  to  you 
would  be  to  write  into  the  bill  a  provision  that  States  should  have  the 
option  to  set  maximums  after  which  the  State  supplement  would  not 
apply.  For  example,  one  might  say  that  in  no  case  would  a  State  be 
required  to  pay  if  the  Federal  standard  and  the  disregards  added  to 
more  than  perhaps  150  percent  of  the  State  standard  payment.  In  this 
way  the  disregards  could  not  add  up  to  such  a  sum  that  the  recipient 
is  really  getting  much  more  income  than  the  State  would  be  inclined 
to  give  were  it  to  start  without  those  disregards. 

There  should  also  be,  as  Speaker  Kurfess  has  mentioned,  an  option 
for  the  States  to  experiment  with  supplementary  payments  to  en- 


2258 


courage  a  recipient  to  relocate  as  from  one  part  of  the  State  to  an- 
other in  order  to  take  a  job. 

The  final  section  deals  with  the  administration  of  the  cash  assistance 
and  services,  and  here  we  list  on  the  left  the  uniform  recipient  identi- 
fication system,  uniform  performance  standards,  and  accountability 
for  the  use  of  Federal  funds,  uniform  data,  and  statistical  systems 
necessary  for  proper  planning  and  evaluation,  the  availability  of  Fed- 
eral information  for  the  use  in  locating  nonsupporting  fathers,  this  is 
particularly  important,  and  we  will  refer  to  it  later  on,  if  we  may,  and 
a  uniform  national  system  for  identification  of  available  jobs  to  the 
employment  service. 

But  while  making  those  tilings  uniform  we  would  suggest  that  the 
States  be  preserved  the  option  of  administering  the  cash  assistance 
program  both  for  families  and  for  adult  categories  without  financial 
penalty. 

At  the  present  time  the  bill  is  written  so  that  the  States  may  continue 
some  of  this  administration,  but  if  they  do  it  will  be  a  their  own  ex- 
pense, and  the  hold  harmless  provisions  of  the  act  would  not  apply. 
We  feel  this  is  an  unnecessary  club  to  force  States  to  agree  that  Federal 
administration  of  these  payments  is  a  better  system  than  State  pay- 
ments and,  naturally,  speaking  on  behalf  of  State  legislatures  we  are 
reluctant  to  make  that  concession.  We  think  there  are  advantages  in  a 
certain  amount  of  local  control,  and  a  certain  amount  of  experimenta- 
tion with  how  administration  can  best  proceed. 

Senator  Anderson.  I  have  to  warn  you  time  is  running  pretty 
rapidly. 

Mr.  Dines.  I  think  I  have  covered  the  points  that  were  assigned  to 
me,  and  would  like  to  ask  Representative  Hodes  of  Florida  if  he  would 
deliver  a  short  statement  on  the  social  services  aspect  which  we  feel 
is  very  important. 

Senator  Anderson.  Very  well. 

Mr.  Hodes.  Members  of  the  committee,  I  will  just  take  a  few 
moments.  I  am  here  primarily  because  I  am  chairman  of  the  Commit- 
tee on  Health  and  Rehabilitative  Services  of  the  Florida  House  of 
Representatives.  I  am  going  to  direct  your  attention  primarily  to  the 
matter  of  services  delivery  as  they  are  related  to  this  particular  pro- 
posed legislation.  The  key  provision  in  this  bill  is  one  which  would 
provide  that  there  would  be  a  freeze  on  those  funds  available  through 
titles  IV (A)  and  XVI,  and  would  have  the  effect  of  limiting  the 
availability  of  Federal  assistance  for  potential  welfare  recipients 
under  the  programs  currently  in  effect.  It  would  tend  to  deny  those 
States  that  choose  to  continue  to  innovate  in  the  area  of  potential 
recipients  in  the  rehabilitative  programs  from  the  opportunities  of 
having  Federal  assistance  in  innovation.  The  damaging  aspect  of  this 
is  that  it  would  discourage  development  of  improved  services  by  States 
in  that  it  would  freeze  them  at  the  present  level  and  any  development 
programs  they  would  have  would  have  to  relate  solely  to  their  own 
tax  base. 

I  can  recognize  the  thrust  of  the  freeze  concept  since  IV  and  XVI 
services  today  are  aimed  at  many  who  would  come  under  the  eligibility 
of  the  new  program  and  the  new  program  contemplates  a  different 
sort  of  service. 


2259 


However,  it  is  important  that  individuals  in  both  categories,  the 
working  poor  and  unemployables,  are  usually  seriously  in  need  of 
social  and  health  services  that  are  available  only  through  State 
agencies. 

The  classical  assistance  offered  by  social  workers  and  vocational 
rehab  counsellors  is  often  insufficient  to  met  the  needs  of  many  families 
on  public  assistance  or  who  are  potential  public  assistance  recipients 
in  the  titles  IV (A)  and  XVI  categories.  So  while  we  have  social  work- 
ers who  provide  excellent  intake  and  excellent  referral  functions  to 
other  State  agencies  they  usually  in  themselves  are  unprepared  to  re- 
solve some  of  the  problems  of  America's  poor. 

It  is  our  concept  in  Florida,  and  we  have  already  funds  to  initiate 
this,  that  the  key  to  effectiveness  of  these  services  is  cordination.  For 
example,  a  single  recipient  family  may  have  correctional,  psychiatric, 
or  emotional  problems  and  could  best  be  treated  by  State  agencies  by 
integration  of  programs  of  this  nature. 

At  the  present  time  Florida  is  attempting  to  demonstrate  this  under 
a  concept  that  we  developed  in  the  Palm  Beach  County  under  Federal 
grant  under  the  name  of  a  Comprehensive  Services  delivery  system. 
We  refer  to  this  by  the  acronym  of  the  CSDS  project  and  this  project 
has  only  been  operative  for  a  short  time  but  there  are  some  case  studies, 
of  which  you  have  been  given  copies,  which  illustrate  very  brief  and 
very  simple  cases  of  how  this  coordinated  concept  works.  The  idea  is 
that  legislation  should  be  designed  not  to  discourage  but  to  encourage 
improved  State  services  by  treating  the  multiple  disabilities  of  the 
poor  by  making  them  available  to  the  poor  without  having  to  shop 
around  from  agency  to  agency. 

I  would  like  to  suggest  that  social  services  funds  be  made  available 
to  provide  incentives  for  creating  a  coordinated  social  services  system. 
Such  a  system  could  embody  State  control  and  comprehensive  delivery. 
The  present  fragmentation  of  services  wherein  the  potential  recipient, 
although  he  may  be  eligible  or  ineligible  for  cash  assistance,  has  to 
shop  around  for  months  at  a  time  from  one  agency  to  another  to  find 
the  appropriate  social  services  should  be  discouraged.  What  we  should 
have  is  a  coordinated  comprehensive  service  delivery  system  available 
by  a  coordination  of  these  services  within  a  State  where  a  single  State 
agency  has  overall  an  overview  of  this  and  delivers  these  services  and 
makes  them  available  to  recipients  at  a  local  level. 

The  design  of  a  comprehensive  services  delivery  system  at  State  level 
should  be  encouraged  by  the  provision  of  matching  funds  for  this  pur- 
pose and  not  by  just  freezing  any  further  innovation  under  the  pro- 
posed sections  of  this  bill. 

The  agencies  that  insist  upon  separate  and  exclusive  control  should 
be  discouraged,  and  the  encouragement  of  comprehensive  State  serv- 
ices for  disabilities  to  the  poor  can  result,  we  believe,  in  a  marked  in- 
crease in  the  employable  among  the  unemployable,  and  the  level  of 
income  among  the  employable. 

The  posture  of  the  bill  encouraging  day  care  planning  should  be 
included  in  the  comprehensive  delivery  system  because  we  find  the 
greatest  reason  for  disability  and  the  greatest  reason  for  unemploy- 
ability  is  the  absence  of  child  care  services  and,  of  course,  the  growth 
of  the  program  is  due  to  the  absence  of  family  planning  services. 


2260 


The  chairman's  own  State  of  Louisiana  is  exemplary  in  the  value  of 
family  planning  service  and  what  it  can  do  to  hold  down  welfare  costs 
in  a  State,  so  I  would  encourage  the  committee,  in  fact  urge  the  com- 
mittee, to  try  to  amend  this  legislation  so  that  it  does  not  deny  the 
States  the  opportunity  for  innovation  in  the  services  delivery  area 
outside  of  the  public  assistance  role  and  even  the  vocational  rehab 
role  but,  in  fact,  amend  the  legislation  to  encourage  all  States  to  de- 
velop comprehensive  services  delivery,  both  within  the  superstructure 
of  State  government  and  also  to  have  comprehensive  service  delivery 
programs  at  the  local  level  so  that  a  single  recipient  can,  as  we  have 
demonstrated  in  Palm  Beach,  can  complete  an  interview  application 
by  every  State  agency  for  possible  eligibility  for  need  of  services 
within  a  matter  of  a  couple  of  hours.  This  is  very,  very  efficient.  It 
saves  a  great  deal  of  money  and  it  would  go  a  long  way  from  removing 
people  from  the  unemployable  category  and  placing  them  in  the  em- 
ployable category  which  would  then  assign  them  to  perhaps  some  other 
agency,  as  is  contemplated  in  the  bill  through  the  Department  of 
Labor. 

The  biggest  value  of  this  type  of  system,  too,  would  be  to  develop 
a  job  profile  wherein  that  job  profile  could  be  plugged  into  a  Com- 
merce or  Labor  Departments  job  availability  structure  and  proper 
matching  of  jobs  and  individuals  could  be  taken  care  of.  At  the  same 
time  whatever  disabilities  exist  in  the  family  that  have  been  provided 
to  the  State  agencies  can  be  delivered.  This  could  cover  behavioral 
problems,  mental  health  problems  or  just  simply  vocational  educa- 
tional problems.  These  could  all  be  covered  by  having  a  comprehensive 
system,  and  the  legislation  should  encourage  coordinated  comprehen- 
sive service  delivery  systems  at  the  State  level  with  Federal  assistance. 
Thank  you. 

Mr.  Ktjrfess.  Mr.  Chairman,  I  understand  your  time  is  limited  this 
morning.  I  would  like  to  thank  you  for  this  opportunity  that  we  have 
had  to  make  this  presentation  to  you.  We  want  to  emphasize,  as  our 
outline  indicates  to  you,  our  concern  from  our  position  as  policymakers 
at  the  State  level,  and  certainly  indicate  to  you  that  as  you  continue 
your  consideration  of  this  measure  we  will  be  happy  to  respond  to  any 
questions  or  reactions  that  you  might  want  from  us. 

Senator  Anderson.  I  think  it  is  a  very  good  statement.  You  have 
made  some  very  good  comments.  We  will  take  advantage  of  your 
observations.  It  is  extremely  valuable. 

Any  questions  ? 

Senator  Fannin.  Mr.  Chairman,  this  certainly  presents  very  fine 
testimony.  It  is  regrettable  we  do  not  have  more  time  because  I  know 
we  will  benefit  from  your  testimony  and  we  will  read  your  complete 
statement. 

I  am  just  wondering  if  you  could  furnish  for  the  record  from  the 
National  Legislative  Conference  the  percent  that  medicaid  costs  are 
to  the  total  welfare  costs  in  the  individual  States.  We  have  had  that 
furnished  for  some  of  the  States  but  not  for  all.  I  wonder  if  that  is 
available  from  the  National  Legislative  Conference. 

Mr.  Ktjrfess.  We  would  certainly  get  it  for  you. 

Senator  Fannin.  Thank  you  kindly.  I  appreciate  very  much  your 
testimony. 

(The  prepared  statement  of  Mr.  Kurfess  and  a  table  referred  to  by 
Senator  Fannin  follows.  Hearing  continues  on  p.  2268.) 


2261 


Total  expenditures  for  medical  assistance,  and  welfare  expenditures 
broken  by  percent  of  expenditures  for  medical  assistance  and  cash 
assistance  plus  social  services ,  fiscal  year  1971 


Percent  of  expenditures  for— 

Expenditures  for  

medical  Medical         Cash  assistance 

assistance  assistance     plus  social  services 


Alabama   82,  702  34.  1  65.  9 

Alaska  

Arizona  

Arkansas   12,  631  10.  9  89.  1 

California   1,  109,  164  34.  0  66.  0 

Colorado   56,223  47.8  52.2 

Connecticut   97,  743  44.  9  55.  1 

Delaware   7,482  26.0  74.0 

District  of  Columbia   39,  857  35. 4  64.  6 

Florida   83,  516  32. 4  67.  6 

Georgia   129, 995  38.  5  61.  5 

Guam   495  21.  3  78.  7 

Hawaii   22,249  39.7  60.3 

Idaho   10, 483  34. 9  65.  1 

Illinois   287,  680  33.  7  66.  3 

Indiana   53, 972  31.  0  69.  0 

Iowa   27,  115  21.  0  79.  0 

Kansas   39,910  30.0  70.0 

Kentucky   71,  002  35.  6  64. 4 

Louisiana   54,  824  20.  1  79. 9 

Maine   18,  802  24.  7  75.  3 

Maryland   108,  227  41.  9  58.  1 

Massachusetts   343,  092  46.  0  54.  0 

Michigan   277, 512  39.  0  61.  0 

Minnesota   113,  295  38.  3  61.  7 

Mississippi   35, 835  26.  8  73.  2 

Missouri   60, 453  22.  9  77.  1 

Montana   11,150  34.6  65.4 

Nebraska   24, 402  30.  7  69.  3 

Nevada   8,  276  38.  8  61.  2 

New  Hampshire   7,  665  24.  4  75.  6 

New  Jersey   181,  669  32.  8  67.  2 

New  Mexico   17,  571  26.  0  74.  0 

New,  York   1,  555,  518  49.  0  51.  0 

North  Carolina   98,  187  40.  9  59.  1 

North  Dakota   13,  382  39.  6  60.  4 

Ohio   131,746  29.5  70.5 

Oklahoma   96,  350  37.  6  62. 4 

Oregon   19,  961  15.  5  84.  5 

Pennsylvania   363,  405  37.  6  62.  4 

Puerto  Rico   71,  383  56.  3  43.  7 

Rhode  Island   42,  189  44.  6  55. 4 

South  Carolina   34, 412  42.  2  57.  8 

South  Dakota   9,  037  26.  4  73.  6 

Tennessee   38,  840  20.  5  79.  5 

Texas   181,  587  28.  8  71.  2 

Utah   18,  845  33.  0  67.  0 

Vermont   15,  508  39. 4  60.  6 

Virgin  Islands   1,  337  44.  5  55.  5 

Virginia   58,  944  33.  2  66.  8 

Washington   105,  073  34.  1  65.  9 

West  Virginia   23,  320  25.  5  74.  5 

Wisconsin   162,  848  54.  8  45.  2 

Wyoming   1,  828  17.  9  82.  1 


U.S.  total   6,  434,  692  37.  1  62.  9 


Source:  OA-25,  November  1971. 


2262 


Statement  of  Speaker  Charles  F.  Kurfess,  Ohio  House  of  Representatives  ; 
State  Senator  Allen  Dines,  Colorado,  Co-Chairman  ;  and  State  Representa- 
tive Richard  S.  Hodes,  Florida,  on  Behalf  of  the  Human  Resources  Task 
Force  of  the  Intergovernmental  Relations  Committee  of  the  National 
Legislative  Conference 

summary 

Mr.  Chairman,  we  appreciate  the  opportunity  to  testify  before  this  Committee 
to  represent  the  National  Legislative  Conference  to  discuss  the  welfare  reform 
legislation  now  under  consideration.  The  panel  of  state  legislators  which  will 
present  this  testimony  are  members  of  the  Human  Resources  Task  Force  of  the 
Intergovernmental  Relations  Committee  of  the  National  Legislative  Conference. 
Other  members  of  the  Task  Force  and  their  staff  are  also  here  today.  We  have 
provided  to  the  Committee  the  list  of  those  in  attendance  today. 

While  there  are  many  aspects  and  details  of  H.R.  1  that  we  are  concerned 
with,  we  have  focused  our  attention  on  the  following : 

I.  National  Uniformity  and  State  Role. — Outlining  those  elements  of  a  welfare 
and  related  services  program  that  can  have  national  uniformity  and  those  ele- 
ments that  require  a  state  role  or  options  to  deal  with  area  and  state  variations 
and  be  administratively  workable. 

II.  State  Role  in  Services. — Present  suggested  amendments  to  H.R.  1  to  improve 
the  services  programs  contemplated  and  including  specific  examples  of  States' 
efforts  to  provide  public  service  employment  and  a  specific  example  of  a  State's 
effort  to  provide  comprehensive,  one-stop  social  service  delivery  system. 

III.  Child  Support. — Presenting  suggestions  to  improve  the  abiLity  of  States  to 
enforce  child  support  payments  by  fathers. 

IV.  Medicaid  Financing. — Suggest  changes  in  the  Medicaid  provisions  to 
increase  rather  than  decrease  the  federal  participation  in  the  cost  of  Medicaid. 

V.  Fiscal  Relief. — Suggest  changes  in  the  fiscal  relief  provisions  to  make  more 
equitable  between  States  the  fiscal  relief  and  allow  for  cost  of  living  increases. 

Proposed  Federal-State  Division  of  Responsibility  in  Welfare  Reform 

Legislation 

National  Uniformity  State  Role  and  Options 

cash  assistance  program  standards  and  policies 

1.  Federal  financed  national  minimum  1.  Intrastate  variations  in  amount  of 

payment  standard.  state  supplementary  payments  re- 

flecting cost  variations  within  the 
State. 

2.  Uniform  policy  on  liens  and  allowable  2.  State  option  to  alter  amount  and 

resources  for  eligibility.  nature  of  state  supplementary  pay- 

ment in  providing  shelter  allow- 
ances and  institutional  and  com- 
munity care  payments. 

3.  Uniform  definition  of  employability.  3.  State  option  in  supplementary  pay- 

ments to  change  ratio  of  total 
amount  of  payments  between  in- 
dividual and  couple  payments  un- 
der old  age  assistance. 


WORK  REQUIREMEN 

4.  Minimum  wage  at  which  recipient 
must  accept  employment  as  condi- 
tion of  eligibility. 


5.  Uniform  income  disregards  on  na- 
tional minimum  payment  stand- 
ards. 


^S  AND  INCENTIVES 

4.  Option  to  State  in  determining  eligi- 

bility for  state  supplementary  as- 
sistance to  apply  a  gross  income 
limitation  of  eligible  families  to  no 
less  than  150%  of  the  State's  pay- 
ment level. 

5.  Option  to  State  to  provide  incentives 

to  recipients  with  state  supple- 
mentary payments  to  relocate  near 
available  employment. 


2263 


ADMINISTRATION  OF  CASH  ASSISTANCE  AND  SERVICES 


6.  Uniform     recipient  identification 
system. 


7.  Performance  standards  and  finan- 
cial management  policies  for  ac- 
countability in  use  of  federal 
funds. 

&  Uniform  data  and  statistical  system 
for  planning  and  evaluation. 


Availability  of  federal  agencies  in- 
formation for  use  in  locating  non- 
support  fathers. 


10. 


Uniform  national  system  for  iden- 
tification of  available  jobs. 


6.  State  option  for  state  administra- 

tion of  cash  assistance  program 
for  families  without  financial 
penalty. 

7.  State  option  for  state  administra- 

tion of  cash  assistance  program 
for  the  aged,  blind,  disabled,  with- 
out financial  penalty. 

8.  Continued  state  responsibility  for 

administering  enforcement  of 
father  support  with  state  option 
to  develop  sanctions  for  use  in 
locating  and  enforcing  father 
support. 

9.  State  option  to  submit  a  Compre- 

hensive State  Opportunities  for 
Families  services  plan  for  man- 
power, public  service  employment, 
child  care  and  related  social,  re- 
habilitation, and  health  services. 

10.  State   determination   of  order  of 

priority  for  employable  individ- 
uals to  receive  Opportunities  for 
Families  services. 

11.  State  administration  of  social  serv- 

ices for  the  aged,  blind,  disabled, 
and  families  with  continued  avail- 
ability of  adequate  funds  and  flex- 
ibility in  their  use  to  enable  States 
to  develop  and  provide  compre- 
hensive social  services. 


I.  FEDERAL  AND  STATE  ROLES  IN  DEFINING  SOCIAL  PROBLEMS  AND  SOLUTIONS 

In  the  development  of  the  previous  outline  for  suggestions  for  national  uni- 
formity and  provision  of  state  role  and  options,  certain  key  questions  were 
asked  in  evaluating  this  proposed  major  national  social  legislation: 

A.  What  should  be  or  can  be  the  extent  of  the  national  definition  of  the  problem 
being  dealt  with  and  what  can  be  determined  and  defined  only  on  a  state  by 
state  basis? 

B.  What  should  be  or  can  be  the  extent  of  the  national  prescription  of  the 
solution  to  the  problem  and  require  national  uniformity  and  what  must  rely 
on  state  by  state  determination  of  the  optimum  solution  to  the  problem  and 
without  national  uniformity? 

Some  of  the  nationwide  variations  which  must  be  taken  into  account  are : 
Characteristics  of  the  unemployed,  present  welfare  recipients,  and  low 
income  people. 

Average  income  levels,  wages  and  cost  of  living  in  an  area  or  State. 

Educational,  social  or  occupational  skill  levels  of  welfare  and  low  income 
individuals  in  an  area  or  State. 

Present  extent  and  organization  for  delivering  public  human  services  in 
a  State. 

Availability  of  private  employment  or  potential  public  service  employment. 
Location  and  mobility  of  the  unemployed  in  relation  to  present  or  poten- 
tially available  private  or  public  jobs. 
Too  often  the  flexibility  in  federal  legislation  to  deal  with  state  and  area 
differences  is  provided  to  the  federal  administering  agency  and  not  to  state 
elected  officials.  Therefore  we  are  asking  that  statutory  flexibility  to  deal  with 
state  and  area  variations  be  instead  explicitly  provided  to  state  elected  officials. 

Cash  assistance  program  standards  and  policies. — We  see  the  need  for  the 
federal  government  to  establish  some  minimum  standard  for  cash  assistance 
which  would  be  fully  federally  financed  and  apply  throughout  the  country.  Also 
equity  would  dictate  the  need  to  establish  uniform  policy  on  liens  on  recipients 
property  and  the  amount  of  allowable  resources  in  determining  eligibility. 


2264 


However,  it  is  also  essential  that  we  recognize  the  variations  in  the  income 
levels,  wages,  and  cost  of  living  between  States  and  areas  within  States.  We  are 
therefore  suggesting  variations  in  the  supplementary  payments  provision  to  pro- 
vide states  the  option  of  continuing  the  practice  now  in  a  number  of  States  of 
distributing  part  of  the  assistance  payment  based  on  shelter  costs  and  institu- 
tional and  community  care  payments.  In  addition,  States  which  now  provide  the 
same  payment  for  an  individual  whether  living  as  an  individual  or  with  their 
spouse  as  a  couple  under  the  old  age  assistance  program  should  have  the  option 
to  continue  such  a  practice. 

Work  requirements  and  incentives. — We  believe  that  national  uniformity  in 
the  establishment  of  a  uniform  definition  of  employability  is  reasonable. 

The  present  law's  provisions  regarding  that  amount  of  income  which  may  be 
disregarded  in  determining  eligibility  for  assistance  payments  has  seen  the 
gross  income  of  families  still  receiving  some  payment  rise  to  such  levels  that 
the  entire  program  of  providing  work  incentives  for  low  income  people  has 
suffered.  Thus  we  are  proposing  that  the  States  have  the  option  in  determining 
eligibility  for  state  supplementation  to  apply  some  gross  income  limitation  at 
which  point  a  family  would  no  longer  be  eligible  for  state  supplementary  assist- 
ance. We  are  suggesting  no  less  than  150  percent  of  the  State's  payment  level.  It 
should  be  pointed  out  that  this  is  somewhat  of  a  defense  against  the  provision 
in  H.R.  1  which  in  effect  discourages  states  from  making  supplementary  payments 
because  income  disregards  are  first  applied  against  the  federal  payment. 

Among  the  options  which  we  feel  should  be  made  available  to  States  is  flexibility 
in  the  use  of  state  supplementary  payments  to  provide  incentives  for  welfare 
recipients  to  relocate  near  available  employment.  In  some  cases  this  may  mean 
providing  incentives  for  a  family  to  move  to  a  rural  area  where  an  employment 
opportunity  may  exist  or  is  being  developed  by  the  State  and  where  living  costs 
such  as  for  housing  may  be  lower. 

II.  FEDERAL- STATE  DIVISION  OF  RESPONSIBILITY  FOR  ADMINISTRATION  OF  CASH 
ASSISTANCE  AND  SERVICES 

Key  questions  which  must  be  dealt  with  in  determining  the  division  of  respon- 
sibility between  the  federal  and  state  governments  for  administering  cash  assist- 
ance and  manpower,  social,  rehabilitation,  child  care,  and  other  related  services. 
These  include : 

What  arrangements  can  provide  the  most  responsiveness  to  the  needs  of 
the  people  served  and  the  total  electorate? 

What  arrangements  can  provide  the  most  efficient  administration  including 
the  use  of  the  newest  administrative  procedures  and  technology? 

What  arrangements  can  provide  the  most  effective  link  and  interrelation- 
ship among  related  services? 
The  following  chart  illustrates  the  fragmentation  of  responsibility  for  ad- 
ministering cash  assistance  and  services  under  H.R.  1  compared  to  provisions  in 
the  present  law. 

X=Proposed  responsibilities  in  H.R.  1 ;  0=Responsibilities  under  federal  law : 


Social  Family 

Security  Benefits 

Administra-  Administra-  Department 

tion  tion  of  Labor  States 


Administering  cash  assistance  for  families   X   0 

Administering  cash  assistance  for  aged,  blind,  and   X   0 

diabled. 
Administering  services: 

Employable  heads  of  families   X  0) 

Familes  with  "unemployable"  head  of  family        X,  0 

Aged,  blind,  and  disabled..    X,  0 


i  Labor  Department  project  grant  to  State  employment  service  for  specific  areas  in  State. 

Comprehensive  State  opportunities  for  families  services  plan. — The  Adminis- 
tration has  indicated  that  it  intends  to  ask  the  Congress  to  appropriate  over  $2 
billion  for  manpower  training,  public  service  employment,  child  care  and  health, 
rehabilitation  and  other  supportive  and  social  services  for  the  first  year  of 


2265 


implementation  of  the  Opportunities  for  Families  Program  for  employable  re- 
cipients. The  need  for  these  various  services  vary  considerably  from  state  to 
state  according  to  the  characteristics  of  the  recipients  and  the  nature  of  the 
job  market. 

H.R.  1  provides  for  categorical  authorization  of  funds  for  each  of  these  serv- 
ices and  for  the  Secretary  of  Labor  to  continue  to  use  the  categorical  project 
grant  approach  in  funding  such  services  without  taking  into  account  efforts  by 
States  to  coordinate  various  human  service  programs.  Such  a  situation  would 
result  in  further  fragmenting  the  programs  which  must  be  interrelated  to  be 
effective  in  assisting  people  in  achieving  their  fullest  self-support  potential. 
Also,  the  bill  has  five  separate  funding  authorities  related  to  child  care.  We 
believe  that  each  State  should  submit  a  Comprehensive  State  Opportunities  for 
Families  Services  Plan  for  a  combined  funding  and  coordinated  provision  of 
these  services  to  be  most  responsive  to  the  needs  in  that  State.  State  elected 
officials  would  designate  the  state  agency  to  administer  or  supervise  the  adminis- 
tration of  such  a  plan.  The  Secretaries  of  Labor,  and  Health,  Education  and 
Welfare  would  be  required  to  approve  such  state  plan  if  it  met  the  requirements 
of  the  Act  unless  they  determine  that  some  other  unit  of  government  has  the 
capability  to  more  effectively  carry  out  the  purposes  of  the  Program  and  has  a 
greater  capability  to  provide  or  to  enter  into  arrangement  with  other  appropriate 
agencies  to  provide  the  necessary  services. 

Senator  Louise  Conner  of  Delaware  will  explain  to  you  some  innovative  pro- 
grams in  that  State  for  developing  public  service  employment  opportunities  for 
welfare  recipients  and  coordinated  delivery  of  services. 

State  administration  of  comprehensive  social  services. — H.R.  1  continues  to 
provide  a  state  role  in  administration  of  social  services  for  those  defined  as 
"unemployable".  However,  the  bill  would  deny  adequate  funding  and  incentives 
to  states  to  develop  comprehensive  social  services.  Representative  Richard  Hodes, 
Chairman  of  the  Health  and  Rehabilitative  Services  Committee  of  the  Florida 
House  of  Representatives  will  discuss  this  matter  with  you  and  provide  a 
specific  example  of  a  comprehensive  one-stop  social  service  project  now  operating 
in  his  state. 

Administering  cash  assistance. — While  persistent  arguments  have  been  made 
for  the  desirability  of  federal  administration  of  the  cash  assistance  program  for 
both  families  and  the  adult  categories,  the  continued  state  participation  in  financ- 
ing the  supplementary  payments  makes  it  essential  that  states  have  the  option 
to  administer  the  cash  assistance  programs  and  without  the  financial  penalties 
in  choosing  such  an  option  as  proposed  in  H.R.  1.  The  size  and  complexity 
of  the  federal  bureaucracy  which  would  be  required  and  the  variations  from 
state  to  state  which  would  still  have  to  continue  plus  the  sheer  size  and  difficulty 
of  the  transition  to  federal  administration  would  cause  very  difficult  problems. 

We  do  recognize  that  some  increased  uniformity  in  administrative  procedures 
with  uniform  recipient  identification  system  and  uniform  data  and  statistical 
system  that  is  actually  useful  for  plannning  and  evaluation  would  be  desirable. 
In  addition,  federal  technical  assistance  to  states  to  improve  administrative 
procedures  and  ensure  the  use  of  modern  technology  could  provide  the  advan- 
tages of  national  uniformity  without  the  problems  of  federal  administration. 

III.  IMPROVING  STATES'  ABILITY  TO  LOCATE  AND  ENFORCE  PAYMENT  OF  CHILD  SUPPORT 

BY  ABSENT  FATHERS 

Major  growth  of  the  percentage  of  families  receiving  cash  assistance  payments 
due  to  the  absence  or  desertion  of  the  father  of  the  children  requires  changes 
in  the  Social  Security  Act,  improved  administrative  procedures,  and  availability 
of  financial  resources  to  enforce  payment  of  support  payments  by  absent  fathers. 
These  changes  include : 

1.  Availability  without  court  order  of  federal  agencies  information  for 
use  in  locating  fathers  who  are  deliquent  in  support  payments,  specifically 
information  from  Internal  Revenue  Service  and  Veterans  Administration. 

2.  Amendments  to  the  Social  Security  Act  to  require  mothers  to  assist  in 
identifying,  locating  and  taking  legal  action  to  obtain  support  from  the 
absent  parent. 

3.  Provide  100%  federal  financing  for  state  welfare  departments  to  directly 
hire  staff  or  to  contract  with  other  agencies  for  units  of  government  to 
assist  in  carrying  out  programs  of  enforcing  father  support. 


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4.  Provide  States  the  option  to  experiment  with  sanctions  to  enforce  the 
requirement  that  mothers  assist  in  identifying  and  locating  the  absent  father. 

5.  Continue  to  provide  States  a  proportionate  share  of  the  support  pay- 
ment related  to  the  proportion  of  non-federal  share  of  the  cash  assistance 
payment. 

Mr.  Ben  Kain,  from  the  Illinois  Department  of  Public  Aid  and  representing 
here  today  the  national  organization  of  state  officials  concerned  with  adminis- 
tering the  interstate  compact  on  enforcement  of  support  has  developed  a  back- 
ground paper  on  this  issue  for  the  Committee  and  specific  legislative  language 
to  amend  the  Social  Security  Act. 

IV.  MEDICAID 

We  recognize  the  need  to  continually  improve  the  utilization  review  procedures 
in  the  Medicaid  program  to  insure  that  a  certain  level  of  care  and  kind  of  care 
is  actually  needed  by  patients.  However,  proposals  to  reduce  federal  matching 
for  costs  of  long-term  care  now  in  H.R.  1  are  opposed  because  the  time  periods 
are  arbitrary,  do  not  recognize  medical  necessity  and  would  increase  costs  to 
states. 

V.  STATE  FISCAL  RELIEF  PROVISIONS  IN  H.R.  1 

We  are  aware  that  various  states  have  made  fiscal  projections  on  the  impact 
of  H.R,  1  on  States  that  have  indicated  that  even  with  the  hold  harmless  pro- 
visions for  cash  assistance  there  may  still  be  significant  additional  costs  to 
states  not  covered  by  the  hold  harmless  provision. 

We  do  not  believe  it  would  be  politically  feasible  for  states  to  deny  Medicaid 
coverage  to  those  made  newly  eligible  for  cash  assistance  under  H.R.  1.  We  rec- 
ommend that  H.R.  1  provide  a  "hold  harmless"  provision  to  protect  states  against 
increases  in  Medicaid  costs  for  those  made  newly  eligible  for  cash  assistance 
programs  under  H.R.  1. 

State  fiscal  relief  provisions  in  H.R.  1  should  be  amended  to  provide  federal 
participation  in  the  cost  to  a  state  of  (1)  maintaining  present  levels  of  support 
and  (2)  increasing  payment  levels  to  reflect  cost  of  living  increases. 

We  also  support  proposed  amendments  to  H.R.  1  to  provide  emergency  and 
retroactive  fiscal  relief  for  States  from  welfare  costs. 


Improving  State  Ability  To  Locate  and  Enforce  Payment  of  Child  Support 

by  Absent  Fathers 

Memorandum  from  National  Conference  on  Uniform  Reciprocal  Enforcement 
of  Support  to  Senate  Finance  and  House  Ways  and  Means  Committee  Consider- 
ing Amendments  to  the  Social  Security  Act,  Including  HR  1, 

The  National  Conference  on  Uniform  Reciprocal  Enforcement  of  Support,  com- 
posed of  judges,  masters,  referees,  clerks,  probation  officers,  various  other  court 
officials,  local  prosecutors,  state  attorney  general  representatives,  welfare  ad- 
ministrators, social  workers  and  the  like,  wishes  to  bring  several  matters  of 
general  concern  to  the  attention  of  the  Committee  for  its  consideration. 

Of  utmost  concern  are  the  several  federal  district  court  decisions  holding  the 
granting  of  AFDC  benefits  may  not  be  conditioned  upon  the  cooperation  of  the 
mother,  or  other  custodial  relative,  with  welfare  department  or  law  enforcement 
officials  in  obtaining  support  for  the  child  (ren)  from  an  absent  parent.  These 
decisions  have  been  affirmed  by  the  United  States  Supreme  Court  in  Juras  v. 
Meyers.  No.  71-63  (Oregon)  and  Weaver  v.  Doe,  No.  71-478  (Illinois)  and  apply 
whether  the  child  is  born  in  or  out-of-wedlock. 

The  so-called  "NOLEO"  provisions  of  the  early  '50s  requiring  that  prompt 
notice  be  given  the  local  law  enforcement  official  of  the  furnishing  of  aid  to  a 
child  who  has  been  deserted  or  abandoned  by  a  parent,  the  requirement  in  the 
early  '60s  that  each  state  establish  a  central  unit  for  location  purposes,  the 
1967  Social  Security  Amendments  requiring  a  single  unit  for  obtaining  support 
from  an  absent  parent,  including  establishing  paternity  when  necessary  and 
federal  participation  in  the  special  funding  of  these  efforts,  seem  to  express 
clear  congressional  intent.  Under  today's  law,  the  mother  is  excluded  from  this 
cooperative  effort. 


2267 


In  order  to  implement  these  requirements  effectively,  many,  if  not  most, 
states  have  required  the  cooperation  of  the  mother,  or  other  custodial  relative, 
as  a  condition  of  eligibility  for  the  child  (ren)  for  whom  a  duty  of  support  is 
owed.  For  a  child  born  out-of-wedlock,  the  mother  is  the  only  person  who  can 
name  the  father,  sign  the  paternity  complaint,  and  testify  to  material  facts. 

While  it  is  true  some  states  have  Statutes  enabling  the  welfare  department 
to  bring  an  action  in  its  own  name  to  obtain  support  from  the  absent  parent  of  a 
child  born  in  wedlock  or  whose  paternity  has  been  established,  usually  the  only 
evidence  it  can  present  from  case  files  regarding  desertion  and  non-support 
is  self  serving  and  second  hand.  Law  enforcement  officials  and  courts  customarily 
require  testimony  of  a  witness  having  first-hand  knowledge  of  the  circumstances 
and  the  action,  being  civil  in  nature,  does  not  carry  the  usually  sanctions  of  the 
non-support  misdemeanor.  We  hasten  to  point  out,  cooperation  is  needed  to  ob- 
tain the  address  of  all  types  of  absent  parents  or  leads  upon  which  to  base  loca- 
tion effort. 

Although  the  proposed  disregard  of  a  portion  of  the  income  from  support  pay- 
ments in  arriving  at  need  will  serve  as  an  incentive  in  some  cases,  there  seems  to 
be  little  justification  for  not  taking  appropriate  support  action  in  all  cases  where 
possible. 

The  Conference  urges  strong  federal  sanctions  be  enacted  as  soon  as  possible 
by  amendment  of  the  Social  Security  Act  requiring  full  recipient  cooperation  in 
every  material  aspect  of  the  support  enforcement  process  as  a  condition  of  initial 
or  continuing  eligibility  for  AFDC.  Without  such  sanctions,  Conference  members 
feel  cooperation  will  be  minimal,  rising  caseloads  with  decreasing  support  con- 
tributions will  result,  and  an  effective  test  of  whether  or  not  there  is  a  bona 
fide  desertion  under  current  federal  law  will  be  lost. 

Self-incrimination,  right  to  privacy,  equal  protection  and  the  imposition  of  an 
additional  eligibility  requirement  by  the  states  not  required  by  the  Social  Se- 
curity Act  have  been  the  issues  raised  in  the  federal  court  cases.  The  courts 
have  not  reached  the  Constitutional  objections  in  their  decisions. 

Sanctions  contained  in  Social  Security  Act  amendment  could  be  waived  in  the 
event  criminal  prosecution  for  adultery  or  fornication  were  possible  under  state  or 
local  law.  Those  few  states  having  such  laws  could  then  grant  immunity  from 
prosecution  by  legislative  amendment  where  such  information  was  obtained  for 
support  purposes  in  welfare  cases  or  abolish  the  criminal  Statutes  altogether  in 
accordance  with  current  trends.  There  seems  to  be  some  favorable  precedent  with 
regard  to  the  privacy  issue,  leaving  only  a  possible  attack  on  grounds  of  equal 
protection. 

The  Conference  is  of  the  opinion  principal  responsibility  for  support  and  fraud 
prosecution  should  be  left  with  the  various  states  under  existing  laws  and  collec- 
tion procedures.  Under  present  federal  and  state  law,  there  is  appropriate  sharing 
of  the  proceeds  of  on-going  support  money,  reimbursement  of  assistance  granted, 
or  money  obtained  by  fraud  prosecution. 

However,  more  equitable  and  definite  arrangements  for  sharing  of  the  proceeds 
of  support  and  fraud  action  need  be  established  under  HR  1  and  other  Social 
Security  Act  amendments.  States  supplementing  the  federal  minimum  income 
allowance  should  share  on  a  proportionate  basis. 

In  the  event  S.  3019  is  adopted  by  the  Congress,  Attorney  General  actions  likely 
will  be  relatively  few  in  number  since  most  absent  parents  reside  in  the  state 
where  assistance  is  granted,  a  number  of  mothers  have  been  the  persons  traveling 
in  interstate  commerce  and,  in  many  instances,  paternity  has  not  been  established. 
Sharing  of  any  recovery  with  the  state,  however,  should  not  be  conditioned  upon 
a  prior  state  court  order.  Personal  service  for  ordering  support  normally  is  re- 
quired and  not  possible  when  the  whereabouts  of  the  absent  parent  is  unknown. 

The  Conference  urges  Congress  make  funds  more  readily  available  for  the  law 
enforcement  process  for  obtaining  support.  Although  funds  are  currently  avail- 
able for  welfare  department  support  activity,  salaries  and  fees  for  prosecuting 
attorneys,  courts,  clerks,  sheriffs,  and  the  like,  are  furnished  from  state  and  local 
funds,  with  the  federal  government  sharing  in  the  proceeds. 

Matching  funds  are  available  currently  for  selected  demonstration  projects 
involving  arrangements  with  local  courts  and  law  enforcement  officials  supplying 
other  than  usual  service  to  the  welfare  agencies.  Reported  projects  seem  to  be 
limited  to  assumption  of  welfare  agency  responsibilities  for  which  funds  were 
already  available  with  little,  if  any,  net  increase  in  money  to  the  states. 


2268 


Lastly,  the  Conference  believes  information  should  be  available  to  state  locator 
services  in  welfare  cases  from  all  federal  agencies,  including  the  Veterans  Admin- 
istration from  which  no  information  may  be  obtained  at  this  time.  Address  in- 
formation from  Internal  Revenue  Service  should  be  available  without  the  neces- 
sity of  a  prior  court  order,  as  in  the  case  of  the  Social  Security  Administration. 

Section  402(a)  (17)  of  the  Social  Security  Act  is  amended  by  striking  the 
semicolon  at  the  end  thereof  and  substituting  a  comma  and  the  word  "and", 
and  by  adding  the  following  new  subparagraph  : 

"(C)  that  if  and  for  so  long  as — 

(i)  a  mother  who  has  in  her  care  a  child  referred  to  in  clause  (A)  (i) 
refuses  to  identify  the  father  of  such  child  and  to  participate  in  establishing 
the  child's  paternity  and  securing  support  for  him,  and 

(ii)  a  mother  or  other  relative  having  in  her  or  his  care  a  child  referred 
to  in  clause  (A)  (ii)  refuses  to  supply  information  to  aid  in  locating  the 
deserting  or  abandoning  parent  and  to  participate  in  obtaining  support  from 
such  parent. 

such  mother's  or  other  relative's  needs  shall  not  be  taken  into  account  in  making 
a  determination  under  clause  (7),  and  aid  for  any  dependent  child  in  the  family 
in  the  form  of  payments  of  the  type  described  in  section  406(b)  (2)  (which  in 
such  cases  shall  be  without  regard  to  clauses  (A)  through  (E)  thereof)  or 
section  408  will  be  made;  except  that  the  provisions  of  this  clause  (C)  shall  not 
apply  to  a  mother  of  a  child  born  out-of-wedlock  if  her  identifying  the  father 
of  such  child  would  subject  her  to  criminal  prosecution  under  State  laws  or 
local  ordinances  pertaining  to  adultery  or  fornication,  and  the  State  agency  shall 
for  a  period  of  sixty  days  make  payments  of  the  type  described  in  section  406 
(b)(2)  (without  regard  to  clauses  (A)  through  (E)  thereof)  on  behalf  of  the 
mother  or  other  relative  having  charge  of  the  child  if  during  such  period  such 
mother  or  other  relative  accepts  counseling  or  other  services  aimed  at  persuading 
such  mother  or  other  relative  to  participate  in  obtaining  support  for  the  child ;" 

Mr.  Dines.  Mr.  Chairman,  we  have  with  us,  just  arrived,  Senator 
Louise  Conner  from  Delaware  and,  if  you  have  a  few  minutes,  we  had 
planned  to  ask  her  to  tell  you  about  a  program  in  Delaware  that  I  think 
would  be  of  particular  interest  to  you.  I  don't  know  if  your  time 
permits  that  now  or  not. 

Senator  Anderson.  We  started  off  with  all  we  can  do,  but  go  ahead. 

STATEMENT  OF  HON.  LOUISE  T.  CONNER,  STATE  SENATOR  FROM 
DELAWARE;  ACCOMPANIED  BY  ARVA  JACKSON,  AIDE  TO  GOV. 
RUSSELL  W.  PETERSON  OF  DELAWARE 

Mrs.  Conner.  All  right;  thank  you,  gentlemen.  I  am  sorry  we  were 
late,  we  were  delayed  and  we  very  much  appreciate  this  opportunity. 
I  have  with  me  today  Mrs.  Aiwa  Jackson,  who  is  an  aide  to  Gov.  Russell 
Peterson  of  Delaware,  and  the  Governor  has  been  very  innovative  in 
this  field. 

In  our  State  we  have  tried  to  do  the  best  we  can  within  the  categorical 
grants  to  have  integrated  programs  and  cross-division  and  department 
lines  in  order  to  get  our  people  in  State  government  working  together, 
and  we  have  developed  two  or  three  quite  innovative  programs. 

The  first  one  I  am  going  to  talk  about  very  briefly  is  the  something 
for  something  program  and  obviously  this  is  a  play  on  words  something 
for  nothing.  What  we  have  tried  to  do  in  that  program,  which  was 
developed  only  a  year  ago,  is  to  take  adults  and  children  for  whom  it  is 
feasible  to  promote  movement  to  economic  self-sufficiency,  and  for 
those  for  whom  economic  self-sufficiency  won't  work,  to  get  them  work- 
ing as  much  as  we  can,  so  that  they  have  the  feeling  that  they  are 
making  a  worthwhile  contribution  to  society  and  not  just  getting  a  dole. 

In  lieu  of  a  grant  check  moneys  are  paid  for  training  experiences  for 
welfare  recipients  who  are  assigned  within  the  department  of  health 


2269 


and  social  services.  A  check  in  the  amount  of  $281  gross  per  month  per 
employee-trainee  is  received.  Most  of  the  employee-trainees  in  the 
something  for  something  program  have  been  put  in  human  service 
slots.  They  have  been  given  jobs  in  our  hospital  for  the  mentally 
retarded,  the  Delaware  State  Hospital,  Ferris  School  for  Boys,  the 
Family  Court,  vocational  rehabilitation  centers,  and  the  thought  has 
been  to  take  these  people  and  pay  them  very  little  less  than  the  mini- 
mum that  is  paid  people  in  the  State  government,  so  that  we  don't 
get  into  trouble  with  the  unions,  and  to  put  them  in  slots  where  they 
can  help  provide  State  services,  and  we  have  found  that  they  are 
particularly  adapted  in  human  services,  for  example,  someone  working 
at  the  State  hospital  who  might  have  a  real  feel  for  working  with 
people,  and  might  need  a  little  training,  and  they  have  been  used  in 
this  way,  and  been  given  the  feeling  that  they  are  people  who  really 
amount  to  something  because  they  are  giving  a  real  service  to  the 
State  and  not  just  getting  a  deal,  and  that  is  what  was  behind  the 
something  for  something  program. 

Another  one  of  our  main  programs  has  been  the  Delaware  Joint 
Action  Plan  which  we  just  put,  gave  legislative  implementation  within 
the  last  week,  and  the  purpose  behind  this  program  is  to  take  general 
assistance  recipients  who,  for  the  most  part,  do  not  have  families,  and 
to  get  them,  get  the  notion  to  them,  that  they  are  not  going  to  get  their 
relief  payment  if  they  turn  down  a  job,  so  they  are  offered  a  job,  and 
they  are  sent  over  to  vocational  rehabilitation  to  get  some  training. 
Then  if  they  won't  participate  in  any  of  these  efforts  to  upgrade  them 
it  is  made  very  clear  to  them  they  don't  get  their  checks,  their  relief 
checks,  in  this  program.  We  are  actually  applying  a  little  bit  of  force, 
and  giving  them  a  little  extra  push  and  saying  to  them,  "If  you  really 
want  to  amount  to  something  you  can't  just  stay  forever  on  the  dole 
but  you  have  to  be  willing  to  go  to  work,  be  willing  to  upgrade  yourself 
and  take  some  vocational  training." 

Now,  we  also  have  had  in  Delaware  the  WIN  program,  which  I 
don't  have  to  explain  to  you  gentlemen  because  you  understand  about 
it,  and  we  have  had  a  TV  program  which  has  had  a  whole  lot  of  work 
on  it  and  it  has  to  do  with  vocational  rehabilitation  of  public  assistance 
recipients,  and  again  this  was  envisioned  about  a  year  ago,  the  first 
prospectus  was  written  on  it,  and  in  the  meantime  they  have  really 
been  struggling  to  make  it  fly,  and  there  have  been  the  usual  difficul- 
ties you  have  when  you  have  got  something  creative  and  innovative 
going  and  when  you  are  reaching  across  division  and  department 
lines,  you  have  got  the  department  of  labor  and  the  department  of 
health  and  social  services  involved  here  and  they  have  had  to  learn  to 
work  with  each  other  and  to  be  creative  and  cut  redtape,  but  again  we 
have  had  progress. 

In  the  papers  that  we  will  turn  in  to  you,  which  we  hope  you  will 
read,  there  are  figures  telling  how  well  we  have  done  with  this  program. 

All  in  all,  I  think  that  the  State  of  Delaware  under  Governor  Peter- 
son has  been  showing  real  creativity  and  a  sense  of  purpose  in  trying 
to  make  people  understand  that  in  order  to  be  worthwhile  citizens 
they  must  do  their  level  best  to  make  a  contribution,  and  we  have  done 
everything  we  can  to  upgrade  them  vocationally  and  to  make  them, 
make  a  worthwhile  contribution. 


72-573' — 72 — pt.  5  4 


2270 


Senator  Talmadge.  May  I  ask  a  question  at  that  point? 
Mrs.  Conner.  Right. 

Senator  Talmadge.  Have  you  done  any  experimentation  in  the  State 
of  Delaware  with  AFDC  mothers  serving  in  child  care  centers  looking 
after  the  children  of  their  neighbors  so  they  could  work? 

Mrs.  Coxxer.  I  think  that  Airs.  Jackson  can  give  you  more  facts  on 
that  than  I  can.  We  have  particularly  in  our  something  for  something 
program  been  concerned  with  the  ADC  mothers. 

Mrs.  Jacksox.  Yes,  I  would  be  glad  to.  As  a  matter  of  fact,  this  is 
an  idea  we  considered  when  the  something  for  something  program 
was  developed.  We  had  difficulty  working  out  a  funding  mechanism 
that  was  acceptable,  so  we  have  started  by  using  those  AFDC  mothers 
who  are  the  ones  in  the  something  for  something  program  in  State 
agencies.  We  will  soon  be  moving  them  into  private  agencies,  and  it 
its  anticipated  that  we  will  be  able  to  work  out  a  system  so  that  they 
might  be  established  as  day  care  mothers  and  be  able  to  care  for  the 
children  of  other  AFDC  mothers  and  will  then  be  released  to  go  to 
work  using  this  mechanism. 

Senator  Talmadge.  It  looks  like  to  me  this  would  be  an  ideal  system 
because  they  normally  live  in  the  same  neighborhood  and  frequently 
they  are  acquainted  personally,  and  if  you  could  pick  out  the  best- 
informed  woman  in  the  community  to  take  care  of  the  children  of 
several  of  her  neighbors,  that  would  free  them  to  work,  and  I  think  that 
ought  to  be  a  very  good  solution  to  some  of  the  problems  involving  day 
care. 

Mr.  Hodes.  May  I  make  a  comment  on  that.  Senator?  In  the  city  of 
Tampa's  model  cities  program,  this  was  developed  very  carefully,  us- 
ing clay  care  centers  and  using  AFDC  mothers  and  training  them  as 
public  service  employees.  By  and  large,  it  is  a  fair  program.  It  has 
some  great  defects  because  quality  day  care  requires  some  training  and 
a  certain  amount  of  interest  and  being  consistent  in  attending  to  the 
job.  and  just  getting  people  to  show  up  for  work  is  a  very  difficult  thing 
to  do.  Currently,  we  don't  have  any  mechanism  for  making  AFDC 
payments  contingent  upon  that  particular  activity. 

Senator  Talmadge.  Would  you  recommend  we  write  such  a  mech- 
anism into  this  bill  ? 

Mr.  Hodes.  I  am  not  certain  but  that  it  wouldn't  be  a  good  idea,  that 
if  employment  is  available  and  people  are  trained  for  the  job — now,  of 
course,  they  may  not  be  trained. 

Senator  Talmadge.  Xo,  but  they  would  be  as  well  trained  as  the 
mothers  in  the  community  that  are  looking  after  them  now,  wouldn't 
they  ? 

Mr.  Hodes.  Xo  question  about  it.  In  fact,  there  are  people  that  we 
tiied  to  get  in  the  program,  who  are  doing  some  babysitting  at  home, 
and  yet  when  we  tried  to  get  them  to  work  in  the  day  care  center,  they 
had  already  taken  care  of  children,  they  would  somehow  develop  an 
extraordinary  incapability  of  taking  care  of  children  in  a  day  care 
center.  It  is  very  startling  how  that  will  arise  every  once  in  a  while. 

The  Chairmax  (presiding) .  Well,  now  let  me  ask  you  this  about  an 
approach.  Supposing  we  said  to  a  State  and  a  community  that,  "We 
will  provide  two  kinds  of  matching,  we  will  just  continue  to  give  you 
what  you  are  getting  now,  if  you  want  to  pay  people  for  income  mainte- 
nance, but  if  you  want  to  pay  them  to  do  something,  just  anything 
that  you  think  is  worthwhile,  marginal  though  it  may  be,  we  will  give 


2271 


you  better  matching.  For  example,  we  will  give  you  50-50  matching  if 
you  have  more  than  the  average  income  in  your  State,  give  you  50-50 
matching  for  income  maintenance  purposes,  for  what  you  presently 
call  the  AFDC.  If  you  want  to  put  that  mother  doing  something,  we 
will  give  you  2  for  1,  we  will  give  you  66%  rather  than  50-50,  so  you 
get  2-f  or-i  matching  if  you  are  paying  people  to  do  something.  But  you 
get  only  50-50  matching  insofar  as  you  are  paying  income  mainte- 
nance/' 

If  you  could  then  get  your  money  freed  by  the  legislature  so  you 
can  use  it  either  way,  and  in  many  instances  it  wouldn't  require  an 
act  of  the  legislature,  so  you  could  do  it  either  way,  so  you  could  either 
do  income  maintenance  or  you  could  pay  for  work,  wouldn't  that  pro- 
vide you  with  an  incentive? 

I  see  this  lady  here  wants  to  add  something  to  it. 

Mrs.  Jackson.  I  want  to  add  to  that.  Actually,  that  machinery  really 
exists  now.  If  you  use  the  State's  share  of  the  AFDC  grant  and  match 
it  with  title  IV (A)  money  of  the  Social  Security  Act  you  can  get  a 
75-25  matching,  use  it  that  way. 

The  Chairman.  Don't  say  IV (A)  because  you  are  talking  like  a 
technician ;  put  it  in  layman's  language. 

Mrs.  Jackson.  It  is  the  purchase  of  services  that  any  division  of  so- 
cial services  or  department  of  welfare  can  use  once  they  have  deter- 
mined services  they  will  purchase.  That  is  usually  the  only  State  agency 
that  can  use  that  matching  formula,  but  if  they  choose  to  use  their 
State  appropriation  that  way,  and  this  is  what  we  have  done  in  the 
something  for  something  program,  we  are  able  to  get  the  best  use  of 
that  money  and  pay  people  for  doing  those  kinds  of  human  services 
jobs.  That  is  precisely  what  our  something  for  something  program  does. 

The  Chairman.  Weil,  there  are  just  a  lot  of  things  people  can  do. 
Governor  Reagan  suggested  that  one  of  the  type  things  that  would  be 
worth  paying  for  would  be  in  the  area  where  you  have  had  your  school 
buildings  vandalized — just  pay  somebody  to  keep  an  eye  on  the  school 
building.  Now,  a  person  can  take  the  child  along  with  them.  The  child 
can  play  with  other  children  right  on  the  school  grounds,  and  hope- 
fully they  might  pick  up  some  of  the  litter  that  might  be  laying  down 
there  and  help  to  tidy  the  place  up  a  bit.  That  is  not  hard  work ;  and, 
at  the  same  time,  if  you  get  far  more  favorable  matching  with  your 
money  then  on  that  program  you  could  pav  them  a  lot  more  for  that 
than  you  can  for  just  sitting  at  home,  and  it  gives  a  person  a  feeling 
of  usefulness  in  doing  that.  They  are  doing  something  and  doing  a  use- 
ful job  for  this  society  of  ours,  not  just  living  on  a  dole  somewhere. 

Mrs.  Conner.  Exactly. 

Senator,  if  I  may,  I  would  like  to  give  you  a  very  short  list  here  of 
the  State  agencies  that  are  using  at  least  one  something  for  something 
employee:  Our  State  hospital  for  the  mentally  retarded;  Delaware 
State  Hospital ;  our  school  for  boys,  delinquent  boys ;  our  family  court 
has  four  and  will  take  two  more ;  our  vocational  rehabilitation  centers 
are  using  five  of  them ;  division  of  social  services,  12 ;  and  our  delin- 
quent school  for  girls  is  using  one.  These  are  all  people,  AFDC  mothers 
instead  of  just  getting  a  grant  are  doing  something,  making  some- 
thing of  themselves  and  making  a  contribution  to  the  State  government 
in  human  services. 

Senator  Talmadge.  If  you  will  yield,  Mr.  Chairman,  what  percent- 
age have  you  enrolled  in  your  something  for  something  program  ? 


2272 


Mrs.  Conner.  A  very  small  percentage,  because  this  whole  thing  is? 
we  have  only  had  a  year  to  get  it  going. 

Senator  Talmadge.  Would  it  be  1  percent,  2,  5  or  less  ? 
Mrs.  Conner.  More  like  1. 1  would  say. 
Senator  Talmadge.  One  percent. 
Mrs.  Conner.  Eight. 

Senator  Talmadge.  That  is  at  least  a  start. 

Mrs.  Conner.  It  is  at  least  a  start,  that  is  right,  and  the  legislature, 
we  have  tried  to  be  as  cooperative  as  we  could  here,  and  give  enabling 
legislation  to  make  these  things  go. 

The  Chairman.  Any  further  questions  ? 

Well,  permit  me  to  say  something  for  something  makes  twice  as 
much  sense  to  me  as  something  for  nothing. 
Thank  you  very  much. 

Mrs.  Conner.  Thank  you  very  much  for  this  opportunity. 
(The  prepared  statement  with  attachments  of  Mrs.  Conner  fol- 
lows : ) 

Prepared  Statement  of  State  Senatoe  Louise  T.  Conner,  Chairman  of  Health 
and  Social  Seevices  Committee  of  State  Senate,  and  Mes.  Aeva  Jackson^ 
Aide  to  Goveenor  Russell  W.  Peterson 

The  State  of  Delaware  recogizes  the  need  for  creativity  in  designing  programs 
to  help  people  to  help  themselves. 

In  an  attempt  to  experiment  with  diverse  self-support  efforts  the  following 
programs  are  being  carried  out : 

I.  Something  for  Something. 

II.  Vocational  Rehabilitation  Social  Services  Project. 

III.  Work  Incentive  Program  (WIN). 

IV.  Joint  Action  Plans. 

Report  to  Advisory  Committee  on  the  Vocational  Rehabilitation  of  Public 
Assistance  Recipients,  January  17,  1972 

overview 

During  the  first  six  months  of  operation  of  this  program,  primary  effort  has 
been  devoted  to  physical  facilities,  staffing,  and  staff  orientation  and  training. 
An  effort  of  this  scope,  especially  one  that  deliberately  sought  to  cross  tradi- 
tional agency  and  professional  boundaries,  has  had  and  will  continue  to  have  a 
wide  variety  of  developmental  problems.  Nonetheless,  the  program  is  beginning 
to  operate  essentially  as  it  was  envisioned  and  authorized.  Except  for  one  office 
which  has  experienced  some  real  difficulty  in  becoming  established,  all  units  ap- 
pear to  be  functioning  satisfactorily  except  for  the  problems  that  are  outlined 
below.  Of  special  interest  is  the  fact  that  there  seems  to  be  very  little  internal 
difficulty  with  the  dual  role  assigned  to  each  discipline  within  the  concept  of 
integration  of  services.  Externally,  however,  it  is  sometimes  difficult  to  separate 
broad  concepts  of  agency  role  from  that  of  integrated  delivery  of  social,  em- 
ployment, and  rehabilitation  services  to  an  individual. 

Caseload  statistics 


Total  public  assistance  recipients :  July  to  December,  1971   1821 

Current  cases :  In  evaluation  status  (includes  53  in  trial  services  to  deter- 
mine feasibility)   1079 

In-service  status  (includes  13  ready  for  employment  and  53  in  employ- 
ment)   569 

Cases  closed  since  July  : 

Not   accepted   116 

Not  feasible  after  trial  services   6 

Rehabilitated    24 

Closed  unemployed   27 


Total  closed   17a 


2273 


EVALUATION 

An  objective  of  the  program  as  originally  envisioned  was  to  develop  the 
•capacity  to  complete  an  initial  evaluation  of  a  client  within  one  week  of  the  first 
contact.  While  the  development  of  the  technical  capacity  to  do  this  is  progressing 
satisfactorily,  staffing  has  been  and  remains  a  critical  problem.  With  the  objec- 
tive of  utilizing  carefully  trained  paraprofessional  persons  from  minority  back- 
grounds to  administer  the  evaluation  instruments,  we  have  interviewed  and 
tested  over  80  applicants  for  these  positions,  including  a  special  list  of  some  60 
persons  identified  by  the  Director  of  Personnel  as  eligible  for  the  position  of 
"Neighborhood  Worker."  Despite  these  efforts,  three  of  the  positions  currently 
remain  unfilled,  and  most  of  the  other  eleven  have  only  recently  been  filled. 

The  practical  result  of  this  problem  is  that  some  of  our  units  are  now  sched- 
uling as  much  as  six  weeks  in  advance  for  necessary  evaluations.  Use  of  private 
psychologists  and  physicians  has  also  reached  a  saturation  level.  Efforts  are 
underway  to  recruit  hospital  residents  and  additional  psychological  and  psycho- 
metric personnel  to  handle  the  mounting  backlog  of  persons. 

Delaware  Programs 
"something  for  something"  program 
Goals  (developed  February  1971). — 

1.  For  those  adults  and  children  for  whom  it  is  feasible:  to  promote  move- 
ment to  economic  self-sufficiency. 

2.  For  those  for  whom  economic  self-sufficiency  is  not  feasible :  to  maintain 
their  maximum  independence,  self-determination,  and  to  lessen  their  isolation. 

Status. — Currently  there  are  26  trainees  in  this  program.  It  is  anticipated  that 
the  Vocational  Rehabilitation  Centers  will  select  28  more,  for  the  14  centers  by 
February  1972.  Family  Court  has  employed  two  (2)  trainees  to  begin  work  effec- 
tive January  1.  They  will  hire  four  (4)  more  soon.  Three  (3)  trainees  will  help 
in  our  Protective  Services  Program.  By  February  1,  there  should  be  a  total  of 
approximately  60  trainees. 

Cost. — In  lieu  of  a  grant  check  monies  are  paid  for  training  experiences  for 
welfare  recipients  who  are  assigned  within  the  Department  of  Health  and  Social 
Services.  A  check  in  the  amount  of  $281  gross  per  month  per  "employee-trainee" 
is  received.  ($281  x  200  (projected  no.  of  trainees  per  month)  =  $56,200)  when 
program  is  fully  operative. 

Most  of  the  employee-trainees  are  in  Human  Services  job  slots.  All  are  at  Pay 
<^rade  2  ($281/month) — a  grade  just  below  the  lowest  pay  grade  for  regular  state 
employees. 

Currently  (at  least  one  SFS  employee-trainee) . — 

Delaware  Hospital  for  the  Mentally  Retarded. 

Delaware  State  Hospital. 

Ferris  School  for  Boys. 

Family  Court — 4  (will  take  2  more). 

Vocational  Rehabilitation  Centers — 5. 

Division  of  Social  Services — 12. 

Woodshaven-Kruse  School  for  Girls. 

Proposed  Geriatric  Services  (private). — 

Plans  to  take  20. 

Estimates  they  can  take  200. 

The  State's  share  of  AFDC  money  is  used  to  match  Title  IV-A  money  on  a 
75-25  ratio. 

We  provide  group  coverage  by  Blue  Cross  (via  transfer  Medicaid  funds)  and 
Day  Care. 

JOINT  ACTION  PLAN 

Goals. — To  remove  general  assistance  recipients  who  have  been  identified  as 
employable  from  the  welfare  caseloads  and  to  provide  concentrated  and  coordi- 
nated services  in  order  to  provide  them  with  employment  and/or  rehabilitative 
preparation  for  employment. 

Target  Population. — 2,143  recipients  between  the  ages  of  18  and  54  years  who 
have  identified  by  the  Division  of  Social  Services  as  employable  (1530)  or  poten- 
tially employable  (613). 

Current  Status. — With  the  issuance  of  the  February  grant  1530  employable  re- 
cipients will  have  been  advised  that  they  are  being  referred  to  the  Division  of 


2274 


Employment  Services  for  job  counseling  and  that  their  case  is  being  discontinued 
by  the  Division  of  Social  Services. 

In  a  similar  manner  613  potentially  employable  recipients  will  have  been  ad- 
vised that  they  are  being  referred  to  the  Division  of  Vocational  Rehabilitation  for 
services  and  that  their  case  is  being  discontinued  by  the  Division  of  Social  Serv- 
ices. In  addition,  the  Division  of  Employment  Services  will  assign  an  Employ- 
ment Counselor  to  the  intake  section  of  Region  I  Office  of  the  Division  of  Social 
Services  by  January  10,  1972.  All  persons  applying  for  assistance  as  of  that  date 
will  be  screened  to  determine  whether  they  are  applying  for  one  of  the  following 
reasons : 

(1)  They  are  employable  but  are  applying  because  of  loss  of  employment: 

(2)  They  are  applying  because  of  exhaustion  of  resources  and  are  employable ; 

(3)  They  have  exhausted  their  unemployment  compensation  benefits  and  are 
employable.  If  the  applicant  meets  any  of  these  three  stipulations,  he  will  be 
referred  immediately  to  the  Employment  Counselor  and  no  (fiscal)  assistance 
will  be  granted. 

In  addition,  joint  exploration  will  be  made  by  the  staff  of  the  Department  of 
Labor  and  Department  of  Health  and  Social  Services  toward  the  feasibility  of 
transferring  all  or  part  of  the  administrative  responsibility  for  the  General 
Assistance  Program  from  the  Division  of  Social  Services  to  the  Department  of 
Labor  and/or  a  redefinition  of  eligibility  for  this  program  regardless  of  the 
administrative  or  organizational  pattern. 

The  Chairman.  The  next  witness  is  Mr.  Eichard  M.  Loughery,  ad- 
ministrator of  the  Washington  Hospital  Center,  accompanied  by  Ken- 
neth Williamson,  director  of  the  Washington  Service  Bureau,  Ameri- 
can Hospital  Association.  Will  you  proceed,  sir  ? 

STATEMENT  OF  RICHARD  M.  LOUGHERY,  ADMINISTRATOR, 
WASHINGTON  HOSPITAL  CENTER,  ON  BEHALF  OF  THE  AMERI- 
CAN HOSPITAL  ASSOCIATION;  ACCOMPANIED  BY  KENNETH 
WILLIAMSON,  DEPUTY  DIRECTOR,  AMERICAN  HOSPITAL  ASSO- 
CIATION, AND  DIRECTOR,  WASHINGTON  SERVICE  BUREAU 

Mr.  Loughery.  Thank  you,  sir. 

Mr.  Chairman,  I  am  Eichard  M.  Loughery,  administrator  of  the 
Washington  Hospital  Center  here  in  the  District  of  Columbia,  and  I 
appear  today  on  behalf  of  the  American  Hospital  Association  which 
represents  some  7,000  hospitals  of  the  Nation.  I  am  accompanied  by 
Mr.  Kenenth  Williamson,  deputy  director  of  the  American  Hospital 
Association  and  director  of  its  Washington  Service  Bureau. 

We  appreciate  this  opportunity  to  present  to  the  committee  the  issues 
which  give  us  concern  in  H.E.  1. 1  have  a  full  statement  which  I  would 
like  to  submit  for  the  record.  But  because  of  the  limitations  of  time, 
I  shall  speak  only  about  two  key  aspects  which  the  hospitals  feel  might 
impair  their  verv  existence. 

First,  the  problem  of  hospitals,  unrecovered  community  service  costs. 
One  of  the  major  concerns  of  the  hospital  field — and  we  have  discussed 
this  with  the  committee  in  the  past — is  the  failure  of  the  medicare  pro- 
gram in  its  capacity  as  the  payer  for  hospital  services  provided  medi- 
care patients  to  participants  in  meeting  the  full  cost  of  hospitals'  com- 
munity services  on  the  same  basis  as  other  payers  for  similar  services. 
The  Government  excluded  from  medicare  reimbursement  the  cost  of 
the  hospital's  community  services.  These  include  such  items  as  unre- 
covered costs  due  to  nonpaying  patients,  charity  services  and  deficits 
from  contractual  arrangements,  together  with  growth  and  develop- 


2275 


ment  costs.  These  costs  must  be  borne  by  other  patients  and  this  is 
patently  inequitable. 

In  our  past  testimony  before  this  committee,  we  presented  results 
of  a  2-year  study  on  the  part  of  the  hospital  field  of  a  new  basis  or  reim- 
bursement to  meet  the  full  financial  requirements  of  health  care  insti- 
tutions and  which  related  reimbursement  to  planning  control.  This 
study  resulted  in  the  adoption  by  the  association  of  a  financial  policy 
statement,  "The  Statement  on  the  Financial  Requirements  of  Health 
Care  Institutions  and  Services."  A  copy  of  this  has  been  provided  in 
the  past  to  each  member  of  the  committee. 

The  policy  statement  has  been  accepted  by  the  hospitals  of  the 
Nation  as  a  basis  for  establishing  rates  for  all  purchasers  of  hospital 
services — individuals  and  third  party  payers,  including  the  Govern- 
ment. We  believe  the  financing  of  institutional  health  care  should  in- 
clude several  items. 

1.  The  institution's  responsibilities  to  the  community  ; 

2.  The  need  for  systematic  financing  of  all  their  operating  and  capi- 
tal needs ; 

3.  A  rationale  for  proper  planning  of  facilities  and  services ; 

4.  Incentives  for  economy  and  efficiency  in  the  delivery  of  high 
quality  health  care;  and 

5.  The  necessity  for  the  maintenance  of  quality  and  the  protection 
of  the  interests  of  both  provider  and  purchaser.  These  financing  prin- 
ciples take  cognizance  of  the  differences  between  the  institutional 
health  care  system  and  the  rest  of  the  economy.  In  the  free  market, 
industry  can  alter  either  the  nature  or  the  quality  of  its  products  or  it 
might  discontinue  a  product  in  order  to  assure  that  current  revenues 
are  adequate  to  meet  operating  and  capital  needs.  If  the  quality  and 
scope  of  health  services  are  to  be  maintained,  health  care  institutions 
cannot  be  allowed  these  same  options.  The  prices  established  through 
bargaining  between  individual  providers  and  large  groups  of  pur- 
chasers must  provide  revenues  that  are  sufficient  to  finance  these 
services. 

Because  of  the  significant  problems  created  by  nonpaying  patients ; 
because  of  the  necessity  to  maintain  standby  services;  and  because 
of  the  cost  involved  in  meeting  the  educational  responsibilities  of 
health  care  institutions,  hospitals  find  that  the  limited  capital  pay- 
ments that  are  currently  included  in  contractual  reimbursement  agree- 
ments often  must  be  diverted  toward  meeting  operating  expenses. 
Thus,  the  health  care  system  has  had  increasing  difficulty  in  main- 
taining and  expanding  its  capital  financing. 

The  association's  "Statement  on  Financial  Requirements"  provides 
that  all  payers  of  health  care  including  direct  pay  patients  and  all 
third  party  payers  shall  contribute  to  the  total  financing  of  the  com- 
munity hospital  on  a  fair  and  equitable  basis. 

To  help  accomplish  this  and  have  the  Federal  Government  accept 
its  full  responsibility  to  the  hospitals  of  the  country  for  care  provided 
to  Medicare  patients,  we  again  recommend  that  the  act  be  changed 
to  redefine,  reasonable  cost  to  include  total  community  health  care 
costs — to  be  shared  equally  by  all  payers  for  hospital  services.  Specific 
language  to  accomplish  this  is  contained  in  our  statement. 


2276 


Mr.  Chairman,  to  put  this  in  perspective  let  me  tell  you  the  effect 
the  failure  of  the  Government  to  share  in  these  unrecovered  costs  has 
at  my  hospital. 

In  our  institution  medicare  represents  23  percent  of  our  total  busi- 
ness and  medicaid  an  additional  8  percent,  or  a  total  for  those  Govern- 
ment programs  of  31  percent  of  our  total  volume. 

Last  year  our  nonpaying  patients,  the  bad  debts,  amounting  to 
$1.8  million  and  my  charity  work  and  less  than  cost  services  to  indigent 
patients  under  an  agreement  with  the  District  of  Columbia,  cost  us 
SI  million.  Thirty-one  percent  of  these  amounts — not  recoverable  from 
the  medicare  and  medicaid  programs — is  about  a  million  dollars.  Add 
to  this  a  4-percent  factor  for  growth  and  development  which  the 
Government  doesn't  recognize  and  we  have  about  $1.5  million  which 
must  be  recovered  from  paying  patients  who  are  already  paying  their 
fair  share  of  these  costs,  but  we  have  to  overprice  the  services  to 
them  by  more  than  $6  per  day  they  are  in  the  hospital.  I  have  a  state- 
ment prepared  by  our  accounting  department  documenting  these  costs 
and  I  will  be  pleased  to  make  this  a  part  of  the  record. 

Now,  the  second  phase  

Senator  Curtis.  May  I  ask  you  a  question  ? 

Mr.  Lotjghery.  Yes,  sir. 

Senator  Curtis.  Is  there  anybody  else  besides  the  Government  who 
pavs  a  hospital  on  what  is  determined  are  reasonable  costs? 

Mr.  Loughery.  By  other  patients,  sir,  do  you  mean  a  private-paying 
patient  ? 

Senator  Curtis.  Yes.  or  an  insurance  company  or  anybody  else. 
Mr.  Loughery.  Yes.  These  people  all  pay  their  own  cost. 
Senator  Curtis.  No,  no,  here  is  what  I  want  to  know — is  there  any- 
body's billing  that  is  handled  by  medicare  and  medicaid  ? 
Mr.  Loughery.  Most  of  the  Blue  plans  are,  sir. 
Senator  Curtis.  The  Blue  plans. 
Mr.  Loughery.  Yes,  sir. 

Senator  Curtis.  Based  upon  what  it  costs  the  hospital  ? 
Mr.  Loughery.  Yes,  sir. 

Senator  Curtis.  There  are  no  private  insurance  companies  that  do 
that? 

Mr.  Loughery.  No,  sir.  That  is  because  most  of  the  private  com- 
panies are  on  an  indemnity  basis.  They  pay  billings. 

Senator  Curtis.  How  much  money  do  all  the  hospitals  spend  in 
trying  to  submit  and  prove  what  the  reasonable  costs  are  ? 

Mr.  Loughery.  An  inordinate  amount,  sir. 

Senator  Curtis.  How  much  money  does  the  Government  spend  run- 
ning around  checking  hospitals  and  disputing  items  as  to  what  was  a 
reasonable  cost  ? 

Mr.  Loughery.  I  would  have  no  idea  as  to  the  Government's  ex- 
penditure for  these  audits  of  the  various  formulas. 

Senator  Curtis.  I  think  it  is  a  terrible  system  and  I  find  in  my 
State  there  may  be  a  rural  hospital  that  is  well  run,  and  the  patients 
get  well,  I  guess  that  is  what  a  hospital  is  for,  I  suppose,  and  they  may 
have  a  daily  rate  of  $40,  and  they  will  be  harassed  and  punished  as 
much  to  prove  that  thev  should  be  paid  $40  as  another  hospital  whose 
rate  is  $80  and  I  can't  figure  it  out  other  than  it  is  make-work  for  the 
Government. 


2277 


Mr.  Loughery.  Well,  sir,  one  of  the  problems  on  this  I  presume 
we  have  a  responsibility  to  the  public  to  prove  our  costs.  If  there  were 
only  one  formula  to  be  followed  it  wouldn't  be  so  bad. 

Senator  Curtis.  No,  but  we  shouldn't  take  a  great  portion  of  the 
hospital's  budget  or  the  Government's  to  do  the  paperwork. 

Mr.  Loughery.  Senator  Curtis,  I  am  totally  in  sympathy  with  you, 
but  I  don't  know  how  to  accomplish  that.  There  is  an  inordinate 
amount  of  time  that  is  spent  in  justifying  and  reproving  what  our 
public  accounting  firm,  the  outside  auditors,  have  already  stated. 

Senator  Curtis.  They  don't  take  anybody's  word  for  it? 

Mr.  Loughery.  No,  sir. 

Senator  Curtis.  They  don't  take  anybody's  word  for  it.  Yet  it  is 
taking  money  that  was  intended  to  help  people  to  pay  their  expenses 
of  illness  for  an  outside  exercise  that  doesn't  serve  any  purpose 
whatever  and  does  not  save  money  for  the  Government. 

Senator  Nelson.  May  I  ask  a  question  along  that  line  ? 

Mr.  Loughery.  Yes,  sir. 

Senator  Nelson.  Do  I  understand  your  testimony  to  be  that  your 
hospital  must  charge  $6  a  day  additional  in  order  to  offset  the  losses, 
so  to  speak,  that  the  hospital  experiences  from  medicare  and  medicaid 
patients  not  assuming  their  full  costs  ? 

Mr.  Loughery.  That  is  correct,  Senator  Nelson.  The  reimbursement 
formula  does  not  recognize  community  services.  The  formula  is  con- 
strictive in  that  it  rules  out  things  that  must  be  provided  to  all  patients, 
such  as  there  is  a  certain — for  instance,  obstetrics,  no  medicare  pa- 
tient, by  and  large,  needs  obstetric  services.  The  cost  of  the  obstetric 
department  is  not  considered  in  establishing  the  medicare  reimburse- 
ments formula. 

Senator  Nelson.  Do  you  charge  every  patient  who  uses  the  same 
facilities  in  the  hospital  the  same  price  except  the  medicare  and  medi- 
caid patient? 

Mr.  Loughery.  That  is  correct,  in  general.  There  are  many  patients 
who  cannot  meet  their  bills.  Medicare  and  medicaid  will  assume  no 
portion  of  those  unpaid  bills,  whereas  you  or  anyone  else  as  a  paying 
patient  has  to  pick  up  that  slack.  This  is  the  community  service  that 
is  not  covered. 

Senator  Nelson.  Thank  you. 

Senator  Curtis.  I  don't  want  to  take  too  much  time  but  I  have 
one  more  question.  Do  you  have  an  interest  expense  because  you  are 
waiting  for  the  Government  to  reimburse  you  ?' 

Mr.  Loughery.  No,  sir.  This  is  one  of  the  reasons  in  our  institution 
that  we  have  a  growth  and  development  fund.  It  would  be  the  same 
as  we  have  to  use  a  reserve  while  we  are  waiting  for  various  third 
parties  to  pay  their  bills  but  we  do  not  have  commercial  loans.  I  do 
know,  in  answer  to  your  question  

Senator  Curtis.  Would  your  reserve  be  invited  ? 

Mr.  Loughery.  Yes,  sir,  without  question,  but  I  do  know,  in  direct 
answer  to  your  question,  that  this  has  happened  to  many  institutions. 

Senator  Curtis.  Yes,  I  know  a  hospital  run  by  a  church  which  has 
had  to  pay  interest  on  about  $300,000  some  years. 

Mr.  Loughery.  Yes,  sir. 

Senator  Curtis.  While  Government  auditors  fiddle  with  their  pen- 
cils. It  is  a  bad  system.  I  don't  mean  to  reflect  on  the  individual  in- 


2278 


volved  in  auditing,  not  at  all,  but  I  think  we  have  to  work  out  some- 
thing different. 

Mr.  Loughery.  There  are  mechanics,  I  believe,  that  are  available. 
I  am  sure  the  American  Hospital  Association  would  be  glad  to  coun- 
sel with  the  appropriate  parties  as  to  how  this  could  be  helped. 

The  determination  of  reasonable  hospital  costs  under  medicaid, 
undoubtedly,  the  item  of  greater  concern  in  H.R.  1  to  the  health  field 
and  which  we  believe  potentially  would  have  the  greatest  adverse 
effect  on  the  quality  and  availability  of  patient  care,  is  section  232. 
This  section  would  authorize  States  to  develop  their  own  methods  and 
standards  for  payment  of  reasonable  costs  for  inpatient  hospital  care 
under  the  medicaid  and  maternal  and  child  health  programs. 

Since  the  very  inception  of  the  medicare  and  medicaid  programs  in 
1966,  tremendous  effort  has  been  expended  by  the  hospital  field  and 
by  the  Federal  Government  to  provide  for  uniform  cost  findings, 
records,  and  billings.  This  is  directly  what  you  were  asking,  Senator 
Curtis.  This  effort  has  avoided  expenditures  which  otherwise  would 
have  been  required  to  develop  cost  finding  systems  to  comply  with 
different  reimbursement  formulas.  Certainly,  if  section  232  is  enacted, 
it  will  eliminate  the  benefit  of  the  substantial  progress  that  has  been 
made  to  simplify  the  accounting  involved  in  titles  XVIII  and  XIX. 
Further,  it  would  nullify  the  potential  for  simplification  and  coordina- 
tion of  the  administration  of  these  titles.  It  would  be  a  backward  step 
which  would  inevitably  increase  the  costs  of  administration  of  these 
programs. 

It  is  our  understanding  that  this  proposal  was  put  forth  by  the 
States  to  reduce  expenditures.  Since  section  232  would  prohibit  reim- 
bursement in  excess  of  the  medicare  formula,  it  can  only  be  intended 
to  allow  States  to  pay  hospitals  less  for  services  provided  medicaid 
patients  than  the  Social  Security  Administration  has  determined  to 
be  fair  and  reasonable  under  the  medicare  formula. 

As  I  pointed  out  earlier  the  medicare  formula  does  not  even  now 
require  the  Federal  Government  to  pay  a  fair  share  of  support  for 
the  community  hospitals.  Certainly,  any  proposal  which  would  permit 
the  States  to  pay  even  less  than  costs  as  determined  under  the  medicare 
formula  would  be  completely  inequitable  and  unfair  to  hospitalized 
patients. 

There  can  be  only  two  likely  results  from  the  inaction  of  enactment 
of  232.  Hospitals  will  either  have  to  reduce  the  number  of  poor  and 
near  poor  patients  for  whom  they  can  provide  services  or  the  Federal 
Government  will  have  to  provide  some  form  of  subsidy  to  keep  hospi- 
tals from  bankruptcy.  The  number  of  private  paying  patients  to  whom 
hospitals  must  turn  to  recover  their  unreimbursed  community  service 
costs  is  an  extremely  small  number  of  people.  If  this  amendment  is 
passed,  the  total  amount  of  unrecovered  costs  will  be  increased  and 
hospitals  will  be  forced  to  "Robin  Hood"  these  costs  from  a  dwindling 
group  of  other  patients,  thus  creating  for  them  an  intolerable  burden. 

Mr.  Chairman,  you  may  recall  that  my  hospital  recently  announced 
a  reduction  in  its"  rates.  We  reduced  our  rates  $11  per  patient-day 
which  on  an  annual  basis  amounts  to  $1.7  million;  80  percent  of  this 
reduction  was  made  possible  by  the  institution  of  a  medicaid  program 
in  the  District  of  Columbia  under  which  hospitals  are  now  being  paid 
costs  as  determined  under  the  medicare  formula  for  care  provided  the 


2279 


poor  and  near  poor.  Prior  to  the  District  of  Columbia  medicaid  pro- 
gram we  were  being  paid  substantially  less  than  half  of  our  costs  for 
care  provided  indigent  patients  and  my  hospital's  deficit  from  such 
indigent  care  had  to  be  "Kobin  Hooded"  from  our  paying  patients  to 
the  tune  of  an  additional  $8  or  $9  a  day. 

Frankly,  gentlemen,  our  field  has  great  difficulty  in  comprehending 
the  rationale  of  legislation  by  which  the  Federal  Government  would 
on  the  one  hand,  authorize  States  to  pay  less  than  cost  as  determined 
under  the  medicare  formula  for  the  care  of  medicaid  patients ;  and  on 
the  other  hand,  refuse  under  the  medicare  program,  to  pay  any  share 
of  the  deficiency  arising  from  such  "less  than  cost"  services. 

We  strongly  urge  that  the  committee  delete  section  232  from  the  bill. 
Mr.  Chairman,  hospitals  are  fully  cognizant  and  understanding  of 
the  concern  of  the  Government  in  respect  to  the  cost  of  hospital  care 
and  recognize  the  need  for  controlling  these  costs.  A  number  of  pro- 
visions in  H.K.  1  are  designed  to  accomplish  this  purpose  and  we  are 
in  general  agreement  with  many  of  them. 

We  believe  that  a  major  improvement  in  the  delivery  and  financing 
of  health  care  is  necessary  in  order  to  provide  comprehensive  care 


Hospital  Association  has  invested  extensive  resources  in  basic  studies 
and  in  the  development  of  guiding  principles  to  accomplish  this  goal. 
We  presented  our  recommendations  in  the  matter  to  this  committee  in 
April  of  last  year  and  to  the  House  Ways  and  Means  Committee  last 
November  in  the  course  of  hearings  on  the  subject  of  national  health 
insurance. 

We  are  making  every  effort  to  bring  about  planning  controls  so  as 
to  assure  that  neither  health  facilities  nor  services  can  be  developed 
or  operated  unless  it  can  be  demonstrated  that  they  are  needed  by 
the  community. 

We  are  exerting  efforts  to  bring  about  the  development  or  rate  review 
mechanisms  or  agencies  at  the  State  level  which  must  sanction  any 
changes  in  hospital  rates.  In  essence  this  would  require  all  hospitals 
to  justify  their  rates. 

Further,  we  strongly  support  experiments  and  demonstration  proj- 
ects that  would  involve  reimbursement  to  hospitals  on  the  basis  of 
prospective  rates.  This  would  require  individual  hospitals  to  work 
within  a  prospectively  approved  budget  in  contrast  to  the  present 
method  of  reimbursement  which  is  largely  on  a  retrospective  basis. 

Accomplishment  of  several  of  these  goals  will  require  Federal  finan- 
cial support  for  experiments  and  demonstrations  and  we  are  pleased 
to  note  H.K.  1  contains  provisions  authorizing  such  financial  assistance. 

Mr.  Chairman,  the  statement  I  have  submitted  contains  specific 
recommendations  on  a  number  of  other  provisions  in  H.E.  1.  On  behalf 
of  the  hospitals  of  the  Nation  and  of  the  patients  and  communities 
they  serve,  we  ask  the  committee's  earnest  consideration  of  these 
recommendations  which  I  have  not  discussed  only  because  of  the  time 
limitation  for  my  presentation. 

Again,  we  appreciate  this  opportunity  to  present  these  views  of  the 
American  Hospital  Association  and  we  will  be  pleased  to  answer  any 
questions  or  provide  any  additional  information  we  can  to  the 
committee. 

Thank  you. 


in  the  most 


manner  possible.  The  American 


2280 


Senator  Anderson  (presiding) .  Thank  you  for  a  very  fine  statement. 
(Prepared  statement  and  attachments  of  Mr.  Loughery  follow. 
Hearing  continues  on  p.  2288.) 

Prepaeed  Statement  of  Richard  M.  Loughery,  on  Behalf  of  the  American 

Hospital  Association 

Mr.  Chairman,  I  am  Richard  M.  Loughery,  Administrator  of  the  Washington 
Hospital  Center  here  in  the  District  of  Columbia,  and  I  appear  today  on  behalf 
of  the  American  Hospital  Association  which  represents  some  7000  hospitals 
of  the  nation.  I  am  accompanied  by  Mr.  Kenneth  Williamson,  Deputy  Director 
of  the  American  Hospital  Association  and  Director  of  its  Washington  Service 
Bureau. 

We  appreciate  this  opportunity  to  present  to  the  committee  the  issues  which 
give  us  concern  in  H.R.  1. 

The  Problem  of  Hospitals'  Unrecovered  Community  Service  Costs.  One  of  the 
major  concerns  of  the  hospital  field — and  we  have  discussed  this  with  the  com- 
mittee in  the  past — is  the  failure  of  the  Medicare  program  in  its  capacity  as  the 
payer  for  hospital  services  provided  Medicare  patients  to  participate  in  meeting 
the  full  cost  of  hospitals'  community  services  on  the  same  basis  as  other  payers 
for  similar  services.  The  government  excluded  from  Medicare  reimbursement 
the  cost  of  the  hospital's  community  services.  These  include  such  items  as  un- 
recovered costs  due  to  non-paying  patients,  charity  services  and  deficits  from 
contractual  arrangements,  together  with  growth  and  development  costs.  These 
costs  must  be  borne  by  other  patients  and  this  is  patently  inequitable. 

In  our  past  testimony  before  this  committee,  we  presented  results  of  a  two  year 
study  on  the  part  of  the  hospital  field  of  a  new  basis  of  reimbursement  to  meet 
the  full  financial  requirements  of  health  care  institutions  and  which  related 
reimbursement  to  planning  controls.  This  study  resulted  in  the  adoption  by  the 
Association  of  a  financial  policy  statement,  "The  Statement  on  the  Financial 
Requirements  of  Health  Care  Institutions  and  Services."  A  copy  of  this  has  been 
provided  in  the  past  to  each  member  of  the  committee. 

The  policy  statement  has  been  accepted  by  the  hospitals  of  the  nation  as  a 
basis  for  establishing  rates  for  all  purchasers  of  hospital  services — individuals 
and  third  party  payers,  including  the  government.  We  believe  the  financing  of 
institutional  health  care  should  recognize  : 

1.  The  institution's  responsibilities  to  the  community  ; 

2.  The  need  for  systematic  financing  of  all  their  operating  and  capital  needs ; 

3.  A  rationale  for  proper  planning  of  facilities  and  services  ; 

4.  Incentives  for  economy  and  efficiency  in  the  delivery  of  high  quality  health 
care;  and, 

5.  The  necessity  for  the  maintenance  of  quality  and  the  protection  of  the 
interests  of  both  provider  and  purchaser. 

These  financing  principles  take  cognizance  of  the  differences  between  the 
institutional  health  care  system  and  the  rest  of  the  economy.  In  the  free  market, 
industry  can  alter  either  the  nature  or  the  quality  of  its  products  or  discontinue 
a  product  in  order  to  assure  that  current  revenues  are  adequate  to  meet  operat- 
ing and  capital  needs.  If  the  quality  and  scope  of  health  services  are  to  be  main- 
tained, health  care  institutions  cannot  be  allowed  these  same  options.  The  prices 
established  through  bargaining  between  individual  providers  and  large  groups 
of  purchasers  must  provide  revenues  that  are  sufficient  to  finance  these  services. 

Because  of  the  significant  problems  created  by  non-paying  patients;  because 
of  the  necessity  to  maintain  standby  services;  and  because  of  the  cost  involved 
in  meeting  the  educational  responsibilities  of  health  care  institutions,  hospitals 
find  that  the  limited  capital  payments  that  are  currently  included  in  contrac- 
tual reimbursement  agreements  often  must  be  diverted  toward  meeting  operating 
expenses.  Thus,  the  health  care  system  has  had  increasing  difficulty  in  maintain- 
ing and  expanding  its  capital  financing. 

The  Association's  "Statement  on  Financial  Requirements^"  provides  that  all 
payers  of  health  care  including  direct  pay  patients  and  all  third  party  payers 
shall  contribute  to  the  total  financing  of  the  community  hospital  sytsem  on  a 
fair  and  equitable  basis. 

To  accomplish  this  and  thus  have  the  Federal  Government  accept  its  full 
responsibility  to  the  hospitals  of  the  country  for  care  provided  to  Medicare 
patients,  we  again  recommend  that  the  language  of  Section  1861  (v)  (c)  of  Public 
Law  89-97  be  revised  as  follows : 


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1.  Delete  clause  (A)  of  the  fourth  sentence  of  such  section,  and  substitute 
therefore  the  following : 

"(A)  take  into  account  both  direct  and  indirect  costs  of  providers  of  services, 
provided,  however,  that  the  costs  of  new  construction  or  expansion  and  that  the 
cost  of  providing  new  services  shall  not  be  included  unless  such  new  construc- 
tion, expansion  or  new  service  shall  have  been  approved  in  advance  by  the 
designated  area-wide  planning  agency." 

2.  "The  term  'reasonable  cost'  as  used  in  this  law  shall  mean  the  total  mone- 
tary resources  that  a  health  care  institution  or  service  needs  or  will  need  to 
fulfill  its  role  in  meeting  community  health  service  objectives.  The  Federal  Gov- 
ernment's share  of  these  financial  requirements  for  its  beneficiaries  shall  not  be 
more  than  nor  less  than  the  share  borne  by  all  other  paying  patients." 

DETERMINATION   OF   REASONABLE   HOSPITAL   COSTS   UNDER  MEDICAID 

Undoubtedly,  the  item  of  greatest  concern  in  H.R.  1  to  the  health  field  and 
which  we  believe  potentially  would  have  the  greatest  adverse  effect  on  the  qual- 
ity and  availability  of  patient  care,  is  Section  232.  This  section  would  authorize 
states  to  develop  their  own  methods  and  standards  for  payment  of  reasonable 
costs  for  inpatient  hospital  care  under  the  Medicaid  and  Maternal  and  Child 
Health  Programs. 

Since  the  very  inception  of  the  Medicare  and  Medicaid  programs  in  1966, 
tremendous  effort  has  been  expended  by  the  hospital  field  and  by  the  Federal 
Government  to  provide  for  uniform  cost  findings,  records,  and  billings.  This 
effort  has  avoided  expenditures  which  otherwise  would  have  been  required  to 
develop  cost  finding  systems  to  comply  with  different  reimbursement  formulas. 
Certainly,  if  Section  232  is  enacted,  it  will  eliminate  the  benefit  of  the  substan- 
tial progress  that  has  been  made  to  simplify  the  accounting  involved  in  Title 
XVIII  and  XIX.  Further,  it  would  nullify  the  potential  for  simplification  and 
coordination  of  the  administration  of  these  Titles.  It  would  be  a  backward  step 
which  would  inevitably  increase  the  cost  of  administration  of  these  programs. 

It  is  our  understanding  that  this  proposal  was  put  forth  by  the  states  to  reduce 
expenditures.  Since  Section  232  would  prohibit  reimbursement  in  excess  of  the 
Medicare  formula,  it  can  only  be  intended  to  allow  states  to  pay  hospitals  less 
for  services  provided  Medicaid  patients  than  the  Social  Security  Administration 
has  determined  to  be  fair  and  reasonable  under  the  Medicare  formula. 

We  are  concerned  that  the  Medicare  formula  does  not  even  now  require  the 
Federal  Government  to  pay  a  fair  share  of  support  for  the  community  hospitals. 
Certainly,  any  proposal  which  would  permit  the  states  to  pay  even  less  than 
costs  as  determined  under  the  Medicare  formula  would  be  completely  inequitable 
and  unfair  to  hospitals. 

There  can  be  only  two  likely  results  from  the  enactment  of  Section  232.  Hos- 
pitals will  either  have  to  reduce  the  number  of  poor  and  near  poor  patients  for 
whom  they  can  provide  services  or  the  Federal  Government  will  have  to  provide 
some  form  of  subsidy  to  keep  hospitals  from  bankruptcy.  The  number  of  private 
paying  patients  to  whom  hospitals  must  turn  to  recover  their  unreimbursed  com- 
munity service  costs  is  extremely  small.  If  this  amendment  is  passed,  the  total 
amount  of  unrecovered  costs  will  be  increased  and  hospitals  will  be  forced  to 
"Robin  Hood"  these  costs  from  a  dwindling  group  of  other  patients,  thus  creat- 
ing for  them  an  intolerable  burden. 

Frankly,  gentlemen,  our  field  has  great  difficulty  in  comprehending  the  ration- 
ale by  which  the  Federal  Government  would  on  the  one  hand,  authorize  the 
states  to  pay  less  than  cost  as  determined  under  the  Medicare  formula  for  the 
care  of  Medicaid  patients ;  and  on  the  other  hand,  refuse  under  the  Medicare 
program,  to  pay  any  share  of  the  deficiency  arising  from  such  "less  than  cost" 
services. 

RECOMMENDATION 

We  strongly  urge  that  the  committee  delete  Section  232  from  the  bill. 

Mr.  Chairman,  hospitals  are  fully  cognizant  and  understanding  of  the  con- 
cern of  the  government  in  respect  to  the  cost  of  hospital  care  and  recognize  the 
need  for  controlling  these  costs.  A  number  of  provisions  in  H.R.  1  are  designed  to 
accomplish  this  purpose  and  we  are  in  general  agreement  with  many  of  these. 

We  believe  that  a  major  improvement  in  the  delivery  and  financing  of  health 
care  is  necessary  in  order  to  provide  comprehensive  care  in  the  most  economic 
and  efficient  manner  possible.  The  American  Hospital  Association  has  invested 


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extensive  resources  in  basic  studies  and  in  the  development  of  guiding  principles 
to  accomplish  this  goal.  We  presented  our  recommendations  in  the  matter  to  this 
committee  in  April  of  last  year  and  to  the  House  Ways  and  Means  Committee  last 
November  in  the  course  of  hearings  on  the  subject  of  National  Health  Insurance. 

We  are  making  every  effort  to  bring  about  planning  controls  so  as  to  assure 
that  neither  health  facilities  nor  services  can  be  developed  or  operated  unless  it 
can  be  demonstrated  that  they  are  needed  by  the  community. 

We  are  exerting  efforts  to  bring  about  the  development  of  rate  review  mecha- 
nisms or  agencies  at  the  state  level  which  must  sanction  any  changes  in  hos- 
pital rates.  In  essence  this  would  require  all  hospitals  to  justify  their  rates. 

Further,  we  strongly  support  experiments  and  demonstration  projects  that 
would  involve  reimbursement  to  hospitals  on  the  basis  of  prospective  rates.  This 
would  require  individual  hospitals  to  work  within  a  prospectively  approved 
budget  in  contrast  to  the  present  method  of  reimbursement  which  is  largely  on 
a  retrospective  basis. 

Accomplishment  of  several  of  these  goals  will  require  Federal  financial  sup- 
port for  experiments  and  demonstrations  and  we  are  pleased  to  note  H.R.  1  con- 
tains provisions  authorizing  such  financial  assistance. 

UTILIZATION  REVIEW 

The  Association  favors  strong  utilization  review  programs  and  has  expended 
great  efforts  in  attempting  to  insure  good  utilization  review  in  our  hospitals. 
Today  every  hospital  has  some  form  of  professional  review  of  the  utilization  of 
its  facilities  and  services.  Our  statistics  show  a  gradual  continuing  decline  in 
the  average  length  of  stay  of  hospital  inpatients.  We  believe  hospital  utiliza- 
tion review  committees  have  contributed  substantially  to  this  reduction. 

H.R.  1,  as  passed  by  the  House,  would  provide  under  Section  222  authorization 
for  the  Secretary  of  Health,  Education,  and  Welfare  to  develop  and  carry  out 
experiments  and  demonstration  projects  in  area  wide  peer  review,  utilization 
review,  and  medical  review  mechanisms.  We  are  in  full  agreement  with  this  pro- 
vision. It  seems  clear  that  in  addition  to  good  and  effective  review  procedures 
within  individual  institutions  there  is  evidence  of  the  need  for  continuing  overall 
review  of  such  procedures  by  a  body  outside  the  individual  health  care  institu- 
tion. We  believe  that  experiments  should  be  undertaken  with  a  variety  of  review 
mechanisms.  It  would  also  be  important  to  include  in  such  experiments  care  pro- 
vided in  nursing  homes,  physician's  offices  and  ambulatory  care  facilities  out- 
side the  hospital  setting.  These  various  experiments  should  be  compared  for  their 
effectiveness  in  a  study  program  conducted  by  the  National  Center  for  Health 
Services  before  any  one  model  is  accepted  to  cover  the  entire  country. 

In  testifying  before  this  committee  last  year  on  H.R.  17550,  we  expressed  our 
real  concern  with  the  Professional  Standards  Review  Organization  amendment 
sponsored  by  Senator  Bennett.  The  amendment  called  for  the  establishment  of 
PSROs  with  primary  control  centered  in  local  medical  societies,  to  conduct 
ongoing  reviews  of  the  maintenance  and  regular  examination  of  patients,  practi- 
tioners, and  provider  profiles  of  care  and  services.  We  support  the  goal  sought 
to  be  accomplished  by  Senator  Bennett's  amendment,  however,  we  believe  that 
it  would  be  a  great  mistake  to  establish  a  program  of  such  magnitude  on  a 
nationwide  basis  without  carefully  organized  demonstrations  or  experiments  to 
ascertain  the  results  of  such  a  program,  the  administrative  problems  and  the 
effects  on  the  delivery  of  quality  medical  care,  as  well  as  the  cost  involved. 

Because  of  these  concerns  which  we  today  reiterate  to  the  committee,  we 
are  pleased  that  H.R.  1,  as  approved  by  the  Ways  and  Means  Committee  and 
passed  by  the  House  of  Representatives  would  in  Section  222  specifically  au- 
thorize the  Secretary  of  Health,  Education,  and  Welfare  to  develop  and  engage 
in  experiments  and  demonstration  projects  for  areawide  peer  review,  utilization 
review,  and  medical  review  mechanisms. 

RECOMMENDATION 

We  urge  the  committee's  acceptance  of  Section  222  of  H.R.  1  as  passed  by 
the  House.  If  it  is  approved,  you  may  be  sure  that  the  American  Hospital 
Association  and  its  member  hospitals  are  ready  to  provide  whatever  assistance 
we  can  in  the  initiation  and  continuation  of  appropriate  demonstrations  and 
experiments. 


2283 


MEDICARE  COVERAGE  FOR  DISABLED  BENEFICIARIES 

Abundant  statistical  data  is  available  to  confirm  the  simple  observation  that 
the  disabled  require  more  medical  care  than  those  who  are  not  disabled  and 
that  the  cost  of  such  care  is  extremely  high.  Low  incomes  are  also  character- 
istic of  the  disabled  who  cannot  work  regularly.  Providing  Medicare  benefits 
to  Social  Security  disability  beneficiaries  and  to  disabled  qualified  railroad 
retirement  annuitants  who  have  been  entitled  to  disability  benefits  for  at  least 
two  years  would  of  course  greatly  help  a  large  and  deserving  group. 

Last  year  coverage  of  the  disabled  under  Medicare  before  they  reach  the  age 
of  65  was  considered  but  not  included  in  either  the  House  or  Senate  versions 
of  H.R.  17550,  presumably  because  of  the  additional  program  costs  that  would 
be  involved.  We  agree  with  the  statement  in  the  Report  of  the  House  Ways  and 
Means  Committee  on  H.R.  1  that  because  of  cost  and  financing  considerations 
it  is  "imperative  to  proceed  on  a  conservative  basis"  in  providing  coverage  for 
the  disabled. 

We  are  not  opposed  to  extending  Medicare  benefits  to  the  disabled.  We  would 
however  point  out  that  many  disabled  patients  in  health  care  facilities  require 
extra  amounts  of  nursing  and  ancillary  services  and  providing  such  coverage 

We  recommend  that  if  Medicare  coverage  is  extended  to  the  disabled  under 
will  be  very  costly. 

RECOMMENDATION 

65,  the  government  should  at  the  same  time  provide  a  realistic  basis  for  financ- 
ing the  coverage  in  order  to  keep  the  trust  fund  on  a  sound  basis. 

OUT-OF-HOSPITAL  DRUG  BENEFITS 

As  requested  by  Senator  Montoya,  we  are  pleased  to  include  in  our  testimony 
comments  on  his  bill,  S.  936  (amendment  464  to  H.R.  1)  which  would  establish 
a  program  of  out-of -hospital  drug  benefits  under  Part  A  of  Medicare. 

For  many  of  the  elderly  the  purchase  of  drugs  is  one  of  the  biggest  items  in 
their  budget  and  it  often  constitutes  a  real  hardship  because  of  their  limited 
income.  As  in  the  case  of  extending  Medicare  coverage  to  the  disabled,  there  can 
be  no  doubt  that  an  out-of-hospital  drug  program  would  help  a  very  large 
group  of  beneficiaries.  The  cost  to  the  government  for  providing  such  benefits 
will  likewise  be  very  substantial. 

We  are  pleased  to  note  that  S.  936  (Amend.  464)  embodies  some  suggestions 
made  by  our  Association  in  previous  testimony,  including  a  requirement  that  the 
out-of-hospital  drugs  to  be  provided  Medicare  beneficiaries  be  listed  by  generic 
names  and  that  the  government  establish  a  limited  list  of  specific  drugs  to  be 
covered — those  that  are  most  needed  by  aged  patients  and  which  constitute  for 
them  the  greatest  financial  outlays.  There  are  various  sources  that  could  provide 
guidance  in  the  development  of  such  a  list. 

Further,  we  believe  that  at  least  in  the  initial  stages  of  such  a  program  it  will 
be  necessary  for  the  government  to  establish  effective  cost  controls  over  the 
program.  This  could  be  done  by  fixing  an  annual  dollar  limitation  on  the  pur- 
chase of  the  listed  drugs  for  each  beneficiary  or  by  requiring  a  eopayment  for 
each  purchase  of  drugs  under  the  program,  or  it  might  be  necessary  to  use  both 
methods  of  cost  control. 

LIMITS  ON  MEDICAL  PAYMENTS  FOR  SKILLED  NURSING  HOME  AND  INTERMEDIATE  CARE 

Section  225  of  H.R.  1,  would  limit  Federal  financial  participation  in  reim- 
bursement for  skilled  nursing  home  and  intermediate  care  per  diem  to  105  per- 
cent of  prior  levels  of  payment.  Exceptions  would  be  authorized  to  account  for 
increases  in  the  Federal  minimum  wage  or  other  increases  arising  from  Federal 
law. 

This  provision  is  completely  arbitrary  with  no  reasonable  relation  to  the 
economics  involved.  While  exception  is  granted  for  expenses  resulting  from 
direct  Federal  legislative  mandates,  no  exception  is  authorized  for  other  legiti- 
mate increases,  not  even  from  the  indirect  application  of  Federal  programs  such 
as  the  obvious  reflection  of  increased  minimum  wages  in  charges  by  suppliers  of 
equipment,  etc.  Certainly,  if  a  ceiling  is  to  be  established  it  should  recognize  all 
legitimate  increases  in  cost  to  the  provider,  such  as  the  maintenance  of  wage 
differentials  in  health  care  facilities  resulting  from  any  increase  in  the  minimum 
wage  and  as  reflected  in  the  increases  in  the  cost  of  supplies  and  commodities. 


2284 


There  are  continuing  pressures  from  the  public  and  the  government  for  im- 
provement of  the  quality  of  care  in  nursing  homes  and  intermediate  care  facilities. 
There  are  also  pressures  for  adding  new  services  for  patients  in  such  facilities. 
Enactment  of  Section  25  would  make  it  practically  impossible  for  these  institu- 
tions to  increase  patient  services  or  improve  the  quality  of  care  they  are  providing. 

SUPPLEMENTAL  MEDICAL  INSURANCE 

Section  203  of  H.R.  1,  would  limit  premium  increase  for  Part  B,  supplemental 
insurance,  to  not  more  than  the  percentage  by  which  the  social  security  cash 
benefits  have  increased  since  the  last  Part  B  premium  adjustment.  Any  excess  cost 
would  be  paid  out  of  general  revenues.  Section  204  would  increase  the  Part  B 
medical  insurance  deductible  from  $50  to  $60 ;  Section  205  would  revise  the  co- 
insurance factor  to  begin  with  the  31st  day :  and  Section  206  would  provide  for 
automatic  enrollment  for  supplemental  medical  insurance. 

We  do  not  question  the  need  or  desirability  of  these  changes  in  the  Supple- 
mental Medical  Insurance  Program  as  it  is  now  structured.  However,  we  con- 
tinue to  feel  as  we  have  expressed  to  the  committee  in  the  past,  that  the  Part  B 
program  should  be  combined  with  Part  A. 

Combining  Parts  A  and  B  would  afford  future  beneficiaries  the  opportunity 
to  prepay  the  cost  of  physician  services  in  exactly  the  same  manner  as  they 
presently  prepay  the  cost  of  institutional  health  care  services.  It  would  cer- 
tainly facilitate  the  understanding  which  aged  persons  have  of  the  benefits  to 
which  they  are  entitled  and  would  provide  a  good  base  for  the  development  of 
comprehensive  care  including  preventive  care,  multiphasic  screening  and  other 
ambulatory  health  services  while  at  the  same  time  simplify  and  make  less  ex- 
pensive the  adminstration  of  the  program. 

We  are  pleased  that  the  President  in  his  State  of  the  Union  message  proposes 
to  eliminate  the  Part  B  Medicare  premium  which  all  who  voluntarily  enroll  in  the 
program  must  pay.  This  would  make  Part  B  benefits  available  to  all  Medicare 
beneficiaries  without  payment  of  a  premium. 

INCENTIVES    FOR    STATES    TO    UNDERTAKE    REQUIRED    INSTITUTIONAL    CARE  REVIEW 
ACTIVITIES  AND  TO  EMPHASIZE  COMPREHENSIVE  HEALTH  CARE  UNDER  MEDICAID 

Section  207  of  H.R.  1.  provides,  with  some  exceptions,  for  a  one-third  reduc- 
tion in  the  Federal  Medicaid  matching  share  for  total  inpatient  stays  in  a  fiscal 
year  which  exceed  :  60  days  in  a  general  or  TB  hospital :  60  days  in  a  skilled  nurs- 
ing home ;  and  90  days  in  a  mental  hospital,  with  a  lifetime  limit  of  365  days  of 
care  in  a  mental  hospital.  At  the  same  time,  provision  is  made  for  an  increase  of 
25  percent  in  the  Federal  Medicaid  matching  share  for  amounts  paid  by  states 
under  contract  with  a  health  maintenance  organization,  a  community  health 
center,  or  similar  facility  providing  comprehensive  health  care. 

A  somewhat  similar  provision  was  included  in  the  House  version  of  H.R.  17550 
last  year.  The  proposed  reduction  in  Federal  Medicaid  matching  was  identical  to 
that  proposed  here.  However,  the  25-percent  increase  in  Federal  Medicaid  match- 
ing was  proposed  as  an  incentive  for  ambulatory  care  and  was  conditioned  on 
payment  being  made  by  the  state  for  hospital  outpatient,  clinic,  and  home  health 
services  rather  than  on  payment  of  the  25  percent  increase  to  states  making  pay- 
ments to  a  health  maintenance  organization,  a  community  health  center  or  other 
similar  facility  providing  comprehensive  health  care  as  now  proposed. 

In  commenting  on  the  proposed  one-third  reduction  in  Federal  matching  in 
H.R.  17550  last  year,  we  pointed  out  that  this  reduction  would  result  in  a  very 
substantial  decrease  in  funds  available  for  care  of  Medicaid  patients  and  that 
it  would  be  extremely  doubtful  that  any  such  decrease  in  funds  would  be  made 
up  by  the  states.  Thus,  the  end  result  would  inevitably  be  a  cut  back  in  the  care 
of  the  beneficiaries  and  any  savings — estimated  at  $235  million — would  be  at  the 
price  of  rendering  that  much  less  care. 

We  agree,  of  course,  that  emphasis  needs  to  be  put  on  treating  patients  on  an 
ambulatory  basis  and  for  this  reason  we  felt  that  the  provision  in  H.R.  17550,  to 
pay  a  25  percent  bonus  on  Federal  matching  to  states  when  payments  were  for 
outpatient,  clinic  and  home  health  services  was  a  good  incentive  to  move  in  this 
direction.  The  current  provision  in  H.R.  1,  would,  however,  change  the  formula 
for  the  25  percent  increase  to  a  requirement  that  payment  by  the  state  be  made 
to  a  health  maintenance  organization  or  other  type  comprehensive  health  care 
facility. 


2285 


We  fully  support  the  HMO  concept  as  a  means  of  providing  a  more  comprehen- 
sive type  of  care.  However,  today  and  for  the  near  future  comparatively  few 
people  throughout  the  country  have  available  to  them  the  services  of  an  HMO  or 
other  type  of  comprehensive  health  care  organization.  For  this  reason  it  would 
seem  to  us  that  the  movement  to  comprehensive  care  for  all  the  people  of  this 
country  would  be  better  advanced  by  providing  the  increased  payment  as  an  in- 
centive payment  not  only  to  HMOs  and  other  comprehensive  care  facilities,  but 
also  for  all  ambulatory  type  care — outpatient,  clinic,  and  home  health  care,  as 
originally  proposed  in  H.R.  17550. 

PROVIDER  REIMBURSEMENT  REVIEW  BOARD 

This  committee  in  reporting  out  H.R.  17550  in  the  last  Congress  added  a 
provision  establishing  a  Provider  Reimbursement  Review  Board  which  would 
be  empowered  to  review  claims  on  appeal  by  a  provider  from  decisions  of  the 
intermediary  on  final  settlements  of  their  costs.  The  amount  in  controversy 
would  have  to  be  $10,000  or  more  but  could  be  cumulative  as  to  a  group  of 
providers  if  the  matter  in  controversy  involved  a  common  question  of  fact  or 
interpretation  of  law  or  regulation. 

H.R.  1,  as  it  is  before  this  committee  contains  a  similar  Provider  Reimburse- 
ment Review  Board  provision.  However,  it  has  been  limited  to  individual  claims 
in  the  amount  of  $10,000  or  more  and  does  not  include  coverage  for  claims  in- 
volving a  common  issue  as  was  originally  authorized  by  this  committee. 

Since  all  providers  of  health  care  are  bound  by  the  cost  formula  prescribed 
by  the  government  for  payment  for  Medicare  patients  obviously  many  of  the 
questions  raised  involving  the  law  and  regulations  governing  such  payments 
will  have  a  commonality  of  interest  to  the  providers  and  cumulatively  could 
represent  very  substantial  amounts  and  have  a  serious  financial  impact  on  the 
operation  of  all  hospitals  serving  Medicare  patients.  For  this  reason  we  urge 
the  committee  as  a  minimum  to  restore  this  right  of  review  on  a  common  issue 
as  it  was  contained  in  H.R.  17550  of  the  last  Congress. 

Frankly,  gentlemen,  we  do  not  think  the  provision,  even  then,  will  do  complete 
justice  to  the  hospital  field.  Under  the  provisions  a  provider  would  have  a  right 
to  appeal  to  the  Board  a  decision  of  the  intermediary  and  the  Board's  decision  on 
such  appeal  would  be  final  unless  reversed  or  modified  by  the  Secretary  ad- 
versely to  the  provider.  If  the  Board  finds  adversely  to  the  provider  and  its  de- 
cision is  affirmed  by  the  Secretary,  the  provider  is  prohibited  from  pursuing  the 
matter  further  and  from  having  his  "day  in  court". 

We  would  like  to  see  the  provision  broadened  to  allow  providers  to  have  any 
adverse  decision  involving  a  reasonable  amount — cumulative  to  cover  items  of 
common  interest  to  a  number  of  hospitals — decided  by  a  court  of  law,  at  least 
to  the  same  extent  as  is  currently  authorized  under  the  Social  Security  Law 
for  its  other  beneficiaries. 

RECOMMENDATION 

We  therefore  recommend  that  Section  1815  of  the  Act  be  amended  to  include 
the  following  provision : 

"Determinations  by  the  Secretary  under  this  Section  shall  be  subject  to  ad- 
ministrative hearings  to  the  same  extent  as  is  provided  for  in  Section  205  (b)  of 
the  Social  Security  Act  and  in  the  case  of  a  determination  involving  payment 
to  a  provider  of  $1,000  or  more  or  in  the  case  of  an  expenditure,  regardless 
of  the  amount  which  by,  agreement  between  the  provider  or  his  representative 
aDd  the  representatives  of  the  Secretary,  constitutes  a  principle  of  reimburse- 
ment common  to  all  providers,  to  judicial  review  of  the  Secretary's  final  decision 
after  such  hearings  as  provided  for  in  Section  205  (g)  of  such  Act." 

PHYSICAL  THERAPY  SERVICES  UNDER  MEDICARE 

Providing  Part  B  Medicare  coverage  for  the  services  of  physical  therapists 
in  independent  practice  when  furnished  in  a  practitioner's  office  or  the  patient's 
home  would  have  the  undesirable  effect  of  splintering  such  services  from  the 
facility-based  health  team.  It  can  be  anticipated  that  approval  of  such  a  pro- 
vision would  lead  to  requests  for  similar  Part  B  coverage  for  the  services  of 
other  members  of  the  health  team,  for  example,  psychologists,  social  workers, 
speech  therapists,  etc.  Such  fragmentation  of  health  services  would  be  extremely 
unwise. 


72-573— 72— pt.  5  5 


2286 


Placing  an  annual  dollar  limitation  on  total  payments  for  physical  therapy 
services  provided  to  a  beneficiary  in  his  home  or  a  practitioner's  office  as  a 
cost  control  mechanism  and  as  an  attempt  to  guard  against  abuse  of  the  benefit 
would  require  a  tremendous  amount  of  complicated  and  expensive  paper  work 
and  administrative  procedures.  Without  doubt  it  would  significantly  increase 
the  administrative  cost  of  the  program. 

RECOMMENDATION 

We  recommend  deletion  of  Section  251. 

EXEMPTION    OF    CHRISTIAN    SCIENCE    SANATORIUM  S    FROM    CERTAIN    NURSING  HOME 
REQUIREMENTS  UNDER  MEDICAID  PROGRAM 

Section  268  exempts  Christian  Science  Sanatoriums  from  the  requirements 
established  for  skilled  nursing  homes  in  regard  to  maintaining  detailed  medical 
records,  having  disgnostic  and  other  service  arrangements  with  general  hos- 
pitals, and  having  a  skilled  nursing  home  administrator  licensed  by  the  state. 

There  are  a  great  number  of  hospitals  that  are  owned  and  operated  by  various 
religious  denominations.  Each  of  these  are  required  to  meet  all  the  standards 
specified  for  participation  in  the  Medicaid  program.  We  see  no  reason  whatever 
why  a  sanatorium  operated  by  any  church  group  should  be  exempted  from  the 
standards  established  by  the  law,  yet  be  free  to  benefit  from  its  provisions.  All 
institutions  participating  in  the  program  should  meet  the  prescribed  standards. 

Similarly,  we  see  no  justification  for  the  exemption  of  Christian  Science 
sanatoriums  from  the  provisions  of  Section  221  of  the  bill. 

RECOMMENDATION 

1.  That  paragraph  (h)  of  Section  1122  as  added  by  Section  221  of  the  bill 
be  deleted. 

2.  That  Section  268  of  the  bill  be  deleted. 

STUDY  OF  CHIROPRACTIC 

The  Department  of  Health,  Education,  and  Welfare  has  in  the  past  conducted 
an  extensive  study  of  chiropractic,  which  resulted  in  enunciation  of  the  position 
that  chiropractic  does  not  come  within  the  healing  arts.  In  view  of  such  past 
studies  and  findings,  we  believe  there  is  no  need  to  spend  the  taxpayers'  money 
for  the  study  and  report  called  for  in  section  273  of  H.R.  1. 

RECOMMENDATION 

We  know  of  no  scientific  basis  for  including  the  services  of  chiropractors  under 
the  Medicare  program.  We  recommend  deletion  of  Section  273  of  H.R.  1  and 
further,  that  no  provision  to  cover  the  services  of  chiropractors  under  Medicare 
be  added  to  the  bill. 

SPELL  OP  ILLNESS 

An  area  which  we  feel  lends  itself  to  greater  simplification  with  consequent 
monetary  savings  is  the  area  of  deductibles  required  to  be  accounted  for  in 
almost  every  phase  of  care  authorized  under  Medicare.  We  have  recommended 
in  the  past  and  want  to  reiterate  here  today  our  strong  belief  that  substitution 
of  a  reasonable  coinsurance  factor  in  lieu  of  deductibles  would  eliminate 
tremendous  administrative  problems,  would  benefit  the  hospital  and  the  patient, 
and  would  result  in  substantial  savings  in  the  cost  of  the  program. 

As  an  example,  when  a  patient  enters  the  hospital  he  begins  a  "spell  of  ill- 
ness" and  determination  must  be  made  as  to  whether  his  hospital  deductible 
has  been  previously  paid.  This  necessitates  contacts  by  the  hospital  with  the 
intermediary  and  with  the  Social  Security  Administration  and  approximately 
one-half  of  the  time  the  answer  does  not  reach  the  hospital  until  after  the 
patient  has  been  discharged. 

We  believe  that  the  law  could  be  changed  to  provide  beneficiaries  with  un- 
limited care — 365  days  a  year — with  no  additional  cost  to  the  program,  and 
in  fact,  with  substantial  administrative  savings.  This  could  be  accomplished 
by  inflating  a  co-payment  on  every  admission,  plus  a  small  daily  payment  for 
each  day  of  hospitalization.  Admittedly,  since  this  copayment  would  be  on 
each  admission,  some  beneficiaries  would  pay  it  more  than  once.  However,  we 
understand  that  the  relative  costs  of  such  approach  have  been  computed  by 
employees  of  the  Social  Security  Administration  based  on  1969  experience.  For 


2287 


that  year  for  the  same  program  costs  each  beneficiary  could  have  been  authorized 
needed  inpatient  care  for  a  copayment  of  $35  per  admission,  plus  $1  for  each 
day  of  hospitalization.  Not  only  would  this  promote  better  understanding  by 
our  older  citizens  of  the  Part  A  benefit  but  it  would  eliminate  very  significant 
administrative  problems,  without  increasing  program  costs  and  with  savings 
in  administrative  expenses  which  easily  will  run  into  millions  of  dollars. 

RECOMMENDATION 

We  recommend  that  the  spell  of  illness  provisions  of  existing  law  be  revised 
to  provide  for  365  days  a  year  of  hospital  care  with  a  reasonable  copayment  for 
each  admission  and  a  reasonable  per  diem  copayment  throughout  the  length 
of  any  hospital  stay,  the  amount  of  such  payments  to  be  reviewed  annually  by 
the  Secretary  of  Health.  Education,  and  Welfare. 

We  greatly  appreciate  the  opportunity  of  presenting  the  views  of  the  American 
Hospital  Association  to  the  committee.  We  will  be  glad  to  answer  any  questions 
or  furnish  any  additional  information  which  will  be  helpful  to  the  committee 
in  its  deliberations. 


Washington  Hospital  Center,  the  effect  of  cost-formulas  which  do  not  participate 
in  all  the  financial  costs  and  needs  of  the  hospital 


Total  non-paying  patients  (bad  debts)  for  1971  at 

WHC  :  4y2  percent  of  $40,000,000  (gross  business)  $1,  800,  000 


Medicare  23  percent  of  total  business 

Medicaid  8  percent  of  total  business 

31  percent  of  $1,800,000  ( bad  debts )   558,  000 

85  percent  cost  on  charges :  Amount  which  had  to  be  re- 
covered by  overcharging  paying  patients   474,  300 


City  cases  2  percent  of  total  business   800,  000 

Charity  cases  x/i  percent  of  total  business   200,  000 


Total  charges  city  and  charity  services   1.  000.  000 

85  percent  Cost  on  charges   850,  000 

Reimbursement  received*   280,  000 


To  be  recovered  by  overcharging  paying  patients   570,  000 


Growth  and  development  not  paid  by  : 

Medicare  total  business   9,  200,  000 

Medicaid  total  business   3,  200,  000 

City  total  business   800,  000 

Charity  total  business   200,  000 


Total  business  without  provision  for  growth  and  develop- 
ment   13,  400,  000 

4  percent  growth  and  development  not  included  in  these  contracts 
which  had  to  be  recovered  from  paying  patients  by  overcharging 
services   536.  000 


♦The  city  reimburses  $38  per  inpatient  day  and  $6  per  outpatient  visit  under  its  medi- 
cal charities  program.  These  figures  amount  to  about  35  percent  of  actual  charges. 


Summary  of  unrecovered  financial  needs 


Unrecovered  costs : 

Nonpaying  patients  (bad  debts)   $474,300 

Charity  and  sub-cost  contracts   570,  000 


Total  unrecovered  costs   1,  044,  000 

Unrecovered  growth  and  development   536,  000 


Grand  total  of  deficiencies  in  financial  contracts*   1,  580,  000 


*This  amounts  to  an  average  of  approximately  $6.20  per  adult  patient  day. 


2288 


Senator  Talmadge  (presiding).  Our  next  witness  will  be  Dr.  F.  J. 
Pepper,  vice  chairman,  American  Veterans  Conimittee.  You  may 
proceed,  Dr.  Pepper. 

STATEMENT  OF  F.  J.  PEPPER,  M.D.,  VICE  CHAIRMAN,  AMERICAN 
VETERANS  COMMITTEE 

Dr.  Pepper.  Thank  you,  Senator. 

Mr.  Chairman,  I  am  F.  J.  Pepper,  M.D.,  I  am  a  practicing  psy- 
chiatrist and  a  Vietnam  war  veteran  and  served  as  a  battalion  surgeon 
in  Vietnm  in  1966  and  1967.  I  am  the  national  vice  chairman  of  the 
American  Veterans  Committee,  and  it  is  on  behalf  of  the  American 
Veterans  Committee  that  I  am  appearing  here  today. 

We  welcome  the  opportunity  to  present  our  views  to  the  Senate 
Finance  Committee.  I  want  to  say  the  views  to  be  presented  are  a  gen- 
eral statement  of  the  principles  that  we  feel  should  be  embodied  in 
any  legislation  passed  rather  than  a  technical  analysis  of  specific  legis- 
lative proposals. 

The  American  Veterans  Committee  is  an  organization  of  veterans 
of  World  War  I  and  II,  and  the  Korean  and  Vietnam  conflicts.  Our 
motto  is  "Citizens  first — veterans  second."  We  are  therefore  deeply 
concerned  about  legislation  that  would  affect  the  welfare  of  some  13 
million  Americans. 

As  a  veterans  organization  we  have  a  special  concern  about  the  mili- 
tary security  of  our  Nation.  The  strength  of  our  country,  however,  can 
only  be  s  strong  as  the  strength  of  its  people.  We  are  dismayed  by  the 
figures  of  the  Department  of  Defense  which  show  that  in  1964  about 
35  percent  of  those  who  appeared  for  induction  failed  to  meet  the  mili- 
tary's physical  mental  and  moral  fitness  standards.* 

Over  55  percent  of  the  beneficiaries  of  welfare  benefits  are  chil- 
dren, our  future  generation.  Poverty,  which  causes  inadequate  nutri- 
tion, health  services  and  a  dismal  environment  can  only  result  in  a 
generation  of  adults  with  serious  physical  and  mental  deficiencies. 

As  veterans  we  have  been  the  beneficiaries  of  various  programs  under 
the  GI  bill  because  this  country  recognizes  the  special  needs  of  the 
returning  servicemen.  We  are  grateful  for  the  benefits  we  received  but 
also  recognize  that  we  have  an  obligation  to  support  action  by  our 
country  to  meet  the  needs  of  others  so  that  they  can  live  and  rear  their 
children  at  a  decent  level  of  existence. 

At  our  convention  in  June  1971,  the  following  resolution  was  passed : 

AVC  urges  action  in  this  session  of  Congress  to  create  a  new  system 
of  income  maintenance  which  will  meet  the  basic  needs  of  all  individ- 
uals and  families  who  are  unable  to  work,  whose  earnings  are  inade- 
quate and  for  whom  jobs  are  not  available.  Such  legislation  should  be 
based  on  the  following  principles : 

1.  A  unified  and  largely  federally  financed  program  of  assistance 
to  assure  equitable  and  efficient  treatment  and  administration. 

2.  Benefits  should  be  available  to  everyone  in  need — those  in  low 
paying  jobs  as  well  as  the  unemployed,  those  without  families  as  well 
as  dependent  children  and  their  parents. 


*  Dialog  on  the  Draft,  American  Veterans  Conimittee,  1967,  p.  20. 


2289 


3.  Assistance  grants  should  provide  all  Americans  with  an  income 
adequate  to  sustain  them  in  a  state  of  health  and  minimal  decency. 
If  fiscal  consideration  precludes  such  immediate  grant  levels,  then 
provisions  should  be  placed  in  the  legislation  for  orderly  steps  at 
time  intervals  to  reach  standards  of  adequacy  for  health  and  decency 
as  determined  by  the  Bureau  of  Labor  Statistics  with  flexibility  of 
grant  levels  to  meet  realistic  variations  in  costs  of  living. 

4.  Incentives  and  realistic  aids  should  be  employed  to  encourage 
those  eligible  for  public  assistance  to  move  into  job  training  and 
full  employment.  No  recipient  should  be  required  to  take  a  job  at 
less  than  the  minimum  Federal  wage  to  prevailing  area  wage,  which- 
ever is  higher.  Recipients  should  have  the  right  to  keep  enough  earned 
income  to  make  working  more  attractive  rather  than  relying  solely 
on  public  assistance.  Further,  public  service  jobs  should  be  provided 
where  there  is  a  shortage  of  private  or  other  public  service  jobs. 

5.  A  declaration  of  need  should  be  accepted  as  prima  facie  evi- 
dence of  eligibility.  Spot  checks  can  be  used  to  determine  accuracy 
of  eligibility  and  payment,  such  as  those  used  in  the  social  security 
and  income  tax  programs. 

6.  Rearing  children  should  be  recognized  as  important  and  mean- 
ingful employment.  Mothers  of  school  age  children  should  not  be 
forced  to  accept  work  or  training  against  their  will. 

7.  Adequate  child  care  facilities  are  necessary  if  working  mothers 
are  to  take  advantage  of  work  and  training  programs.  Provisions 
should  be  made  for  national  standards  for  child  care  services.  Child 
care  should  be  not  merely  custodial  but  should  he  designed  to  meet  the 
educational,  nutritional,  and  health  needs  of  the  children.  Care  should 
be  provided  for  elementary  schoolchildren  after  school.  The  poor 
should  be  trained  and  employed  as  child  care  center  workers.  No 
family  should  be  required  to  pay  a  fee  for  child  care  unless  it  has 
income  sufficient  to  meet  its  needs  with  minimal  decency. 

We  submit  that  these  principles  should  be  embodied  in  any  welfare 
legislation.  The  action  of  this  committee  and  Congress  on  this  legisla- 
tion will  set  the  tone  of  our  country's  concern  and  demonstrate  the 
extent  that  it  cares  for  those  in  need. 

Thank  you. 

Senator  Talmadge.  Thank  you  very  much,  Dr.  Pepper.  Any 
questions  ? 

The  next  witness  is  Mr.  Chester  Shore,  chairman,  Committee  on 
Federal  Legislation,  Health  and  Welfare  Council  of  the  National 
Capital  Area. 

Is  Mr.  Shore  here  ? 

STATEMENT  OF  CHESTER  SHORE,  CHAIRMAN,  COMMITTEE  ON 
FEDERAL  LEGISLATION,  HEALTH  AND  WELFARE  COUNCIL  OF 
THE  NATIONAL  CAPITAL  AREA 

Mr.  Shore.  Yes,  sir,  I  am.  Thank  you. 
Senator  Talmadge.  Proceed,  sir- 
Mr.  Shore.  Mr.  Chairman,  my  name  is  Chester  Shore  and  I  am 

appearing  as  chairman  of  the  Committee  on  Federal  Legislation  of 

the  Health  and  Welf  are  Council. 


2290 


The  Health  and  Welfare  Council  of  the  National  Capital  Area 
embodies  the  District  of  Columbia  and  surrounding  counties  in  Mary- 
land and  Virginia.  We  are  supported  by  the  United  Givers  Fund, 
and  we  both  allocate  funds  for  TJGF  and  we  coordinate  the  support 
of  the  private  sector  in  the  health,  welfare,  and  community  services 
area. 

There  are  219  organizations  which  are  affiliated  with  us,  and  which 
represent  the  wide  spectrum  of  social  services  in  this  area. 

Our  delegates  assembly  and  board  of  directors,  we  submit,  repre- 
sents a  broad  cross  section  of  the  community. 

Now  we  are  concerned  about  this  legislation  for  a  number  of 
reasons,  and  we  have  been  working  on  this  legislation  ever  since 
President  Nixon  first  gave  his  statement  with  regard  to  the  matter 
of  welfare,  and  we  have  been  in  contact  with  health  and  welfare 
councils  throughout  the  area  and  have  worked  with  them  on  this 
legislation,  and  by  "throughout  the  area"  I  mean  throughout  the 
country. 

We  feel  that  this  legislation  is  of  vital  significance  to  this  country. 
It  vitally  affects  our  member  agencies  because  they  have  found  that 
permanent  change  can  come  only  if  people  are  able  to  live  with 
the  basic  decent  necessities  of  life  and  that  any  counseling  or  other 
services  that  our  private  agencies  affiliated  with  us  can  do  are  minimal 
unless  these  basic  necessities  are  met. 

We  also  are  concerned  about  this  legislation  for  basic  humanitarian 
purposes.  As  this  committee  is  aware,  55  percent  of  the  recipients  are 
children,  who  are  our  future  generation.  It  would  be,  it  is,  both  shock- 
ing and  disgraceful  that  these  children,  many  of  them,  are  forced  to 
live  under  conditions  so  that  their  lives  are  blunted,  they  are  ill  - 
nourished,  ill-clothed,  and  ill-sheltered. 

As  this  committee  is  aware,  16  percent  of  the  recipients  are  the  aged. 
I  was  a  delegate  to  the  White  House  Conference  on  the  Aging  and 
I  heard  both  President  Nixon  and  Senators  Fong  and  McGee  discuss 
how  important  it  is  that  those  of  the  aged  who  have  contributed  to 
our  country  should  have  the  opportunity  to  live  the  rest  of  their  lives 
in  decency,  and  we  have  had  other  witnesses  here  today  who  have, 
particularly  Senator  Eagleton,  who  has  stressed  the  problems  of  the 
aged. 

We  are  also  concerned  about  this  legislation  because  of  the  rela- 
tionship of  poverty  to  social  problems.  Poverty  causes  ill  health  and 
crime  and  slums,  and  it  must  be  clear  to  everybody  that  unless  Ave  do 
make  this  attack  on  poverty  our  problems  of  ill  health  and  crime  and 
slums  will  merely  increase,  and  the  cost  to  the  future  taxpayer  will  be 
considerably  more  than  the  cost  of  welfare  legislation  that  will  provide 
minimum  decency  for  people. 

Lastly,  this  legislation  will  set  the  tone  of  the  country,  as  the  previ- 
ous witness  has  testified.  It  would  show  to  what  extent  our  country 
really  cares  for  people  in  need. 

Now.  we  have  submitted  a  verv  detailed  statement  of  the  principles 
that  we  feel  should  govern  welfare  legislation  and  I  would  just  like 
to  comment  briefly  on  each  of  those  principles. 

We  have  pointed  out  in  our  statement  that  H.R.  1  does  create  three 
good  constructive  steps :  The  adoption  of  national  standards  of  mini- 
mum benefits,  the  extension  to  a  certain  extent  of  Federal  welfare 


2291 


benefits  to  some  of  the  working  poor,  and  the  expansion  of  opportuni- 
ty for  job  training  and  employment. 

However,  we  have  stated  in  our  statement  that  H.R.  1  on  balance  is 
a  step  backward,  and  that  it  would  create  a  welfare  system  worse 
than  the  present  one. 

The  first  question  that  has  to  be  considered  by  this  committee  is  the 
question  of  benefits.  We  submit  that  $2,400  as  provided  in  H.R.  1  is 
grossly  inadequate,  that  is,  $2,400  for  a  family  of  four.  Nobody  can 
seriously  state  that  a  family  of  four  can  live  on  $2,400. 

In  our  statement  we  have  pointed  out  what  are  the  figures  for  people 
living  in  the  District  of  Columbia.  We  have  pointed  out  that  $2,400, 
which  amounts  to  $200  per  month,  is  $117  per  month  for  a  family  of 
four  less  than  what  the  Department  of  Welfare  has  stated  to  be  the 
standard  of  need. 

We  have  further  pointed  out  that  in  the  District  of  Columbia  our 
figures  show  that  a  minimum  of  $5,700  approximately  is  needed  for 
a  family  of  four  to  sustain  a  low  cost  life  style. 

We  submit  that  S.  2747,  which  has  been  introduced  by  Senator  Har- 
ris, does  set  forth  an  adequate  level  and  a  reasonable  timetable  for 
meeting  that  level  of  need. 

Second,  is  the  question  of  existing  State  benefits.  When  President 
Nixon  first  made  his  speech  with  regard  to  welfare  reform  he  made  a 
promise  that  no  person  under  the  new  Federal  welfare  reform,  no 
person  should  be  worse  off  than  he  is  now.  However,  under  H.R.  1 
there  are  no  matching  funds  with  State  supplementation.  There  is 
therefore  no  mandate  to  the  States  to  supplement  Federal  payment, 
and  no  incentive  on  their  part  to  do  so. 

The  result  will  be  that  many  millions  of  Americans  will  be  worse 
off  under  H.R.  1  than  they  are  at  present. 

The  third  question  is  the  coverage.  We  submit  that  assistance  should 
be  provided  equally  to  all  in  need.  We  see  no  justification  for  denying 
benefits  to  individuals  or  married  couples  without  children.  We  also 
see  no  justification  for  penalizing  families  with  more  than  eight  mem- 
bers. The  additional  family  members  are  children,  and  they  should 
not  be  punished  for  existing. 

The  next  point  we  wish  to  cover  is  the  question  of  income  disregard 
with  regard  to  those  who  are  working.  Under  H.R.  1,  $2  out  of  every 
$3  would  be  lost,  2  out  of  every  3  welfare  dollars  would  be  lost. 
In  other  words,  H.R,  1  is  both  unfair  and  provides  a  strong  disin- 
centive to  work.  Further,  H.R,  1  does  not  permit  the  deduction  of 
work- related  expenses. 

There  has  been  a  recent  article  by  Alice  Rivlin  in  the  Post  which 
discusses  this  whole  question  very  thoroughly,  and  I  would  commend 
that  article  to  this  committee.  It  points  out  that  it  is  sheer  hypocrisy 
for  a  government  to  state  that  it  is  trying  to  get  people  off  welfare  and 
into  work  if  at  the  same  time  they  penalize  them  by  taking  most  of  the 
money  they  earn  from  work  and  give  them  no  incentive  to  work. 

We  suggest  in  our  statement  that  HEW  should  be  the  sole  admin- 
istrator, and  that  Avould  provide  a  single  unified  system. 

With  regard  to  work  in  training  programs,  we  have  discussed  that 
in  our  statement,  There  are  two  points  we  wish  to  bring  to  the  commit- 
tee. One,  we  feel  that  with  regard  to  the  mothers  who  have  


2292 


Senator  Talaiadge.  Mr.  Shore,  I  am  sorry  your  time  has  expired. 
We  will  be  delighted  to  insert  your  full  statement  in  the  record  at 
this  point. 

Mr.  Shore.  May  I  make  one  last  statement,  sir? 
Senator  Talatadge.  Sure. 

Mr.  Shore.  I  would  just  like  to  read  the  last  two  paragraphs  of 
our  statement,  Mr.  Chairman. 

We  recognize  the  fiscal  difficulties  that  many  States  are  in.  We 
strongly  believe  that  help  for  the  States  should  not  blind  us  to  the 
need  for  more  help  for  human  beings.  In  H.E.  1,  the  States  are  held 
harmless,  but  many  people  are  hurt. 

We  are  concerned,  of  course,  with  the  costs  of  developing  an  ade- 
quate public  welfare  system.  But  we  observe  every  day  the  costs  of  an 
inadequate  system,  not  only  in  the  constantly  rising  economic  costs 
of  halfway  help  for  families  unable  to  break  the  welfare  cycle,  but 
also,  painfully,  in  thousands  of  wasted  lives.  If  the  Xation  must  tax 
itself  more  to  truly  reform  the  welfare  system,  or  if  it  must  cut  back 
substantially  on  other  kinds  of  expenditures,  then  it  must.  We  cannot 
afford  a  society  in  which  so  many  exist  without  the  means  to  support 
themselves  in  health  and  decency  and  without  the  prospect  of  any 
basic  improvement  in  their  lives. 

Thank  you,  Mr.  Chairman. 

Senator  Talaiadge.  Thank  you  very  much. 

Any  questions? 

Senator  Fannin. 

Senator  Faxxix.  Thank  you,  Mr.  Chairman:  just  one.  I  am  just 
wondering,  you  say  that  "we  recognize  the  fiscal  difficulties  that  the 
States  face."  Do  you  recognize  the  fiscal  difficulties  this  Xation  faces 
now  in  the  future  ?  We  owe  more  than  all  the  other  nations  in  the  world 
combined.  We  face  a  deficit  this  year  of  maybe  $40  billion  or  $45  bil- 
lion. If  Ave  carry  through  with  the  full  implementation  of  what  you 
recommend,  we  would  probably  have  a  deficit  of  $50  billion  to  $60 
billion  or  more.  The  dollar  would  soon  be  worthless.  How  can  we  do 
what  you  are  asking  us  to  do  under  the  circumstance  that  faces  us. 

Mr.  Shore.  Well,  the  question.  Senator,  is  one  of  priorities.  It  is 
a  term  that  is  used  a  lot  and  perhaps  it  has  become  a  cliche,  but  I  think 
it  is  a  term  that  is  applicable.  The  question  is,  What  is  the  most  im- 
portant thing  we  must  do  ?  The  most  important  thing  we  must  do  is 
take  care  of  our  children,  our  future  generation.  We  cannot  afford  to 
have  them  live  in  poverty,  we  just  can't. 

Senator  Faxxhx.  Xo  one  wants  to  live  in  poverty — I  don't  want  to 
prolong  this — we  want  to  do  the  very  best  we  can.  But  we  have  priori- 
ties. One  of  the  priorities  we  have  is  to  defend  this  Xation  and  defend 
all  the  people  of  this  Xation. 

Mr.  Shore.  I  was  very  much  impressed  with  the  previous  speaker 
who  pointed  out  that,  in  the  final  analysis,  the  money  we  might  spend 
on  weapons  systems  would  be  meaningless  unless  we  have  a  strong- 
people,  and  the  security  of  a  country  

Senator  Faxxix.  We  won't  have  a  strong  people  unless  we  are  free. 

Mr.  Shore.  And  we  woirt  have  a  strong  people  unless  we  see  the 
people  grow  up  in  minimum  decency. 


2293 


Senator  Faxxix.  TTe  certainly  want  to  do  that,  but  we  want  to  do 
it  within  the  ability  of  our  people  to  pay  for  it.  We  certainly  can't  con- 
tinue going  into  debt  and  debt  and  debt. 

Mr.  Shoke.  May  I  make  one  other  point,  sir,  and  I  think  this  is  very 
important.  One  of  the  reasons  we  have  a  large  number  of  people  on 
welfare  is  that  in  the  past  we  have  neglected  our  children.  Now  I  have 
a  niece  and  nephew  and  they  get  a  decent  education,  they  are  not 
hungry,  nothing  is  going  to  happen  to  them.  I  am  positive  that  when 
they  grow  up,  the  possibilities  of  their  being  unable  to  get  a  job  or 
requiring  assistance  is  nil. 

On  the  other  hand.  I  see  in  my  office,  I  am  an  attorney.  I  see  people 
who  are  on  welfare,  and  I  know  people  who  are  on  welfare,  and  I  see 
what  is  happening  to  their  children,  and  I  see  that  they,  if  they  go 
hungry  to  school ;  then  education,  they  can't  get  a  decent  education, 
and.  if  they  grow  up  in  this  poverty,  then  the  chances  are  they  might 
possibly  be  the  future  people  on  welfare. 

Senator  Faxxix.  You  are  talking  about  different  matters  altogether. 
We  want  to  give  the  best  educational  program  we  can  to  every  city  and 
town  in  this  Xation  so  that  isn't  what  I  am  talking  about. 

Mr.  Shore.  But  if  a  child  goes  hungry  a  child  cannot  learn. 

Senator  Faxxix.  We  are  not  talking  about  a  child  going  hungry,  we 
are  not  talking  about  children  going  hungry,  we  are  talking  about  be- 
ing able  to  pay  for  a  program. 

Mr.  Shore.  I  would  submit  as  a  taxpayer,  and  I  would  submit  also 
that  our  organization  represents  a  very  broad  section  of  the  com- 
munity, we  are  willing  to  make  this  payment.  We  feel  in  the  long  run 
it  is  not  only  humanitarian  but  it  is  in  the  best  interests  of  our  country. 

Senator  Talzni  adge.  Any  further  questions  ? 

Thank  you  very  much,  Mr.  Shore. 

(The  prepared  statement  and  attachment  of  Air.  Shore  follow. 
Hearing  continues  on  p.  2299.) 

Prepared  Statement  of  Chester  Shore.  Chairman,  Committee  on  Federal 
Legislation.  Health  and  Welfare  Council  of  the  National  Capital  Area, 
Title  IV  of  H.R.  1 

The  Health  and  Welfare  Council  is  the  central  organization  for  developing  and 
coordinating  the  support  of  the  voluntary  sector  for  health,  welfare  and  related 
community  services  in  the  greater  metropolitan  area  of  Washington.  It  is  a  non- 
profit organization  financed  chiefly  by  the  United  Givers  Fund  and  is  responsible 
for  the  allocation  of  UGF  funds  to  eligible  private  voluntary  agencies.  The  Coun- 
cil is  a  citizen-led  organization  representative  of  all  segments  of  the  metropolitan 
area. 

The  219  organizations  affiliated  with  the  Council  represent  the  entire  range  of 
voluntary  social  services.  Some  agencies  operate  under  contract  with  public 
agencies :  nearly  all  of  them  work  in  some  way  with  people  whose  lives  are  in- 
fluenced by  Federal  welfare  assistance.  We  offer  these  comments  on  the  proposed 
Family  Assistance  Plan  and  Opportunities  for  Families  program  in  light  of  our 
experience  and  our  concern  with  the  problems  of  low-income  people. 

Over  time  the  HWC  agencies  have  learned  the  obvious :  the  very  first  thing 
poor  people  need  is  money.  We  believe  strongly  in  the  value  of  social  services. 
Many  of  our  affiliated  agencies  are  providers  of  these  services.  But  we  know 
equally  well  that  the  counselling  and  other  assistance  that  agencies  offer  cannot 
really  change  things  for  families  that  do  not  have  enough  cash  to  live  on.  Until 
these  families  can  buy  food,  clothing  and  shelter  and  have  some  cash  to  cope  with 
emergency  needs,  welfare  agencies  can  do  next  to  nothing  to  help  them  in  any 
permanent  sense  and  there  is  little  most  can  do  next  to  help  themselves. 

We  believe  therefore  that  an  adequate  welfare  reform  bill  would  clearly  state 
a  federal  policy  to  insure  that  all  Americans  can  achieve  an  income  adequate  to 


2294 


meet  their  basic  needs.  It  should  set  goals  of  federal  benefit  levels  calculated 
to  meet  these  needs  and  it  should  fix  a  timetable  for  reaching  these  goals.  Federal 
benefits  should  be  automatically  adjusted  for  increases  in  the  cost,  of  living.  They 
should  also  reflect  regional  cost-of-living  variations,  and  differences  in  rural 
and  urban  areas. 

S.  2747.  the  Family  Income  Maintenance  and  Work  Incentive  Act.  introduced 
in  the  Senate  by  Senator  Fred  Harris  establishes  what  we  think  are  adequate 
levels  and  a  reasonable  timetable  for  reaching  these  levels.  Under  that  bill  min- 
imum benefits  would  start  at  the  poverty  level  (currently  $3,960)  and  increase  in 
steps  to  the  "cost  of  family  consumption"  component  of  the  Bureau  of  Labor  Sta- 
tistics national  lower  living  standard  by  1976.  Federal  assumption  of  all  costs 
would  be  phased  in  concurrently. 

We  have  examined  H.R.  1  as  it.  was  passed  by  the  House.  We  find  in  Title  IV 
of  the  bill  three  constructive,  if  inadequate,  steps  toward  the  kind  of  welfare 
system  that  will  meet  the  needs  of  our  community  and  the  nation  : 

The  bill  adopts  the  principle  of  national  standards  of  minimum  benefits,  and 
establishes  a  single  national  standard  of  eligibility  for  benefits. 

The  bill  would  extend  federal  welfare  benefits  to  some  of  the  working  poor, 
who  are  excluded  from  the  present  system,  and  thus  would  come  closer  to  pro- 
viding help  to  all  who  live  in  poverty. 

Finally,  the  bill  would  expand  opportunities  for  job  training  and  employment. 
It  recognizes  that  supporting  services  are  necessary  in  order  to  make  training  and 
employment  possible,  and.  in  particular,  it  provides  an  expanded  child  care  pro- 
gram for  families  of  participants  in  work  and  training  programs.  As  we  point 
out  below,  however,  these  expanded  programs  still  fall  far  short  of  needs. 

Last  year,  when  we  examined  the  original  Administration  proposal  for  a  fam- 
ily assistance  plan,  our  analysis  was  that,  despite  some  obvious  weaknesses  in  the 
plan,  if  the  plan  were  adopted  as  proposed,  we  would  have  had  on  the  whole  a 
better  welfare  system.  Now  we  believe  that  the  extensive  changes  in  the  original 
proposal,  introduced  in  this  Congress  as  Title  IV  of  H.R.  1.  would  take  us  back- 
ward rather  than  forward,  creating  a  welfare  system  worse  than  the  present  one 
and  overwhelming  the  three  improvements. 

We  comment  in  more  detail  on  aspects  of  Title  IV  of  greatest  concern  to  the 
Health  and  Welfare  Council  and  outline  the  principal  ways  in  which  we  think 
the  bill  must  be  improved  in  order  to  meet  the  basic  needs  of  the  poor : 

1.  The  basic  minimum  payment  under  the  Family  Assistance  Plan,  now  pro- 
posed to  $2,400  per  year  for  a  family  of  four,  should  be  raised  to  a  level  com- 
mensurate with  need. 

We  do  not  think  that  anyone  seriously  suggests  that  $2,400  per  year  is  enough 
to  sustain  a  family  in  a  state  of  health  and  minimal  decency.  H.R.  1  would  elim- 
inate presently  existing  food  stamp  benefits.  Even  when  state  supplements  are 
considered,  benefit,  levels  in  most  states  would  not  nearly  meet  actual  needs.  In 
the  District  of  Columbia,  for  example,  where  AFDC  payments  are  slightly  higher 
than  the  national  average,  total  benefits  for  a  family  of  four  with  no  other  income 
would  be  no  higher  than  about  $200  per  month.  This  level  of  $200  is  $117  per 
month  less  than  our  Welfare  Department's  standard  of  need,  and  at  least  $247 
per  month  less  than  the  minimum  that  experience  indicates  is  necessary  in  this 
citv  to  sustain  life  at  a  standard  of  minimal  decency. 

Research  conducted  in  January  1971  by  the  Councils  Committee  on  Federal 
Legislation  reveled  that  a  family  of  four  in  the  Washington  metropolitan  area 
at  that  time  needed  a  minimum  income  of  some  $5768  to  sustain  a  low-cost  life- 
style corresponding  to  Rureau  of  Labor  Statistics  budget  components.  Inflation 
has  no  doubt  pushed  that  fismre  up  by  now.  Items  comprising  the  total  included: 

Food  :  $1,920  (based  on  LSD  A  low-cost  food  plan) . 

Housing:  $1,724  (including  household  operation). 

Transportation  :  $441. 

Clothing  and  personal  care  :  $833. 

Medical  care :  $480. 

Other  family  consumption:  $370  (reading,  education,  recreation). 

If  free  school  lunches  and  medical  care  are  provided,  the  family's  annual  cash 
neerjc;  ore  reduced  to  $5,125.  On  the  other  hand,  the  $5,767  figure  was  based  on  the 
assumption  that  no  member  of  the  family  was  employed.  If  the  father  was  work- 
ing, cash  needs  would  rise  to  $7,598.  a  figure  that  includes  work-related  expenses 
and  income  and  social  security  taxes. 

2.  The  states  should  not  be  permitted  to  cut  back  existing  benefits  now  paid  to 
needy  families. 


2295 


A  state  should  be  required  to  maintain  its  present  benefit  level  if  it  is  higher 
than  the  federal  minimum,  and  federal  matching  funds  should  be  authorized  to 
cover  costs  of  state  supplementation,  until  the  adequate  federal  benefit  level  is 
reached.  The  dire  trend  of  welfare  cutbacks  owing  to  the  fiscal  plight  of  the  states 
must  be  reversed,  not  encouraged. 

It  is  significant  that  H.R.  1,  unlike  current  law  and  unlike  last  year's  bill, 
provides  no  federal  matching  to  pay  part  of  a  state's  costs  of  supplementing  wel- 
fare benefits.  Instead,  the  bill  holds  the  states  harmless  against  increased  welfare 
costs  only  if  they  do  not  raise  benefit  levels  above  those  of  January  1971.  It 
eliminates  the  provision  of  present  law  for  the  federal  government  to  pay  half 
the  costs  of  cost-of-living  increases  provided  by  a  state.  The  states,  in  short,  are 
severely  discouraged  from  increasing  present  benefits,  however  inadequate  they 
may  be.  And  they  have  a  stronger  financial  incentive  to  cut  benefits.  Under  present 
law,  a  cut  of  one  dollar  in  benefits  means  a  reduction  of  50  cents  in  federal  match- 
ing funds.  Under  H.R.  1,  if  the  states  cut  benefits,  they  lost  not  a  penny  of  federal 
assistance. 

S.  2747  requires  benefits  for  all  recipients,  including  those  newly  eligible,  to 
be  no  less  than  January  1,  1971  level,  plus  bonus  value  of  food  stamps  as  of  same 
date.  All  recipients,  present  and  future,  are  covered.  It  requires  states  to  reim- 
burse the  federal  government  for  the  amount  by  which  maintenance  of  the  Jan- 
uary 1971  level  exceeds  the  federal  minimum.  The  federal  government  must  ad- 
minister all  supplemental  payments.  S.  2747  also  assures  that  state  costs  will  not 
exceed  fiscal  1971  welfare  costs. 

One  of  the  premises  on  which  the  Administration's  original  welfare  reform 
proposal  was  based  was  that  no  individual  should  be  worse  off  under  the  reformed 
program  than  under  the  existing  program.  This  principle  was  stated  in  the 
President's  message  two  years  ago.  It  should  not  be  forgotten  now. 

3.  Assistance  should  be  provided  equally  to  all  in  need. 

We  know  of  no  justification  for  denying  benefits  to  individuals  or  married 
couples  without  children.  We  believe  that  minimum  subsistence  benefits  should 
be  available  to  everyone  in  need — those  in  low-paying  jobs  as  well  as  the  unem- 
ployed, those  without  families  as  well  as  dependent  children  and  their  parents. 
Families  with  more  than  eight  members  should  not  be  penalized  by  a  $3600  ceiling 
on  benefits.  The  additional  family  members  are  children.  They  should  not  be 
punished  for  existing.  The  Harris  bill  disregards  categories — i.e.,  working  poor, 
blind,  handicapped — and  bases  benefits  solely  on  need. 

4.  A  larger  'income  disregard"  is  needed. 

H.R.  1,  like  present  law,  provides  that  after  a  welfare  family  earns  a  certain 
amount  of  income  ($30  per  month  under  present  law,  $60  per  month  under  H.R. 
1),  it  must  give  up  two  dollars  it  earns.  It  is  subject,  in  effect,  to  a  66%  percent 
tax  on  earnings.  It  is  unfair  to  tax  the  very  poorest  as  millionaires.  It  is  also 
potentially  a  strong  disincentive  to  work.  The  50  percent  tax  rate  of  last  years* 
bill  was  more  fair. 

H.R.  1  would  change  present  law  by  requiring  recipients  to  compute  earned 
income  without  deducting  many  of  the  costs  of  working — such  as  transportation, 
lunch,  union  dues,  uniforms,  tools,  and  income  and  social  security  taxes.  This 
is  a  step  backward  and  another  disincentive  to  work.  The  Harris  Bill  provides 
an  incentive  by  allowing  a  family  to  disregard  the  value  of  all  expenses  reason- 
ably attributable  to  the  earning  of  income,  including  child  care  if  it  is  necessary 
to  enable  a  recipient  to  engage  in  work  or  training. 

5.  The  bill  should  provide  a  single,  simple,  unified  system  of  administration. 
We  favor  the  Department  of  Health,  Education  and  Welfare  as  the  sole 

administrator  of  the  federal  welfare  program.  We  fear  that  responsibilities 
shared  by  HEW  and  the  Department  of  Labor  will  result  in  greater  expense 
and  red  tape  for  recipients,  and  a  greater  likelihood  of  administrative  error 
and  delays.  For  this  reason  we  prefer  the  retention  of  the  present  administra- 
irig  responsibilities  in  HEW  as  provided  in  the  Harris  Bill. 

6.  Participation  in  work  and  training  programs  should  not  be  compelled. 
Rnther,  the  bill  should  provide  standards  to  ensure  that  programs  offer  real 
incentives  and  opportunities  for  productive  work  and  training. 

People  receiving  welfare  are  generally  no  different  in  their  attitudes  toward 
employment  than  other  people.  This  is  confirmed  by  an  increasing  number  of 
studies,  including  the  OEO-funded  income  maintenance  project  in  New  Jersey. 
It  is  confirmed  by  the  experience  of  the  workers  in  local  agencies.  Most  people 
want  to  work  and  support  themselves. 


2296 


For  this  reason  we  think  the  bill's  requirement  that  an  individual  accept  em- 
ployment or  training  is  unnecessary.  Particularly  reprehensible — because  it 
punishes  children  for  acts  of  their  parents  beyond  their  control — is  the  threat  of 
an  $800  reduction  in  the  family  benefit  if  any  family  member  deemed  ''employ- 
able" does  not  accept  whatever  work  or  training  is  offered. 

We  understand  and  share  the  concern  of  spokesmen  of  the  poor  who  say  that 
such  provisions  will  be  used  to  coerce  the  poor  into  dead-end  jobs  at  substandard 
wages.  We  fear  that  the  prospect  of  coercion,  no  matter  how  infrequently  coer- 
cion is  actually  applied,  will  so  alienate  people  as  to  defeat  entirely  the  objectives 
of  the  work  and  training  programs. 

We  also  know  that  the  massive  problem  of  underemployment  in  the  District 
of  Columbia,  and  no  doubt  elsewhere,  arises  primarily  from  the  simple  fact  that 
there  are  not  enough  decent  johs,  jobs  that  pay  enough  to  support  a  family, 
available  for  those  that  want  them. 

Finally  on  the  question  of  compelled  work  and  training,  if  the  past  decade's 
experience  with  work  and  training  programs  has  taught  us  anything,  it  is  that 
the  simple  loss  of  a  paycheck  does  not  prevent  enrollees  from  dropping  out  of 
programs  in  large  numbers.  We  know  by  now  that  for  a  work  and  training  pro- 
gram to  be  successful,  it  must  offer  positive  incentives  and  must  take  positive 
steps  to  remove  the  obstacles  that  now  bar  many  poor  people  from  employment. 

We  suggest  therefore  that  the  following  standards  for  work  and  training  pro- 
grams be  added  to  the  bill,  whether  or  not  participation  in  these  programs  is 
made  mandatory. 

All  training  should  be  for  specific  jobs.  The  experience  in  this  community  and, 
we  think,  in  the  nation  at  large  is  that  this  is  by  far  the  best  way  to  insure 
that  a  training  program  will  actually  lead  to  employment.  Where  possible,  the 
'"hire  first"  principle,  applied  in  the  JOBS  program  and  others,  should  be  applied  : 
a  trainee  should  be  first  hired,  then  trained  on  the  job.  In  any  event,  training 
of  an  individual  should  not  begin  until  an  employer  has  firmly  indicated  his 
intention  to  hire  him  when  trained.  In  this  time  of  high  unemployment,  it 
is  clear  that  jobs  are  not  available  for  all  people  who  must  register  for 
training.  We  do  not  believe  that  people  who  enter  training  in  good  faith 
should  bear  the  risk  that  there  will  be  no  jobs  for  them  when  their  training  is 
completed. 

In  appropriate  cases,  college  education  should  qualify  as  "training"  under 
the  program.  Recipients  attending  college  should  not  be  disqualified  from  bene- 
fits solely  on  the  ground  that  they  are  receiving  post-high  school  education.  If 
we  are  sincere  about  breaking  the  poverty  cycle  in  which  a  fifth  of  our  popu- 
lation finds  itself,  we  must  encourage  welfare  recipients  to  obtain  every  kind 
of  training  for  which  they  are  qualified,  not  just  training  that  prepares  them  for 
semi-skilled  and  unskilled  labor. 

In  light  of  worsened  economic  conditions  over  the  past  year,  the  job  train- 
ing provisions  of  H.R.  1,  and  the  200.000  public  service  jobs  authorized  in 
the  bill,  are  grossly  inadequate  compared  with  the  need.  It  is  unrealistic  to 
require,  as  H.R.  1  would  do,  that  after  three  years  the  states  must  assume  the 
costs  of  public  service  jobs.  After  a  few  years,  the  jobs  would  simply  cease  to 
exist. 

Since  available  training  slots  in  the  foreseeable  future  will  be  far  fewer 
than  the  number  of  people  available  for  training,  the  Congress  should  fix  pri- 
orities for  entry  into  training  programs.  Even  if,  as  we  hope  will  not  happen, 
some  people  are  ultimately  required  to  accept  work  or  training  against  their  will, 
the  first  to  enter  these  programs  should  be  people  who  choose  to  do  so.  The  present 
WIN  program  in  the  District  of  Columbia  has  been  filled  from  its  inception  en- 
tirely with  persons  enrolled  voluntarily. 

Rearing  children  should  be  recognized  as  important  and  meaningful  employ- 
ment. In  no  event  should  mothers  of  school  age  or  pre-school  children  be  forced 
to  accept  work  or  training  against  their  will.  Our  local  agencies  have  for 
some  time  been  concerned  with  the  plight  of  the  "latch-key  child,"  the  child 
with  no  supervision  after  school  and  during  school  holidays.  A  study  by  the 
Arlington  Health  and  Welfare  Council,  a  member  of  HWC.  has  shown  that  it 
is  these  children  who  are  most  likely  to  show  behavior  problems  at  school 
and  at  home,  the  most  likely  to  become  involved  with  law  enforcement  author- 
ities. Many  mothers  of  school  age  children  want  to  work,  and  some  can  make 
proper  arrangements  for  the  care  of  their  children  in  their  absence.  If.  how- 
ever, all  welfare  mothers  are  make  to  work,  the  deterioration  of  the  family  and 
the  damage  to  the  children  that  can  result  would  overshadow  any  conceivable 
benefits  of  their  employment. 


2297 


If  employment  is  to  be  compulsory,  strict  standards  of  what  constitutes 
suitable  employment  are  necessary.  These  should  be  federally  administered  and 
enforced  uniformly  for  private  as  well  as  public  sector  jobs.  The  bill  should 
provide  that  no  one  shall  be  compelled  to  take  a  job  that  does  not  pay  the 
federal  minimum  wage.  Any  job  under  the  program  must  offer  the  opportu- 
nity for  advancement  based  on  ability.  We  endorse  the  guidelines  proposed  in 
the  Harris  Bill  which  direct  the  Secretary  in  determining  suitability  of  a  job  or 
training  program. 

The  bill  would  direct  the  Secretary  of  Labor  to  choose  in  each  locality  the 
one  or  more  organizations  best  qualified  to  run  training  and  employment  pro- 
grams. He  should  be  able  to  contract  with  state,  federal  and  local  agencies, 
community  action  agencies  and  voluntary  agencies.  Very  often — and  we  have 
seen  this  happen  in  our  area — local,  citizen-led  organizations  are  better  able 
than  a  state  or  federal  agency  to  reach  the  people  who  need  jobs  and  bring 
them  into  work  and  training  programs. 

8.  The  bill  recognizes  that  adequate  child  care  facilities  are  necessary  if  work- 
ing mothers  are  to  take  advantage  of  work  and  training  programs,  but  it  does  not 
take  realistic  steps  toward  providing  this  care. 

Experience  with  the  WIN  program  in  this  city,  and  studies  that  have  been 
made  elsewhere,  indicate  that  a  major  obstacle  that  keeps  welfare  mothers 
who  want  to  work  from  working  is  lack  of  adequate  day  care  for  their  school 
age  and  pre-school  children.  The  voluntary  agencies  are  deeply  involved  in 
on-going  child  care  programs.  We  believe  that  properly  run  child  care  pro- 
grams are  invaluable  educational  experiences  for  the  children  themselves.  And 
we  also  know  that  if  any  substantial  numbers  of  welfare  mothers  are  to  work, 
there  must  be  day  care  for  their  children. 

The  need  for  child  care  facilities  and  for  trained  personnel  to  run  them 
is  great.  The  Social  Service  Administration  of  the  Department  of  Human  Re- 
sources of  the  District  of  Columbia  has  estimated  that  there  are  25,000  chil- 
dren under  age  5  in  low-income  families  who  have  working  mothers.  An  ad- 
ditional 10,000  to  15,000  children  need  after-school  care.  Yet  the  number  of 
places  for  disadvantaged  children  now  available  in  day  care  centers  in  the  Dis- 
trict is  less  than  4,000.  This  is  the  situation  in  a  community  that  has  been  a 
leader  in  providing  child  care  facilities.  The  need  in  other  communities  must  be 
as  great  or  greater. 

We  believe  these  needs  can  best  be  met  by  enacting  a  comprehensive  child 
development  law  resembling  the  measure  passed  by  Congress  last  session  but 
vetoed.  Such  legislation  would  ensure  quality  care  with  parental  involvement 
and  local  control.  We  do  not  consider  provisions  for  child  care  offered  in  H.R.  1 
to  measure  up  to  adequate  standards  for  the  emotional,  nutritional  and  intellec- 
tual well-being  of  children. 

With  child  development  experts  estimating  the  cost  of  quality  care  at  $2000- 
2300  a  year  per  child,  the  proposed  authorization  of  H.R.  1  is  plainly  inadequate. 
We  do  not  think  low-income  parents  should  be  required  to  bear  this  expense 
alone.  Their  child  care  costs  should  be  underwritten  by  the  federal  government. 

9.  Administration  and  procedures  should  be  less  harsh,  more  flexible. 

In  this  very  important  area,  H.R.  1  would  take  a  number  of  very  serious 
regressive  steps.  These  include  : 

An  attempted  overruling  of  the  Supreme  Court  decision  invalidating  the  one 
year  residency  requirements  for  eligibility  for  Public  Assistance. 

The  bill  also  apparently  attempts  to  set  aside  a  recent  Supreme  Court  decision 
holding  that  a  recipient's  benefits  may  not  be  cut  off  while  proceedings  to  deter- 
mine eligibility  are  pending. 

Under  present  law,  eligibility  for  assistance  is  based  on  present  needs.  Under 
H.R.  1,  income  in  the  previous  three  quarters  is  taken  into  account.  A  family 
whose  head  dies  or  loses  a  job  could  be  ineligible  for  assistance  for  six  to  nine 
months. 

While  recipients  of  adult  categorical  assistance  may  qualify  simply  by  filling 
out  a  form,  family  recipients  must  be  put  through  a  long  and  complicated  in- 
vestigation of  eligibility  before  they  can  receive  assistance.  The  declaration 
method  specified  in  the  Harris  Bill  has  proved  effective  in  the  AFDC  program 
and  should  be  continued. 

10.  The  social  services  appropriation  should  remain  open-ended. 

The  presently  open-ended  authorization  for  social  services  appropriations 
would  be  closed  under  H.R.  1,  except  for  75  percent  federal  matching  for  child 
care  and  family  planning. 


2298 


Local  agencies  affiliated  with  our  Council  have  been  involved  in  providing 
social  services  to  welfare  recipients.  We  know  these  services  to  be  essential  in 
many  cases  to  helping  recipients  leave  the  welfare  rolls.  An  arbitrary  limitation 
on  funds  for  these  purposes  could  well  cripple  ongoing  efforts  to  help  welfare 
recipients  become  self-sufficient. 

Conclusion 

Welfare  reform  is  not  a  subject  about  which  only  the  needy  or  only  certain 
puhlic  officials  are  concerned.  The  voluntary  agencies  represented  by  the  Health 
and  Welfare  Council,  and  the  very  many  citizen  volunteers  who  support  these 
agencies,  are  also  vitally  concerned.  We  recognize  that  voluntary  agencies  can 
make  a  full  contribution  to  the  solution  of  the  welfare  problems  that  face  us 
only  if  there  are  adequate  public  programs  on  which  to  build. 

We  recognize  the  fiscal  difficulties  that  many  states  are  in.  We  strongly  be- 
lieve that  help  for  the  states  should  not  blind  us  to  the  need  for  more  help  for 
human  beings.  In  H.R.  1.  the  .states  are  held  harmless,  but  many  people  are  hurt. 

We  are  concerned,  of  course,  with  the  costs  of  developing  an  adequate  public 
welfare  system.  But  we  observe  every  day  the  costs  of  an  inadequate  system, 
not  only  in  the  constantly  rising  economic  costs  of  half-way  help  for  families 
unable  to  break  the  welfare  cycle,  but  also,  painfully,  in  thousands  of  wasted 
lives.  If  the  nation  must  tax  itself  more  to  truly  reform  the  welfare  system,  or 
if  it  must  out  back  substantially  on  other  kinds  of  expenditures,  then  it  must. 
We  cannot  afford  a  society  in  which  so  many  exist  without  the  means  to  support 
themseives  in  health  and  decency  and  without  the  prospect  of  any  basic  improve- 
ment in  their  lives. 

Respectfully  submitted, 

Chester  Shore, 
Chairman.  HWC  Committee  on  Federal  Legislation. 

Improvements  in  the  Family  Assistance  Plan  Considered  Essential  by  the 
Health  and  Welfare  Council  of  the  National  Capital  Area,  November  1971 

1.  The  basic  minimum  payment  under  the  Family  Assistance  Plan,  now  proposed 
at  $2400  per  year  for  a  family  of  four,  should  be  raised  to  a  level  commensurate 
with  need,  and  a  fixed  timetable  for  meeting  these  goals  should  be  set.  The 
goals  should  be  adjusted  for  cost  of  living  increases  and  for  differences  in  liv- 
ing costs  in  different  areas.  At  current  price  levels  and  in  our  area,  we  estimate 
the  minimum  that  it  costs  a  family  of  four  to  meet  its  needs  is  $5,000  to  $5,500. 

2.  Existing  benefits  now  paid  to  needy  families  should  not  be  cut  back.  States 
should  be  required  to  supplement  the  federal  benefit  where  present  payments 
are  higher,  until  a  level  of  adequacy  is  reached. 

3.  Assistance  should  be  provided  equally  to  all  in  need — including  individuals, 
couples  without  children,  and  "working  poor." 

4.  A  larger  "income  disregard"  is  needed.  The  50  per  cent  tax  rate  of  last 
year's  bill  was  more  fair  than  the  66%  per  cent  tax  in  H.R.  1.  In  addition, 
all  work-related  expenses  should  be  tax-deductible. 

5.  The  bill  should  provide  a  single,  unified  system  of  federal  administration. 

6.  Participation  in  work  and  training  programs  should  not  be  compelled. 
Rather,  the  bill  should  provide  real  incentives  and  opportunities  for  productive 
work  and  training. 

All  training  should  be  for  specific  jobs. 

In  no  event  should  mothers  of  pre-school  or  school  age  children  be  forced  to 
accept  work  or  training. 

Suitable  employment  standards  are  necessary.  Including  a  provision  that  no 
one  shall  be  compelled  to  take  a  job  that  does  not  pay  the  federal  minimum  wage. 

7.  Adequate  child  care  must  be  provided  so  that  mothers  who  choose  to,  can 
work.  Higher  funding  authorization  and  high  standards  must  be  included  to  en- 
sure adequate  adult-child  ratios  and  nutritional,  medical  and  intellectual  com- 
ponents. 

8.  Punitive  administrative  procedures  involving  eligibility,  application  for 
benefits,  and  fair  hearings  should  be  modified. 

9.  The  social  services  appropriation  should  remain  open-ended,  as  under  cur- 
rent law. 

The  Committee  on  Federal  Legislation  of  the  Health  and  Welfare  Council 
considers  S.  2747.  The  Family  Income  and  Work  Incentive  Act  of  1971,  intro- 
duced by  Sen.  Fred  Harris,  to  be  the  bill  most  adequately  meeting  these  re- 
quirements. 


Senator  Talmadge.  The  next  witness  is  Mr.  William  H.  Shaker, 
Delta  Associates  International. 
Mr.  Shaker,  are  yon  here,  sir  ? 

STATEMENT  OF  WILLIAM  H.  SHAKER,  DELTA  ASSOCIATES 
INTERNATIONAL 

Mr.  Shaker.  Yes,  sir. 

Senator  Talmadge.  Proceed,  sir. 

Mr.  Shaker.  I  appreciate  the  opportunity  to  testify  today  and  it  is 
certainly  a  pleasure  to  be  here.  In  studying  the  previous  testimony 
presented  to  this  committee  it  is  clear  that  you  are  asking  the  right 
questions  and  I  am  convinced  that  you  are  committed  to  finding  a 
pragmatic  solution  to  what  has  come  to  be  known  as  the  welfare  mess. 

In  wrestling  with  this  problem,  I  wonder  if  you  ever  feel  like  you 
can't  win  no  matter  what  you  do. 

This  chart  shows  the  projected  cost  to  1977  of  H.R.  1,  along  with 
several  amendments  that  have  been  proposed.  Now  I  have  difficulty 
relating  to  a  hundred  billion  dollars  and  I  have  therefore  drawn 
as  a  reference  the  total  after  tax  profits  of  all  U.S.  corporations  com- 
bined. That  is  the  blue  line  on  the  chart.  I  have  studied  this  bill  in 
the  light  of  likely  future  changes,  and  their  costs,  both  economic  and 
social,  and  I  am  addressing  some  of  the  points  I  think  that  Senator 
Fannin  just  raised. 

Now,  I  would  like  to  show  the  impact  of  H.R.  1  and  various  pro- 
posed amendments  on  jobs.  You  are  not  going  to  be  able  to  read  this 
chart  and  the  next  series  of  charts  but  that  is  okay  because  you  will  be 
able  to  get  the  concepts  that  I  am  trying  to  get  across. 

Shown  down  the  left  of  the  chart  are  the  States  in  alphabetical 
order.  Across  the  top  of  the  chart  are  jobs  that  would  be  affected  by 
H.R.  1  and  the  various  proposed  amendments  in  H.R.  1. 

I  will  analyze  four  cases.  Case  1  is  H.R.  1  as  it  is  presently  written. 
Case  2  is  setting  the  guaranteed  income  at  the  $4,116  poverty  level. 
Case  3  is  the  $4,800  guaranteed  income  floor  that  is  proposed  in  Sena- 
tor Javits'  amendment  and  as  case  4  I  will  show  the  impact  on  jobs  of 
the  demand  of  the  National  Welfare  Rights  Organization  of  $6,500 
a  year. 

Blocks  representing  jobs  that  pay  less  than  a  specified  guaranteed 
income  are  going  to  be  shown  on  the  charts  as  red. 

If  jobs  in  the  apparel  industry,  for  example,  in  the  State  of  Ala- 
bama paid  less  than  a  particular  guaranteed  income,  the  first  square 
on  the  top  left  corner  of  the  chart  would  be  shown  in  red. 

Here  you  see  jobs  that  pay  less  than  the  H.R.  1  guarantee  of  $2,400 
plus  State  supplement.  Quite  a  few  jobs  are  already  affected  in  the 
services  sector  of  the  economy. 

Here  you  see  jobs  that  pay  less  than  the  $4,116  poverty  level.  The 
first  column  on  the  left  represents  the  apparel  industry  which  is  essen- 
tially wiped  out  at  this  level.  I  say  it  is  essentially  wiped  out  because 
of  world  competition  and  world  markets. 

Senator  Hansen.  If  I  could  interrupt  at  a  moment,  let  me  be  certain 
that  I  understand  what  you  are  saying. 

Mr.  Shaker.  Yes,  sir. 


2300 


Senator  Hansen.  Do  I  gather  that  the  red-shaded  areas  on  the  ex- 
treme left-hand  side  of  yonr  chart  represent  jobs  that  presently  would 
pay  less  than  the  benefits  that  would  be  provided  for  people  according 
to  the  terms  of  H.K.  1  ? 

Mr.  Shaker.  No,  this  chart  shows  the  effect  of  moving  the  floor  up 
to  the  $4,116  poverty  level. 

Senator  Hansen.  I  see. 

Mr.  Shaker.  Thank  you,  because  these  things  have  been  proposed 
several  times  in  your  hearings. 

I  want  to  point  out  the  apparel  industry  exported  goods  last  year 
totaling  in  excess  of  $200  million.  The  effect  of  this  legislation  on  our 
balance  of  payments  would  be  disastrous. 

Now,  this  is  moving  up  to  the  proposed  amendment  of  Senator 
Javits.  You  see  an  increasing  number  of  jobs  both  in  the  manufactur- 
ing sector  and  in  the  services  and  trade  sectors  affected. 

Now  there  have  been  those  who  have  said  yes,  but  people  are  going 
to  work  anyway,  they  get  bored  or  something  like  that.  Well,  this  may 
be  but  I  think  this  argument  is  difficult  to  accept.  You  take  a  cook  in 
California  who  under  this  condition  would  make  more  on  welfare  than 
he  would  collecting  his  paycheck.  You  can't  tell  me  that  he  is  going  to 
continue  to  sweat  in  a  kitchen  when  he  can  go  sit  on  the  beach  and 
collect  the  same  amount  of  money  on  welfare. 

Most  of  these  jobs  are  still  going  to  have  to  be  done  so  what  will 
be  the  effect.  The  effect  will  be  rampant  inflation  throughout  the  land 
because  the  paycheck  will  be  competing  with  the  welfare  check.  Over 
three-quarters  of  a  million  jobs  in  New  York  State,  for  example,  pay 
less  than  the  Javits  guaranteed  income.  Eighty-five  percent  of  the 
manufacturing  sector  of  North  Carolina  pays  less  than  this  amount 
of  money. 

Finally  we  take  a  look  at  the  impact  on  jobs  of  the  National  Wel- 
fare Rights  Organization  demand.  NWRO  demands  might  be  dis- 
missed as  so  much  talk  if  it  were  not  for  the  ever-widening  circle  of 
support  they  are  getting.  This  committee  has  heard  testimony  in  sup- 
port of  NWRO  demands  from  such  organizations  as  the  National 
Council  of  Catholic,  Jewish,  and  Negro  Women,  Church  Women 
United,  and  the  women's  division  of  the  United  Methodist  Church. 

H.R.  1  would  begin  an  inflationary  spiral  that  this  country  has  never 
known  before. 

Just  as  we  can  learn  from  our  own  experience  we  can  learn  from 
others.  Our  written  statement  reviews  the  experience  of  Uruguay  with 
similar  legislation. 

This  chart  shows  the  relative  change  in  the  standards  of  living,  that 
is  in  real  per  capita  income  of  Uruguay.  This  is  between  1950  and 
1969.  In  the  middle  1950's  Uruguay's  living  standard  was  comparable 
to  much  of  Europe  and  double  that  of  Japan.  At  that  time  Uruguay 
launched  an  all-out  campaign  to  eradicate  poverty  with  social  pro- 
grams similar  to  the  administration's  family  assistance  program. 
"  How  much  inflation?  Well  between  1963  and  1968,  inflation  in  all  of 
Latin  America  averaged  a  hundred  percent,  awfully  high.  Would  you 
believe  that  it  was  1600  percent  in  Uruguay  during  that  same  period  ? 
Disaster  could  be  wrought  on  the  economy  by  merely  redistributing 
less  than  one-half  of  1  percent  of  the  gross  national  product.  This 
legislation  would  block  a  way  out  of  the  welfare  mess  forever. 


2301 


How  would  the  administration's  family  assistance  plan  affect  the 
Nation  ?  Senator  Kibicoff  of  this  committee  said : 

I  think  the  country  must  realize  that  we  are  basically  changing  the  social 
philosophy  of  the  United  States  once  we  put  this  into  effect.  None  of  us  can 
anticipate  the  consequences,  but  we  are  definitely  starting  this  nation  into  a  new 
social  program  *  *  *  you  put  25  million  people  into  a  new  social  program  and 
you  are  changing  society — we  do  not  know  the  impact  that  it  will  have  on  the 
people  benefited  and  the  people  outside  the  program,  their  concepts,  their  reac- 
tions and  what  it  will  lead  to  *  *  * 

This  study  suggests  what  some  of  these  consequences  are  likely  to  be 
and  gives  a  foretaste  of  future  changes  and  what  the  future  cost  of 
the  welfare  plan  would  be  to  the  Federal  Government  and  to  society. 

I  would  like  to  review  a  little  histor}\  Shown  on  the  top  chart  is 
the  maximum  effective  income  tax  rate  starting  in  1913.  Now  there  is 
debate  in  Ways  and  Means  as  to  the  advisability  of  limiting  the  maxi- 
mum tax  rate  to  10  percent.  This  was  dismissed  as  unnecessary  be- 
cause it  was  obvious  that  the  tax  rate  would  never  reach  10  percent. 
The  middle  chart  shows  the  spending  record  for  social  security  pro- 
grams in  billions  of  dollars.  Social  security  benefits  have  been  increased 
continuously,  especially  during  election  years,  and  last  of  all  you  see 
the  historical  costs  of  public  aid  along  with  the  projected  costs  of 
H.R.  1,  and  the  various  proposed  amendments,  as  you  saw  on  one 
of  the  earlier  charts.  I  think  the  parallels  that  I  am  trying  to  draw 
here  are  obvious;  1977  costs  may  not  be  the  top  line  of  $115  billion. 
But  I  think  it  is  doubtful  it  will  be  the  HEW  estimate  which  is 
shown  at  the  bottom. 

Let's  look  ahead  5  years.  Testimon}T  of  previous  witnesses  is  used 
in  painting  the  picture  of  the  future.  The  likely  immediate  changes 
would  include  elimination  of  work  requirement,  a  substantial  increase 
in  the  income  floor,  and  inclusion  of  single  individuals  and  childless 
couples.  Heard,  for  example,  is  the  spokesman  for  the  Friends  Com- 
mittee on  National  Legislation  agreeing  that  able-bodied  adults  that 
choose  not  to  work,  that  do  not  offer  themselves  for  hire  at  all,  should 
be  given  an  adequate  income  as  a  matter  of  right. 

Echoing  these  sentiments  was  testimony  given  on  behalf  of  organi- 
zations such  as  the  National  Council  of  Catholic  Women,  Jewish 
Women,  Church  Women  United,  and  the  National  Consumers  League. 
Their  position,  "In  our  judgment,  it  is  neither  necessarv  or  desir- 
able *  *  *  " 

Senator  Talmadge.  Mr.  Shaker,  I  am  sorry  your  time  has  expired. 
We  will  insert  your  full  statement  in  the  record. 
Are  there  airy  questions  ? 

Senator  Fannin.  Mr.  Chairman,  I  just  want  to  commend  you,  Mr. 
Shaker,  for  bringing  to  our  attention  the  seriousness  of  this  matter, 
and  for  furnishing  that  much  information,  this  detailed  information, 
which  will  be  studied,  I  assure  you,  very  thoroughly. 

It  is  shocking  to  see  what  is  projected,  and  I  think  it  is  a  very  valu- 
able contribution  you  render  to  our  committee. 

Mr.  Shaker.  Thank  you,  sir.  I  just  want  to  add  in  our  written  state- 
ment we  do  outline  a  proposed  alternative  to  this  bill,  and  it  is  what 
we  are  calling  guaranteed  job  opportunity.  This  is  outlined  in  some 
detail  in  our  written  statement. 

Senator  Fannin.  Thank  you. 

Mr.  Shaker.  I  hate  to,  I  don't  like  to,  criticize  something  unless  I 
have  something  to  offer  as  an  alternative. 

72-573 — 72— pt.  5  6 


2302 


Senator  Fannin.  Thank  yon. 

Senator  Talmadge.  Mr.  Shaker,  I  too  want  to  compliment  you 
on  your  testimony.  I  have  been  tremendously  impressed  by  your  testi- 
mony, so  much  so  that  I  plan  to  take  your  full  statement  home  and 
read  it  in  its  entirety  and  I  hope  other  members  of  this  committee  and 
the  news  media  will  do  likewise. 

Senator  Hansen. 

Senator  Hansen.  I  would  just  like  to  ask  Mr.  Shaker,  the  charts 
you  have  explained  on  the  screen  are  contained  in  the  statement  ? 
Mr.  Shaker.  Yes,  sir :  they  are. 

Senator  Hansen.  So  they  will  be  available  to  the  committee. 
Mr.  Shaker.  They  will  be  available. 

Senator  Hansen.  Let  me  also  compliment  you  for  exploring  in 
depth  and  pointing  out  what  you  think  may  very  well  be  the  results 
of  some  of  the  proposals  that  are  now  before  this  committee.  I  think 
you  have  done  very  important  work.  You  have  provided  a  vital  serv- 
ice to  us  in  order  that  we  may  better  assess  what  could  be  the  results, 
or  the  impact,  of  some  of  the  proposals  that  have  been  made. 

It  seems  to  me,  Mr.  Chairman,  to  underscore  the  good  wisdom  in  the 
observation  you  made  yesterday,  to  which  I  subscribe  wholeheartedly 
and  without  reservation,  when  you  said  that  you  thought  that  it  was 
fine  to  undertake  a  pilot  project  but  you  see  no  reason  at  all  to  include 
with  that  authorization,  and  the  appropriation  necessary  to  undertake 
such  a  test  effort,  the  implementation  of  a  bill  at  a  time  certain. 

I  think  that  if  the  project  proves  its  merit  Congress  will  certainly  be 
persuaded  by  its  success. 

Senator  Talmadge.  Will  the  Senator  yield  ?  It  is  like  buying  a  house 
before  you  inspect  it.  You  purchase  it  and  then  have  the  right  to  in- 
spect it  afterwards. 

Senator  Hansen.  Precisely.  Thank  you. 

Mr.  Shaker.  One  thing  about  the  testing,  if  you  are  going  to  test 
you  should  design  the  testing  program  so  it  will  be  flexible  enough 
so  people  like  Governor  Reagan  can  try  some  of  his  experiments  also. 
I  think  if  you  put  too  many  constraints  on  it  you  won't  ever  find  any- 
thing out. 

This  chart  is  just  in  our  statement,  too.  It  shows  the  results  of  a 
program  in  Puerto  Rico  where  they  also  set  out  to  eliminate  poverty; 
but  their  approach  was  different.  It  involved  private  enterprise.  This 
chart  is  also  in  the  written  statement.  It  compares  Puerto  Rico's  prog- 
ress with  Uruguay. 

Senator  Hansen.  Thank  you. 

Senator  Talmadge.  Thank  you  very  much,  Mr.  Shaker. 
(The  prepared  statement  and  attachments  of  Mr.  Shaker  follow. 
Hearing  continues  on  p.  2335.) 

Prepared  Statement  of  William  H.  Shaker,  Delta  Associates  International 

AN    ANALYSIS    OF    THE    ADMINISTRATION'S    FAMILY    ASSISTANCE    PLAN  WITH 
RECOMMENDATION    FOR   EFFECTIVE    WELFARE  REFORM 

A  Research  Report  to  the  Senate  of  the  United  States  : 
Summary  of  Key  Points 

My  name  is  William  H.  Shaker. 

I  appreciate  the  opportunity  to  testify  and  it  is  a  pleasure  to  be  here.  In 
studying  previous  testimony  presented  to  this  committee  it  has  become  clearly 
evident  that  you  are  asking  the  right  questions.  I  am  convinced  that  you  are  com- 


2303 


milled  to  finding  a  pragmatic  solution  to  the  "welfare  mess,"  and  I  hope  that  my 
testimony  and  our  previously  submitted  written  material  will  be  of  some  help'. 
In  wrestling  with  this  problem  do  you  ever  feel  like  you  can't  win — no  matter 
what  you  do? 

This  chart  (Exhibit  1,  page  5)  shows  the  projected  cost  to  1977  of  H.R.  1,  along 
with  several  amendments  that  have  been  proposed.  I  have  difficulty  relating  to 
$100  billion  and  have  therefore  drawn,  as  a  reference,  the  total  after-tax  profits 
of  all  United  States  corporations. 

I  would  now  like  to  review  a  little  history  because  we  can  learn  from  it  (Ex- 
hibit 2,  page  6) .  Shown  on  the  top  chart  is  the  maximum  effective  income  tax  rate, 
starting  in  1913.  There  was  debate  in  Ways  and  Means  as  to  the  advisability  of 
limiting  the  maximum  tax  rate  to  10%.  This  was  dismissed  as  unnecessary  be- 
cause it  was  obvious  that  the  tax  rate  would  never  reach  10%.  The  middle  chart 
shows  the  spending  record  for  social  security  programs.  Social  Security  Lenefits 
have  been  increased  continuously,  especially  during  election  years.  And  last  of  all 
you  see  the  historical  cost  of  public  aid,  along  with  projected  costs  of  H.R.  1  and 
the  various  proposed  amendments. 

Now,  I  would  like  to  show  the  impact  of  H.R.  1  and  various  proposed  amend- 
ments on  jobs.  You're  not  going  to  be  able  to  read  this  chart — the  details  of  it— 
but  that's  okay  because  you  will  be  able  to  get  the  concept.  Shown  down  the  left 
of  the  chart  (Exhibit  4,  page  16)  are  all  of  the  states.  Across  the  top  of  the  chart 
:ire  jobs  that  would  be  affected  by  H.R.  1  and  proposed  amendments  to  H.R.  1.  I 
will  analyze  four  cases :  H.R.  1  (Exhibit  4,  page  18)  ;  setting  the  guaranteed  in- 
come at  the  $4,116  poverty  level  (Exhibit  5,  page  17)  ;  the  $4,S00  guaranteed  in- 
come floor  that  is  proposed  in  Senator  Javits'  amendment  (Exhibit  6,  page  18)  ; 
and  then  lastly,  I  will  show  the  impact  on  jobs  of  the  demand  of  the  National 
Welfare  Rights  Organization  of  $6,500/year  (Exhibit  7,  page  19).  Blocks  repre- 
senting jobs  that  pay  less  than  a  specified  guaranteed  income  will  be  shaded  in. 
If  jobs  in  the  apparel  industry  in  the  state  of  Alabama  paid  less  than  a  particular 
guaranteed  income  the  first  square  in  the  top  left  corner  of  the  chart  would  be 
shaded  in.  Here  (Exhibit  4),  you  see  jobs  that  pay  less  than  the  H.R.  1  guarantee 
of  $2,400  (plus  state  supplements) . 

Quite  a  few  jobs  are  already  affected  in  the  services  sector  of  the  economy. 
Here  (Exhibit  5),  you  see  the  number  of  jobs  that  would  be  affected  at  the 
$4116  poverty  level.  Moving  upward  to  the  proposed  amendment  of  Senator 
Javits  (Exhibit  6),  you  see  an  increasing  number  of  jobs,  both  in  the  manu- 
facturing sector  and  in  the  services  and  trade  sectors,  affected.  There  have  been 
those  who  have  said,  "yes,  but  people  are  going  to  work  anyway.  Maybe  it's 
because  they  get  bored"— well,  this  may  be — but  this  argument  is  difficult  to 
accept.  Take  a  cook  in  California— is  he  going  to  continue  to  work  in  a  sweaty 
kitchen  when  he  can  go  and  sit  on  the  beach  and  collect  the  same  amount  of 
money  on  welfare?  Most  of  these  jobs  are  still  going  to  have  to  be  done.  So,  what 
will  be  the  effect?  The  effect  will  be  rapid  inflation  throughout  the  land  be- 
cause the  paycheck  will  be  competing  with  the  welfare  check.  Finally,  we 
take  a  look  at  the  impact  on  jobs  of  the  $6500.  National  Welfare  Rights  Organiza- 
tion demand.  N.W.R.O.  demands  might  be  dismissed  as  so  much  silly  talk  if  it 
were  not  for  the  ever-widening  circle  of  support  that  they  are  getting.  This  com- 
mittee has  heard  testimony  in  support  of  N.W.R.O.  demands  from  such  organiza- 
tion as  National  Councils  of  Catholic,  Jewish  and  Negro  Women ;  Church  Women 
United ;  and  the  Women's  Division  of  the  United  Methodist  Church.  These  "in- 
come as  a  matter  of  right"  plans  will  affect  a  larger  section  of  the  economy 
than  that  represented  by  the  lady  that  Senator  Long  has  referred  to  from  time 
to  time  during  hearings  that  can  not  hire  domestic  help  because  welfare  is  more 
attractive. 

Disaster  could  be  wrought  on  the  economy  by  merely  redistributing  less  than 
one-half  of  1%  of  the  G.N.P.  Our  written  statement  reviews  the  experience  of 
Uruguay  with  similar  legislation.  Between  1958  and  1968  inflation  in  all  of 
Latin  America  averaged  100%.  It  was  1600%  in  Uruguay  during  that  same  period. 
It  would  be  no  easier  for  government  to  eradicate  poverty  by  guaranteeing  an 
income  to  the  poor  by  redistributing  a  little  bit  of  the  income  of  the  "non- 
poor"  than  it  would  be  to  let  just  a  little  air  out  of  a  balloon  by  picking  it 
with  a  pin  (see  our  written  statement  relating  to  Uruguay).  Our  research  has 
gone  behind  the  emotional  screens  and  displayed  facts.  We  believe  most  of  the 
fa  cts  presented  will  be  mindstickers. 

How  would  the  Administration's  Family  Assistance  Plan  affect  the  nation? 
In  the  words  of  Senator  A.  Ribicoff,  "I  think  the  country  must  realize  that  we 
are  basically  changing  the  social  philosophy  of  the  United  States  once  we 


2304 


put  this  into  effect.  None  of  us  can  anticipate  the  consequences,  but  we  are 
definitely  starting  this  nation  into  a  new  social  program  .  .  .  you  put  25  mil- 
lion people  into  a  new  social  program  and  you  are  changing  society — we  do  not 
know  the  impact  that  it  will  have  on  the  people  benefited  and  the  people  out- 
side the  program,  their  concepts,  their  reactions  and  what  it  will  lead  to  .  .  .'r 
This  study  suggests  what  some  of  these  consequences  are  likely  to  be  and  gives 
a  fore-taste  of  future  changes  and  what  the  future  cost  of  the  welfare  plan 
would  be  to  the  Federal  Government  and  to  society.  Testimony  of  previous 
witnesses  is  used  in  painting  this  picture  of  the  future.  The  likely  immediate 
changes  would  include  the  elimination  of  the  work  requirement,  a  substantial 
increase  in  the  income  floor,  and  inclusion  of  single  individuals  and  childless 
couples. 

Heard,  for  example,  is  the  Friends  Committee  on  National  Legislation  spokes- 
man agreeing  that  able-bodied  adults  that  choose  not  to  work,  that  do  not  offer 
themselves  for  hire  at  all,  should  be  given  an  adequate  income  as  a  matter  of 
right.  Echoing  these  sentiments  was  testimony  given  on  behalf  of  organiza- 
tions such  as  the  National  Council  of  Catholic  Women  and  Jewish  Women ; 
Church  Women  United ;  and  National  Consumers  League.  Their  position :  "in 
our  judgment,  it  is  neither  necessary  nor  desirable  that  training  and  work  re- 
quirements be  mandatory.  We  believe  that  a  mandatory  work  requirement  is 
not  needed  for  either  men  or  women,  and  urge  its  deletion."  Just  about  every 
organization  that  supports  the  Act  is  demanding  that  the  federal  floor  be  raised. 
If  this  bill  is  passed  intact,  the  floor  is  destined  to  rise,  especially  during  elec- 
tion years.  Total  costs  of  these  demands  is  presented,  which  in  most  case  would 
cost  more  than  the  total  after-tax  profits  of  all  U.S.  corporations  combined. 
Intangible  costs  of  the  work  incentive  is  simulated  using  the  experience  of 
another  country — Uruguay.  The  cost  would  be  around  $300  billion — 150%  of  the 
total  1970  federal  budget.  H.R.  1  would  have  the  effect  of  wiping  out  millions 
of  jobs.  Study  findings  identify  jobs  and  industries  that  would  be  eliminated 
state  by  state.  Nearly  three-fourth  of  a  million  jobs  would  be  wiped  out,  for 
example,  in  New  York  state  under  Senator  Javits'  amendment  to  H.R.  1.  His 
amendment  would  also  wipe  out  85%  of  the  manufacturing  sector  in  North 
Carolina.  Our  attached  statement  concludes  with  recommendations  for  effective 
welfare  reform  and  proposes  a  program  of  guaranteed  job  opportunity  as  an 
alternative  to  guaranteed  income. 

An  Analysis  of  the  Administration's  Family  Assistance  Plan  (H.R.  1) 
With  Recommendations  for  Effective  Welfare  Reform,  William  H.  Shaker, 
P.E.,  Delta  Associates 

A  Research  Report  to  the  Senate  of  the  United  States: 
Abstract. — The  purpose  of  this  report  is  to  inform  and  to  initiate  public  de- 
bate of  the  welfare  issue.  Our  research  study  goes  behind  the  emotional  screens 
and  displays  facts.  Most  of  the  facts  presented  are  mind  stickers — which 
should  be  startling  to  many,  thought  provoking  to  most.  Read  with  an  open 
mind,  we  believe  that  many  supporters  of  H.R.  1  will  re-think  their  positions. 
Out  of  this  process  can  come  real  welfare  reform. 

The  study  is  presented  in  the  format  of  testimony  to  the  Committee  on  Finance, 
United  States  Senate.  It  contains  a  detailed  and  critical  analysis  of  the  Admin- 
istration's Family  Assistance  Plan,  along  with  some  recommendations  for  effec- 
tive reform. 

In  the  words  of  United  States  Senator  Abraham  Ribicoff :  "...  I  think  the 
country  must  realize  that  we  are  basically  changing  the  social  philosophy  of 
the  United  States  once  we  put  this  (H.R.  1)  into  effect.  None  of  us  can  anticipate 
the  consequences,  but  we  are  definitely  starting  this  Nation  into  a  new  social 
program  .  .  .  you  put  25  million  people  into  a  new  social  program  and  you  are 
changing  society — we  do  not  know  the  impact  that  it  will  have  on  the  people 
benefited  and  the  people  outside  the  program,  their  concepts,  their  reactions  and 
what  it  will  lead  to  .  .  ."  This  study  suggests  what  some  of  these  consequences 
are  likely  to  be  and  gives  a  foretaste  of  future  changes  and  what  the  future 
cost  of  the  welfare  plan  would  be  to  the  Federal  Government  and  to  the  society. 
Testimony  of  previous  witnesses  is  the  paint  for  this  picture  of  the  future.  The 
likely  immediate  changes  would  include  elimination  of  the  work  requirement,  a 
substantial  increase  in  the  income  floor  (guaranteed  income)  and  inclusion  of 
single  individuals  and  childless  couples. 

_  Heard,  for  example,  is  the  Friends  (Quaker)  Committee  on  National  Legisla- 
tion spokesman  agreeing  that  able-bodied  adults  who  choose  not  to  work — who 


2305 


do  not  offer  themselves  for  hire  at  all — should  be  given  an  adequate  income  as 
a  matter  of  right.  Echoing  these  sentiments  was  testimony  given  on  behalf  of 
organizations  such  as  the  national  councils  of  Catholic  Women  and  Jewish 
Women,  Church  Women  United,  and  the  National  Consumers  League.  Their 
position :  "In  our  judgment,  it  is  neither  necessary  nor  desirable  that  training 
and  work  requirements  be  mandatory.  We  believe  that  a  mandatory  work  re- 
quirement is  not  needed  for  either  men  or  women  and  urge  its  deletion."  The 
American  Civil  Liberties  Union  testified:  "Compelling  a  person  to  accept  em- 
ployment as  a  condition  for  receiving  welfare  benefits  is  in  fundamental  conflict 
with  the  principles  of  free  society,  with  the  13th  Amendment's  prohibition  against 
involuntary  servitude  and  the  14th  Amendment's  guarantee  of  equal  protection 
of  the  laws." 

This  report  is  intended  to  give  the  membership  of  the  organizations  that 
presented  testimony  a  clear  understanding  of  the  positions  taken  by  their 
leadership.  Thus,  this  report  is  addressed  to  the  concerned  and  interested  lay- 
man and  laywoman  as  well  as  governmental  and  industrial  leadership. 

Just  about  every  organization  that  supports  the  act  is  demanding  that  the 
Federal  floor  (guaranteed  income)  be  raised.  The  total  cost  of  these  demands 
is  presented,  which  in  most  cases,  would  cost  more  than  the  total  after-tax  profits 
of  all  United  States  corporations  combined.  It  is  generally  acknowledged  that 
H.R.  1  contains  some  degree  of  disincentive  to  work.  The  intangible  cost  of  this 
work  disincentive  is  simulated  using  the  experience  of  another  country — Uruguay. 
The  result  would  be  a  cost  of  around  $300  billion — one-hundred-fifty  per  cent  of 
the  total  1970  Federal  budget.  H.R.  1  would  have  the  effect  of  wiping  out  mil- 
lions of  jobs.  Study  findings  identify  jobs  and  industries  that  would  be  elimi- 
nated— state  by  state.  Three-fourth  of  a  million  jobs  would  be  wiped  out,  for 
example,  in  New  York  State  under  Senator  Javits  Amendment  to  H.R.  1.  His 
Amendment  would  also  wipe  out  85%  of  the  manufacturing  sector  in  North 
Carolina. 

The  study  concludes  with  recommendations  for  effective  welfare  reform  and 
proposes  a  program  of  guaranteed  job  opportunity  as  an  alternative  to  guaran- 
teed income. 

INTRODUCTION 

In  studying  the  previous  testimony  presented  to  this  committee  (both  on  H.R.  1 
and  H.R.  16311) ,  it  has  become  clearly  evident  to  me  that  this  committee  is  asking 
the  right  questions.  I  don't  think  that  you  have  yet  come  up  with  a  pragmatic 
solution  to  the  ^welfare  mess" — but  it  is  also  very  clear  that  you  are  committed 
to  doing  so.  I  hope  that  my  testimony  here  today  and  the  attached  written  ma- 
terial will  be  of  some  help. 

Today's  industrial  systems  engineer  is  charged  with  maximizing  the  utilization 
of  all  available  resources — including  people — and  to  large  extent  might  be  con- 
sidered a  "social  engineer".  Part  of  his  function  is  the  creation  of  new  jobs  and 
job  opportunities.  Perhaps  as  a  systems  engineer  and  a  citizen  deeply  concerned 
about  certain  trends  in  this  country,  I  can  add  a  different  perspective  to  this 
legislation  and  provide  information  that  will  be  of  value  during  further 
deliberations. 

THE  URGENT  NEED  FOB  REFORM 

The  opening  remarks  of  Joseph  C.  Wilson,  Chairman,  Xerox,  in  support  of  the 
Administration's  Family  Assistance  Plan  is  fairly  typical : 

".  .  .  we  find  the  present  system  of  public  welfare  to  be  demeaning,  inefficient, 
inadequate,  and  with  so  many  disincentives  built  into  it  that  it  encourages  con- 
tinued dependency.  It  is  hopelessly  bad  and  incapable  of  reform".  - 

All  sides  see  the  need  for  reform.  In  opposing  the  bill,  Liberty  Lobby  testified : 

".  .  .  That  the  present  welfare  system  is  wasteful  and  mismanaged  is  a  point 
on  which  we  can  all  agree  .  .  .". 

And  the  'Chamber  of  Commence  of  the  United  States  : 

".  \  .  We  agree  with  the  diagnosis  of  the  welfare  problem,  but  we  disagree 
completely  with  the  proposed  solution". 

H.R.  1  can  serve  as  a  vehicle  to  truly  effect  welfare  reform.  All  political  per- 
have  not  yet  agreed,  however,  on  a  "suitable"  definition  of  the  word  "reform". 

I  am  tired  of  listening  to  criticism  from  people  who  are  not  able  to  offer  con- 
structive alternatives.  Hopefully,  I  am  not  guilty  of  this  omission. 

Before  H.R.  1  can  be  used  as  a  framework  for  welfare  reform,  two  fundamental 
changes  must  be  made  in  the  bill : 

1.  Remove  the  principles  of  guaranteeing  an  income  as  a  matter  of  right. 

2.  Remove  the  principle  of  the  negative  income  tax. 


2306 


The  discussion  which  follows  is  intended  to  make  evident  why  these  two 
changes  to  H.R.  1  are  so  essential  for  reform  and  why  I  have  concluded  that 
passage  of  H.R.  1  with  the  negative  income  tax  and  guaranteed  income  provisions 

intact  will  block  effective  reform  forever. 

H.R.   1  IN  ITS  PRESENT  FORM  AND  A  PREDICTION  OF  THE  FUTURE 

This  bill  must  be  studied — not  the  way  that  it  reads  today — rbut  the  way  that 
suasions  are  virtually  unanimous  in  saying  that  the  need  for  reform  is  urgent.  All 
your  best  judgment  says  that  it  will  read  in  the  future. 

Exhibit.  1  illustrates  the  cost  effect  of  several  amendments  that  have  been  pro- 
posed. I  have  great  difficulty  grasping  the  meaning  of  $100  billion.  I  have  there- 
fore shown,  as  a  reference  line,  the  projected  total  after-tax  profits  of  all  United 
States  corporations  for  1971. 

I  suggest  that  the  cost  of  H.R.  1  in  ithe  future  will  be  one  of  the  higher  points. 

I  have  come  to  this  conclusion,  both  from  examining  the  trends  of  govern- 
mental spending  and  studying  the  testimony  of  previous  Witnesses,  that  this  com- 
mittee has  called  to  testify. 

The  projected  cost  of  H.R.  1  along  with  the  growth  of  the  personal  income  tax 
and  social  security  is  shown  in  exhibit  2. 

There  was  much  debate  in  Ways  and  Means  in  the  year  1913  as  to  the  ad- 
visability of  putting  a  limit  of  10%  maximum  on  the  income  tax  bill.  The 
major  argument  against  such  a  limitation  was  that  the  rate  would  never  reach 
that  level  and  that  it  was  silly  to  worry  about  such  things. 

One  of  the  objectives  of  the  Social  Security  Act  was  to  relieve  poverty 
and  distress  through  contributory  programs  in  such  a  way  that  relief  could 
be  gradually  tapered  off  to  negligible  levels.  The  government  was  to  get  out 
of  the  business  of  relief.  In  a  message  to  the  Congress  in  1935,  Franklin  D. 
Roosevelt  declared: 

".  .  .  The  Federal  Government  must  and  shall  quit  this  business  of  relief 
.  .  .  Continued  dependence  upon  relief  induces  a  spiritual  and  moral  disinte- 
gration, fundamentally  destructive  to  the  national  fiber  .  .  ." 

As  with  the  Administration's  guaranteed  annual  wage  proposal,  Social  Se- 
curity was  enacted  on  the  premise  that  it  would  make  direct  relief  unnecessary 
and  so  displace  it.  That,  of  course,  did  not  happen.  Direct  relief  has  grown 
steadily — despite  growing  prosperity.  Social  security  benefits  have  been  in- 
creased continually — especially  during  election  years — new  programs  have  been 
added  and  expanded  and  the  coverage  constantly  widened. 

Past  actuary  for  the  Social  Security  Board,  W.  Rulon  Williamson  has  esti- 
mated Social  Security  liability  (not  including  Medicare)  to  the  families  of  those 
paying  social  security  taxes — but  not  yet  retired — to  be  $1  trillion. 

The  cost  of  social  welfare  in  the  United  States  is  growing  at  an  annual  rate 
of  about.  14%.  In  1970  the  money  spent  in  the  United  States  by  all  levels  of 
government  for  social  welfare  amounted  to  $143  billion.  Spreal  on  a  per  family 
basis,  this  amounts  to  $2650  for  the  typical  American  family.  The  proposed  wel- 
fare cost  increases  under  H.R.  1  would  be  on  top  of  this  amount. 

I  will  now  describe  the  probably  future  welfare  picture — if  H.R.  1  (with 
guaranteed  income  and  negative  income  tax  provisions  intact)  is  enacted — 
based  on  highlights  from  testimony  given  to  this  committee  on  H.R.  16311  and 
Administration  testimony  on  H.R.  1. 

SOCIAL  PHILOSOPHY  CONTAINED  IN  H.R.  1 

I  think  that  the  meaning  of  H.R.  1  is  succinctly  expressed  in  a  statement  by 
Senator  Ribicoff. 

"...  I  think  the  country  must  realize  that  we  are  basically  changing  the 
social  philosophy  of  the  United  States  once  we  put  this  [H.R.  1]  into  effect.  None 
of  us  can  anticipate  the  consequences,  but  we  are  definitely  starting  this  Na- 
tion into  a  new  social  program  .  .  .  you  put  25  million  people  into  a  new  social 
program  and  you  are  changing  society — we  do  not  know  the  impact  that  it  will 
have  on  the  people  benefited  and  the  people  outside  the  program,  their  con- 
cepts, their  reactions  and  what  it  will  lead  to  .  .  ." 

HEW  cost  estimates  assume  that  a  sizable  proportion  of  the  people  eligible 
for  benefits  will  not  apply.  Secretary  Richardson  has  estimated  that  perhaps 
50%  of  the  people  eligible  under  current  law  have  not  applied.  But  there  is 
still  a  certain  social  stigma  attached  to  going  on  welfare.  Many  people  are  too 
proud  to  accept  welfare.  H.R.  1  is  designed  to  change  that.  Somehow  it  will  legis- 
late "dignity"  to  those  on  welfare. 


2307 


What  this  legislation  would  accomplish,  in  the  words  of  its  chief  archi- 
tect, Dr.  Moynihan  "...  is  provide  income  as  a  matter  of  right." 

Once  a  guaranteed  income  or  income  supplement  is  declared  to  be  a  right 
under  the  law,  it  is  doubtful  if  very  many  people  will  refuse  it.  I  am  sure  that 
N.W.R.O.  and  O.E.O.  lawyers  would  be  able  to  supply  adequate  information  for 
those  people  who  would  not  otherwise  completely  understand  their  new  rights. 

I  have  plenty  of  friends — professional  people  and  tradesmen — who  are  opposed 
to  this  legislation.  But  if  it  passes  they  will  be  looking  forward  to  taking  advan- 
tage of  it  when  benefits  get  up  to  where  they  can  receive  an  "adequate"  income. 

Much  of  the  testimony  has  supported  this  legislation — but  only  as  a  beginning. 
Dr.  Roy  Nicks,  Chancellor,  University  of  Tennessee,  and  President,  American 
Public  Welfare  Association,  stated  ".  .  .  This  legislation  will  establish  a  base 
upon  which  further  improvements  can  be  built."  This  same  thought  permeated 
much  of  the  testimony  and  has  also  been  carried  in  the  popular  press.  To  quote 
Time  Magazine,  ".  .  .  it  remains  a  firm,  if  modest  first  step  in  the  right 
direction." 


ftaifAN  iM  Tiib  MTURE/ 


120 


NWRO 

'50%  TAX  PROGRAM' 
$115  BILLION 


/NWRO 
"66-2/3%  TAX  PROGRAM' 
$70  BILLION 

/  S3433 
/  $40  -  $53  BILLION 


SENATOR  RIBICOFF 
AMENDMENT  = 
$28.5  BILLION 

H.R.  1  =  $16.2  BILLION 

^CURRENT  LAW 
$15.8  BILLION 


1960 


1965 


1970 


1975 


1980 


1985 


Exhibit  1 


2308 


1915  1930  1945  1960  1975 


120 


100 


*  1ISJWRO,  FLOOR 
^-<$6500 

($115  BILLION 


WORK  REQUIREMENTS 

There  has  been  much  heated  discussion  over  the  work  requirement  and 
whether  work  ought  to  be  suitable. 

H.R.  1  would  require  that  able-bodied  recipients  register  in  the  Opportunities 
for  Families  program  of  the  Department  of  Labor.  Secretary  Hodgson  estimates 


2309 


that  this  program  would  register  about  3  million  persons  for  training  and  job 
opportunities.  The  past  track  record  for  programs  of  this  nature  has  proved  to 
be  only  10%  effective. 

As  a  point  of  clarification,  the  requirement  that  the  potentially  employable 
seek  work  or  job  training  to  remain  eligible  already  exists — as  you  know — in 
many  of  the  states.  Perhaps  it  was  included  to  make  the  bill  more  acceptable 
to  the  working  man  who  must  assume  the  obligation  of  providing  an  adequate, 
guaranteed  income  to  the  man  that  does  not  work. 

But  to  remove  any  doubt,  many  people  would  like  to  have  any  mention  of 
work  requirements  removed  from  the  bill. 

Take,  for  example,  the  testimony  of  Edward  T.  Anderson,  representing  the 
Friends  Committee  on  National  Legislation. 

The  Friends  Committee  was  completely  opposed  to  the  work  requirement. 
Work  should,  of  course,  be  optional  if  the  recipient  would  elect  to  work. 

Mr.  Anderson  was  asked.  "What  do  you  recommend  in  reference  to  the  indi- 
vidual able-bodied  adult,  who  chooses  just  not  to  work  at  all,  doesn't  offer  him- 
self for  hire  at  all?  Are  you  for  a  program  that  would  give  a  federally  assured 
income  to  that  person  as  a  matter  of  right?  Answer:  "Yes.  As  long  as  a  person 
is  alive  there  are  certain  basic  needs  he  has  ...  he  still  has  to  eat  .  .  .  shelter 
.  .  .  clothes."  Question :  "These  needs  must  be  met — even  if  this  able-bodied 
adult  chooses  not  to  work?"  Answer :  "Yes." 

The  next  statement  represents  the  position  of  the  following  organizations : 
National  Council  of  Jewish  Women,  National  Council  of  Catholic  Women,  Na- 
tional Council  of  Negro  Women,  Church  Women  United,  The  National  Board 
of  Managers,  National  Consumers  League — 

"In  our  judgment,  it  is  neither  necessary  nor  desirable  that  training  and  work 
requirements  be  mandatory.  We  believe  that  a  mandatory  work  requirement  is 
not  needed  for  either  men  or  women  and  urge  its  deletion." 

During  its  testimony,  Common  Cause  seemed  quite  irate  that  the  "suitable 
work"  language  was  deleted  from  the  original  house  bill.  Common  Cause  testi- 
fied that  a  recipient  should  be  allowed  to  refuse  work  where  the  pay  is  less  than 
the  prevailing  or  minimum  wage — whichever  is  higher.  Common  Cause  wants 
mothers  with  school  age  children  to  be  exempted  from  the  work  requirement. 

A  very  strong  force  in  this  country  is  the  American  Civil  Liberties  Union. 
Their  position  is  the  following : 

"Compelling  a  person  to  accept  employment  as  a  condition  for  receiving  wel- 
fare benefits  is  in  fundamental  conflict  with  the  principles  of  a  free  society, 
with  the  13th  Amendment's  prohibition  against  involuntary  servitude  and  the 
14th  Amendment's  guarantee  of  equal  protection  of  the  laws." 

WHAT  WOULD  THE  GUARANTEED  INCOME  BE  IN  THE  FUTURE  ? 

Many  organizations — some  of  them  with  a  real  and  immediate  interest,  such 
as  the  National  Welfare  Rights  Organization — have  recommended — some  de- 
manded— that  the  income  floor  be  raised  far  above  the  $2400  per  year  that  is 
presently  proposed. 

Many  members  of  the  United  States  Senate  would  also  vote  to  raise  the  floor. 
The  amendment  of  Senator  Javits,  for  example,  would  redefine  the  poverty 
level  at  $4800  for  a  family  of  four.  His  basic  amendment  phases  in  this  redefined 
poverty  level  with  the  Federal  government  handling  the  entire  welfare  system 
by  1979.  If  a  nominal  inflation  rate  of  4%  in  the  cost  of  living  is  assumed,  the 
Senator's  poverty  level  would  be  $7100  in  1979. 

A  large  number  of  witnesses  have  called  for  the  poverty  level  to  be  redefined 
as  that  amount  to  provide  a  minimal  low  standard  of  living.  What  is  that?  The 
Bureau  of  Labor  Statistics  estimates  this  to  be  $6567  for  a  family  of  four.  It 
might  be  of  interest  to  note  that  the  poverty  level  for  "minimum  subsistence" 
for  a  family  of  four  has  risen  61%  in  constant  1970  $'s  between  1941  and  1969. 
(In  1941  the  poverty  level  for  a  family  of  four  was  $836 1  or  $2570  in  constant 
1970  $'s). 

A  number  of  national  leaders  have  urged  that  the  floor  be  moved  up  to  the 
poverty  level  ($4116  in  1971  $'s).  Mayor  John  Lindsay  thinks  that  the  floor 
should  be  moved  to  at  least  the  poverty  level  and  that  the  cost  of  living  increase 
principle  he  applied  to  it.  Mr.  Lindsay  supports  current  legislation  because 
being — in  his  words — "a  practical  politician,"  he  does  not  see  any  chance  in 
moving  it  [the  $2400  minimum]  up  at  this  time. 


1  "Poverty  and  Affluence.  The  20th  Century  Fund."  p.  14S. 


2310 


From  the  Business  community  you  heard  testimony  from  Joseph  C.  Wilson, 
Chairman,  Xerox  Corporation,  and  C.  W.  Cook,  Chairman,  General  Foods.  The 
position  taken  by  these  gentlemen  was  as  follows  : 

"At  the  present  time  we  support  the  proposed  uniform  national  level  of  income 
maintenance  for  a  family  of  four.  We  believe,  however,  that  inasmuch  as  mini- 
mum income  of  [$2400]  for  a  family  of  four  hardly  provides  a  subsistence  level 
of  income,  a  priority  claim  against  future  available  Federal  funds  should  be 
invoked  to  raise  total  assistance  to  more  acceptable  levels." 

In  its  testimony,  the  Friends  Committee  on  National  Legislation  supported 
the  floor  recommended  by  the  White  House  Conference  on  Food,  Nutrition  and 
Health  in  1969.  This  amount,  adjusted  for  inflation  in  the  cost  of  living,  would 
be  $6011  in  1971. 

The  National  Welfare  Rights  Organization  (NWRO)  has  proposed  the  benefit 
level  for  a  family  of  four  be  set  at  $6500  per  year.2 

Adjusting  this  figure  for  cost  of  living  (assuming  4%)  would  bring  this  to 
$8900  hy  1979.  NWRO  demands  that  their  guaranteed  income  he  adjusted  for 
productivity  increase  in  the  economy  as  well  as  for  inflation.  This  would  bring 
their  guaranteed  income  to  $10,000  by  1979. 

This  kind  of  discussion  probably  seems  like  fantasy  to  the  typical  American 
who  works  for  a  living.  And  it  might  be  sluffed  so  deadly  serious  in  demanding 
from  society  what  they  believe  to  be  their  right  and  because  NWRO  is  develop- 
ing an  ever  widening  circle  of  support. 

With  a  membership  in  excess  of  100,000  NWRO  could  be  a  powerful  force  in 
getting  changes  made  in  the  law  that  they  want.  Many  "establishment  type" 
organizations  are  in  complete  sympathy  with  NWRO  demands.  National  Council 
of  Jewish  Women.  National  Council  of  Catholic  Women.  National  Council  of 
Negro  Women,  Church  Women  United  and  the  Womens  Division  of  the  United 
Methodist  Church  are  among  those  that  support  NWRO  demands.3 

Because  of  what  they  consider  to  be  political  reality,  however,  most  of  these 
organizations  tend  to  support  a  lesser  amount  and  recommend  that  the  proposed 
amendment  of  Senator  Javits — a  poverty  level  of  $4800  be  initially  accepted.  This 
would  be  for  starters.  They  recommend  that  periodic  revision  of  the  poverty 
definition  be  made  thereafter  in  light  of  subsequent  price  rises  and  general 
productivity  and  income  advances,  and  the  increasing  capacity  of  the  economy 
to  meet  the  needs  of  all  Americans. 

In  other  words,  all  Americans,  as  a  matter  of  right,  even  those  able-bodied 
Americans  who  choose  not  to  offer  themselves  for  hire  should  share  in  the  pro- 
ductivity improvement  of  those  of  us  that  do  choose  to  work. 

Does  it  not  occur  to  these  people  that  under  those  conditions  an  increasing 
number  of  us  will  decide  to  flee  the  work  scene? 

The  point  that  I  am  trying  to  make  is  this :  Once  this  new  kind  of  philosophy 
is  legislated  there  will  be  no  end  to  the  pressures  to  increase  the  benefits — 
especially  during  election  years. 

SINGLE  INDIVIDUALS  AND  CHILDLESS  COUPLES 

Parallel  to  the  efforts  to  increase  the  minimum  guarantee  will  be  a  drive  to 
include  single  individuals  and  childless  couples  in  the  program. 

The  si)okesman  for  Common  Cause  testified  ".  .  .  .  excluding  individuals  and 
couples  without  children  is  a  cruel  and  discriminating  practice  towards  these 
people  in  need."  Common  Cause  demands  uniform  "adequate"  assistance — includ- 
ing needy  individuals  and  couples  without  children. 

In  the  words  of  Edward  T.  Anderson,  representative  of  the  Friends  Commit- 
tee on  National  Legislation,  ".  .  .  [The  Administration  program]  incorporates 
only  limited  application  of  new  principles  and  falls  far  short  of  needed 
changes  .  .  .  The  completely  arbitrary  decision  to  exclude  single  persons  and 
childless  couples  betrays  a  cruel  indifference  to  their  plight.'' 

John  Lindsay  testified  that  exclusion  of  impoverished  single  persons  and  child- 
less couples  from  the  Federal  program  is  one  of  its  shortcomings. 

Mr.  Wilson  of  Xerox  also  recommended  the  inclusion  of  single  persons  and 
childless  couples.  He  also  believes  that  neither  training  nor  work  should  be  made 
a  condition  for  continuance  of  public  assistance  to  women  heads  of  households. 

From  the  American  Association  of  University  Women  came  this  statement :  "In 
the  eyes  of  our  members  a  principle  shortcoming  of  the  House  bill  is  its  failure  to 


2  Secretary  Richardson — Hearings  on  H.R.  1,  Aug.  2,  1971. 

3  Testimony  on  H.R.  16311,  p.  1403,  2297. 


2311 


cover  the  single  poor  and  impoverished  childless  couple  .  .  .  Are  we  justified  in 
speaking  reform  if  one-third  of  the  deprived  are  excluded  from  this  so-called  bill?" 
And  so  it  goes. 

Based  on  this  level  of  support,  it  seems  safe  to  conclude  that  once  the  concept 
of  guaranteed  income  is  legislated,  the  bill  will  be  expanded  to  include  single 
persons  and  childless  couples. 

Let  us  take  a  long,  hard  look  at  what  the  probable  effect  of  this  would  be. 

The  1971  definition  of  the  poverty  line  for  a  single  individual  is  $1996.  That  is 
higher  than  the  1967  per  capita  incomes  in  four  states  (Kentucky,  Mississippi, 
Virginia,  and  Georgia). 

At  the  age  of  18.  I  personally  would  have  loved  to  have  been  a  beach  comber  if 
someone  like  the  Federal  Government  were  to  have  paid  me  for  it. 

This  provision  would  most  certainly  encourage  proliferation  of  the  "hippie 
commune''  subculture.  Marriage  would  certainly  be  discouraged  as  the  guaranteed 
income  for  two  individuals,  at  the  poverty  level,  would  be  $3990.  The  figure 
would  be  $2400  for  a  married  couple. 

EESORS  IN  LOGIC  THE  NEGATIVE  INCOME  TAX  DILEMMA 

On  August  2  Secretary  Richardson  demonstrated  a  gadget  that  quickly  shows 
the  effect  of  various  income  maintenance  schemes.  HEW  is  fighting  for  the  pas- 
sage of  H.R.  1.  Therefore  I  am  not  sure  why  they  built  the  gadget  because  their 
gadget  demonstrates  the  theoretical  infeasibility  and  complete  unworkability  of 
any  program  based  on  the  principles  underlying  H.R.  1. 

In  any  negative  income  tax  scheme,  as  the  guaranteed  income  floor  is  raised  up 
closer  to  what  might  be  defined  as  an  income  necessary  to  supply  the  basic  needs 
of  the  poor — the  level  of  income  at  which  some  welfare  supplement  is  received 
rises  sharply.  It  becomes  advantageous  for  the  marginal  worker  to  leave  work 
and  go  on  welfare.  The  income  disregard  must  be  increasingly  higher  to  overcome 
the  incentive  to  drop  out,  etc.,  The  program  is  self-defeating. 

The  gadget  clearly  demonstrated  the  dilemma  of  this  legislation.  Either  it  is 
completely  inadequate  at  the  lower  end  of  the  scale  of  earnings — or  it  is  highly 
excessive  at  the  upper  end.  If  you  assume  a  negative  tax  of  50%,  it  must  pay  only 
half  an  "adequate"  income  (by  its  own  definition  of  "adequate")  to  a  family  that 
earns  no  income  or  it  must  pay  nearly  twice  an  "adequate"  income  to  family  that 
already  earns  an  almost  adequte  income. 

This  problem  can  be  reduced  by  changing  the  disregard  formula  from  allowing  a 
recipient  to  keep  one  dollar  for  every  two  earned  to  allowing  him  to  keep  only  one 
dollar  for  every  three  earned. 

But  this  creates  the  problem  of  not  providing  sufficient  incentive  to  entice  a 
person  to  continue  working. 

The  negative  income  tax  concept  also  creates  serious  inequities  between  work- 
ing families  on  welfare  and  working  families  not  on  welfare.  Let  me  illustrate 
this  with  an  example  of  how  the  income  disregard  formula  can  work  in  Michigan 
under  present  law. 

H.R.  1  would  do  nothing  to  improve  the  situation,  "...  in  an  extreme  case,  a 
family  of  four  earning  $310  per  month  ($3720  per  year)  would  not  be  eligible  for 
assistance.  Another  family,  initially  with  no  income,  receives  a  welfare  payment 
of  $305  per  month  ($3660)  annually.  Subsequently,  the  latter  family  head  obtains 
a  job  paying  $310  a  month,  which  combined  with  the  reduced  welfare  payment  of 
$158  provides  a  total  monthly  income  of  $468  ($5616  yearly).  Additionally,  this 
latter  family  is  entitled  to  free  child  care  and  full  medical  services,  while  the 
former  is  not.  The  inescapable  conclusion  is  that  by  attempting  to  make  work 
more  attractive  to  Aid  to  Dependent  Children  recipients  income  disregard  pro- 
grams also  make  Aid  to  Dependent  Children  more  attractive  to  the  working 
poor."  4 

The  problem  is  brought  into  even  sharper  focus  in  the  Finance  Committee  staff 
report — Appendix  B  of  the  H.R.  1  hearings. 

The  equivalent  "tax  rate"  increases  from  49%  to  112%  when  annual  earnings 
increase  from  $1000  to  $1001  for  a  family  of  4,  in  Wilmington,  Delaware.  The 
report  goes  on  to  point  out  that  each  dollar  earned  over  $5,000  would  cost  this 
family  $1.33  in  Chicago. 


4  This  example  is  taken  from  "Council  Comments."  Citizens  Research  Council  of  Michi- 
gan, Robert  E.  Pickup,  executive  director,  July  9,  1971. 


2312 


REGIONAL  EFFECTS 


Exhibit  3 


REGIONAL  EFFECTS 

More  than  50%  of  the  families  in  the  shaded  areas  in  exhibit  3  have  incomes 
less  than  the  "poverty  level"  and  would  be  receiving  welfare  payments  under 
H.R.  1.  These  blotches  on  the  map  will  surely  grow  as  our  productive  drive  is 
marasmically  weakened.  The  affect  on  the  working  man  as  well  as  the  crippling 
of  industry  can  be  forecast  with  some  degree  of  certainty. 

What  is  the  affect  of  H.R.  1  on  people  who  are  not  on  welfare  and  are  working 
alongside  a  man  that  is  drawing  welfare  subsidy?  This  should  be  carefully 
examined — with  the  following  facts  in  mind.  What  kind  of  Utopia  would  H.R.  1 
bring? 

In  response  to  a  question  from  Senator  Ribicoff,  Secretary  Hodgson  furnished 
a  chart  which  indicates  by  state  the  wage  levels  required  to  get  off  welfare. 
Comparing  these  data  with  average  (before  tax)  hourly  earnings  (1970)  for  the 
various  states  reveals  that  the  wage  level  at  which  a  person  could  still  receive 
welfare  payments  under  H.R.  1  is  higher  than  the  average  hourly  earnings  in  15 
states.  (These  states  are:  Connecticut,  Maine,  Massachusetts,  Minnesota,  Mis- 
sissippi, Missouri,  Nebraska,  New  Hampshire,  New  Jersey,  New  York,  Rhode 
Island,  Pennsylvania,  South  Dakota,  Vermont,  and  Virginia.) 

There  is  a  strong  possibility  that  H.R.  1  would  wipe  out  complete  industries 
and  millions  of  jobs.  Work  requirements  will,  I  believe,  eventually  be  written  out 
of  the  legislation.  Even  if  the  work  requirement  were  retained,  it  is  maintained 
that  it  would  not  (and  could  not)  be  enforced — based  on  the  following  premises  : 

Premise  1.  Given  a  strong  enough  incentive,  the  average  worker  can  figure  out 
a  way  to  lose  his  job  without  quitting. 

Premise  2.  Given  a  strong  enough  incentive,  the  average  worker  can  make 
himself  available  for  employment  and  continue  to  seek  employment  without 
ever  actually  getting  a  job. 

If  the  above  argument  is  accepted,  the  effect  of  the  guaranteed  annual  income 
would  be  to  cripple  the  American  economy.  The  effort  would  be  different  in  dif- 
ferent states  because  of  regional  differences  in  pay  rates  and  type  of  industry. 

I  analyzed  the  affect  that  H.R.  1  would  have  on  several  key  industries  on  a 
state-by-state  basis  for  four  different  minimum  guaranteed  incomes : 

Case  1:  H.R.  1  ($2400,  assumes  state  supplements  continue  at  present 
levels). 

Case  2:  Poverty  level  ($4116) . 

Case  8:  Senator  Javits'  amendment  ($4800) . 

Case  4:  NWRO  demand  ($6500) . 


2313 


The  results  of  this  analysis  are  shown  in  exhibits  4  through  7.  The  industries 
.and  jobs  that  pay  less  than  the  guaranteed  income  (and  which  would  be  pre- 
sumably wiped  out)  are  indicated  with  a  dot.  (The  analytical  backup  for  these 
charts  is  contained  in  the  attached  Appendix)  .5 

For  example,  exhibit  4  shows  that  at  the  H.R.  1  floor  for  Alabama  ($2400), 
waiter  and  waitress  jobs  pay  less  than  the  guaranteed  income.  At  the  poverty 
level  (exhibit  5),  jobs  in  the  apparel  industry  are  below  the  income  floor  as  are 
all  jobs  in  the  "clerical/other"  section  of  the  chart  with  the  exception  of  delivery- 
men,  insurance  agents,  secretarial  and  wholesale  trade.  As  the  guaranteed  in- 
come floor  moves  up  to  the  level  proposed  by  Senator  Javits  ($4800.)  in  exhibit 
6,  you  can  see  that  the  floor  for  Alabama  is  above  the  wages  paid  in  apparel,  food 
products,  textile  mills,  and  weaving  mills.  The  floor  of  $4800.  is  also  above  the 
wages  paid  in  all  jobs  shown  in  the  '"clerical/other"  section  of  the  chart.  At  the 
NWRO  demand  ($6500.),  exhibit  7  shows  the  floor  for  Alabama  would  be  greater 
than  the  wages  paid  in :  apparel,  chemicals,  fabricated  metal  products,  food 
products,  printing  and  publishing,  textile  mills,  and  weaving  mills.  This  NWRO 
demand  is  also  greater  than  wages  paid  in  all  jobs  shown  in  the  "clerical/other" 
section  of  the  chart. 

The  average  spendable  income  for  the  average  production  or  non-supervisory 
worker  on  private  payrolls  is  only  $1500  per  year  more  than  the  guaranteed 
income  would  be  at  the  poverty  level  ($4116.).  It  is  likely  that  many  people  with 
after  tax  incomes  that  are  only  marginally  above  the  guaranteed  income  would 
find  it  not  worth  their  while  to  work  at  all.  This  effect  is  not  shown  on  the 
charts.  In  constructing  them,  I  included  only  jobs  that  pay  less  than  the  stated 
guaranteed  annual  incomes.  Even  on  this  basis,  the  effect  would  be  economic 
paralysis. 

One-half  million  jobs  would  be  wiped  out  in  the  state  of  New  York  under 
Senator  Javits'  amendment.  The  affect  of  setting  the  floor  at  the  poverty  level 
would  wipe  out  60%  of  all  manufacturing  jobs  in  Mississippi  and  70%  of  the 
manufacturing  sector  in  North  Carolina.  85%  of  the  manufacturing  sector  would 
be  wiped  out  in  North  Carolina  under  Senator  Javits'  amendment. 

I  offer  just  one  example  of  secondary  effect  of  such  a  collapse — our  balance  of 
payments.  Apparel,  which  is  one  of  the  industries  to  be  essentially  wiped  out  at 
the  poverty  level,  exported  goods  totaling  $200  million  last  year.8 

I  have  tried  to  demonstrate  that  these  "income  as  a  matter  of  right"  schemes 
will  affect  a  much  broader  part  of  the  economy  than  that  depicted  by  the  lady 
that  Senator  Long  has  referred  to  from  time  to  time  during  the  course  of  the 
testimony  that  can  not  hire  domestic  help  because  welfare  is  more  attractive. 
This  disaster  could  be  wrought  up  by  merely  redistributing  less  than  one-half  of 
1%  of  the  GNP.  Guaranteed  annual  income  legislation  will  not,  as  many  have 
implied  during  these  hearings,  bring  Utopia.  To  the  contrary,  it  could,  as  I  have 
attempted  to  demonstrate  in  exhibits  4  through  7,  result  in  an  infusion  of  car- 
cinogenics  into  the  lif eblood  of  our  economy. 

THERE  IS  NO  FREE  LUNCH— GOVERNMENT  CANNOT  ELIMINATE  POVERTY 

The  thrust  of  much  of  the  testimony  has  been  geared  at  what  government  must 
do  to  eliminate  poverty.  What  level  of  income  should  government  guarantee ; 
should  work  be  required  ;  should  single  individuals  be  included? — and  so  on. 

But  more  fundamental  is  the  question :  Can  government  eliminate  poverty  by 
redistributing  a  small  fraction  of  the  disposable  income  of  those  not  in  poverty? 
The  answer  is  a  resounding  no.  Perhaps  the  elimination  of  poverty  can  be  ap- 
proached in  this  country — but  not  this  way.  Poverty  will  never  be  wiped  out  by 
severing  the  link  between  effort  and  reward. 

Several  governments  have  committed  themselves  to  eliminating  poverty.  They 
have  all  failed — e.g.,  England,  Uruguay.  It  is  logically  impossible  for  govern- 
ment to  eradicate  poverty  because  all  such  government  schemes  to  do  so  are  self- 
defeating.  They  progressively  reduce  incentive. 

The  elimination  of  poverty  implies  the  creation  of  wealth.  Government  cannot 
create  wealth — it  can  only  redistribute  it.  But,  it  is  said  so  repeatedly,  this  coun- 
try should  be  able  to  eliminate  poverty  if  it  has  been  able  to  place  a  man  on  the 
moon.  Out  of  this  notion  has  grown — what  I  believe  to  be — a  great  deal  of  fuzzy 
thinking. 


5  The  source  data  for  this  analysis  is  earnings  data  published  by  the  various  states  and 
earnings  and  employment  data  published  by  the  U.S.  Bureau  of  Labor  Statistics. 

6  "Business  Week",  Sept.  18,  1971. 


2314 


2315 


1 

_ 

■ 

1 

: 

2317 


2318 


But,  as  some  have  asserted,  it  is  so  easy.  All  government  need  do  is  re-dis- 
tribute a  small  proportion  of  disposable  income.  A  study  conducted  by  the  New 
School  of  Social  Research 7  has  demonstrated  that  all  persons  could  be  brought 
above  the  "minimum  adequacy"  level  (about  $6500  in  today's  dollars)  by  redis- 
tributing 13.6%  of  the  disposable  income  of  "non-poor"  Americans.  It  was  con- 
cluded then  (1966  that  such  a  redistribution  would  not  be  politically  feasible  and 
would  probably  occasion  violent  opposition.  They  then  went  on  to  calculate  what 
percentage  of  disposable  income  must  be  redistributed  to  eliminate  "abject  pov- 
erty"— i.e.,  raise  everyone's  income  above  the  poverty  level.  That  turned  out  to- 
be  about  3  per  cent  of  the  disposable  income  of  those  not  in  poverty.  They  con- 
cluded that  this  would  be  not  only  feasible  but  easy. 

It  would  be  no  easier  for  government  to  eradicate  poverty  by  guaranteeing  an 
income  to  the  poor  by  redistributing  a  little  bit  of  the  income  of  the  "non-poor" 
than  it  would  be  to  let  just  a  little  air  out  of  a  balloon  by  pricking  it  with  a  pin. 
This  is  pointed  out  rather  graphically  in  the  following  example. 

AN  UGLY  SCENARIO  OF  THE  UNITED  STATES — 15  YEARS  FROM  NOW 

A  senior  member  of  the  management  community  suggested  that  a  precursor 
of  what  the  United  States  is  in  for  if  H.R.  1  is  passed  might  be  gleaned  from  a 
nation  that  tried  to  eliminate  poverty  using  similar  philosophy  to  that  contained 
in  H.R.  1.  Perhaps  we  might  learn  from  another  country's  experience  with  gov- 
ernmental welfarism.  The  case  selected  was  Uruguay. 

The  Uruguayan  is  typically  of  European  origin.  Uruguay's  literacy  rate  is  one 
of  the  world's  highest — 91  per  cent ;  it  has  South  America's  lowest  population 
growth :  1.4%.  In  the  middle  fifties  Uruguay  was  distinguished  for  her  high 
living  standard,  with  a  per  capita  income  nearly  double  the  average  for  all  of 
Latin  America  and  comparable  with  the  per  capita  income  of  Ireland.  Italy  and 
the  Netherlands — and  about  double  that  of  Japan..  (The  relative  growth  in  real 
per  capita  income  of  Uruguay  is  shown  in  Exhibit  8). 

Some  fifteen  years  ago.  Uruguay  launched  an  all-out  campaign  to  eliminate 
poverty.  They  hoped  to  do  this  through  greatly  expanded  social  welfare  and 
governmental  programs. 

Approximately  45  per  cent  of  the  population  is  now  dependent  on  the  govern- 
ment for  their  total  income — consisting  mainly  of  government  jobs  and  govern- 
ment provided  programs  such  as  family  allowances  (guaranteed  annual  income). 
All  of  this  has  been  paid  for  with  extremely  high  taxes  and  deficit  spending. 
Approximately  50%  of  the  industrial  payroll  costs  are  paid  to  the  government 
for  social  insurance  programs.  Yet  taxes  have  not  been  sufficient  to  pay  the  bill 
of  the  ever  spiraling  cost  of  this  welfare  state.  This  has  meant  huge  deficits — 
thus  skyrocketing  inflation. 

During  the  period  1963-1968  the  inflation  of  consumer  prices  in  Uruguay  rose 
1600%.  This  compares  with  a  16%  rise  in  the  United  States  and  an  average  rise 
of  100%  for  the  remaining  Latin  American  countries. 

Unemployment  has  climbed  to  over  30  per  cent  and  demands  for  more  govern- 
mental benefits  continue. 

In  efforts  to  halt  inflation,  the  government  declared  a  freeze  on  wages,  prices 
and  dividends  in  mid-1968.  Inflation  now  seems  to  be  somewhat  in  check — but 
problems  worsen.  About  half  of  the  "work  force"  has  continued  on  and  off  24 
hour  work  stoppages  in  protest  against  the  freeze.  Many  establishments,  includ- 
ing private  hospitals,  were  closed  for  violating  the  wage-price  freeze. 

Prom  the  New  York  Times  of  January  21,  1969 : 

".  .  .  Striking  government  employees  rioted  in  downtown  Montevidio  today, 
smashing  windows,  setting  up  flaming  barricades  and  sending  tourists  fleeing 
in  panic.  .  .  .  The  police  fought  back  with  tear  gas,  high-pressure  water  hoses 
and  clubs  .  .  . 

The  striking  civil  servants  were  demanding  payment  of  monthly  salary 
bonuses  of  $24.00,  which  they  say  is  two  months  overdue." 
It  seems  that  the  conditions  in  Uruguay  will  not  be  reversed.  It  appears  to  be 
politically  infeasible  because  the  people  are  not  willing  to  let  any  of  the  many 
social  programs  of  government  be  trimmed  back. 

Ever  since  a  Marxist  was  democratically  elected  president  of  a  Latin  American 
nation,  observers  have  been  increasingly  aware  of  the  possibility  of  a  radical 
change  at  other  national  polls.  According  to  the  July  '71  issue  of  Business — Latin 


T  "Poverty  and  Affluence,  The  20th  Century  Fund,"  1966. 


2319 


INCREASES  IN  REAL  PER  CAPITA  INCOME 
CONSTANT  1968  $s 
(1950  -  1863; 


mOBi  1830-  1.00 


2.G0 


1.50 


UNITED 
STATES 


LATIN 
AMERICA 


URUGUAY 


•0,50 


Exhibit  8 


America,  it  now  seems  likely  that  President  Jorge  Pochico  Areco  will  not  retain 
his  office — and  that  Uruguay  will  go  the  way  of  Chile. 

A  mind  sticking  question :  would  it  be  possible  for  guaranteed  income  legisla- 
tion designed  to  eliminate  poverty  (H.R.  1  in  its  present  form)  to  put  America 
on  the  same  course?  A  sobering  thought — I  do  believe ! 

As  Sterling  Slappey  points  out  in  Nations  Business  8 — "Until  [just  15  years 
ago  Uruguay]  called  itself  'The  Switzerland  of  Latin  America'  because  its  people 
were  so  industrious,  busy  and  neat.  Montevidio  is  now  one  of  the  world's  filthiest 
cities  outside  the  Orient.  The  people  have  so  little  pride  left  they  litter  their 
streets  with  paper  and  dump  their  nastiest  garbage  on  the  curb." 


8  "Nations  Business" — April  1967. 


2320 


This,  then  lias  been  the  result  of  a  political  and  economic  system  which  no 
longer  requires  its  citizens  to  produce  an  honest  day's  work — a  system  which 
guarantees  an  adequate  income  as  a  matter  of  "right." 

In  his  August  6  speech  on  the  Senate  floor  opposing  the  guaranteed  wage 
provision  of  H.R.  1,  Senator  Long  concluded  with  : 

".  .  .  Uncle  Sam  will  not  be  the  inspiration  of  the  free  world  while  the  major 
cities  of  America  are  clogged  with  trash  and  pollution  and  the  tax-paid  welfare 
loafers  wallow  in  litter  and  debris." 

WHAT  IS  THE  COST  OF  THE  WORK  DISINCENTIVE? 

Frequently,  throughout  the  hearings,  the  question  has  been  raised  as  to  the 
intangible  cost  of  the  work  disincentives  contained  in  negative  income  tax  legis- 
lation. I  have  attempted  to  simulate  this  effect  by  using  Uruguay's  experience 
as  a  model. 

Recent  U.S.  productivity  increases  have  averaged  2.5%  per  year  (it  was  5%  in 
1962).  Based  on  a  productivity  increase  of  2.5%/year  and  in  constant  1970  $'s, 
U.S.  per  capita  income  should  reach  $4483  by  1977.  On  the  other  hand,  if  we  use 
Uruguay  as  a  model,  our  productivity  would  decrease  by  approximately  1%  per 
year.  In  that  case,  1977  per  capita  income  would  drop  to  $3396.  A  net  loss  of 
$1087  per  capita,  or  a  total  cost  in  1977  of  $243  billion.  Add  to  this  an  actual 
cost  of  the  welfare  payments,  and  we  are  talking  about  a  program  that  will 
cost  the  American  people  around  $300  billion — one  hundred  fifty  per  cent  of  the 
total  1970  Federal  budget. 

JOB  PROVISIONS 

H.R.  1  provides  for  about  400,000  training  opportunities  that  will  move  people 
through  training  and  theoretically  into  private  jobs.  In  my  opinion,  this  portion 
of  the  program  will  be  ineffective.  What  mechanism  works  to  cause  people  to  be 
trained  for  the  right  job?  I  don't  believe  there  is  one.  Judging  from  the  track 
record  of  the  Department  of  Labor  makes  one  rather  pessimistic. 

You  are  all  familiar  with  the  Auerbach  Corporation  study  that  was  performed 
for  the  Ways  and  Means  Committee.  This  study  analyzes  the  performance  of 
WIN  (Work  Incentive  Program),  whose  work  incentive  features  closely  parallel 
those  of  H.R.  1. 

In  fiscal  1969  less  than  4%  of  the  budget  appropriated  under  WIN  for  on-the- 
job  training  was  spent.  It  dropped  to  about  3%  in  1970.  And  OJT  seems  to  be 
the  only  practicable  portion  of  the  program. 

Unfortunately,  in  most  cases,  institutional  training  and  special  projects  have 
not  resulted  in  jobs  either. 

The  Auerbach  study  stated  that  there  has  been  little  investigation  of  labor 
markets  to  determine  where  and  how  jobs  can  be  obtained  and  concludes  that  it 
will  probably  be  impossible  for  many  WIN  participates  to  find  jobs.  It  would 
seem  that  the  main  affect  of  these  government  training  programs  is  the  creation 
of  deeper  levels  of  frustration  and  despair. 

H.R.  1  would  earmark  $2.2  billion  for  jobs,  for  manpower  development  and 
for  supporting  job  placement  services. 

Senator  Bennett  and  others  have  shown  concern  regarding  the  job  provisions 
of  H.R.  1.  "It  seems  to  me  that  we  may  be  wasting  our  time  and  our  money  if 
we  set  up  elaborate  day  care  centers,  if  we  set  up  elaborate  training  programs, 
but  if  at  the  end  of  the  road  there  are  no  jobs  .  .  ." 

I  think  that  in  its  attempts  to  provide  jobs,  H.R.  1  is  only  repeating  past  mis- 
takes. Of  the  362,000  persons  trained  for  work  under  Federally  funded  and  ad- 
ministered training  programs,  only  about  10%  have  been  placed  in  jobs.  H.R. 
1  would  require  that  an  estimated  3  million  people  register  for  training  in  the 
Opportunities  for  Families  program.  Based  on  past  performance  and  the  many 
fold  increase  in  cases,  is  there  any  reason  to  believe  that  things  will  work  any 
better  in  the  future?  Isn't  it  about  time  that  we  came  up  with  new  and  more 
creative  approaches  to  this  problem? 

THE  NEED  FOR  MORE  PRODUCTIVE  JOBS 

The  continued  growth  of  welfare  and  non-productive  governmental  spending 
discourages  productivity.  U.S.  productivity  growth  was  5%  in  1962.  It  has  dropped 
to  1.3%  in  1969 — the  lowest  of  9  competing  nations  in  the  free  world.  This 
situation  is  taking  on  immediate  urgency  as  the  United  States  is  finding  it  in- 


2321 


creasingly  difficult  to  compete  in  the  world  market  place.  Evidence  the  emergency 
10%  tariff  on  imports. 

A  solution  to  this  prohelm  would  be  to  provide  opportunity  for  our  non-produc- 
tive and  marginally  productive  people  to  become  fully  productive.  This  would 
also,  by  the  way,  come  close  to  eradicating  poverty  in  this  country.  Implementa- 
tion of  this  solution  will  be  difficult — but  not  impossible. 

It  is  estimated  that  it  would  require  approximately  10  million  new  jobs  to 
accomplish  this.9 

Can  government  create  10  million  useful  and  needed  public  service  jobs? 

Doubtful,  since  that  number  would  come  close  to  equaling  the  entire  payroll  of 
all  governmental  units  in  the  United  States  (local,  state  and  federal).  In  any 
case,  that  solution  would  do  little  to  improve  real  productivity  of  this  country. 

A  better  answer  would  be  to  develop  the  majority  of  these  jobs  in  private 
industry.  Definite  legislation  must  be  written  to  give  the  American  businessman 
the  incentive  to  do  this  on  the  massive  scale  that  is  required. 

Recognized  management  authority,  Peter  Drucker,  has  estimated  that  between 
20%  and  30%  of  the  manufacturing  assets  owned  by  American  companies  are 
outside  of  this  country.  As  an  example,  Remington  Rand  Division  of  Sperry 
Rand  makes  two-thirds  of  its  manual  typewriters  in  Italy  and  South  America, 
and  recently  shifted  all  of  its  calculator  manufacturing  from  the  United  States 
to  Japan.  The  Singer  Company  manufactures  its  middle  and  low-priced  sewing 
machines  in  Italy  and  Britain. 

Some  way  must  be  found  to  get  industry  to  put  poor  Americans  to  work  in 
such  a  way  that  is  competitive  (the  answer  is  not  protective  tariffs). 

Although  large  corporations  are  generally  acknowledged  to  be  a  major  store- 
house of  the  special  capabilities  required  to  solve  national  problems  such  as 
those  associated  with  poverty,  a  way  to  tap  it  has  not  yet  been  implemented. 

The  major  thrust  of  business  has  been  through  JOBS  program  of  the  National 
Alliance  of  Businessmen. 

NATIONAL  ALLIANCE  OF  BUSINESSMEN 

Compared  with  job  training  programs  run  by  the  Department  of  Labor,  the 
N.A.B.  JOBS  (Job  Opportunities  in  the  Business  Sector)  program  has  been 
quite  effective. 

The  National  Alliance  of  Businessmen  job  training  program  was  launched  in 
1968.  The  Federal  government  pays  part  of  the  training  costs,  which  vary  de- 
pending on  the  job.  To  date  72,570  companies  have  participated  in  N.A.B.  After 
approximately  SY2  years  of  operation  and  through  the  first  quarter,  1971,  266,- 
000  persons  were  working  in  N.A.B.  found  jobs.  This  is  35%  of  President 
Nixon's  goal  of  614,000  jobs  by  June  1971. 

Although  266,000  jobs  is  far  short  of  the  number  of  jobs  required,  it  is  a 
much  better  record  than  turned  in  by  programs  run  and  managed  by  government 
agencies. 

Programs  such  as  this  will  only  make  a  small  contribution  in  relation  to 
those  jobs  needed.  And  when  times  are  hard,  financially  beleaguered  firms  cut 
back  on  the  social  front.  Last  year  (1970),  for  example,  Chrysler  cancelled  a 
$13  million  contract  to  train  4,500  workers.  This  was  done  just  as  Chrysler  chair- 
man, Lynn  Townsend,  was  about  to  become  chairman  of  N.A.B. 

A  much  more  massive  program  that  would  be  tied  directly  to  the  profit  and 
loss  yardstick  is  needed.  It  will  require  a  much  higher  level  of  cooperation  be- 
tween government,  business  and  labor  than  we  have  had  in  the  past. 

SENATOR  LONG'S  PROPOSAL  FOR  SUBSIDIZED  JOBS 

Senator  Long  has  proposed — as  an  alternative  to  the  negative  income  tax 
approach — that  an  individual's  wages  be  supplemented  on  an  hours-worked  basis. 
Senator  Long's  example  follows.10 

"For  example,  suppose  a  father  is  earning  $1.20  an  hour.  We  might  decide 
to  supplement  his  wages  by  40  cents  an  hour  for  up  to  40  hours  a  week.  With 
this  approach,  he  would  start  receiving  an  additional  $16  for  each  week  in  which 


9  Unemployed  =  4  million,  incomes  under  $1,000  =  . 65  million,  incomes  $1,000  to 
$2,000  =  5  million. 

10  Senator  Russell  B.  Long.  Address  on  Senate  floor,  Aug.  6,  1971. 


2322 


lie  works  40  hours.  He  would  receive  $8  if  he  works  only  20  hours,  and  he  will 
receive  no  benefit  at  all  if  he  works  zero  hours.  This  is  in  direct  contrast  to 
H.R  1,  under  which  he  would  be  paid  the  most  in  welfare  benefits  if  he  works 
not  at  all,  less  if  he  works  20  hours  and  least  if  he  works  40  hours." 

The  principle  of  this  proposal  seems  to  be :  guaranteed  earning  opportunity  as 
opposed  to  guaranteed  income. 

This  principle  is  sound — I  question  the  approach. 

For  this  approach,  I  believe,  contains  a  fundamental  defect.  The  supply  and 
demand  mechanism  will  be  upset  when  you  tamper  with  it  on  the  massive  scale 
proposed.  Assume  that  you  subsidize  all  jobs  paying  less  than  $1.60/hour  (this 
would  include  workers  in  variety  stores,  family  clothing  stores,  restaurants  and 
hotels).  What  would  this  mean  for  the  employer  who  is  now  paying  $1.60?  By 
lowering  his  pay  rate  to  $1.20  he  would  not  be  reducing  the  pay  of  his  employees. 
He  would  merely  be  forcing  the  Federal  government  to  pick  up  25%  of  his  pay- 
roll costs.  And  what  about  the  employer  paying  $1.20/hour?  From  his  view- 
point, should  he  not  also  cut  the  rate  of  his  workers  and  let  the  Federal  gov- 
ernment pick  up  the  difference?  A  $1.60  subsidy  cutoff  was  used  in  this  example, 
but  this  amount  is  less  than  the  "poverty  line."  Would  not  pressures  then  mount 
to  continually  raise  the  subsidy — especially  during  election  years? 

A   PROPOSAL  GUARANTEED  OPPORTUNITY 

Just  as  it  is  unsound  legislation  to  guarantee  income  as  a  matter  of  right — it  is 
also  unsound  legislation  to  guarantee  jobs  as  a  matter  of  right.  How  can  you 
guarantee  a  job  to  a  person  who  does  not  want  one?  Once  you  guarantee  a  job  you 
eliminate  any  need  for  a  worker  to  demonstrate  competence,  the  ability  to  learn, 
or  the  need  for  good  work  habits — e.g.,  habitual  tardiness  and  absenteeism,  van- 
dalism could  be  expected. 

But,  you  might  argue,  this  situation  would  still  be  better  than  paying  somebody 
for  not  working  at  all.  The  answer  is  you  guarantee  an  opportunity  to  work. 
Then,  if  a  person  does  not  work,  his  (her)  welfare  check  should  be  small  enough 
to  make  him  (her)  very  uncomfortable.  This  in  turn  would,  I  believe,  make  work 
opportunities  seem  very  attractive  indeed. 

There  is  no  one  solution  or  one  approach  that  will  guarantee  these  opportuni- 
ties, but  the  following  guidelines  should  be  followed. 

1.  The  majority  of  the  newly  created  jobs  should  be  in  the  private  sector. 

2.  Training  should  be  done  by  private  industry.  Department  of  Labor  training 
programs  have  been  proven  to  be  ineffective  and  it  is  not  feasible  for  these  pro- 
grams to  match  up  training  with  market  place  demands.  In  the  American  system 
that  is  the  function  of  "free  enterprise." 

3.  Government  provided  public  service  jobs  can  serve  as  a  flywheel — but  should 
:provide  only  a  small  proportion  of  the  newly  created  jobs. 

Objective:  The  objective  of  a  guaranteed  opportunities  program  would  be  to 
provide  everyone  with  an  opportunity  to  perform  useful  work  for  a  wage  sufficient 
to  provide  for  essential  needs. 

Gentlemen,  I  wish  to  pose  a  question.11  If  you  were  in  charge  of  an  underdevel- 
oped country  (e.g.,  the  Mississippi  Delta)  where  most  of  the  people  were  under- 
educated  and  underfed,  and  you  were  given  the  opportunity  to  bring  in  100  people 
to  help  your  country,  who  would  be  the  most  valuable  people  you  could  bring  in  ? 
Teachers?  Doctors?  Lawyers?  Engineers?  Perhaps  social  workers? 

Probably  none  of  these — no — 100  entrepreneurs  would  contribute  the  most. 

An  entrepreneur  is  a  person  who  organizes  and  manages  an  enterprise — a  busi- 
ness— usually  with  considerable  initiative  and  risk.  He  is  an  employer  of  produc- 
tive labor.  It  is  from  this  person  that  all  else  follows.  The  land  is  cleared,  jobs  are 
provided,  schools  and  hospitals  are  built  and  staffed.  Then  all  the  other  ingredients 
of  a  viable  society  follow.  It  is  the  entrepreneur — the  self-starter — that  must  be 
put  to  work  on  this  problem  if  we  are  to  achieve  our  objective. 

Profit  and  Loss  Yardstick:  The  businessman — the  entrepreneur — will  not  be  put 
to  work  on  this  effort  on  the  massive  scale  needed  unless  a  way  can  be  found  for 
his  efforts  to  be  acceptable  against  the  profit  and  loss  yardstick.  (This  yardstick 
must  be  retained  because  the  profit  motive  is  responsible  for  America's  success- 
relative  to  the  rest  of  the  world.) 

American  business  and  industry  will  not,  at  the  present  time,  address  itself  to 
the  problem  on  the  massive  scale  required  because  of  the  many  short-term  dis- 


u  This  if?  taken  from  an  address  by  A.  S.  Farha  before  the  International  Luncheon  Club, 
Midland,  Mich.,  May  1971. 


2323 


advantages  connected  with  organizing  and  utilizing  people  who  are  not  presently 
qualified  for  the  world  of  work.  These  short-term  disadvantages  can  be  compen- 
sated for  and  overcome. 

Some  of  the  short-term  disadvantages  that  must  be  overcome  are : 

1.  High  dropout  rate. 

2.  Recurrent  absenteeism. 

3.  The  need  to  teach  such  basics  as  reading  and  arithmetic. 

4.  The  difficulty  of  getting  people  that  have  never  held  a  steady  job  to 
adjust  to  the  8-to-4  routine — adapt  to  discipline. 

5.  The  need  to  train  leaders  who  will  make  more  mistakes  than  most  while 
learning — and  let  these  mistakes  be  made  as  a  part  of  the  learning  process. 

6.  Higher  level  than  normal  of  supervisors  to  workers. 

7.  High  amount  of  scrap  material  because  of  lack  of  worker  skill. 

8.  Lack  of  motivation. 

9.  Disadvantages  of  locating  plants  in  underdeveloped  parts  of  the  coun- 
try— e.g.,  Mississippi  Delta. 

Proposal — Tax  concessions  would  be  granted  to  labor  intensive  industries  such 
as  garments,  textiles,  and  electronic  parts  assembly.  To  qualify  a  firm  would  hire 
a  certain  percentage  of  its  workforce  from  the  under-trained  poor  categories — the 
the  criteria  established  for  the  H.R.  1,  O.F.F.  Program  could  be  used.  The  higher 
the  percentage  of  the  workforce  in  the  O.F.F.  category,  the  greater  the  tax 
concession  that  would  be  given. 

This  proposal  would  not  displace  presently  employed  workers  because  the  per- 
sons hired  from  the  O.F.F.  categories  would  be  hired  to  produce  goods  for  a  new 
market.  That  market  is  the  poor  who,  prior  to  going  to  work,  had  no  purchasing 
power  to  buy  the  goods  and  services  that  they  are  themselves  now  producing. 

The  tax  concession  program  would  be  designed  to  encourage  companies  to  build 
plants  in  economically  depressed  and  underdeveloped  parts  of  the  country  such 
as  the  Mississippi  Delta  and  Appalaehia.  It  would  also  encourage  the  location  of 
small,  light  manufacturing  plants  in  the  core  of  the  city  (this  would  be  a  much 
more  effective  solution  for  the  ghettos  than  existing  renewal  projects,  which 
wipe  out  slum  housing  and  erect  high  rise  apartment  and  office  buildings,  but 
do  not  supply  jobs  for  the  residents) . 

To  ensure  that  these  new  plants  continue  to  operate — i.e..  that  the  businessman 
does  not  pick  up  his  marbles  and  leave  after  the  tax  holiday  has  been  dimin- 
ished— it  might  be  necessary  to  require  that  a  specified  percentage  of  the  profits 
be  invested  back  into  the  area  where  the  plant  is  located. 

A  hypothetical  example  showing  how  the  tax  break  might  diminish  as  short- 
term  disadvantages  are  overcome  is  shown  in  exhibit  9. 

The  percentage  of  Federal  income  tax  reduction  would  be  in  proportion  to  the 
added  risk  taken.  It  is  assumed  in  this  example  that  the  effectiveness  of  a  plant 
locating  in  an  economically  depressed  area  and  employing  under-trained  workers 
would  be  27%  of  that  of  a  plant  locating  in  a  developed  region.  The  under- 
developed area  might  be  the  Mississippi  Delta  or  an  urban  slum.  In  this  example 
comparative  effectiveness  increases  to  100%  at  the  end  of  10  years  and  the  100% 
tax  holiday  provided  for  the  first  years  drops  off  to  "0." 

Under  this  proposed  amendment  to  H.R.  1,  the  tax  concessions  would  supply 
the  incentive  for  business  to  take  the  added  risks  necessary  if  the  short-term 
disadvantages  associated  with  the  economically  depressed  regions  and  with 
putting  the  poor  to  work  are  to  be  overcome.  The  businessmen  becomes  involved 
in  solving  these  problems  as  part  of  the  day-to-day  operations  of  his  firm.  This  ap- 
proach will  guarantee  overall  success  because  it  does  not  guarantee  against  fail- 
ure of  an  individual  firm.  This  risk  of  failure  is  a  prerequisite  to  success.  This 
legislation  would  let  the  businessman  do  what  he  does  best — perform  against  the 
veritable  yardstick  of  profit  and  loss.  Planning  would  be  done  by  tough  minded 
managers  who  are  judged  only  by  results — not  by  insular  bureaucratic  agencies. 

I  don't  pretend  to  suggest  that  this  proposed  tax  scheme  would  be  a  cure-all. 
It  can,  however,  bring  into  this  battle  what  President  Nixon  has  termed  "the 
greatest  engine  of  progress  ever  developed  in  the  history  of  man — American  pri- 
vate enterprise." 

Demonstrated  Success — The  tax  incentive  is  not  a  new  concept.  Many  states 
have  tax  holiday  programs.  Likewise  with  local  communities.  On  the  federal  level, 
a  familiar  tax  incentive  to  spur  general  growth  in  the  economy  is  the  investment 
credit. 

The  Commonwealth  of  Puerto  Rico  presents  a  highly  successful  example  of 
the  type  of  program  that  I  am  proposing- 


2324 


EFFECT  OF  TAX  VACATION 


100 


90  _ 


SG 


60 


50 


AO 


30 


r 


20  — 


10  _ 


0 


1       2        3       4       5       6       7       8       9       10      11      12      13  14 
YEARS  FROM  PLANT  STARTUP 


One  way  of  measuring  economic  progress  is  by  the  growth  in  real  per  capita 
income.  Exhibit  10  compares  the  relative  growth  in  real  per  capita  income  of 
Puerto  Rico  to  that  of  the  United  States  and  Mississippi  along  with  Latin  Amer- 
ica and  Uruguay.  Uruguay  is  again  shown  to  depict  the  stark  contrast  in  results 
between  a  country  like  Uruguay  that  tried  to  eradicate  poverty  through  govern- 
ment welfare  and  Puerto  Rico  that  adapted  another  approach — that  of  improving 
the  productivity  of  her  people  by  encouraging  entrepreneurship. 

Much  of  this  prodigious  growth  has  been  attributed  to  a  tax  holiday  package 
that  was  legislated  in  1947.  Under  this  program,  qualifying  industries  are  ex- 
empted from  all  corporate  income  tax  for  varying  periods  of  time,  depending  on 
type  of  industry  and  location.  The  Puerto  Rican  government's  recent  extension 
until  1983  of  the  tax  holiday  scheme  will  undoubtedly  encourage  continued 
progress. 

I  am  not  suggesting  that  Puerto  Rico  doesn't  have  its  problems.  It  does. 

Last  year's  unemployment  rate  of  about  10.5%,  which  some  observers  place 
much  higher,  would  have  been  more  severe  if  it  bad  not  been  for  migration  to  the 
U.S.  mainland.  There  is  also  a  serious  shortage  of  skilled  labor.  Per  capita  income 
is  still  only  about  70%  of  that  of  Mississippi.  But  take  note — Puerto  Rico  is 
catching  up  fast.  If  trends  continue,  it  will  exceed  that  of  Mississippi  within 
the  decade,  as  shown  in  exhibit  11. 

I  have  outlined  the  Puerto  Rican  experience  to  show  the  general  results  that 
can  be  expected — not  as  a  model  of  the  tax  incentive  program  that  is  proposed 
to  generate  new  jobs  in  the  States.  The  major  difference  is  that  the  tax  holiday 
legislation  that  I  have  recommended  would  be  designed  to  encourage  labor  inten- 
sive industries.  Puerto  Rico's  tax  holiday  is  based  on  a  long-standing  government 
policy  of  promoting  growth  in  capital  intensive  highly  automated  industries  such 
as  petrochemicals.  This  policy  is  thought  to  be  partly  responsible  for  the  island's 
unemployment  crunch  and  skilled  labor  shortage. 

Despite  these  problems.  I  think  that  most  observers  would  agree  that  Puerto 
Rico's  economic  progress  has  been  fantastic. 

Puerto  Rico  accomplished  this  against  a  backdrop  of  considerable  obstacles. 
Manufacturing  plants  in  the  early  fifties  were  essentially  non-existent  and  the 
economy  was  heavily  dependent  on  agriculture — mostly  sugar.  Population  pres- 
sures are  severe.  Puerto  Rico  is  six  times  more  densely  populated  than  the 
state  of  California  and  has  a  population  density  2,000%  greater  that  that  en- 
joyed by  Uruguay.  As  for  natural  resources,  the  island  is  blessed  with  very  few. 

Puerto  Rico's  Economic  Development  Administration  predicts  that  225,000 


Exhibit  9 


2325 


jobs  will  have  been  created  by  the  end  of  the  decade  as  a  direct  result  of  the 
incentive  package.  In  proportion  to  population,  this  would  be  equivalent  to  16 
million  new  jobs  in  the  U.S.  mainland. 


3,00 1 — 


INCREASE  1N  REAL  PER  CAPITA  INCOME 
CONSTANT  1958  $'s 
(1950  -  1969) 


r 


-  1.01 


UNITED  MISSISSIPPI 
STATES 


PUERTO 
RICO 


LATIN 
AMERICA 


URUGUAY 


0.50 


Exhibit  10 


Public  Service  Jobs — If  we  are  to  have  a  "Guaranteed  Opportunities"  pro- 
gram, it  will  be  necessary  for  government  to  become  the  "employer  of  last 
resort."  There  is  an  increasing  need  for  public  service  jobs  and  swings  in  the 
jobs  available  in  the  private  sector  are  bound  to  continue.  Many  of  these  public 
service  jobs  can  be  of  a  project  nature  and  the  public  service  sector  can  act  as 
sort  of  a  flywheel  to  dampen  out  the  wide  swings  in  unemployment.  I  think  that 
more  effort  must  be  devoted  to  identifying  the  specific  jobs  that  government  would 
create.  These  jobs  could  probably  include  ecology  efforts  such  as  the  recycling 
of  man-made  wastes,  work  in  parks,  in  hospitals,  and  a  limited  number  of  jobs 
on  public  works  projects. 

One  way  of  providing  needed  jobs,  while  at  the  same  time  contributing  to 
a  better  environment,  would  be  through  the  formation  of  a  joint  government- 
private  ecological  corporation.  This  corporation  could  be  similar  in  structure 
to  Comsat  Corporation.  It  would  recycle  man-made  waste  material  (paper,  glass) 
that  would  be  unattractive  to  recycle  on  the  basis  of  pure  economics. 


2326 


CCmPASlSOM   OF  f£K   CAPITA  JMCoM£5 
PUetSTO  RlCO  p£R  CAPITA  INCoMe-r  MISSISSIPPI   P£2  CAPITA  1NCom£ 


1950         1955         1980         1968         1370  1980'* 


If  we  are  to  guarantee  opportunity  it  is  imperative  that  these  "last  resort" 
government  created  jobs  be  transitional.  They  should  provide  the  worker  with 
an  opportunity  to  advance  into  permanent  jobs  in  regular  employment. 

The  language  in  the  recently  passed  Emergency  Employment  Act  could  supply 
the  mechanism  to  turn  on  and  off  the  availability  of  these  jobs.  As  I  understand 
it,  federal  spending  is  turned  on  when  unemployment  goes  above  a  given  per- 
centage for  a  specified  number  of  months  in  a  row  and  is  turned  off  when  unem- 
ployment dips  below  the  given  percentage  for  the  specified  length  of  time. 

Chairman  Mills  has  stated  that  the  purpose  of  the  public  service  jobs  provision 
[in  H.R.  1]  is  to  see  that  those  people  who  do  not  find  work  in  regular  employ- 
ment may  have  an  opportunity  to  get  work  in  these  [public  service]  projects. 

The  key  here  is  regular  employment.  As  regular  employment  becomes  more 
plentiful  to  the  under-trained  through  the  proposed  tax  incentive  program  the 
need  for  "government  as  the  employer  of  last  resort"  will  diminish. 

With  guaranteed  opportunity,  the  need  for  welfare  benefits  of  anything  more 
than  bareboned  subsistence  will  diminish.  Welfare  payments  under  current  law 
should  then  be  programmed  to  be  cut  back  accordingly  for  able-bodied  recipients. 


2327 


APPENDIX 


Competition  Between  Welfare  Rolls  and  Payrolls — Analytical  Backup 
Material  for  an  Analysis  of  the  Administration's  Family  Assistance 
Plan  (H.R.  1),  1971,  Delta  Associates 

(By  William  H.  Shaker) 

Tlie  purpose  of  the  Job  Sensitivity  Charts  (Exhibits  4-7)  is  to  present  the 
overall  impact  of  guaranteed  income  legislation  in  an  easily  understood  format. 
These  charts  show  jobs,  by  state,  that  would  be  affected  by  the  various  guaran- 
teed income  proposals.  Since  these  charts  are  intended  as  an  overview,  they  do 
not  necessarily  show  all  jobs  in  a  particular  state  that  might  be  affected  by  a 
given  guaranteed  income  proposal.  More  detailed  information  is  contained  in  the 
attached  Tables. 

Data  availability  dictated  that  certain  estimates  and  assumptions  be  made 
and  the  basis  for  this  is  given  in  Tables  I-VI,  along  with  the  data  sources. 

Table  I  shows  the  approximate  income  floor  under  H.R.  1  that  would  exist  in 
the  various  states — assuming  that  state  supplements  continue  at  present  levels. 
Also  contained  in  Table  I  is  the  manufacturing  pay  rate  as  a  percentage  of  the 
U.S.  average  manufacturing  pay  rate  for  each  state. 

Table  II  shows  jobs  in  the  manufacturing  sector  affected  by  the  various  guar- 
anteed income  plans. 

Table  III  presents  national  pay  rates  for  selected  jobs  in  other  than  the 
Manufacturing  Sector  of  the  economy.  These  rates  are  based  on  testimony 
submitted  by  Secretary  James  D.  Hodgson  to  the  Committee  on  Finance,  United 
States  Senate  during  Administration  testimony  on  H.R.  1.  Estimates  of  pay 
rates  in  the  individual  states  were  derived  by  multiplying  the  rates  submitted 
by  Secretary  Hodgson  by  the  percentages  reported  in  Table  I.  This  procedure 
was  necessary  because  pay  rates  for  these  jobs  were  not  available  on  a  state- 
by-state  basis. 

In  general,  the  analysis  is  based  on  gross  earnings.  This  procedure  under- 
estimates the  impact  of  the  guaranteed  income  plans  because  welfare  recipients 
do  not  pay  Federal  social  security  and  income  taxes  on  their  welfare  payments. 
An  exception  to  this  procedure  was  made  in  the  case  of  the  Javits  Amendment. 
In  that  instance,  an  estimate  of  spendable  earnings  was  used.  See  Table  IV. 

Negative  income  tax  proposals  are  promoted  as  a  means  of  supplementing  the 
incomes  of  the  "working  Poor".  H.R.  1  would  also  supplement  the  earnings  of 
persons  in  the  middle  income  brackets.  Table  V  shows  the  average  hourly  earn- 
ings that  a  person  could  receive  and  still  get  some  welfare  payment.  As  can  be 
seen  in  Table  V,  the  average  hourly  earnings  in  10  states  is  less  than  the  amount 
of  earnings  required  for  a  person  to  "work  himself  off  welfare". 

Table  VI  presents  an  estimate  of  the  number  of  jobs  that  would  be  affected 
by  the  Javits'  Amendment  in  a  few  selected  states. 


TABLE  I 


Approximate 
income  floor 
under  H.R. 1 

(basic  Federal 
$2,400.  Plus 

State  supple- 
ments at 

present  levels) 

(1) 


Manufacturing 
pay  rate  as  a 

percentage  of 
U.S.  average 
pay  rate 

(2) 


Alabama    $1.20  86 

Alaska      2.25  146 

Arizona      1. 20  102 

Arkansas                                                                                   .  1.20  79 

California   1.32  117 

Colorado   1.59  107 

Connecticut..     1.98  104 

Delaware    1.20  107 

District  of  Columbia     1.43  108 

Florida      1.20  86 

Georgia                                                                                        .  1.20  80 

Hawaii.   1.58  95 

Idaho   1.45  101 

llinois  .     1.69  110 


2328 


TABLE  I— Continued 


Approximate 
income  floor 
under  H.R. 1 

(basic  Federal 
$2,400.  Plus 
State  supple- 
ments at 

present  levels) 

(1) 


Manufacturing 
pay  rate  as  a 

percentage  of 
U.S.  average 
pay  rate 

(2) 


Indiana   1.20  113 

Iowa   1.46  109 

Kansas  .   1.64  100 

Kentucky   1.20  98 

Louisiana    1.20  99 

Maine   1.20  82 

Maryland   1.20  102 

Massachusetts   1.88  97 

Michigan   1.58  132 

Minnesota   1.79  106 

Mississippi   1.20  76 

Missouri   1.20  103 

Montana       1.37  111 

Nebraska   1.20  95 

Nevada  .   1.20  130 

New  Hampshire     1.76  83 

New  Jersey   2.08  105 

New  Mexico   1.20  86 

New  York   2.02  104 

North  Carolina     1.20  74 

North  Dakota    1.57  91 

Ohio   1.20  116 

Oklahoma   1.20  95 

Oregon..     1.35  114 

Pennsylvania     1.88  101 

Rhode  Island     1.58  86 

South  Carolina    1.20  76 

South  Dakota     1.80  91 

Tennessee   _  1.20  83 

Texas   1. 20  98 

Utah    1.27  107 

Vermont    1.82  88 

Virginia   1.57  83 

Washington   1.82  121 

West  Virginia       1.20  103 

Wisconsin   1.30  108 

Wyoming      1.36  104 


1  Derived  from  data  furnished  in  table  9,  p.  55,  app.  B— material  related  to  H.R.  1— work  and  training  provisions  (pre- 
pared by  the  staff  of  the  Committee  on  Finance)— published  in  hearings  before  the  Committee  on  Finance,  U.S.  Senate, 
92d  Cong— 1st  sess.  on  H.R.  1,  p.  393.  U.S.  Government  Printing  Office.  1971. 

Derivation  is  based  on  the  lower  figure  shown  in  table  9  for  each  State  and  does  not  assume  a  family  member  in  training. 
For  example:  Alabama  (($230— $30)Xl2)-=-2,000  =  $1.20 ;  Iowa  (($274-$30)X12)h-2,000  =  $1.46,  etc. 

2  Derived  from  detailed  State  statistics  published  in  "Employment  and  Earnings  State  and  Area  Earnings",  U.S.  De- 
partment of  Labor,  BLS,  Bulletin  No.  1370.  U.S.  Government  Printing  Office. 

Manufacturing  pay  rate  as  a  percentage  of  U.S.  average  pay  rate  was  developed  as  follows: 

..  .  =average  hourly  earnings  (State, +State2+.  .  .  4-State5o+D.C.)=$2.97. 
National  average  — — —  —  ^  

Stated  )(percent)=State,X100. 

$z.y7 


For  example:  Alabama  (2.55/2.97)Xl00  =  86  percent. 


2329 


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2334 


Table  III 


Pay  rates  for  selected  jobs  in  other  than  manufacturing  sector  of  economy1 

Job 

Insurance 

Laundry 


Job  Hourly  rate 

Bank  clerk   $3L  75 

Beautician    1. 63 

Cook    2.02 

Dental  assistant   1.  88 

Delireryman   2. 50 

Domestics    1.83 

Dry  cleaning   1.  67 

Farm  labor   2.38 

l  la  s  station  attendant   1.  80 

General  store   1.  70 

Motels/hotels   1.  69 


Hourly  rate 

agents  $2.  45 

  1. 67 

Nurses  aid   2.  01 

Office  machine  operator   2.  30 

Receptionist    2. 25 

Retail  trade   1.60 

Secretarial   2.  50 

Telephone  operator   2. 16 

Waitress/waiter   .  82 

Wholesale  trade   2.80 

Waste  water  treatment   1.  80 


1  Source  :  Bureau  of  Labor  Statistics- — Estimates  of  jobs  and  pay  rates  in  wbicb  Oppor- 
tunities for  Families  recipients  migbt  be  placed  in  or  trained  for.  Testimony  of  Secretary 
James  D.  Hodgson  submitted  to  Committee  on  Finance,  first  session  on  H.R.  1,  1971. 

TABLE  IV.— SPENDABLE  INCOME  1 2  AS  A  PERCENTAGE  OF  GROSS  INCOME  FOR  A  FAMILY  OF  4 


Category 

Gross 
average 
weekly 
earnings 

Spendable 
average 
weekly 
earnings 

Percentage 
of  gross 
earnings 
that  is 

spendable 

Total  private                                          .  ... 

    $129 

$112 

87 

Mining                           ...  .....   

  173 

149 

86 
86 

Construction.      

  216 

185 

Manufacturing   ...    

  143 

124 

87 

Transportation,  utilities      

   177 

155 

88 

Wholesale  'retail    

   120 

91 

89 

Finance,  insurance,  real  estate  

  121 

  104 

107 
93 

88 
89 

1  i  he  earnings  figures  used  in  the  analysis  are  gross  earnings— the  amount  earned  before  deductions  for  Federal  social 
security  and  income  taxes.  This  approach,  in  effect,  under-estimates  the  impact  of  the  guaranteed  income  plans  that  are 
analyzed  because  taxes  would  not  be  paid  on  welfare  payments.  The  magnitude  of  this  underestimation  can  be  seen  from 
the  above  table.  Spendable  income  was  used  in  the  case  of  the  "Javits  amendment".  Spendable  income  derived  by  assuming 
13  percent  deduction  for  Federal  social  security  and  income  tax. 

2  Derived  from  September  1971  data  published  in  Employment  and  Earnings,  vol.  18,  No.  5,  November  1971,  U.S.  De- 
partment of  Labor,  B.L.S. 

TABLE  V.— COMPARISON  1  OF  AVERAGE  HOURLY  EARNINGS  BY  STATE,  TO  THE  SALARY  LEVELS  REQUIRED  TO  GET 
AN  INDIVIDUAL  OFF  WELFARE  (FAMILY  OF  4) 


State 


Eiiminate 
welfare 
payments 


Average 
hourly 
earnings 


Alabama   $2.43  $2.83 

Alaska     3.96  4.93 

Arizona   2.66  3.28 

Arkansas    2.07  2.45 

California...   3.31  3.75 

Colorado    2.48  3.50 

Connecticut   3.33  3.40 

Delaware   2.48  3.34 

District  of  Columbia.    2.50  3.72 

Florida..        .         ...  2.37  2.83 

Georgia   2.23  2.63 

Hawaii   2.73  3.24 

Idaho   2.54  3.15 

Illinois    2.90  3.62 

Indiana    3.26  3.67 

Iowa   2.55  3.64 

Kansas   2.55  3.14 

Kentucky   2.31  3.23 

Louisiana     2.28  3.  55 

Maine    3.50  2.64 

Maryland     2.13  3.36 

Massachusetts   3.19  3.19 

Michigan    2.73  4.12 

Minnesota  ..        .    3.47  3.47 

Mississippi    2.45  2.40 

Missouri..   3.29  3.21  ! 


State 


Eliminate 
welfa  re 
payments 


Montana  

Nebraska  

Nevada  

New  Hampshire. 

New  Jersey  

New  Mexico  

New  York  

North  Carolina.. 
North  Dakota.... 

Ohio  

Oklahoma  

Oregon  

Pennsylvania  

Rhode  Island  

South  Carolina.. 
South  Dakota.... 

Tennessee  

Texas  

Utah  

Vermont  

Virginia  

Washington  

West  Virginia  

Wisconsin  

Wyoming  


Average 
hourly 
earnings 


2.41 

3.  50 

3.  33 

3.18 

3.21 

4. 06 

3.01 

2.  72 

3.48 

3.39 

2.  19 

2.  68 

3.  38 

3.41 

2.  07 

2.  45 

2.71 

2.  94 

2. 17 

3.  76 

2.07 

3.  06 

2.38 

3.  74 

3.18 

3.30 

2.  73 

2.  82 

2. 14 

2.  48 

3.  06 

2.  98 

2.31 

2.69 

2.  07 

3. 14 

2.  26 

3. 44 

3.10 

2.  89 

2.  72 

2.71 

3.09 

4.  02 

2.  07 

3. 36 

2.31 

3.  58 

2.  75 

3.  29 

i  Sources:  Hourly  earnings  data,  Employment  and  Earnings,  Department  of  Labor,  BLS,  April  1970.  Eliminate  welfare 
payments  data  fare  from  testimony  submitted  by  Secretary  James  D.  Hodgson  to  Committee  on  Finance,  1st  sess.  only 
H.R.  1,  1971. 


2335 

TABLE  VI. -ESTIMATES  OF  NUMBER  OF  JOBS  AFFECTED  BY  THE  JAVITS  AMENDMENT  FOR  SELECTED  STATES 


Manufacturing 


Finance/ 
insurance 


State 


sector    Trade  sector 


Services 


Total 


Connecticut. 


New  York 


Alabama. 
Arizona.. 
Arkansas. 


Georgia. 
Idaho... 
Indiana 
Iowa... 


216,  000 
43, 000 

143,  000 
58,  000 

367,  000 
15,  000 
63, 000 
17,  000 

647,  000 


180,  000 
84,  000 
102, 000 
160,  000 
250,  000 
36, 000 
56,  000 
83, 000 
721,000 


20,  000 


24,  000 


5,000 


22, 000 
37,  000 
68,  000 
70, 000 

130,000 
15,000 
30,  000 
98,  000 

238,  000 


244,  000 
164,  000 
333,  000 
288,  000 
752,000 
66,  000 
149, 000 
198,  000 
1,606,  000 


i  Estimates  of  the  number  of  jobs  affected  by  the  amendment  of  Senator  Javits  are  derived  from  Employment  and 
Earnings  by  States  and  Areas,  Bureau  of  Labor  Statistics,  estimates  based  on  spendable  income  (see  table  IV). 


Senator  Talmadge.  I  see  Senator  Hatfield  lias  arrived.  Pie  wanted 
the  privilege  of  introducing  the  witness  from  his  State  and  we  will 
now  recognize  Senator  Hatfield  and  he  will  introduce  the  next  witness. 

Senator,  we  are  delighted  to  have  you  before  the  Finance  Commit- 
tee, and  you  may  proceed,  sir. 

Senator  Hatfield.  Thank  you  very  much,  Mr.  Chairman. 

Mr.  Chairman  and  members  of  the  committee,  it  is  my  pleasure  to 
introduce  to  you  today  several  very  outstanding  women  of  the  com- 
munity of  Eugene,  Oreg.  Testifying  on  their  behalf  is  Mrs.  Wilt, 
president  of  the  Aid  to  Dependent  Children  Association  of  Lane 
County,  Oreg.,  and  with  her  are  Mrs.  Robin  Derringer,  Mrs.  Patricia 
Ban,  Mrs.  Loretta  Daniel.  All  of  these  women  are  here  today  because 
of  contributions  that  were  made  to  provide  them  with  the  transporta- 
tion expenses  to  come  and  testify  before  this  committee  and  all  are 
recipients  of  the  Federal-State  welfare  program,  but  they  have  taken 
very  unique  constructive  initiatives  to  educate  themselves  for  jobs  so 
that  they  may  leave  the  welfare  rolls. 

They  are  also  working  constructively  and  with  quiet  effectiveness 
with  State  and  local  authorities,  with  members  of  the  State  Legisla- 
ture of  Oregon,  and  with  the  local  community  college  and  the  Univer- 
sity of  Oregon  at  Eugene  to  help  educate,  provide  educational  oppor- 
tunities and  scholarships  for  other  recipients. 

In  the  process  they  have  been  reeducating  the  citizens  of  Oregon, 
changing  the  image  of  those  who  receive  welfare  aid.  They  will  submit 
testimony  not  only  as  to  what  they  believe  should  be  done  about  the 
present  and  proposed  welfare  program  but  will  try  to  apprise  the 
committee  of  the  tremendously  worthwhile  self-help  programs  which 
they  have  in  operation  and  have  had  for  several  years. 

Mr.  Chairman,  too  often  the  newspapers  spread  only  the  sensational 
and  the  bad  news  about  those  on  welfare  rolls,  just  as  they  print  often- 
times too  much  of  the  negative  and  destructive  forces  at  work  in  our 
political  system,  which  has  led  to  great  polarization  and  estrangement 
between  social  groups.  The  media  too  often  ignore  the  quiet  construc- 
tive efforts  of  hundreds  of  women  and  men  such  as  underway  in  the 
State  of  Oregon,  and  those  who  will  testify  today  from  my  State,  to 
Tielp  themselves  and  in  turn  to  help  others  in  the  community.  They 
have  done  so  much  to  relieve  the  human  suffering  and  hopelessness 
which  are  characteristic  of  those  who  think  no  one  cares  and  have 
brought  hope  and  a  chance  for  a  changed  life  to  many  people. 


2336 


Mr.  Chairman,  I  commend  them  to  yon,  and  trust  that  the  committee 
will  listen  deeply  as  to  what  they  have  to  say,  and  I  am  very  grateful 
for  this  opportunity  to  introduce  to  you  at  this  time  Mrs.  Wilt  and 
these  other  women,  and  to  say  that  I  have  left  my  hearing  in  the  Com- 
merce Committee  on  environmental  problems  of  the  urban  poor  and, 
therefore,  with  your  permission  I  would  like  at  this  time  to  turn  the 
microphone  over  to  Mrs.  Wilt  and  leave  her  in  the  good  hands  of  your 
committee. 

Senator  Talmadge.  Thank  you,  Senator  Hatfield. 
Mrs.  Wilt,  will  you  invite  the  other  ladies  to  take  seats  at  the  witness 
table,  please. 

STATEMENT  OE  MRS.  LYNDA  WILT,  PRESIDENT,  AID  TO  DEPEND- 
ENT CHILDREN  ASSOCIATION  OE  LANE  COUNTY,  OREG-.;  ACCOM- 
PANIED BY  MRS.  PATRICIA  BAN,  MRS.  ROBIN  DERRINGER,  AND 
MRS.  LORETTA  DANIEL 

Mrs.  Wilt.  Thank  you,  I  will,  Senator. 

Mr.  Chairman  and  members  of  the  committee,  I  am  Lynda  Wilt 
and  I  am  president  of  the  ADC  Association  of  Lane  County  in  Eugene,, 
Oreg.  I  am  testifying  today  on  behalf  of  the  federated  self-help 
groups  of  Oregon. 

The  materials  we  have  entered  as  testimony  will  indicate  the  extent 
of  the  self-help  programs  and  their  effectiveness  in  Oregon.  These  are 
programs  designed  by  the  poor,  implemented  by  the  poor  and  financed 
through  the  efforts  of  the  poor. 

Under  H.R.  1  most  of  our  programs  will  be  discontinued.  Our 
scholarship  program,  the  telephone  aides  program,  and  the  Confidence 
Clinic  will  be  eliminated.  We  have  several  alternatives  we  would  like 
to  suggest  to  this  committee.  We  would  suggest  that  the  Federal  Gov- 
ernment allow  the  States  to  pay  up  the  number  of  quarters  that  any- 
one on  welfare  is  lacking,  so  that  the  aged,  blind,  and  disabled  can 
be  eligible  for  total  social  security  benefits.  The  Federal  Government 
should  incorporate  Federal  regulations  which  state  that  all  States  are 
required  to  adopt  ADC-UN  programs  to  eliminate  the  increase  in 
family  breakdown.  They  should  eliminate  certain  categories  of  need, 
and  substitute  categories  for  people  in  need.  The  Federal  Government 
should  establish  a  Federal  minimum  standard  of  living  for  each  area. 
On  acceptance  of  these  standards,  the  Federal  Government  would 
assume  the  cost  on  a  9-to-l  matching  basis.  The  Federal  Government 
should  recognize  their  responsibility  for  all  people  in  need.  In  par- 
ticular, we  refer  to  those  persons  currently  declared  as  unmat enable. 
For  example,  those  currently  receiving  unemployment,  those  receiving 
workman's  compensation,  and  those  receiving  general  assistance.  They 
should  guarantee  basic  training  and  development  funds  for  innovative 
programs  designed  by  the  poor. 

It  has  long  been  accepted  as  a  part  of  our  industrialized  society  that 
those  who  work  hard  are  entitled  to  the  goods  of  our  society.  It  is  time 
we  recognized  that  this  concept  is  not  necessarily  true.  Tell  the  un- 
employed aircraft  workers  from  Seattle  that  they  did  not  work  hard. 
Tell  the  unemployed  workers  from  the  closed  factories  that  have  now 
relocated  in  Thailand,  Samoa,  and  other  underdeveloped  countries  that 


2337 


they  did  not  work  hard.  But  tell  them  that  children  are  now  working 
in  some  of  those  factories,  and  they  apparently  do  work  hard. 

It  is  time  that  this  country  responded  to  the  necessity  of  a  guaranteed 
income  for  the  poor.  These  standards  must  be  set  at  one  of  the  more 
realistic  levels  set  by  the  Department  of  Agriculture.  The  guaranteed 
income  not  unlike  the  present  welfare  system  would  merely  designate 
a  larger  amount  of  money  passing  through  the  hands  of  the  poor, 
directly  back  into  the  local  economy.  A  guaranteed  income  for  the 
poor  merely  follows  the  precedent  introduced  by  the  middle  class  in 
the  form  of  soil  banks,  civil  service,  teacher  tenure,  and  oil  depletion 
allowance. 

The  poor  of  this  country  are  not  depositing  their  money  in  Swiss 
banks.  They  are  not  buying  tax  free  school  bonds,  municipal  bonds, 
or  State  bonds.  They  are  not  investing  money  in  ventures  that  will  pay 
off  far  into  the  future,  thus  adding  to  the  already  pressing  problem,  of 
not  enough  money  in  circulation.  They  are  taking  their  monthly  wel- 
fare checks,  and  immediately  sending  them  back  to  middle-class  pock- 
ets. They  pay  rent,  heating,  and  light  bills,  buy  food  and  clothing.  The 
money  they  receive  goes  directly  back  into  the  economy  to  keep  it 
moving.  I  submit  to  you  at  this  time,  that  welfare  was  never  created 
to  take  care  of  people,  but  to  take  care  of  an  economy  that  depends 
on  money  passing  through  many  hands  to  stay  alive. 

The  increase  in  the  number  of  ADC  recipients  is  not  the  result  of 
self-inflicted  wounds ;  it  is  the  result  of  a  society  that  has  broken  down. 
This  society  no  longer  pays  off  for  hard  work,  for  education,  or  for 
wanting  to  be  a  good  parent. 

We  are  aware  that  no  one  should  be  exempt  from  the  due  process  of 
law,  but  due  process  should  also  include  equal  opportunity.  Equal 
opportunity  to  choose  one's  destiny,  equal  opportunity  to  live  in  decent 
housing  and  partake  of  adequate  nourishment,  to  be  properly  clothed, 
and  to  participate  in  the  decisionmaking  policies  of  our  Government. 

The  federated  self-help  groups  of  Oregon  are  an  example  of  the  poor 
in  this  country  who  have  been  involved.  We  are  involved  at  the  State 
and  local  levels  of  our  Government,  we  are  involved  with  agencies,  civic 
groups,  fraternal  organizations,  education,  and  the  working  classes. 
We  have  proven  that  the  poor  can  be  responsible  and  concerned  for  the 
future  of  our  country.  They  are  concerned  with  the  decisions  their 
lawmakers  are  called  upon  to  make.  They  are  aware  of  the  low  priority 
given  to  their  wishes,  to  their  hopes,  and  their  dreams.  They  resent 
handouts,  condescending  attitudes,  and  categorizing.  They  resent  the 
lack  of  response  to  their  cries  for  understanding.  They  will  respond  to 
any  offer  of  involvement  in  their  future,  or  to  any  hope  for  opportu- 
nity. Basically,  they  are  reiterating  again  and  again  that  when  a  man 
is  starving,  give  him  a  hook  and  line,  not  a  fish. 

H.R.  1  is  not  welfare  reform.  It  will  not  cure  the  disease  of  poverty, 
nor  will  it  put  all  the  poor  to  work.  It  will  provide  an  avenue  to  build 
a  new  bureaucracy  designed  to  administer  a  "get  tough"  policy,  which 
is  doomed  to  failure.  This  new  bureaucracy  will  not  be  trained  in  the 
problems  of  the  poor,  they  will  not  be  trained  in  the  problems  of  so- 
ciety. The  new  bureaucracy  will  learn  as  the  charitable  workers  of 
the  1800's  did,  that  poverty  is  a  result  of  the  society,  not  the  sin  of 
the  poor. 


2338 


We  are  not  living  in  the  1800's  nor  are  the  poor  as  ignorant  as  their 
earlier  counterparts.  True  reform  must  incorporate  incentive,  equality 
of  opportunity,  and  due  process  of  law. 

We  must  question  whether  or  not  H.K.  1  is  true  reform.  Does  it 
incorporate  equality  of  opportunity  and  the  due  process  of  law,  as 
guaranteed  under  the  Constitution  ?  If  it  does  not  guarantee  the  rights 
and  opportunities  for  all  citizens,  then  it  cannot  be  reform,  it  becomes 
repression. 

You  must  examine  the  constitutionality  and  the  intent  of  H.R.  1.. 
We  have  merely  brought  to  your  attention  some  of  our  feelings  con- 
cerning H.R.  1,  a  few  suggestions  for  alternatives,  and  a  showing  that 
self-help  programs  in  Oregon  are  working. 

Thank  you. 

Senator  Talmadge.  Thank  you  very  much,  Mrs.  Wilt.  I  have  scanned 
through  your  complete  testimony,  and  I  want  to  compliment  you  on 
it.  I  intend  to  read  your  entire  statement. 

Any  questions  ? 

Mrs.  Wilt.  Thank  you. 

Senator  Talmadge.  Thank  you,  we  are  honored  indeed  to  have  you 
before  our  committee. 
Senator  Harris. 

Senator  Harris.  First  of  all  I  want  to  say  that  I  am  really  impressed 
by  your  testimony  and  I  appreciate  it.  I  agree  with  what  you  have  said. 
I  wonder  if  the  other  women  with  you  might  introduce  themselves 
and  say  something  about  their  own  background  and  interest  in  this 
subject. 

Mrs.  Wilt.  I  think  that  would  be  very  good. 

Mrs.  Derringer.  Kobin  Derringer,  I  have  one  child  and  a  disabled 
husband  at  home.  I  am  a  full-time  student  at  the  University  of  Oregon 
on  our  ADC  scholarship.  I  am  a  member  of  the  executive  board  of  the 
Lane  County  Association  and  I  am  a  member  of  John  Galvin's  advi- 
sory board  in  the  State  of  Oregon  and  involved  in  other  activities. 

Senator  Harris.  Do  you  receive  aid  to  dependent  children  ? 

Mrs.  Derringer.  Yes,  I  am  on  welfare. 

Senator  Harris.  How  much  do  you  get  ? 

Mrs.  Derringer.  We  get  $204  a  month  for  a  family  of  three. 

Senator  Harris.  What  is  the  ADC  scholarship,  you  mentioned  it. 
How  are  its  funds  raised  ? 

Mrs.  Wilt.  Our  funds  for  our  scholarship  program  are  raised  on  a 
local  level.  We  raise  the  first  dollar  and  then  they  are  matched  3  to  1 
by  the  Federal  Government,  This  term  we  have  300  people  in  school 
and  it  has  been  quite  a  problem  raising  money  for  all  of  them.  All  of 
the  money  is  raised  locally  though  and  raised  by  the  recipients. 

Senator  Harris.  What  about  your  own  situation?  You  didn't  talk 
about  yourself  personally. 

Mrs.  Wilt.  About  me  ? 

Senator  Harris.  Yes. 

Mrs.  Wilt.  I  am  Lynda  Wilt,  and  president  of  the  Lnne  County 
ADC  Association.  I  am  also  a  full-time  student.  I  carried  18  hours  last 
year  and  came  out  with  a  3.8  average.  I  am  on  John  Galvin's  board, 
who  is  the  John  Galvin  who  is  head  of  the  advisory  board  and  I  am 
also  on  numerous  resource  activities,  and  we  also  help  in  the  University 
of  Oregon  teaching  the  classes. 


2339 


Senator  Harris.  Do  you  receive  aid  to  dependent  children? 
Mrs.  Wilt.  Yes. 

Senator  Harris.  How  much  do  you  receive  ? 

Mrs.  Wilt.  I  have  two  children,  a  daughter  10  and  son  8,  and  receive 
$204  a  month. 

Senator  Harris.  And  you  ? 

Mrs.  Daniel.  I  am  Loretta  Daniel,  49  years  old.  I  am  a  University 
of  Oregon  student  and  also  a  part-time  teacher.  I  teach  classes  in  the 
community  services  and  public  affairs  school.  I  made  a  3.85  last  term 
to,  I  carried  14  hours.  I  have  four  children,  two  are  married,  one  is 
married  to  the  director  of  the  mentally  retarded  program  in  Medf ord. 
My  other  daughter  is  attending  graduate  school.  My  third  daughter 
is  at  Antioch  College  on  a  scholarship.  My  fourth  daughter  is  16  and 
she  is  a  freshman  at  college.  I  serve  on  the  Governor's  advisory  board. 
I  serve  on  the  scholarship  committee  and  I  am  legislative  chairman 
for  the  ADC  Association. 

Mrs.  Ban.  My  name  is  Patricia  Ban  and  I  am  28  years  old,  I  have 
three  children,  I  have  a  son  9y2  and  twin  daughters  who  are  8,  and  I 
serve  on — I  am  a  full-time  student  at  the  University  of  Oregon,  also. 
I  serve  on  John  Galvin's  advisory  committee  also.  I  serve  on  an  ad- 
visory committee  at  Lane  Community  College.  I  also  serve  on  an 
advisory,  or  on  the  board  for  the  county  commissioners.  I  have  been 
active  in  and  involved  in  the  ADC  Association  for  approximately  2 
years  now. 

Senator  Harris.  What  would  you  all  do  if  you  didn't  have  aid  to 
dependent  children  ? 

Mrs.  Daniel.  We  wouldn't  be  able  to  feed  our  children.  I  am  pro- 
bably the  only  one  who  receives  aid  for  the  disabled. 

Senator  Harris.  You  are  ? 

Mrs.  Daniel.  Yes,  I  have  a  heart  condition. 

Senator  Harris.  It  is  really  wonderful  to  see  people  like  you  doing 
the  thing  you  are  doing. 

What  about  the  work  provisions  in  H.R.  1  ?  Do  you  know  anything 
about  that  ?  What  do  you  think  about  going  to  work  and  putting  your 
children  in  substandard  day  care  and  other  similar  aspects  of  H.R.  1  ? 

Mrs.  Wilt.  Robin  is  probably  better  qualified,  she  has  been  going 
through  the  Talmadge  amendments. 

I  guess  one  of  the  things  I  would  question  in  the  work  amendments 
is  how  well  they  are  working  presently  and  I  think  all  we  have  to  do  is 
look  at  the  present  features  on  the  WIN  program,  the  statistics  that 
are  available,  to  know  that  those  programs  are  not  working.  I  think 
that  the  WIN,  according  to  the  statistics,  less  than  50  percent  of  the 
people  who  are  on  the  WIN  program  complete  it.  I  think  our  program 
will  bear  out  the  fact  that  we  have  a,  pretty  close  to  a,  70  percent  em- 
ployment rate  when  our  people  are  through  with  their  training.  This 
last  terms  of  our  200  students  that  we  had  in  school,  89  percent  of  them 
had  2  or  better  grade  averages  which  is  an  average.  Thirty-nine  per- 
cent of  our  people  were  on  the  honor  roll  which  is  a  3  or  better. 

I  think  also  under  the  child-care  provisions  that  I  would  question^ 
and  I  know  several  witnesses  before  me  mentioned  the  day-care  recip- 
ients taking  care  of  other  recipients'  children,  and  I  guess  I  would 
question,  the  fact  as  to,  you  know,  why  this  has  to  be.  Perhaps  they 
are  not  qualified  or  perhaps  that  is  not  what  they  really  want,  and  I 


2340 


think  by  locking  them  into  a  clay-care  or  living  room  day-care  situa- 
tion, we  are  not  eliminating  the  poverty.  What  we  are  doing  is  telling 
those  people  "You  must  be  satisfied  with  what  we  are  giving  you  and 
we  will  not  be  giving  you  a  chance  to  get  off'  welfare,"  because  ob- 
viously they  cannot  when  they  are  being  paid  $90  a  month  to  baby 
sit. 

Senator  Harris.  Anybody  else  want  to  comment  on  that  %  Robin,  who 
takes  care  of  your  children  while  you  go  to  school  \ 

Mrs.  Wilt.  I  have  been  very  fortunate.  I  tried  to  arrange  my  class- 
rooms around  the  time  when  my  children  are  in  school.  This  isn't 
always  possible  and  when  it  isn't  I  use  a  private  babysitter. 

Senator  Harris.  Do  you  think  that  women  who  can  work  would 
voluntarily  work  if  they  had  day  care  and  a  job  available  to  them  ? 

Mrs,  Wilt.  Yes,  I  believe  they  would.  I  think  that  what  we  have 
done  is  not  allow  for  options  of  going  to  work.  We  have  said,  "We 
will  set  all  obstacles  in  your  way,  and  if  you  can  make  it  by  it,  then 
you  have  pulled  yourself  up  by  your  bootstraps  and  done  a  fine  job.*' 
But  what  we  are  not  doing  is  clearing  the  way  and  showing  there 
are  options  available.  We  are  telling  them,  "You  have  to  be  a  secre- 
tary or  you  have  to  be  a  welder.'"  We  are  not  saying  to  them,  "We  are 
going  to  provide  these  options,  and  you  choose  what  you  are  best  quali- 
fied to  do." 

Senator  Harris.  Do  you  have  any  feelings  one  way  or  the  other  about 
saying  to  a  mother  she  must  leave  her  children  in  a  day  care  center 
and  take  a  job  whether  she  wants  to  or  not? 

Mrs.  Wilt.  Yes,  I  do.  I  am  sure  that  we  recognize  that  not  all  of 
the  citizens  in  our  country  are  qualified  or  have  the  initiative  or  the 
feeling  that  they  must  work,  and  I  think  this  is  exemplified  very 
much  by  the  middle  class.  What  we  are  saying  is,  if  you  are  married 
and  if  you  marry  well  enough,  then  you  don't  have  to  work.  But  if 
you  have  not  had  that  option  available,  or  if  you  have  not  provided 
that  for  yourself,  then  you  must  go  to  work,  and  what  we  are  doing 
is  cutting  off  one  group  of  our  society. 

Senator  Harris.  Thank  you  very  much. 

Senator  Talatadge.  Thank  you  very  much. 

Any  further  questions?  We  appreciate  your  appearing,  and  you 
made  an  excellent  statement. 
Mrs.  Wilt.  Thank  you. 

(The  prepared  statement  of  Mrs.  Wilt  with  attachments  follows. 
Hearing  continues  on  p.  2352.) 

Prepared  Statement  oe  Lyxdia  Wilt,  President,  Aid  to  Dependent  Children 
Association  of  Lane  County,  Oreg. 

I  am  Lyndia  Wilt.  I  am  president  of  the  A.D.C.  Association  of  Lane  County, 
Oregon.  I  am  testifying  today  in  behalf  of  the  federated  self-help  groups  of 
Oregon. 

The  materials  we  have  entered  as  testimony  will  indicate  the  extent  of  the 
self-help  programs  and  their  effectiveness  in  Oregon.  These  are  programs  designed 
by  the  poor,  implemented  by  the  poor,  and  financed  through  the  efforts  of  the 
poor. 

Under  H.R.  1  most  of  our  programs  will  be  discontinued.  Our  scholarship  pro- 
gram, the  telephone  aides  program,  and  the  Confidence  Clinic  will  be  eliminated. 
We  would  suggest  that  the  federal  government  allow  the  states  to  pay  up  the 
number  of  quarters  that  anyone  on  welfare  is  lacking,  so  that  the  aged,  blind 


2341 


and  disabled  can  be  eligible  for  total  Social  Security  benefits.  The  federal  govern- 
ment should  incorporate  federal  regulations  which  state  that  all  states  are  re- 
quired to  adopt  A.D.C.-UN  programs  to  eliminate  the  increase  in  family  break- 
down. They  should  eliminate  certain  categories  of  need,  and  substitute  categories 
for  people  in  need.  The  federal  government  should  establish  a  federal  minimum 
standard  of  living  for  each  area.  On  acceptance  of  these  standards,  the  federal 
government  would  assume  the  cost  on  a  9  to  1  matching  basis.  The  federal  gov- 
ernment should  recognize  their  responsibility  for  all  people  in  need.  In  particular, 
we  refer  to  those  persons  currently  declared  as  unmatchable.  For  example,  those 
currently  receiving  unemployment,  those  receiving  workman's  compensation,  and 
those  receiving  general  assistance.  They  shouid  guarantee  basic  training  and 
development  funds  for  innovative  programs  designed  by  the  poor. 

It  has  long  been  accepted  as  a  part  of  our  industrialized  society  that  those 
who  work  hard  are  entitled  to  the  goods  of  our  society.  It  is  time  we  recognized 
that  this  concept  is  not  necessarily  true.  Tell  the  unemployed  aircraft  workers 
from  Seattle  that  they  did  not  work  hard.  Tell  the  unemployed  workers  from  the 
closed  factories  that  have  now  relocated  in  Thailand,  Samoa  and  other  under- 
developed countries  that  they  did  not  work  hard.  But  tell  them  that  children  are 
now  working  in  some  of  those  factories,  and  they  apparently  do  work  hard. 

It  is  time  that  this  country  responded  to  the  necessity  of  a  guaranteed  income 
for  the  poor.  These  standards  must  be  set  at  one  of  the  more  realistic  levels  set 
by  the  Department  of  Agriculture.  The  guaranteed  income  not  unlike  the  pres- 
ent welfare  system  would  merely  designate  a  larger  amount  of  money  passing 
through  the  hands  of  the  poor,  directly  back  into  the  local  economy.  A  guar- 
anteed income  for  the  poor  merely  follows  the  precedent  introduced  by  the  mid- 
dle class  in  the  form  of  soil  banks,  civil  service,  teacher  tenure  and  oil  deple- 
tion allowance. 

The  poor  of  this  country  are  not  depositing  their  money  in  Swiss  banks.  They 
are  not  buying  tax  free  school  bonds,  municipal  bonds  or  state  bonds.  They  are  not 
investing  money  in  ventures  that  will  pay  off  far  into  the  future,  thus  adding  to 
the  already  pressing  problem,  of  not  enough  money  in  circulation.  They  are  tak- 
ing their  monthly  welfare  checks,  and  immediately  sending  them  back  to  middle 
class  pockets.  They  pay  rent,  heating  and  light  bills,  buy  food  and  clothing.  The 
money  they  receive  goes  directly  back  into  the  economy  to  keep  it  moving.  I 
submit  to  you  at  this  time,  that  welfare  was  never  created  to  take  care  of  people, 
but  to  take  care  of  an  economy  that  depends  on  money  passing  through  many 
hands  to  stay  alive. 

The  increase  in  the  number  of  A.D.C.  recipients  is  not  the  result  of  self- 
inflicted  wounds ;  it  is  the  result  of  a  society  that  has  broken  down.  This  society 
no  longer  pays  off  for  hard  work,  for  education,  or  for  wanting  to  be  a  good  parent. 

We  are  aware  that  no  one  should  be  exempt  from  the  due  process  of  law, 
but  due  process  should  also  include  equal  opportunity.  Equal  opportunity  to 
choose  one's  destiny,  equal  opportunity  to  live  in  decent  housing  and  partake 
of  adequate  nourishment,  to  be  properly  clothed  and  to  participate  in  the  decision- 
making policies  of  our  government. 

The  federated  self-help  groups  of  Oregon  are  an  example  of  the  poor  in  this 
country  who  have  been  involved.  We  are  involved  at  the  state  and  local  levels  of 
our  government,  we  are  involved  with  agencies,  civic  groups,  fraternal  organiza- 
tions, education  and  the  working  classes.  We  have  proven  that  the  poor  can  be 
responsible  and  concerned  for  the  future  of  our  country.  They  are  concerned 
with  the  decisions  their  law  makers  are  called  upon  to  make.  They  are  aware  of 
the  low  priority  given  to  the  wishes,  hopes  and  dreams  of  their  class.  They 
resent  hand-outs,  condescending  attitudes  and  categorizing.  They  resent  the  lack 
of  response  to  their  cries  for  understanding.  They  will  respond  to  any  offer  of 
involvement  in  their  future,  or  to  any  hope  for  opportunity.  Basically,  they  are 
reiterating  again  and  again  that  when  a  man  is  starving,  give  him  a  hook  and 
line,  not  a  fish. 

H.R.  1  is  not  welfare  reform.  It  will  not  cure  the  disease  of  poverty,  nor  will 
it  put  all  the  poor  to  work.  It  will  provide  an  avenue  to  build  a  new  bureaucracy 
designed  to  administer  a  "get  tough"  policy,  which  is  doomed  to  failure.  This 
new  bureaucracy  will  not  be  trained  in  the  problems  of  the  poor,  they  will  not  be 
trained  in  the  problems  of  society.  The  new  bureaucracy  will  learn  as  the 
charitable  workers  of  the  1800's  did,  that  poverty  is  a  result  of  the  society, 
not  the  sin  of  the  poor. 


2342 


We  are  not  living  in  the  1800's  nor  are  the  poor  as  ignorant  as  their  earlier 
counterparts.  True  reform  must  incorporate  incentive,  equality  of  opportunity 
and  due  process  of  law. 

We  must  question  whether  or  not  H.R.  1  is  true  reform.  Does  it  incorporate 
equality  of  opportunity  and  the  due  process  of  law,  as  guaranteed  under  the 
constitution  ?  If  it  does  not  guarantee  the  rights  and  opportunities  for  all  citizens, 
then  it  cannot  be  reform,  it  becomes  repression. 

You  must  examine  the  constitutionality  and  the  intent  of  H.R.  1.  We  have 
merely  brought  to  your  attention  some  of  our  feeling  concerning  H.R.  1,  a  few 
suggestions  for  alternatives,  and  a  showing  that  self-help  programs  in  Oregon 
are  working. 

REVIEW  OF  H.R.  1 

I.  H.R.  1  establishes  an  eligibility  scheme  that  excluded  many  classifications 
of  needy  persons  from  welfare  benefits.  Generally,  H.R.  1,  provided  that  certain 
families,  as  defined  in  the  act,  are  eligible  for  benefits.  A  family,  in  order  to  be 
eligible,  must  contain  at  least  two  <or  more  individuals  at  least  one  of  whom  is 
a  child.  (Section  2155(a)  (4).  This  definition  excluded  the  following  persons  : 

(a)  the  single  person  over  the  age  of  18  who  are  childless. 

(b)  married  couples  without  children  or  whose  children  are  over  the  age 
of  18  and  not  attending  school. 

(c)  a  single  woman  who  is  pregnant  and  has  no  other  children. 

(d)  an  unmarried  person  whose  child  is  over  the  age  of  18  and  not  attend- 
ing school. 

Undoubtedly  other  classifications  of  ineligible  persons  can  be  derived  from  the 
restrictive  definition  of  family  as  defined  in  the  act. 

The  above  classifications  are  derived  from  the  definition  of  "family"  as  found 
in  Section  2155(a)  (4).  There  is  one  significant  and  specific  exclusion  found  in  the 
act.  //  the  head  of  the  household  is  a  full  time  undergraduate  or  graduate  stu- 
dent at  a  college  or  unversity,  he  or  she  is  excluded  from  the  benefits,  Section 
2155(a)  (4)  (a). 

II.  General  eligibility  requirements 

Every  eligible  family  is  entitled  to  benefits  upon  registration  for  manpower 
training  and  employment,  Section  2102.  Those  individuals  who  are  determined 
by  the  Secretary  of  HEW  to  be  a  member  of  an  eligible  family  and  available  for 
employment,  must  register  with  the  Secertary  of  Labor  for  man-power  services, 
training,  and  employment,  Section  2111(a). 

If  the  Secretary  determines  that  an  individual  is  unable  to  engage  in  work 
training  by  reason  of  illness,  incapacity,  or  advanced  age,  he  is  not  required  to 
accept  employment,  Section  2111(b)  (1).  Until  July  1,  1974,  a  mother  of  a  child 
under  the  age  of  six  is  not  eligible  for  employment.  Thereafter,  a  mother  of  a  child 
under  the  age  of  three  is  not  eligible  for  employment,  Section  2111(b)  (2). 

The  only  standards  for  the  employ-ability  of  an  individual  is  whether  he  is 
able  to  engage  in  work  or  training  by  reason  of  illness,  incapacity  or  advanced 
age.  There  is  not  requirement  that  the  work  be  suitable  or  gainful.  The  act  spe- 
cifically requires  that  employment  cannot  be  refused  if  the  wages  for  the  work 
offered  are  at  an  hourly  rate  of  not  less  than  %  of  the  minimum  wage.  As  speci- 
fied in  Section  6(a)  (1)  of  the  fair  labor  standards  act  of  1938,  Section  2111(c) 
(2)  (d).  The  effect  of  this  provision  would  create  a  vast  pool  of  unskilled  cheap 
labor  that  would  be  utilized  by  industries  that  were  not  subject  to  the  fair  labor 
standards  act.  These  persons  Could  be  compelled  to  work  for  the  sum  of  $1.20  per 
hr.  gross,  or  otherwise  be  ineligible  for  benefits  provided  in  H.R.  1.  The  act  con- 
templates that  women  with  children  will  be  deemed  employable. 

The  act  therefore  provides  that  childcare  and  other  supportive  services  will 
be  provided.  Section  2112.  The  Secretary  of  Labor  is  authorized  to  make  provi- 
sions for  the  furnishing  of  childcare  services.  There  appears  to  be  no  provision 
in  the  act  that  allows  a  mother  to  decline  child-care  services  if  they  are  at  an 
inconvenient  location,  or  unsuitable  because  of  unsafe  or  unsanitary  conditions. 
Therefore,  it  is  not  clear  whether  a  mother  who  declines  employment  because 
of  the  unavailability  of  suitable  childcare  facilities  would  remain  eligible  under 
the  act  for  benefits,  because  there  are  no  provisions  in  the  act  allowing  her 
to  justifiably  refuse  employment  under  these  conditions.  It  is  likely  that  the 
Secretary  would  determine  that  she  was  ineligible.  The  Secretary  of  HEW  must 
establish  standards  assuring  the  quality  of  child  care  services,  Section  2134. 


2343 


III.  Eligibility  for  an  amount  of  benefits 

Resources  of  an  eligible  family  cannot  exceed  $1,500,  Section  2152(a)  (2).  The 
Secretary  of  HEW  has  the  power  to  determine  the  resources  of  a  family  that 
should  be  excluded  from  the  $1,500  maximum.  The  Secretary  has  the  power  to 
determine  the  value  of  the  home  that  should  be  excluded  or  included  in  the 
$1,500  maximum  as  well  as  the  value  of  the  household  goods,  personal  effects 
and  other  property  which  the  Secretary  deems  essential  to  the  families  means 
of  support,  Section  2154(a). 

These  guidelines  have  not  been  formulated.  In  cases  where  The  Secretary 
determines  that  a  family  has  assets  above  the  $1,500  maximum  that  are  not 
excludable,  he  can  prescribe  a  period  or  periods  of  time  and  the  manner  in 
which  this  property  shall  be  liquidated.  The  funds  that  the  family  receives 
through  this  liquidation  process  is  considered  an  overpayment  if  benefits  are 
being  paid  during  the  time  of  disposal,  Section  2154  ( b ) .  The  amount  of  benefits 
for  a  family  are  paid  at  the  rate  of  $800  yearly  for  each  of  the  first  2  members, 
plus  $400  yearly  for  each  of  the  next  3  members,  plus  $300  yearly  for  each  of 
the  next  2  members,  plus  $200  for  the  next  member,  Section  2152  (b) . 

The  act,  therefore,  clearly  does  not  compensate  eligible  families  that  are 
greater  than  8  in  number. 

The  amount  of  benefits  payable  initially  to  an  eligible  family  must  be  based 
upon  the  Secretary's  estimate  of  the  families  income  for  such  quarter. 

The  Secretary  must  take  into  account  the  families  income  from  preceding 
quarters  in  any  modifications  which  are  likely  to  occur  on  the  basis  of  change 
of  circumstances  or  conditions.  The  amount  of  benefits  payable  to  any  family 
for  any  quarter  of  a  calendar  year  shall  be  determined  by  the  Secretary  in  the 
quarter  immediately  following  such  quarter ;  and,  to  the  extent  that  the  amount 
actually  paid  to  such  family  for  such  quarter ;  was  more  or  less  than  the  amount 
so  determined,  proper  adjustment,  or  recovery  can  be  made,  Section  2152(d)  (1). 
This  would  allow  the  Secretary  to  deny  benefits  to  the  family  whose  earnings 
for  appreciating  quarters  were  high  in  relation  to  the  benefits  that  they  would 
he  entitled  to  receive  under  the  act.  The  act  undoubtedly  contemplates  that 
the  family  has  "saved"  this  difference  when  in  fact  it  may  not  have  been  saved 
hecause  it  was  necessary  to  apply  these  sums  on  pre-existing  family  indebtedness. 

IV.  The  hearing  process 

H.R.  1  specifically  allows  the  Secretary  to  make  determinations  that  would 
deny  benefits,  recover  overpayments,  and  assess  penalties  without  a  prior  hear- 
ing. The  Secretary  can  make  adjustments  for  overpayments.  Section  2152(d) 
(2),  and  assess  penalties  and  fines  if  certain  data  is  not  furnished.  Section 
2031(e)  (1)  and  redetermines  benefit  levels  at  any  time  he  receives  notice  or 
has  reason  to  believe  there  has  been  a  material  change  in  the  families  circum- 
stances, Section  2152  (d)  (1). 

The  impact  of  the  Secretary's  power  is  that  benefits  can  be  denied,  curtailed 
or  fines  imposed  without  a  prior  hearing.  The  Supreme  Court  of  the  United 
States  has  repeatedly  held  that  once  a  person  is  entitled  to  benefits  that  they 
cannot  be  limited,  withdrawn,  or  denied  without  a  prior  hearing.  This  casts 
a  serious  constitutional  question  on  the  validity  of  the  hearing  provisions. 

In  all  such  cases,  the  recipient  must  request  a  hearing  after  the  fact  and 
carry  the  burden  of  proof  that  the  Secretary's  action  was  unwarranted.  This 
invokes  a  hearing  process  that  is  equally  oppressive. 

HISTORICAL  BACKGROUND  OF  THE  LANE  COUNTY  ADC  ASSOCIATION 

Prior  to  the  1966  state  general  election,  the  Y-ettes  (a  recipient  group  tak- 
ing part  in  a  socialization  training  program  of  YM/WCA  and  the  welfare  depart- 
ment) were  encouraged  to  sponsor  a  candidate  fair.  The  candidates  fair  was 
an  opportunity  for  all  those  people  running  for  state  and  local  positions  to 
appear  as  a  group  to  speak  on  the  welfare  issues.  As  a  result  of  the  candidates 
fair,  interested  members  of  the  Y-ettes.  the  mother's  group  sponsored  by  the 
Lutheran  Family  Services  Friendly  House  counseling  group,  and  other  wel- 
fare recipients  began  meeting  informally  to  discuss  what  they  needed  to  do  about 
some  of  the  more  common  problems  shared  by  welfare  recipients.  Although 
they  were  well  aware  that  there  was  an  urgent  need  for  changing  policy,  laws, 
rules  and  regulations  pertaining  to  welfare,  the  immediate  needs  of  the  group 
were  related  to  survival.  It  was  just  before  Christmas,  and  the  mo?t  loudly 


2344 


voiced  question  was,  "How  can  we  get  free  Christmas  trees,  and  free  turkeys, 
so  we  can  still  buy  a  toy  for  the  children."  This  is  an  indication  of  why  it  is 
essential  for  poor  people  to  be  in  charge  of  their  own  groups,  because  only 
poor  people  could  understand  that  you  can  not  solve  state  or  national  problems 
of  the  poor  until  you  have  solved  your  own  immediate  needs  of  food,  shelter,  and 
clothing. 

With  the  help  of  Vista  volunteers,  and  the  co-operation  of  the  Forest  Serv- 
ice, they  arranged  for  the  cutting  and  delivery  of  truck  loads  of  Christmas 
trees.  With  the  help  of  friends  and  businessmen  in  the  community  they  were 
able  to  supply  turkeys  at  a  drastic  discount.  They  referred  to  the  turkeys  as 
disabled  rejects,  since  they  came  to  them  with  various  portions  of  their  anatomy 
missing ;  such  as  a  missing  wing,  neck,  leg,  or  large  patches  of  skin  .  .  .  but  they 
were  turkeys  and  they  were  very  cheap. 

Once  the  group  had  satisfied  its  immediate  needs  it  was  willing  to  look  at 
some  of  the  reasons  behind  those  needs.  Again,  with  the  assistance  of  some 
Yista  volunteers,  the  group  learned  how  to  draw  up  its  statement  of  purpose, 
and  gave  the  organization  a  name;  ADC  Association  of  Lane  County. 

They  realized  that  using  "ADC"  as  part  of  their  legal  name  would  classify 
them  solidly  within  the  welfare  stereotype,  but  they  also  agreed  that  they  could 
use  this  label  to  their  advantage  and  work  to  reduce  the  stigma  that  had  always 
been  attached  to  it. 

In  formulating  the  initial  operational  strategy,  they  borrowed  liberally  from 
a  beginner's  book  on  public  relations  that  they  found  at  the  public  library  (these 
books  are  abundant  and  may  be  very  useful  to  groups  that  are  in  their  form- 
ative stages).  Some  of  the  ideas  that  they  adopted  from  this  book  and  that 
have  been  used  are  : 

a.  To  present  ourselves  honestly,  including  admitting  our  condition  and 
dealing  with  it  straightforwardly. 

b.  To  be  willing  to  be  questioned  on  any  point  dealing  with  our  own  per- 
sonal situations  and  to  discuss  openly  the  causes  of  our  being  on  public  as- 
sistance. (It  should  be  mentioned  that  any  member  who  was  unwilling  to 
follow  these  precepts  was  encouraged  to  participate  in  areas  that  did  not 
involve  public  representation.) 

c.  To  be  representative  in  appearance  and  thought  of  all  recipients  as 
much  as  possible,  thus  avoiding  the  extension  of  our  own  personalities  into 
issues  that  really  belong  to  an  entire  class. 

d.  To  use  a  factual,  informative  approach  and  to  avoid  emotionalism 
in  presenting  issues. 

e.  To  use  peer  groups  in  bringing  pressure  to  bear  on  the  people  we  are 
trying  to  convince. 

In  short,  they  learned  how  to  use  "the  system"  for  the  benefit  of  the  people 
represented.  Tbe  next  step  was  to  work  up  the  constitution  and  by-laws,  and 
tile  for  articles  of  incorporation. 

They  came  to  an  agreement,  by  consensus,  that  they  would  follow  a  line  of 
public  relations  procedures,  using  as  their  motto,  "When  a  man  is  starving, 
don't  give  him  a  fish  .  .  .  give  him  a  hook  and  line  and  teach  him  to  fish  for 
himself".  Getting  input  from  the  entire  Association  now  that  they  had  a  state- 
ment of  purpose,  constitution  and  by-laws,  was  made  much  easier  because  the 
association  had  a  direction  in  which  to  go.  From  there  they  could  concentrate 
on  changes  that  were  needed  for  tbe  entire  recipient  population.  They  chose  the 
things  that  they  felt  were  to  he  achieved  immediately.  They  realized  that  some 
goals  would  take  a  little  longer,  perhaps  as  long  as  ten  years.  They  proceeded 
to  recruit  sympathetic  local  people  who  were  not  politicians,  but  who  had  ex- 
perience dealing  within  the  political  arena.  These  people  worked  as  associate 
members.  They  were  from  both  political  parties  and  from  all  educational  back- 
grounds, i.e.,  sociologists,  psychologists,  economists,  representatives  from  busi- 
ness, social  work,  education,  law,  and  public  administration.  Other  valuable 
associates  were  ex-legislators  and  the  wives  of  politically  influential  persons 
within  the  community. 

They  were  also  fortunate  in  finding  a  film  which  was  designed  to  teach  people 
how  to  get  a  bill  written,  sponsored,  and  how  to  lobby  in  the  legislature.  The 
thirty  minute  movie  was  nothing  like  the  real  thing,  and  they  couldn't  see  the 
long  educational  process  ahead  of  them  for  the  next  six  years.  The  movie  made 
the  process  look  simple,  and  motivated  them  to  action  They  soon  realized  that 
there  was  no  better  way  to  learn  than  by  experience. 


2345 


Don't  hesitate  in  getting  involved  because  you're  afraid  of  making  mistakes. 
Every  session  mistakes  have  been  made,  however,  we  have  profited  from  those 
mistakes,  and  avoided  making  them  a  second  time.  For  instance,  during  the  first 
session  the  "'hard  sell"  was  given  to  a  man  thought  to  be  a  legislator,  only  to 
find  out  he  was  the  man  from  the  supply  room.  From  then  on  identity  was  an 
essential  part  of  the  format. 

This  drive  to  learn,  also  drove  our  lobbyists  to  the  need  to  be  there  representing 
the  group,  even  when  they  were  working  under  adverse  conditions.  For  instance, 
one  of  the  two  people  who  was  going  to  the  legislature  was  suffering  from  an 
attack  of  asthma  complicated  by  emphysema.  One  day  it  was  decided  that  she 
would  sit  in  the  ladies  room  which  had  a  cot  in  it  and  would  rest  while  the 
other  member  of  the  team  did  the  leg  work.  After  a  period  of  two  hours  the  leg 
man  returned  to  reports  that  she  had  gotten  three  legislators  to  sign  the  bills. 
With  a  gasp,  the  reclining  lobbyist  replied,  'T  have  been  working  too.  I  have 
been  catching  the  lady  legislators  as  they  came  through  here.  It's  like  having  my 
own  office."  It  generated  the  natural  reply,  "You  may  have  your  own  office  but 
you're  sure  limiting  your  clientele  with  the  sign  you  have  outside." 

The  next  step  was  to  take  the  ideas  that  were  felt  to  be  attainable,  present 
them  to  a  sympathetic  legislator  and  have  them  drawn  into  legal  bill  form.  Note : 
don't  ever  put  all  your  eggs  in  one  basket;  the  mistake  first  session  was  in 
allowing  one  liberal  legislator  to  be  the  chief  sponsor  of  all  the  Association's 
bills.  Unfortunately,  they  were  not  aware  that  they  would  also  inherit  all  of  his 
enemies,  which  would  cause  future  problems  in  getting  the  bills  out  of  committee. 
Our  tactics  in  later  legislative  session  were  to  strategically  divide  the  bills 
between  the  House  and  Senate  and  to  get  conservative  legislators  to  sponsor 
them.  Our  reason  for  doing  this  will  become  clear  in  any  lobbying  effort  that  is 
undertaken  by  anyone. 

While  the  lobbying  effort  was  in  progress,  other  members  of  the  Association 
were  reading  and  absorbing  information  on  subjects  that  ranged  from  child  care 
to  legal  procedure.  They  were  investigating  ways  to  fund  the  Association,  by 
looking  at  the  possibility  of  O.E.O.  funds,  and  other  agencies  monies.  The  Asso- 
ciation chose  not  to  accept  any  funding  if  it  necessitated  relinquishing  their 
self-governing  principles.  Since  they  found  that  usually  there  were  stipulations 
requiring  that  relinquishment,  they  looked  elsewhere  for  funding.  Since  the 
need  for  funds  was  present,  some  of  the  members  worked  on  cake  sales,  rum- 
mage sales,  movies,  dinners  and  other  fund  raising  projects.  This  money  was 
partially  used  for  expenses  incurred  in  lobbying.  One  of  these  expenses  was  a 
result  of  the  lobbyists  having  to  coax  the  life  out  of  a  series  of  old  cars  owned 
by  the  members  of  the  Association,  in  order  to  get  to  the  capitol  which  was 
eighty  miles  away.  Besides  the  expense  of  gas,  the  lobbyists  also  found  that 
they  had  to  have  a  lunch  every  day  and  parking.  Certs  were  essential  so  the 
lobbyists  did  not  "bad  mouth"  the  legislators. 

Other  members  were  engaged  in  recruiting  new  members  in  order  to  get  more 
welfare  recipients  involved  in  determining  the  goals  of  the  Association.  Still 
others  were  mailing  out  news-letters  informing  recipients  in  the  county  about 
the  activities  and  how  they  could  participate.  The  news-letters  were  put  out  with 
money  contributed  by  some  friends  within  the  community.  They  were  run  of£ 
on  different  mimeograph  machines  from  churches,  university  departments,  and 
business  people.  They  rotated  the  use  of  equipment  in  order  to  keep  as  many  com- 
munity groups  as  possible  involved  in  their  progress.  They  took  it  to  the  first 
person  that  expressed  an  interest  and  told  them  it  was  the  only  copy  that  they 
had.  If  they  wanted  to  use  it  to  make  a  copy  for  themselves  they  were  asked  to 
make  a  few  extras  for  the  Association.  Research  in  the  law  library  was  being 
done  by  another  committee  in  order  to  back  up  testimony  for  the  lobbyists. 
People  were  recruiting  by  personal  contact,  telephone,  and  other  means. 

The  willingness  to  work  led  to  the  programs  that  exist  today.  The  cohesiveness 
of  the  people  involved  has  led  to  the  success  of  those  programs.  For  the  first 
time  there  were  alternatives. 

NEIGHBORHOOD  VOLUNTEERS  PROGRAM 

Plan. — To  recruit,  train  and  make  use  of  Public  Welfare  recipients  in  supple- 
menting social  services  for  the  purpose  of  improving  understanding  between 
recipients  and  social  service  staff ;  improving  understanding  of  human  resources 
and  of  the  Public  Welfare  Department.  The  primary  technique  is  the  use  of  the 


2346 


telephone  in  geographically  distant  areas.  Recipients  are  recruited  because  of 
their  connection  with  the  informal  communication  network  among  low-income 
people.  It  has  been  demonstrated  that  recipients  find  it  easier  to  seek  information 
from  their  peers. 

Need  for  this  service. — Public  Welfare  recipients  are  residing  in  areas  which 
are  geographically  distant  or  isolated  from  the  County  Welfare  Office.  Most 
recipients  do  not  have  telephones  and  must  borrow  a  neighbor's  phone  or  use 
a  pay  phone.  Telephone  communications  between  recipients  and  service  work- 
ers are  usually  lengthy  and  frequently  in  response  to  a  crisis  situation.  Telephone 
lines  into  the  office  are  frequently  busy  so  the  caller  must  wait.  A  neighborhood 
volunteer  can  channel  telephone  calls  by  knowing  who  to  call  for  help.  The  call 
itself  is  usually  briefer  when  the  volunteer  is  calling  in  behalf  of  the  recipient, 
thus  saving  some  caseworker  time.  Geographical  isolation  from  the  county  office 
presents  a  transportation  problem.  Almost  no  small  community  has  adequate 
public  bus  transportation.  Telephone  communication  is  therefore  more  important 
for  these  people. 

Recruitment  of  neighborhood  volunteers  is  usually  done  through  casework 
staff  who  are  able  to  identify  those  recipients  who  meet  the  desired  criteria. 
The  caseworker  looks  for  recipients  who :  ( 1 )  have  shown  an  interest  in  being 
of  help  to  others;  (2)  have  knowledge  of  the  social  and  economic  conditions 
in  their  specific  community;  (3)  have  some  knowledge  of  local  resources;  (4) 
have  demonstrated  an  identity  with  and  commitment  to  their  community ;  and 
(5)  are  in  communication  with  other  low-income  people  in  their  area.  In  addi- 
tion, the  volunteer  should  have  reasonably  good  health  and  should  be  able  to 
drive  a  car. 

Successful  recruitment  depends  upon  how  well  the  staff  knows  their  clients.  In 
some  areas,  client  groups  or  CAP  agencies  may  be  able  to  suggest  neighborhood 
volunteers. 

Publicity  about  the  services  of  a  neighborhood  volunteer  is  done  through  ar- 
ticles in  local  newspapers  and  announcements  by  radio  stations.  The  primary- 
method  of  notifying  the  recipients  is  done  by  the  caseworkers  who  send  letters 
or  notify  their  clients  verbally.  Newspaper  publicity  by  itself  is  not  effective 
since  most  newspapers  do  not  wish  to  print  telephone  numbers. 

Activities 

The  neighborhood  volunteer  must  be  available  on  a  twenty-four  hour  basis  to 
provide  advice  and  help  to  those  recipients  who  are  faced  with  an  emergency 
arising  from  a  fire,  medical  needs,  housing  eviction,  and  other  personal  or  family 
crises. 

To  advise  local  recipients  and  residents  about  the  resources  of  the  welfare 
department,  education  and  training  resources,  availability  of  housing,  availability 
of  medical  care,  specialized  resources  for  children,  day  care  and  emergency 
baby  sitters. 

To  advise  recipients  and  residents  on  how  to  make  use  of  the  resources.  To 
accept  and  record  messages  for  the  caseworker  as  requested  by  the  agency  client, 
by  other  community  residents,  or  by  the  caseworker  to  be  relayed  to  a  specific 
client. 

To  provide  supplementary  service  in  behalf  of  the  caseworker  and  to  act,  when 
appropriate,  as  a  liaison  for  the  caseworker. 

To  provide  emergency  transportation  or  locate  transportation  for  an  agency 
client. 

To  notify  the  caseworker  or  other  appropriate  staff  of  requests  for  service,  date 
and  hour  of  the  request  and  disposition  of  the  request;  and  to  provide  periodic 
reports. 

To  help  locate  and  to  solicit  certain  items  such  as  appliances,  furniture,  or 
clothing  from  the  local  community  in  order  to  help  the  recipient  supplement  their 
assistance  grant. 

The  neighborhood  volunteer  is  likely  to  be  in  a  position  to  give  supportive  help 
in  a  wide  range  of  situations.  Examples  are :  death  in  the  family,  money  manage- 
ment, utility  shut  off,  washer  breakdown,  eviction  notices,  etc. 

The  volume  of  contacts,  either  in  person  or  by  telephone,  varies  greatly  be- 
tween neighborhood  volunteers.  Factors  influencing  activity  are:  isolation  or 
distance  from  County  Welfare  Office,  experience  and  personality  of  the  volunteer, 
and  the  density  of  the  client  population.  An  experienced  neighborhood  volunteer 
may  record  as  many  as  155  contacts  a  month.  Most  contacts  occur  during  the 


2347 


regular  working  day,  and  most  of  the  activity  revolves  around  the  use  of  the 
telephone. 

Training  the  volunteers 

Training  consists  of  two  parts ;  initial  orientation  and  on-going  training. 

1.  Orientation. — Each  neighborhood  volunteer  should  undergo  an  intensive 
period  of  orientation  for  one  week.  Included  is  an  in-depth  review  of  public  wel- 
fare resources  and  services  and  other  human  resources  in  the  community.  Each 
volunteer  should  be  given  a  resource  directory  or  manual  which  contains  current 
information  about  resources.  The  volunteer  should  tour  the  office  and  meet  the 
county  staff.  Duties  of  the  volunteer  should  be  discussed  with  concrete  illustra- 
tions being  used  to  teach  them  their  functions.  The  basic  function  and  role  of  the 
caseworker  should  also  be  discussed.  Training  responsibility  should  be  centralized 
in  one  county  staff  person  who  has  demonstrated  the  ability  to  teach  and  to  com- 
municate with  low-income  people. 

2.  On-going  training. — A  monthly  session  should  be  planned  for  the  volunteers 
during  which  problems  should  be  aired  and  resolved.  Caseworkers  should  also 
participate  in  these  sessions,  to  help  clarify  the  difference  in  caseworker-volunteer 
roles.  Tours  should  be  planned  to  other  major  resource  agencies  such  as :  Social 
Security,  Employment  Office,  Mental  Health,  CAP,  and  Legal  Aid.  During  the  ses- 
sions the  training  goal  should  be  focused  on  providing  information  which  is 
specific  and  relevant. 

Costs 

Neighborhood  volunteers  should  be  partially  paid  volunteers.  A  monthly  fee 
for  service  should  be  paid  to  each  volunteer  to  help  them  to  cover  expenses  of 
additional  clothing  and  personal  items  which  they  believe  to  be  important  in 
helping  them  to  meet  the  public.  The  fee  for  service  also  represents  a  concrete 
form  of  recognition  for  services  being  given  by  recipient-volunters.  The  monthly 
telephone  charge  should  be  covered  as  well  as  the  original  telephone  installation 
cost  when  the  selected  volunteer  has  no  telephone.  Reimbursement  for  private 
car  mileage  should  be  paid  when  necessary,  and  child  care  to  enable  the  volun- 
teer to  attend  training  sessions  or  to  be  away  from  home  when  providing  emer- 
gency transportation. 

INFORMATION  FORUM 

On  vital  issues  concerning  large  portions  of  welfare  population  such  as  medical 
care,  education,  food  stamps,  H.R.  1,  etc.,  we  felt  that  public  information  forums 
for  welfare  recipients  and  for  the  general  public  should  be  held  so  that  the  great- 
est number  of  people  could  have  the  facts.  The  way  we  went  about  publicizing 
these  forums  was  to  get  public  service  announcements  on  television,  write-ups 
in  newsoapers,  in  Democratic/Republican  newsletters,  flyers  to  students  and 
recipients,  posters,  and  word  of  mouth.  In  some  instances  more  than  one  forum 
was  set  aside  for  these  depending  on  content  and  interest.  An  example  of  this 
was  an  open  forum  held  in  a  public  hall  on  H.R.  1  which  stimulated  a  great  deal 
of  interest  from  the  general  public  and  the  recipients  which  required  many 
smaller  meetings,  especially  with  the  League  of  Women  Voters.  Members  of 
the  League  seemed  to  be  upset  by  our  stand  on  H.R.  1.  since  we  opposed  it.  so 
we  asked  to  be  put  on  the  agenda  of  their  smaller  grouo  meetings  where  our 
members  presented  arguments  in  opposition  to  H.R.  1.  We  also  were  asked  to 
sneak  before  many  classes  at  the  University  of  Oregon,  the  University  of  Oregon 
YWCA,  to  labor  unions,  social  concern  groups  of  churches,  a  community  college, 
granges,  honorary  sororities,  the  Lane  County  Council  of  Governments,  and  the 
Citv  Council.  The  positive  response  from  these  meetings,  came  in  the  form  of 
volunteers,  for  writing  letters  to  legislators,  for  carrying  petitions  opoosing 
H.R.  1.  raising  funds  for  lobbying  and  for  sending  recipients  to  testify  at 
hearing's  in  Washington.  D.C. 

Another  examvle. — Results  from  an  informational  open  forum  on  medical  cnre 
for  the  underprivileged  brought  about  a  much  better  understanding  between  the 
medical  profession  and  welfare  recipients,  an  understanding  of  doctor's  prob- 
lems by  recipients,  and  an  agreement  between  the  two  groups  to  work  on  better 
medical  services  for  welfare  recipients  in  the  county.  A  system  has  been  devised 
whereby  everyone  who  needs  a  doctor  may  call  the  county  medical  office  and  a 
doctor's  name  will  be  given  and  he  must  respond  to  the  request.  Sub-standard 
drug  list,  i.e.,  no  liquid  penicillin,  no  prophylactics,  no  fluorides,  were  brought 
to  the  attention  of  the  Association.  In  turn  these  grievances  were  taken  to  the 


2348 


Governor's  Advisory  Committee  on  Medical  Assistance  for  the  Underprivileged 
by  the  Association's  representative  and  as  a  result  these  items  have  been  added 
to  the  drug  list.  Also,  we  were  asked  to  elect  a  representative  to  attend  the 
meetings  of  the  charitable  division  of  the  Lane  County  Medical  Association.  In 
addition  the  Lane  County  Medical  Association  appointed  as  a  consultant  the  ADC 
representative  from  the  Governor's  Advisory  Committee  on  Medical  Assistance 
for  the  Underprivileged. 

TELEPHONE   AIDES  PROGRAM 

Agreement  to  purchase  services  from  Neighborhood  Aides 

The  Oregon  State  Public  Welfare  Commission  agrees  to  purchase,  through  the 
Lane  County  Public  Welfare  Commission,  specified  services  from  the  Lane 
County  ADC  Association,  to  be  provided  in  the  communities  of :  Leaberg,  Maple- 
ton,  Cottage  Grove,  Oakridge  and  Junction  City.  It  is  intended  that  current  mem- 
bers of  the  ADC  Association  who  reside  in  these  communities  will  be  available 
to  clients  living  in  these  communities,  to  provide  emergency  service  and  referral 
services.  Services  will  be  available  on  a  twenty-four  hour  basis  to  provide  advice 
and  help  to  those  recipients  who  are  faced  with  an  emergency  arising  from  a  fire, 
medical  needs,  housing  eviction,  etc.  The  aide  is  expected  to  notify  the  case- 
worker as  soon  as  the  county  office  is  open.  The  Neighborhood  Aide  will  also  be 
expected  to  advise  local  recipients  about  the  resources  of  the  Welfare  Depart- 
ment, educational  and  training  agencies,  availability  of  housing,  availability  of 
medical  care,  specialized  resources  for  children,  day  care  and  emergency  baby- 
sitters. The  Lane  County  Welfare  Commission  staff  will  prepare  lists  which 
identify  resources  and  how  to  contact  resources  when  the  caseworker  is  not 
available  or  when  the  county  staff  has  requested  referral  activity  from  the  aide. 
The  aide  is  expected  to  keep  a  record  of  these  activities. 

The  neighborhood  aide  will  also  be  expected  to  take  messages  for  the  casework- 
er as  requested  by  the  welfare  recipient,  by  other  community  members  or  by  the 
caseworker  to  be  relayed  to  a  specific  recipient.  It  is  intended  by  this  agreement, 
that  the  neighborhood  aide  be  available  to  provide  supplementary  service  in  be- 
half of  the  caseworker  and  to  act,  when  appropriate,  as  a  liaison  for  the  case- 
worker. The  neighborhood  aide  mil  not  act  for  the  caseworker,  unless  specifically 
requested  to  represent  that  caseworker. 

Training  of  the  neighborhood  aide  will  be  carried  out  by  designated  staff  of  the 
Lane  County  Welfare  Commission  with  consultantion  from  rs.  Loretta  Daniel. 
Training  wil  linclude  knowledge  about  community  resources,  the  Assistance  and 
Service  Programs  of  the  Lane  County  Welfare  Commission,  telephone  techniques, 
etc.  On-going  consultation  will  be  made  available  by  the  Lane  County  staff. 
The  resources  of  the  staff  of  the  State  Public  Welfare  Commission  will  be  made 
available.  Expenses  to  be  covered  by  this  agreement  include  installtaion  of  a 
telephone  when  necessary,  the  monthly  telephone  bill  and  a  thirty  dollar  fee  per 
month.  The  Lane  County  Public  Welfare  Commission  will  be  billed  by  the  Lane 
County  ADC  Association  who  will  handle  the  reimbursement  of  the  individual 
Neighborhood  Aide. 

The  period  of  time  to  be  covered  by  this  agreement  will  begin  and 

will  continue  in  effect  until  . 

SPEAKERS  BUREAU 

The  Speakers  Bureau  was  developed  because  of  our  lobbying  efforts  at  the 
State  Legislature.  Many  groups  in  the  community  were  interested  as  to  why  we 
went  to  the  legislature  and  the  results  of  our  efforts.  Because  the  burden  of  these 
speaking  requests  fell  on  two  people,  it  was  necessary  to  develop  more  versatility 
in  the  group. 

Buddy  System. — The  simplest  way  to  remedy  the  situation  was  to  divide  into 
two  groups,  with  each  experienced  speaker  taking  and  inexperienced  member  to 
a  speaking  engagement.  As  the  member  developed  experience,  she  in  turn  sub- 
divided and  took  a  new  member  along.  The  least  experienced  member  spoke  before 
small  groups  and  as  they  gained  experience,  moved  to  appearing  before  large 
groups ;  they  started  with  WIN  orientations,  university  classes,  business  soror- 
ities, churches,  civic  clubs,  and  to  Demo  forums,  conferences,  and  eventually  to 
participating  in  lobbying  efforts.  The  main  things  we  found  to  develop  confidence 
in  conjunction  with  speaking,  was  to  give  our  people  vast  amounts  of  information 
on  welfare  policy,  law  conditions,  housing,  food  stamps,  medical  aid,  and  our  own 


2349 


programs,  (statistics,  etc.;  and,  always,  to  work  in  pairs).  We  also  found  it 
essential  for  success,  to  be  frank,  open,  and  willing  to  discuss  personal  experiences 
in  public. 

The  Flash  Card  System. — People  who  were  very  timid  about  giving  speeches, 
used  note  cards  with  brief  reminders  concerning  essential  points.  From  these 
notes  and  from  the  information  they  accumulated,  it  was  easier  to  go  through 
lengthy  speeches. 

Results  derived  from  the  speakers  bureau  have  been :  contributions  for  trans- 
portation to  the  legislature,  for  our  scholarship  program,  donations  of  cloth- 
ing for  our  students  and  children,  and  a  better  understanding  by  the  commu- 
nity of  welfare  problems.  In  addition,  a  great  deal  of  respect  within  the  com- 
munity has  been  generated  by  the  self-help  concepts  of  our  organization.  As  an 
example  of  this  respect,  the  ADC  Association  and  its  self-help  concept  was  men- 
tioned in  the  application  of  the  City  of  Eugene  for  Ail-American  City,  an  award  it 
won  for  the  year  1970. 

INFORMATIONAL  BACKGROUND  A.D.C.  ASSOCIATION  OF  LANE  COUNTY  J  A.D.C.  SCHOLAR- 
SHIP PROGRAM 

I.  Historical  background 

The  Lane  County  A.D.C.  Scholarship  Program  was  conceived  and  designed 
around  a  kitchen  table  by  a  group  of  A.D.C.  recipients.  They  presented  it  to  the 
1967  Oregon  State  Legislature  and  lobbied  to  ensure  its  passage. 

The  program  was  originally  designed  to  receive  token  funding  from  the  state. 
"When  passage  of  the  bill  setting  it  up  was  in  danger  for  lack  of  funding,  the 
A.D.C.  group  agreed  instead,  to  specify  that  needed  funds  would  be  raised  by  the 
local  A.D.C.  association. 

Because  originally  no  state  money  was  appropriated  for  staffing,  the  program 
was  poorly  administered  until  1970  when  some  staff  was  added  at  the  local  level 
to  try  to  provide  services  for  the  large  growth  in  numbers  of  students. 

The  A.D.C.  Scholarship  covers  costs  for  tuition  and  books  only.  The  Lane 
County  Welfare  Commission  has  appointed  an  A.D.C.  Scholarship  Committee  to 
approve  scholarship  applicants  and  administer  funds.  Membership  on  the  Com- 
mittee includes  welfare  recipients  and  representatives  from  the  ministerial  as- 
sociation, business  community,  labor  organizations,  and  educational  institutions. 

Most  students  attend  Lane  Community  College  but  approximately  6  per  cent 
attend  the  University  of  Oregon. 

II.  Philosophy 

'The  program  operates  on  a  philosophy  that  all  people  should  have  an  oppor- 
tunity for  education  regardless  of  financial  status,  test  scores,  professional  eval- 
uations, previous  failures  and  past  problems. 

III.  Case  studies 

These  case  studies  of  typical  A.D.C.  Scholarship  students  provide  examples  of 
some  of  the  program  successes  : 

Mr.  M. — Age  25-30 ;  wife  and  2  children  had  nervous  breakdown — not  eli- 
gible for  other  programs  one  year  training  in  Radio  Broadcasting  employed 
1970  in  California  as  a  radio  broadcaster. 

Mr.  C. — Age  33 ;  wife  and  2  children  severely  handicapped  by  polio — re- 
fused training  by  all  other  agencies  and  judged  to  be  physically  unemploy- 
able. Wife  hospitalized  for  emotional  problems.  Two-year  program  in  Tech- 
nical Drafting.  Employed  1971  as  a  draftsman  for  local  construction  firm. 

Mrs.  G. — Age  36 ;  three  children ;  divorced  one-year  Secretarial/Social 
Science  course  on  welfare  on  Thursday,  enrolled  in  school  the  following 
Monday.  Employed  1970  by  City  of  Eugene  as  a  community  development 
worker. 

Mrs.  M. — Age  29 ;  children ;  divorced  two-year  Accounting  Clerical  course 
honor  student — member  Phi  Theta  Kappa  honor  society  employed  1971 — 
ten  days  after  graduation  by  local  restaurant. 

IV.  Growth  and  scope  of  program 

During  the  1967-68  school  year  19  people  attended  school  on  an  A.D.C.  Scholar- 
ship. As  knowledge  of  the  program  spread,  the  number  of  students  increased  so 
that  during  1971-72  between  200  and  300  people  are  expected  to  take  advantage 
of  training  opportunities. 


72-573— 72— pt.  5  9 


2350 


The  A.D.C.  student  population  is  comprised  of  divorced  or  widowed  mothers 
with  children,  children  in  A.D.C.  homes,  unwed  mothers,  school  dropouts,  men 
refused  by  other  programs,  foster  children  and  physically  or  mentally  handi- 
capped people. 

Seventeen  per  cent  of  the  students  are  children  (under  21)  from  A.D.C.  homes 
and  the  rest  are  adults  ranging  in  age  from  the  early  twenties  to  the  forties  and 
fifties. 

At  present  (1971-72)  we  have  over  200  students  at  Lane  Community  College 
and  20  at  the  University  of  Oregon,  our  students  continue  to  succeed.  This  is 
evidenced  by  their  grades  (2.5  average)  and  by  their  increasing  involvement  in 
the  community  at  many  levels. 

Y.  Future  of  the  program 

The  explosive  growth  in  the  numbers  of  A.D.C.  scholarship  students  since  1967 
has  caused  a  funding  and  service  crisis.  There  has  not  been  adequate  counsel- 
ing, follow-up,  or  welfare  servicing.  Even  in  light  of  financial  difficulties,  A.D.C. 
Association  members  are  continuing  to  raise  funds  and  adjust  the  program  to 
meet  current  needs.  However,  this  adjustment  does  not  include  turning  away 
eligible  applicants  for  lack  of  funds.  Our  policy  continues  to  be  one  of  enrolling 
the  student  first  and  raising  the  money  afterward.  This  is  consistent  with  the 
distinguishing  characteristic  of  the  A.D.C.  program  which  is  its  philosophy 
of  concern  for  the  worth  and  success  of  individuals.  This  differs  greatly  from 
the  philosophies  of  other  programs  which,  when  implemented,  appear  to  be  more 
concerned  about  statistical  information  and  showing  results,  often  to  the  neglect 
of  the  individual's  real  interest 

As  a  part  of  this  concern  for  our  students,  we  are  constantly  on  the  alert  for 
possible  violations  of  Federal  and  State  laws  and  regulations.  Sometimes  our 
information  comes  to  us  through  our  friends,  thus,  illustrating  the  importance 
of  establishing  firm  contacts  within,  and  beyond,  the  community. 

In  one  case,  we  received  information  from  an  educational  Financial  Aids 
officer  in  California  through  a  local  friend,  who  told  us  that  the  Welfare  Depart- 
ment was  illegally  deducting  school  expenses  (NDEA  loans,  grants  and  scholar- 
ships) from  regular  assistance  checks.  We  wrote  a  letter  to  the  regional  HEW 
office  in  Seattle  to  check  this  information,  and  their  replies  showed  us  that  the 
Department  was  clearly  in  error. 

Following  are  copies  of  the  letters  we  received.  We  keep  these  in  our  files,  along 
with  all  other  correspondence  to  use  at  any  time  that  there  is  a  dispute  over 
the  validity  of  our  statement  or  our  actions.  Then,  we  can  produce  Xerox  copies 
of  whatever  we  need,  while  retaining  the  originals  for  future  use. 

On  issues  such  as  this,  where  large  groups  of  people  are  involved  and  legal 
rights  are  threatened,  we  make  our  information  available  to  everyone  concerned 
as  quickly  as  possible. 

Knowledge  is  protection  against  unnecessary  distress.  It  is  our  obligation  to 
provide  an  education  regarding  the  students  rights  and  privileges  under  the 
welfare  system  as  well  as  encouraging  them  in  an  education  toward  self-suffi- 
ciency. 

CONFIDENCE  CLINIC 

One  of  the  most  exciting  programs  we're  beginning  to  establish  in  Oregon, 
is  the  Confidence  Clinic  Program,  designed  to  increase  the  level  of  morale  and 
feeling  of  self -worth  among  recipients  so  that  they  will  be  better  able  to  take 
direction  of  their  own  lives.  Although  this  intent  of  the  contract  itself  is  to 
prepare  persons  for  eventual  training  and  employment,  the  philosophy  inherent 
in  the  Association  is  to  make  recipients  aware  of  their  full  potential  as  human 
beings  and  to  give  them  enough  confidence  to  exercise  that  potential  in  whatever 
manner  best  fits  their  individual  desires. 

Programs  have  already  been  established  in  Medford,  Klamath  Falls,  and 
Roseburg.  Lane  County  is  in  the  process  of  establishing  one  in  Eugene.  These 
programs  vary  somewhat  in  format,  to  allow  for  differences  in  regional  re- 
sources and  emphasis,  but  all  the  programs  share  the  common  goal  of  personal 
self-worth. 

The  Confidence  Clinic  has  tremendous  potential  for  expanding  our  thinking  on 
welfare  reform  and  rehabilitation,  by  creating  a  program  that  is  multi-focus  in 
nature,  and  that  draws  from  the  recipient  population  allowing  recipients  to  be- 
come their  own  change  agents,  we  are  perhaps  making  an  even  more  dynamic 
statement  about  the  nature  of  professionalism  and  human  service  in  this  country. 


2351 


We  are  saying,  .that  the  client  is  his  own  best  resource  and  that  paraprofessionals, 
as  trained  through  active  participation  in  our  program,  will  be  able  to  perform 
quality  services  to  the  community  in  areas  that  were  formerly  thought  to  be  the 
exclusive  province  of  the  college  educated. 

With  this  program,  we  are  possibly  taking  a  critical  step  in  answering  the 
questions  "How  does  a  person  get  out  of  the  welfare  cycle?",  and  more  impor- 
tant, "What  can  be  done  about  the  welfare  problem?" 

Our  contract  as  follows  : 

AGREEMENT  TO  PURCHASE  SERVICES 

Whereas,  Lane  County  ADO  Association,  Inc.,  hereinafter  referred  to  as  Asso- 
ciation, is  a  nonprofit  corporation  of  the  State  of  Oregon,  and 

Whereas,  the  Children's  Service  Division,  hereinafter  referred  to  as  the  Divi- 
sion, desires  to  obtain  services  through  a  purchase  of  services  agreement,  from 
available  funds, 

Now,  therefore,  Association  and  Division  agree  as  follows  : 
Association  Agrees  to: 

1.  Furnish  the  following  services  through  the  Confidence  Clinic,  for  the  pur- 
pose of  providing  pre-employment  or  pre-training  services  which  will  help  the 
individual  become  better  prepared  for  employment  or  training. 

a.  Basic  education 

b.  GED  training 

c.  Grooming 

d.  Job  search  techniques 

e.  Individual  and  group  counseling 

f .  Referrals  to  Divorce  Clinic 

g.  Office  training 

h.  Speech 

i.  Locate  housing  and  child  care  in  emergencies 

2.  Through  the  combined  efforts  of  members  of  the  Association  to  provide 
mutual  encouragement  and  support  to  each  individual  referred  to  them  for  the 
above  services  (see  No.  1). 

3.  Confer  and  help  develop  an  individual  plan  for  each  individual  referred  by 
the  staff  of  the  Division. 

4.  Provide  progress  reports  on  each  individual  and  other  reports  as  may  be 
required  by  ithe  Division. 

5.  Provide  reports  which  will  demonstrate  and  document  individual  change  in 
response  to  services  received  from  the  Association. 

6.  Provide  for  a  periodic  internal  audit  following  established  auditing  pro- 
cedures to  insure  accountability  of  expenditures  and  costs. 

7.  Abide  by  the  applicable  State  and  Federal  statutes,  the  applicable  rules 
and  regulations  of  the  Division,  and  the  applicable  rules  and  regulations  of  the 
U.S.  Department  of  Health,  Education,  and  Welfare. 

Division  agrees,  through  the  Lane  County  Department,  to: 

1.  Screen  and  refer  AFDC  recipients  who  appear  to  be  in  need  of  confidence 
building  as  part  of  their  general  rehabilitation,  to  the  Association  for  the  above 
services  ( see  No.  1  a.  through  i. ) . 

2.  Encourage  the  participation  of  the  individuals  who  have  been  referred,  in 
the  services  of  the  Association. 

3.  Provide  information  to  the  Association  which  will  help  the  Association  in 
providing  services  to  individuals. 

4.  Arrange  and  provide  child  care  costs  and  training  allowances  in  accordance 
with  current  Division  policies. 

5.  Provide  consultation  and  technical  assistance  to  the  Association  through 
the  staff  of  the  Division  and  the  Lane  County  Welfare  Office. 

6.  Payment  for  services  provided  for  individuals  referred  to  the  Association 
as  follows: 

a.  Monthly  payment  of  services  for  each  individual — $110.00. 

b.  Cost  of  service  is  based  upon  an  average  of  20  referrals  each  month  for 
a  period  of  service  up  to  90  days  for  each  individual. 

The  parties  mutually  agree  that: 

1.  Association  shall  act  as  an  independent  agency  and  Division  shall  be  in  no 
way  associated  with  or  otherwise  connected  with  the  actual  performance  of  this 


2352 


agreement  on  the  part  of  the  Association,  nor  shall  this  agreement  in  any  way 
render  the  Division  or  its  staff  responsible  or  liable  in  any  way  for  any  act  or 
omission  of  Association  or  its  staff  in  such  performance. 

2.  This  agreement,  each  and  every  part,  rights  and  duties,  is  not  assignable. 

3.  Either  party  hereto  may  terminate  this  agreement  by  at  least  90  days' 
written  notice  or  it  may  be  terminated  by  mutual  consent,  but,  if  not  so  termi- 
nated, it  shall  be  in  effect  from  day  of  ,  197  ,  through  the 

 day  of  ,  197  ,  and  shall  be  automatically  renewed  each  year 

on  a  year-to-year  basis  unless  days'  written  notice  is  given  to  the  other 

party  expressing  an  intent  that  the  contract  shall  not  be  automatically  renewed. 

Senator  Taoiadge.  The  next  witness  is  Mr.  Michael  B.  Trister, 
Washington  Research  Project  Action  Council,  accompanied  by  Nancy 
Duff  Levy. 

STATEMENT  OF  MICHAEL  B.  TEISTER,  WASHINGTON  RESEARCH 
PROJECT  ACTION  COUNCIL;  ACCOMPANIED  BY  NANCY  DUEF 
LEVY 

Mr.  Trister.  Mr.  Chairman,  my  name  is  Michael  B.  Trister,  and 
I  am  testifying  on  behalf  of  the  Washington  Research  Project  Action 
Council.  With  me  is  Nancy  Duff  Levy,  attorney,  who  has  represented 
numerous  welfare  recipients  and  welfare  client  organizations  through- 
out the  country.  The  research  project  action  council  has  participated 
with  many  other  groups,  some  of  whom  you  have  heard  from  already, 
in  developing  and  supporting  the  Harris  welfare  proposal,  S.  2747. 
We  believe  the  Harris  proposal  is  a  genuine  step  in  the  direction  of 
welfare  reform,  that  it  offers  a  reasonable  and  a  sensible  structure 
for  welfare  reform,  and  that  it  deals  with  the  essential  issues  of  wel- 
fare reform  f orthrightly  and  in  a  manner  which  I  think  deserves  the 
close  attention  of  this  committee. 

As  attorneys  we  would  like  to  address  ourselves  today  to  some  of 
the  procedural  problems,  the  problems  which  relate  to  the  treatment 
that  welfare  recipients  receive  or  would  receive  under  H.R.  1,  and 
to  refer  the  committee  to  the  manner  in  which  the  Harris  bill  attempts 
to  deal  with  some  of  these  aspects  of  H.R.  1. 

The  first  point  we  would  call  the  committee's  attention  to  is  the 
requirement  in  H.R.  1  that  all  recipients  will  be  terminated  auto- 
matically at  the  end  of  2  years  on  the  welfare  rolls  and  will  then  have 
to  go  through  all  of  the  procedures  and  all  of  the  paperwork  to 
reapply. 

So  far  as  we  are  concerned  this  is  just  one  of  the  many  provisions 
in  H.R.  1  which  is  designed  to  harass  welfare  recipients,  to  subject 
them  to  numerous  requirements  which  have  no  purpose  whatsoever. 
Since  the  welfare  recipient  under  H.R.  1  would  be  eligible  to  reapply 
it  certainly  can't  be  aimed  at  getting  them  off  the  rolls  for  any  legiti- 
mate reason.  The  only  reason  for  making  recipients  reapply,  it  seems, 
is  in  the  hopes  that  some  of  them  will  get  lost  in  the  shuffle  and  some 
of  them  will  not  know  that  they  can  reapply  and  some  of  them  will  be 
unable  to  go  through  the  paperwork  to  deal  with  the  bureaucracy  and 
will  be  lost,  as  we  say  hi  the  shuffle. 

There  is  no  other  reason  to  create  such  a  bureaucracy  and  to  require 
people  to  just  go  through  a  needless  procedure  to  reapply  for  welfare. 

Senator  Hansen.  May  I  interrupt,  that  is  your  conclusion,  I  guess, 
isn't  it? 


2353 


Mr.  Trister.  Quite  clearly.  We  would  refer  you  to  the  committee 
report  from  the  House,  which  simply  says  that  "We  are  doing  this  as 
an  example  of  our  desire  to  get  people  off  the  welfare  rolls  as  a  sym- 
bolic gesture,"  and  I  think  the  reference  is  in  the  committee  report, 
and  we  appreciate  the  need  to  get  people  off  the  welfare  rolls,  and  we^ 
are  not  encouraging  people  to  stay  on  the  welfare  rolls  for  2  years. 
But  we  think  it  is  a  symbolic  gesture  that  simply  creates  more  paper- 
work and  serves  no  purpose  whatsoever. 

A  second  aspect  which  we  would  like  to  mention  are  the  penalties 
and  reporting  requirements  which  the  bill,  which  H.R.  1,  sets  up. 

Under  the  bill,  under  H.R.  1,  a  recipient  must  report  at  the  end  of 
each  quarter  his  or  her  income  for  that  quarter.  They  must  do  this 
whether  or  not  there  has  been  any  change  in  his  income  or  whether 
that  would  have  any  effect  on  his  or  her  grant. 

Now  existing  law  requires  recipients  to  report  changes  when  they 
would  have  an  effect  on  the  grant.  We  don't  disagree  with  that  pro- 
vision whatsoever.  What  we  disagree  with  is  requiring  recipients  to 
file  again  quarterly  reports  and  penalizing  them  in  dollar  amounts 
and  finally  terminating  their  grants  if  they  do  not  file  those  reports 
when  filing  a  report  can  give  the  welfare  agency  no  new  information 
at  all,  and  may  well  indicate  that  the  recipient  was  getting  less  money 
than  they  were  entitled  to.  Even  in  that  situation  if  a  recipient  failed 
to  provide  the  report,  that  recipient  would  be  penalized  and  we  see  no 
reason  whatsoever  for  that  kind  of  reporting  requirement  again. 

The  third  procedural  aspect  of  H.R.  1  which  is  not  found  in  the 
language  of  the  bill  but  is  found  in  the  House  committee  report  refers 
to  the  simplified  declaration  system  which,  as  the  committee  is  aware, 
has  been  tested  in  virtually  all  of  the  States  by  now.  Under  this  proce- 
dure welfare  recipients  go  in  and  fill  out  a  fairly  detailed  report  con- 
cerning their  financial  situation,  and  on  the  basis  of  that  report  their 
eligibility  is  determined.  If  they  are  eligible  they  are  immediately 
placed  on  the  welfare  rolls. 

The  experience  under  this  system  is  that  it  saves  an  enormous  amount 
of  time  on  behalf  of  welfare  officials,  that  it  does  not  lead  to  an  in- 
crease in  fraud,  and  that  there  is  a  tremendous  saving  in  terms  of  time 
and  money  on  behalf  of  the  welfare  department. 

Unfortunately,  the  House  committee  report  clearly  states  that  under 
H.R.  1  that  procedure  could  no  longer  be  used  even  on  a  test  basis,  and 
we  see  no  reason  again  to  implement  procedures,  in  this  case  which 
would  require  investigations  into  every  recipient  before  they  are  eligi- 
ble, before  they  are  determined  to  be  eligible,  instead  of  adopting  a 
procedure  which  has  been  tested  and  proved  to  work  with  great 
success. 

"We  would  also  like  to  call  the  committee's  attention  to  several  other 
provisions  in  H.R.  1  which  we  believe  are  arbitrary  although  they  do 
not  involve  paperwork  and  that  sort  of  problem.  For  example,  under 
the  bill  if  a  recipient  fails  to  apply  for  other  benefits  from  other  gov- 
ernmental programs  within  30  days,  the  entire  family  is  cut  off.  Now 
we  understand  the  desire  of  the  House  committee  to  encourage  recip- 
ients to  explore  other  resources  for  their  income  in  widow's  benefits, 
whether  they  are  veterans  benefits,  or  social  security  benefits  are  avail- 
able. Quite  clearly  the  welfare  recipients  should  apply  for  those,  but 
where  they  do  not  we  can  see  no  reason  for  penalizing  the  entire  family 


2354 


particularly  'when  it  is  not  in  regard  to  the  amount  of  any  benefits  they 
may  have  received. 

We  think  it  is  a  much  fairer  procedure  to  simply  say  if  benefits  are 
available,  and  the  recipient  does  not  apply  for  them  why  not  just  re- 
duce their  grant  by  the  amount  of  those  benefits,  but  certainly  don't 
terminate  the  entire  family  without  any  regard  to  the  amount  of  those 
benefits. 

Also  we  would  like  to  mention  the  residence  requirements.  Now  as 
this  committee  is  well  aware,  I  am  sure,  the  Supreme  Court  on  five 
separate  occasions  beginning  in  1969  has  struck  down  durational 
residency  requirements  for  welfare.  Nevertheless,  H.R.  1  allows  the 
States  to  impose  a  residency  requirement  with  regard  to  the  supple- 
mental benefits  under  the  H.R.  1  program.  We  are  deeply  concerned 
about  Congress  essentially  just  ignoring  the  Constitution  and  the 
Courts'  pronouncements  on  this  kind  of  matter  where  it  is  spoken  so 
clearly  and  has  shown  absolutely  no  indication  that  it  will  be  changed. 
The  most  recent  decisions  are  only  2  weeks  ago  involving  the  States 
of  New  York  and  Connecticut. 

There  are  other  procedural  rights  in  H.R.  1  that  we  think  are  being 
eroded  tremendously  and  we  would  like  to  refer  to  those.  The  right 
to  administrative  hearing  according  to  the  Supreme  Court  must  come 
before  the  benefits  are  terminated.  This  is  a  right  which  other  recipients 
of  governmnt  benefits  have  and  the  Supreme  Court  has  said  that 
the  Constitution  requires  it. 

Nevertheless,  the  committee  report  from  the  House  would  indicate 
that  if  a  recipient  does  attempt  to  have  such  a  prior  hearing  and  ulti- 
mately loses  the  hearing  they  will  be  penalized  for  the  time  they  were 
on  welfare,  while  they  were  waiting  for  the  hearing.  We  think  this 
is  an  effort  to  deter  recipients  from  seeking  hearings  which  they  are 
entitled  to,  and  essentially  to  erode  a  constitutional  right  which  the 
Supreme  Court  has  said  applies  in  these  cases. 

Similarly,  the  right  to  judicial  review  of  administrative  hearings 
under  the  welfare  reform  bill,  H.R.  1,  is  significantly  limited  insofar 
as  there  is  no  review  of  questions  of  fact.  We  can  see  no  reason  for 
singling  out  welfare  recipients  administrative  hearings  from  social 
security  hearings  and  from  all  other  administrative  hearings  in  this 
system  and  simply  saying  for  welfare  recipients  they  get  less  of  a  right 
to  judicial  review. 

Senator  Talmadge.  Mr.  Trister,  I  am  sorry  your  time  has  expired. 
Your  full  statement  will  be  inserted  in  the  record.  Are  there  any 
questions  ? 

Senator  Fannin.  Mr.  Chairman,  I  would  just  like  to  know,  are  you 
an  officer  of  the  Washington  Research  Project  Action  Council,  officer 
or  official  ? 

Mr.  Trister.  No,  Senator,  I  am  an  attorney  and  appearing  on  be- 
half of  the  Action  Council.  I  work  for  the  Research  Project  

Senator  Fannin.  You  work  for  them.  Do  they  receive  Federal 
funds? 

Mr.  Trister.  No,  Senator. 

Senator  Fannin.  What  is  the  source  of  the  funds? 
Mr.  Trister.  Private  funds. 
Senator  Fannin.  Sir  ? 


2355 


Mr.  Trister.  Private  funds. 

Senator  Fannin.  Private  funds,  foundations. 

Mr.  Trister.  Not  for  the  Action  Council,  no. 

Senator  Fannin.  Sir  ? 

Mr.  Trister.  Not  for  the  Action  Council. 

Senator  Fannin.  Not  for  the  Action  Council.  Are  there  foundation 
funds  involved  then  in  the  money  that  is  utilized  to  for  instance,  pay 
you  and  others  who  are  working  for  the  Washington  Research  Project 
Action  Council? 

Mr.  Trister.  I  do  not  work  for  the  Action  Council,  I  work  for  the 
Washington  Research  Project  on  Non-Legislative  and  Non-Political 
Matters,  entirely  as  an  attorney  and  that  is  paid. 

Senator  Fannin.  I  am  just  trying  to  find  out  what  is  the  Washing- 
ton Research  Action  Council,  how  many  members  do  they  have,  what 
does  it  consist  of? 

Mr.  Trister.  It  is  not  a  membership  organization  itself,  Senator. 

Senator  Fannin.  What  is  it  ?  If  we  are  having  testimony  from  you 
as  attorney  for  them,  I  would  like  to  know  who  you  represent. 

Mr.  Trister.  We  are  an  organization,  a  public  interest  organization, 
that  has  worked  with  welfare  recipients  and  welfare  recipient  groups 
throughout  the  country  in  legal  matters  and  nonlegal  matters.  We  work 
on  other  issues  relating  to  poverty  and  civil  rights.  We  are  not  a  mem- 
bership organization.  We  attempt  ot  represent  the  issues  of  the  poor 
as  they  present  them  to  us  here  in  Washington. 

Senator  Fannin.  Well,  I  still  don't  know  how  you  are  funded  other 
than  you  say  you  receive  contributions,  is  that  your  statement  ? 

Mr.  Trister.  Yes,  sir. 

Senator  Fannin.  And  that  is  the  sole  source  of  the  funding  of  the 
Washington  Research  Project  Action  Council. 
Mr.  Trister.  Yes,  sir. 
Senator  Fannin.  Thank  you. 
Senator  Talmadge.  Thank  you  very  much. 

Senator  Harris.  Mr.  Chairman,  I  have  a  question  or  two.  Nancy,  did 
you  have  anything  you  wanted  to  add  ? 

Mrs.  Levy.  Well,  no.  We  prepared  the  testimony  together  and  we 
tried  to  emphasize  what  we  thought  were  the  rights  provisions,  espe- 
cially as  attorneys  which  we  were  particularly  concerned  about. 

Senator  Harris.  It  seems  to  me  that  we  should  want  particularly  to 
encourage  the  fair  treatment  under  law  for  poor  people,  and  that  is 
what  you  are  talking  about  insofar  as  the  deficiencies  of  H.R.  1  are 
concerned,  isn't  that  so  ? 

Mrs.  Levy.  Yes. 

Senator  Harris.  To  try  to  use  the  law.  If  society  thinks  there  are 
some  good  reasons  why  it  ought  to  tax  itself  with  a  welfare  system 
either  because  we  want  to  give  charity  to  others  and  make  ourselves 
feel  better  or  because  we  think  there  is  some  self-interest  involved  or 
for  other  reasons,  one  would  think  we  wouldn't  try  to  demean  people 
by  making  them  have  to  humiliate  themselves  to  get  what  we  set  up. 
That  is  why  I  think  what  you  said  is  terribly  important,  that  peo- 
ple ought  to  be  encouraged  to  understand  what  their  rights  are  and 
there  ought  to  be  clear  provisions  to  litigate  their  rights.  That  is  what 
our  society  is  about.  So  I  appreciate  very  much  what  you  have  said.  I 
think  that  it  is  a  major  deficiency  in  H.R.  1,  that  we  still  want  to 


2356 


inflict  charity  on  people  and  we  want  to  have  them  take  their  caps 
off  and  shuffle  a  little  bit  to  get  it,  I  think  it  would  be  a  lot  better  to 
stand  up  and  be  Americans.  I  think  that  is  what  you  are  talking  about 
and  so  I  appreciate  what  you  are  doing.  I  also  appreciate  what  the 
Washington  Research  Action  Council  is  doing. 

May  I  just  also  say  that  I  think  it  is  really  awful  what  the  Con- 
gress did  in  regard  to  the  tax-exempt  laws.  I  opposed  that  at  the  time, 
and  I  think  it  is  a  shame  that  a  lot  of  poor  people  and  minorities  and 
others  now  really  have  an  awful  time  competing  with  corporations 
that  can  lobby  and  advertise  on  public  issues  as  a  business  deduction, 
whereas  others  have  a  much  more  difficult  time  now  that  the  new  law 
has  been  passed.  I  am  glad  there  are  people  like  yourself  and  I  think 
you  have  made  some  very  important  testimony  here. 

Senator  Talaeadge.  Thank  you  very  much. 

(The  prepared  statement  of  Mr.  Trister  follows :) 

Peepaed  Statement  of  Michael  B.  Teistee  ox  Behalf  of  Washixgtox 
Reseaech  Pboject  Acttox  Cotjxcil 

Mr.  Chairman,  my  name  is  Michael  B.  Trister.  and  I  am  testifying  on  behalf 
of  the  Washington  Research  Project  Action  Council,  which  has  participated  with 
numerous  other  organizations  in  developing  and  supporting  S.  2747.  the  welfare 
reform  bill  introduced  by  Senator  Harris.  We  believe  that  S.  2747  offers  a  genu- 
ine step  in  the  direction  of  a  guaranteed  adequate  income  for  all  Americans, 
financed  and  administered  by  the  federal  government.  It  eliminates  the  arbitrary 
categories  and  distinctions  which  characterize  our  present  welfare  system,  and 
it  provides  humane  and  decent  incentives  to  encourage  recipients  to  work.  Fin- 
ally, the  Harris  proposal  provides  a  sound  and  fair  structure  for  the  adminis- 
tration of  the  welfare  program.  It  is  on  this  aspect  of  the  bill  that  we  would  like 
to  focus  our  attention  today. 

As  attorneys  for  welfare  recipients  and  recipient  organizations  throughout  the 
country,  we  are  especially  concerned  with  the  treatment  received  by  recipients 
within  the  welfare  system  and  we  are  aware  of  the  role  of  arbitrary  and  harsh 
rules  and  procedures  in  defeating  the  beneficial  purooses  of  the  welfare  program 
itself. 

Title  IV  of  H.R.  1.  as  passed  by  the  House,  is  filled  with  numerous  procedural 
obstacles,  whose  purpose  can  only  be  to  harass  welfare  recipients  and  to  insure 
that  many  genuinely  needy  persons  are  lost  in  a  maze  of  needless  bureaucracy 
and  paper  work.  Recipients,  for  example,  are  automatically  terminated  and  must 
reapply  every  two  years,  whether  or  not  their  conditions  have  changed  in  the 
slightest.  The  Report  of  the  House  Committee  on  Ways  and  Means  states  that 
this  provision  demonstrates  Congress'  commitment  to  removing  recipients  from 
the  rolls  in  as  short  a  period  as  possible.  HEW  has  argued,  on  the  other  hand, 
that  it  is  necessary  to  obtain  current  data  concerning  the  causes  of  poverty.  It  is 
not  clear,  however,  how  either  of  these  purposes  would  be  served,  since  recipients 
can  reapply  immediately,  and  the  same  data  can  be  obtained  without  requiring 
a  new  application.  Rather,  the  requirement  must  be  designed  with  the  hope  that 
needy  individuals  will  not  reapply  after  they  are  terminated.  If  many  do.  of 
course,  an  enormous  amount  of  needless  administration  will  have  been  created. 
The  provisions  of  the  Harris  bill,  which  eliminate  this  requirement,  should  be 
adopted. 

An  equally  unnecessary  procedure  is  outlined  in  the  statement  of  the  House 
Committee  report  that  the  simplified  declaration  system  for  determining  eligi- 
bility, which  is  now  being  tested  in  most  of  the  states,  can  no  longer  be  used. 
Under  this  procedure,  welfare  recipients,  like  middleclass  taxpayers,  social  se- 
curity recipients,  and  many  other  beneficiaries  of  government  programs,  become 
eligible  immediately  after  filling  out  a  detailed  statement  of  their  financial  con- 
dition. There  is  no  investigation  into  every  recipient's  private  life  and  no 
long  delay  before  she  receives  assistance.  All  available  studies  of  the  experiment 
have  found  that  cases  of  fraud  have  not  increased  and  that  there  are  substantial 
savings  in  staff  time  and  other  administrative  expenses.  Moreover,  the  simplified 
eligibility  procedure  frees  welfare  caseworkers  for  the  more  important  social 


2357 


work  tasks  for  which  they  are  trained.  The  Harris  bill  would  apply  the  declara- 
tion system  to  all  recipients. 

In  spite  of  the  burdensome  eligibility  process  and  automatic  termination  after 
two  years,  H.R.  1  also  requires  a  family  to  report  its  earnings  and  expenses 
within  thirty  days  after  the  end  of  each  quarter  that  it  receives  assistance.  A 
family  which  fails  to  make  such  a  report  will  be  terminated  until  the  report  is 
received,  and,  if  the  failure  was  willful,  it  will  be  liable  for  a  penalty  of  $25  for 
the  first  failure,  $50  for  the  second,  and  $100  thereafter.  The  report  must  be  filed, 
and  the  penalties  attached,  even  where  there  has  been  no  change  in  the  family's 
status  which  would  affect  its  assistance  payment  (or  where  the  unreported  change 
was  in  its  own  favor).  (The  Ribicoff  bill  retains  this  requirement,  but  allows 
the  Secretary  of  Health,  Education  and  Welfare  to  fix  the  penalties.)  Under 
current  law,  recipients  are  required  to  report  all  changes  in  their  status  im- 
mediately after  they  occur,  but  they  do  not  have  to  go  through  the  burdensome 
procedures,  subject  to  stiff  and  unfair  penalties,  of  filing  otherwise  useless 
reports.  Moreover,  under  H.R.  1  it  is  possible  that  many  grants  will  be  termi- 
nated because  the  reports  are  lost  in  the  mail  or  are  not  properly  recorded  by 
welfare  officials. 

The  administrative  scheme  proposed  in  H.R.  1  is  more  than  burdensome  and 
wasteful.  In  several  important  respects,  it  subjects  recipients  to  arbitrary  and 
harsh  conditions  which  have  no  place  in  a  system  based  on  due  process  of  law. 
For  example,  the  payment  to  which  a  family  is  entitled  will  be  based  on  its 
estimated  earnings  for  the  current  calendar  quarter  (discounted  by  its  excess 
earnings  during  the  previous  three  quarters.)  If,  for  any  reason,  the  estimated 
earnings  fall  short  of  actual  earnings,  then  the  bill  provides  that  the  family's  next 
payment  will  be  adjusted  downward  to  make  up  for  the  previous  overpayment. 

This  adjustment  apparently  will  be  made  regardless  of  whether  the  family 
or  any  individual  member  was  responsible  for  the  inaccurate  estimate  and 
regardless  of  whether  the  reduced  grant  will  meet  the  family's  current  need. 
By  contrast,  under  AFDC  law,  overpayments  may  be  taken  from  current  grants 
only  if  the  family  has  the  excess  funds  available  to  meet  current  needs,  unless 
the  overpayment  resulted  from  a  wrongful  withholding  of  information.  It  is,  of 
course,  arbitrary  and  unduly  harsh  to  punish  a  family  because  of  administrative 
errors  or  changes  in  their  income  over  which  they  have  no  control.  S.  2747 
allows  recovery  of  overpayments  only  when  the  recipient  is  at  fault  and  the 
funds  are  still  available. 

If  a  recipient  fails  within  thirty  days  to  apply  for  benefits  available  from 
other  sources,  his  or  her  entire  family  is  made  ineligible,  regardless  of  the 
amount  of  benefits  which  they  might  have  received.  We  have  no  difficulty  with 
requiring  recipients  to  exhaust  alternative  resources,  but  we  cannot  under- 
stand why  the  entire  family  must  suffer  or  why  their  grant  is  not  simply  re- 
duced by  the  amount  of  outside  benefits  which  are  available  to  them. 

H.R.  1  also  allows  the  states  to  impose  a  one-year  durational  residence  require- 
ment as  a  condition  for  receiving  supplemental  benefits.  As  this  Committee  is 
certainly  aware,  the  Supreme  Court  has  struck  down  as  unconstitutional  iden- 
tical requirements  for  receiving  welfare  benefits  on  at  least  five  different  oc- 
casions since  1969,  including  two  cases  decided  only  two  weeks  ago  by  a  unani- 
mous Court.  We  hope  this  Committee  will  not  approve  such  open  and  flagrant 
defiance  of  the  Constitution  and  the  Court. 

Fundamental  procedural  rights  are  also  severely  curtailed  under  H.R.  1  in 
1970,  the  United  States  Supreme  Court  ruled  that  welfare  recipients  are  entitled 
to  a  hearing  before  their  public  assistance  grants  are  terminated ;  and  regula- 
tions issued  by  HEW  have  extended  this  right  to  include  reductions  in  benefit 
levels  under  certain  circumstances.  The  House  Committee  report  attempts  to 
deter  recipients  from  pursuing  these  rights  by  providing  that  recipients  who  ask 
for  a  hearing  before  termination  or  reduction  will  be  liable  for  any  benefits  re- 
ceived during  the  hearing  process  if  their  appeal  is  ultimately  unsuccessful.  Also, 
judicial  review  of  questions  of  fact  decided  in  such  hearings  is  expressly  denied 
by  H.R.  1.  Numerous  other  beneficiaries  of  government  programs,  including 
holders  of  government  contracts  and  school  systems  receivnig  federal  financial 
assistance,  are  fully  protected  in  both  of  these  areas.  'There  is  no  legitimate  rea- 
son for  ignoring  these  rights  where  welfare  recipients  are  concerned. 

Finally,  H.R.  1  would  allow  the  Department  of  Health,  Education  and  Welfare 
to  continue  to  operate  the  welfare  program  beyond  the  scrutiny  of  Congress  and 
the  public  in  general.  By  its  passage  of  the  Administrative  Procedure  Act,  Con- 


2358 


gress  lias  recognized  the  benefits  obtained  from  requiring  administrative  agencies 
to  follow  public  rulemaking  procedures  before  making  any  fundamental  policy 
or  regulatory  decisions.  We  therefore  urge  the  adoption  of  the  provision  in  the 
Harris  bill  which  subjects  HEW's  procedures  under  the  new  program  to  the 
strictness  of  the  Administrative  Procedure  Act. 

As  troubling  as  the  burdensome  and  arbitrary  rules  imposed  by  H.R.  1  are  the 
numerous  ways  in  which  the  bill  seeks  to  control  the  conduct  of  recipients 
through  coercive  and  ill-conceived  measures.  Thus,  the  bill  attempts  to  force 
parents  to  meet  their  obligations  to  support  their  families  by  making  the  failure 
to  support  a  federal  crime.  This  imposes  a  different  standard  of  parental  sup- 
port and  penalties  for  failure  upon  poor  families  than  upon  others,  with  the 
federal  government  usurping  functions  normally  handled  by  state  laws  and 
courts. 

In  addition,  H.R.  1  imposes  a  lien  on  any  future  federal  entitlements  which 
may  be  due  an  alleged  deserting  parent,  including  future  welfare  benefits  or  old 
age  insurance  benefits,  in  an  attempt  to  recover  alleged  support  payments  due. 
This  is  done  without  benefit  of  a  court  order  or  hearing  to  establish  either  de- 
sertion or  the  amount  of  support  owed.  Such  provisions  not  only  discriminate 
against  the  poor,  they  also  violate  basic  concepts  of  due  process. 

Similarly,  it  is  counterproductive  to  reduce  a  family's  assistance  because  of 
the  income  of  a  stepparent  without  regard  to  whether  he  has  a  legal  duty  of 
support  for  his  wife's  family  under  state  law  or  whether  he  is  also  contributing 
to  the  support  of  his  own  children.  Rather  than  forcing  the  stepparent  to  support 
his  stepchildren,  the  requirement  will  more  likely  discourage  mothers  from 
remarrying  and  thereby  reducing  the  family's  benefits,  and  will  encourage  cur- 
rent stepparents  to  leave  home  so  the  mother  and  children  can  receive  higher 
benefits.  This  can  only  result  in  an  increased  rather  than  decreased  need  for 
welfare  benefits. 

Finally,  one  of  the  most  pernicious  elements  of  control  in  H.R.  1  is  the  treat- 
ment afforded  family  members  whom  a  caseworker  determines  are  in  need  of 
vocational  rehabilitation  or  who  are  disabled  due  to  drug  or  alcohol  abuse. 
Such  persons  are  eligible  for  benefits  only  so  long  as  they  undergo  approved 
treatment  for  their  conditions.  These  are  clearly  the  kinds  of  provisions  which 
can  be  disabused  to  control  recipients  who  are  most  in  need  of  help.  Yet  H.R. 
1  contains  no  standards  for  making  such  determinations. 

In  conclusion,  Mr.  Chairman,  we  believe  that  each  of  these  issues  is  so 
important  to  welfare  reform  that  we  cannot  support  H.R.  1  or  any  other  bill 
unless  they  are  corrected. 

Senator  Talmadge.  The  next  witness  is  Mr.  William  F.  Biggs, 
executive  director,  Salt  Lake  area  community  action  program,  Salt 
Lake  City,  Utah. 

Senator  Bennett. 

Senator  Bennett.  Mr.  Chairman,  I  was  happy  to  welcome  Mr.  Biggs 
and  his  companions  to  my  office  this  morning  and  we  already  have 
had  a  very  interesting  discussion  of  the  legislation  and  the  problems, 
and  I  am  happy  that  he  is  here  as  a  witness  to  tell  us  how  this  proposed 
law  looks,  from  the  point  of  view  of  the  people  of  Utah.  He  has  given 
me  some  information  with  respect  to  the  potential  effects  of  the  law 
on  Utah's  present  system  which  I  did  not  have  before. 

Mr.  Biggs,  would  you  introduce  the  other  two  people  with  you. 

STATEMENT  OF  WILLIAM  F.  BIGGS,  EXECTJTICE  DIRECTOR,  SALT 
LAKE  AREA  COMMUNITY  ACTION  PROGRAM,  SALT  LAKE  CITY, 
UTAH,  ACCOMPANIED  BY  MRS.  BONNIE  HARTLEY,  VICE  PRESI- 
DENT, UTAH  WELFARE  RIGHTS;  AND  ANDREW  GALLEGOS,  COA- 
LITION OF  SPANISH  SPEAKING  ORGANIZATIONS  OF  UTAH 

Mr.  Biggs.  I  would  like  to  introduce  Andy  Gallegos  representing 
the  Utah  Coalition  of  Spanish  Speaking  Organizations,  and  Bonnie 
Hartley  representing  LTtah  Welfare  Rights. 


2359 


Senator  Talmadge.  You  may  proceed. 

Mr.  Biggs.  Thank  you,  Senator.  I  greatly  appreciate  the  opportunity 
to  appear  before  you  today  representing  Utah  CAP  Director's  Associa- 
tion, the  Utah  Coalition  of  Spanish-Speaking  Organizations  in  the 
State  of  Utah,  Utah  Welfare  Rights  Organization.  In  addition  to 
those  I  named  I  am  also  representing  the  Utah  Association  of  Neigh- 
borhood Councils,  and  the  executive  board  of  the  Utah  Council  of 
Churches,  We  firmly  believe  in  the  need  for  welfare  reform,  firmly 
support  the  need  to  provide  incentives  to  those  on  welfare,  assistance 
to  the  working  poor,  and  we  support  the  basic  provisions  in  H.R.  1 
for  the  elderly  poor  and  disabled. 

However,  the  f  amity  assistance  portion  of  H.R.  1  would,  we  believe, 
prove  a  disaster  upon  implementation.  I  urge  you  to  consider  with  me 
the  effects  of  this  portion  of  the  bill  upon  the  individuals  and  in- 
stitutions of  Utah.  Since  Utah  is  in  the  middle  of  States  in  this  coun- 
try in  terms  of  levels  of  payments,  the  situation  is  especially  relevant 
for  comparison  of  present  and  proposed  assistance  levels  under  H.R.  1. 

The  State  of  Utah  recently  approved  an  increase  in  assistance  grants 
from  70  percent  of  basic  minimum  need  to  75  percent  of  needs.  Under 
the  75-percent-of-need  figure  we  will  be  providing  for  a  family  of 
four  a  basic  grant  of  $2,880  annually.  In  addition  each  family  is 
eligible  for  a  food  stamp  bonus  of  $516  for  a  total  annual  benefit  of 
$3,396  per  year. 

In  contrast,  H.R.  1  provides  for  an  income  floor  of  only  $2,400  for 
a  family  of  four  and  eliminates  the  food  stamp  program.  Assuming 
no  State  support  and  the  bill  provides  no  incentive  for  the  State  to 
do  so,  this  would  mean  a  cut  in  benefit  levels  for  a  family  of  four 
of  $996  or  28  percent.  But  even  worse  is  the  effect  on  the  larger  family 
since  the  payment  level  under  H.R.  1  is  not  based  on  need  and  provides 
no  additional  assistance  to  families  over  eight  in  size.  The  eligibility 
and  benefit  sections  of  this  legislation  make  no  provisions  for  families 
consisting  of  more  than  eight  members.  This  evidently  intended 
omission  could  effectively  reduce  the  status  of  many  beneficiary 
families  from  certain  Indian  groups  in  Utah  as  well  as  other  large 
families,  to  one  of  degradation  and  starvation.  Specifically,  as  it  ap- 
plies to  Utah,  this  section  of  the  legislation  would  adversely  affect 
4,562  individuals  now  receiving  assistance.  For  a  family  oi  10  on 
AFDC  in  Utah,  the  level  of  assistance  would  be  cut  from  $6,504  to 
$3,600. 

Senator  Harris.  For  a  family  of  how  many  ? 

Mr.  Biggs.  Of  10.  With  the  cuts  of  medicaid  also  contained  in  the 
bill  the  cut  would  reach  close  to  50  percent.  Thus  in  Utah  we  would 
be  faced  with  cuts  of  from  28  percent  up  to  60  percent  from  an  assist- 
ance level  which  only  meets  75  percent  of  minimum  need  as  set  by  the 
State  legislature. 

What  would  happen?  Private  agencies  including  the  Mormon 
Church  welfare  program  could  not  conceivably  take  up  the  slack.  For 
the  larger  family  a  lack  of  housing  or  starvation  would  be  a  reality. 
How  could  a  family  of  10  support  itself  on  $3,600  a  year.  Further,  how 
can  a  payment  of  only  $2,400  for  a  family  of  four  be  justified  when 
in  the  same  bill  $2,400  is  provided  for  an  eiderly  family  of  two. 

Inadequate  attention  has  also  been  given  to  the  strain  that  this  bill 
would  put  on  the  State  and  local  government  as  well  as  private  agencies. 


2360 


The  pressure  of  families  needing  to  provide  for  their  children  added 
to  that  of  humane  concerns  of  Utah  citizens  would  pressure  State  gov- 
ernment to  provide  additional  assistance.  However,  the  legislative 
and  executive  branches  would  have  difficulty  supporting  with  State 
funds  a  now  totally  federalized  program  with  no  incentives  to  do  so. 

If  they  did  provide  assistance,  additional  assistance,  would  be  in  the 
form  of  a  check  to  the  Federal  Government. 

The  second  most  serious  defect  in  the  bill,  after  the  low-assistance 
level,  is  the  punitive  and  arbitrary  requirements  related  to  work.  The 
assumption  is  made  throughout  H.R.  1  that  persons  receiving  assistance 
are  unwilling  to  work  and  that  this  is  the  major  problem  with  the 
present  program.  This  we  simply  find  to  be  not  true.  First  of  all,  many 
of  those  on  assistance  are  not  able  to  work  because  of  the  necessity  of 
taking  care  of  their  young  children.  Second  and  most  important  jobs 
are  simply  not  available.  Less  than  40  percent  of  those  graduating 
from  WIN  training  actually  receive  a  job  because  of  the  existing  high 
unemployment  rate  of  6.1  percent  in  Utah.  The  Salt  Lake  Community 
Action  Agency  

Senator  Harris.  Less  than  what  percent  ? 

Mr.  Biggs.  On  WIN,  only  40  percent  of  those  graduating  actually 
achieve  a  job. 

Senator  Harris.  Find  jobs. 

Mr.  Biggs.  The  Salt  Lake  community  action  program  normally  re- 
ceives at  least  20  job  applications  from  persons  on  welfare  for  every 
aide  position  opened  in  spite  of  the  fact  that  the  beginning  salary 
level  is  only  $300  per  month.  Under  the  much  heralded  emergency 
employment  act  only  about  5  percent  of  those  hired  in  Utah  and  na- 
tionally were  welfare  recipients,  not  because  they  did  not  apply  but 
because  of  high  qualifications  such  as  college  education  or  an  elec- 
trician, the  number  of  people,  persons  seeking  positions  and  because 
of  what  we  believe  to  be  simply  prejudice  against  persons  on  assistance. 
While  everyone  talks  about  lazy  welfare  recipients  no  one,  except  a 
few  businessmen,  appear  willing  to  offer  welfare  recipients  a  job. 

The  $800  million  proposed  for  public  services  jobs  under  H.R.  1  rep- 
resents a  positive  step  forward,  in  our  opinion,  but  is  inadequate.  This 
would  provide  only  approximately  800  positions  in  Utah.  I  can  assure 
you  that  we  have  both  enough  welfare  recipients  and  disadvantaged 
people  in  Utah,  and  enough  needed  productive  jobs  for  them  to  per- 
form to  urge  at  least  a  doubling  of  this  program  during  the  first  year. 

We  are  also  opposed  to  the  provision  that  as  of  1974,  all  mothers 
without  children  under  3  years  of  age  must,  without  exception,  regis- 
ter for  work  or  take  training,  regardless  of  the  quality  of  child  care 
available,  or  the  children's  need  for  a  parent  in  the  home.  I  certainly 
would  not  want  my  wife  to  work  before  our  children  are  in  the  first 
grade,  or  6  years  old,  and  furthermore  I  would  want  my  wife  or  myself 
to  be  at  home  with  the  children  during  the  summer.  Especially,  young 
children  need  the  attention  of  their  parents.  Furthermore,  in  many 
cases,  the  child  care  costs  will  exceed  the  income  gained  from  work. 

The  incentive  provisions  of  H.R.  1  with  one  exception  represent  a 
tremendous  step  forward  and  are  vitally  needed.  The  bill's  provision 
which  basically  allows  for  a  person  on  family  assistance  to  keep  the 
first  $720  of  earned  income  plus  one-third  of  the  remainder  is  strongly 


2361 


supported  by  Utah  Welfare  Rights  and  the  other  groups  represented 
before  you  today.  What  we  take  execption  to  is  recipients  on  assistance 
will  be  required  to  accept  jobs  paying  as  low  as  $1.20  per  hour.  This 
provision  will  only  perpetuate  low-paying  jobs  presently  not  covered 
by  the  Federal  minimum  wage. 

Over  the  past  6  years  a  body  of  laws  have  been  developed  providing 
a  number  of  basic  rights  to  recipient  on  assistance  which  has  enabled 
recipients  to  enjoy  some  of  the  same  basic  rights  as  others. 

Senator  Talmadge.  I  am  sorry,  Mr.  Biggs,  your  time  has  expired. 
Your  entire  statement  will  be  inserted  in  the  record. 

Mr.  Biggs.  Thank  you. 

Senator  Talmadge.  Any  questions  ? 

Senator  Harris.  Mr.  Gallegos,  have  you  got  any  additional  com- 
ments that  you  want  to  make  ? 

Mr.  Gallegos.  Of  course,  we  have  input  into  the  statement  Mr.  Biggs 
has  been  reading.  We  would  hope  this  committee  in  considering  the 
new  Employment  Emergency  Act  that  a  minimum  of  50  percent  of 
those  jobs  be  allocated  to  the  disadvantaged  people.  I  might  add  that 
in  our  State  the  Governor  had  wanted  as  a  goal,  at  least  because  of  the 
Department  of  Labor  regulations,  however  as  a  goal  for  two-thirds 
of  the  jobs  that  we  received  to  be  allocated  for  the  disadvantaged.  Un- 
fortunately, we  have  only  18  percent  of  those  that  have  been  filled  to 
the  disadvantaged  because  of  the  high  requirements. 

Senator  Harris.  Mrs.  Hartley,  did  you  have  anything  else  you 
wanted  to  add  ? 

Mrs.  Hartley.  No.  I  think  the  mothers  who  were  here  before  spoke 
so  well  I  certainly  could  not  improve  upon  that. 

Senator  Harris.  Well,  I  really  appreciate  your  testimony.  What  you 
demonstrated  again,  despite  the  misconceptions  of  a  lot  of  well-mean- 
ing progressive  people  in  the  country,  is  that  H.E.  1  is  not  welfare  re- 
form. It  has  got  some  awfully  punitive  and  regressive  factors  involved 
in  it  and  if  that  is  going  to  pass  as  welfare  reform,  I  think  we  are  in  lots 
of  trouble. 

Senator  Bennett.  Mr.  Chairman,  I  woidd  like  to  add  my  thanks  to 
these  folks  who  have  come  all  the  way  from  Salt  Lake  and  I  hope  you 
have  enjoyed  your  experience  in  participating  in  the  process  of  legisla- 
tion today,  and  the  specific  suggestions  which  are  contained  in  that 
part  of  your  statement  that  you  did  not  read  will  be  carefully  analyzed 
by  the  staff  and  looked  at  by  the  members  of  the  committee. 

Senator  Talmadge.  Thank  you  very  much,  we  appreciate  your 
appearing. 

(The  prepared  statement  and  attachments  of  Mr.  Biggs  follow. 
Hearing  continues  on  p.  2370.) 

Prepared  Statement  op  William  F.  Biggs,  Executive  Director,  Community 
Action  Program,  Salt  Lake  City,  Utah  1 

introduction 

Mr.  Chairman,  Honorable  members  of  Congress,  distinguished  visitors.  I 
greatly  appreciate  the  opportunity  (to  appear  before  you  today  to  express  the 


1  Representing  the  Utah  CAP  Director's  Association,  the  Utah  Association  of  Neighbor- 
hood Councils,  the  Union  of  the  Poor,  the  Coalition  of  Spanish-Speaking  Organizations 
(COSSO-Utah)  Utah  Welfare  Rights,  Social  Action  Committee  and  the  Executive  Board 
of  the  Utah  Council  of  Churches,  and  Church  and  Society  Committee  of  Cooperating 
Christian  Churches  of  Utah.  The  denominations  represented  are  United  Presbyterian, 
United  Methodist,  United  Church  of  Christ,  United  Christian  Church — Disciples. 


2362 


concerns  regarding  H.R.  1  of  a  wide  range  of  organizations  in  Utah,  including 
the  Utah  CAP  Director's  Association,  the  Utah  Coalition  of  Spanish-Speaking 
Organizations  in  the  State  of  Utah,  Utah  Welfare  Rights  Organization,  the 
Social  Action  Committee  and  the  Executive  Committee  of  the  Board  of  the  Utah 
Council  of  Churches,  and  the  Church  and  Society  Committee  of  the  Cooperating 
Christian  Churches  of  Utah.  The  numerous  Utah  organizations  which  I  repre- 
sent here  today  firmly  believe  in  the  need  for  welfare  reform,  firmly  support  the 
need  to  provide  incentives  to  those  on  welfare,  assistance  to  the  working  poor, 
and  firmly  support  the  provisions  in  H.R.  1  for  the  elderly  poor  and  disabled. 
However,  the  family  assistance  portion  of  H.R.  1  would,  we  believe,  prove  a 
disaster  upon  implementation.  I  urge  you  to  consider  with  me  the  effects  of  this 
portion  of  the  bill  upon  the  individuals  and  institutions  of  Utah.  Many  programs 
look  good  in  overall  concept ;  it  is  only  when  we  examine  their  actual  effect  in 
the  various  states  of  the  Union  that  their  true  nature  can  be  judged. 

ASSISTANCE  PAYMENT  LEVELS 

The  situation  in  Utah  is  especially  relevant  for  a  comparison  of  present  and 
proposed  assistance  levels  under  H.R.  1  since  Utah  is  in  the  middle  of  states  in 
this  country  in  terms  of  level  of  payments.  An  average,  rather  than  an  extreme 
situation,  is  therefore  represented. 

The  State  of  Utah  recently  approved  an  increase  in  assistance  grants  from 
70%  of  basic  minimum  need  to  75%  of  needs  which  will  take  effect  in  the  latter 
part  of  this  year,  barring  a  dip  in  the  economy  and  a  subsequent  increase  in 
welfare  recipients.2  using  the  75%  of  need  figure,  Utah  will  be  providing  for  a 
family  of  four  a  basic  grant  of  $240  per  month,  or  $2,880  annually.  In  addition, 
each  family  is  eligible  for  a  food  stamp  bonus  of  $43  per  month  or  $516  annually, 
for  a  total  annual  benefit  of  $3,396  per  year.3  For  a  family  of  ten,  and  we  have  a 
number  of  large  families  in  Utah,  the  total  annual  benefits  including  both  grant 
and  food  stamp  bonuses  would  be  $6,504. 

In  contrast,  H.R.  1  provides  for  Federal  administration  of  assistance  programs 
with  a  guaranteed  income  floor  of  only  $2,400  for  a  family  of  four  and  eliminates 
the  food  stamp  program  for  those  receiving  assistance.4  Assuming  no  state 
support,  and  the  bill  provides  no  incentive  for  the  state  to  do  so,  would  mean  a 
■cut  in  benefit  levels  for  a  family  of  four  from  $3,396  to  $2,400.  This  is  a  reduction 
of  $996,  or  29%.  But,  even  worse  is  the  effect  on  the  larger  family  since  the 
payment  level  under  H.R.  1  is  not  based  on  need  and  provides  no  additional 
assistance  to  families  over  eight  in  size.  The  eligibility  and  benefit  sections  of 
this  legislation  make  no  provisions  for  families  consisting  of  more  than  eight 
members.  This  evidently  intended  omission  could  effectively  reduce  the  status 
of  many  beneficiary  families  from  certain  Indian  groups  and  religious  denomi- 
nations, as  well  as  all  other  large  families,  to  one  of  degradation  and  starvation. 
Specifically,  as  it  applies  to  Utah,  this  section  of  the  legislation  would  adversely 
affect  4.562  individuals  now  receiving  assistance.  For  a  family  of  ten  on  AFDC 
in  Utah  the  level  of  assistance  would  be  cut  from  $6,504  to  $3,600  under  H.R.  1. 
This  is  a  cut  of  $2,904,  or  44%.  With  the  cuts  in  Medicaid  also  contained  in 
the  Bill,  the  cut  would  reach  close  to  50%.  (See  attached  chart  for  a  comparison 
of  assistance  levels  by  houshold  size,  page  7a.) 

Thus,  in  Utah,  we  would  be  faced  with  cuts  of  from  29%  to  60%  from  an 
assistance  level  which  only  meets  75%  of  need.  What  would  happen?  Private 
agencies,  including  the  Mormon  Church  Welfare  Program,  could  not  conceivably 
take  up  the  slack.  For  the  larger  family  starvation  would  be  a  reality.  Can  you 
imagine  a  family  of  ten  supporting  itself  on  $3,600  a  year?  The  43,860  present 
recipients  of  AFDC  in  Utah  would  face  a  situation  of  total  frustration.  How 


2  The  projected  payment  level  figure  of  75%  of  need  was  used  in  order  to  more  ade- 
quately reflect  tlie  effect  of  H.R.  1  at  its  projected  time  of  implementation  in  1973. 

3  The  assumption  is  made  that  everyone  will  take  advantage  of  the  new  food  stamp 
program  at  the  full  level  provided  for.  On  the  other  hand,  none  of  the  various  income 
exemptions  such  as  medical  and  housing  costs  over  30%  of  income  are  taken,  so,  in  fact, 
for  some  families  the  food  stamp  bonus  would  be  greater. 

4  The  incentive  bonus  of  $360,  which  would  be  provided  under  H.R.  1  for  those  engaged 
in  training,  as  well  as  existing  bonuses  under  the  present  WIN  program,  are  not  included 
since  the  number  of  persons  who  would  actually  receive  the  $360  incentive  bonus  under 
H.R.  1  is  difficult  to  project,  and  would  be  offset,  in  part,  by  costs  involved  in  taking 
training,  such  as  meals  away  from  home,  etc. 


2363 


many  people  would  leave  their  family  or  escape  through  other  means  when  faced 
with  an  inability  to  provide  food  or  shelter  for  their  children? 

Further,  how  can  a  level  of  payment  of  only  $2,400  for  a  family  of  four  be  justi- 
fied when  in  the  same  bill  $2,400  is  provided  for  an  elderly  or  disabled  family 
of  two,  which  is  described  as  a  minimum  level.  Is  a  child  worth  only  half  as 
much  as  a  senior  citizen?  One  commentator  accurately  remarked  that  H.R.  1  is  the 
natural  consequence  of  a  Bill  in  which  those  most  affected,  children,  didn't 
have  a  lobby. 

H.R.  1  eliminates  the  provisions  for  immediate  adjustment  of  the  recipient's 
situation  when  a  situation  changes.  Adjustments  can  only  be  made  on  a  three 
month  basis.  Thus,  an  employed  person  suddenly  terminated  from  a  low-paying 
job  would  have  to  be  unemployed  for  many  months  to  be  eligible  for  assistance, 
rather  than  the  current  thirty  days.  If  the  person  has  not  been  able  to  build 
up  any  equity  and  is  unable  to  get  another  job,  what  happens  to  the  family? 
What  happens  to  the  family  whose  breadwinner  dies  if  the  woman  is  unable  to 
work  or  to  get  work?  What  about  rent  or  house  payments?  I  think  it  doesn't 
take  too  much  thought  before  one  begins  to  realize  what  would  be  the  impact 
if  a  job  were  lost  and  three  months  had  to  pass  before  the  family  could  become 
eligible  for  assistance,  particularly  since  the  job  could  be  one  that  would  not 
qualify  the  worker  to  receive  unemployment  compensation. 

Inadequate  attention  has  been  given  to  the  strains  that  this  Bill  would  put 
on  the  state  and  local  government,  as  well  as  private  agencies.  One  of  the  needs 
is  to  support  local  governmental  institutions  and  reduce  the  division  occurring 
in  our  society.  This  bill  would  have  the  opposite  affect. 

Assuming  a  chaotic  situation  did  not  exist  before  the  state  legislative  ses- 
sion, chaos  would  erupt  then.  The  pressure  of  families  needing  to  provide  for 
their  children,  added  to  that  of  the  human  concerns  of  Utah  citizens  would  pres- 
sure the  legislature  to  maintain  present  levels ;  however,  the  legislative  and  ex- 
ecutive branches  would  have  difficulty  supporting  with  state  funds  a  now  totally 
Federalized  program  with  no  incentives  to  do  so.  To  supplement  the  inadequate 
assistance  provided  under  H.R.  1,  the  state  would  have  to  actually  give  the 
money  to  the  Federal  government  unless  the  state  was  willing  to  provide  for 
all  administrative  costs.  Furthermore,  if  they  did  so,  there  would  not  be  any 
reduction  in  state  expenditure,  which  the  populace  has  been  led  to  believe  would 
happen  with  passage  of  H.R.  1.  (See  attached  chart,  page  7b).  The  social  and 
governmental  system  in  Utah,  like  in  other  states,  is  too  fragile  to  be  subject 
to  such  cross-pressures  without  possible  serious  consequence. 

H.R.  1  has  been  sold  as  providing  "a  basic  floor"  and  equalizing  payments 
among  the  states.  In  fact,  in  Utah,  as  in  45  other  states,  what  would  be  presented 
is  not  a  floor  but  a  ceiling,  and  the  equalization  effect  would  be  through  reducing 
and  not  elevating  present  assistance  levels,  which  are,  in  Utah  and  most  states, 
below  the  minimum  needed  for  sustenance.  The  result  would  be  not  only  untold 
hardships  and  perhaps  even  starvation  for  many  families,  but  an  intolerable 
burden  on  already  overtaxed  local  government  and  private  agencies.  A  basic 
floor,  at  least  equal  to  that  provided  the  elderly  and  disabled  and  close  to  the 
assistance  level  provided  by  Utah  and  most  States  with  the  food  stamp  bonus 
is  needed.  Additional  support  must  be  provided  to  larger  families.  This  would 
mean  then,  a  level  of  at  least  $2,400  for  a  family  of  two,  $3,400  for  a  family  of 
four,  plus  $500  for  each  additional  children.  A  provision  that  assistance  pay- 
ments will  not  be  lowered  or  incentives  for  states  to  maintain  existing  levels 
should  be  included.  Anything  less  than  this  would  mean  not  welfare  reform 
but  simply  punitive  action  against  those  with  no  voice — children. 

What  would  this  cost?  According  to  the  report  of  the  Senate  Finance  Committee 
staff,  the  total  increase  for  payments  to  families  under  H.R.  1  would  be  only  1.4 
billion  which  would  be  almost  totally  offset  by  reduction  of  the  food  stamp  pro- 
gram. The  actual  additional  cost  projected  primarily  relates  to  increased  services 
and  increases  in  payments  to  the  aged,  blind  and  disabled.  The  minimal  level  of 
assistance  we  project  as  needed  would  represent  an  increased  cost.  However, 
much,  if  not  most  of  this  cost  would  be  simply  an  assumption  by  the  Federal 
government  of  existing  state  expenditures.  Again,  we  come  to  a  question  of 
priorities  and  whether  we  are  seriously  concerned  with  achieving  welfare  reform 
and  making  progress  toward  the  goal  of  eliminating  poverty  or  simply  enforcing 
additional  punitive  measures  against  the  poor. 


2364 


COMPARISON  OF  ASSISTANCE  SUPPORT 


Projected  H.R.  1  support  levels 
Projected  Utah  support  levels  annually  annually 


Utah  AFDC 
75  percent  of 

Family  size  need  budget     Food  stamps  Total  H.R.  1  Difference 

(1)  (2)  (3)  (4) 


1      $1,356 

2       1,824 

3....      2,412 

4     2,880 

5      3.660 

6    4,320 

7    4,632 

8   4,956 

9...    5,268 

10     5,580 

11   5,892 

12...     6,216 

13..     6,528 

14       6,840 

15   7,152 

16     7,476 


$144 

$1,  500 

0 

0 

288 

2,112 

$1,600 

-$512 

432 

2,844 

2,000 

-844 

516 

3,396 

2,400 

-996 

528 

4,188 

2,800 

-1,388 

612 

4,932 

3,200 

-1,732 

684 

5,316 

3,400 

-1,916 

756 

5,712 

3,600 

-2,112 

840 

6, 108 

3,600 

-2,  508 

924 

6.  504 

3,600 

-2,904 

1,008 

6,900 

3,600 

-3,300 

1,092 

7,308 

3.600 

-3,  608 

1,176 

7,704 

3,600 

-4,104 

1,260 

8,100 

3,600 

-4,  500 

1,452 

8,604 

3.600 

-5, 004 

1,536 

9,012 

3,600 

-5,412 

(1)  The  Utah  AFDC  75%  of  need  budget  figures  will  not  probably  become  ef- 
fective until  the  latter  part  of  1972.  This  figure  is  used  in  order  to  more  ac- 
curately reflect  the  effect  of  H.R.  1  at  its  projected  time  of  implementation 
in  1973. 

(2)  The  dollar  amount  indicated  as  income  was  derived  by  using  the  grant 
assistance  amount  as  adjusted  net  income.  In  no  case  would  the  adjusted  net 
income  exceed  the  amount  indicated,  however,  it  would  in  all  possibility  be 
lower  than  the  figures  used,  and  would,  therefore,  generate  more  food  stamp 
bonus  than  is  indicated.  The  assumption  is  made  that  all  eligible  families  would 
utilize  the  maximum  allowable  food  stamp  purchases. 

(3)  The  incentive  bonus  of  360,  which  would  be  provided  under  H.R.  1  for 
those  engaged  in  training  as  well  as  existing  bonuses  under  the  present  WIN 
program,  are  not  included  since  the  number  of  persons  who  would  actually 
rceive  the  $360  incentive  bonus  under  H.R.  1  is  difficult  to  project,  and  would 
be  offset,  at  least  in  part,  by  costs  involved  in  taking  training,  such  as  meals 
away  from  home,  etc. 

(4)  The  one  family  household  is  presently  provided  for  mainly  under  State 
General  Assistance.  Presumably  this  would  continue  under  H.R.  1  although 
additional  members  previously  provided  for  under  AFDC  might  have  to  be  picked 
up  by  the  state. 

The  column  labeled  "Difference"  is  based  on  the  above  mentioned  assumptions. 

COST  BY  FAMILY  SIZE  FOR  STATE  OF  UTAH  TO  MAINTAIN  PRESENT  ASSISTANCE  LEVELS  IN  COMPARISON  TO 

PRESENT  STATE  COSTS 


Savings  or  cost  to 

Average  Utah  Difference  between      State  to  maintain 
share  of  AFDC     assistance  levels  75  percent  of 

Family  size  assistance         under  H.R.  1  need  leval 


I   $398  0  0 

2       536  -$512  1  +$24 

3      709  -844  2-135 

4..      846  -996  2  -150 

5      1,076  -1,388  2  -312 

6...       1,270  -1,732  2  -462 

7...     1,361  -1,916  2  -555 

8    1,457  -2,112  2  _655 

9     1,548  -2,508  2  -960 

10        1,640  -2,904  2  -1,264 

II.  ...      1,732  -3,300  2  -1,568 

12       1,827  -3,608  2  -1,781 

13     1,919  -4,104  2  -2,185 

14      2,010  -4,500  2  -2,490 

15     2,102  -5,004  2  -2,902 

16.        2,197  -5,412  2  -3,215 


1  Reflects  savings  to  the  State  of  Utah  if  under  H.R.  1  75  percent  level  was  maintained. 

2  Reflects  additional  cost  to  the  State  of  Utah  beond  that  presently  spent  to  maintain  75  percent  of  need  support  levels 
if  H.R.  1  becomes  law. 


2365 


UTAH   WELFARE  STATISTICS 

Average  number  of  persons  in  the  State  of  Utah  receiving  public  assistance  is 
57,639.  This  includes  all  categories  of  assistance. 

The  number  of  people  by  type  of  assistance  is  as  follows : 


Old  age  assistance   4,  506 

Aid  to  families  with  dependent  children   43,  864 

Aid  to  the  blind   231 

Aid  to  the  disabled   6,  282 

General  assistance   1,  018 

Child  care   1,  738 


As  of  June,  1971,  Utah's  assistance  levels  as  compared  to  the  other  50  states  : 

OAA— Utah  ranks  37th  out  of  50  ; 

AFDC — Utah  ranks  23rd  out  of  50  ; 

AB— Utah  ranks  14th  out  of  50 ; 

AD— Utah  ranks  29th  out  of  50  ; 

GA— Utah  ranks  12th  out  of  50. 

96.6  percent  of  Utah  families  on  public  assistance  have  eight  or  less  family 
members.  The  following  is  a  percentage  list  by  family  size. 

Percent 


0    .6 

1   28.2 

2   22.4 

3   17.7 

4   12.5 

5   8.2 

6   4.7 

7   1.8 

8   .5 

9  through  16   3.4 


WORK  PROVISIONS 

The  second  most  serious  defect  in  the  Bill,  after  the  low  assistance  level,  is  the 
punitive  and  arbitrary  requirements  related  to  work.  The  assumption  is  made 
throughout  H.R.-l  that  persons  receiving  assistance  are  unwilling  to  work  and 
that  this  is  the  major  problem  with  the  present  program.  This  we  simply  find  to 
be  not  true.  First  of  all,  many  of  those  on  assistance  are  not  able  to  work  because 
of  the  necessity  of  taking  care  of  their  young  children.  Second  and  most  impor- 
tant, jobs  are  simply  not  available.  Less  than  40%  of  those  graduating  from  WIN 
training  actually  receive  a  job  because  of  the  existing  high  unemployment  rate 
of  6.1%  in  Utah.  The  Salt  Lake  Community  Action  Agency  normally  receives  at 
least  20  job  applications  from  persons  on  welfare  for  every  aide  position  opened 
in  spite  of  the  fact  that  the  beginning  salary  level  is  only  $300  per  month.  Also, 
unlike  most  other  public  or  private  agencies  supported  by  the  Federal  govern- 
ment, Community  Action  Program  agencies  have  made  a  practice  of  providing  an 
opportunity  to  welfare  recipients  by  offering  jobs  to  them.  Uniformly,  our  expe- 
rience has  been  very  positive.  The  Federal  government  and  local  governmental 
agencies  have  not  shown  a  willingness  to  provide  jobs  to  those  receiving  assist- 
ance. Under  the  much  heralded  Emergency  Employment  Act  (PEP)  Public  Em- 
ployment Program,  only  5%  of  those  hired  in  Utah  and  nationally  were  welfare 
recipients,  not  because  they  didn't  apply,  but  because  of  high  qualifications 
(college  degree  or  special  skills  such  as  electrician),  the  number  of  persons  seek- 
ing positions,  and  what  we  believe  to  be  simply  prejudice  against  persons  on 
assistance.  While  everyone  talks  about  lazy  welfare  recipients,  no  one,  except  a 
few  businessmen,  appear  willing  to  offer  welfare  recipients  a  decent  job. 

The  $800  million  proposed  for  public  services  jobs  under  H.R.  1  represents 
a  positive  step  forward  in  our  opinion,  but  is  inadequate.  This  would  provide 
only  approximately  800  positions  in  Utah.  I  can  assure  you  that  we  have  both 
enough  welfare  recipients  and  advantaged  people  in  Utah,  and  enough  needed 
productive  jobs  for  them  to  perform  to  urge  at  least  a  doubling  of  this  program 
during  the  first  year. 

In  view  of  the  lack  of  jobs  for  those  presently  on  welfare,  and  the  need  for 
many  mothers  to  provide  love  and  attention  to  young  children,  we  are  opposed 


72-573 — 72 — pt.  5-  10 


2366 


to  the  provision  that  as  of  1974,  all  mothers  without  children  under  three  years 
of  age  must,  without  exception,  register  for  work  or  take  training,  regardless 
of  the  quality  of  child  care  available,  or  the  children's  need  for  a  parent  in  the 
home.  I  certainly  would  not  want  my  wife  to  work  before  our  children  are  in 
the  1st  grade,  or  six  years  old,  and  furthermore  I  would  want  my  wife  or  myself 
to  be  at  home  with  the  children  during  the  summer.  Especially  young  children 
need  the  attention  of  their  parents.  Furthermore,  in  many  cases,  the  child  care 
costs  will  exceed  the  income  gained  from  work. 

H.R.  1,  in  its  origin,  seemed  to  reflect  a  sincere  desire  on  the  part  of  our  selected 
officials  to  provide  an  income  guarantee  to  provide  our  disadvantaged  citizens 
with  a  means  of  dignified  survival,  but  so  many  punitive  measures  have  been 
inserted  into  the  legislation  that,  along  with  the  absurdly  low  guaranteed  income, 
H.R.  1  now  takes  on  the  character  of  a  Bill  to  use  minimal  income  payments  to 
the  poor  as  a  means  of  control  and  coercion  with  respect  to  employment,  child 
rearing,  and  general  behavior.  For  example,  the  $2,400  annual  income  level  for 
a  family  of  four,  often  referred  to  as  a  "guaranteed  income",  can  be  reduced  to 
$1,600  if  any  member  of  that  family,  presumed  to  be  employable,  refuses  work, 
training,  rehabilitation  or  drug  rejection.  Therefore,  the  true  "guaranteed  in- 
come" is  actually  lower  than  present  assistance  payments  (plus  Food  Stamp 
subsidy)  in  any  state  of  the  Union. 

Assuming  that  jobs  are,  or  will  be  available,  I  am  sure  we  are  all  agreed  that 
able-bodied  people  should  work  rather  than  be  supported  by  welfare,  but  should 
children  and  other  non-employable  family  members  be  punished  by  starvation 
or  malnutrition  for  the  transgressions  of  another  family  member?  Does  such 
punishment  contribute  to  the  productivity  and  independence  of  the  next 
generation  ? 

INCENTIVES 

The  incentives  provisions  of  H.R.  1  with  one  exception  represent  a  tremendous 
step  forward  and  are  vitally  needed.  The  Bill's  provision  which  basically  allows 
for  a  person  on  family  assistance  to  keep  the  first  $720  of  earned  income  plus 
one-third  of  the  remainder  is  strongly  supported  by  Utah  Welfare  Rights  and 
the  other  groups  represented  before  you  today.  The  existing  welfare  provision 
which  basically  eliminates  a  dollar  for  every  dollar  earned  despite  the  costs  of 
working  helps  to  perpetuate  welfare  and  prevents  parents  from  developing  an 
income  adequate  to  support  their  families  through  securing  part-time  or  low- 
paying  jobs.  In  addition,  we  support  the  retention  in  H.R.  1  of  the  $30  per  month 
incentive  for  those  taking  training  as  vital  to  compensate  for  work  related 
expenses,  such  as  food,  clothing,  and  incidental  expenses  related  to  work. 

Perhaps  even  more  important  is  the  support  for  the  so-called  "working  poor" 
in  low-paying  positions.  Not  only  is  the  support  provided  for  in  H.R.  1  desperately 
needed  to  provide  a  basic  level  of  support  to  enable  the  working  poor  to  adequately 
support  their  families,  but  to  help  provide  a  cushion  between  jobs. 

The  one  element  in  the  incentive  provision  that  we  take  exception  to  is  the 
provision  that  recipients  of  assistance  may  be  required  to  accept  jobs  paying  as 
low  as  $1.20  per  hour.  This  provision  would  not  only  help  perpetuate  low-paying 
jobs  presently  not  covered  by  the  Federal  minimum  wage,  but  could  inhibit  the 
securing  of  appropriate  job  development  and  training  which  could  lead  to  secur- 
ing of  jobs  providing  sufficient  pay  as  to  make  Federal  assistance  no  longer 
necessary. 

ADMINISTRATION  AND  RIGHTS  OF  RECIPIENTS 

Administration  of  the  program  is  apparently  control  oriented,  and  effectively 
eliminates  rights  of  beneficiaries  built  into  the  original  Social  Security  Act  and 
expanded  by  court  and  administrative  rulings. 

The  division  of  administrative  responsibility  for  this  section  among  three  Fed- 
eral agencies  would  probably  result  in  a  nightmarish  confusion  as  to  agency  re- 
sponsibility, with  families  being  shifted  from  agency  to  agency  as  their  status 
changed  with  respect  to  age,  employability  or  age  of  dependent  children  with 
resultant  delays  in  benefits,  confusion  of  the  beneficiaries  and  exorbitant  ad- 
ministrative costs.  Separation  of  eligibility  determination  from  services  delivery 
responsibility  should  be  a  protection  for  the  beneficiary  if  provided  within  one 
administering  agency,  but  eligibility  determination  by  the  Department  of  Health, 
Education  and  Welfare  (Sec.  2111),  assignment  of  responsibility  to  the  Depart- 
ment of  Labor  and  subsequent  redetermination  of  benefits  by  the  Department  of 
Labor  (Sec.  2151)  would  be  an  invitation  to  confusion  and  delay. 


2367 


A  more  cumbersome  system  would  be  hard  to  conceive.  Every  quarter  a  com- 
plete statement  of  income  and  assets  must  be  filed  by  the  recipient  with  evidence 
substantiating  the  figures.  Further,  every  two  years,  in  spite  of  the  above  re- 
quirements, the  recipient  must  reapply  for  welfare  assistance.  No  guarantee  is 
provided  that  the  Federal  government  will  provide  the  necessary  aid  to  recipients 
to  meet  these  requirements,  and  there  is  no  provision  to  ensure  that  recipients 
are,  in  fact,  adequately  informed  ahead  of  time.  In  typical  bureaucratic  fashion, 
these  requirements  are  to  be  satisfied  solely  through  punitive  measures.  Further, 
if  there  is  a  delay  in  processing  the  amount  of  paperwork,  the  recipient  will  simply 
go  without  as  there  is  no  adequate  provision  to  meet  emergency  needs  or  built  in 
recourse  for  the  recipient. 

The  Bill  does  not  provide  for  (1)  speedy  processing  of  application  forms;  (2) 
adequate  means  to  meet  emergency  needs,  especially  of  the  larger  family;  (3) 
an  adequate  means  for  coordination  between  the  three  agencies  involved  so  fam- 
ilies do  not  get  lost  in  the  administrative  shuffle. 

As  the  Utah  Board  of  Family  Services  has  stated  in  the  attached  letter,  "the 
provision  allowing  the  payment  of  a  maximum  $100  on  an  emergency  basis  by 
local  administrators  is  totally  inconsistent  to  the  basic  needs  of  certain  size 
families  (and  will)  undoubtedly  create  severe  hardships  for  many  applicants." 
This  maximum,  along  with  the  provision  that  the  information  contained  in 
applications  must  be  substantiated  by  the  furnishing  of  evidence  (no  longer 
processed  on  the  basis  of  an  individual's  declaration),  along  with  the  split  in 
responsibilities  among  three  agencies  with  resulting  delays  as  clients  are  trans- 
ferred from  one  to  the  other,  and  along  with  the  lack  of  any  provision  for  im- 
mediate adjustment  with  a  change  in  circumstances,  would  establish  a  totally 
inflexible  system  with  no  ability  to  relate  to  the  actual  needs  of  families  as  they 
develop  and  before  total  disintegration  of  the  family  as  a  productive  unit  takes 
place.  A  dollar  of  assistance  when  needed  is  worth  five  dollars  after  the  damage 
has  occurred.  This  principle  is  as  true  in  this  area  as  in  medicine. 

Over  the  past  six  years,  a  body  of  laws  based  on  court  and  legislative  decisions 
have  been  developed  providing  a  number  of  basic  rights  to  recipients  of  assistance. 
Not  only  have  these  laws  enabled  recipients  to  enjoy  the  same  basic  rights  as 
others,  but,  at  least  in  Utah,  these  laws  have  helped  develop  a  higher  level  of 
trust,  understanding,  and  confidence  between  the  State  Division  of  Family 
Services  and  recipients.  A  basic  system  of  resolving  questions  and  disputes  ac- 
ceptable to  all  has  been  developed.  The  State  Division  of  Family  Services  is  now 
solidly  committed  to  the  system  of  fair  hearings,  which  they  believe  has  helped 
them  both  in  administering  equitably  the  program,  and  resolving  disputes. 
H.R.  1  sets  us  back  six  years  by  remanding  a  number  of  basic  rights,  such  as, 
in  effect,  that  of  a  fair  hearing.  According  to  H.R.  1,  the  Department  of  Health, 
Education  and  Welfare  will  be  the  sole  judge  of  fact.  Furthermore,  the  Bill 
provides  that  a  state  may  impose  a  residency  requirement  which  the  Supreme 
Court  has  already  declared  illegal.  We  urge  that  H.R.  1,  or  similar  Welfare 
Reform  Bills,  retain  the  basic  rights  for  recipients  of  assistance  as  they  presently 
exist. 

RECOM  MEND  ATION  S 

The  following  brief  summarizes  our  concerns  with  the  legislation  being  con- 
sidered, H.R.  1,  and  lists  our  recommendations  for  changes  which  would  make 
the  Bill  consistent  with  the  principle  of  welfare  reform.  Most  of  our  recom- 
mendations relate  to  the  Family  Programs  Section  of  the  Ribicoff  Amendment 
which  is  co-sponsored  by  Senator  Frank  E.  Moss  of  Utah.  We  understand  that 
Senator  Ribicoff  has  now  indicated  that  he  wishes  any  welfare  reform  program 
to  be  instituted  on  a  pilot  basis  only. 

We  feel  that  no  legislation  at  all  would  be  preferable  to  the  Family  Programs 
section  of  H.R.  1  as  it  is  now  proposed.  However,  we  strongly  support  a  pilot 
program  or  a  national  welfare  reform  program  which  corrects  the  deficiencies 
pointed  out  in  his  testimony  and  incorporates  either  the  Ribicoff  Amendment 
or  the  basic  recommendations  outlined  herein  : 

H.R.  1 — "Social  Security  Amendments  of  1971" 

RECOMMENDATIONS 

Title  I.  Provisions  relating  to  Old  Age,  Survivors,  and  Disability  Insurance 

We  approve  passage  of  the  provisions  in  this  section  relating  to  adult  cate- 
gories of  benficiaries  which  provide  for  increased  benefits. 


2368 


Title  II.  Pi~ovisions  relating  to  Medicare,  Medicaid,  and  Maternal  and  Child  Health 
In  view  of  the  many  inadequacies  we  recommend  either  elimination  of  this 
section  of  the  legislation  or  a  drastic  revision.  The  health  issues  involved  are 
perhaps  too  complex  to  be  adequately  considered  as  a  section  of  a  complicated 
welfare  reform  bill,  and  should  be  handled  in  separate  legislation  directed  to- 
ward providing  decent  health  services  for  all  Americans.  For  a  detailed  analysis 
of  the  effect  of  the  Medicare  and  Medicaid  provisions  contained  in  this  section 
we  call  your  attention  to  the  entitled  "H.R.  1 :  Medicare  and  Medicaid  Provi- 
sions" prepared  by  the  National  Health  and  Environmental  Law  Program  and  the 
University  of  Pennsylvania  Health  Law  Project.  We  concur  with  their  findings. 
Briefly,  we  find  that  the  H.R.  1  provisions:  1)  would  substantially  increase, 
through  deductions  and  cost-saving  features,  the  cost  of  medical  services  to  the 
needy  on  the  rationale  that  this  would  encourage  cost-consciousness  and  dis- 
courage over-utilization,  despite  massive  evidence  that  the  poor  do  not  over- 
utilize  health  services  and  that  doctors  prescribe  90%  of  medical  services ;  2 ) 
would  limit  Medicaid  eligibility  more  severely  than  current  law  in  Utah ;  3)  does 
not  provide  for  a  work  incentive  but,  in  fact,  only  a  work  disincentive  by  low- 
ering Medicaid  eligibility  leveLs :  and  4)  could  lead  to  a  reduction  in  services.  We 
believe  that  medical  services  should  be  free  for  all  persons  under  the  poverty 
guidelines.  A  sliding  scale  needs  to  be  enacted  but  only  for  those  above  the 
guideline. 

Title  III.  Assistance  for  the  Aged,  Blind,  and  Disadled 

H.R.  1  would  replace  existing  state  programs  of  assistance  for  the  aged,  blind, 
and  disabled  with  a  Federal  program  and  would  assure  these  categories  of  per- 
sons a  monthly  income  above  the  present  state  levels.  Unlike  the  family  pro- 
visions, this  section  would  present  a  slight  step  forward  in  providing  decent  levels 
of  assistance.  At  the  present  time  a  family  of  one  in  Utah  on  old  age  or  dis- 
ability benefits  receives,  including  the  Food  Stamp  bonus,  $118  per  month  which 
under  the  75%  of  need  level  would  increase  to  $125  per  month.  Under  H.R.  1 
this  level  would  be  increased  to  $130  for  fiscal  year  1973,  $140  for  fiscal  year 
1974.  and  $150  for  fiscal  year  1975.  For  a  family  of  two  the  level  of  assistance 
at  the  75%  of  need  level  would  be  $152  plus  a  Food  Stamp  bonus  of  $29  or  $176 
total.  Under  H.R.  1  this  level  would  be  increased  to  $195  for  fiscal  1973  and 
$200  for  fiscal  1974.  We  approve  this  section. 

Title  IV.  Family  Programs 

The  purposes  of  this  Title,  as  stated  in  Section  2101,  eloquently  express  our 
desire  that  every  citizen  be  assisted  in  securing,  retaining,  and  advancing  in 
employment  and  that  everyone  be  assisted  in  improving  family  life  and  enhanc- 
ing personal  dignity. 

Part  A — Opportunities  for  Families 
Section  2112 

We  believe  that  this  section  should  include  language  clarifying  standard  of 
quality  for  child  care  facilities  and  programs,  and  assuring  mothers  of  children 
some  rights  in  selecting  or  approving  the  care  provided  her  child.  We  believe 
that  mothers  with  children  under  six  should  not  be  forced  to  accept  training  or 
employment.  We  believe  that  subsection  (b)  (4)  of  this  section  cannot  be  effec- 
tively implemented  within  the  dollar  limit  set  (800  million)  and  recommend 
that  this  amount  be  increased  to  provide  $2,400,000,000  for  a  public  service  em- 
ployment program  to  provide  400,000  jobs  nationally.  Such  a  program  would 
provide  Utah  with  2,000  much  needed  public  service  jobs. 

Section  2115 

We  recommend  deletion  of  paragraph  (2)  (c)  of  subsection  (a),  denying  the 
incentive  payment  to  beneficiaries  in  manpower  training  which  has  the  purpose 
of  obtaining  for  him  a  college  degree. 

Part  B — Family  Assistance  Plan 

(As  it  refers  to  Part  C — Determination  of  Benefits). 

Section  2152,  suosection  (o)  "Amount  of  Benefits" 

We  recommend  that  the  benefit  amounts  specified  be  increased  to  provide  an 
income  floor  at  least  equal  to  that  provided  the  adult  disabled  and  close  to  the 
level  of  assistance  presently  provided  in  Utah,  or  $1,400  for  a  family  of  one,  $2,- 
400  for  a  family  of  two,  $3,400  for  a  family  of  four,  and  $500  per  additional 


2369 


member.  This  income  floor  should  be  raised  to  the  official  poverty  level  within 
four  years.  A  provision  that  present  assistance  payments  will  not  be  reduced  in 
those  states  with  higher  payments  for  a  period  of  at  least  four  years  should 
be  added. 

Part  D — "Payments  of  Benefits" 

Section  2111,  subsection  (a)  (4) 
We  recommend  the  limit  of  the  financial  emergency  cash  advance  be  increased 
to  $300  to  protect  beneficiaries  against  delays  in  processing  or  in  transmitting 
assistance  payments. 

Subsection  (c)  (3) — Hearings  and  review 
We  recommend  continuing  the  recipient  rights  established  over  the  years  and 
clarification  of  the  rights  of  the  individual  to  court  review  of  the  results  of  all 
hearing  Drocedures  and  elimination  of  the  clause  stating  that  the  secretary  shall 
be  »the  final  decider  of  fact. 

Title  V.  Miscellaneous 
Section  502 

We  recommend  deletion  of  the  prohibitions  (  Section  502)  against  participa- 
tion of  beneficiaries  of  the  Family  and  Adult  Assistance  Programs  in  the  Food 
Stamp  Program  unless  assistance  benefit  levels  are  raised  to  100%  of  needs 
or  to  establish  Federal  poverty  guideline  levels. 

Section  503 

We  recommend  provisions  for  incentives  for  state  supplementation. 
Section  523 

We  recommend  retention  of  Section  523  establishing  exclusions  by  state 
agencies  of  earned  income  up  to  $60  per  month  per  individual,  plus  one-third  of 
the  remainder  of  such  income,  up  to  a  limit  of  $3,000  per  year. 

Section  525 

We  recommend  deletion  of  those  parts  of  Section  525  which  amend  the  word- 
ing of  the  original  Social  Security  Act  Section  402,  substituting  the  word 
"spouse"  for  the  word  "parent,"  to  make  such  spouses  liable  for  child  support 
without  regard  for  applicable  state  laws  or  Supreme  Court  decisions. 

Division  of  Family  Services, 
Salt  Lake  City,  Utah,  September  21, 1911. 

Hon.  Frank  E.  Moss, 
U.S.  Senator, 

New  Senate  Office  Building, 
Washignton,  D.G. 

Dear  Senator  Moss  :  We  wish  to  convey  to  you  our  concerns  about  the  pro- 
posed national  welfare  legislation  now  before  you  in  Congress  in  the  form  of 
H.R.  1. 

The  newspapers  have  indicated  that  President  Nixon  is  desirous  of  having 
this  legislation  completed  as  soon  as  possible,  even  though  proposed  implemen- 
tation will  be  delayed  until  July  1, 1973. 

In  reviewing  the  proposed  legislation  and  after  receiving  comments  from  our 
counterparts  on  local  Boards  of  Public  Welfare,  we  believe  there  are  certain 
provisions  that  need  to  be  carefully  considered  by  you  and  by  Congress. 

We  are  greatly  disturbed  by  the  fragmentation  of  programs  in  the  proposed 
legislation  that  will  result  in  the  present  programs  administered  by  the  Division 
of  Family  Services  being  taken  over  by  agencies  of  the  U.S.  Department  of  Labor, 
U.S.  Department  of  Health,  Education  &  Welfare,  Social  Security  Administra- 
tion, and  the  residue  of  these  programs,  not  allocated  to  other  agencies,  remain- 
ing with  the  state  organization.  It  seems  that  one  agency  should  be  assigned  the 
mandate  to  provide  supporting  services — day  care,  transportation — for  all  re- 
cipients rather  than  as  H.R.  1  now  provides. 

The  elimination  of  food  stamp  participation  for  those  families  receiving  money 
grants,  even  though  they  may  be  given  an  equivalent  of  money,  would  un< 
doubtedly  deprive  many  children  of  an  adequate  diet.  The  money  received  in 
cash  would  go  for  many  items  other  than  food  and  would  not  increase  food 
budgets  to  the  extent  food  stamps  do. 


2370 


The  provision  of  allowing  the  payment  of  a  maximum  $100  on  an  emergency 
basis  by  local  administrators  is  totally  inconsistent  to  the  basic  needs  of  certain 
size  families.  No  provision  to  issue  more  than  one  grant  will  undoubtedly  create 
severe  hardships  for  many  applicants. 

We  believe  that  the  removal  of  these  programs  from  the  state  level  to  federal 
level  would  possibly  result  in  the  lack  of  response  to  the  needs  of  individuals  and 
families  which  could  be  more  realistically  handled  on  a  local  level.  It  further 
removes  the  local  concern  to  resolve  the  social  problems  which  create  the  de- 
pendency. 

The  option,  which  is  left  to  the  states  to  supplement  fully-funded,  basic  main- 
tenance payments,  could  result  in  many  states,  including  Utah,  refusing  to  sup- 
plement the  federal  program  and  thus  reducing  the  level  of  payments  now  being 
provided  to  meet  minimum  standards  of  living  in  the  various  states. 

In  contrast  to  our  concerns  about  the  specific  provisions  in  H.R.-l,  we  would 
like  to  express  our  recommendations  for  specific  improvements  in  the  bill  or 
new  concepts  that  we  believe  would  enhance  or  improve  the  overall  operation 
of  welfare  in  the  United  States.  These  statements  are  as  follows  : 

1.  Improvement  could  be  made  in  H.R.-l  by  retaining  the  present  organiza- 
tion structure,  and 

(a)  Establishing  uniform,  standardized  levels  of  payments  across  the  nation; 
(&)  Establishing  uniform  eligibility  requirements  across  the  nation  ; 
(c)  Establishing  uniform  definition  of  income  and  exemption  of  income  (in- 
come disregard) . 

2.  Permtting  states  to  relate  supplemental  payments  to  residency  require- 
ments and  providing  federal  matching  in  supplemental  payments  as  an  inducement 
for  the  states  to  meet  the  needs  of  people  on  a  level  of  payment  that  the  state 
has  the  resources  to  provide. 

3.  Abolishing  all  categorical  programs  of  assistance  and  replacing  them  with 
one  program  for  all  persons  who  are  in  need  of  assistance. 

4.  Providing  and  assuring  that  every  able-bodied  recipient  has  the  opportu- 
nity to  work  or  to  receive  training  that  will  prepare  him  for  employment. 

Such  actions  would  avoid  the  creation  of  new  federal  bureaus  at  a  time  when 
national  trend  is  to  be  conservative. 
Sincerely. 

Paul  S.  Rose.  Chairman. 

Senator  Talmadge.  The  next  witness  is  Mr.  E.  T.  Dibble,  Manage- 
ment Systems  consultant.  Atlanta.  Ga. 

Mr.  Dibble.  I  am  delighted  to  welcome  yon  as  a  constituent  and 
friend  of  our  committee.  You  may  proceed,  sir. 

STATEMENT  OF  E.  T.  DIBBLE,  MANAGEMENT  SYSTEMS 
CONSULTANT,  ATLANTA,  GA. 

Mr.  Dibble.  Thank  you.  Mr.  Chairman. 

I  am  not  here  representing  any  group  except  the  taxpayers  for  which 
I  can  only  speak  for  myself.  My  educational  program  netted  out  for 
you,  I  have  a  bachelor's  and  master's  degree  in  petroleum  geology. 
I  am  a  systems  analyst  by  profession  and  I  am  going  back  next 
quarter  to  work  on  my  doctor's  degree  in  management  information 
systems. 

"  For  the  past  3i/2  years  it  has  been  my  opportunity  to  work  for  HEW 
in  an  offhanded  way,  and  I  work  for  a  private  concern  which  had  a 
contract  through  the  State  of  Florida  to  work  on  a  management 
information  system  for  the  welfare  load.  I  guess  would  be  the  best 
way  to  put  it. 

We  developed  the  systems  side  to  make  the  program  work.  This 
was  a  program  oriented,  and  I  differentiate  program  with  a  capital 
"P"  to  assure  everybody  here  it  was  not  a  computer  program.  It  was 


2371 


a  people  oriented  welfare  program.  Our  job  and  my  job  as  project  sys- 
tems manager  was  to  provide  the  means  so  that  the  welfare  program 
people  could  have  the  data  to  operate  on.  My  experience  in  this  project, 
known  as  the  case  and  administrative  service  system  or  CASS  for 
short,  took  me  into  three  States  which  were  participating  in  the  pro- 
gram: Florida,  Maine  and  Minnesota.  I  commuted  from  Atlanta  to 
these  States  on  a  weekly  basis  leaving  on  a  Monday  morning  and  get- 
ting back  on  Friday  night, 

At  the  request  of  the  then  Commissioner  of  CSA  in  HEW,  Mr. 
Steve  Simonds,  I  took  a  leave  of  absence  from  the  firm  I  was  with  and 
became  a  consultant  here  in  HEW  to  CSA,  to  develop  the  management 
information  system.  My  primary  concern  is,  as  I  have  explained  to 
other  Congressmen,  I  feel  you  gentlemen  are  not  getting  what  I  feel 
is  valid  information  with  which  to  make  decisions  affecting  every- 
body who  has  testified  this  morning  as  well  as  the  rest  of  the  taxpayers. 

I  have  personal  feelings  about  H.R.  1  and  welfare  in  general  which 
I  will  not  get  into  because  that  destroys  my  objectivity.  My  goal  is, 
as  a  systems  analyst,  to  provide  management  with  the  information  to 
make  valid  decisions  with.  The  primary  concern  that  I  have  this 
morning  is,  and  I  am  not  going  to  read  that  statement  because  it  is 
pretty  self-explanatory,  but  I  will  get  into  other  details,  that  nobody 
really  knows  what  is  going  on  in  welfare.  When  we  talk  about  welfare 
reform  we  don't  really  know  what  we  are  basing  our  decisions  on  be- 
cause the  information  we  get  by  virtue  of  the  system  we  have  today 
probably  is  invalid  through  nobody's  cognizant  efforts.  I  guess,  no- 
body can  say,  I  don't  believe  anybody  is  honestly  making  an  effort  to 
defraud,  you  know,  Congress  or  their  State  legislatures,  and  so  on. 
There  may  be  a  few  welfare  recipients  who  are,  but  nobody  really 
knows  without  doing  a  physical  manual  audit  and  I  have  been  in- 
volved in  one  of  those  in  the  firm  and  obviously  there  are  a  few  people 
who  ruin  it  for  the  many. 

The  problem  you  really  run  into  a  place,  in  a  State,  where  a  welfare 
recipient  lives  on  the  boundary,  say,  between  two  cities.  Without 
naming  names,  they  can  go  to  one  city  for  services  they  get  a  case 
number  there.  They  go  to  another  city  for  payment  and  they  get  an- 
other number  there.  They  report  it  to  the  research  statistics  people  at 
the  State  level,  the  people  of  that  agency  gets  a  count  of  one  family 
from  one  family  and  one  from  another  and  you  get  a  count  of  two. 
Department  of  Labor  representatives  report  them  under  their  system, 
OEO  reports  them  under  their  system,  this  happens,  and  by  the  time 
it  gets  up  to  Congress  the  group  you  are  really  concerned  with  gets 
four  cases  instead  of  one. 

Senator  Talmadge.  Will  you  yield  ? 

Mr.  Dibble.  Yes. 

Senator  Talmadge.  Let's  see  if  I  understand  what  you  are  talking 
about.  We  will  assume  a  citizen  of  Atlanta,  Ga,  applies  for  welfare 
assistance  there,  and  then  goes  over  to  North  Carolina  and  applies 
for  medicaid,  and  goes  down  to  Alabama  and  applies  for  some  form  of 
public  assistance  down  there,  and  goes  down  to  Mississippi  and  applies 
for  another  form  of  public  assstance  and  is  receiving  benefits  from 
four  different  States  simultaneously  under  four  different  code  names. 
Is  that  possible  ? 


2372 


Mr.  Dibble.  I  think  it  is  possible.  I  think  it  is  perhaps  frequently 
unconsciously  because  people  living  in  Columbus,  Ga.,  let's  say,  they 
get  payment  there  and  get  payment  from  Alabama  for  social  services 
because  there  is  no  Federal  definition  for  family.  The  workers  in  the 
field  have  the  burden  put  on  them  to  make  a  judgment  as  to  what  they 
are  talking  about. 

I  have  been  proposing  and  made  the  proposal  to  numerous  people, 
that  there  should  be  a — I  always  hate  to  say  it  because  I  spent  6  hours 
in  Senator  Ervin's  office  reading  testimony  in  leisure  there,  but  I  don't 
see  any  way  to  get  around,  a  unique  identification  method  for  the  terms 
that  we  are  interested  in,  family,  head  of  family,  family  member, 
household.  My  private  concern  is  that  the  definition  of  household  as 
is  written  up  in  H.E.  1  will  not  work  when  it  gets  out  into  the  field 
when  it  becomes  operational.  I  have  discussed  this  with  friends  of 
mine  in  the  FAP  sj7stems  planning  group.  I  have  talked  about  the 
proposal  for  this  numbering  system  we  are  talking  about  here  with 
people  from  Social  Security,  Department  of  Labor  and  FAP  and 
basically  we  are  in  agreement.  But  there  are  always  reasons  why, 
somebody  says  "But  my  business  is  different." 

When  I  was  working  as  an  IBM  salesman  I  never  ran  into  a  cus- 
tomer or  prospect  who  didn't  say  his  business  wasn't  different,  I  in- 
stalled business  equipment  from  Litton  Industries  to  a  wholesale  lum- 
beryard. This  concept  was  tested.  I  don't  say  implement  the  concept 
exactly  as  we  tested  it  in  the  field,  but  the  concept  seems  to  be  valid, 
perhaps  more  work  needs  to  be  done.  I  am  not  going  to  make  that 
judgment.  All  I  am  saying  is  this  could  be  a  solution,  the  social 
security  account  number  could  be  used  to  derive  a  family  unit  number, 
and  again  I  think  legislation  has  to  be  provided  and  it  is  incumbent 
upon  you  gentlemen  to  provide  this  legislation  to  insure  the  privacy 
of  the  individual.  Obviously,  information  can  be  cross-referenced  from 
one  file  to  another,  any  systems  analyst  can  tell  you  how  to  do  it.  They 
can  also  tell  you  how  to  protect  the  individual  privacy  if  given  the 
opportunity. 

I  think  in  any  business,  and  welfare  is  a  business  today,  you  have 
to  have  uniform  definitions  and  a  standard  chart  of  account  numbers 
apply  across  the  business ;  in  this  case  across  the  United  States.  You 
can't  have,  for  instance,  in  the  State  of  California,  49  counties  each 
with  their  own  numbering  system,  each  with  their  own  set  of  rules, 
everybody  should  be  using  the  same  Bible,  at  least  in  a  case  like  this. 

Senator  Talmadge.  Will  you  answer  this  question,  please.  It  has 
been  suggested  by  some  members  of  our  committee  and  perhaps  other 
witnesses  that  we  use  the  social  security  number  as  a  means  of  identi- 
fication and  they  have  pointed  out,  for  instance,  that  if  a  father  aban- 
dons his  family  and  his  children  in  Atlanta,  Ga.,  and  gets  a  good  job 
up  in  Detroit,  making  $10,000  a  year.  But  he  would  prefer  that  the 
taxpayers  support  his  family  rather  than  supporting  them  himself. 
With  some  means  of  universal  identification,  we  could  immediately 
flash  the  signal  where  he  could  be  located  and  be  held  responsible  for 
his  family. 

Mr.  Dibble.  If  Congress  were  to  mandate  that  is  the  way  they 
wanted  a  system  to  operate,  yes,  you  could.  Now  that  is  assuming  a  lot. 

Senator  Talmadge.  Will  you  please  state  in  writing  what  you  sug- 
gest this  committee  incorporate  into  the  law  and  give  it  to  our  staff 
at  some  time  ? 


2373 


Mr.  Dibble.  Yes,  sir. 

Senator  Talmadge.  I  think  you  have  made  a  helpful  suggestion 
here.  Our  committee  has  long  since  arrived  at  similar  conclusions  but 
I  don't  think  we  have  yet  reached  a  consensus  as  to  the  mechanics  of 
what  we  ought  to  do.  You,  as  a  systems  analyst  who  has  worked  in  that 
field  and  made  suggestions  to  HEW,  could  perhaps  provide  us  with 
some  very  helpful  suggestions.  I  appreciate  very  much  your  appear- 
ing here. 

Any  questions? 

Thank  you  very  much  and  it  is  an  honor  to  have  you  before  our 
committee. 

Mr,  Dibble.  Thank  you. 

(The  prepared  statement  with  attachments  of  Mr.  Dibble  follows:) 

Prepared  Statement  of  E.  T.  Dibble,  Management  System,  Consultant, 

Atlanta,  Ga. 

subject  :  national  welfare  numbering  system 

The  following  comments  summarize  my  conversation  with  Senator  Talmadge, 
related  to  a  National  Welfare  Numbering  system  to  be  used  as  the  basis  for 
uniform  accounting  by  local,  state  and  federal  agencies. 

1.  From  the  viewpoint  of  the  recipient,  the  taxpayer  and  Congress,  the  issue 
of  results  from  money  spent,  or  to  be  spent,  on  welfare  efforts  is  of  great 
concern. 

2.  Logically,  before  results  can  be  tabulated  and  judged,  there  must  be  some 
valid  accounting  method  provided  and  controlled  by  management ;  in  this  case 
the  Federal  government. 

3.  Most  accounting  relies  on  a  uniform  "Chart  of  Accounts"  developed  for 
the  application.  For  each  account  number  there  is  a  valid,  workable  definition 
which  limits  the  amount  of  interpretation  allowed  the  person  working  with  the 
ledger.  For  audit  purposes  this  is  a  prerequisite. 

4.  In  our  welfare  system,  this  uniformity  does  not  exist,  which  precludes  valid 
accounting  or  judging  results  on  a  detailed  basis. 

5.  There  is  an  urgent  need  for  a  system  which  allows  workers  in  different 
agencies  and  jurisdictions  to  aid  the  recipient,  the  Program  administrator  and 
staff  to  properly  manage  their  resources,  and  for  Congress  and  the  taxpayer 
to  receive  unduplicated  information  based  on  uniform  definitions  and  accounting 
procedures. 

6.  The  recent  Case  and  Administrative  Service  System  project,  an  H.E.W. 
demonstration  project,  tested  the  feasibility  of  various  concepts.  One  of  these 
was  treating  the  family  as  a  unit,  thus  enabling  an  agency  to  render  better  serv- 
ice. In  order  to  do  this,  Program  staff  voiced  the  need  to  identify  an  individual 
and  be  able  to  then  relate  the  individual  to  a  family  unit,  and  vice  versa.  Another 
concept  tested  was  a  numbering  system  which  enabled  both  of  these  goals  to  be 
achieved,  (see  exhibit  1) . 

7.  The  validity  and  usefulness  of  these  concepts  was  demonstrated  during  the 
nine  months  field  test,  after  three  years  of  preparation,  in  three  states.  The 
concepts  are  being  used  today  in  on-going  systems  in  different  states,  with  local 
modification  in  lieu  of  Federal  guidelines.  The  numbering  system  was  successful 
in  satisfying  both  Program  and  statistical  requirements. 

8.  If  desirable,  the  use  of  Social  Security  Account  Numbers  could  be  the 
base  for  derivation  of  the  Family  Unit  control  number  used  by  this  concept.  No 
revision  to  the  system  would  be  necessary  to  meet  this  requirement.  Proper 
legislation  should  be  provided  to  assure  individual  privacy,  (see  exhibit  2). 

9.  This  concept  has  been  discussed  with  representatives  from  various  agencies 
with  the  general  concurrence  that  a  common  numbering  system  and  uniform  set 
of  definitions  is  not  only  desirable,  but  necessary. 

This  system  will  work.  It  will  require  specific  action  steps  to  analyze,  design 
and  implement  it  on  a  nationwide  basis.  It  won't  be  easy  or  accomplished  in  a 
short  time,  but  the  results  could  shape  the  course  of  welfare  in  future  vears. 

February  2,  1972 


2374 


Exhibit  1 

Arthur  Young  &  Co., 
6935  Wisconsin  Avenue, 
Washington,  D.C.,  August  20,  1970. 

Mr.  Stephen  P.  Simonds, 

Commissioner  of  C.S.A.,  Department  of  Health,  Education  and  Welfare,  Wash- 
ington, D.C. 

Attached  is  a  copy  of  the  numbering  system  used  for  the  Case  Administrative 
Service  System.  As  you  know,  CASS  is  a  demonstration  project  to  test  the 
feasibility  of  various  concepts.  One  of  the  concepts  was  treating  the  family  as  a 
group,  thus  enabling  an  agency  to  render  better  service.  In  order  to  do  this,  the 
Program  staff  voiced  the  need  to  identify  an  individual  and  be  able  to  then  relate 
the  individual  to  a  family  unit.  Conversely,  they  specified,  it  is  necessary  to  be 
able  to  identify  the  family  and  be  able  to  identify  the  members  and  their  relative 
role  in  the  family.  The  concept  used  with  the  CASS  numbering  system  enables 
both  these  goals  to  be  achieved. 

The  validity  and  usefulness  of  the  numbering  concept  has  been  demonstrated 
during  the  nine  months  of  the  test  period,  and  is  being  used  with  minor  modi- 
fication to  local  conditions  in  one  of  the  test  states  (Florida).  It  would  be 
possible  to  expand  the  concept  and  adapt  it  for  use  by  the  Department  of  H.E.W. 
throughout  the  United  States.  To  do  this  would  entail  some  specific  tasks  which 
we  are  proposing  as  a  project  under  the  direction  of  C.S.A.  This  would  accomplish 
at  least  two  goals.  One,  it  would  enable  the  numbering  system  to  be  tied  to  the 
definition  of  Family  as  developed  by  C.S.A. ,  and  two,  it  could  then  be  coordinated 
through  C.S.A.  with  the  other  needs  of  the  department.  One  of  the  prime  needs 
that  immediately  comes  to  mind  is  with  the  F.A.P.  system  that  is  currently 
being  developed.  As  you  know  they  are  working  on  a  means  of  identifying  in- 
dividuals, although  for  service  purposes  there  seems  to  be  a  need  to  identify  the 
family. 

A  .brief  review  of  some  tasks  involved,  in  not  only  agreeing  upon  a  common 
numbering  system  for  use  by  all  Departments  of  H.E.W.,  but  for  actually  planning 
implementation,  is  in  order.  A  f  ew  of  the  tasks  are  : 

Determine  the  Agencies  needs  for  family  and  individual  identification,  both 
at  the  State  and  Federal  level. 

Evaluate  the  present  systems  to  determine  any  commonality  between  systems 
in  use  by  all  agencies. 

Evaluate  the  environment  of  staff,  administrators,  and  legal  advisors  in  the 
locality  affected. 

Determine  the  actual  implementation  problems  at  Federal  and  State  level.  This 
could  be  affected  by  local  conditions  such  as  type  of  administration  (local  or 
state),  training  requirements,  equipment  presently  used,  availability  of  man- 
power and  time. 

Determine  the  mechanics  of  actually  converting  existing  systems  to  a  Federally 
assigned  number. 

Determine  the  role  of  the  Social  Security  Administration  and  the  Individual 
Identification  Number  as  promulgated  by  the  National  Bureau  of  Standards. 

Because  of  the  widespread  and  urgent  interest  in  this  problem  we  would  like 
the  opportunity  of  an  early  meeting  to  discuss  this  proposal  with  you  . 
Very  truly  yours, 

Arthur  Young  &  Co. 

Exhibit  1 
C.A.S.S.  Numbering  System1 

CONSTRUCTION  OF  CASE  NUMBER 

XXXXXX        6  Digits  comprise  the  Family  Unit  Number. 

YY  2  Digits  comprise  the  Family  Member  Number. 
XXXXXX-YY  8  Digits  comprise  the  Case  Number. 

Example :  123456-01 — This  8  digit  number  is  the  Case  Number  for  the  "Legal 
Male  Head"  of  Family  Unit  123456.  01  is  always  the  Legal  Male  Head  as  defined 

below : 


1  Not  proposed  as  the  National  Welfare  Numbering  Concept. 


2375 


00-  Conceptually  the  "family"  is  considered  an  individual  with  certain 
characteristics. 

01-  Always  the  Legal  Male  Head  of  the  family. 

02-  Always  the  Legal  Female  Head  of  the  family. 

03-  Reserved  for  future  use. 

11-  Oldest  Child  in  family. 

12-  Second  oldest  child  in  family. 
Continue  in  sequence  for  other  children. 

To  illustrate  the  use  of  the  CASS  Numbering  System  consider  a  female  child 
in  one  family  who  marries,  divorces  and  then  remarries.  The  record  of  her  Case 
history  could  be  shown  as  follows  : 


Year  Present  Previous 


1969    123456-02     432561-02   During  the  year  1969  she  divorced,  remarried,  and  received  present 

case  No.  123456-02. 

1968    432561-02    354260-11    During  the  year  1968  she  married  and  became  the  legal  female 

head  of  family  432561. 

1967   354260-11    In  1967  she  was  the  oldest  child  in  case  354260,  with  no  previous 

case  number. 


NOTE.— Exact  dates  are  kept  to  show  when  the  changes  took  place  and  could  be  retrieved  if  necessary. 

Exhibit  2 2 

Department  of  Health,  Education,  and  Welfare, 

Social  and  Rehabilitation  Service, 
Community  Services  Administration, 

March  25,  1911. 

Subject  SSA  #  for  Welfare. 

To :  Stephen  P.  Simonds,  Commissioner. 

Steve  :  Netting  it  out,  here  are  the  pros  and  cons  of  using  SSA  #  for  Welfare. 

pros 

1.  It  is  an  easily  derived  number 

2.  It  can  be  checked  for  validity  through  existing  SSA  procedures 

3.  A  number  can  be  acquired  within  about  10  days  for  those  not  having  one 

4.  Reporting  to  I.R.S.  is  by  SSA  # 

5.  Reporting  to  Unemployment  is  by  SSA  # 

6.  Reporting  to  DOL  (WIN)  is  by  SSA  # 

Accounting  procedures  for  welfare  could  be  tied  into  these  reporting  systems 

7.  Information  from  different  agencies,  related  to  the  same  family,  could  be 
more  easily  kept  track  of 

8.  Reports  sent  to  NCSS  for  use  of  HEW  would  reflect  unduplicated  counts, 
if  properly  implemented. 

9.  For  proper  evaluation  and  accountability  throughout  HEW  it  seems  nec- 
essary to  use  a  common  account  number  for  one  family. 

10.  If  necessary,  information  could  be  exchanged  between  agencies  using 
the  SSA  #  for  the  link 

CONS 

1.  A  client  could  probably  go  to  court  and  obtain  an  injunction  against  the 
use  of  SSA  #  for  keeping  track  of  their  records.  The  answer  to  this  to  to  im- 
mediately come  out  with  a  position  paper  on  control  and  access  to  informa- 
tion (as  Secretary  Richardson  suggested). 

2.  The  most  obvious  concern  is  the  one  of  invasion  of  privacy  The  answer 
to  this  to  immediately  come  out  with  a  position  paper  on  control  and  access 
to  information  (as  Secretary  Richardson  suggested) . 

3.  Clients  are  not  apt  to  have  their  SSA  #  readily  available  to  them.  This  is 
the  same  problem  States  encounter  with  Medical  numbers  and  have  resolved  this 
problem  to  the  benefit  of  the  Clients. 

Fankly,  thinking  this  problem  through  as  best  I  can,  it  is  difficult  for  me  to 
arrive  at  any  valid  opposition  to  the  use  of  SSA  #  for  the  derivation  of 
Family  Unit  number. 

Edwin  T.  Dibble, 

Consultant/ OS  A. 


3  Excerpts  from  Lowler  paper. 


2376 


Senator  Talmadge.  The  final  witness  is  Mr.  James  H.  Heller,  Chair- 
man of  the  American  Civil  Liberties  Union. 

STATEMENT  OE  JAMES  H.  HELLER,  CHAIRMAN,  AMERICAN  CIVIL 

LIBERTIES  UNION 

Mr.  Heller.  Mr.  Chairman  and  members  of  the  committee,  I  thank 
you  very  much  for  the  opportunity  to  testify  today.  I  will  try  to  see 
that  you  don't  end  with  a  total  whimper  here  instead  of  a  bang  in 
my  testimony.  I  will  not  read  my  statement  in  full.  I  simply  

Senator  Talmadge.  It  will  be  inserted  in  full  in  the  record  and  if 
you  would  summarize  it  we  would  appreciate  it. 

Mr.  Heller.  I  appreciate  that. 

As  I  indicated  in  the  beginning  of  the  prepared  statement  we  have 
four  basic  foci  of  concern  with  this  bill.  The  first  one  is  the  area  of 
privacy.  You  just  were  talking  about  that  with  the  last  witness.  I 
kind  of  fear  that  the  complexity  of  computer  terminals  and  systems 
for  relating  data  in  this  world  is  too  great  for  anything  that  this  com- 
mittee can  do  in  the  language  of  the  law  except  sternly,  I  think,  and 
we  have  urged  this  strictly  to  enjoin  upon  the  administrators  of  this 
law  or  any  other  welfare  law  or  any  other  general  Federal  benefit  law 
that  the  information  received  should  be  the  minimum  necessary  and 
should  be  only  used  for  the  purposes  of  that  law.  Whether  a  social 
security  number  is  used,  a  tax  reporting  number  or  a  new  identifica- 
tion system,  undoubtedly  there  will  be  ingenuity  and  machinery  to 
relate  it  to  other  information  in  the  Federal,  local,  and  State  data 
banks,  but  the  problem,  and  the  problem  we  have  encountered  with 
FBI  files  as  well,  is  somebody  must  enjoin  the  administrators  of  the 
Federal  act  to  keep  the  information  to  themselves  and  use  it  only 
when  it  should  be  used  for  that  program.  They  didn't  get  it  for  any 
other  purpose  and  it  should  not  be  used  for  any  other  purpose. 

Privacy  is  an  essential  matter  here.  Many  of  the  other  civil  liberties 
problems  in  this  bill,  H.R.  1,  as  we  see  them,  can  be  resolved  as  a  mat- 
ter of  fact.  The  Ribicoff  amendments,  the  Harris  substitute,  the  Mc- 
Govern  substitute,  on  civil  liberties  grounds  are  all  infinitely  prefer- 
able on  the  points  that  we  make  in  this  statement.  Moreover,  if  they 
are  not  resolved,  we  can  anticipate  that  in  many  respects  the  courts 
will  resolve  them  in  a  way  that  they  must  be  resolved  as  a  matter  of 
fairness  and  dignity  to  the  individuals  under  this  program. 

Privacy,  however,  is  a  matter  which  this  committee  must  take  up 
because  this  is  an  area  in  which  Congress  must  dictate  to  the  adminis- 
trative branch  of  the  Government  what  is  required  for  human  decency 
and  for  that  area  of  all  our  lives  that  we  want  to  keep  to  ourselves  or  at 
least  as  much  to  ourselves  as  we  can. 

I  think  really  this  is  the  most  important  single  thing  that  must  be 
put  in  this  law  by  this  committee  before  it  goes  out  to  the  Senate 
floor.  The  Senate  has  always  had  a  great  sensitivity  to  civil  liberties. 

One  of  the  other  areas  we  have  talked  about  is  procedural  fairness 
and  we  particularly  talked  about  a  right  to  a  hearing  before  welfare 
cutoff  exactly  as  the  Supreme  Court  indicated  in  Goldberg  v.  Kelly. 
I  recall  when  the  Senate  debated  the  Civil  Rights  Act  of  1964,  title 
VI,  the  funds  cutoff  for  federally  assisted  programs,  was  the  focus 


2377 


of  concern.  There  were  lengthy  concerns,  days,  weeks,  months  about 
prior  hearings  and  the  rationale,  north,  south,  east,  and  west  requiring 
hearings  before  cutting  off  funds  that  those  programs  all  have  benefici- 
aries behind  the  agencies  who  immediately  receive  the  money.  It  can't 
be  that  in  welfare  this  committee  or  the  Congress  means  not  to  insure 
explicitly  that  there  will  be  a  prior  hearing,  a  prior  hearing  held 
promptly,  with  reasonable  opportunities  for  the  receipient  to  prepare, 
but  certainly  a  prior  hearing  before  there  is  a  fund  cutoff.  There 
won't  be  any  departure  from  the  traditions  that  the  Senate  has  upheld 
on  that  point,  I  hope. 

There  are  arbitrary  standards  in  this  bill.  They,  too,  suffer  by  com- 
parison with  the  Harris  and  McGovern  and  even  the  Ribicoff  bill, 
standards  which  don't  allow  people  to  question  the  suitability  of  work 
even  though  it  may  really  be  injurious  to  their  health.  Standards  which 
don't  allow  parents  to  question  whether  their  children  are  getting  ade- 
quate day  care  even  though  that  is  also  essential  decency  and  in  effect, 
peonage  of  children  if  it  is  terrible  care,  and  even  though  as  a  matter 
of  fact  this  is  a  bill  designed  to  increase  parental  responsibilities  and 
produce  new  generations  of  people  who  will  be  better  off  than  their 
parents. 

We  must  again,  I  think,  give  consideration  to  dignity  and  decency 
throughout  the  bill. 

There  are  some  lesser  provisions  we  object  to,  such  as  reint reduc- 
tion of  a  minor  version  of  the  man-in-the-house  rule,  the  responsibility 
of  a  spouse  of  a  parent  to  contribute  his  income  to  the  family  in  which 
he  is  only  a  step  parent,  whereas  he  may  have  another  family  for 
which  he  is  really  legally  responsible. 

Running  all  through  this,  aside  from  dignity,  I  think  is  the  ques- 
tion of  equal  protection  under  the  law.  All  of  us  do  apply  for  Federal 
benefits.  We  all  expect  to  be  treated  fairly  and  to  have  the  minimum 
rules  and  requirements  imposed  upon  us  for  reporting  or  divulging 
our  private  lives.  We  all  expect  to  have  fair  warning  of  the  changes 
in  the  rules.  We  all  expect  to  have  standards  that  don't  assume  some- 
thing that  is  not  true,  such  as  that  black  is  white  and  white  is  black. 
There  are  provisions  in  this  bill  we  have  outlined,  and  others  have  too, 
which  really  don't  meet  those  standards  and  they  raise,  therefore,  a 
question  of  equal  protection  of  the  laws. 

The  Washington  Post,  if  I  may  say  so,  had  a  very  interesting  edi- 
torial this  morning  in  which  they  said  a  few  policemen  in  the  District 
of  Columbia  police  force — and  I  am  from  the  District  of  Columbia, 
I  am  the  Civil  Liberties  chairman  for  this  area — a  few  policemen 
have  been  accused  of  misconduct,  there  have  been  rumors  of  a  few 
more.  Everybody  has  said  it  is  a  few.  We  have  a  5,000  man  police 
force  and  nobody  thinks  that  the  police  force  is  calumnified  by  this  or 
is  all  suffering  from  the  same  shabby  standard  that  a  few  might.  That 
must  be  true  as  well  of  welfare  recipients,  the  least  privileged  people 
in  our  society.  This  bill,  I  think,  must  recognize  that  basic  truth. 

Thank  you  very  much  for  hearing  me. 

(The  prepared  statement  of  Mr.  Heller  follows.  Hearing  continues 
on  p.  2382.) 

Prepared  Statement  of  James  H.  Heller  on  Behalf  of  the  American  Civil 

Liberties  Union 

Mr.  Chairman,  members  of  the  Committee,  my  name  is  James  H.  Heller.  I 
appear  here  today  on  behalf  of  the  American  Civil  Liberties  Union  to  express 


2378 


its  views  on  the  civil  liberties  aspects  of  H.R,  1  and  the  other  proposals  being 
considered  by  your  Committee  for  major  revision  of  our  welfare  programs. 

Our  concern  with  such  legislation  has  always  had  certain  focal  points.  These 
are :  protection  of  the  rights  of  privacy  of  those  assisted  under  such  programs ; 
the  use  of  standards  which  are  free  from  arbitrariness ;  procedural  fairness  and 
use  of  standards  which  do  not  penalize  or  inhibit  the  right  of  our  citizens  to 
travel  freely  and  live  where  they  wish. 

It  goes  without  saying  that  personal  dignity  should  be  an  essential  underlying 
consideration  in  the  drafting  of  legislation  such  as  this.  As  the  Board  of  Di- 
rectors of  the  ACLU  stated  in  1969,  "To  be  poor  is  tragedy  enough.  To  be  forced 
to  forego  elementary  rights  of  privacy  and  decency  in  order  to  obtain  financial 
assistance  is  improper  and  violates  the  fundamental  precepts  of  a  democratic 
society." 

There  is  a  related  consideration  which  has  practical  as  well  as  legal  and  phil- 
osophical importance,  as  is  commonly  true  of  civil  liberties  matters.  Our  papers 
and  airways  have  been  filled  recently  with  indignant  comments  about  "Wel- 
fare chiselers"  and  people  "feeding  at  the  trough"  of  government  assistance. 
But  if  we  truly  expect  assistance  recipients  to  benefit  from  these  programs 
and  to  achieve  insofar  as  possible,  economic  independence,  the  programs  them- 
selves must  accord  them  a  full  measure  of  dignity  and  fairness.  Regrettably, 
there  are  features  of  the  H.R.  1  now  before  this  Committee  which  do  not  meet 
this  standard  and  are,  to  that  extent,  likely  to  be  self-defeating  causes  of  just 
resentment  on  the  part  of  those  to  whom  they  would  apply. 

In  1969,  the  Supreme  Court  ruled  in  Goldberg  v.  Kelly,  397  U.S.  54  (1969), 
that  it  was  unconstitutional  to  deny  an  individual  welfare  benefits  he  or  she  has 
been  receiving  before  giving  that  individual  a  hearing,  whereas  in  other  situa- 
tions a  hearing  after  the  adverse  determination  might  be  permissible.  In  reaching 
this  decision,  the  Court  highlighted  the  essence  of  the  problem  when  it  pointed 
out  that  for  welfare  recipients  those  benefits  are  "the  very  means  by  which  to 
live."  As  the  Court  said,  a  welfare  recipient  "lacks  independent  resources,  his 
situation  becomes  immediately  desperate.  His  need  to  concentrate  upon  finding 
the  means  for  daily  subsistence,  in  turn,  adversely  affects  his  ability  to  seek 
redress  from  the  welfare  bureaucracy." 

A  person  in  such  straits  is  not  likely  to  measure  up  to  high  preachments  about 
self-reliance  and  "turning  square  comers."  Therefore,  as  a  practical  matter  as 
well  as  a  matter  of  basic  respect  for  civil  liberties,  it  behooves  the  Congress  to 
"turn  square  corners"  in  this  bill  by  framing  legislation  which  embodies  fairness 
at  every  turn. 

It  is  in  this  context  that  we  have  the  following  comments  to  make  on  the 
principal  welfare  reform  proposals  before  the  Committee.  We  have  concentrated 
on  H.R.  1  as  the  basic  proposal  before  you.  However,  we  urge  the  Committee  to 
examine,  for  solutions  to  the  problems  which  concern  us,  alternative  measures 
before  you,  particularly  those  principally  sponsored  by  Senators  Harris  (S.  2747), 
and  McGovern  (S.  2372),  and,  to  a  substantial  degree  the  Amendment  offered  by 
Senator  Ribicoff  (Amendment  559  to  H.R.  1). 

PRIVACY 

We  are  all  concerned  with  the  growing  web  of  information  requirements  and 
central  data  banks  which  threaten  to  denude  Americans  of  what  many  think  to 
be  our  most  precious  right  of  all,  fundamental  privacy  vis-a-vis  other  citizens 
and  the  government.  No  class  of  persons  is  more  threatened  by  this  growing 
phenomenon  than  those  enrolled  in  public  assistance  programs.  Certain  unde- 
sirable welfare  practices  are  more  easily  corrected  than  others.  Welfare  recipi- 
ents may  protest  the  midnight  investigation,  the  arbitrariness  of  the  "man-in- 
the-house"  rule,  or  the  arbitrary  cut-off  and  hearing  procedures.  They  are  less 
likely  to  fell  themselves  enabled  to  protest  the  information  requirements  on  ap- 
plication forms  or  interview  forms  which  they  must  fill  out  in  the  first  instance 
even  to  gain  eligibility.  Yet  the  privacy  of  these  individuals  is  often  most  egre- 
giously  infringed  at  this  point. 

Proponents  of  welfare  reform  have  long  urged  that  welfare  applicants  simply 
be  required  to  fill  out  forms  without  having  to  agree  to  home  visits  and  other 
intrusive  forms  of  investigation  not  inflicted  on  other  applicants  for  government 
benefits.  Yet,  the  House  Ways  and  Means  Committee,  in  its  report  accompany- 
ing H.R.  1  (House  Report  No.  92-231,  page  161)  underscored  its  determination 
that,  "there  will  be  no  simple  declaration  process"  for  establishing  eligibility. 
There  is  no  reason  why  that  should  be  so.  The  risk  of  fraud,  which  can  be  the 


2379 


only  justification  for  which  a  rule,  is  just  not  so  great  a  risk,  since  the  backing 
for  a  declaration  procedure  is  the  threat  of  prosecution  for  giving  false  infor- 
mation. There  cannot  be  a  more  meaningful  threat.  It  might  be  pointed  out  that 
in  the  District  of  Columbia  we  now  use  a  very  simple  declaration  process  for 
registration  to  vote  even  though  voting  is  a  precious  right  and  over  the  years 
voting  frauds  have  rivaled  welfare  frauds  in  the  political  life  of  this  country. 

But  if  more  than  a  declaration  procedure  is  to  be  employed,  the  Congress 
should  at  the  very  least  require  expressly  that  it  be  as  simple  and  as  spare  as 
possible,  with  the  least  possible  intrusions  on  individual  privacy. 

Beyond  that,  there  should  be  statutory  protection  of  the  confidentiality  of  the 
information  received.  This  includes  not  merely  divuigence  to  persons  outside  the 
government,  but  divuigence  to  other  public  officials  and  agencies  of  the  govern- 
ment. There  should  be  a  fiat  prohibition  on  the  use  of  such  information  for  any 
purpose  not  related  to  the  administration  of  the  welfare  program  itself  or  to  the 
basic  statistical  needs  of  the  government.  Such  a  prohibition  should  include, 
above  all,  law  enforcement  programs  not  related  to  the  welfare  program. 

The  opportunities  for  wrongful  divuigence  of  information  through  niismated 
computer  terminals  and  other  abuses  are  so  complex  and  manifold  that  it  may 
well  be  impossible  to  legislate  against  them  in  specific  terms.  That  is  why  we 
suggest  a  flat  prohibition  with  the  exceptions  noted  and  urge  the  Congress  to 
maintain  a  continuing  watch  over  this  problem,  as  Senator  Ervhrs  Subcom- 
mittee on  Constitutional  Rights  has  attempted  to  do  in  the  area  of  government 
employment  and  in  other  areas  where  the  potential  for  misuse  of  data  to  strip 
citizens  of  their  privacy  has  become  most  pronounced. 

The  problem  of  privacy  will  be  escaluated  when  the  welfare  program  is  fed- 
eralized because  the  body  of  personal  information  will  be  centralized.  We  are 
dealing  here  with  a  genie  that,  once  out  of  the  bottle,  will  be  almost  impossible 
to  stuff  back  in.  There  is  not  a  person  in  this  country  who  does  not  have  to 
register  for  some  governmental  benefit  or  requirement.  All  of  us  have  the  right 
to  expect  that  the  information  which  we  provide  in  registering  will  be  confined 
to  the  uses  for  which  it  was  required  in  the  first  place.  Welfare  recipients  ought 
to  have  that  protection  as  well.  Our  experience  in  these  problems  leads  us 
reluctantly  to  the  conclusion  that  if  Congress  itself  does  not  spell  out  standards 
in  this  enabling  statute,  the  necessary  sensitivity  to  privacy  simply  will  not 
exist. 

Both  S.  2747  and  S.  2372  address  themselves  to  the  question  of  privacy  in  a 
constructive  and  laudable  manner.  Both  bills  provide  that  "all  records  kept  by 
the  Secretary  shall  remain  strictly  confidential  and  may  be  used  only  by  the 
Secretary  to  effectuate  and  enforce  the  provisions  of  this  Act,"  with  the  excep- 
tion that  the  enrollee  is  guaranteed  the  right  to  examine  his  own  file.  See  Sec- 
tion 2006(c)  (10)  of  S.  2747  and  Section  ll(j)  of  S.  2372.  Moreover,  those  pro- 
posals command  the  Secretary  to  use  simple  and  understandable  enrollment 
forms.  <S.  2747  further  stipulates  that,  "Information  required  must  be  reason- 
able and  necessary  and  must  not  violate  the  right  of  privacy  of  the  claimant  or 
of  any  member  of  his  [family]  unit."  Section  2006(e)  (1).  Provisions  such  as 
these  should  be  included  in  any  measure  reported  out  by  the  Committee. 

Certain  provisions  of  H.R.  1  do  not  meet  the  test  of  substantive  fairness  re- 
quired by  our  constitutional  guarantee  of  due  process  of  law.  That  is,  they 
incorporate  standards  or  presumptions  which  are  arbitrary  in  many  foresee- 
able applications.  The  problem  is  aggravated  because  some  of  these  provisions 
either  do  not  provide,  or  unduly  restrict,  an  administrative  remedy  for  the  victims 
of  such  arbitrariness. 

It  may  well  be  that  the  courts  would  themselves  invalidate  such  standards  and 
would  in  any  case  provide  a  remedy  if  Congress  did  not.  But  this  means  of 
resolving  statutory  deficiencies  is  itself  unfair  for  obvious  reasons.  First  of  all, 
by  its  very  nature,  a  law  applying  to  million  of  persons  unable  to  afford  the 
necessities  of  life,  much  less  legal  representation,  ought  to  be  drafted  with 
special  attention  to  clarity  and  fairness  of  standards.  Moreover,  to  the  extent 
that  standards  have  the  potential  to  be  unfair  or  arbitrary  in  specific  situations, 
the  law  itself  ought  to  provide  the  remedy,  so  resort  to  the  courts  is  not  neces- 
sary. If  courts  must  intervene,  they  are  likely  to  interfere  with  orderly  admini- 
stration and  the  remedy  they  provide  is  likely  to  come  too  late  for  many  who 
need  it.  It  is  far  better  to  minimize  the  need  for  their  intervention. 

The  two  most  serious  examples  of  arbitrariness  occur  in  Sections  2111(c)  and 
2112  of  H.R.  1.  The  first  provision  sharply  limits  the  ability  of  persons  who  are 
required  to  register  for  work  or  work  training  to  question  the  suitability  of 


2380 


employment  offered  to  them.  The  second  provision  completely  fails  to  provide  any 
opportunity  for  a  working  parent  to  question  the  adequacy  of  care  for  his  or 
her  children. 

Section  2111(c)  gives  added  offense  because,  as  the  Committee  knows,  it 
provides  a  minimum  wage  standard  for  private  employment  which  is  only  four- 
fifths  of  the  current  Federal  minimum  wage.  Thus  a  registrant  for  employment 
may  be  required  to  accept  work  at  substantially  lower  pay  than  any  other  person 
doing  similar  work  Whose  wages  and  hours  are  regulated  by  Federal  law.  The 
wages  may  even  be  lower  than  those  paid  the  person  next  to  him  in  line  at  the 
registration  office  Who  was  sent  to  work  for  a  public  agency  at  the  legal 
minimum  wage. 

Section  2111(c)  takes  no  account  of  the  possibility  that  the  work  assigned 
to  a  registrant  may  be  totally  unsuitable  for  him  or  even  dangerous  to  his  well- 
being.  We  believe  that  a  court  would  hold  this  requirement  tantamount  to  peonage 
in  some  situations.  But  we  really  seriously  question  whether  Congress  wishes  to 
enact  a  standard  which  entrusts  such  matters  to  unfettered  administrative  dis- 
cretion. It  should  be  noted  too  that  Section  2114  of  H.R.  1  does  not  provide  for 
any  consultation  with  the  enrollee  in  developing  his  "employability  plan." 

Of  the  four  major  proposals  to  which  we  have  referred,  H.R.  1  is  by  far  the 
most  limited  in  its  provision  of  opportunity  to  challenge  the  suitability  of  work 
or  training  offered  to  an  enrollee.  Indeed,  the  McGovern  bill  does  not  even  con- 
tain an  involuntary  work  requirement.  Both  the  Harris  and  Ribicoff  proposals 
contain  important  and  detailed  safeguards  in  the  form  of  requirements  imposed 
upon  the  Secretary  of  Labor  in  selecting  suitable  work  and  "good  cause"  reasons 
for  an  enrollee  to  refuse  to  accept  work  as  unsuitable.  Sections  2111  and  2114 
of  the  Ribicoff  proposal  and  Section  2008  of  the  Harris  bill  contain  the  type  of 
protection  that  ought  to  be  made  a  part  of  any  work  requirement  approved  by 
the  Committee.  Those  proposals  likewise  command  that  at  least  current  Federal 
minimum  wage  shall  be  paid  for  all  such  work. 

The  other  key  example  of  arbitrariness  concerns  child  care.  We  do  not  under- 
stand how  Congress  could  even  contemplate  forcing  a  parent  to  put  his  or  her 
children  into  the  care  of  another  person  without  providing  an  opportunity  to 
question  the  suitability  and  quality  of  that  care.  On  the  most  minimal  level  that 
would  be  inexplicable  in  terms  of  the  desire  to  encourage  better  parental  re- 
sponsibility. There  is  growing  awareness  that  all  across  the  country  there  are  fos- 
ter homes  and  day  care  institutions  which  indeed  are  totally  unfit  to  assume 
responsibility  for  children.  Moreover,  there  are  children  with  special  problems 
that  can  only  be  dealt  with  by  people  having  special  training.  We  simply  assume 
that  the  Secretary  of  HEW  and  his  subordinates  will  be  able  to  deal  with  these 
problems  so  well  that  there  need  be  no  opportunity  to  question  their  judgment 
in  individual  cases.  No  concerned  parent  would  agree  to  commit  his  or  her  chil- 
dren to  the  care  of  others  on  such  a  basis. 

The  provisions  of  the  Harris  and  Ribicoff  proposals  cited  above  include  in- 
adequacy of  day  care  arrangements  as  one  of  the  "good  cause"  bases  for  refusal 
to  accept  offered  work.  As  pointed  out,  the  McGovern  measure  avoids  these  diffi- 
cult civil  liberties  questions  altogether  by  providing  that  there  shall  be  no  in- 
voluntary work  requirement. 

H.R.  1  appears  to  be  filled  with  provisions  which  have  the  effect  of  penalizing 
those  who  need  assistance  the  most.  Section  2155(d)  of  H.R.  1,  for  example,  rep- 
resents a  modest,  but  nonetheless  disheartening,  reintroduction  of  the  man-in-the- 
house  rule.  It  provides  that  the  income  of  a  stepfather  or  stepmother  is  deemed 
to  be  available  to  the  other  members  of  the  family.  Obviously,  however,  the  step- 
parent may  have  primary  legal  responsibility  to  others  and  therefore  may  be 
put  in  a  vise  between  two  conflicting  legal  requirements.  The  real  victims  will  be 
the  current  spouse  and  his  or  her  children,  who  are  presumed  to  have  available 
to  them  income  which  is  not  in  fact  available  because  it  is  committed  elsewhere. 
The  three  alternative  measures  offered  by  Senators  Harris,  Ribicoff  and  Mc- 
Govern avoid  this  problem  completely  by  stipulating  that  the  income  of  a  family 
member  shall  not  be  deemed  to  be  available  to  a  family  unless  that  person  has  an 
obligation  of  support  under  the  law  of  the  state  in  which  the  family  resides. 

Another  instance  in  which  H.R.  1  appears  to  penalize  dependents  for  the  de- 
linquencies of  parents  is  Section  2171(e)  (2),  under  which  benefits  may  be  cut 
off  to  the  entire  family  because  of  failure  of  a  parent  to  submit  a  timely  report 
on  benefits  received  during  the  previous  calendar  quarter.  Also,  Section  2171(a) 
(2)  (C)  permits  the  denial  of  benefits  to  any  family  because  of  failure  to  register 
for  employment  or  accept  employment  or  training  or  other  rehabilitation  serv- 
ices ;  but  at  least  that  provision  authorizes  the  Secretary  to  continue  such  bene- 


2381 


fits  in  his  discretion.  By  contrast,  Section  2171(e)  (2)  appears  to  give  the  Sec- 
retary no  such  discretion.  [Similarly,  Section  2152(g)  (1)  cuts  off  benefits  to  a 
whole  family  because  one  member  refuses  to  accept  offered  (but  possibly  un- 
suitable) employment.  In  general,  we  question  in  any  case  those  provisions  of 
the  law  which  penalize  dependents  for  the  sins  of  omission  of  their  parents  or 
guardians. 

PROCEDURAL  FAIRNESS 

It  has  been  pointed  out  above  that  some  of  the  basic  requirements  which  H.R.  1 
would  impose  on  welfare  recipients  are  not  subject  to  administrative  challenge 
or  hearing  at  all.  In  those  cases,  there  is  a  total  lack  of  procedural  fairness. 

There  are  two  features  of  Section  2171(c)  which  severely  limit  the  fairness  of 
even  those  hearings  which  are  provided  for  in  the  bill.  In  light  of  Goldberg  v. 
Kelly,  it  should  certainly  be  made  explicit  that  a  hearing  must  be  held  prior  to 
the  cut-off  of  welfare  assistance.  Perhaps  the  House  Ways  and  Means  Com- 
mittee may  have  assumed  that  this  and  other  basic  procedural  requirements  for 
such  hearings  would  be  incorporated  as  part  of  general  standards  of  administra- 
tive due  process  or  pursuant  to  the  requirements  of  the  Administrative  Procedure 
Act.  But  whether  welfare  is  administered  by  Federal,  State  or  local  officials, 
it  will  inevitably  be  in  the  hands  of  thousands  of  different  persons  before  whom 
innumerable  hearings  will  be  held.  The  basic  standards  governing  those  hearings 
ought  to  be  clear,  full,  and  fair,  and  they  should  be  written  out  in  the  governing 
statute. 

Section  2171(c)  (3)  also  provides  a  standard  of  judicial  review  which  purports 
to  cut  off  all  such  review  of  administrative  fact  determinations.  As  a  part  of 
administrative  due  process  or  of  statutory  standards  of  review,  courts  have 
regularly  upheld  the  right  of  the  judiciary  to  reject  factual  determinations 
which  are  arbitrary  and  capricious  or  which  do  not  have  substantial  evidentiary 
support  in  the  administrative  record.  In  the  main  area  where  such  judicial 
review  has  been  curtailed  by  Federal  statute,  government  procurement  (see  41 
U.S.C.  321),  the  rationale  has  been  that  the  further  curtailment  was  really  based 
on  the  contract  of  the  parties.  Thus  it  was  reasoned  that  the  parties  had  con- 
tracted to  limit  the  review  of  the  contracting  agencies  in  a  dispute.  But  there 
is  no  such  contract  between  the  welfare  beneficiary  and  the  government.  Cer- 
tainly the  beneficiary  cannot  be  deemed  to  have  agreed,  or  be  required,  to  accept 
an  arbitrary  factual  determination  cutting  off  his  or  her  basic  subsistence. 

Section  2171(a)(2)(C)  provides  no  hearing  in  a  case  where  the  Secretary 
decides  to  pay  benefits  to  a  person  outside  of  the  family  because  of  asserted 
failure  of  a  member  of  the  family  to  register  for  or  accept  work  or  training 
under  Section  2111.  By  contrast  with  Subsection  (A)  of  Section  2171(a)(2), 
which  provides  for  a  hearing  if  payments  are  made  to  a  third  party  because  of 
asserted  inability  of  the  family  member  to  manage  his  funds,  Subsection  (C) 
appears  to  contemplate  no  such  hearing.  Moreover,  because  it  refers  back  to 
Section  2111  which,  as  we  have  observed,  narrowly  limits  challenges  to  the 
suitability  of  offered  training  or  employment,  Subsection  (C)  incorporates  that 
arbitrary  standard  by  indirection.  We  believe  Section  2171  should  be  amended 
to  remedy  these  deficiencies. 

In  these  procedural  areas,  the  Harris  and  McGovern  proposals  are  notably 
more  explicit  and  more  protective  of  the  liberties  of  those  subject  to  the  program. 
See  Section  2006(c)  of  S.  2747  and  Section  11  of  S.  2372.  In  addition  to  providing 
for  administrative  hearings  prior  to  cut-off  of  benefits,  both  bills  specify  that 
decisions  in  the  first  instance  shall  be  subject  to  further  administrative  review 
and  "shall  be  fully  reviewable"  in  the  Federal  courts.  We  understand  this 
language  to  rebut  any  claim  that  administrative  fact  determinations  are  binding 
upon  the  courts,  no  matter  how  arbitrary  or  capricious  they  may  be. 

In  general,  both  the  Harris  and  McGovern  proopsals  show  a  greater  concern 
for  procedural  safeguards,  including  provisions  for  the  payment  of  hearing 
and  litigation  expenses  where  the  assistance  beneficiaries  are  unable  to  meet 
those  expenses — as  will  commonly  be  the  case.  The  Harris  bill  also  provides  a 
fuller  measure  of  procedural  protections,  and  a  more  limited  basis,  for  making 
welfare  payments  to  third  parties  in  lieu  of  the  eligibles  themselves.  The  Mc- 
Govern bill  does  not  provide  for  third-party  payments  at  all. 

An  important  procedural  protection  which  is  expressly  incorporated  in  the 
Harris  and  McGorern  bills  and  has  no  counterpart  in  either  H.R.  1  or  the 
Ribicoff  amendment  is  an  express  requirement  of  notice  and  public  hearing  prior 
to  change  in  rules  and  regulations.  Moreover,  notice  must  be  given  directly  to 
groups  certified  and  registered  as  organizational  representatives  of  assistance 
recipients,  and  periodically  the  Secretary  must  give  direct  written  notice  to  all 

72^573— 72— pt.  5  11 


23S2 


assistance  recipients  of  the  current  requirements  and  rules  of  the  program. 
These  are  obviously  important  protections  under  a  law  which  affects  millions 
of  persons  who  suffer  from  educational  as  well  as  financial  disadvantages  and 
who  confront  nearly  insuperable  problems  in  learning  about  day-to-day  changes 
in  administrative  requirements.  H.R.  1  contains  another  cut-off  provision  which 
could  have  drastic  consequences  on  affected  individuals.  Section  2175  permits 
the  Federal  government  to  withhold  unilaterally  any  payments  due  under  other 
provisions  of  law  (e.g.  veterans  benefits)  from  a  person  who  is  alleged  to  have 
deserted  or  abandoned  his  spouse  or  his  children  who  continue  to  receive  gov- 
ernment welfare  benefits. 

The  Ribicoff  amendment  contains  the  same  offset  provision.  The  Harris  and 
MeGwern  bills  do  not.  This  provision  for  unilateral  offset  and  withholding  with- 
out a  prior  hearing  could  be  cruelly  unfair.  Again,  we  refer  the  Committee  to 
the  sound  premise  of  Goldberg  v.  Kelly,  supra — that  the  Constitution  does  not 
permit  welf  are  recipients  to  be  deprived  of  their  benefits  without  a  prior  hearing, 
because  they  have  no  alternative  resources  to  support  themselves  while  the  argu- 
ment goes  on.  Section  2175  ignores  that  principle. 

BASIC  FREEDOM  OF  MOVEMET 

Two  features  of  H.R.  1  affect  the  basic  liberty  of  Americans  to  move  freely 
within  this  country.  One  of  these,  Section  2156(c),  permits  states  to  impose  a 
residency  requirement  of  up  to  one  year  for  supplemental  state  benefits.  This  is 
contrary  to  Shapiro  v.  Thompson,  394  U.S.  618,  the  Suprem'e  Court's  1969  decision, 
and  to  the  recent  action  of  the  Court  in  summarily  affirming  two  lower  court 
decisions  striking  down  residency  requirements,  Wyman  v.  Lopez,  Xo.  71-620  and 
Dunn  v.  Rivera,  No.  71-679.  40  Law  Week  3346  (January  25.  1972).  No  similar 
provision  in  the  Harris.  Ribicoff  or  McGovern  proposals  appears. 

Section  2176  would  enact  a  sort  of  Federal  criminal  non-support  law,  based  on 
interstate  flight  to  avoid  the  duty  of  support.  We  believe  this  to  be  an  unneces- 
sary and  needlessly  stringent  provision.  We  are  not  aware  of  any  lack  of  coopera- 
tion among  the  states  in  dealing  with  serious  cases  of  interstate  flight  to  avoid 
the  duty  of  child  or  spouse  support.  Moreover,  we  believe  civil  remedies  have 
proved  both  fairer  and  more  effective  to  deal  with  this  type  of  problem.  We  would 
regret  exceedingly  any  attempt  to  impose  a  Federal  panel  requirement  to  deal 
with  a  problem  of  this  sort.  While  the  Ribicoff  amendment  preserves  this  bad 
feature  of  H.R.  1,  the  Harris  and  McGovern  bills  contain  no  criminal  penalties, 
but  make  the  deserting  parent  severely  liable  to  the  Federal  government  for 
support  and  maintenance  which  the  government  provides  to  his  or  her  depend- 
ents. 

CONCLUSION 

Running  through  all  these  civil  liberties  problems  in  H.R.  1  is  an  underlying 
question  of  equal  protection  of  the  laws.  This  constitutional  guarantee  simply 
does  not  permit  the  Congress  to  legislate  different  standards  for  the  poor  and 
needy  than  those  applied  to  the  vast  majority  of  our  citizens  in  their  dealings 
with  the  government.  As  has  been  pointed  out  above,  there  is  not  a  person  in  this 
country  who  does  not  at  one  time  or  another  have  to  register  with  the  govern- 
ment either  to  receive  benefits  or  to  satisfy  some  information  or  licensing  require- 
ment. On  the  whole,  because  we  see  ourselves  in  the  same  situations,  we  have 
insisted  that  these  requirements  be  fair  and  impose  the  least  burden  necessary 
on  the  citizen.  Moreover,  where  the  generality  of  standards  has  created  the  threat 
or  arbitrariness  in  specific  situations,  we  have  insisted  upon  the  fairest  of  admin- 
istrative procedures  and  remedies. 

The  provisions  of  H.R.  1  simply  do  not  measure  up  to  this  standard.  There  is  an 
implication  that  this  law  is  addressed  to  a  suspect  class  of  people  who  must  be 
dealt  with  more  harshly.  Such  underlying  assumptions  must  be  laid  to  rest 
before  real  progress  in  welfare  reform  which  takes  account  of  human  dignity 
can  be  made.  We  urge  this  Committee  and  the  Congress  to  correct  these  civil 
liberties  dangers  so  that  the  legislative  effort  in  this  area  will  be  directed  solely 
toward  the  betterment  of  the  lives  of  so  many  of  our  citizens. 

Senator  Talmadge.  Thank  yon  for  appearing. 

Any  questions  ?  If  not  we  will  stand  in  recess  until  10  o'clock  Mon- 
day morning. 

(Whereupon,  at  12  :50  p.m.,  the  committee  was  adjourned  until  Mon- 
day, Februar}^  7, 1972,  at  10  a.m. ) 


SOCIAL  SECURITY  AMENDMENTS  OF  1971 


MONDAY,  FEBRUARY  7,  1972 

U.S.  Sex  ate. 
Committee  ox  Fixaxce. 

Washington,  D.O. 
The  committee  met,  pursuant  to  recess,  at  10  o'clock  a.m.,  in  room 
2221,  New  Senate  Office  Building,  Senator  Eussell  B.  Long  (chair- 
man) presiding. 

Present:  Senators  Long,  Anderson,  Talmadge,  RibicofT,  Byrd  of 
Virginia,  Nelson,  Bennett,  Curtis,  Jordan  of  Idaho,  Fannin,  and 
Hansen. 

The  Chairman.  The  committee  will  come  to  order. 
The  first  witness  this  morning  will  be  Dr.  Hollis  S.  Ingraham,  pres- 
ident of  the  Association  of  State  and  Territorial  Health  Officers. 
We  are  pleased  to  have  you,  Doctor. 
Dr.  Ixgraham.  Senator  Long  

The  Chairman.  We  have  your  statement  here  which  we  will  print, 
and  I  suggest  that  you  summarize  it. 

STATEMENT  OF  HOLLIS  S.  INGRAHAM,  M.D.,  PRESIDENT,  ASSOCIA- 
TION OF  STATE  AND  TERRITORIAL  HEALTH  OFFICERS 

Dr.  Ixgraham.  Senator  Long  and  members  of  the  committee,  I  ap- 
preciate very  much  the  opportunity  of  being  here  and  I  shall  read 
simple  excerpts  from  the  testimony  that  I  have  submitted. 

The  association,  in  general,  strongly  favors  the  thrust  of  the  legis- 
lation but  does  wish  to  comment  on  certain  aspects  of  the  medical  care 
provisions. 

For  example,  H.R.  1  demands  a  reduction  in  the  Federal  medicaid 
reimbursement  rate  by  one-third  after  the  first  60  days  of  general 
hospital  or  skilled  nursing  home  care  unless  the  State  establishes  that 
it  has  an  effective  utilization  review  program.  We  certainly  agree 
that  this  is  good,  but  we  do  think  that  the  very  tight  means  of  es- 
tablishing utilization  review  is,  as  spelled  out  in  the  statute,  un- 
necessary. 

The  association  agrees  that  periodic  utilization  and  medical  review 
of  hospital  and  long-term  care  are  essential,  but  we  do  not  agree 
that  the  specific  means  of  accomplishing  these  practices  should  be 
spelled  out.  We  do  believe  that  the  individual  States  should  be  per- 
mitted to  experiment  with  innovative  utilization  and  medical  review 
programs  best  suited  to  their  unique  situations,  such  as  selected  sam- 
pling on  a  significant  percentage  of  medicaid  cases. 

In  New  York  State,  to  cite  an  example,  there  are  now  more  than 
43,000  medicaid  patients  in  more  than  630  skilled  nursing  homes,  all 

(2383) 


2384 


of  whom,  under  this  section  of  H.K.  1  and  under  existing  medicaid 
rules,  must  be  individually  screened  annually.  Moreover,  under  H.R. 
10804,  which  became  law  2  months  ago,  more  than  24,000  medicaid 
patients  in  intermediate  care  facilities  were  added  to  the  caseload  which 
must  be  individually  reviewed  in  this  cumbersome  manner.  At  a  time 
when  there  are  pressing  shortages  in  virtually  all  medical  manpower 
disciplines,  we  question  whether  the  cost  of  this  bed-by-bed  review 
approach  is  the  wisest  use  of  medicaid  program  funds. 

We  further  believe  that  the  categorical  restrictions  placed  on  mental 
hospital  inpatient  care  under  this  section  of  H.R.  1  are  unduly  strin- 
gent. To  reduce  Federal  medicaid  reimbursement  by  one-third  after 
90  days  and  to  cut  off  any  degree  of  Federal  aid  after  365  days  of  care 
in  a  lifetime  will  inveitably  lead  to  serious  hardship  for  families  of 
the  long-term  mentally  ill  who  cannot  qualify  for  other  forms  of  pub- 
lic assistance. 

Our  second  question  relates  to  another  feature  of  section  207,  the  pro- 
vision that  the  Secretary  of  Health,  Education,  and  Welfare  is  to  com- 
pute a  reasonable  cost  differential  for  reimbursement  between  skilled 
nursing  homes  and  intermediate  care  facilities.  We  believe  this  is  at 
odds  with  the  thrust  of  H.R.  1  toward  permitting  States  a  greater 
latitude  in  setting  medicaid  institutional  policy. 

New  York  and  many  other  States  have  pioneered  the  area  of  costing 
and  we  are  loath  to  see  this  erosion  of  prerogatives.  We  believe  that 
only  the  individual  State  is  in  a  position  to  judge  purely  local  economic, 
social,  and  geographic  factors  which  combine  to  dictate  the  optimum 
reimbursement  patterns  for  the  available  mix  of  acute  and  long-term 
care  facilities. 

We  believe  that  this  provision  would  deny  the  States  one  of  the  tools 
most  essential  to  helping  them  shape  the  development  of  their  health 
care  systems. 

In  any  event,  we  do  think  that  it  should  be  amended  at  least  to  spe- 
cifically key  the  determination  of  this  differential  to  include  both  op- 
erating and  capital  costs.  If  this  is  not  done  the  capital  construction 
and  improvement  loan  programs  operated  by  New  York  and  other 
States  will  be  sharply  handicapped. 

For  instance,  intermediate  care  facilities  seeking  to  provide  new  or 
improved  patient  care  facilities  will  be,  in  effect,  penalized  for  their 
efforts. 

Finally,  it  should  be  clearly  stated  in  this  section  of  H.R.  1  that 
however  the  differential  may  be  established,  the  process  will  take  into 
account  regional  variations  in  long-term  care  facility  operating  costs. 

Now,  our  third  suggestion  has  to  do  with  section  225  of  H.R.  1  which 
establishes  certain  limits  on  payments  for  skilled  nursing  homes  and 
intermediate  care  facilities.  Here,  H.R.  1  would  limit  the  average  per 
diem  costs  for  these  categories  of  care  countable  for  Federal  financial 
participation  to  105  percent  of  such  costs  for  the  same  quarter  of  the 
preceding  year. 

As  you  know,  the  health  care  system  is  subject  to  national  and  re- 
gional inflationary  pressure  beyond  its  control  but  unlike  most  other 
industries,  however,  health  care  is  subject  also  to  a  unique  kind  of 
inflation,  one  dictated  in  part  by  revolutionary  and  costly  advances  in 
technology  which  in  turn  engender  new  Federal  and  State  rules  aimed 
at  insuring  that  all  health  care  facilities  offer  the  best  possible  care. 


2385 


Because  of  this  phenomenon,  controlling  the  health  care  industry's 
inflationary  spiral  is  a  most  delicate  process  requiring  great  flexibil- 
ity and  full  understanding  of  the  medical,  economic,  and  social  forces. 

In  New  York  State  where  we  pioneered  in  health  care  cost  control 
and  in  an  increasing  number  of  other  States  where  cost  control  is  al- 
ready proving  successful,  we  have  seen  progress  only  because  we  have 
maintained  a  delicate  balance  between  the  encouragement  of  better 
quality  care  and  the  moderation  of  costs  of  that  care.  Therefore,  we 
strongly  urge  amendments  to  the  present  form  of  H.R.  1  which  would 
specifically  deal  with  these  issues : 

First,  nonoperational  costs :  If  capital  construction  or  improvement 
costs  are  to  be  calculated  into  that  5-percent  ceiling,  the  impact  on 
nursing  homes  and  intermediate  care  facilities  throughout  the  Nation 
would  be  catastrophic.  Facilities  wishing  to  construct  new  structures 
or  to  renovate  existing  plants  would  be  effectively  barred  from  doing 
so.  Moreover,  States  such  as  New  York  which  have  developed  health 
facility  loan  programs  would  see  their  efforts  to  upgrade  health  care 
virtually  killed.  A  flat  5 -percent  ceiling  would  have  this  impact  simply 
because  the  cost  of  amortizing  construction  and  mortgage  costs  in  to- 
day's economy  can  constitute  from  10  to  20  percent  of  the  per  diem  rate 
in  a  long-term  care  facility. 

Second,  concerning  employee  wages,  H.R.  1,  as  presently  constituted 
excludes  only  those  salary  increases  mandated  under  Federal  mini- 
mum wage  legislation  from  the  105  percent  calculation.  But  in  New 
York  and  many  other  States  minimum  wages  well  above  the  Federal 
standard  have  been  established  and  are  periodically  raised.  Moreover,, 
many  States  are  in  the  midst  of  a  period  of  rapid  upward  adjustment 
in  health  care  industry  wages.  Labor  contracts  are  being  signed  which 
are  fast  propelling  hospital  and  long-term  care  salaries  up  to  and  be- 
yond the  general  wage  levels  of  other  industries.  This  adjustment  is 
long  overdue  but  it  is  costing,  in  many  cases,  far  more  than  would  be 
permissible  under  a  flat  5 -percent  inflation  ceiling. 

Third,  improvements  in  care:  A  5-percent  limitation  on  increased 
costs  would  also  seriously  jeopardize  continuing  improvements  in  the 
quality  of  long-term  care  which  flow  from  changes  in  State  health 
care  codes  and  in  Federal  medicare  and  medicaid  regulations.  If  the 
added  costs  necessitated  by  essential  regulations  are  to  be  calculated 
into  that  5-percent  limit  without  exception,  many  long-term  care  fa- 
cilities will  be  forced  out  of  the  medicaid  program. 

Our  fourth  principal  area  of  concern  relates  to  section  232  of  H.R.  1 
which  spells  out  the  means  of  determination  of  reasonable  costs  of 
inpatient  hospital  services  in  both  the  medicaid  and  the  maternal  and 
child  health  programs. 

This  section  provides  that  while  States  will  be  allowed  to  develop 
methods  and  standards  for  reimbursing  the  reasonable  costs  of  med- 
icaid supported  inpatient  hospital  services,  such  costs  cannot  exceed 
medicare  rates.  Now  medicare  operates  on  the  premise  that  the  average 
daily  cost  for  a  spell  of  illness  is  less  for  a  medicare  patient  than  for  a 
medicaid  patient. 

Also  we  have  some  questions  in  our  statement  about  the — whether  or 
not  the  medicaid  method  of  determining  costs  is  the  best  one  and  we 
believe  the  two  should  not  be  tied  together  at  this  time. 


2386 


That  summarizes  the  statement  I  wish  to  present  to  you  and  I  ap- 
preciate very  much  this  opportunity  of  appearing-  before  you. 
The  Chairman.  Thank  you  very  much. 
Are  there  any  questions,  gentlemen  ? 
Senator  Ribicoff.  I  have  one,  Mr.  Chairman. 

I  am  wondering,  Dr.  Ingraham,  at  present  there  are  three  different 
HEW  agencies  involving  the  standard  setting  and  standards  of  care 
for  medicare  and  medicaid.  Does  this  pose  any  problem  for  the  State 
having  three  agencies  telling  you  what  you  ought  to  be  doing  ? 

Dr.  Ingraham.  Yes ;  it  does.  They  frequently  are  contradictory  and 
it  does  make  much  greater  effort,  of  course,  from  our  point  of  view.  My 
association  believes  that  there  is  a  tremendous  necessity  for  combining 
health  agencies  in  Washington.  As  a  matter  of  fact,  we  have  proposed 
that  there  should  be  one  Department  of  Health  and  somewhat  face- 
tiously I  said  it  should  have  just  one  telephone  number  precisely  for 
this  reason,  so  that  the  States  would  know  with  whom  they  must  deal 
and  would  have  uniform  regulations  and  interpretations  of  regula- 
tions. 

Senator  Ribicoff.  In  other  words,  the  Medical  Services  Administra- 
tion, the  Community  Health  Services,  the  Bureau  of  Health  Insur- 
ance— ought  to  be  consolidated  at  least  under  the  Assistant  Secretary 
of  Health  so  there  would  be  one  directive  going  out  to  the  States  in- 
stead of  having  three  contradictory  ones  ? 

Dr.  Ingraham.  It  would  be  very  helpful,  sir. 

Senator  Ribicoff.  That  is  all,  Mr.  Chairman. 

The  Chairman.  Any  further  questions,  gentlemen  ? 

Thank  you  very  much,  Dr.  Ingraham. 

Dr.  Ingraham.  Thank  you,  sir. 

(The  prepared  statement  of  Dr.  Ingraham  follows:) 

Prepared  Statement  of  Hollis  S.  Ingraham,  M.D. 

SUMMARY 

1.  The  Association  of  State  and  Territorial  Health  Officers  supports  welfare 
reform  provisions  of  H.R.  1. 

2.  The  Association  endorses  H.R.  1  provisions  which  would  provide  economic 
and  administrative  incentives  for  individual  states  to  improve  the  quality  and 
availability  of  health  care. 

3.  The  Association  urges  amendments  to  strengthen  individual  states'  involve- 
ment in  administering  health  care  components  of  H.R.  1  as  follows : 

A.  Permit  individual  states  to  determine  appropriate  means  of  conducting 
utilization  and  medical  review  of  long  term  care  Title  XIX  (Medicaid)  bene- 
ficiaries (Section  207)  ; 

B.  Permit  individual  states  to  determine  appropriate  Title  XIX  reimburse- 
ment differential  between  skilled  nursing  homes  and  intermediate  care  facilities 
(Section  207)  ; 

C.  Exempt  certain  essential  cost  increases  (capitalization,  salary  increases 
and  expenses  mandated  by  Federal  and  state  regulations)  from  five  per  cent  limit 
on  long  term  care  per  diem  rate  inflation  (section  225)  ; 

D.  Permit  individual  states  to  set  formulae  for  relating  Medicaid  to  Medicare 
inpatient  hospital  rates  (Section  232). 

Mr.  Chairman,  members  of  the  Committee.  I  am  Dr.  Hollis  S.  Ingraham,  im- 
mediate past  president  of  the  Association  of  State  and  Territorial  Health  Officers 
and  Commissioner  of  Health  of  the  State  of  New  York. 

The  Association  which  was  established  in  1942,  represents  the  public  health 
authorities  of  the  50  states,  the  District  of  Columbia.  Guam,  Puerto  Rico,  the 
Trust  Territory  of  the  Pacific  and  the  Virgin  Islands.  Prior  to  1942.  the  leaders 
of  these  agencies  had  met  annually  since  1902  when  the  Congress  authorized 


2387 


the  United  States  Surgeon  General  to  convene  meetings  of  state  health  officers. 

As  its  name  and  history  imply,  the  Association  is  intensely  interested  in  any 
national  legislation  which  impinges  upon  the  common  weal  of  the  citizen  whose 
good  health  we  serve  and  whose  best  health  interests  we  seek  to  represent  in 
Washington. 

Most  of  the  national  debate  over  H.R.  1  has  centered  on  the  welfare  reform 
aspects  of  this  historic  legislation,  aspects  which  my  Association  strongly  sup- 
ports. We  believe  that  a  Federal  assumption  of  key  public  assistance  responsi- 
bilities would  at  once  stabilize  our  welfare  system  and  remove  an  increasingly 
intolerable  financial  burden  from  the  larger,  urbanized  states  which  now  are 
carrying  a  disproportionate  share  of  what  is,  in  fact,  a  common  national  problem. 

However,  too  little  of  this  debate  has  focused  on  a  number  of  major  changes 
that  enactment  of  this  statute  would  wreak  on  the  nation's  health  care  system. 
It  is  my  purpose  today  to  discuss  briefly  what  some  of  these  changes  will  mean 
to  the  individual  states  and  to  point  out  some  provisions  of  this  legislation 
which  my  Association  believes  must  be  substantively  amended  if  H.R.  1  is  to 
further  the  cause  of  sound,  accessible  health  care  in  America. 

The  Association  applauds  the  overall  thrust  of  H.R.  1  with  respect  to  its 
health  care  provisions.  We  are  particularly  hopeful  that  this  legislation,  if 
coupled  with  a  sound  national  health  insurance  program,  will  have  a  significant 
stabilizing  effect  on  the  revenue  sources  of  our  health  care  system.  Such  stability 
would  redound  to  the  benefit  of  all  segments  of  society  by  permitting  more 
rational  planning  for,  and  organization  of,  health  care  services. 

We  further  applaud  the  emphasis  that  this  legislation  places  on  the  role  of 
the  individual  states  with  respect  to  implementing  many  long-needed  improve- 
ments in  the  health  care  system,  improvements  which  have  previously  been  dif- 
ficult, if  not  impossible,  in  some  areas  of  the  nation,  largely  because  of  uncertain 
national  policy  and  inadequate  national  financial  support.  This  legislation  would 
make  possible  the  extension  to  all  areas  of  the  country  of  several  innovative  con- 
cepts already  proven  in  New  York  and  other  major  states.  These  include :  truly 
comprehensive  health  facility  planning ;  the  involvement  of  public  health  agencies 
in  actively  promoting  and  reviewing  the  quality  of  institutional  health  care; 
and  the  creation  and  encouragement  of  pre-paid  preventive  health  care 
organizations. 

Armed  with  the  incentives  provided  by  H.R.  1,  all  states  would  be  better 
able  to  join  in  speeding  the  day  when  all  Americans,  regardless  of  economic 
standing,  will  have  ready  access  to  high  quality  health  care  services  whenever 
and  wherever  they  may  need  them — and  at  a  price  this  nation  can  afford. 

As  my  statement  must  be  brief,  I  will  confine  my  specific  comments  to  four 
provisions  which  the  Association  believes  must  be  re-structured  to  ensure  that 
the  administrative  and  financial  tools  provided  in  this  legislation  can  be  most 
effectively  used  by  the  states  in  accomplishing  the  objectives  of  H.R.  1. 

The  first  of  our  suggested  amendments  concerns  Section  207  wherein  a  series 
of  incentives  are  established  to  encourage  the  states  to  emphasize  preventive 
health  care  under  Medicaid. 

While  the  Association  strongly  supports  the  intent  embodied  in  these  incen- 
tives, we  fear  that  several  of  the  disincentives  provided  in  H.R.  1  to  discourage 
prolonged  institutional  care  will,  if  not  amended,  cause  major  problems  fof 
the  states. 

For  example,  H.R.  1  demands  a  reduction  in  the  Federal  Medicaid  reimburse- 
ment rate  by  one-third  after  the  first  60  days  of  general  hospital  or  skilled 
nursing  home  care  unless  the  state  establishes  that  it  has  an  effective  utiliza- 
tion review  program.  At  face  value,  this  provision  seems  unquestionably  good. 
However,  rather  than  establish  the  principle  and  permit  leeway  for  its  exe- 
cution, the  precise  means  of  utilization  review  of  nursing  home  services  is  spelled 
out  in  the  statute,  to  wit :  each  Medicaid  patient  must  be  individually  reviewed 
by  a  professional  team  whose  members  are  neither  directly  involved  with  the 
care  of  that  patient  nor  employed  by  or  financially  interested  in  any  skilled 
nursing  home. 

The  Association  agrees  that  periodic  utilization  and  medical  review  of  hos- 
pital and  long  term  care  are  essential  to  ensuring  that  Medicaid  services  are 
properly  delivered.  But  we  do  not  agree  that  the  specific  means  of  accomplish- 
ing these  practices  should  be  spelled  out  in  this  detail  in  Federal  legislation. 
Rather,  we  believe  that  individual  states  should  be  permitted  to  experiment 
with  innovative  utilization  and  medical  review  programs  best  suited  to  their 


2388 


unique  situations  such  as  selecting  sampling  on  a  significant  percentage  of  Medic- 
aid cases  with  application  of  modern  computer  technology  to  determine  whether 
the  entire  system  is  working  to  everyone's  best  advantage. 

In  New  York  State,  to  cite  an  example,  there  are  now  more  than  43,000  Medic- 
aid patients  in  more  than  630  skilled  nursing  homes,  all  of  whom,  under  this 
section  of  H.R.  1  and  under  existing  Medical  rules,  must  be  individually  screened 
annually.  Moreover,  under  H.R.  10604  which  became  law  two  months  ago,  more 
than  24,000  Medicaid  patients  in  intermediate  care  facilities  were  added  to 
the  caseload  which  must  be  individually  reviewed  in  this  cumbersome  manner. 
At  a  time  when  there  are  pressing  shortages  in  virtually  all  medical  manpower 
disciplines,  we  question  whether  the  cost  of  this  bed-by-bed  review  approach 
is  the  wisest  use  of  Medicaid  program  funds. 

We  further  believe  that  the  categorical  restrictions  placed  on  mental  hos- 
pital inpatient  care  under  this  section  of  H.R.  1  are  unduly  stringent.  To  re- 
duce Federal  Medicaid  reimbursement  by  one-third  after  90  days,  and  to  cut 
off  any  degree  of  Federal  aid  after  365  days  of  care  in  a  lifetime  will  inevitably 
lead  to  serious  hardship  for  families  of  the  long  time  mentally  ill  who  can- 
not qualify  for  other  forms  of  public  assistance. 

Our  second  question  relates  to  another  feature  of  Section  207,  the  provision 
that  the  Secretary  of  Health,  Education  and  Welfare  is  to  compute  a  reasonable 
cost  differential  for  reimbursement  between  skilled  nursing  homes  and  inter- 
mediate care  facilities. 

This  provision  seems  at  direct  odds  with  the  thrust  of  H.R.  1  toward  per- 
mitting states  a  greater  latitude  in  setting  Medicaid  institutional  reimbursement 
policy.  Were  this  section  consistent  with  that  thrust,  the  states  would  determine 
the  proper  differential,  basing  it  on  the  economic  realities  of  their  own  health 
care  system.  New  York  and  many  other  states  have  pioneered  in  this  area  and  we 
are  loathe  to  see  this  erosion  of  our  prerogatives.  Only  the  individual  state  is  in 
a  position  to  judge  purely  local  economic,  social  and  geographic  factors  which 
combine  to  dictate  the  optimum  reimbursement  patterns  for  the  available  mix  of 
acute  and  long  term  care  facilities.  For  the  Federal  government  to  pre-empt  this 
function  would  be  to  deny  the  states  one  of  the  tools  most  essential  to  helping 
them  shape  the  development  of  our  health  care  system. 

In  any  event,  H.R.  1  should  at  the  very  least  be  amended  to  specifically  key  the 
determination  of  this  differential  to  include  both  operating  and  capital  costs.  If 
this  is  not  done,  the  capital  construction  and  improvement  loan  programs  operated 
by  New  York  and  other  states  will  be  sharply  handicapped.  To  cite  but  one  specific 
impact  of  this  provision  if  it  is  not  amended  :  intermediate  care  facilities  seeking 
to  provide  new  or  improved  patient  care  facilities  will  be,  in  effect,  penalized  for 
their  efforts. 

Finally,  it  should  be  clearly  stated  in  this  section  of  H.R.  1  that  however  the 
differential  may  he  established,  the  process  will  take  into  account  regional  varia- 
tions in  long  term  care  facility  operating  costs.  This  provision  would  be  particu- 
larly important  to  large,  urbanized  states  where  extensive  rural  areas  surround 
major  urban  centers. 

Our  third  objection  has  to  do  with  section  225  of  H.R.  1  which  establishes  cer- 
tain limits  on  payments  for  skilled  nursing  homes  and  intermediate  care  facilities. 

Here,  H.R.  1  would  limit  the  average  per  diem  costs  for  these  categories  of  care 
countable  for  Federal  financial  participation  to  105  per  cent  of  such  costs  for  the 
same  quarter  of  the  preceding  year. 

The  health  care  system,  like  all  other  industries,  is  subject  to  national  and 
regional  inflationary  pressures  beyond  its  control.  Unlike  most  other  industries, 
however,  health  care  is  subject  also  to  a  unique  kind  of  inflation,  one  dictated 
in  part  by  revolutionary — and  costly — advances  in  technology  which  in  turn 
engender  new  Federal  and  state  rules  aimed  at  ensuring  that  all  health  care 
facilities  offer  the  best  possible  care,  incorporating  innovative  technology,  new 
classes  dt  medical  professionals,  new  medicines  and  new  treatment  methodologies. 

Because  of  this  phenomenon,  controlling  the  health  care  industry's  inflationary 
spiral  is  a  most  delicate  process  requiring  great  flexibility  and  full  understanding 
of  the  medical,  economic  and  social  forces  working  to  push  medical  care  costs  up. 

In  New  York  iState,  where  we  have  pioneered  in  health  care  cost  control,  and  in 
an  increasing  number  of  other  states  where  Cost  control  is  already  proving  suc- 
cessful, We  have  seen  progress  only  hecause  we  have  maintained  a  delicate  bal- 
ance between  the  encouragement  of  better  quality  care  and  the  moderation  of 
costs  Of  that  care.  The  inflexible  five  per  cent  inflation  celling  dictated  by  H.R.  1 
could  do  incalculable  damage  to  that  balance. 


2389 


Therefore,  we  strongly  urge  amendments  to  the  present  form  of  H.R.  1  which 
would  specifically  deal  with  these  issues  : 

1.  Non-operational  costs. — If  capital  construction  or  improvement  costs  are  to 
be  calculated  into  that  five  per  cent  ceiling,  the  impact  on  nursing  homes  and 
intermediate  care  facilities  throughout  the  nation  would  be  catastrophic.  Facili- 
ties wishing  to  construct  new  structures  or  to  renovate  existing  plants  would  be 
effectively  barred  from  doing  so.  Moreover,  states  such  as  New  York  which  have 
developed  health  facility  loan  programs  would  see  their  efforts  to  upgrade 
health  care  virtually  killed.  A  flat  five  per  cent  ceiling  would  have  this  impact 
simply  because  the  cost  of  amortizing  construction  and  mortgage  costs  in  today's 
economy  can  constitute  from  10  to  20  per  cent  of  the  per  diem  rate  in  a  long 
term  care  facility. 

All  states,  including  New  York,  bear  the  responsibility  to  ensure  that  all 
health  care  facilities  are  professionally  and  structurally  upgraded  to  meet  at 
least  minimum  Federal  and  state  standards.  New  York  and  many  other  states 
have  embarked  on  massive  aid  programs  designed  to  make  these  improvements 
possible.  To  underline  the  potential  impact  of  a  flat  five  per  cent  inflation  ceiling 
on  not  only  government  but  also  private  capitalization  programs,  I  will  detail 
some  of  the  experience  New  York  has  had  over  the  past  several  years. 

In  1966,  when  the  New  York  State  Department  of  Health  assumed  comprehen- 
sive health  facility  "franchising"  powers,  we  had  42,500  long  term  care  beds  in 
operation,  with  fully  half  of  these  failing  to  meet  current  Federal  and  state 
standards.  Today,  we  have  over  69,000  long  term  care  beds  in  use,  with  only  11 
per  cent  of  these  under  applicable  standards  to  any  substantial  degree.  More- 
over, we  have  an  additional  47,000  beds  either  under  construction  or  planned 
to  be  built  by  1975,  a  number  which  will  greatly  expand  our  long  term  care 
capacity  and  enable  us  to  phase  out  existing  substandard  facilities  over  the  next 
several  years. 

Obviously,  this  progress  in  meeting  New  York  State's  long  term  care  needs  has 
been  costly.  For  the  State,  it  has  meant  the  commitment  of  almost  $1  billion  out 
of  health  facility  mortgage  loan  programs  of  $4.7  billions,  to  provide  a  means  of 
financing  non-profit  and  public  nursing  homes  and  intermediate  care  facilities. 
Also  since  1966,  private  capitalization  in  New  York  State  has  financed  hundreds 
of  millions  of  dolars  of  long  term  care  facility  construction  and  renovation. 

The  medical  need  for  this  massive  infusion  of  capital  is  undeniable.  But  re- 
paying that  capital — a  process  which  can  be  reflected  in  10  to  20  per  cent  of  a 
long  term  care  facility's  per  diem  rate  over  30  to  40  years — is  unavoidable.  To 
deny  these  costs  through  imposition  of  an  arbitrary  per  diem  inflation  ceiling 
would  yield  only  a  short  term,  show-case  financial  saving.  In  the  long  view,  such 
a  policy  would  result  only  in  an  unacceptable  disservice  to  the  medical  needs  of 
our  long  term  care  population. 

Unless  H.R.  1  is  amended  specifically  to  exclude  construction  costs  from  that 
five  per  cent  ceiling,  our  health  care  system  could  face  a  dilemma  of  insoluble 
proportions.  Nursing  homes  and  intermediate  care  facilities  would  have  to  choose 
between  shifting  these  costs  to  non-Medicaid  patients,  who  comprise  only  30  per 
cent  of  some  states'  long  term  care  patient  populations,  or  eventually  close  their 
doors  to  up  to  70  per  cent  of  those  needing  long  term  care. 

2.  Employee  wages. — H.R.  1,  as  presently  constituted,  excludes  only  those 
salary  increases  mandated  under  Federal  minimum  wage  legislation  from  the 
105  per  cent  calculation.  But  in  New  York  and  many  other  states,  minimum 
wages  well  above  the  Federal  standard  have  been  established  and  are  periodically 
raised.  Moreover,  many  states  are  in  the  midst  of  a  period  of  rapid  upward  ad- 
justment in  health  care  industry  wages.  Labor  contracts  are  being  signed  which 
are  fast  propelling  hospital  and  long  term  care  salaries  up  to  and  beyond  the 
general  wage  levels  of  other  industries.  This  adjustment  is  long  overdue — but  it 
is  costing,  in  many  cases,  far  more  than  would  be  permissible  under  a  flat  five 
per  cent  inflation  ceiling. 

3.  Improvements  in  care. — A  five  per  cent  limitation  on  increased  costs  would 
also  seriously  jeopardize  continuing  improvements  in  the  quality  of  long  term 
care  which  flow  from  changes  in  state  health  care  codes  and  in  Federal  Medicare 
and  Medicaid  regulations.  If  the  added  costs  necessitated  by  essential  regulations 
are  to  be  calculated  into  that  five  per  cent  limit  without  exception,  many  long 
term  care  facilities  will  be  forced  out  of  the  Medicaid  program — and  perhaps  out 
of  business  altogether. 

Our  fourth  principal  area  of  concern  relates  to  section  232  of  H.R.  1  which 
spells  out  the  means  of  determination  of  reasonable  costs  of  inpatient  hospital 


2390 


services  under  both  the  Medicaid  and  the  Maternal  and  Child  Health  programs. 

This  section  provides  that  while  states-  will  be  allowed  to  develop  methods 
and  standards  for  reimbursing  the  reasonable  costs  of  Medicaid-supported  in- 
patient hospital  services,  such  costs  cannot  exceed  Medicare  rates. 

This  provision  if  enacted  without  amendment,  will  generate  a  tremendous 
accounting  dilemma  for  all  states  in  that  it  is  impossible  to  equate  Medicare  and 
Medicaid  service  costs.  Medicare  operates  on  the  premise  that  the  average  daily 
cost  for  a  spell  of  illness  is  less  for  a  Medicare  patient  than  for  a  Medicaid 
patient.  This  disparity  results  from  the  actuarial  fact  that  the  Medicare  patient, 
due  to  age  and  general  physical  condition,  is  hospitalized  longer  for  a  given 
illness  than  is  his  younger  Medicaid  counterpart. 

If  Medicaid  rates  must  be  equated  with  Medicare  rates,  it  will  be  necessary 
for  each  state  to  subject  each  individual  medical  service  offered  by  each  hospital 
to  the  complex  Ration  of  Cost  to  Charges  (RCC)  process  mandated  by  Federal 
rules.  The  effect  of  this  process  on  this  nation's  more  than  6,000  hospitals  will  be 
tremendous.  And  particularly  tragic  would  be  the  inflationary  impact  on  services 
provided  to  non-Medicaid-Medicare  eligibles  as  the  hospitals  would  be  forced  to 
to  look  elsewhere  to  make  up  Medicaid  deficits.  Patients  with  indemnity- 
type  health  insurance  coverage  would  suffer  the  most  as  their  limited  health  care 
dollars  would  be  eroded. 

Rather  than  establish  this  impossible  equation  in  Federal  law,  we  strongly 
urge  that  H.R.  1  be  amended  to  permit  the  states  to  set  their  own  formulae  for 
relating  Medicaid  to  Medicare  rates. 

We  in  the  states  and  territories  are  more  than  eager  to  work  with  Wash- 
ington toward  remedying  the  lingering  ills  of  the  nation's  health  care  system.  We 
ask  only  that  the  Congress  heed  our  plea  and  make  the  individual  states  truly 
creative  partners,  rather  than  sidewalk  superintendents,  in  this  most  critical 
national  task. 

The  Chairman.  The  next  witness  is  Mr.  Jeffery  Cohelan,  executive 
director  of  the  Group  Health  Association  of  America.  Inc.,  accom- 
panied by  Dr.  W.  Palmer  Dearing. 

STATEMENT  OP  JEFFERY  COHELAN,  EXECUTIVE  DIRECTOR, 
GROUP  HEALTH  ASSOCIATION  OF  AMERICA;  ACCOMPANIED  BY 
W.  PALMER  DEARING,  M.D.,  MEDICAL  CONSULTANT,  GHAA 

Mr.  Cohelan.  Mr.  Chairman,  my  name  is  Jeffery  Cohelan.  I  am  the 
executive  director  of  Group  Health  Association  of  America.  GHAA 
is  the  national  association  representing  the  major  community  and 
consumer-oriented  prepaid  group  practice  plans  in  the  United  States 
and  Canada.  Our  affiliated  plans  are  responsible  for  the  health  care 
of  4  million  people  and  in  addition  GHAA  is  the  recipient  of  a  Federal 
grant  for  the  purpose  of  organizing  prepaid  group  practice  plans  in 
some  33  cities  over  the  next  few  years.  Currently  we  are  active  in  some 
20  cities  where  our  type  of  health  maintenance  organizations  are  in 
various  stages  of  development. 

I  am  accompanied  this  morning.  Mr.  Chairman,  by  W.  Palmer  Dear- 
ing. M.D..  medical  consultant  to  GHAA  and  my  immediate  predeces- 
sor. Dr.  Dearing  served  as  executive  director  for  10  years  and  before 
that  was  the  Deputy  Surgeon  General  of  the  U.S.  Public  Health  Serv- 
ice. He  is  particularly  qualified  to  speak  on  the  subject  of  our  interest 
in  this  legislation. 

Mr.  Chairman,  you  may  recall  that  GHAA  appeared  before  this 
committee  on  April  25,  1971.  during  the  hearings  on  various  national 
health  insurance  proposals.  At  that  time  we  addressed  ourselves  in  a 
general  fashion  to  the  health  maintenance  organizations  concept  in  the 
context  of  our  experience  and  expertise  with  regard  to  prepaid  group 
practice  plans.  TTe  discussed,  you  will  remember,  the  benefits  which 


2391 


a  well-structured  health  maintenance  organization  could  offer  as  an 
alternative  form  of  health  care  delivery  and  set  forth  some  of  the  dif- 
ficulties and  expense  involved  in  their  creation.  We  recommend  specific 
guidelines  for  those  who  seek  to  organize  and  those  who  seek  to  regulate 
health  maintenance  organizations.  We  will  not  take  the  time  of  the 
committee  this  morning  to  reiterate  that  testimony.  We  will  confine 
ourselves  to  the  existing  health  maintenance  organizations  provisions 
of  H.R.  1.  We  also  have  some  comments  on  catastrophic  health  insur- 
ance and  the  peer  review  amendments  in  the  event  the  committee  con- 
siders adding  these  to  the  bill. 

The  health  maintenance  organizations  provisions  of  H.R.  1  will  be 
the  first  major  legislative  input  into  the  health  maintenance  orga- 
nizations concept  and  will  have  an  important  impact  on  the  national 
health  policy.  Thus  in  its  work  on  the  health  maintenance  organiza- 
tions provisions  of  H.R.  1  this  committee  has  an  important  opportunity 
to  improve  the  chances  for  financially  sound  and  well-structured  health 
maintenance  organizations. 

Ultimately,  we  hope  that  providing  medicare  benefits  through  pre- 
payment to  health  maintenance  organizations  will  result  in  medicare 
beneficiaries  constituting  a  substantial  membership  base  in  health 
maintenance  organizations. 

But  we  do  not  expect  any  appreciable  immediate  increase  in  health 
maintenance  organizations  membership  until  some  time  has  elapsed 
after  the  enactment  and  implementation  of  these  provisions.  Rather, 
we  think  there  will  be  a  slow  but  steady  growth  of  medicare  bene- 
ficiaries in  health  maintenance  organizations  which  will  somewhat 
parallel  the  growth  and  acceptability  of  health  maintenance  organiza- 
tions by  the  public  as  a  whole.  Medicare  beneficiaries  will  be  reluctant 
to  change  traditional  patterns  of  health  care  simply  because  an  alter- 
native system  has  been  made  available  to  them.  The  small  number  of 
existing  health  maintenance  organizations  in  the  country  available  for 
immediate  enrollment  will  likewise  limit  growth. 

I  turn  now  to  catastrophic  insurance,  Mr.  Chairman  and  members 
of  the  committee,  and  I  would  like  to  comment  on  one  proposal  to  help 
solve  the  Nation's  health  care  crisis  which  has  attracted  considerable 
support  among  some  segments  of  the  health  industry  and  public  which 
would  seriously  affect  prepaid  group  practice  plans.  This  is  the  pro- 
posal to  initiate  a  federally  sponsored  program  of  major  medical  or 
catastrophic  illness  as  the  next  step  toward  meeting  the  Nation's  rec- 
ognized health  needs. 

Group  Health  Association  of  America  recognizes,  expensive,  long- 
term  illnesses.  Our  association  would  not  oppose  any  effective  measure 
for  dealing  with  this  problem. 

We  urge  this  committee  to  recognize,  however,  that  catastrophic 
coverage  is  no  substitute  for  comprehensive  health  coverage.  More- 
over, emphasis  on  catastrophic  coverage  right  now  would  almost  cer- 
tainly undermine  efforts  long  overdue  and  now  underway  to  give 
proper  emphasis  to  primary  care  and  ambulatory  services.  New  em- 
phasis on  major  illness  would  most  certainly  distort  the  allocation  of 
national  health  care  resources,  turning  them  again  toward  hospitaliza- 
tion and  other  instituitonal  treatment  and  away  from  prevention, 
home  care,  and  other  neglected  aspects  of  health  care. 


2392 


All  the  catastrophic  coverage  proposals  share  the  fundamental  idea 
that  insurance  should  take  over  only  after  a  family  has  paid  hundreds 
or  even  thousands  of  dollars  for  medical  expenses. 

Experts  in  health  care  economics  who  do  nor  come  from  the  vested 
interests  in  the  field  tell  us  that  national  insurance  limited  to  cata- 
strophic coverage  would  accelerate  the  current  inflation  of  health  care 
costs.  Also,  we  have  had  sufficient  experience  in  the  years  of  medicare 
to  realize  that  providers  will  be  motivated  to  raise  their  prices  so  that 
a  family  or  individual  can  become  eligible  for  catastrophic  benefits. 
The  net  result  would  certainly  be  a  further  boost  in  charges  for  all 
aspects  of  health. 

Other  testimony  before  this  distinguished  committee,  notably  that 
of  the  AFL-CIO  and  the  Xational  Council  of  Senior  Citizens,  has 
gone  much  more  into  detail  with  respect  to  the  disastrous  push  toward 
further  inflation  and  the  distortion  of  priorities  in  deployment  and 
use  of  our  health  resources  that  would  result  from  a  separate  cata- 
strophic illness  insurance  program. 

If.  however,  catastrophic  illness  or  major  medical  insurance  were 
to  be  enacted  as  a  special  benefit  in  whatever  context,  special  provisions 
must  be  made  for  group  practice  plans  if  they  and  their  subscribers 
are  not  be  seriously  disadvantaged  and  overcharged. 

The  comprehensive  benefits  of  group  practice  plans  include  cle  facto 
major  medical  benefits  in  their  regular  contracts.  Whereas,  major 
medical  coverage  added  upon  typical  commercial  and  Blue  Cross- 
Blue  Shield  contracts  would  cost  S-i  to  84.50  per  month,  the  supplemen- 
tal coverage  added  to  a  group  practice  plan  benefit  would  cost  in  the 
neighborhood  of  $1  to  $1.50  per  month.  A  single  national  premium 
charging  indemnity  insurance  rates  would  take  about  S3  per  month 
from  the  group  practice  plan  subscribers. 

Therefore,  a  catastrophic  program  based  on  cost  reimbursement  or 
premium  subsidy  after  large  deductibles  make  the  value  of  the  cata- 
strophic override  worth  worth  much  less  to  members  of  a  prepaid 
group  practice  than  to  other  health  plans.  Further,  prepaid  group 
practice  plans  are  built  upon  incentives  for  minimal  hospitalization 
and  preventive  health  care.  It  would  seriously  diminish  the  effective- 
ness of  prepaid  group  practice  plans  in  the  health  care  market  if  these 
differences  were  ignored. 

In  order  to  assure  the  members  of  our  plans  equitable  treatment  if 
a  catastrophic  health  insurance  program  along  the  lines  of  S.  1376  is 
enacted,  there  should  be  provision  for  prepayment  to  oToup  practice 
plans  on  behalf  of  their  members  from  the  program.  The  prepayment 
should  equitably  relate  to  payments  from  the  program  in  the  nonpre- 
paid  group  practice  area.  This  prepaid  premium  from  the  Federal 
program  should  take  into  account  the  cost  of  care  in  the  geographic 
area  where  the  plans  operate. 

Furthermore,  the  prepaid  premium  should  be  integrated  into  the 
regular  pay  structure  of  our  plans.  Such  a  prepaid  premium  under  a 
catastrophic  health  insurance  program  will  help  to  preserve  the  equi- 
table position  of  our  members  to  that  of  members  of  other  plans. 

Prepaid  group  practices  should  not  be  required  to  cover  all  of  the 
services  involved  to  the  extent  of  the  deductible  under  the  catastrophic 
program.  This  could  cause  diversion  of  the  plan  resources  from  higher 


2393 


priority  services  or  might  mean  a  further  burden  in  the  form  of  rate 
increases  on  our  members.  This  is  especially  true  in  the  case  of  smaller 
plans  where  such  coverage  has  a  greater  actuarial  impact. 

At  this  point,  Mr.  Chairman,  I  submit  for  the  record  some  sug- 
gested language  amending  S.  1376  incorporating  the  foregoing. 

I  am  on  page  9  and  I  quote : 

Section  2004(a)  (4).  In  the  case  of  an  organization  which  provides  or  arranges 
comprehensive  health  care  services  for  a  defined  population,  the  Secretary  shall 
authorize  per  capita  payments  to  such  an  organization  on  behalf  of  eligible  in- 
dividuals enrolled  in  such  organizations.  A  combined  per  capita  payment  may  be 
made  to  such  organizations  for  the  services  set  forth  in  subsections  2004(a)  (3), 
which  are  provided  or  arranged  by  such  organizations.  Such  per  capita  payments 
shall  equal  the  average  payments  made  on  behalf  of  eligible  individuals  resid- 
ing in  the  general  geographic  area  served  by  such  an  organization  and  shall  be 
based  upon  the  undertaking  by  such  organizations  or  arrange  services  to  eligible 
individuals  enrolled  in  such  organizations  and  shall  not  be  based  upon  specific 
services  rendered  to  each  eligible  individual. 

Finally,  Mr.  Chairman  and  members  of  the  committee,  we  have  some 
comments  on  the  amendment  introduced  by  Senator  Bennett  on  Janu- 
ary 25, 1972,  dealing  with  professional  standards  review  organizations. 

Our  main  concern  with  the  peer  review  proposal  from  its  inception 
stemmed  from  review  of  prepaid  group  practice  operations  and  pro- 
cedures by  physicians  whose  orientation  has  in  the  main  been  outside 
a  prepaid  group  practice  setting.  We  were  less  concerned  about  the 
historical  antagonism  of  the  professional  societies  to  our  system  of 
health  delivery  than  we  were  about  the  lack  of  complete  understand- 
ing by  most  physicians  of  the  complexities  of  our  system. 

Prepaid  group  practices  have  always  had  intrinsic  peer  review  ob- 
jectively rendered.  It  is  the  objectivity  of  peer  review  that  has  always 
given  us  pause.  We  felt  it  would  be  difficult  to  establish  by  statute  a 
system  of  peer  review  which  would  be  free  from  bias  and  rendered 
with  a  full  understanding  of  our  operation. 

Also,  Mr.  Chairman,  we  have  some  concern  with  the  authorization 
and,  indeed,  the  encouragement  for  PSRO's  to  go  into  the  insurance 
business  through  risk-sharing  as  provided  in  section  1170  of  Senator 
Bennett's  amendment.  This  would  seem  to  make  possible  a  whole  chain 
of  insuring  organizations  which  were  also  carrying  out  PSRO  func- 
tions, but  without  any  of  the  standards  and  controls  so  elaborately 
provided  for  with  respect  to  health  maintenance  organizations. 

Also,  whether  or  not  PSRO's  can  also  appropriately  undertake  risk 
for  the  services  they  are  supposed  to  monitor  would  seem  to  us 
questionable. 

Mr.  Chairman  and  members  of  this  distinguished  committee,  this 
concludes  our  statement  and  we,  of  course,  would  be  most  pleased  to 
respond  to  any  questions  that  you  might  have. 

The  Chairman.  Well,  I  am  curious  to  know  how  you  feel  that 
catastrophic  insurance  is  going  to  distort  the  use  of  medical  resources. 
My  impression  is  that  in  these  catastrophic  cases  you  either  provide 
the  care  or  the  person  dies. 

Now,  the  services  are  currently  being  provided.  However,  the  fami- 
lies have  all  their  resources  wiped  out,  and  they  are  heavily  in  debt 
for  many  years  to  come. 

Now,  where  does  that  distort  the  use  of  services  ?  The  services  are 
being  provided.  It  is  just  that  the  resources  of  the  people  have  been 


2394 


wiped  out  and  they  are  very  deeply  and  hopelessly  in  debt  for  mam' 
years  to  come. 

Are  you  suggesting  that  in  instances  of  catastrophic  illness  we  just 
let  them  die  ? 

Mr.  Cohelax.  No.  On  the  contrary,  Senator,  as  I  am  sure  you  would 
recognize,  we  are  very  deeply  dedicated  to  the  idea  of  improvement 
and  expansion  of  our  health  care  services  in  this  country  and  to  meet 
some  of  the  desperate  needs  that  this  committee  is  studying. 

We  do,  however,  feel  that  in  relation  to  some  of  the  things  that  are 
going  on — for  example,  health  maintenance  organizations  and  this 
general  conception  which  speaks  to  the  question  of  providing  health 
care  services  and  perhasps  the  use  of  resources  more  efficiently,  that 
to  concentrate  on  this  particular  item  in  relation  to  these  other  things 
could  possibly  drain  away  very  valuable  resources. 

But,  more  importantly,  we  feel  that  if  the  committee  is  disposed  to 
enact  such  legislation,  they  do  so  with  some  understanding  that  this 
should  not  detract  from  these  other  objectives  that  are  contained  in 
the  measures  now  before  us,  and  that  it  also  be  recognized  that  it 
should  not  be  in  conflict  with  the  purposes  of  a  health  maintenance 
organization  and  that  you  recognize  there  is  a  very  significant  dif- 
ference in  the  fee  for  service  systems  for  health  delivery  and  the  pre- 
payment system  of  health  delivery. 

The  Chatrmax.  Of  course,  I  am  for  ambulatory  services,  and  we 
will  be  doing  more  about  that  as  time  goes  by.  But  my  theory  of  insur- 
ance is  that  you  ought  to  insure  yourself  first  from  the  risk  that  you 
cannot  afford  to  take. 

Now,  we  care  for  the  poor,  under  medicaid.  We  will  probably 
provide  more  care  and  that  is  going  to  cost  a  lot  of  money. 

We  are  putting  about  another  $1.5  billion  in  this  bill  through  medi- 
care for  the  disabled. 

Now.  if  you  are  not  poor  and  you  therefore  do  not  qualify  as  a 
medical  indigent,  you  should  be  able  to  pay  out,  especially  if  you  take, 
as  many  families  do,  a  few  months  to  pay  for  it — you  might  be  able 
to  pay  a  $200  or  $300  medical  bill,  but  that  is  not  what  you  need  the 
insurance  for.  What  you  need  the  insurance  for  is  this  type  thing 
which  comes  about  once  in  a  lifetime  which  can  just  completely  wipe 
out  everything  you  have. 

Senator  Curtis.  Would  you  yield? 

Does  your  plan  take  care  of  catastrophic  cases? 

Mr.  Cohelax.  Most  of  our  plans  provide  for  very  comprehensive 
coverage. 

Dr.  Dearing,  would  you  care  to  comment? 

Senator  Corns.  I  didn't  mean  to  take  his  time:  I  just  wanted  to 
know,  do  you  have  a  ceiling  or  don't  you? 

Mr.  Cohelax.  There  are  certainly  limits,  but  we  provide  very  gen- 
erously in  our  comprehensive  coverage. 

Senator  Curtis.  I  don't  want  to  take  the  time. 

Dr.  Dearixg.  The  group  practice  plans  generally  provide  a  great 
proportion  of  catastrophic  coverage  and  the  figures  which  Mr.  Cohelan 
gave  in  his  testimony  of  the  rates  are  actual  figures  from  the  California 
Kaiser  experience,  in  which  some  of  their  insured  groups  have,  by  col- 
lective bargaining,  a  catastrophic  override  which  they  are  required 


2395 


to  take  and  which  the  employer  or  somebody  pays  for ;  and  this  prices 
out  to  about  $4.50,  whereas  the  cost  of  the  added  services  to  the — above 
the  Kaiser  services  is  only  about  $1,  so  let's  say  they  provide  three- 
quarters  of  what  these  going*  catastrophic  coverages  now  in  existence 
in  the  private  market  cost. 

Senator  Curtis.  Excuse  me,  Mr.  Chairman.  I  didn't  mean  to 
interrupt. 

Mr.  Cohelax.  Mr.  Chairman,  this  would  be  the  measure  of  the  dif- 
ference, in  response  to  the  Senator's  question.  We  do  cover  just  about 
everything. 

Senator  Curtis.  Just  about,  but  you  don't  tell  your  people  you  take 
care  of  everything  that  happens  ? 

Mr.  Cohelax.  So,  indeed,  not  quite,  but  we  would  add  to  that,  Sena- 
tor ;  this  is  the  point,  We  would  think  that  the  catastrophic  concept 
should  be  cared  for  in  a  concept  of  comprehensive  health  care. 

The  Chaikmax.  Then  you  want  me  to  vote  for  the  Kennedy  bill,  I 
take — it  that  is,  the  national  health  insurance  bill  ? 

Mr.  Cohelax.  This  is  not  the  issue  before  us  at  this  time. 

There  are  many  of  our  members,  Senator,  who  are  very  actively  in 
support  of  it,  However,  that  is  not  true  of  all  our  members.  There  is 
a  different  view  of  that  in  terms  of  priorities  in  our  own  organization 
so  I  am  not  prepared  to,  at  this  time,  advise  you  on  how  we  would 
hope  you  might  vote  on  some  other  issue.  But  I  would  think  in  respect 
to  the  matters  that  are  before  you  now,  it  is  highly  relevant  to  our 
concerns  and  common  interest  and  it  has  to  do  with  the  effect  of  any 
legislation  that  might  be  drafted  by  this  distinguished  committee  on 
the  existing  health  maintenance  organizations  arrangements  or  those 
that  are  prospective,  that  we  are  setting  up,  and  we  are  proposing  the 
health  maintenance  organization  option  subject  to  approval  of  this 
committee. 

If  we,  on  the  one  hand,  pass  legislation  that  is  going  to  inhibit  the 
development  of  this  pattern  of  health  care  delivery  it  would,  I  think 
you  might  agree,  be  a  mistake  or  at  least  it  should  be  guarded  against 
and  we  have  suggested  two  things :  We  have  suggested,  on  the  one 
hand,  that  this  might  distract  from  primary  comprehensive  health 
matters.  But  if  you  do  move  in  this  direction.  Senator,  we  would  hope 
that  you  would  not  inhibit  the  existing  health  maintenance  organiza- 
tions or  those  about  to  be  formed  bv  recognizing  the  difference — the 
$1  to  $1.50  as  opposed  to  the  $4.50. 

The  Chairmax.  That  is  fine.  I  am  happy  to  recognize  that  and  try 
to  incorporate  that  feature. 

I  have  paid  a  lot  of  medical  expenses  in  my  lifetime,  not  only  for 
myself  but  for  relatives,  even  to  help  pay  a  friend's  medical  bills 
on  occasion,  and  I  am  familiar  with  these  catastrophic  situations.  I 
have  seen  people  who  are  either  dear  to  me  or  dear  to  someone  who  in 
turn  was  dear  to  me,  have  all  their  resources  wiped  out. 

It  is  pretty  disappointing  for  people  to  have  everything  they  had. 
wiped  out,  and  that  is  what  the  insurance  principle,  is  supposed  to 
protect  against. 

Air.  Cohelax.  Well,  so  far  as  insurance  and  the  concept  of  insur- 
ance, Senator,  the  concept  as  I  understand  it  is  to  spread  the  risk; 
and  what  we  found  in  the  health  field  is  that  this  system  of  experience 


2396 


rating  and  all  the  rest  is  a  combination  of  highly  selective  risks  and 
as  a  result  we  get  all  kinds  of  distortions  in  terms  of  this  broad  concept 
of  risk-taking. 

When  you  look  at  the  health  care  delivery  system  that  we  are 
talking  about,  we  are  not  delivering  dollars ;  we  contract  to  provide 
services  and  this  is  a  very  important  difference.  We  provide  a  set  of 
comprehensive  health  services  and  we  do  not  pay  out  dollars.  In  fact, 
I  think  the  record  will  show  that  one  of  the  great  difficulties  in  the 
health  care  delivery  field  with  cost  reimbursement  formulas  of  one 
sort  or  another  is  that  they  have  been  very  inflationary  because  we 
are  dealing  wtih  dollars;  we  are  not  dealing  with  the  offering  of 
services. 

When  you  contract  for  one  of  the  major  programs  in  our  country — 
HIP  in  New  York,  the  Kaiser  Foundation  Health  Plan,  the  Group 
Health  Cooperative  of  Puget  Sound  which  is  the  first  one  to  occur 
of  about  some  20  odd  throughout  the  country  that  are  of  major  sig- 
nificance and  importance — you  contract  for  services  and,  of  course, 
what  we  are  pointing  out  in  reference  to  catastrophic  is  that  most 
members  of  most  plan9  would  be  pretty  well  covered  on  a  very  serious 
long-term  illness. 

The  Chairman.  That  is  in  your  group  health  plans  ? 

Mr.  Cohelan.  That's  right,  sir,  and  that  is  the  point.  But  if  you 
move  into  the  direction  of  catastrophic  we  think  it  is  vitally  important 
that  you  recognize  that  the  difference  between  the  indemnity  program 
and  the  provision  of  care  program  should  be  taken  into  account,  and 
that  we  ought  to  be  allowed  to  make  certain  adjustments,  for  exam- 
ple, in  the  form  of  increased  benefits. 

We  can  increase  

The  Chairman.  Let  me  ask  you  this :  You  are  taking  care  of  a  great 
deal  of  catastrophic  illness  with  group  health,  but  how  about  the  peo- 
ple who  are  not  in  group  health  plans,  aren't  they  in  a  pretty  bad 
situation  with  regard  to  the  catastrophic  illnesses  ? 

Mr.  Cohelan.  Well,  Senator,  one  of  the  things  we  perceive  on  the 
basis  of  matters  that  are  being  considered  at  this  session  of  Congress 
is  this  very  question.  What  you  are  discussing  is  the  question  of  how 
you  finance  medical  care. 

Now,  to  be  sure,  most  prepaid  group  practice  plans  are  available 
for  people  of  a  certain  level  of  disposable  income  but  one  of  the 
things  that  is  developing  in  the  matter  that  is  now  before  you.  H.R.  1, 
is  the  question  of  providing  an  option  for  over  65  for  a  health  main- 
tenance organization.  There  is  reason  to  believe  and  I  think  the  rec- 
ord will  show  there  is  great  advantage  and  there  will  be  savings  in 
costs  to  the  Government  that  could  flow  from  this.  It  certainly  has  to 
be  tested. 

On  the  other  hand,  there  is  other  legislation  pending.  The  adminis- 
tration, of  course,  has  a  bill  before  you,  the  Health  Maintenance  Orga- 
nization Assistance  Act.  There  is  legislation  pending  in  this  honorable 
body  as  well  as  on  the  other  side  and  it  is  all  addressing  itself  to  the 
question  of  the  organization  and  the  standards  for  a  health  mainte- 
nance organization ;  but  also  it  is  speaking  to  the  question  of  how  the 
low-income  groups  could  possibly  be  handled  in  this  configuration  of 
care  and  the  question  is  simply  one  of  financing.  Either  it  comes  from 


2397 


the  productive  process  generally  or  it  would  come  from  income  trans- 
fers from  Government  and  it  is  perfectly  feasible  and,  in  fact,  many 
of  our  programs  under  pilot  programs  now  are  caring  for  the  low- 
income  groups  by  contract  with  the  Federal  Government. 

In  Portland,  Oreg.,  and  in  Seattle  they  have  very  excellent  experi- 
mental programs  where  they  have  about  9,000  individuals  who  are 
selected  from  the  OEO  population  and  they  are  caring  for  them  and 
caring  for  them  quite  beautifully. 

The  same  thing  is  true  in  other  areas  throughout  the  United  States. 
As  a  matter  of  fact,  right  here  in  Washington  there  is  such  a  program 
with  the  existing  Group  Health  Association  of  Washington  which  is 
the  operating  plan  as  opposed  to  the  organization  that  I  represent. 
But  the  point  is,  Senator,  that  the  low-income  population,  and  the  in- 
come transfer  populations,  the  income  maintenance  populations,  could 
conceivably  work  into  a  configuration  of  health  maintenance  organiza- 
tion care. 

The  Chairman.  Thank  you  very  much. 

Senator  Bennett.  Mr.  Chairman,  I  have  a  couple  of  questions. 

On  the  last  page  of  your  statement,  you  are  very  critical  or  a  little 
critical  of  the  proposed  PSRO  program.  You  say  prepaid  group  prac- 
tices have  always  had  intrinsic  peer  review  objectively  rendered. 

I  have  underlined  "objectively  rendered."  Are  you  afraid  to  have 
someone  else  come  in  and  look  at  your  objectivity  ? 

Mr.  Cohelan.  No.  On  the  contrary,  Senator,  as  the  Senator  well 
knows,  there  has  been  a  long  history  of  hostility  to  the  organization  of 
prepaid  group  practice  programs  and  some  of  it  is  the  result  of  mis- 
understanding or  just  simply  a  lack  of  understanding  on  what  the 
general  thrust  in  the  quality  of  a  group  practice  was.  Many  physicians 
simply  don't  like  group  practice  and,  by  the  way  

Senator  Bennett.  So  you  are  saying  that  the  private  physicians  are 
hypocrites,  they  are  biased,  they  cannot  recognize  good  medical  prac- 
tice if  it  is  practiced  by  a  group  and,  therefore,  you  want  to  be  pro- 
tected  

Mr.  Cohelan.  Senator  

Senator  Bennett  (continuing).  From  inspection  by  them? 

Mr.  Cohelan.  Senator,  if  I  could  respectfully  suggest,  we  think 
no  such  thing,  sir.  We  are  most  respectful  and  most  admiring  of  physi- 
cians. As  a  matter  of  fact,  we  hold  generally  to  the  view  that  has  been 
advanced  by  the  distinguished  Professor  Somers  of  Princeton  Uni- 
versity when  he  says  no  matter  what  health  care  delivery  system  we 
have,  sir,  we  must  have  gruntled  doctors  as  opposed  to  disgruntled 
doctors. 

Your  question  is  somewhat  technical  and  I  would  like  to  ask,  with 
your  permission,  my  colleague,  Dr.  Dearing,  to  respond  to  your  ques- 
tion because  he  is  a  physician. 

Senator  Bennett.  Before  Dr.  Dearing  talks,  let  me  ask  another 
question  or  two  of  you. 

Do  you  know  enough  about  the  whole  PSRO  program,  enough  to 
know  if  there  is  a  PSRO  review  group  formed  in  an  area  where  there 
are  HMO's,  that  the  doctors  who  practice  in  the  HMO's  are  expected 
to  participate  in  the  PSRO  review  ? 

Mr.  Cohelan.  I  would  be  very  pleased  to  hear  that. 


72-573— 72— pt.  5  12 


2398 


Senator  Bennett.  Did  not  you  know  it  ? 
Mr.  Cohelax.  Well,  I  now  know  it. 

Senator  Bexxett.  Well,  in  other  words,  you  have  not  read  the  PSKO 
amendment  very  carefully  to  realize  that  that  is  a  very  essential  part 
of  it. 

Did  you  also  know  that  under  the  program — well,  first,  let  me  say 
that  the  theory  of  the  PSRO  group  is  that  it  rotates :  there  is  no  single 
appointment  of  people  who  are  going  to  check  every  program  and  in 
the  course  of  the  rotation  we  have  what  I  would  consider  to  be  an 
educational  opportunity  both  for  doctors  in  HMO's  and  doctors  out- 
side of  HMO's  crossing  lines  into  the  other  fellow's  business.  Did  you 
know  that  under  the  proposal  the  PSRO  group,  if  it  is  satisfied  with 
the  objectivity  of  the  review,  in-house  review,  either  in  a  hospital  or 
in  HMO  can  accept  that  review  and  not  charge  itself  with  attempting 
to  duplicate  it  ? 

Mr.  Cohelax.  Senator,  with  all  due  regard,  I  know  that  you  feel 
this  way  about  the  program  and  that  you  have  been  very  active  in 
sponsoring  this  and  for  the  highest  motives. 

The  problem,  sir,  is  that  in  examining  the  question  and  in  studying 
it,  I  have  learned  from  many  physicians  that  the  concept  of  peer  review 
is  a  very  difficult  one.  I  have  been  told  that  one  of  the  major  difficulties 
is  at  the  very  beginning  you  start  reviewing  what  is  called  normative 
behavior.  One  plrysician  explained  this  to  me  in  some  detail.  It  seems  we 
often,  are  merely  reviewing  in  many  cases  a  lot  of  poor  practices. 
Whether  or  not  this  is  going  to  yield  what  all  of  us  would  hope  for  is 
doubtful. 

We  may  be  setting  up  an  elaborate  structure  that  is  going  to  miss 
the  target. 

But,  more  practically  

Senator  Bexxett.  Have  you  taken  the  opportunity,  before  you  came 
here,  to  check  the  experiment  that  has  just  been  performed  in  Xevv 
Mexico  ? 

Mr.  Cohelax.  Xo,  sir ;  I  am  not  aware  of  that.  Perhaps  Dr.  Dearing 
may  have  some  familiarity  with  that  and,  again,  I  would  say,  I  would 
prefer  that  Dr.  Dearing  respond  to  this  question  because  essentially 
it  is  a  medical  organization  question. 

Senator  Bexxett.  May  I  say  one  other  thing  to  you  ? 

The  cost  of  medical  care  has  skyrocketed;  the  expenses,  particu- 
larly in  medicare,  have  risen  so  fast  that  there  is  not  any  question  but 
we  must  develop  some  kind  of  a  mechanism  to  review  and  control  it. 

Now,  it  is  my  feeling  that  doctors  are  the  only  ones  who  should  be 
allowed  to  review  the  work  of  doctors;  but  if  the  PS^O  idea  fails, 
then  you  are  going  to  have  possibly  the  Department  of  HEW  select- 
ing people  who  will  revieAv  it  or  you  are  going  to  have  clerks  in  the 
insurance  groups  reviewing  it ;  and  I  think  you  had  better  be  a  little 

careful  if  you  are  going  to  reject  it  simply  because  

Mr.  Cohelax.  Senator,  in  terms  of  

Senator  Bexxett.  May  I  talk,  please? 
Mr.  Cohelax.  Excuse  me,  sir. 

Senator  Bexxett.  I  think  you  need  to  be  a  little  careful  if  you  are 
going  to  reject  it  simply  because  the  doctors  in  HMO's  do  not  like 
the  doctors  outside  of  HMO's. 


2399 


Mr.  Cohelan.  Senator,  I  think  the  main  point  I  am  making  as  an 
executive  director  and  as  a  nonphysician  is  simply  this  is  a  problem 
that  I  think  the  committee  should  take  official  notice  of  because  it  is  a 
reality ;  it  has  existed  over  time. 

Now,  as  far  as  the  medical  organization  question  is  concerned,  I 
would  like  to  defer  to  Dr.  Bearing. 

Senator  Bennett.  May  1  say,  before  Dr.  Dearing  talks,  that  we 
have  changed  the  text  of  the  bill  considerably  to  try  to  protect  against 
the  fear  that  you  have.  Now,  probably  you  haven't  had  time  or  an 
opportunity  to  read  the  text  but  

Senator  Anderson.  I  want  some  comments  on  the  New  Mexico  plan 
you  were  talking  about. 

Senator  Bennett.  I  understand  tomorrow  we  will  have  a  witness 
who  will  talk  about  it.  But,  in  a  word,  a  PSRO  group  was  formed  in 
New  Mexico  where  they  only  have  800  physicians  and  they  have  re- 
viewed the  entire  medical  structure  of  New  Mexico  as  it  affects  med- 
icaid— provided  by  the  State  and,  as  I  understand  it,  they  are  now 
willing  to  say — the  results  have  been  so  good  that  they  are  now  con- 
sidering recommending  to  the  State  government  of  New  Mexico  that 
they  remove  all  limitation  on  health  care  services  on  the  basis  of  what 
they  found  and  what  they  have  been  able  to  accomplish. 

Now,  you  also  said  in  your  statement,  which  is  not  a  part  of  your 
written  statement,  that  you  objected  to  section  1170  in  the  bill  because 
it  would  permit  the  Secretary  to  turn  over  to  the  PSRO  group  the 
review  and  payment  of  claims. 

You  did  not  read  that  this  gives  the  Secretary  the  right  to  have  a 
demonstration  of  that  program  if  he  wishes  ?  It  is  not  a  part  of  the  law. 
It  does  not  turn  this  process  over  to  the  insurance  companies ;  and  if 
you  object  to  the  checking  of  the  feasibility  of  a  relationship  between 
insurance  companies  and  PSRO,  wTould  you  object  to  the  bill  re- 
quiring that  we  have  a  feasibility  study  of  the  combination  of  insur- 
ance and  review  in  HMO's  ?  You  have  been  doing  it  but  I  am  not  sure 
we  understand  exactly  how  successful  it  has  been.  Maybe  we  had  better 
check  that. 

Mr.  Cohelan.  Well,  Senator,  in  the  first  place,  let  me  say,  sir, 
that  you  will  note  in  my  statement  I  say  we  express  some  concern  and 
we  are  pointing  up  what  we  conceive  to  be  a  problem,  and  if  the  prob- 
lem is  being  ameliorated  as  you  describe  I  would  say  this  was  a  very 
happy  development. 

The  other  thing  is  in  relation  to  New  Mexico's  program,  I  think  this 
is  a  salutary  development.  As  a  matter  of  fact,  it  goes  right  to  the 
heart  of  many  changes  that  are  taking  place  throughout  our  country  at 
this  time  as  the  result  of  the  health  care  crisis  and  because  of  the 
attention  of  this  committee  and  other  committees  of  the  Congress.  But 
I  would  say,  sir,  that  it  is  a  sad  fact  that  some  of  this  is  coming  rather 
late  and  coming  because  of  the  surveillance  of  congressional  commit- 
tees about  the  situation. 

In  relation  to  prepaid  group  practice  plans  in,  say,  California,  for 
example,  one  of  the  very  happy  developments  that  occurred  in  relation 
to  this  setting  for  the  provision  of  medical  care  was, the  development 
of  the  San  Joaquin  Medical  Foundation  which  is  a  provider-controlled 
operation  and  which  is  serving  quite  beautifully  in  that  area ;  but  the 
point  to  this  sort  of  development  is  that  the  existence  of  our  other  pro- 


2400 


grams  has  helped  to  upgrade  medical  services  throughout  our  State 
and  in  other  States  throughout  the  West. 

Seantor  Bennett.  Well,  I  will  just  ask  you  one  final  question :  Are 
you  putting  your  organization  in  opposition  to  this  section  or  are  you 
just  suggesting  that  maybe  we  should  look  at  it  a  little  more  carefully  ? 

Mr.  Cohelan.  We  are  doing  two  things :  We  are  entering  reserva- 
tions to  the  PSRO  section,  Senator,  and  we  are  calling  attention  to 
what  we  regard  as  some  defects  as  it  is  presently  drafted ;  and  I  would 
like  to  have  Dr.  Dearing  

Senator  Bennett.  You  have  not  seen  the  latest  draft  ? 

Mr.  Cohelan.  I  have  it  in  my  brief  case. 

Senator  Bennett.  O.K. 

Mr.  Cohelan.  May  I  ask  Dr.  Dearing  to  comment  ? 

Dr.  Dearing.  Well,  Senator  Bennett,  I  believe,  in  response  to  your 
last  question,  that  I  would  emphasize  what  the  director  just  said.  We 
are  noting  some  potentials  and  ideas.  I  would  put  it  in  terms  that  we 
believe,  if  this  were  to  pass  as  enacted,  the  administration — Secretary 
of  HEW  and  those  who  carry  on  and  administer  the  program,  monitor 
it.  judge  its  effectiveness  organization  by  organization,  PSRO  by 
PSRO — need  to  be  mindful  of  some  of  this  history  which  gives  us 
concern. 

Now,  with  respect  to  the  New  Mexico  program,  I  think  this  is  a  fine 
example — as  I  understand  it  and  have  heard  reports  on  it — of  what 
can  be  done.  At  the  same  time  the  discussions  we  hear  among  the  pro- 
fession around  the  country  who  admittedly  did  not  understand  and 
have  not  read,  and  some  are  even  fearful  of  all  the  controls  and  the 
administrative  machinery  that  it  will  take  to  administer  and  monitor 
this  PSRO  program,  we  have  some  fear  that  some  places  there  will 
be  bias  and  even  malice. 

Although  the  amendment — your  amendment- — enjoins  against  this, 
to  try  to  get  this  into  effect  all  over  the  country  in  a  very  short  time, 
it  will  be  a  monstrous  administrative  task  and  it  may  be  that  some 
of  our  people  could  get  hurt  before  the  2  years,  let's  say,  that  it  might 
take  for  administration  to  catch  up  with  all  the  local  POOR'S  that  will 
be  operated. 

This  is  really  more  an  expression  of  concern  and  a  caveat,  rather 
than  any  objection  to  the  principle  and  of  the  objectives.  We  well  know 
that  there  is  a  great  need  for  it. 

Senator  Bennett.  It  seems  to  me  it  would  be  a  little  hard  for  you 
to  object  to  the  program  when  you  say  that  you  already  conduct  the 
process  inside  your  own  organizations,  and  we  face  a  problem.  As 
I  say,  the  costs  have  gone  up  so  high  some  method  of  control  must  be 
instituted.  If  we  don't  let  the  physicians  operate  through  the  PSOR's. 
then  we  are  either  going  to  have  a  bureaucrat  or  an  employee  of  the 
carriers — and  I  am  sure  the  physicians  would  feel  much  worse  about 
that  than  they  would  about  having  another  plrysician  looking  over 
their  shoulder. 

Dr.  Dearing.  I  understand  in  New  Mexico  physicians  who  have 
been  working  on  this  have  been  really  quite  excited  about  what  they 
have  been  able  to  accomplish  in  upgrading  the  professional  practice 
simply  by  the  opportunity  to  review  the  claims. 

With  respect  to  section  1107,  the  claims  payment  


2401 


Senator  Bennett.  Wait  a  minute.  The  New  Mexico  physicians  did 
not  review  the  claims  in  the  sense  you  are  talking  about  money.  They 
reviewed  the  medical  practice. 

Dr.  Dearing.  I  understand. 

Senator  Bennett.  OK. 

Dr.  Dearing.  Our  question  about  section  1107  is  not  with  respect  to 
the  claims  review,  which  is  the  way  into  the  system,  and  then  the  op- 
portunity, then,  to  see  what  goes  on  after  the  fact  if  they  have  not 
done  prior  review  of  the  procedure.  It  is  the  matter  of  the  risk  shar- 
ing which,  as  we  understand  it,  is  an  insurance  function  as  distin- 
guished from  the  review  and  the  approval  of  procedures. 

Senator  Bennett.  Well,  of  course,  there  have  been  a  number  of 
variations  of  the  idea  of  peer  review  and  the  carriers  would  like  very 
much  to  put  the  carriers  between  the  Federal  Government  and  the 
reviewers  and,  therefore,  we  feel  that  it  may  be  necessary  to  conduct 
some  experiments  to  find  out  where  best  the  carriers  may  fit  into  this 
pattern. 

Personally,  I  think  the  review  should  be  conducted  outside  of  any 
control  or  regulation  by  the  carriers  and  should  be  conducted  by  the 
physicians  related  to  the  department  directly  rather  than  related  to 
the  department  through  the  carriers. 

Mr.  Cohelan.  Senator,  I  would  just  comment  as  far  as  our  prepaid 
group  practice  programs  that  now  exist  are  concerned  and  hopefully 
those  that  are  about  to  be  formed,  the  concept  of  the  autonomous 
physician  group  is  a  most  important  component  of  our  conception 
and  of  our  teaching  about  how  to  put  together  a  prepaid  group  prac- 
tice program  and  this  autonomy  includes  internal  review,  medical 
records;  and  so  forth,  in  fact,  one  of  the  major  advances  of  group 
practice  as  opposed  to  solo  practice  is  the  fact  there  is  this  more  or 
less  constant  review  of  one's  work. 

Senator  Bennett.  Of  course,  as  I  said  at  the  very  beginning,  if  your 
doctors  are  serving  in  the  PSRO  group  you  preserve  that  autonomy 
in  part  and  you  may  eventually  break  down  the  bias  or  thought  of 
bias  that  exists. 

I  was  just  going  to  say  you  know  there  are  many  doctors  who  were 
as  disturbed  at  the  effect  of  HMO's  on  their  practice  as  the  HMO  doc- 
tors apparently  are  disturbed  at  the  prospect  of  review  by  outside 
doctors  on  their  work. 

Mr.  Cohelan.  Precisely,  and,  Senator,  as  we  indicated  before  this 
distinguished  committee  on  other  occasions,  our  general  approach  to 
all  of  these  matters  is  one  of  pluralism.  We  suggest — all  that  we  are 
suggesting  in  our  proselytizing,  if  you  will,  for  the  prepaid  mode  of 
care  delivery  is  to  give  the  American  people  this  health  alternative 
as  an  option. 

As  the  good  Senator  knows,  in  many  States  in  our  country  we  still 
can't  organize  a  health  care  system  on  this  basis  and  the  reason  that 
we  are  so  concerned  as  it  relates  to  peer  review  is  there  are  these  linger- 
ing hostilities  and  we  would  not  want  to  see  this  attitude  further  hinder 
the  development  of  a  healthy  health  care  delivery  alternative  in  the 
form  of  a  health  maintenance  organization. 

Senator  Bennett.  We  have  an  overriding  problem  which  is  the 
tremendous  increase  of  the  cost  to  the  Government  of  providing  the 


2402 


health  care  that  the  law  says  we  must  give  to  our  people  and  we  can't 
ignore  that  simply  because  doctors  who  work  in  HMO's  are  suspicious 
of  doctors  who  work  outside. 

Our  solution  is  a  kind  of  pluralism  or  maybe  it  is  the  other  way ; 
we  put  the  two  of  them  together  in  the  PSRO  groups  and  let  them 
participate  in  the  review  of  each  other's  type  of  practice. 

Mr.  Cohelax\  Well,  Senator,  we  would  feel  it  very  important  for 
you,  as  a  legislative  body,  and  such  an  important  committee  dealing 
with  this  subject  matter  to  be  highly  sensitive  to  the  matter  that  we 
raise  as  an  issue.  It  could  affect  the  quality  of  the  program. 

As  to  peer  review  generally,  in  my  13  months  out  of  public  office 
and  on  this  particular  job,  I  have  been  undergoing  a  very  intensive 
study  of  what  this  is  all  about,  although  I  was  not  without  some  ex- 
perience before  I  came  on  this  job.  The  questions  that  the  Senator  is 
raising  by  his  peer  review  program  are  questions  that  are  being  studied 
most  carefully  throughout  the  country. 

It  was  my  privilege  only  a  month  ago  or  several  weeks  ago  to  be 
in  New  Orleans  with  Dr.  Elwood's  group  where  the  whole  question  of 
quality  care  was  being  discussed  in  reference  to  the  configuration  of 
health  maintenance  organizations,  but  it  also  had  relevance  to  the  entire 
S3'stem,  measures  that  would  be  acceptable  for  the  determination.  It 
was  framed  in  a  health  outcomes  context  in  this  particular  brainstorm- 
ing session.  So  I  just  want  the  Senator  to  know  so  far  as  I  am  con- 
cerned, currently  representing  GHAA.  we  are  most  sensitive  to  the 
problem  but  we  think  it  quite  proper  to  bring  to  the  attention  of  this 
distinguished  committee  our  concerns  because  we  want  any  such  system 
to  work. 

Senator  Bexxett.  I  have  no  further  questions. 
Senator  Ax^dersox"  (presiding).  Senator  Curtis ? 
Senator  Curtis.  How  does  the  group  health  plan  work  in  a  rural 
area  ? 

Mr.  Cohelax-.  Well,  Senator,  in  a  rural  area  we  have  time-distance 
problems  and  while  it  is  thoroughly  possible  to  work  one,  there  are 
some  very  serious  problems  in  terms  of  the  components. 

In  order  to  put  together  a  viable  health  maintenance  organization, 
we  at  GrHAA  are  pointing  out  that  it  takes  from  about  20,000  individ- 
uals to  50,000  individuals  in  enrolled  population  to  support  a  group  of, 
say,  10  full-time  physicians;  so  clearly  in  sparsely  settled  areas  it  is 
difficult. 

Senator  Curtis.  Give  me  those  figures  again. 

Air.  Cohelax.  It  takes  about  20,000  enrolled  members,  individuals, 
in  order  to  sustain  a  viable  HMO  program  or  prepaid  group  practice 
program  and  if  the  Senator  will  use,  say,  $45  a  month  for  a  family  of 
four  or  as  high  as,  say  $60  a  month  for  a  family  of  four,  and  with  a 
quick  calculation  you  can  see  what  it  will  yield  and  roughly  give  you 
what  you  have  to  finance  and  what  you  have  to  pay  your  mix  physi- 
cians and  specialists. 

The  Kaiser  Foundation  says  it  takes  about  50,000  before  you  can  get 
to  even  a  breakeven  point. 

Senator  Curtis.  50,000  members  ? 

Air.  Cohelax-.  Yes,  sir. 


2403 


Senator  Curtis.  Of  course,  it  is  not  compulsory  ? 

Mr.  Cohelan.  No,  sir ;  the  essential  components  

Senator  Curtis.  How  much  population  do  you  need  to  get  20,000  or 
50,000  members  ? 

Mr.  Cohelan.  What  those  ratios  would  be  escape  me  at  the  moment. 
The  real  problem  is  to  have  a  large  enough  population  to  enroll  suffi- 
cient members  to  generate  your  program.  What  is  conceived  of  by  cur- 
rent development  programs,  Senator,  feasibility  studies  are  first  made ; 
we  in  GrHAA  and  others  are  invited  to  come  into  the  community  and 
help  organize  such  a  program  but  clearly  it  is  a  function  of  population, 
of  the  state  of  the  economy,  the  employment  patterns,  the  productivity, 
and  so  on  because  primarily  it  is  targeted  for  disposable  income  popu- 
lation. Do  I  make  myself  clear  ? 

Senator  Curtis.  Yes ;  to  make  20,000  members  would  you  need  twice 
that  population  ? 

Mr.  Cohelan.  I  would  think  even  more  than  that,  Senator.  I  think 
you  would  have  to  have  a  much  larger  group. 

Senator  Curtis.  So  what  you  are  proposing  really,  isn't  something 
for  the  farm  and  ranch  country  ? 

Mr.  Cohelan.  I  would  not  say  that  it  was  impossible  but  I  would 
think  the  arrangements  would  be  different  and  would  have  to  cover 
a  larger  area.  For  example,  it  is  conceivable  to  have  a  health  main- 
tenance organization  in  the  State  of  Nevada.  It  would  be  conceivable 
to  have  one  in  other  population  areas  that  were — where  there  was  a 
distance  problem,  but  you  would  have  to  work  it  out  on  a  different 
basis  and  you  would  certainly  have  to  have  some  method  of  medical 
evacuation,  as  it  were,  to  get  the  people  to  the  center. 

Senator  Curtis.  If  your  group  practice  does  not  take  care  of  cata- 
strophic cases  without  any  setting  of  a  ceiling  or  limit,  what  is  the 
ceiling  ? 

Mr.  Cohelan.  Dr.  Dearing  can  you  provide  that  data  ? 

Dr.  Dearing.  Well,  Senator  Curtis,  the  plan — some  plans  have  no 
ceiling  at  all  on  hospitalization,  continuing  hospitalization,  as  much 
as  needed,  365  days  a  year.  That  is  pretty  near  full  coverage. 

Senator  Curtis.  How  many  years  ? 

Dr.  Dearing.  Pardon? 

Senator  Curtis.  How  many  years  ? 

Dr.  Dearing.  Indefinite;  some  for  1  year,  but  some  plans — and  I 
believe  GHA  here  in  Washington  has  no  limit  on — no  limit  at  all — 
HIP  has  1  year  and  this  takes  care  of  the  vast  majority  of  the 
catastrophic.  Kaiser's  have  limitations  on  about  4  months  fully  paid 
and  another  4  months,  say,  at  half  pay;  but  as  I  described  earlier, 
their  override  takes  care  of  financially  about  three-quarters  of  the 
general  category. 

Senator  Curtis.  I  suppose  that  small  percentage  that  are  not  taken 
care  of  are  of  concern  of  the  Congress  ? 

Dr.  Dearing.  Indeed  so. 

Senator  Curtis.  Because  I  visited  a  while  back  a  husband,  where  the 
wife  was  ill ;  neither  one  of  them  were  25  vears  old  and  they  faced 
a  hospital  bill  just  of  a  few  weeks  that  amounted  to  $30,000. 

Dr.  Dearing.  Yes,  sir. 

Senator  Curtis.  Now,  to  my  mind  that  is  catastrophic.  I  am  not 
quite  m  accord  with  my  chairman's  definition  of  catastrophic.  Cata- 


2404 


strophic  to  me  is  something  that  just  reaches  outer  limits.  It  can't 
be  done.  It  is  not — every  high  cost  illness  is  definitely  not  catastrophic. 
It  may  be  that  $30,000  would  be  catastrophic  for  most  people  but  it 
shouldn't  be  to  someone  who  makes  that  much  money  in  1  year.  But 
the  people  who  enroll  in  your  setups  they  are  not  taken  care  of  re- 
gardless of  how  much  of  a  burden  they  might  face  ? 

Dr.  Dearing.  Most  have  a  high  ceiling  on  hospitalization.  The  medi- 
cal services — the  doctor  services  are  generally  unlimited. 

Senator  Curtis.  Well,  of  course,  the  big  cost  of  medical  care  is  the 
hospital.  The  doctors'  fees  are  percentagewise  

Mr.  Cohelan.  Senator,  what  the  doctor  is  saying,  most  of  our  plans 
are  noted  for  the  fact,  sir,  that  they  cover  comprehensively  both  in- 
patient and  outpatient  full  hospitalization  in  several  of  the  cases  and 
with  exception  in  some  of  the  cases.  May  I  say  to  the  Senator  that  the 
packages  will  vary  depending  upon  the  need  of  the  individual  and  in 
some  of  our  plans  why  there  are  several  forms  of  services  that  are  pro- 
vided which  would  be  a  function  of  the  premium  or  the  dues  as  we  call 
it,  membership  dues,  that  you  are  able  to  pay ;  and  the  quotations  that  I 
have  been  making  have  been  of  the  optimum  which  would  be  a  family 
of  four  and  these  general  ranges  of  expenditures  for  these  services, 
these  health  services. 

Senator  Curtis.  How  old  is  this  system  ? 

Mr.  Cohelan.  I  would  say  that — Dr.  Dearing — it  goes  back  to  the 
turn  of  the  century,  does  it  not,  with  the  railroads,  but  I  think  the 
significant  date  would  be  1945. 

Dr.  Dearing.  It  is  earlier  than  that.  The  group  plans  started  in  the 
depression  and  even  predepression.  I  believe  the  Ross-Loos  plan  in  Los 
Angeles  started  about  in  1930  and  the  Kaiser  plans  were  in  being  in  the 
late  1930's  in  construction  work  and  then  into  the  war,  where  they  de- 
veloped their  full  potential  while  serving  an  industrial  population. 

Senator  Curtis.  In  the  25  or  30  years  it  has  been  operating,  what  is 
the  smallest  communitv  you  now  have  ? 

Dr.  Dearing.  Two  Harbors,  Minn.,  I  think.  Thev  have  had  about 
5,000  enrollees,  it  is  up  there  at  the  foot  of  the  Iron  Range  above 
Duluth  on  Lake  Superior  and  it  has  continued ;  it  is  mixed ;  they  have 
some  f ee-for-service  patients  and  they  also  have  an  enrolled  population. 

Senator  Bennett.  How  big  is  the  town  ? 

Dr.  Dearing.  I  don't  remember :  a  few  thousand. 

Senator  Bennett.  How  many  ? 

Dr.  Deaptng.  A  few  thousand.  I  would  say  

Senator  Bennett.  A  smaller  town  than  the  number  of  enrollees  in 
the  plan  ? 

Dr.  Dearing.  I  think  possibly. 

Senator  Curtis.  How  manv  doctors  are  involved  ? 

Dr.  Dearing.  There  are  five  or  six  doctors  who  provide  the  basic 
services.  They  use  outside  services  for  specialties  from  Duluth  and 
things  of  that  sort :  but  the  core  is  there. 

Senator  Curtis.  How  far  is  Duluth  ? 

Dr.  Dearing.  Forty  miles,  perhaps. 

Senator  Curtis.  That  is  all,  Mr.  Chairman. 

Senator  Anderson.  Well,  thank  you  very  much  for  your  presenta- 
tion. We  appreciate  it. 


2405 


Dr.  Dearing.  Thank  you,  Senator. 

(Statement  by  the  Group  Health  Association  of  America  presented 
by  Mr.  Cohelan  and  Dr.  Dearing  follows:) 

Statement  of  the  Group  Health  Association  of  America,  Presented  by 
Jeffery  Cohelan,  Executive  Director,  and  W.  Palmer  Dearing,  M.D.,  Med- 
ical Consultant 

introduction 

Mr.  Chairman,  my  name  is  Jeffrey  Cohelan.  I  am  the  Executive  Director  of 
Group  Health  Association  of  America.  GHAA  is  the  national  association  repre- 
senting the  major  community  and  consumer  oriented  prepaid  group  practice 
plans  in  the  United  States  and  Canada.  Our  affiliated  plans  are  responsible  for 
the  health  care  of  four  million  people  and,  in  addition,  GHAA  is  the  recipient 
of  a  federal  grant  for  the  purpose  of  organizing  prepaid  group  practice  plans 
in  some  thirty-three  cities  over  the  next  few  years.  Currently  we  are  active  in 
some  twenty  cities  where  our  type  of  Health  Maintenance  Organization  is  in 
various  stages  of  development. 

I  am  accompanied  this  morning  by  W.  Palmer  Dearing,  M.D.,  Medical  Con- 
sultant to  GHAA  and  my  immediate  predecessor.  Dr.  Dearing  served  as  Execu- 
tive Director  for  ten  years  and  before  that  was  the  Deputy  Surgeeon  General  of 
the  United  States  Public  Health  Service.  He  is  particularly  qualified  to  speak 
on  the  subject  of  our  interest  in  this  legislation. 

Mr.  Chairman,  you  may  recall  that  GHAA  appeared  before  this  Committee 
on  April  25,  1971,  during  the  hearings  on  various  national  health  insurance 
proposals.  At  that  time  we  addressed  ourselves  in  a  general  fashion  to  the 
Health  Maintenance  Organizations  concept  in  the  context  of  our  experience  and 
expertise  with  regard  to  prepaid  group  practice  plans.  We  discussed  the  benefits 
which  a  well-structured  Health  Maintenance  Organization  could  offer  as  an 
alternative  form  of  health  care  delivery  and  set  forth  some  of  the  difficulties 
and  expense  involved  in  its  creation.  We  recommend  specific  guidelines  for  those 
who  seek  to  organize  and  those  who  seek  to  regulate  Health  Maintenance  Or- 
ganizations. We  will  not  take  the  time  of  the  Committee  this  morning  to  re- 
iterate that  testimony.  We  will  confine  ourselves  to  the  existing  Health  Main- 
tenance Organizations  provisions  of  H.R.  1.  We  also  have  some  comments  on 
catastrophic  health  insurance  and  the  peer  review  amendments  in  the  event 
the  Committee  considers  adding  these  to  the  bill. 

The  Health  Maintenance  Organizations  provisions  of  H.R.  1  will  be  the  first 
major  legislative  input  into  the  Health  Maintenance  Organizations  concept  and 
will  have  an  important  impact  on  the  national  health  policy.  Thus  in  its  work 
on  the  Health  Maintenance  Organizations  provisions  of  H.R.  1,  this  Committee 
has  an  important  opportunity  to  improve  the  chances  for  financially  sound  and 
well-structured  Health  Maintenance  Organizations.  Ultimately,  we  hope  that 
providing  Medicare  benefits  through  prepayment  to  Health  Maintenance  Orga- 
nizations will  result  in  Medicare  beneficiaries  constituting  a  substantial  mem- 
bership base  in  Health  Maintenance  Organizations. 

But  we  do  not  expect  any  appreciable  immediate  increase  in  Health  Main- 
tenance Organizations  membership  until  some  time  has  elapsed  after  the 
enactment  and  implementation  of  these  provisions.  Rather,  we  think  there  will 
be  a  slow  but  steady  growth  of  Medicare  beneficiaries  in  Health  Maintenance 
Organizations,  which  will  somewhat  parallel  the  growth  and  acceptability  of 
Health  Maintenance  Organizations  by  the  public  as  a  whole.  Medicare  benefi- 
ciaries will  be  reluctant  to  change  traditional  patterns  of  health  care  simply 
because  an  alternative  system  has  been  made  available  to  them.  The  small 
number  of  Health  Maintenance  Organizations  now  existing  in  the  country  and 
available  for  immediate  enrollment  will  not  of  themselves  bring  about  rapid 
growth. 

Gradual  development  of  Medicare  involvement  with  Health  Maintenance 
Organizations  has  advantages.  Unlike  Medicare,  where  an  entire  system  was 
created  overnight  and  promptly  covered  millions,  a  slower  rate  of  Health  Main- 
tenance Organization  participation  will  afford  time  for  re-examination,  analysis, 
and  modification. 

However,  we  have  some  problems  with  the  present  provisions  of  H.R.  1  as 
they  now  exist.  Under  the  present  bill,  the  per  capita  payments  to  Health 
Maintenance  Organizations  are  limited  to  a  maximum  of  95%  of  the  cost  of  the 


2406 


covered  services  if  they  were  furnished  by  other  than  a  Health  Maintenance 
Organization.  We  have  no  doubt  that  a  well  managed  Health  Maintenance  Orga- 
nization will  have  little  difficulty  providing  the  services  within  these  limitations. 
However,  we  feel  that  the  Committee  should  re-examine  this  provision  and  set 
the  limitation  at  100%  of  the  cost  of  the  services  in  the  non-Health  Maintenance 
Organization  area. 

The  Health  Maintenance  Organizations  concept  has  been  designed  to  provide 
an  alternative  health  care  system.  Through  competition  with  existing  systems 
it  is  hoped  that  Health  Maintenance  Organizations  will  lead  to  higher  quality, 
more  efficient  health  care  with  maximum  economic  utilization  of  the  health 
care  dollar. 

The  real  concern  then,  is  medical  care.  The  real  test  is  who  offers  the  most 
attractive  package  of  medical  benefits.  Under  H.R.  1  a  Health  Maintenance 
Organization  can  improve  the  medical  package  by  using  the  difference  between 
the  actual  cost  of  care  and  the  maximum  limitation  for  additional  benefits  for 
Medicare  beneficiaries.  The  natural  result  of  injecting  competition  in  health 
care  delivery  systems  is  to  direct  all  systems  of  health  systems  toward  improve- 
ment in  quality,  efficiency,  and  economy.  It  would  seem  only  fair  to  put  the 
competing  systems  on  an  equal  footing. 

We  also  urge  the  Committee  to  amend  the  definition  of  Health  Maintenance 
Organizations  to  require  a  minimum  number  of  full-time  physicians.  Since  1963 
GHAA  has  felt  as  a  matter  of  policy  >a  pre-paid  group  practice  plan  must  have 
a  minimum  of  four  full-time  physicians  in  four  basic  specialties — OB-GYN,  in- 
ternist or  family  practitioner,  pediatrician  and  surgeon.  Regulations  under  the 
Group  Practice  Facilities  Act  of  1966  and  the  1970  Health  Cancer  and  Stroke  Act 
Amendments  provide  for  this  in  the  definition  of  prepaid  group  practice.  We 
know  that  a  physician  who  spends  part  of  his  time  in  a  prepaid  group  practice 
and  part  of  his  time  as  a  solo  practitioner,  has  dual  economic  incentives,  which 
might  act  adversely  to  the  prepaid  group  practice.  This  rule  is  just  as  applicable 
to  the  Health  Maintenance  Organization. 

CATASTEOPHC  INSURANCE 

I  would  like  now  to  comment  on  one  proposal  to  help  solve  the  nation's  health 
care  crisis  which  has  attracted  considerable  support  among  some  segments  of 
the  health  industry  and  the  public  which  would  seriously  affect  prepaid  group 
practice  plans.  This  is  the  proposal  to  initiate  a  Federally  sponsored  program 
of  major  medical  or  catastrophic  illness  as  the  next  step  toward  meeting  the 
nation's  recognized  health  needs. 

Group  Health  Association  of  America  recognizes  the  problem  of  the  tragic 
cases  of  families  bankrupted  by  serious,  expensive  long-term  illnesses.  Our  Asso- 
ciation would  not  oppose  any  effective  measure  for  dealing  with  this  problem. 

We  urge  this  Committee  to  recognize,  however,  that  catastrophic  coverage  is 
no  substitute  for  comprehensive  health  coverage.  Moreover,  emphasis  on  catas- 
trophic coverage  right  now  would  almost  certainly  undermine  long  overdue  ef- 
forts now  underway  to  give  proper  emphasis  to  primary  care  'and  ambulatory 
services.  Now  emphasis  on  major  illness  would  most  certainly  distort  the  alloca- 
tion of  national  health  care  resources — turning  them  again  toward  hospitaliza- 
tion and  other  institutional  treatment  and  away  from  prevention,  home  care 
and  other  neglected  aspects  of  health  care. 

All  the  catastrophic  coverage  proposals  share  the  fundamental  idea  that  in- 
surance should  take  over  only  after  a  family  has  paid  out  hundreds  or  even 
thousands  of  dollars  for  medical  expenses. 

Experts  in  health  care  economics  who  do  not  come  from  the  vested  interests 
in  the  field  tell  us  that  national  insurance  limited  to  catastrophic  coverage  would 
accelerate  the  current  inflation  of  health  care  costs.  Also,  we  have  had  sufficient 
experience  in  the  years  of  Medicare  to  realize  that  providers  will  be  motivated  to 
raise  their  prices  so  that  a  family  or  individual  can  become  eligible  for  cata- 
strophic benefits.  The  net  result  would  certainly  be  a  further  boost  in  charges  for 
all  aspects  of  health. 

Other  testimony  before  this  Committee — notably  that  of  the  AFL-CIO  and 
the  National  Council  of  Senior  Citizens — has  gone  much  more  into  detail  with 
respect,  to  the  disastrous  push  toward  further  inflation  and  the  distortion  of 
priorities  in  deployment  and  use  of  our  health  resources,  that  would  result  from 
a  separate  catastrophic  illness  insurance  program. 


2407 


If,  however,  catastrophic  illness  or  major  medical  insurance  were  to  be  en- 
acted as  a  specific  benefit  in  whatever  context,  special  provisions  must  be  made 
for  group  practice  plans  if  they  and  their  subscribers  are  not  to  be  seriously  dis- 
advantaged and  over-charged.  The  comprehensive  benefits  of  group  practice  plans 
include  de  facto  major  medical  benefits  in  their  regular  contracts.  Whereas 
major  medical  coverage  added  upon  typical  commercial  and  Blue  Cross/Blue 
Shield  contracts  would  cost  $4.00  to  $4.50  per  month,  the  supplemental  coverage 
added  to  a  group  practice  plan  benefit  would  cost  in  the  neighborhood  of  $1.00 
to  $1.50  per  month.  A  single  national  premium  charging  indemnity  insurance 
rates  would  take  about  $3.00  per  month  from  the  group  practice  plan  subscribers. 

Therefore,  a  catastrophic  program  based  on  cost  reimbursment  or  premium 
subsidy  after  large  deductibles  makes  the  value  of  the  catastrophic  override  worth 
much  less  to  members  of  a  prepaid  group  practice  than  to  other  health  plans. 
Further,  prepaid  group  practice  plans  are  built  upon  incentives  for  minimal 
hospitalization  and  preventive  health  care.  It  would  seriously  diminish  the 
effectiveness  of  prepaid  group  practice  plans  in  the  health  care  market  if  these 
differences  were  ignored. 

In  order  to  assure  the  members  of  our  plans  equitable  treatment  if  a  catas- 
trophic health  insurance  program  along  the  lines  of  S.  1376  is  enacted,  there 
should  be  provision  for  prepayment  to  group  practice  plans  on  behalf  of  their 
members  from  the  program.  The  prepayment  should  equitably  relate  to  pay- 
ments from  the  program  in  the  non-prepaid  group  practice  area.  This  prepaid 
premium  from  the  Federal  program  should  take  into  account  the  cost  of  care 
in  the  geographic  area  where  the  plans  operate.  Furthermore,  the  prepaid 
premium  should  be  integrated  into  the  regular  pay-structure  of  our  plans.  Such 
a  prepaid  premium  under  a  catastrophic  health  insurance  program  will  help  to 
preserve  the  equitable  position  of  our  members  to  that  of  members  of  other 
plans. 

Prepaid  group  practices  should  not  be  required  to  cover  all  of  the  services 
involved  to  the  extent  of  the  deductible  under  the  catastrophic  program.  This 
could  cause  diversion  of  the  plan  resources  from  higher  priority  services,  or 
might  mean  a  further  burden  in  the  form  of  rate  increases  on  our  members.  This 
is  especially  true  in  the  case  of  smaller  plans  where  even  a  single  case  has  a 
great  actuarial  impact. 

At  this  point,  Mr.  Chairman,  I  submit  for  the  record  some  suggested  language 
amending  S.  1376  to  accomplish  the  foregonig. 

"Section  2004(a)  (4).  In  the  case  of  an  organization  which  provides  or  arranges 
comprehensive  health  care  services  for  a  defined  population,  the  Secretary  shall 
authorize  per  capita  payments  to  such  an  organization  on.  behalf  of  eligible 
individuals  enrolled  in  such  organizations.  A  combined  per  captia  payment  may 
be  made  to  such  organizations  for  the  services  set  forth  in  subsections  2004(a)  (2) 
and  2004(a)  (3),  which  are  provided  or  arranged  by  such  organizations.  Such 
per  capita  payments  shall  equal  the  average  payments  made  on  behalf  of  eligible 
individuals  residing  in  the  general  geographic  area  served  by  such  an  organi- 
zation and  shall  be  'based  upon  the  undertaking  by  such  organizations  to  provide 
or  arrange  services  to  eligible  individuals  enrolled  in  such  organizations  and 
shall  not  be  based  upon  specific  services  rendered  to  each  eligible  individual. 

PROFESSIONAL  STANDARDS  REVIEW 

Finally,  Mr.  Chairman,  we  have  some  comments  on  the  amendment  introduced 
by  Senator  Bennett  on  January  25,  1972,  dealing  with  Professional  Standards 
Review  Organizations. 

Our  main  concern  with  the  peer  review  proposal  from  its  potential  for  review 
of  prepaid  group  practice  operations  and  procedures  by  physicians  whose  orien- 
tation has  in  the  main  been  outside  a  prepaid  group  practice  setting.  We  were  less 
concerned  about  the  historical  antagonism  of  the  professional  societies  to  our  sys- 
tem of  health  delivery  than  we  were  about  the  lack  of  complete  understanding 
of  most  physicians  of  the  complexities  of  our  system. 

Prepaid  group  practices  have  always  had  intrinsic  peer  review  objectively 
rendered.  It  is  the  objectivity  of  peer  review  that  has  always  been  our  concern. 
We  felt  it  may  be  difficult  to  establish  by  statute  a  system  of  peer  review  which 
would  be  free  from  bias  and  rendered  with  a  full  understanding  of  our  operation. 

We  have  some  concern  with  the  authorization  and  indeed  encouragement  for 
PSPiOs  to  go  into  the  insurance  business  through  risk  sharing  as  provided  in 
Section  1170  of  Senator  Bennett's  amendment.  This  would  seem  to  make  possible 


2408 


a  whole  chain  of  insuring  organizations  which  were  also  carrying  out  PSRO 
functions,  but  without  any  of  the  standards  and  controls  so  elaborately  provided 
for  with  respect  to  Health  Maintenance  Organizations.  Whether  or  not  PSROs 
can  also  appropriately  undertake  risk  for  the  services  they  are  supposed  to 
monitor  also  seems  questionable. 

Mr.  Chairman,  this  concludes  our  statement  and  we  would  be  happy  to  respond 
to  any  questions  you  may  have. 

Senator  Anderson.  Dr.  Gibson  ? 

STATEMENT  OF  ROBERT  W.  GIBSON,  M.D.,  MEDICAL  DIRECTOR, 
THE  SHEPPARD  AND  ENOCH  PRATT  HOSPITAL,  TOWSON,  MD. 

Dr.  Gibson.  Mr.  Chairman  and  members  of  the  committee,  my  name 
is  Dr.  Robert  W.  Gibson.  I  am  medical  director  of  the  Sheppard  and 
Enoch  Pratt  Hospital.  I  am  a  trustee  of  the  American  Psychiatric 
Association  and  the  past  president  of  the  National  Association  of 
Private  Psychiatric  Hospitals. 

I  am  honored  to  have  this  opportunity  to  speak  to  you  on  behalf 
of  the  American  Psychiatric  Association,  whose  19,000  members  have 
the  primary  responsibility  for  the  medical  treatment  of  the  mentally 
ill  in  our  country,  and  to  express  the  views  of  the  National  Association 
of  Private  Psychiatric  Hospitals,  whose  150-member  hospitals  have 
the  primary  responsibility  for  the  private  hospital  care  of  the  mentally 
ill. 

It  has  been  my  privilege  to  present  testimony  before  this  committee 
in  1965, 1967,  and  again  in  1970.  Today  I  will  speak  about  some  issues 
that  have  been  discussed  in  previous  testimony  and  will  address  some 
new  areas  of  concern.  In  the  interest  of  time,  my  remarks  will  be  quite 
brief  on  those  items  covered  in  previous  testimony.  Appended  to  this 
testimony  I  present  is  a  relevant  and  more  detailed  statement  from 
previous  testimony  that  I  respectfully  request  be  made  a  part  of  the 
record. 

Senator  Anderson.  It  will  be  made  a  part  of  the  record. 
Dr.  Gibson.  Thank  y ou. 

In  1965  I  asked  that  mental  health  benefits  be  included  under  medi- 
care and  medicaid.  Members  of  the  Senate  Finance  Committee  played 
a  major  role  in  achieving  what  the  psychiatric  profession  hailed  as  a 
major  breakthrough  by  providing  broad  benefits  for  the  treatment  of 
the  mental  ill  under  both  the  medicare  and  medicaid  programs,  albeit 
with  some  significant  limitations. 

In  1967  I  discussed  those  provisions  that  imposed  discriminatory 
limitations  on  treatment  of  the  mentally  ill.  Specifically,  I  asked  that 
under  title  XIX  medical  assistance  for  eligible  individuals  under  the 
age  of  65 — families  with  dependent  children,  blind,  disabled,  and  in- 
digent— be  made  available  in  psychiatric  hospitals  and  community 
mental  health  centers  rather  than  being  limited  only  to  the  general 
hospital. 

Under  title  XVIII,  I  asked — I  asked  at  that  time  that  the  higher 
coinsurance  and  top  limits  applied  to  outpatient  psychiatric  treatment 
be  removed  in  order  that  outpatient  care  of  the  mentally  ill  could  be  at 
the  same  level  as  all  other  medical  conditions.  These  limits  were  such  as 
to  very  much  hamstring  any  kind  of  outpatient  care  of  the  mentally 
ill;  and  I  asked  further  for  the  removal  of  the  190-day  lifetime  limit 
imposed  only  on  treatment  in  a  psychiatric  hospital. 


2409 


The  Senate  Finance  Committee  was  understandably  concerned  about 
the  potential  fiscal  impact  of  these  recommendations  and  therefore 
requested  the  Secretary  of  Health,  Education,  and  Welfare  to  study 
existing  programs  of  the  law,  evaluate  the  problems  involved  in  ex- 
panding or  extending  coverage  for  the  mentally  ill  and  to  make  recom- 
mendations for  change. 

In  1970,  I  again  expressed  the  concern  of  psychiatrists  with  regard 
to  the  various  limitations  applied  only  to  the  mentally  ill.  In  addition, 
I  indicated  our  concern  about  the  proposed  decreases  in  the  Federal 
medical  assistance  percentage — FMAP — by  one-third  after  90  days 
of  care  in  a  mental  hospital  and  the  limit  on  the  FMAP  for  365  days 
of  care  in  a  mental  hospital  and  in  an  individual's  lifetime.  At  that 
time,  unfortunately,  the  study  requested  by  the  Senate  Finance  Com- 
mittee for  evaluation  of  the  problems  involved  in  expanding  coverage 
to  the  mentally  ill  was  not  available. 

Today  my  request  is  again  basically  for  the  elimination  of  all  the 
discriminatory  limitations  applied  to  the  treatment  of  the  mentally 
ill :  removal  of  the  190-day  limit  under  medicare  on  inpatient  treat- 
ment and  removal  of  the  higher  coinsurance  for  outpatient  care  and 
services ;  under  medicaid  the  removal  of  restrictions  that  limit  treat- 
ment of  eligible  individuals  under  65  to  general  hospitals.  This  is  ex- 
tremely important.  This  way  the  mentally  ill  could  receive  active 
rehabilitative  treatment  in  all  accredited  facilities  including  State 
mental  hospitals,  private  psychiatric  hospitals,  community  mental 
health  centers  and  the  general  hospitals.  Again,  under  medicaid,  I 
recommend  the  elimination  of  the  provisions  that  would  lower  the 
Federal  medical  assistance  percentage — FMAP — for  care  in  mental 
hospitals. 

Today  I  can  now  assert  with  confidence  that  these  changes  would 
not  create  serious  fiscal  problems.  The  study  requested  by  the  Senate 
Finance  Committee — Eesearch  Report  No.  37,  by  HEW,  SSA,  Office 
of  Research  and  Statistics,  published  in  1971,  "Financing  Mental 
Health  Care  Under  Medicare  and  Medicaid" — provides  a  detailed  anal- 
ysis of  utilization  and  costs  of  psychiatric  benefits  under  medicare  and 
medicaid.  I  will  not  dwell  on  these  findings  since  this  report  has  been 
studied  by  this  committee. 

I  do  want  to  note,  however,  that  in  the  fiscal  year  1969  medicare  and 
medicaid  expenditures  for  psychiatric  services  on  behalf  of  patients 
aged  65  and  over  represented  only  about  3.7  percent  of  the  total  medi- 
care and  medicaid  outlay.  It  is  of  particular  interest  that  the  data 
show  that  utilization  of  and  charges  for  outpatient  services  under 
medicare  in  1967  were  very  low — less  than  1  percent  of  all  supplemental 
medical  insurance  enrollees  ever  used  the  services — and  total  charges 
were  only  $2.6  million. 

Since  the  expenditures  for  psychiatric  service  represent  a  tiny  per- 
centage of  the  total  outlay  for  all  services,  it  is  evident  that  broadening 
the  scope  of  benefits  to  make  them  equivalent  to  care  for  other  medical 
conditions  would  not  impose  a  serious  burden  on  the  program.  We 
strongly  support  those  provisions  that  would  include  under  medicare 
the  disabled,  including  those  disabled  by  mental  illness ;  and,  if  pro- 
visions are  added  for  benefits  to  protect  against  catastrophic  illness, 
we  would  urge  that  these  not  perpetuate  those  restrictions  under  medi- 
care that  are  discriminatory  against  the  mentally  ill.  Mental  illness  is 


2410 


one  of  the  worst  catastrophes  that  can  befall  a  human  being  and 
adequate  protection  should  be  provided  against  it.  We  are  also  appre- 
ciative of  the  efforts  being  made  to  alleviate  the  damaging  effects  of 
social  conditions  which  perpetuate  poverty  since  the  poor  and  disad- 
vantaged all  suffer  a  high  incidence  of  mental  illness. 
I  refer  here  particularly  to  the  family  program. 

Further  corroboration  that  the  cost  of  psychiatric  care  can  be  cov- 
ered comes  from  a  study  entitled  "Insurance  Plans  and  Psychiatric 
Care:  Utilization  and  Costs"  now  being  completed  by  the  American 
Psychiatric  Association  under  a  grant  from  the  National  Institute  of 
Mental  Health.  The  findings  of  this  study  by  a  panel  of  experts 
headed  by  a  leading  health  economist.  Dr.  Louis  Reed,  will  be  pub- 
lished in  the  near  future,  and  I  will  make  a  point  of  providing  copies 
to  the  members  of  this  committee. 

Specifically,  this  study  shows  that  under  a  wide  variety  of  health 
insurance  plans,  the  charges  for  hospital  inpatient  care  for  mental 
conditions  are  in  the  range  of  from  3  to  6  percent  of  charges  for 
inpatient  hospital  care  for  all  conditions. 

Under  many  plans  which  offer  full  coverage  of  ambulatory  psy- 
chiatric care,  the  number  of  physician  office  visits  for  mental  conditions 
was  from  2  to  -1  percent  of  the  total.  Even  under  the  high  option  of  the 
Blue  Cross-Blue  Shield  plan  for  Federal  employees  which  covers  am- 
bulatory psychiatric  care  on  the  same  basis  as  ambulatory  care  for 
other  conditions — SO  percent  of  charges  after  $100  deductible — bene- 
fit payments  for  such  care  amounted  in  1969  to  an  annual  approximate 
figure  of  just  S2.15  per  person  covered :  and  under  this  program  which 
provides  virtually  the  same  coverage  for  mental  conditions  as  for  all 
conditions,  total  benefits  paid  for  all  types  of  care  for  mental  condi- 
tions including  both  inpatient  and  outpatient,  amounted  annually  to 
only  £7.07  per  person  covered. 

I  cite  this  study  particularly  because  this  is  an  outstanding  limit. 
This  is  the  highest  kind  of  costs  that  are  encountered. 

The  American  Psychiatric  Association  study  on  utilization  and  costs 
for  treatment  of  mental  illness  shows  that  the  cost  ©f  coverage  for 
psychiatric  care  under  insurance  programs  is  relatively  small.  I  sub- 
mit that  both  these  studies  demonstrate  that  it  is  economically  feasible 
for  the  Federal  Government  to  provide  a  full  range  of  active  reha- 
bilitative psychiatric  care  for  the  mentally  ill  indigent  and  disadvan- 
taged under  the  medicare  and  medicaid  programs;  and.  further,  that 
there  need  be  no  arbitrary  restrictions  on  where  the  patient  can  obtain 
this  care :  rather,  it  should  be  made  available  to  the  mentally  ill  indigent 
and  disadvantaged  in  all  accredited  facilities  including  State  mental 
health  programs,  the  private  psychiatric  hospital,  the  community  men- 
tal health  center,  by  private  psychiatrists,  in  the  general  hospital  and 
in  the  health  maintenance  organization. 

I  am  aware  that  many  of  these  points  were  presented  to  this  commit- 
tee some  2  weeks  ago  in  testimony  on  behalf  of  the  State  mental  health 
program  directors.  I  would  like  to  emphasize  that  we  support  their 
recommendations  for  the  increase  in  support  for  the  mentally  ill 
indigent.  TTe  were  particularly  appreciative  of  Senator  Long's  com- 
ments that  clarified  that  it  was  intended  in  section  251  of  H.R.  1  that 
public  hospitals  for  mental  diseases  might  be  certified,  at  least  in 


2411 


distinct  parts,  as  intermediate  care  facilities  for  the  aged  mentally  ill. 

I  would  now  like  to  address  my  remarks  to  those  provisions  of  H.R.  1 
related  to  HMO's,  since  section  207  would  create  incentives  for  States 
to  contract  with  HMO's  or  similar  organizations  by  providing  for  an 
increase  of  25  percent,  up  to  a  maximum  of  95  percent,  in  the  Federal 
medical  assistance  percentage  to  States  having  contracts  with  HMO's 
or  other  comprehensive  health  care  facilities. 

Members  of  the  American  Psychiatric  Association  are  supportive  of 
the  concept  of  the  HMO  in  terms  of  its  emphasis  on  preventive  health 
care  and  maintenance  and  because  it  shows  promise  under  appropriate 
circumstances  of  being  an  efficient  delivery  system.  Psychiatrists  are 
concerned,  however,  that  many  prepaid  group  plans,  prototypes  of  the 
HMO,  have  provided  little  coverage  for  psychiatric  conditions.  We 
urge  that  the  legislation  language  concerning  HMO's  provide  guaran- 
tees that  the  mentally  ill,  particularly  the  mentally  ill  indigent  and 
disadvantaged,  have  an  opportunity  to  obtain  their  treatment  within 
HMO's.  To  this  end  we  urge  that  the  definition  of  an  HMO  specify 
that  it  must  provide  those  health  services  which  a  defined  population 
might  reasonably  require  to  be  maintained  in  good  mental  health  as 
well  as  good  physical  health. 

We  believe  that  expenditures  under  Federal  programs  should  be 
used  to  support  active  rehabilitative  care  and  that  they  should  be  uti- 
lized, not  just  to  maintain  the  status  quo  but  to  improve  State  mental 
health  programs,  communit}^  mental  health  programs  and  those  serv- 
ices provided  by  the  private  sector. 

To  this  end  we  strongly  support  the  establishment  of  and  further 
experimentation  in  the  use  of  utilization  review,  medical  audit  and 
peer  review  to  assure  the  continued  improvement  of  services,  the  main- 
tenance of  quality  of  services  and  to  provide  guarantees  to  the  Con- 
gress that  funds  are  used  for  the  purposes  intended.  You  can  rely  on 
the  members  of  the  American  Psychiatric  Association  to  work  toward 
these  goals.  Thank  you. 

Senator  Anderson.  Any  questions. 

Senator  Curtis.  How  many  or  what  portion  of  the  company,  as  dis- 
tinguished from  various  units  of  government,  company  health  plans, 
include  full  psychiatric  services '? 

Dr.  Gibson.  By  company  you  are  referring  to  a  prepaid  group  prac- 
tice type  of  plan  ? 

Senator  Curtis.  Well,  regardless  of  how  they  handle  it.  a  company 
that  is  the  employer  of  people  often  has  through  private  insurance  or 
some  other  a  health  and  hospital  plan  for  their  employees. 

Dr.  Gibson.  Yes,  sir. 

Senator  Curtis.  My  question  is,  do  most  of  them  include  full  psy- 
chiatric services  ? 

Dr.  Gibson.  Most  of  the  plans  of  that  type  do  include  some  psy- 
chiatric services.  They  almost  all  have  some  limitations  that  are  some- 
what different  than  they  have  for  other  illnesses.  For  example,  if  the 
particular  plan  involves  an  80  percent  coinsurance  feature,  they  may 
make  it  a  50-percent  coinsurance  feature  for  the  psychiatric  condition. 
They  often  are  somewhat  more  limited  on  the  number  of  outpatient 
visits ;  but  as  a  general  answer,  most  do  provide  some  psychiatric  cov- 
erage but  very  few  provide  it  on  the  same  basis  as  other  conditions. 


2412 


Senator  Curtis.  What  is  the  situation  in  reference  to  Government 
employees  ? 

Dr.  Gibson.  The  Government  employees'  insurance  program  is  one 
of  the  very  strongest  plans  in  terms  of  psychiatric  coverage.  There  are 
virtually  no  special  limits  imposed  on  psychiatric  care.  I  can  say  

Senator  Curtis.  It  is  treated  like  other  illness  ? 

Dr.  Gibson.  Yes;  it  is  treated  just  like  another  illness  and  I  can  say 
as  a  generalization  that  psychiatrists  are  most  appreciative  and  most 
strongly  endorse  the  leadership  that  has  been  taken  because  clearly  the 
Federal  Government  was  instrumental  in  asking  for  this  kind  of  cover- 
age and  it  is  a  kind  of  leadership  that  has  been  taken  to  place  the  treat 
ment  of  the  mentally  ill  on  the  basis  of  other  individuals  which  we  very 
firmly  believe  in. 

Senator  Curtis.  That  is  all,  Mr.  Chairman. 

Senator  Anderson.  Thank  you  very  much. 

Dr.  Gibson.  Thank  you. 

(The  appendix  to  Dr.  Gibson's  statement  follows :) 

Mr.  Chairman  and  members  of  the  committee,  I  am  honored  to  have  this  op- 
portunity to  speak  to  you  on  behalf  of  the  American  Psychiatric  Association, 
whose  18,000  members  have  the  primary  responsibility  for  the  medical  treatment 
of  the  mentally  ill  in  our  country,  and  to  speak  on  behalf  of  the  National  Associa- 
tion of  Private  Psychiatric  Hospitals,  whose  134  member  hospitals  have  the 
primary  responsibility  for  the  private  hospital  care  of  the  mentally  ill. 

As  psychiatrists,  we  are  indebted  to  the  members  of  this  Committee  for  their 
continuing  interest  in  those  provisions  of  the  Social  Security  Legislation  affecting 
psychiatric  care.  And,  we  are  particularly  grateful  to  your  Chairman,  Senator 
Long,  for  his  personal  efforts.  The  mentally  ill  are  neither  articulate  nor  effec- 
tive spokesmen  in  their  own  behalf  and  it  is  indeed  fortunate  that  in  Senator 
Long  they  have  a  dedicated  champion,  sensitive  and  concerned  about  their  needs. 

Gentlemen,  I  speak  to  you  today  with  grave  concern  and  disappointment  about 
the  legislation  before  us.  It  does  nothing  to  eliminate  the  discriminatory  provi- 
sions of  Medicare  and  Medicaid.  In  fact,  Section  225  singles  out  the  mentally  ill 
for  even  further  limitations  under  the  Medicaid  program  by  a  decrease  in  Federal 
matching  of  one-third  after  90  days  of  care  in  mental  hospitals  and  provision 
for  no  Federal  matching  after  an  additional  275  days  of  such  care  during  an 
individual's  lifetime. 

In  testimony  presented  before  this  Committee  some  three  years  ago,  I  asked 
for  the  elimination  under  Title  XVIII  of  the  special  financial  limitations  placed 
on  psychiatric  outpatient  treatment 

I  asked  for  the  elimination  under  Title  XVIII  of  the  190  lifetime  limit  placed 
on  treatment  in  a  psychiatric  hospital. 

Three  years  ago  the  reluctance  to  act  on  these  recommendations  because  of 
the  deep-seated  concern  about  the  overall  costs  of  the  Medicare  and  Medicaid 
programs  was  understandable.  The  apprehension  about  the  total  costs  of  the 
programs  was  shared  even  though  I  did  not  believe  that  our  recommendations 
regarding  psychiatric  benefits  would  create  fiscal  problems. 

But  now,  three  years  later,  there  is  evidence  that  the  concern  about  costs 
of  psychiatric  care  is  not  warranted.  In  1968,  based  on  claims  paid  under  Medi- 
care, payments  for  psychiatric  hospitalization  represented  only  0.7%  of  the 
total  amount  reimbursed  and  the  suggested  changes  would  add  little  if  anything 
to  this. 

I  will  review  only  briefly  the  recommendations  concerning  outpatient  treat- 
ment under  Title  XVIII.  Under  the  supplementary  medical  insurance  benefits 
for  the  aged,  outpatient  treatment  may  be  paid  for  after  a  $50  deductible,  with 
the  patient  paying  20%  and  with  no  top  limit,  but  in  the  case  of  psychiatric 
treatment,  the  patient  must  pay  50%  after  the  deductible,  and  there  is  a  top  limit 
of  $250.  This  limitation  seriously  curtails  outpatient  treatment  for  the  aged 
patient.  In  many  instances  the  limitation  will  prevent  the  adequate  outpatient 
evaluation  and  screening  that  have  been  shown  to  decrease  unnecessary  hospital- 
izations. The  retention  of  this  limitation  on  psychiatric  outpatient  services  is 
particularly  incongruous  in  the  light  of  comments  on  page  38  of  the  Report  of 
the  Committee  on  Ways  and  Means  on  H.R.  17550  noting  a  wish  "to  encourage 


2413 


states  to  make  more  efficient  use  of  health  services"  and  a  wish  to  "create  in- 
centives to  encourage  outpatient  services  and  disincentives  for  long  stays  in 
institutional  settings." 

Thus,  I  ask  for  the  elimination  of  discriminatory  provisions  limiting  outpatient 
psychiatric  care  for  the  treatment  of  the  aged  under  Title  XVIII. 

This  would  mean  deleting  the  phrase  "(c)  Notwithstanding  any  other  provi- 
sion of  this  part,  With  respect  to  expenses  incurred  in  any  calendar  year  in  con- 
nection with  the  treatment  of  mental,  psychoneurotic,  and  personality  disorders 
of  an  individual  who  is  not  an  inpatient  of  a  hospital  at  the  time  such  expenses 
are  incurred,  there  shall  be  considered  as  incurred  expenses  for  purposes  of  sub- 
sections (a)  and  (b)  only  whichever  of  the  following  amounts  is  smaller:  (1) 
$312.50  or  (2)  62y2%  of  such  expenses."  P.L.  89-97,  Title  XVIII,  Section  1833(c). 

Again  addressing  myself  briefly  to  Title  XVIII,  there  is  a  190  day  lifetime  limit 
placed  on  treatment  in  a  psychiatric  hospital.  No  such  limit  is  placed  on  treat- 
ment in  a  general  hospital,  even  if  such  treatment  in  the  general  hospital  is  for 
a  psychiatric  illness.  It  makes  no  sense  to  force  a  patient  to  shift  from  one  in- 
stitution to  another  and  that  is  exactly  What  can  happen.  Only  infinitesmal  finan- 
cial savings  Could  be  achieved  through  this  limitation  and  in  fact  it  is  possible 
that  by  forcing  patients  into  more  expensive  general  hospital  beds  this  190  day 
lifetime  limitation  is  increasing  the  costs  to  the  program. 

Therefore,  I  ask  you  to  eliminate  the  190  lifetime  limit  on  treatment  in  a  psy- 
chiatric hospital  under  Title  XVIII. 

This  would  mean  deleting  the  phrase  "(3)  inpatient  psychiatric  hospital  serv- 
ices furnished  to  him  after  such  services  have  been  furnished  to  him  for  a  total  of 
190  days  during  his  lifetime."  P.L.  89-97,  Title  XVIII,  Section  1812(b). 

In  its  Annual  Report  on  Medicare,  the  Health  Insurance  Benefits  Advisory 
Council  recommended  the  enactment  of  legislation  which  would  allow  the  partici- 
pation of  community  mental  health  centers  in  the  Medicare  program.  Mental 
health  centers  that  are  affiliated  With  general  hospitals  are  certified  under  Medi- 
care as  part  of  the  general  hospital ;  centers  that  are  affiliated  with  a  psychiatric 
hospital  are  certified  as  part  of  that  hospital.  But,  a  number  of  new  centers  have 
developed  independently  and  are  free  standing.  To  qualify  as  a  Medicare  provider 
for  service  and  receive  reimbursement  for  inpatient  care,  present  law  requires 
that  the  free  standing  mental  health  centers  meet  the  conditions  of  participation 
for  psychiatric  hospitals. 

We  urge  the  enactment  of  legislation  that  would  allow  the  participation  under 
Medicare  of  all  qualified  community  mental  health  centers.  This  is  consistent  with 
the  development  of  such  centers  throughout  the  country  to  provide  more  compre- 
hensive treatment  services,  accessible  to  the  population  groups  served. 

To  accomplish  this,  the  inpatient  services  in  these  centers  could  be  covered  under 
Part  A  of  the  program,  subject  to  the  same  conditions  and  limitations  as  are  appli- 
cable to  inpatient  psychiatric  benefits.  Payment  for  outpatient  services  could  be 
made  under  Part  B,  on  a  reimbursable  cost  basis  in  much  the  same  manner  as  out- 
patient hospital  services. 

Turning  now  to  Title  XIX,  medical  assistance  is  provided  for  persons  under  65 
who  are  in  families  with  dependent  children,  are  blind,  or  permanently  and  totally 
disabled,  and  whose  incomes  and  resources  'are  insufficient  to  meet  the  costs  of 
necessary  medical  services.  Recipients  under  the  age  of  65  may  receive  inpatient 
psychiatric  treatment  on  the  psychiatric  unit  of  a  general  hospital,  but  not  in  a 
mental  institution,  whether  it  be  a  public  or  a  private  mental  hospital,  or  even  a 
community  mental  health  center. 

This  limitation  is  highly  objectionable.  Not  a  single  state  in  our  country  has 
a  sufficient  number  of  psychiatric  units  in  general  hospitals  to  treat  the  persons 
now  eligible  for  benefits  under  Title  XIX.  Furthermore,  the  psychiatric  unit  of 
a  general  hospital  provides  only  a  limited  spectrum  of  care — primarily  diag- 
nostic and  brief  stay.  They  seldom  have  the  full  range  of  specialized  mental 
health  professionals,  and  the  shortage  of  facilities  and  staff  to  treat  children 
is  particularly  severe.  Treatment  in  a  public  mental  hospital,  a  private  psy- 
chiatric hospital,  and  a  community  mental  health  center  was  included  by  the 
Congress  under  Title  XVIII  and  the  failure  to  do  so  under  Title  XIX  is  funda- 
mentally inconsistent  with  the  emphasis  on  community  psychiatry  so  vigorously 
supported  by  the  Congress. 

To  do  this,  you  must  include  all  the  properly  qualified  institutions.  We  want 
the  definition  of  a  hospital  to  include  the  public  mental  hospital,  the  private 
psychiatric  hospital,  and  the  community  mental  health  center. 


72-573 — 72— pt.  5  13 


2414 


jThis  would  mean  deleting  the  phrase  "other  than  services  in  an  institution 
for  .  .  .  mental  diseases."  P.L.  89-97  Title  XIX,  Section  1905  (a)(1). 

I  would  now  like  to  refer  to  Section  225,  of  HR  17550,  which  increases  by 
25%  the  Federal  medical  assistance  available  for  outpatient  hospital  service 
and  clinic  service,  but  also  provides : 

"after  an  individual  has  received  inpatient  services  in  a  hospital  for  mental 
diseases  on  90  days  occurring  after  December  31,  1970  (whether  or  not  such 
days  are  consecutive)  the  Federal  medical  assistance  percentage  with  respect 
to  any  such  services  furnished  to  such  individual  on  an  additional  two  hundred 
and  seventy-five  days  (whether  or  not  such  days  are  consecutive)  shall  be  de- 
creased by  33%  per  centum  thereof  and  no  payment  may  be  made  under  this  Title 
for  any  such  services  furnished  to  such  individual  on  any  day  after  such  275 
days." 

As  indicated  in  the  Report  of  the  Committee  on  Ways  and  Means  of  HR 
17550 : 

"The  proposal  to  increase  the  Federal  matching  for  outpatient,  clinic  and 
home  health  services  is  directed  at  encouraging  the  States  to  provide  early 
diagnosis  and  treatment  of  illness,  preventive  services,  and  alternatives  to  in- 
stitutional care  intended  to  reduce  the  need  for  and  use  of  inpatient  services. 

"The  proposed  limitations  on  length  of  stay  in  mental  institutions  reflect  the 
assumption  that  medical  treatment  of  mental  illness  inpatients  generally  does 
not  exceed  three  months  and  for  patients  over  65  rarely  continues  beyond  a 
year." 

Outpatient  services  should  be  encouraged  not  only  because  they  are  more 
economical  but  because  when  used  appropriately  they  are  in  the  best  interests 
of  the  patient.  The  assumption  that  treatment  of  psychiatric  inpatients  does  not 
exceed  three  months  is  a  generalization  and  over-simplification.  In  previous 
testimony  I  have  indicated  that  many  elderly  patients  do  respond  to  an  active 
treatment  program  in  less  than  90  days,  but  there  also  are  significant  numbers 
that  need  care  over  a  prolonged  period.  Arbitrary  and  inflexible  limitations 
such  as  those  proposed  will  unquestionably  deprive  many  patients  of  needed 
treatment. 

It  must  be  noted  that  a  high  percentage  of  elderly  patients  in  mental  hospitals 
are  suffering  from  significant  degrees  of  physical  impairment  and  do  receive 
needed  medical  treatment.  Limiting  the  Federal  medical  assistance  available 
to  hospitals  for  mental  diseases  would  encourage  shifting  such  patients  to  more 
expensive  medical  and  surgical  institutions  where,  incidentally,  the  psychiatric 
needs  would  not  be  adequately  met. 

Admittedly  some  States  have  not  effectively  utilized  the  Medicaid  funds  avail- 
able for  psychiatric  services.  Nevertheless,  these  programs  do  have  meaningful 
potential  and  it  would  be  a  disservice  to  disqualify  all  in  one  sweeping  judg- 
ment. In  attempting  to  eliminate  those  programs  that  are  not  delivering  ef- 
fective services,  it  would  be  preferable  to  insist  on  more  adequate  documenta- 
tion of  services  rendered  and  to  intensify  utilization  review. 

A  further  limitation  in  Section  225  affects  skilled  nursing  homes  : 

"(B)  after  an  individual  has  received  care  as  an  inpatient  in  a  skilled  nursing 
home  on  90  days  (whether  or  not  such  days  are  consecutive)  during  any  cal- 
endar year,  the  Federal  medical  assistance  percentage  with  respect  to  any  such 
care  furnished  thereafter  to  such  individual  in  the  same  calendar  year  shall 
be  decreased  by  33%  per  centum  thereof ;" 

This  limitation  will  ony  intensify  the  plight  of  the  elderly  person  suffering 
from  mental  illness  because  many  such  patients  with  lesser  degrees  of  mental 
impairment  are  being  cared  for  effectively  in  the  skilled  nursing  homes.  This 
further  withdrawal  of  support  for  older  persons  with  psychiatric  disabilities 
would  be  most  unfortunate. 

In  brief,  I  strongly  favor  the  increased  Federal  medical  assistance  being 
made  available  for  outpatient  hospital  service  but  oppose  those  reductions  and 
lifetime  limitations  on  the  assistance  available  for  inpatient  services  in  a  hos- 
pital for  mental  disease  and  the  curtailment  of  assistance  for  skilled  nursing 
home  care. 

Our  associations  ask  for  an  insurance  benefit  system  that  would  enable  the 
profession  of  psychiatry  to  provide  the  full  range  of  psychiatric  treatment  to 
all  persons  deemed  eligible  and  to  do  so  on  an  effective  basis.  We  look  forward 
to  the  opportunity  to  work  collaboratively  with  the  Federal  Government  in 
achieving  this.  We  pledge  our  wholehearted  support  to  the  Congress  and  to 


2415 


the  public  and  private  agencies  in  making  such  an  equitable  system  fully  work- 
able and  maximally  effective. 

Robert  W.  Gibson,  M.D., 
Medical  Director,  the  Sheppard  and  Enoch  Pratt  Hospital. 

Senator  Anderson.  Dr.  Catchings  ? 

STATEMENT  OF  JAMES  A.  A.  CATCHINGS,  D.D.S.,  MEMBER,  COUN- 
CIL ON  DENTAL  HEALTH,  AMERICAN  DENTAL  ASSOCIATION; 
PAST  PRESIDENT,  NATIONAL  DENTAL  ASSOCIATION;  ACCOM- 
PANIED BY  HAL  M.  CERISTENSEN,  DIRECTOR,  WASHINGTON 
OFFICE,  AMERICAN  DENTAL  ASSOCIATION 

Dr.  Catchings.  Mr.  Chairman  and  members  of  the  committee,  my 
name  is  Dr.  James  A.  A.  Catchings,  of  Detroit,  Mich. 

In  addition  to  maintaining  a  private  dental  practice,  I  am  a  mem- 
ber of  the  Council  on  Dental  Health  of  the  American  Dental  Associa- 
tion and  a  past  president  of  the  National  Dental  Association.  I  am 
here  today  on  behalf  of  those  two  organizations.  With  me  is  Hal  M. 
Christensen,  director  of  the  American  Dental  Association.  We  appre- 
ciate this  opportunity  to  present  our  views  on  some  of  the  complex 
health  issues  affected  by  provisions  of  H.K.  1.  Our  oral  testimony  is 
brief,  Mr.  Chairman.  We  have,  however,  two  appendixes  attached  to 
it  and  would  be  grateful  if  they  could  also  be  made  a  part  of  the 
record. 

Senator  Anderson.  They  will  be  made  a  part  of  the  record. 

Dr.  Catchings.  Hospital  admissions  for  dental  services  under  med- 
icare :  H.R.  1,  as  passed  by  the  House,  has  in  section  256  of  part  C  of 
title  II  a  technical  amendment  that  would  remedy  a  source  of  con- 
fusion that  exists  under  part  A  of  medicare  as  presently  written. 

Briefly,  the  provision  would  permit  a  dentist  to  certify  to  the  neces- 
sity for  hospital  admission  of  a  medicare  beneficiary  for  treatment 
of  a  dental  condition.  Upon  such  certification  and  admission  the  pa- 
tient's hospital  expenses  would  be  covered  on  the  same  basis  as  any 
other  medical  admission.  There  would  be,  of  course,  no  coverage  of 
the  dental  services  themselves. 

Enactment  of  the  provision  would  eliminate  an  existing  cumber- 
some and  unnecessary  procedure  and  bring  medicare  into  conformity 
in  this  regard  with  typical  health  benefit  programs  in  the  private  sec- 
tor, including  those  offered  to  employees  of  the  Federal  Govern- 
ment. We  urge  you  to  retain  this  provision  of  H.R.  1. 

Equity  in  outpatient  benefits  coverage :  Along  this  same  line  there 
is  need  for  a  further  clarifying  amendment  related  to  the  definition 
of  a  physician  under  section  1861  (r)  of  title  XVIII.  Although  the 
original  intent  behind  this  section  was  to  make  clear  that  a  dentist 
would  be  authorized  to  provide  any  covered  service  that  legally  is 
within  the  scope  of  his  license  to  practice,  the  administrators  of  the 
program  have  narrowly  construed  the  language  to  include  only  cov- 
ered services  that  require  surgical  intervention.  Thus,  the  expenses 
of  a  patient  with  a  condition  such  as  an  infection  that  can  be  treated 
medically  may  not  be  reimbursed  if  the  treatment  is  rendered  by  a 
dentist,  usually  one  who  specializes  in  oral  surgery,  but  would  be  re- 
imbursed if  the  same  treatment  were  rendered  by  a  physician.  The 


2416 


association  requests  that  this  inequity  be  remedied  by  adoption  of  pi 
the  following  amendment  to  H.R,  1 :  ff 
Section  1861  (r)  of  the  Social  Security  Act  is  amended  by  striking  L 
subparagraph  (2)  in  its  entirety  and  inserting  in  lieu  thereof  the  (t 
following : 

(2)  A  doctor  of  dental  surgery  or  of  dental  medicine  who  is  legally  author-  J 
ized  to  practice  dentistry  by  the  state  in  which  he  performs  such  function  a 
but  only  wtih  respect  to  (A)  surgery  or  Other  treatment  related  to  the  jaw  !  L 
or  any  structure  contiguous  to  the  jaw  or  (B)  the  reduction  of  any  fracture  of  n 
the  jaw  or  any  facial  bone. 

61 

Professional  standards  review  organization :  In  late  January,  Sen-  |( 
ator  Bennett  introduced  amendment  823  to  H.R.  1.  This  amendment  | 
would  establish  a  new  title  XI  creating  a  professional  standard  re- 
view procedure  for  services  "for  which  payment  may  be  made  under  t, 
the  Social  Security  AcV' 

It  is  apparent  and  understandable  that  the  framers  and  supporters 
of  the  amendment  are  anxious  that  the  core  structure  of  the  PSRO 
not  be  fragmented  but  that  instead  the  central  responsibility  for  its  ]j 
operations  be  clearly  assigned  to  one  organization,  with  the  local  niedi-  j 
cal  society  being  the  preferential  choice.  ;  . 

Senator  Bennett.  May  I  interrupt  you  at  that  point  ?  [ 

Dr.  Catchings.  Yes,  sir. 

Senator  Bennett.  That  last  statement  is  wrong.  We  have  leaned 
over  backAvard  to  keep  the  local  medical  society  from  controlling  the 
PSRO  and  that  is  why  we  have  insisted  that  it  must  be  a  separate 
organization,  that  every  doctor  must  be  given  access  to  it  whether 
or  not  he  is  a  member  of  the  medical  society  and,  to  the  extent  that  j 
the  leadership  of  the  medical  society  encourages  its  members  to  par- 
ticipate, we  welcome  that. 

But  we  have— I  have  been  very  careful  from  the  beginning  to  make 
it  clear  that  this  is  an  organization  that  is  entirely  outside  the  privately 
organized  medical  societies. 

Dr.  Catchings.  Thank  you  very  much,  Senator. 

We  raise  no  basic  objection  to  that  framework.  It  is  nonetheless  true 
that  large  numbers  of  dentists  and  other  nonphysician  health  profes-  j 
sionals  render  services  under  social  security  programs  to  many  thou- 
sands  of  beneficiaries.  We  have  no  doubt  that  physicians  themselves 
would  be  the  first  to  concede  that  their  training  does  not  qualify  them  j 
to  determine  the  necessity  for  or  quality  of  dental  care.  If  the  PSRO 
is  truly  going  to  wrork  with  respect  to  dental  services,  then  it  is  essen- 
tial to  "require  that  dental  societies  be  delegated  the  responsibility  for 
the  review  of  such  services. 

We  have  attached  to  our  statement,  as  appendix  I,  suggestions  for 
changes  in  line  with  out  recommendation.  We  urge  the  committee's 
favorable  consideration  of  them.  Also  included  as  appendix  II  are ; 
recent  official  policy  statements  of  the  American  Dental  Association, 
in  which  the  National  Dental  Association  concurs,  underlining  our 
commitment  to  a  broad-based  peer  review  system,  containing  sanctions  i 
for  government-ally  financed  health-care  programs. 

Medicaid :  Beginning  some  30  years  ago,  organized  dentistry  began 
urging  the  Federal  Government  to  take  a  more  active  role  in  bring- 
ing dental  care  to  the  needy  and  near  needy,  especially  the  children 
in  those  categories.  Candidly,  our  representations  met  with  little  sue- 


2417 


cess  over  the  years.  As  short  a  time  ago  as  calendar  year  1966,  total 
public  sector  spending  for  dental  care — Federal,  State,  and  local — 
was  $57  million ;  today  it  is  about  $260  million.  Medicaid's  enactment 
marked  the  first  time  that  some  emphasis  was  put  on  dental  care  for 
the  needy  and  near  needy  by  the  public  sector. 

The  committee  may  recall  that  at  the  time  of  medicaid's  enactment, 
Senator  Ribicoff  led  a  drive  to  include  dental  services  for  children  as 
a  mandatory  benefit  under  the  program.  The  committee  approved  the 
amendment  and  its  approval  was  then  confirmed  by  the  full  Senate. 
Regretfully,  the  Ribicoff  amendment  was  deleted  in  conference.  The 
emphasis  on  dental  care,  then,  has  been  optional  rather  than  obliga- 
tory; nonetheless,  it  generated  a  real  beginning  for  the  first  time  in 
history. 

This,  we  think,  is  one  of  the  bright  spots  in  medicaid  history.  We 
fully  recognize  that  there  are  many  other  chapters  that  are  not  so 
agreeable.  There  seems  to  be  evident  intention  to  make  changes  in 
medicaid,  perhaps  even  beyond  what  is  already  in  H.R.  1. 

Our  association's  most  urgent  concern  is  that  the  foothold  estab- 
lished by  medicaid  with  respect  to  dental  care  not  be  lost.  Indeed,  that 
foothold  should  be  enlarged  as  swiftly  as  is  prudent  until  comprehen- 
sive dental  care  is  reasonably  available  to  every  American  irrespective 
income. 

The  committee  action  on  the  Ribicoff  amendment  of  1965  was  evi- 
dence that  it,  too,  feels  this  commitment.  In  the  years  since  then,  it  is 
true  the  entire  Nation  has  had  to  face  some  sobering  realities  about  the 
difficulties  that  lie  between  concept  and  implementation  of  health 
care.  But  nothing  that  has  happened  can  justify  a  total  Federal  aban- 
donment of  its  role  in  bringing  dental  care  to  the  poor. 

Our  professional  preference  still  is  to  concentrate  first  on  children. 
That  is  also,  we  believe,  the  most  promising  path  from  a  fiscal  point 
of  view.  It  may  be  that  it  is  not  feasible  to  include  all  children  at  once. 
Perhaps  we  must  proceed  more  modestly  on  an  incremental  basis.  But 
whatever  ultimate  course  of  action  the  committee  takes  with  respect  to 
medicaid,  we  hope  that  it  will  provide  adequately  for  dental  care  of  the 
poor,  with  emphasis  on  children. 

Insurance  against  catastrophic  illness:  In  his  statement  at  the 
opening  day  of  these  hearings,  the  chairman  said  he  hoped  "that  the 
committee  will  receive  testimony  regarding  *  *  *  insurance  portection 
against  the  costs  of  catastrophic  illness." 

A  common  f  actor  in  any  proposal  of  this  nature  is  the  concept  of  a 
deductible  for  personal  health  expenses,  a  deductible  that,  once  satis- 
fied, allow  Federal  assistance  to  start. 

Some  of  the  bills  now  pending  would  not  permit  a  family  to  include 
its  dental  care  expenses  in  the  computation  leading  toward  satisfac- 
tion of  the  deductible.  Where  this  has  occurred,  as  in  S.  1376,  we  be-  ♦ 
lieve  it  to  have  been  inadvertent. 

Regular  dental  care  is  surely  an  intrinsic  part  of  a  family's  total 
health  care.  Public  policy  has  long  recognized  it  as  such,  as  is  shown, 
for  example,  by  its  being  part  of  the  medical  care  deductions  allowed 
in  Federal  and  State  income  tax  returns.  The  preventive  aspects  of 
care  are  more  clear  cut  with  respect  to  dental  disease  than  with  most 
other  kinds  of  illness  since,  despite  its  universal  occurrence,  most 
dental  disease  is  readily  preventable. 


2418 


Dental  care  sendees  account  for  about  9  percent  of  the  private  health 
dollar.  An  average  family  obtaining  reasonably  regular  dental  care 
might  spend  some  $160  annually.  To  the  family,  that  is  clearly  a 
.significant  expenditure.  Its  addition  to  the  deductible  category,  how- 
ever, would  not  add  unduly  to  the  cost  of  the  program.  In  any  given 
year,  of  course,  some  families  may  well  face  larger  expenditures  for 
dental  treatment  that  cannot  be  postponed.  Treatment  for  advanced 
periodontitis,  for  example,  can  extend  for  many  months  and  cost  as 
much  as  $700  to  $1,000.  Inclusion  of  such  essential  health  expenditures 
in  the  deductible  category  seems  to  us  to  be  proper  and  necessary. 

While  most  dental  disease  is  admittedly  not  catastrophic  as  that 
term  is  defined  in  this  context,  some  manifestations  can  indeed  have  a 
catastrophic  effect  on  a  family's  finances.  The  two  most  obvious  ex- 
amples of  this  are  oral  cancer  and  cleft  lip  and/or  palate.  We  urge 
that  consideration  be  given  them  in  defining  what  constitutes  disease 
of  a  catastrophic  nature. 

Mr.  Chairman,  this  concludes  our  testimony.  On  behalf  of  the 
National  Dental  Association  and  the  American  Dental  Association, 
I  want  to  express  our  pleasure  at  having  this  opportunity  to  appear. 

Mr.  Christensen  and  I  would  be  glad  now  to  respond  to  any 
questions. 

Senator  Anderson.  Are  there  any  questions  ? 

Senator  Bennett.  Mr.  Chairman.  I  would  like  to  express  my  thanks 
to  Dr.  Catchings  for  his  support  of  the  principle  of  peer  review  and 
to  assure  him  that  the  language  of  the  bill  as  it  is  finally  adopted,  if 
any  peer  review  is  adopted,  will  make  sure  that  only  dentists  review 
"the  work  of  dentists  as  only  doctors  shoud  review  the  work  of  doctors. 

Now,  we  may  not  agree  as  to  who  is  going  to  select  those  reviewers. 
Tt  seems  to  me  that  having  taken  a  strong  stand  on  the  principle  that 
organized  medicine  should  not  be  the  agency  to  select  the  doctors  who 
should  participate  in  peer  review,  I  have  to  take  the  same  stand  with 
respect  to  organized  dentistry,  and  I  think  in  the  end  that  is  an 
important  phase  of  the  success  of  the  program. 

Dr.  Catchings.  Very  important,  Mr.  Senator,  and  we  certainly 
thank  you  for  your  words  on  that. 

Senator  Curtis.  Mr.  Chairman,  I  just  want  to  refresh  my  memory 
about  these  programs.  Dental  services  per  se  are  not  included  in 
medicare,  are  they  ? 

Dr.  Catchings.  ISTo ;  not  per  se. 

Senator  Curtis.  But  I  believe  you  said  if  a  medicare  patient  would 
have  an  infection  and  went  to  the  hospital,  and  the  infection  was 
handled  by  a  medical  doctor  it  would  come  under  medicare  ? 

Dr.  Catchings.  Yes. 

Senator  Curtis.  Even  though  it  was  related  to  a  tooth  ? 
*    Dr.  Catchings.  Maybe  I  would  let  Mr.  Christensen  answer  it. 

Mr.  Christensen.  That  is  not  100-percent  correct, 

Senator  Curtis.  Correct  me  on  that  so  I  set  it  straight. 

Mr.  Christensen.  What  is  covered  under  medicare  are  those  condi- 
tions that  may  be  treated  either  by  a  physician  or  a  dentist.  That  was 
the  intent  of  the  amendment  that  is  in  there  now.  All  routine  type 
dental  care  is  excluded  specifically. 

Senator  Curtis.  What  is  the  situation  in  reference  to  medicaid? 


2419 


Mr.  Christensen.  Medicaid  is  an  optional  program  with  the  States. 
Some  of  them — New  York,  Massachusetts,  Illinois — have  fairly  com- 
prehensive programs.  Others  have  little  more  than  emergency  care 
and  some  not  even  that. 

Senator  Curtis.  So,  insofar  as  the  Federal  law  is  concerned  dental 
services  are  in  medicaid  because  the  States  could  go  ahead  

Mr.  Christensen.  That's  right;  they  could  do  it  and  the  Federal 
Government  in  that  case  matches  at  a  regular  basis. 

Senator  Curtis.  And  there  the  test  is  a  matter  of  income  ? 

Mr.  Christensen.  Eight. 

Senator  Curtis.  I  understand  your  recommendations  about  peer 
review  and  I  understand  about  the  definition  of  doctors ;  I  don't  know 
as  I  have  used  the  right  term,  but  are  you  at  this  time  advocating 
the  expansion  of  any  programs  to  include  dental  care  ? 

Mr.  Christensen-.  Only  with  respect  to  programs  such  as  medicaid 
which  are  for  the  needy.  We  believe  that  those  programs  should  in- 
clude a  reasonable  provision  for  dental  care. 

Senator  Curtis.  That  is  the  law  now  so  far  as  the  Federal  Govern- 
ment is  concerned  ? 

Mr.  Christensen.  Eight. 

Senator  Curtis.  That  is  all,  Mr.  Chairman. 

Senator  Bennett.  May  I  have  1  more  minute,  Mr.  Chairman?  I 
want  to  say  to  Dr.  Catchings  that  we  will  carefully  study  these  recom- 
mendations in  your  statement  regarding  the  peer  review  concept  and 
we  will  include  as  many  of  them  either  in  the  language  or  in  the  report 
as  we  can,  consistent  with  the  basic  principle  of  the  idea. 

Dr.  Catchings.  Thank  you. 

Senator  Btrd.  Thank  you,  Mr.  Chairman.  Just  one  question  of  Dr. 
Catchings. 

What  has  been  the  experience  of  the  dental  profession  with  the 
fluoridation  program  ? 

Dr.  Catchings.  With  the  fluoridation  program  ? 
Senator  Btrd.  Yes. 

Dr.  Catchings.  The  fluoridation  program  has  gone  over  well  in  most 
of  the  larger  communities  of  the  country.  We  find  that  we  do  have 
forces  that  oppose  it;  forces  that  are  not  well  grounded  or  well 
founded.  But  in  the  cities,  the  larger  metropolitan  areas  where  the 
program  is  working,  we  have  found  that  it  is  working  well ;  the  in- 
cidence of  caries  has  been  reduced  greatly  and  we  hope  we  will  con- 
tinue to  expand  throughout  the  Nation. 

Senator  Btrd.  You  are  convinced  that  it  is  a  logical  and  sound  thing 
to  do? 

Dr.  Catchings.  Yes  sir. 

Senator  Btrd.  I  am  interested  in  that.  Twenty-five  years  ago,  as  a 
newspaper  editor,  I  championed  that  cause  in  Virginia.  My  dentist 
friends  sold  me  on  the  idea  and  it  seemed  sound  and  logical  and  it  has 
proved  out  over  the  years,  you  feel  ?! 
>  Dr.  Catchings.  1  think  in  the  long  run  it  will  be  proven  conclu- 
sively that  it  is  really  necessary. 

Senator  Btrd.  Thank  you,  Doctor. 

Thank  you,  Mr.  Chairman. 

Senator  Anderson.  Thank  you  very  much. 


2420 


(The  prepared  appendixes  I  and  II  by  Dr.  Catchings  follow:) 

Appendix  I 

RECOMMENDATIONS  REGARDING  PROFESSIONAL  STANDARDS  REVIEW 
ORGANIZATIONS 

As  indicated  in  the  text  of  the  statement  presented  to  the  Committee,  the 
dental  profession  is  concerned  that  Amendment  823  to  H.R.  1  does  not  make 
adequate  provision  for  the  peer  review  of  health  services  which  are  provided 
under  the  Social  Security  Act  by  health  practitioners  other  than  physicians.  Nor 
does  it  accord  any  representation  in  the  advisory  or  administrative  mechanism 
for  other  than  physicians.  The  following  amendments  would  correct  these 
deficiencies  and  are  recommended  to  the  Committee : 

Section  1152(e)  is  amended  by  inserting  after  "of  his  profession."  the  follow- 
ing^ "Nor  shall  any  such  organization  utilize  the  services  of  any  individual  who 
is  not  a  duly  licensed  dentist  to  make  final  determination  with  respect  to  the 
professional  conduct  of  any  other  duly  licensed  dentist  or  any  act  performed  by 
any  duly  licensed  dentist  in  the  exercise  of  his  profession." 

Section  1155(b)  is  amended  by  deleting  "is  authorized"  and  inserting  in  lieu 
thereof  "is  required". 

Section  1155(c)  is  amended  by  inserting  "and  other  providers"  after  "to 
familiarize  physicians"  and  further,  by  inserting  "other  providers,"  after  "ac- 
tivities by  physicians,". 

Section  1155(d)  (2)  is  amended  by  adding  "and  dental"  after  "medical". 

Section  1162(b)  is  amended  by  deleting  subparagraph  "(B)"  and  inserting  in 
lieu  thereof  the  following  :  "(B)  Four  members  of  the  health  professions,  no  more 
than  two  of  whom  shall  be  physicians  (one  designated  by  the  state  medical 
society  and  one  designated  by  the  state  hospital  association)  and  no  more  than 
one  of  whom  shall  be  a  dentist  who  shall  be  designated  by  his  state  dental  society  ; 
and". 

Section  1163(a)  (1)  is  amended  by  deleting  "physicians"  and  inserting  in  lieu 
thereof  "members  of  the  health  professions". 

Section  1163  is  amended  by  deleting  paragraph  "(b)"  and  inserting  in  lieu 
thereof  the  following:  "(b)  Members  of  the  Council  shall  consist  of  physicians, 
dentists  and  other  health  practitioners  of  recognized  standing  and  distinction 
in  the  appraisal  of  health  services.  A  majority  of  such  members  shall  be  physi- 
cians and  dentists  who  have  been  recommended  to  the  Secretary  to  serve  on  the 
Council  by  national  organizations  recognized  by  the  Secretary  as  representing 
practicing  physicians  and  dentists.  The  membership  of  the  Council  shall  include 
physicians  and  dentists  who  have  been  recommended  for  membership  on  the 
Council  by  consumer  groups  and  other  health  care  interests." 

Appendix  II 

EXCERPTS  FROM     AMERICAN  DENTAL  ASSOCIATION  GUIDELINES  FOR  DENTISTRY'S 
POSITION   IN  A   NATIONAL  HEALTH  PROGRAM 

Review  Procedures 

1.  Licensed  dentists  should  be  involved  at  all  levels  of  review  of  the  dental 
aspects  in  a  dental  component  of  a  national  health  program,  and  review  of  the 
quality  of  professional  services  should  be  under  the  control  of  licensed  dentists. 

2.  Dental  societies  should  establish  effective  committees  that  have  consumer 
representation  to  ensure  accountability  to  the  public.  The  committees  should  be 
well  publicized  and  should  provide  for  discourse  between  consumers  and  dentists. 

3.  Review  in  a  dental  component  of  a  national  health  program  should  include 
review  of  program  design  and  administration,  quality  of  services  rendered,  fee 
questions  and  utiliation  of  services. 

4.  Continuing  review  of  the  design  and  administration  of  the  dental  compo- 
nent of  a  national  health  program  should  include  such  matters  as  effectiveness 
in  meeting  the  dental  need  of  the  population,  patient  utilization,  economy  in 
administration,  effect  of  benefit  patterns  on  dental  health  and  dental  practice, 
provision  of  uniform  forms  and  procedures,  efficiency  of  administrative  require- 
ments, accessibility  of  dental  care,  utilization  of  fluoridation  and  effectiveness  of 
review  procedures. 


2421 


5.  Review  of  quality  of  dental  care  in  a  national  program  should  include 
review  of  the  quality  of  services  performed,  review  of  the  reasonableness  of 
procedures  and  whether  the  services  were  performed  in  accordance  with  pro- 
fessional standards. 

6.  Review  of  treatment  should  be  performed  according  to  professionally  estab- 
lished guidelines  through  review  techniques  such  as  screening  of  claims,  statis* 
tical  audits,  random  sampling  of  records,  review  of  radiographs,  random  exami- 
nation of  patients  and  evaluation  of  complaints. 

7.  Dental  society  review  committees  should  be  used  in  the  dental  component 
of  a  national  health  program  for  review  of  professional  matters,  such  as  review 
of  services  rendered  and  fee  questions. 

8.  Channels  of  referral  to  dental  review  committees  under  a  national  program 
should  be  open  to  the  program  administrators,  dentists,  insuring  agencies  and 
patients. 

9.  Appeal  procedures  for  all  participants  should  be  provided  in  the  review 
structure  of  a  national  program. 

10.  A  dental  review  structure,  in  order  to  be  creditable,  must  include  appro- 
priate sanction  against  abuse. 

11.  Effective  review  procedures  should  be  developed  to  resolve  fee  questions, 
to  determine  if  fees  are  in  accordance  with  provisions  of  the  program,  and  to 
assess  whether  fees  are  in  fact  usual,  customary  and  reasonable  when  this  pay- 
ment method  is  used. 

12.  Effective  procedures  should  be  instituted  to  protect  the  review  committee 
members. 

Senator  Anderson.  Miss  Stone? 

STATEMENT  OF  VIRGINIA  STONE,  CHAIRMAN,  EXECUTIVE  COM- 
MITTEE, DIVISION  OF  GERIATRIC  NURSING  PRACTICE,  AMERI- 
CAN NURSES'  ASSOCIATION;  ACCOMPANIED  BY  CONSTANCE 
HOLLERAN,  DIRECTOR,  GOVERNMENTAL  RELATIONS  DEPART- 
MENT, ANA 

Miss  Stone.  Mr.  Chairman  and  committee  members,  I  am  Virginia 
Stone,  chairman  of  the  Executive  Committee  of  the  Division  of  Geriat- 
ric Nursing  Practice  of  the  American  Nurses'  Association.  Accom- 
panying me  is  Constance  Holleran,  director  of  the  Governmental  Rela- 
tions Department  of  the  American  Nurses'  Association.  Today  I  ap- 
pear before  you  on  behalf  of  the  American  Nurses'  Association  and 
in  the  interest  of  time  I  will  summarize  the  points  we  have  made  in 
our  complete  statement,  which  you  also  have  before  you. 

In  relation  to  the  health  insurance  for  the  disabled,  the  association 
has  urged  over  the  years  that  disabled  persons  whose  incomes  are 
limited,  who  are  likely  to  require  more  health  services  and  who  ex- 
perience difficulty  in  obtaining  adequate  insurance  protection  against 
the  cost  of  health  services  also  be  accorded  benefits  under  the  medicare 
program.  We  urge  the  members  of  this  committee  to  approve  the  ac- 
tion of  the  House  of  Representatives. 

In  relation  to  the  social  security  retirement  benefits,  the  American 
Nurses'  Association  agrees  with  the  increase  in  benefits  effectively,  June 
1972,  and  the  provision  for  automatic  increases  to  reflect  cost-of-living 
increases.  The  liberalization  of  the  amount  a  beneficiary  may  earn 
from  the  present  $1,680  to  $2,000  without  loss  of  social  security  income 
is  an  improvement  although  we  would  have  preferred  a  ceiling  of 
$2,700.  The  nurse  of  retirement  age  could  help  meet  the  health  needs 
of  the  community  in  manv  ways.  She  or  he  could  give  home  nursing 
care,  teach  home  health  aides  or  work  in  one  of  many  nursing  homes 
which  say  they  cannot  secure  registered  nurses. 


2422 


As  for  child-care  deductions,  the  American  Nurses'  Association  has 
long  supported  legislation  which  would  liberalize  child-care  income 
tax  deductions  for  workingwomen.  We  are  pleased  that  Congress  has 
provided  tax  aid  for  child-care  expenses  in  the  new  law,  Public  Law 
92-178.  Day-care  and  household  help  deductions  up  to  $400  per  month 
are  now  available  to  families  with  a  yearly  adjusted  gross  income  of 
$18,000  or  under  for  the  cost  of  care  of  children  under  age  15  and/or 
invalids. 

PROFESSIONAL  STANDARDS  REVIEW  ORGANIZATION 

As  to  the  professional  standards  review  organization,  the  Ameri- 
can Nurses'  Association  agrees  that  provision  should  be  made  for 
utilization  review  of  health  services  to  individuals  and  peer  review 
to  insure  that  the  services  are  of  high  quality.  Our  objection  to  the 
proposed  professional  standards  review  organization  is  that  it  places 
responsibility  for  surveillance  of  utilization  and  quality  almost  totally 
on  one  profession — medicine — in  the  health  field.  It  is  our  contention 
that  each  profession  within  the  health  field  should  have  the  respon- 
sibility, and  be  accountable,  for  developing  standards  of  care  within 
his/her  area  of  expertness.  We  submit  that  review  of  care  in  extended 
care  facilities,  skilled  nursing  homes  and  home  health  agencies,  where 
the  major  constant  service  provided  is  nursing  care,  is  the  responsibil- 
ity of  nurses.  In  utilization  review,  we  believe  the  approach  should 
be  multidisciplinary,  involving  representatives  of  all  the  health  profes- 
sions. We  recommend  that  National  and  State  professional  standards 
review  councils  include  in  their  membership  representatives  of  other 
health  professions,  in  addition  to  physicians.  We  also  recommend  that 
any  organization,  established  within  an  area  for  the  purpose  of  re- 
viewing utilization,  effectivness,  and  quality  of  services,  be  multi- 
disciplinary. 

Delegates  to  the  recent  White  House  Conference  on  Aging  recom- 
mended and  they  underscored  that  comprehensive  health  care  services 
become  available.  Services  cannot  be  comprehensive  unless  all  mem- 
bers of  the  health  team  are  involved  in  total  planning  and  review. 
^  Medicare  and  medicaid  proposals :  The  American  Nurses'  Associa- 
tion takes  serious  exception  to  two  provisions  relating  to  the  medicare 
and  medicaid  programs,  for  we  believe  they  are  not  in  the  best  interest 
of  patients. 

The  first  provision,  section  241,  would  set  up  a  program  to  deter- 
mine qualifications  for  certain  health  care  personnel  who  do  not  have 
educational  credentials  but  have  on-the-job  experience. 

I  would  like  to  remind  you,  when  State  licensure  came  into  being 
people  with  work  experience  were  reviewed  and  educational  require- 
ments waived. 

Under  the  present  medicare  and  medicaid  regulations  that  govern 
extended-care  facilities  and  skilled  nursing  homes,  practical  nurses 
licensed  by  waiver  can  be  employed.  We  have  no  objection  to  this  as 
long  as  registered  nurse  supervision  is  available.  If  the  intent  of  the 
provision  in  H.R.  1  is  to  test  practical  nurses  licensed  by  waiver  to 
determine  whether  they  may  assume  the  role  of  charge  nurse,  and  we 
believe  this  is  the  intent,  we  would  have  serious  objections.  If  this  is 
not  the  intent,  the  American  Nurses'  Association  feels  it  is  unnecessary 


2423 


to  include  the  waivered  licensed  practical  nurses  in  the  groupings 
named  in  section  241. 

It  is  possible  to  test  in  a  pencil-and-paper  test  for  factual  knowl- 
edge ;  however,  it  is  doubtful  if  it  can  effectively  assess  an  individual's 
level  of  understanding,  ability  to  engage  in  interdependent  and  in- 
dependent decisionmaking,  ability  to  collaborate  effectively  with  other 
members  of  the  health  team  and  to  coordinate  diverse  activities  in  pa- 
tient care.  Because  of  the  complexities  of  health  needs  of  the  aged, 
provisions  should  be  made  to  encourage  the  use  of  the  best  prepared 
health  personnel  rather  than  the  least  prepared  personnel. 

The  second  provision  we  object  to  is  section  267,  which  would  waive 
the  requirement  that  skilled  nursing  homes  under  the  medicaid  pro- 
gram have  at  least  one  full-time  registered  nurse  on  the  staff  when  the 
skilled  nursing  home  is  in  a  rural  area.  Under  the  provision,  standards 
would  be  lowered  for  people  in  rural  sections  of  the  country. 

A  real  concern  of  the  American  Nurses'  Association  is  the  lack  of 
clarity  of  several  parts  of  the  proposal  which,  perhaps,  some  of  the 
members  of  this  committee  could  clarify  for  us. 

What  is  your  definition  of  rural  ?  What  proportion  of  nursing  home 
beds  are  located  in  rural  communities  by  such  definition  ?  How  many 
rural  area  facilities  are  adjacent  to  medical  centers?  Is  there  a  true 
shortage  of  RN's  in  such  locations  ?  Is  there  an  EN  shortage  in  other 
facilities  in  that  same  area?  These  last  questions  are  asked  because 
there  are  indications  from  several  State  nurses  associations  that  the 
major  problem  is  not  a  shortage  of  UN's  but  the  fact  that  the  salaries 
and  personnel  policies  of  extended-care  facilities  are  not  being  reviewed 
and  updated — and  they  are  not  competitive. 

Recruitment  programs  are  not  as  vigorous  as  they  might  be. 

These  questions  are  posed  because  of  the  necessity  to  consider  a  safe 
level  of  care  for  all  older  people  regardless  of  the  location  of  the 
facility. 

The  American  Nurses'  Association  supports  amendments  to  medicare 
which  would  extend  coverage  to  the  cost  of  out-of -hospital  prescrip- 
tion drugs;  would  freeze  at  the  present  level  of  $50  the  amount  the 
covered  individual  must  pay  in  a  given  year;  would  eliminate  the 
requirement  in  H.R.  1  of  daily  copayments  for  the  31st  through  60th 
day  of  hospitalization.  Increasing  deductibles  and  coinsurance  could 
have  the  effect  of  screening  out  individuals  most  in  need  of  care  and 
early  treatment,  possibly  resulting  in  a  more  serious  and  costly  illness. 

We  are  in  agreement  that  requiring  a  3-day  hospital  stay  before  an 
individual  is  entitled  to  medicare  coverage  of  home  health  services 
should  be  eliminated  when  care  can  appropriately  and  successfully  be 
given  at  home.  Studies  have  indicated  that  given  the  opportunity,  old 
people  prefer  to  remain  in  their  homes. 

We  are  strongly  in  favor  of  the  establishment  of  an  advisory  com- 
mittee on  home  health  services  to  assist  the  Assistant  Secretary  for 
Health  and  Scientific  Affairs  in  the  administration  of  home  health 
services  provided  under  medicare,  medicaid,  and  the  maternal  and 
child  health  program. 

We  believe  home  health  benefits  under  the  medicare  program  have 
been  overcontrolled.  Intermediaries  have  made  arbitrary  decision  with 
respect  to  the  nursing  care  they  will  approve  for  payment.  As  an  ex- 


2424 


ample,  payment  will  not  be  paid  for  prevention  of  decubitus  ulcer  or 
bed  sores  but  payment  will  be  made  after  that  lias  been  developed  and 
is  given  care. 

Since  less  than  1  percent  of  medicare  expenditures  have  been  used 
to  pay  for  home  health  services,  it  does  not  appear  that  the  number 
of  home  visits  have  been  excessive.  It  is  our  opinion  that  the  nursing 
administration  is  in  the  best  position  to  determine  the  need  for  services 
in  the  home.  Nursing  in  the  home  and  homemaker  home  health  aide 
services  can  maintain  individuals  in  their  own  homes,  avoiding  crisis 
situations  and  serious  breakdown  that  lead  to  need  for  the  most  expen- 
sive care. 

Again,  the  delegates  to  the  White  House  Conference  on  Aging  rec- 
ommended that  services  be  expended  and  broadened  in  the  home  so 
that  there  would  be  alternatives  of  care  available  to  the  elderly. 

The  American  Nurses'  Association  agrees  with  the  proposal  in  sec- 
tion 237,  which  includes  utilization  review  requirements  for  hospitals 
and  skilled  nursing  homes  under  medicaid  and  maternal  and  child 
health  programs.  We  strongly  support  the  belief  that  the  same  high 
quality  of  care  available  to  the  general  public  should  be  given  both 
medicaid  and  medicare  recipients. 

In  conjunction  with  the  same  quality  of  care  given  to  both  medicaid 
and  medicare  recipients,  the  availability  of  health  care  to  both  cate- 
gories of  recipients  would  not  be  equal  under  the  proposal  in  section 
232,  which  deals  with  the  determination  of  reasonable  cost  of  inpatient 
hospital  services  under  medicaid  and  maternal  and  child  health  pro- 
grams. 

The  American  Nurses'  Association  supports  the  current  reimburse- 
ment policy,  where  States  are  required  to  reimburse  hospitals  for  in- 
patient care  under  medicaid  on  the  basis  of  the  reasonable  cost  form- 
\ila  set  forth  in  medicare.  This  proposal  would  probably  reduce  hos- 
pital and  home  health  care  costs,  but  to  the  detriment  of  poor  people 
whose  access  to  health  services  would  be  greatly  curtailed  because 
sufficient  medicaid  funds  would  not  be  available.  We  oppose  the  pro- 
posal in  section  232  for  we  firmly  support  the  belief  that  there  should 
not  be  a  double  standard,  and  that  medicaid  recipients  should  be  elig- 
ible for  the  same  benefits  as  are  available  to  medicare  recipients. 

I  appreciate  the  opportunity  to  be  here  today  and  present  the  views 
of  the  American  Nurses'  Association.  Thank  you. 

Senator  Anderson.  Are  there  any  questions  ? 

Senator  Bennett.  No  questions. 

Senator  Curtis.  Yes. 

The  States  license  nurses,  issue  the  licenses  as  to  who  is  to  be  a  reg- 
istered nurse ;  is  that  right  ? 
Miss  Stone.  That  is  right. 

Senator  Curtis.  Medicare  was  enacted  to  help  people  meet  the  fin- 
ancial burden  of  their  illness  and  it  was  not  enacted  for  the  purpose  of 
transferring  to  Washington  the  direction  and  control  of  all  the  various 
medical  professions ;  and  it  is  creating  havoc  in  the  country.  To  have 
life  and  death  over  the  continuation  of  a  hospital  being  determined  at 
Washington  just  does  not  make  sense  at  all. 

On  a  "different  subject,  I  have  a  very  well-qualified  doctor  in  one 
of  our  Nebraska  communities  who  has  clone  considerable  work  on  a 
paper  on  f  urther  utilizing  the  visiting  nurse  as  a  means  not  only  of  serv- 


2425 


ing  the  patients  much  better  but  also  very  materially  cutting  down  the 
costs  of  medicare  and  medicaid. 

If  I  delivered  that  paper  to  you,  would  you  furnish  us  with  your 
comments  on  his  proposal  ? 

Miss  Stone.  We  would  be  delighed,  sir. 

Senator  Curtis.  He  points  out  a  number  of  specific  cases  where  a 
patient  needs  to  have  something  done — a  check  made — it  may  be  a 
blood  test  or  it  may  be  something  else— and  if  you  get  an  ambulance 
and  send  the  patient  to  the  hospital  it  is  part  of  medicare  expenses; 
but  if  they  use  a  visiting  nurse  to  do  that  very  thing  it  is  not  covered. 

Are  you  familiar  with  any  of  those  problems  ? 

Miss  Stone.  Yes,  sir;  I  think  we  also  have  to  keep  in  mind  what 
it  does  to  the  old  person  to  move  them  from  one  facility  to  another 
if  the  service  could  be  rendered  at  home  instead. 

Senator  Curtis.  Yes ;  he  cites  a  number  of  important  illustrations ; 
he  said  in  one  situation  a  man  TO  years-of-age  had  a  pacemaker  de- 
vice inserted  in  his  heart  and  when  he  was  returned  from  the  hospital 
there  was  no  provision  for  a  visiting  nurse  checking  him  periodically — ■ 
pulse  and  just  a  few  other  things — to  see  if  the  pacemaker  was  work- 
ing all  right ;  and  the  only  way  he  can  get  it  taken  care  of  is  to  go  back 
to  the  hospital. 

Miss  Holleran.  One  of  the  serious  problems  the  home  health  agen- 
cies are  facing  right  now,  Senator,  is  that  frequently  the  fiscal  agent 
who  reviews  the  service  rendered  has  disallowed  reimbursement,  indi- 
cating it  is  not  skilled  nursing  care.  The  decision  is  being  made  at  that 
level.  Many  of  the  home  health  agencies  are  in  serious  financial  diffi- 
culties because  they  cannot  collect  for  the  kind  of  care  they  need  to 
provide. 

Senator  Curtis.  Who  said  it  was  not  skilled  ? 
Miss  Holleran.  Those  reviewing  it. 
Senator  Bennett.  Blue  Cross/Blue  Shield. 

Miss  Holleran.  Frequently  they  say  

Senator  Curtis.  Who  is  they  ? 
Miss  Holleran.  The  agents  that  review  the  claims. 
Senator  Curtis.  For  the  Federal  Government '? 
Miss  Holleran.  Right. 

Senator  Curtis.  For  the  Federal  Government  ? 
Senator  Bennett.  Insurers. 

Senator  Curtis.  That  is  what  I  had  in  mind  in  my  earlier  remark. 
We  did  not  enact  medicare  to  have  the  Federal  Government  run  the 
health  professions  or  the  hospitals ;  the  States  do  that  and  the  purpose 
of  medicare  is  to — like  any  other  insurance  company — relieve  people 
of  their  medical  financial  difficulties. 

You  feel  if  it  had  not  been  for  those  regulations  the  visiting  nurses 
and  other  nurses  could  have  rendered  a  service  that  would  have  been 
very  beneficial  to  the  patient  as  well  as  saved  expense  ? 

Miss  Holleran.  Yes ;  and  frequently  the  service  has  been  provided 
but  the  reimbursement  has  not  been  available. 

Senator  Curtis.  Well,  Mr.  Chairman,  I  would  like  to  ask  that  the 
statement  entitled  "A  New  Look  at  the  Visiting  Nurse,"  by  Dr.  Paul 
HofF,  of  Seward  Clinic,  Seward.  Nebr.,  be  inserted  in  the  record. 

Senator  Anderson.  Without  objection,  it  will  be  done. 


2426 


Senator  Curtis.  I  will  get  you  a  copy  and  I  will  ask  further  if  these 
witnesses  wish  to  make  any  comment  after  they  have  had  time  to  study 
this,  that  it  go  in  the  same  place  in  the  record.  That  is  all. 

Senator  Anderson.  Thank  you  very  much. 

(The  prepared  statements  of  Virginia  Stone,  Constance  Holleran, 
and  Dr.  Hoff  and  comments  of  Constance  Holleran  on  Dr.  Hoff's 
statement  follows.  Hearings  continue  on  p.  2434.) 

Prepared  Statement  of  Virginia  Stone,  R.N.,  Ph.  D.,  American  Nurses' 

Association 

I  am  Virginia  Stone,  Chairman,  Executive  Committee  of  the  Division  of 
Geriatric  Nursing  Practice  of  the  American  Nurses'  Association,  and  Director, 
Department  of  Graduate  Studies,  Duke  University  School  of  Nursing,  and  Presi- 
dent, North  Carolina  Nurses'  Association.  Accompanying  me  is  Constance  Hol- 
leran, Director  of  the  Government  Relations  Department  of  the  American  Nurses' 
Association.  I  appear  here  today,  representing  the  American  Nurses'  Association, 
the  professional  association  of  registered  nurses  in  the  United  States,  to  speak  to 
certain  provisions  in  H.R.  1,  the  Social  Security  Amendments  of  1971. 

The  American  Nurses'  Association  has  supported  the  provisions  of  the  Social 
Security  Act  and  extensions  and  improvements  in  the  system  since  its  adoption. 
It  was  the  first  organization  in  the  health  field  to  lend  support  for  proposals  to 
provide  health  insurance  coverage  for  the  aged  through  the  social  security 
mechanism. 

health  insurance  for  the  disabled 

The  Association  has  urged  over  the  years  that  disabled  persons  also  be  ac- 
corded benefits  under  the  Medicare  program.  The  disabled  have  limited  income, 
are  likely  to  require  more  health  services  and,  in  addition,  experience  difficulty 
in  obtaining  adequate  insurance  protection  against  the  costs  of  health  services. 
We  are  in  agreement  with  the  House  that  the  "unmet  need  for  health  insurance 
protection  among  the  disabled — is  so  great  that  this  extension  of  protection 
under  Medicare  should  not  be  put  off  any  longer."  1  We  urge  the  members  of  this 
Committee  to  approve  the  action  of  the  House  of  Representatives. 

social  security  retirement  benefits 

We  approve  the  increase  in  benefits  effective  June  1972  and  the  provision  for 
automatic  increases  to  reflect  cost  of  living  increases;  the  liberalization  of  the 
amount  a  beneficiary  may  earn  from  the  present  $1,680  to  $2,000  without  loss  of 
social  security  income,  although  we  would  have  preferred  a  ceiling  of  $2,700.  A 
higher  ceiling  would  be  an  inducement  to  many,  nurses  included,  to  return  to 
work,  at  least  on  a  part-time  basis.  Registered  nurses  are  in  short  supply.  It 
would  seem  that  the  nurse  of  retirement  age  could  help  meet  the  health  needs  of 
the  community  in  many  ways ;  for  example,  by  giving  home  nursing  care,  teach- 
ing home  health  aides,  or  teaching  in  one  of  the  pre-vocational  health  training 
programs  or  working  in  nursing  homes  which  say  they  cannot  secure  registered 
nurses. 

CHILD  CARE  DEDUCTIONS 

The  American  Nurses'  Association  has  long  supported  legislation  which  would 
liberalize  child  care  income  tax  deductions  for  working  women. 

The  Association  is  pleased  with  the  new  law,  P.L.  92-178,  the  Revenue  Act  of 
1971,  and  the  included  provision  dealing  with  tax  aid  for  child  care  expenses.  Day 
care  and  household  help  deductions  up  to  $400  per  month  are  now  available  to 
families  with  a  yearly  adjusted  gross  income  of  $18,000  or  under  for  the  cost  of 
care  of  children  under  age  15  and/or  invalids. 

While  we  are  dealing  with  the  subject  of  child  care,  there  is  another  aspect 
of  this  problem  that  has  not  previously  been  dealt  with.  Unlike  teachers,  social 
workers,  and  most  other  health  professionals,  the  services  of  registered  nurses, 
practical  nurses,  nurses'  aides  are  required  around-the-clock,  24  hours  a  day, 
seven  days  a  week.  This  means  that  not  only  are  child  care  services  needed  dur- 


1  Social  Security  Amendments  of  1971.  Report  of  the  Committee  on  Ways  and  Means  on 
H.R.  1,  House  Report  92-231. 


2427 


ing  the  day,  but  in  the  evening  and  during  the  night.  Practical  nurses  and  nurses 
aides  have  the  same  needs.  Hospitals,  skilled  nursing  homes,  and  extended  care 
facilities  currently  suffer  a  shortage  of  these  categories  of  manpower.  There 
are  many  indications  that  the  needed  manpower  does  exist  and  would  join  the 
work  force  if  the  range  of  child  care  services  was  considerably  expanded.  We 
should  recognize,  too,  that  in  many  circumstances  fathers  have  the  need  for  child 
care  services,  if  they  are  to  work  as  well. 

PROFESSIONAL  STANDARDS  REVIEW  ORGANIZATION 

The  American  Nurses'  Association  agrees  that  provision  should  be  made  for 
utilization  review  of  health  services  to  individuals  and  peer  review  to  insure 
that  the  services  are  of  high  quality.  The  present  practice  whereby  fiscal  inter- 
mediaries and  public  officials  make  the  decisions  about  the  use  of  services  and 
the  kind  of  care  that  will  be  covered  has  resulted  in  some  arbitrary  decisions 
not  related  to  an  individual's  need  for  care.  This  has  been  especially  noted  by 
home  health  agencies,  and  has  resulted  in  hardship  both  to  the  agency  and  the 
person  requiring  care. 

Our  objection  to  the  proposed  professional  standards  review  organization  is 
that  it  places  responsibility  for  surveillance  of  utilization  and  quality  almost 
totally  on  one  profession  in  the  health  field.  For  example,  the  proposed  national 
Professional  Standards  Review  Council  would  be  composed  only  of  physicians, 
The  proposed  Statewide  Professional  Standards  Review  Councils  would  also  be 
dominated  by  medical  practitioners.  Provision  is  made  for  health  practitioners 
to  be  appointed  to  State  Advisory  Groups. 

Further,  the  P.S.R.O.  is  charged  with  the  responsibility  for  review  of  the 
professional  activities  of  all  health  care  practitioners  and  of  institutions  and 
agencies  providing  health  services. 

It  is  our  contention  that  each  profession  within  the  health  field  should  have 
the  responsibility,  and  be  accountable,  for  developing  standards  of  care  within 
his  area  of  expertness.  Obviously,  the  physician  has  the  expertise  to  make  judg- 
ments about  the  need  for  medical  care  and  the  quality  of  that  care.  Other  health 
professionals,  including  nurses,  are  the  most  competent  to  make  the  judgments 
within  their  area  of  practice.  In  extended  care  facilities,  skilled  nursing  homes 
and  home  health  agencies,  the  major  constant  service  provided  is  nursing  care. 
We  submit  that  review  of  that  care  is  the  responsibility  of  nurses.  In  assessing 
the  quality  and  totality  of  health  care  we  believe  there  should  be  a  collaborative 
effort  of  all  the  health  disciplines  involved. 

In  utilization  review  we  believe  the  approach  should  be  multi-disciplinary, 
involving  representatives  of  all  the  health  professions.  The  interests  of  the  indi- 
viduals needing  services  will  be  better  served  when  the  knowledges  of  a  diverse 
group  are  brought  to  bear  on  an  issue  or  problem. 

We,  therefore,  recommend  that  national  and  state  professional  standards 
review  councils  include  in  their  membership  representatives  of  other  health  pro- 
fessions, in  addition  to  physicians.  We  also  recommend  that  any  organization, 
established  within  an  area  for  the  purpose  of  reviewing  utilization,  effectiveness 
and  quality  of  services  be  multi-disciplinary. 

MEDICARE  AND  MEDICAID  PROPOSALS 

There  are  two  provisions  relating  to  the  Medicare  and  Medicaid  Programs  with 
which  we  take  serious  exception  because  we  believe  they  are  not  in  the  best 
interest  of  patients. 

The  first  provision,  Section  241,  would  set  up  a  program  to  determine  qualifica- 
tions for  certain  health  care  personnel  who  do  not  have  educational  credentials 
but  have  on-the-job  experience.  In  all  states  there  is  provision  for  the  licensing 
of  practical  nurses.  When  these  laws  are  initially  enacted  many  individuals  with- 
out formal  preparation  were  licensed  by  waiver.  The  requirements  for  such  licen- 
sure varied  from  state  to  state.  In  some,  practical  nurses  took  the  national  exam- 
ination, called  the  state  board  test  pool  examination ;  in  others,  an  examination 
developed  by  the  licensing  authority ;  in  others,  the  license  was  granted  without 
examination. 

Whatever  the  circumstances,  the  license  issued  by  waiver  is  valid  and  cannot 
be  revoked  or  suspended  without  just  cause  and  evidence  that  the  practical  nurse 
has  violated  the  law.  He  or  she  can  be  employed  but  state  law  does  stipulate  that 
the  individual  work  under  the  supervision  of  a  registered  nurse. 


2428 


Under  the  present  Medicare  and  Medicaid  regulations  that  govern  extended 
care  facilities  and  skilled  nursing  homes,  practical  nurses  licensed  by  waiver  can 
be  employed.  We  have  no  objection  to  this  as  long  as  registered  nurse  supervision 
is  available.  • 

However,  if  the  intent  of  the  provision  in  H.R.  1  is  to  test  the  practical  nurse 
licensed  by  waiver  to  determine  whether  she  may  assume  the  role  of  charge  nurse, 
and  we  believe  this  is  the  intent,  we  would  have  serious  objections. 

A  charge  nurse  is  responsible  for  the  total  nursing  care  activities  in  a  facility. 
Supervision  of  total  nursing  care  is  based  on  judgments  which  can  only  be 
made  as  a  result  of  knowledge  acquired  in  an  appropriate  educational  program. 
Graduates  of  schools  of  practical  nursing  or  waiver  applicants  are  not  taught 
nor  expected  to  plan,  direct,  or  supervise  patient  care.  Most  laws  stipulate 
that  they  practice  practical  nursing  under  the  direction  of  a  licensed  physi- 
cian or  registered  nurse. 

The  practice  of  geriatric  nursing  involves  a  sequential  process  including: 

(1)  the  assessment  of  nursing  needs  of  older  people  based  upon  the  following 
factors : 

The  chronological  age  and  effect  of  the  aging  process, 

The  multiplicity  of  the  aged  person's  losses :  social,  economic,  physiologic 
and  biologic, 

The  frequently  atypical  response  of  the  aged  to  disease,  coupled  with 
the  different  forms  disease  entities  may  assume  in  the  aged  person, 

The  accumulative  disabling  effect  of  multiple  chronic  illnesses  and/ 
or  degenerative  processes, 

Cultural  values  associated  with  aging  and  social  attitudes  toward  the 
aged,  and 

Finally,  the  uncertainty  of  his  remaining  life  span  and  the  increasing 
possibility  of  his  death. 

(2)  planning  and  implementing  nursing  care  to  meet  these  needs;  and 

(3)  evaluating  the  effectiveness  of  such  care  to  achieve  and  maintain  a 
level  of  wellness  consistent  with  the  limitations  imposed  by  the  aging  process. 

This  content  is  not  encompassed  in  educational  programs  preparing  prac- 
tical nurses  and  it  is  exceedingly  doubtful  that  the  LPN  licensed  by  waiver 
would  have  acquired  this  knowledge  and  these  skills  through  experience. 

It  is  possible  to  test  in  a  pencil  and  paper  test  for  factual  knowledge.  How- 
ever, the  effectiveness  of  a  proficiency  test  to  determine  level  of  understanding, 
the  ability  to  engage  in  interdependent  and  independent  decisionmaking,  the 
ability  to  collaborate  effectively  with  other  members  of  the  health  team  and 
coordinate  diverse  activities  in  patient  care  is  doubtful,  no  matter  how  well 
the  test  is  constructed. 

We  are  all  concerned  that  people  in  extended  care  facilities  and  skilled 
nursing  homes  receive  nursing  care  that  is  of  high  quality.  The  most  effective 
way  to  assure  this  is  through  professional  supervision  and  continuing  educa- 
tion of  all  nursing  personnel. 

The  second  provision  we  object  to  is  Section  267,  which  would  waive  the 
requirement  that  skilled  nursing  homes  under  the  Medicaid  program  have 
at  least  one  full  time  registered  nurse  on  the  staff  when  the  skilled  nursing 
home  is  in  a  rural  area. 

A  facility  without  a  registered  nurse  on  the  staff  is  not  providing  skilled 
nursing  care.  We  do  not  believe  that  tax  monies  should  be  used  to  per- 
petuate poor  standards  of  nursing  care.  Requirements  for  safe  care  should 
be  the  same  for  all  people.  Rural  people  would  not  have  the  same  quality 
available  under  this  provision.  When  the  Social  Security  Amendments  of 
1965  were  enacted  with  provisions  for  Medicare  and  Medicaid,  Congress 
did  indicate  its  interest  in  the  provision  of  health  services  of  high  quality. 

In  May,  1971,  the  General  Accounting  Office's  Report  to  the  Congress  on 
Problems  in  Providing  Proper  Care  to  Medicaid  and  Medicare  Patients  in 
Skilled  Nursing  Homes  concluded:  "There  is  a  direct  relationship  between 
HEW  requirements  for  skilled  nursing  homes  and  the  provision  of  proper 
care.  Deficiencies  in  meeting  these  requirements  should  be  a  clear  warning 
that  patient  health  and  safety  may  be  in  jeopardy  and  that  many  homes,  par- 
ticularly those  having  inadequate  nursing  service  and  those  involving  in- 
frequent physician's  visits,  are  not  capable  of  providing  the  level  of  skilled 
nursing  care  that  patients  require." 

In  June.  1971.  President  Nixon,  in  his  speech  to  the  National  Retired  Teachers 
Association  and  the  American  Association  of  Retired  Persons,  stated :  "If  there's 


2429 


any  single  situation  in  this  country  that  symbolizes  the  tragic  isolation  and  shame- 
ful neglect  of  older  Americans  ...  it  is  the  substandard  nursing  home,  and  there 
are  some.  I  don't  believe  Medicare  and  Medicaid  funds  should  go  to  substandard 
nursing  homes  in  this  country  and  subsidize  them." 

Health  care  facilities  facing  the  problem  of  lack  of  qualified  registered  nurses 
in  the  area  should  step  up  their  recruitment  program  and  review  their  salary  and 
personnel  policies  so  that  they  are  competitive.  States  unable  to  meet  the  require- 
ments should  take  a  look  at  and  perhaps  revise  the  system  of  health  care  services. 
If  the  old  and  the  poor  are  either  unwilling  or  unable  to  seek  medical  attention 
in  a  distant  city,  the  most  logical  answer  would  be  to  bring  the  health  care  services 
to  them,  rather  than  lowering  standards  and  perpetuating  unsafe  and  question- 
able health  care  practices. 

The  American  Nurses'  Association  supports  amendments  to  Medicare  which 
would  extend  coverage  to  the  cost  of  out-of -hospital  prescription  drugs ;  would 
freeze  at  the  present  level  of  $50  the  amount  the  covered  individual  must  pay  in 
a  given  year ;  would  eliminate  the  requirement  in  H.R.  1  of  a  daily  co-payment  of 
$7.50  by  beneficiaries  for  the  thirty-first  through  the  sixtieth  day  of  hospitaliza- 
tion. 

The  Medicare  program  was  intended  to  relieve  elderly  persons  on  a  fixed  income 
of  the  anxiety  of  meeting  health  care  costs  at  a  time  of  life  when  illness  and 
disability  are  more  likely  to  occur.  Increasing  deductibles  and  co-insurance  could 
have  the  effect  of  screening  out  individuals  most  in  need  of  care  and  early  treat- 
ment, possibly  resulting  in  a  more  serious  and  costly  illness. 

We  are  in  agreement  that  the  requirement  of  a  three  day  hospital  stay  before 
an  individual  is  entitled  to  Medicare  coverage  of  home  health  services  should 
be  eliminated  when  care  can  appropriately  and  successfully  be  given  at  home. 

Health  insurance  in  this  country,  whether  provided  through  public  or  private 
mechanisms  has  encouraged  the  use  of  the  most  expensive  facilities  for  the 
provision  of  care.  The  requirement  of  three  days  hospitalization  prior  to  home 
care  perpetuates  this  practice.  We  urge  that  it  be  removed. 

We  support  also  the  establishment  of  an  advisory  committee  on  home  health 
services  to  assist  the  Assistant  Secretary  for  Health  and  Scientific  Affairs  in  the 
administration  of  home  health  services  provided  under  Medicare,  Medicaid  and 
the  maternal  and  child  health  program. 

For  the  record,  we  would  like  to  state  that  we  believe  home  health  benefits  under 
the  Medicare  program  have  been  over-controlled.  Intermediaries  have  made 
arbitrary  decisions  with  respect  to  the  nursing  care  they  will  approve  for  pay- 
ment. To  be  sure  their  decisions  are  based  on  regulations  of  the  Social  Security 
Administration  that  are  perhaps  interpreted  rigidly.  On  the  other  hand,  the  lim- 
itations on  home  health  services  in  the  regulations  need  to  be  reconsidered.  Agen- 
cies providing  these  services  have  a  long  history  of  controlling  their  activities  and 
unnecessary  visits  by  nursing  staff  have  been  discouraged.  Supervision  of  staff  is 
of  a  high  caliber.  Case  conferences  on  patient  needs  and  evaluation  of  the  service 
provided  is  a  long  established  practice  in  these  agencies.  Since  less  than  one  per- 
cent of  Medicare  expenditures  have  been  used  to  pay  for  home  health  services, 
there  is  some  justification  in  believing  the  agencies  are  not  given  to  over-visiting 
for  the  sake  of  the  Medicare  dollar.  It  is  our  opinion  that  the  nursing  administra- 
tion is  in  the  best  position  to  determine  the  need  for  services  at  the  home. 

Traditionally,  health  insurance,  whether  provided  through  public  or  private 
mechanisms,  has  encouraged  the  use  of  the  most  expensive  facilities  and  pro- 
viders, resulting  in  over-utilization  of  these  and  contributing  to  an  inflationary 
trend  in  costs.  Nursing  in  the  home  and  homemaker/home  health  aide  services 
can  maintain  individuals  in  their  own  homes,  avoiding  crisis  situations  and 
serious  breakdown  that  lead  to  need  for  the  most  expensive  care. 

The  American  Nurses'  Association  is  in  accord  with  the  proposal  in  Section 
237  to  include  utilization  review  requirements  for  hospital  and  skilled  nursing 
homes  under  Medicaid  and  maternal  and  child  health  programs.  We  have  always 
supported  the  belief  that  the  same  high  quality  of  care  available  to  the  general 
public  should  be  given  both  Medicaid  and  Medicare  recipients. 

The  American  Nurses'  Association  is  opposed  to  the  proposal  in  Section  232, 
which  deals  with  the  determination  of  reasonable  cost  of  inpatient  hospital 
services  under  Medicaid  and  maternal  and  child  health  programs.  The  organi- 
zation supports  the  current  reimbursement  policy,  where  states  are  required  to 
reimburse  hospitals  for  inpatient  care  under  Medicaid  on  the  basis  of  the  reason- 
able cost  formula  set  forth  in  Medicare.  This  reasonable  cost  formula  allows  for 


72-573— 72— pt.  5  14 


2430 


more  care  to  be  available  to  more  poor  people,  and  we  believe  this  was  the  intent 
of  Congress.  Under  this  new  proposal  in  Section  232.  hospital  and  home  health 
care  costs  would  probably  be  reduced,  but  to  the  detriment  of  poor  people  whose 
access  to  these  health  services  would  be  greatly  curtailed  because  sufficient 
Medicaid  funds  would  not  be  available.  We  firmly  support  the  belief  that  there 
should  not  be  a  double  standard,  and  that  Medicaid  recipients  should  receive 
the  same  benefits  as  are  available  to  those  covered  by  Medicare. 

Finally,  the  American  Nurses'  Association  does  not  agree  with  Section  265 
which  specifies  that  provision  of  medical  social  services  would  not  be  required 
as  a  condition  of  participation  for  an  extended  care  facility  under  the  Medicare 
program.  As  a  professional  group,  we  recognize  the  contribution  that  social  work 
lias  made  in  assisting  the  aged  and  in  working  with  nurses  and  other  health 
professionals  to  improve  conditions  in  nursing  homes.  It  is  the  professional  social 
worker  who  is  fully  qualified  to  attend  to  the  medically  related  social  problems  of 
patients.  It  is  this  professional  social  workers  participation  in  staff  training 
programs,  case  conferences,  and  orientations  to  community  services  which  enables 
all  of  us.  as  a  professional  multidisciplinary  team,  to  best  meet  the  health  needs 
of  this  segment  of  our  population  covered  by  Medicare. 

As  a  member  of  the  largest  group  of  professional  people  giving  health  care  and 
who  are  deeply  concerned  with  the  health  of  the  American  people.  I  appreciate 
the  opportunity  to  appear  here  today  to  present  the  views  of  the  American 
Nurses'  Association. 


Statement  of  the  American  Nurses'  Association.  Inc.  Submitted  by  Con- 
stance Holleran,  Director.  Government  Relations 

statement  on  catastrophic  health  insurance 

The  position  of  the  American  Nurses'  Association  is  that  health  care  is  a 
basic  right  of  all  people.  Government  has  a  responsibility  for  assuring  through 
appropriate  legislation  that  all  people  have  equal  access  to  such  care. 

We  believe  the  health  care  provided  should  be  comprehensive  and  consist 
of  preventive,  health  maintenance,  diagnostic  and  treatment,  restorative  and 
protective  services. 

The  association  believes  that  any  system  of  national  health  insurance  that 
is  initiated  should  provide  these  comprehensive  services.  Provision  should  also 
be  made  in  such  a  program  to  help  meet  the  costs  of  a  catastrophic  illness 
which  can  indeed  have  unfortunate  economic  consequences  for  an  individual 
or  family. 

Therefore,  we  would  prefer  to  have  catastrophic  health  insurance  as  one 
element  in  a  comprehensive  program.  Catastrophic  illness  can  be  the  result 
of  lack  of  preventive  and  diagnostic  services  and  of  easy  access  to  facilities 
and  health  professionals.  Payment  for  preventive  and  diagnostic  services  and 
a  shift  to  the  use  of  ambulatory  services — clinics,  out-patient  departments, 
the  home,  neighborhood  health  centers  could  have  an  influence  on  the  inci- 
dence of  catastrophic  illness. 

Additional  public  and  private  financing  of  health  care  services  alone  will 
not  guarantee  that  health  care  is  accessible  to  all.  If  the  health  care  benefits 
are  not  comprehensive  the  consumer  will  be  further  encouraged  to  seek  care 
only  in  crisis  situations. 

Of  course,  as  nurses,  we  are  intimately  aware  of  the  financial  hardships 
and  at  times  financial  disaster  of  families  of  those  with  a  catastrophic  ill- 
ness. Assistance  to  such  families  is.  of  course,  needed.  What  is  catastrophic 
to  one  family  is  not  to  another  so  the  conditions  for  eligibility  must  be 
adjusted  to  size  of  family,  income,  length  of  illness  (long  term  care  at  a 
lower  cost  than  crisis  care  can  still  .be  catastrophic)  loss  of  earning  power  and 
other  factors. 


A  New  Look  at  the  Visiting  Nurse 

(By  R  Paul  Hoff.  M.D..  Seward  Clinic  P.C..  311  Jackson  Street.  Seward. 

Nebr. ) 

You  are  To  years  old  and  live  in  a  nursing  home.  Tour  sight  is  very  poor 
and  your  arthritis  painful.  You  are  diabetic  and  have  been  given  20  units 
of  insulin  every  day  for  the  past  four  years.  No  laboratory  tests  have  been 


2431 


done  in  those  four  years  to  check  to  see  if  you  are  still  taking  the  correct 
dosage  of  insulin.  What  about  those  odd  dizzy  spells  that  come  out  of  nowhere? 
Medicare  will  not  pay  to  have  you  admitted  to  the  hospital  overnight  for 
diagnostic  work.  There  is  no  doctor  in  the  town  where  you  live  and  your 
arthritis  will  not  allow  you  to  ride  in  a  car  to  the  town  where  there  is  one. 

You  are  67  years  old  and  have  been  in  poor  health  for  several  years. 
As  a  result,  you  have  been  on  welfare  for  those  years.  Coumadin  therapy  is 
necessary  to  treat  your  condition,  and  it  is  very  important  that  the  Coumadin 
level  in  your  blood  be  checked  occasionally.  For  you,  this  means  a  trip  to  the 
hospital  or  the  doctor's  office  by  ambulance.  Welfare  will  not  allow  this  expense 

Your  husband  is  70  years  old  and  has  just  had  a  pacemaking  device  inserted 
into  his  heart.  This  is  your  first  day  at  home  alone  with  him  since  he  came 
some  from  the  hospital.  The  last  few  weeks  have  been  so  frightening.  Do  you 
remember  just  what  the  nurse  .and  doctor  told  you  about  checking  your  hus- 
band's pulse  and  the  signs  of  trouble  to  watch  for?  You  hate  to  bother  the 
doctor,  but  it  would  be  so  reassuring  to  talk  with  someone  about  your  husband's 
care. 

We  met  situations  like  these  just  last  summer  when  a  town  of  about  1,300 
people  fifteen  miles  south  of  our  town  lost  their  doctor.  This  town  has  no 
hospital,  but  does  have  two  nursing  homes;  one  with  a  120-bed  capacity  and 
the  other  with  a  65-bed  capacity.  These  elderly  patients  plus  a  number  of  others 
living  alone  in  their  homes  presented  a  long  list  of  problems.  How  could  these 
people  be  given  good  medical  care  and  service  staying  within  the  framework 
of  services  allowed  by  Medicare,  the  County  Welfare  Department,  and  the 
private  insurance  companies?  We  feel  we  have  found  a  way  to  do  this  and  have, 
in  fact,  been  doing  this  for  six  months,  but  Medicare  and  welfare  have  disallowed 
payments. 

About  two  years  ago,  our  hospital  began  an  intensive  and  coronary  unit  that 
has  been  received  by  the  nursing  personnel  with  great  enthusiasm.  Of  the  30 
registered  nurses  who  work  at  the  hospital,  18  have  voluntarily  taken  a  full 
course  in  coronary  care  nursing.  They  are  also  trained  in  using  IPPB  apparatus, 
resusitative  procedures,  and  taking  blood  for  laboratory  studies.  Among  these 
nurses  was  a  young  woman  who  had  formerly  been  the  assistant  to  the  nursing 
supervisor  at  the  hosptial.  Because  of  her  family,  she  did  not  wish  to  work  on  a 
full-time  basis  and  was  working  part-time  last  summer. 

Would  it  be  possible  for  our  office  to  hire  this  capable  nurse  to  be  a  "visiting 
nurse"  to  the  town  without  a  doctor?  She  would  certainly  not  be  a  "visiting 
nurse"  in  the  old  sense ;  bed  baths,  enemas,  and  backrubs  would  not  be  her  forte. 
On  her  weekly  visits  to  this  town  she  might  find  herself  running  an  electro- 
cardiogram, drawing  blood  to  be  sent  to  a  laboratory  and  making  a  call  in  a 
home  to  observe  and  reassure  a  patient  recently  dismissed  from  the  hospital. 
We  began  to  plan. 

The  patients  who  would  benefit  most  seemed  to  fall  into  two  broad  categories ; 
<1)  Those  who  are  bedfast  or  incapacitated  in  some  way  that  makes  travel  by 
automobile  very  difficult  and  (2)  Those  who  have  recently  been  dismissed  from 
the  hospital.  Any  of  these  patients  might  need  blood  drawn  for  "blood  thinning" 
therapy  or  follow  up  for  other  drug  administration.  A  visit  by  this  nurse  to 
the  coronary  patient  newly  home  from  the  hospital  could  be  very  beneficial 
and  reassuring.  Diet  and  medications  could  be  discussed  again  and  the  home 
observed  for  any  factors  that  might  be  harmful  to  the  patient.  While  in  coronary 
care,  relatives  often  are  not  thoroughly  briefed  on  their  responsibilities  when 
the  patient  is  dismissed.  We  like  to  get  our  patients  home  as  soon  as  possible. 
This  in  turn  is  a  saving  to  the  patient,  his  insurance  company  and/or  Medicare 
or  county  welfare. 

A  new  mother  just  home  with  her  firstborn  child  would  certainly  benefit  from 
a  visit  by  this  nurse.  The  new  mother  may  have  felt  when  she  was  in  the  hospital 
that  she  had  her  instructions  well  in  her  mind  but  after  a  nearly  sleepless  night 
or  two,  she  would  probably  welcome  a  refresher  course  and  some  reassurance. 
The  visits  by  this  nurse  were  not  meant  to  replace  the  usual  appointments  to 
the  doctor's  office  made  for  those  dismissed  from  the  hospital.  In  some  cases  an 
earlier  dismissal  from  the  hospital  is  possible  when  it  is  known  that  the  patient 
will  be  observed  at  home  in  a  few  days.  Neither  would  the  visit  of  the  nurse  to 
the  bedfast  or  incapacitated  eliminate  the  need  for  calls  by  the  doctor  at  times. 
With  the  observations  by  the  nurse  and  the  result  of  the  tests  performed  by  her 
or  with  her  help,  a  judgment  could  be  made  about  the  need  for  the  patient  to  be 
seen  by  the  doctor  or  hospitalized. 


2432 


Recently,  there  have  been  a  number  of  articles  written  about  the  development 
of  medical  assistants  in  the  rural  areas  to  help  the  general  practitioner.  We 
needed  an  idea  that  we  know  would  work  and  that  we  could  begin  to  use  right 
away. 

The  Visiting  Nurse  Association  in  the  state  capitol  and  the  Medicare  office  for 
the  state  were  contacted  for  their  opinion.  It  seepas  that  no  program  like  this 
has  been  initiated  in  the  state.  No  encouragement  or  discouragement  were  found, 
only  the  comment,  "it  has  never  been  done." 

The  fee  to  charge  for  the  visit  of  this  nurse  was  a  problem  that  took  careful 
consideration.  At  tirst  we  thought  we  would  charge  mileage  plus  a  charge  for 
whatever  service  she  performed.  The  Home  Health  Care  Service  in  the  state 
capitol  charges  $7.50  for  a  call  by  one  of  their  nurses,  plus  medications  or  any 
extras.  However,  this  is  strictly  a  nursing  service.  We  decided  to  charge  $6.00 
per  visit  by  the  nurse,  plus  any  laboratory  or  medications  to  be  charged  as 
usual. 

Our  new  visiting  nurse  program  has  now  been  in  operation  over  six  months. 
The  result  has  been  very  pleasing.  Our  nurse  has  been  met  with  enthusiasm  by 
people  in  nursing  homes  and  in  their  own  homes ;  and  she,  herself,  enjoys  this 
new  job  and  looks  forward  to  continuing  in  this  capacity. 

We  would  like  to  mention  some  of  the  interesting  cases  we  have  found  in  the 
six  months  we  have  operated  this  program. 

In  one  of  the  nursing  homes  we  found  a  little  elderly  lady  who  was  deaf  and 
almost  totally  blind  and  confined  to  bed.  She  had  been  on  20  units  of  NPH 
insulin  for  the  past  four  years  without  having  had  a  blood  sugar  evaluation  dur- 
ing this  time.  Blood  sugar  tests  were  done  and  after  evaluation  she  was  placed 
on  55  units  of  insulin  daily.  This  lady  is  now  much  more  alert  and  able  to  be  up 
and  about  with  help.  She  must  have  been  bordering  on  diabetic  acidosis  before 
her  insulin  was  increased. 

Several  cases  were  found  where  the  patient  has  been  on  a  digitalis  prepara- 
tion for  a  long  time.  After  electrocardiograms  were  taken  it  was  found  that  these 
patients  were  in  heart  block.  The  digitalis  was  either  discontinued  or  enhanced 
in  some  way  to  improve  the  patient's  condition. 

There  is  a  grand  gentleman  who  has  been  a  paraplegic  for  many  years  due  to 
a  spinal  injury,  who  has  been  visited  by  our  nurse.  He  is  in  his  home  and  cared 
for  by  his  wife.  He  ehas  osteoarthritis,  and  scoliosis  and  lordosis  of  his  back.  He 
was  hospitalized  two  years  ago  with  a  broken  leg.  He  has  an  indwelling  catheter 
and  has  intermittent  bladder  infections  that  are  controlled  if  caught  early.  He  is 
diabetic.  He  is  able  to  get  around  in  a  walker,  built-up  shoes  and  braces ;  but  get- 
ting down  the  steps  from  his  home,  into  his  car,  out  of  his  car  and  into  our  office 
to  have  blood  drawn  for  laboratory  tests  is  often  more  than  he  can  tolerate.  It  has 
been  so  successful  to  have  our  nurse  call  this  man  and  tell  him  not  to  eat  until 
she  gets  to  his  home  the  next  morning.  She  draws  the  blood  for  the  laboratory 
and  takes  it  to  our  office  where  we  run  the  blood  sugar  and  call  him  if  he  needs 
to  change  his  medication  or  diet.  Cost  comparison  :  $11.00  total  if  he  is  seen  in  the 
office  $12.00  if  the  nurse  visits.  Medicare  has  allowed  neither  the  nurses  calls  nor 
the  laboratory  fee.  yet  they  would  pay  the  entire  fee  in  the  office. 

A  physician  from  our  office  recently  made  a  rushed  trip  to  the  town  15  miles 
south  to  examine  an  elderly  woman  found  unconscious  in  her  home.  By  the 
time  he  arrived  she  had  regained  consciousness.  After  a  brief  examination  he 
decided  that  she  needed  further  evaluation.  She  flatly  refused  to  be  hospitalized 
or  to  take  the  15  mile  trip  to  be  seen  in  the  office.  She  did  agree  to  allow  our 
nurse  to  visit  her  in  her  home  and  take  an  electrocardiogram  and  draw  blood 
for  laboratory  work.  While  doing  the  electrocardiogram,  our  nurse  found  a  large 
firm,  indented  mass  in  the  lower  quadrant  of  this  woman's  breast.  When  con- 
fronted with  this  situation,  she  did  finally  agree  to  have  a  mastectomy.  Had 
it  not  been  possible  to  comply  with  this  woman's  wishes  and  allow  her  to  have 
tests  taken  at  home,  she  might  have  refused  examination  altogether  which 
would  have  resulted  in  her  tumor  eventually  forming  a  draining  wound  that 
would  have  caused  her  great  misery,  plus  long-term  hospitalization  at  the  ex- 
pense of  Medicare  and  family.  In  our  opinion,  because  of  this  program,  Medi- 
care was  probably  saved  enough  to  fund  our  whole  program  for  a  year ! 

We  have  puzzled  over  the  past  two  years  as  to  the  cause  of  an  idiopathic 
anemia  in  two  gentlemen,  one  in  a  nursing  home  in  the  town  15  miles  to  the 
south  and  the  other  in  a  nursing  home  in  our  town.  We  have  had  adequate 
consultations  with  no  answers  as  to  etiology.  Until  we  find  the  cause,  we  must  treat 
the  symptoms.  This  means  periodic  hemoglobin  determinations  (blood  tests) 


2433 


and  the  administration  of  blood  transfusions  when  the  red  blood  count  gets  too 
low.  Both  of  these  men  are  very  frail,  one  of  them  being  completely  blind  and 
partially  deaf.  It  is  helpful  to  have  our  nurse  visit  them  and  draw  blood  for 
their  laboratory  tests.  The  only  other  alternative  is  to  have  them  transported 
by  ambulance  at  least  once  or  twice  a  month  to  the  hospital  at  a  total  cost  of 
well  over  $50.00  per  trip. 

Obviously,  as  well  as  being  a  service  bringing  better  medical  care  to  people, 
we  feel  our  program  is  cutting  costs  to  the  taxpayer. 

A  couple  was  having  difficulty  conceiving.  They  put  in  for  adoption.  Three 
months  later  they  were  called  to  come  and  get  their  infants.  That's  right,  twins. 
They  were  tickled  pink  .  .  .  but  also  frightened.  They  were  not  used  to  children 
after  nine  years  of  marriage  and  to  suddenly  have  two  less  than  10  days  old 
was  "a  little  much."  Examination  and  consultation  in  our  office  by  the  doctor 
was  followed  in  three  days  with  a  home  visit  by  our  nurse.  The  new  mother  has 
mentioned  at  least  three  times  how  much  this  meant  to  her  and  what  a  tremen- 
dous boost  it  gave  her.  Money  saved? — none — worry,  sleep,  saved? — how  do  you 
start  to  measure? 

An  elderly  county  patient  in  the  nursing  home  15  miles  to  the  south  of  our 
town  recently  had  an  embolectomy.  She  recovered  from  the  surgery,  but  would 
ordinarily  have  been  kept  in  the  hospital  a  rather  long  time  as  she  was  on 
Coumadin  therapy  and  needed  to  have  blood  tests  every  few  days  to  be  sure 
she  was  on  the  correct  dosage  of  Coumadin.  Due  to  our  program,  she  was  able 
to  be  dismissed  to  the  nursing  home  soon  after  surgery ;  her  blood  was  checked 
by  the  nurse  in  the  nursing  home.  There  was  undoubtedly  quite  a  difference 
between  the  bill  to  Medicare  for  this  lady.  Thirty  to  forty  dollars  per  day 
versus  six  dollars  every  week  plus  the  laboratory  fee  for  the  visits  by  our  nurse 
in  the  nursing  home. 

The  list  could  go  on  and  on,  but  the  reader  should  be  getting  the  idea  by  now ! 

Here  are  a  few  quotations  from  a  booklet  prepared  by  the  American  Medical 
Association,  American  Hospital  Association,  American  Public  Health  Asso- 
ciation, American  Public  Welfare  Association,  Blue  Cross  Association,  National 
Association  of  Blue  Shield  Plans,  National  League  for  Nursing,  and  the  Public 
Health  Service.1 

(1)  "As  a  home  care  program  is  developed  it  should  be  planned  to  eventually 
provide  service  to  all  patients  residing  in  the  area  who  would  benefit  from  the 
program.  To  be  effective,  a  home  care  program  should  be  operated  in  a  manner 
that  preserves  traditional  physician-patient  relationships; 

(2)  A  home  care  patient,  in  general,  is  one  whose  needs  and  home  and  family 
situation  are  such  that  the  care  he  requires  can  be  provided  most  appropriately 
in  his  place  of  residence.  Visits  to  a  physician's  office,  clinic,  or  hospital  out- 
patient department  are  not  feasible  or  cannot  meet  all  his  medical  care  needs. 
He  does  not  need  professional  observation  and  treatment  24  hours  a  day  and 
the  nursing  and  other  therapeutic  services  his  doctor  prescribes  may  be  brought 
to  him  on  an  intermittent  basis,  with  good  results  ; 

(3)  The  home  is  not  appropriate  for  all  chronically  ill  patients  in  all  stages 
of  their  illness.  It  can,  however,  be  the  most  desirable  setting  for  many  more 
patients  than  are  currently  served  ;  and 

(4)  This  guide  which  deals  with  the  development  of  coordinated  home  care 
programs  recognizes  the  existence  of  other  guides  for  the  development  of  home 
care  services.  It  does  not,  in  any  manner,  attempt  to  standardize  or  stereo-type 
home  care  programs." 

Our  experience  to  date,  however,  is  that  unless  it  is  a  stereo-typed  "public- 
health"  type  program  it  is  doomed  to  failure  because  it  will  not  be  accepted  bv 
Medicare. 

I  hope  that  the  fact  that  this  is  an  idea  that  originated  in  an  area  other 
than  a  metropolitan  medical  center,  without  the  use  of  public  funds  for  develop- 
ment will  not  preclude  its  use  as  one  way  to  help  the  elderly  and  shut-ins  get 
the  care  they  deserve.  However,  it  must  be  recognized  and  accepted  by  the  wel- 
fare and  Medicare  organizations. 

To  date,  they  have  not  only  disallowed  the  fee  for  nurses  visits,  but  also  the 
laboratory  and  electrocardiogram  fees.  (The  verv  same  procedures  that  are 
fully  allowed  in  our  office  or  hospital.)  We  are  currently  about  $2,000.00  in  the 

f2r  Development  and Administration  of  Coordinated  Home  Care  Programs  Pub- 
lic Health  Service  Publication  No.  1579.  December,  1966.  8  ' 


2434 


red  on  our  program  because  we  have  picked  up  the  tab  for  the  nurse  and  paid 
for  laboratory  and  electrocardiogram  intepretations  sent  to  independent  lab- 
oratories and  cardiologists.  We  cannot  continue  this  independently.  Hopefully 
these  agencies  will  change  their  rules  and  reimbursement  will  be  allowed. 


American  Nurses'  Association,  Inc., 

New  York,  N.Y.,  February  7, 1972. 

Senator  Carl  T.  Curtis, 
U.S.  Senate, 

New  Senate  Office  Building, 
Washington,  D.C. 

Dear  Senator  Curtis  :  I  have  reviewed  as  you  requested  the  paper  "A  New 
Look  At  The  Visiting  Nurse"  by  R.  Paul  Hoff,  M.D.  of  Seward  Clinic,  Seward 
Nebraska  and  I  think  he  has  very  clearly  pointed  out  both  the  potential  for 
service  and  the  problems  in  obtaining  reimbursement,  for  home  nursing  care. 
Visiting  Nurse  Associations  have  been  providing  such  services  for  a  long  time.  The 
problem  with  federal  reimbursement  for  services  for  "skilled  nursing  care"  has 
been  a  serious  one  for  many  of  these  home  health  agencies.  Financial  disaster 
is  facing  many  of  them  that  provide  services  such  as  those  described  by  Dr. 
Hoff  and  they  cannot  be  reimbursed,  as  the  person  reviewing  the  claim  says  the 
service  is  not  "skilled  nursing." 

I  am  happy  to  have  had  the  opportunity  to  read  Dr.  Hoff's  article.  He  is 
correct  that  in  the  long  run  money  could  be  saved  and  patients  needing  care 
would  be  happier  and  better  served.  Professional  nursing  judgment  is  allowed 
to  decide  which  nursing  services  shoud  be  provided  under  various  federal  health 
programs. 

We  hope  we  can  count  on  your  support  on  this  important  issue. 
Sincerely  yours, 

Constance  Holleran, 
Director,  Government  Relations. 

Senator  Anderson.  Dr.  Wiggins  ? 

STATEMENT  OF  JACK  G.  WIGGINS,  PSYCHOLOGIST,  CLEVELAND, 
OHIO,  MEMBER,  BOARD  OF  GOVERNORS,  COUNCIL  FOR  THE  AD- 
VANCEMENT OF  PSYCHOLOGICAL  PROFESSIONS  AND  SCIENCES 
(CAPPS),  AND  EXECUTIVE  COMMITTEE;  ACCOMPANIED  BY 
A.  EUGENE  SHAPIRO,  DIPLOMATE,  CLINICAL  PSYCHOLOGY, 
CONSULTANT  IN  PSYCHOLOGY,  ST.  MICHAELS  HOSPITAL, 
NEWARK,  NJ. 

Dr.  Wiggins.  Mr.  Chairman  and  members  of  the  committee,  I  am 
Dr.  Wiggins,  a  psychologist  from  Cleveland,  Ohio.  I  am  accom- 
panied by  A.  Eugene  Shapiro  of  New  Jersey.  We  would  like  to  sub- 
mit our  written  statements  for  the  record  and  confine  our  oral  remarks 
to  excerpts  from  our  written  statements. 

Senator  Anderson.  Without  objection,  that  will  be  done. 

Dr.  Wiggins.  Thank  you. 

We  generally  have  a  favorable  reaction  to  the  intent  of  H.R.  1 
and  would  like  to  restrict  our  comments  to  the  utilization  of  psycho- 
logical services. 

I  have  asked  Dr.  Shapiro  to  share  this  time  with  me  and  if  he  may 
make  some  introductory  remarks,  please.  Dr.  Shapiro  ? 

Dr.  Shapiro.  By  way  of  introduction,  I  am  Dr.  A  Eugene  Shapiro,  a 
diplomate  in  clinical  psychology,  and  I  have  been  in  private  practice 
for  close  to  20  years.  I  am  a  consultant  in  psychology  to  St.  Michaels 
Hospital  in  Newark,  N.J.,  a  general  hospital,  and  I  have  a  staff 


2435 


appointment  to  another  general  hospital,  the  Newark  Beth  Israel  Med- 
ical Center. 

I  have  also  been  involved  with  the  professional  affairs  of  psychology. 
I  have  been  chairman  of  the  insurance  committee  of  the  State  of  New 
Jersey.  I  have  been  on  the  committee  of  health  insurance  and  am 
currently  serving  on  the  American  Psychological  Association  and  am 
on  the  board  of  directors  of  the  New  Jersey  Psychological  Association. 

In  general,  what  I  would  like  to  communicate,  as  I  leave  my  notes 
and  share  some  thoughts  with  you  for  the  sake  of  brevity,  is  the 
concept  that  is  stated  on  page  6  of  the  original  Medicare  and  Medicaid 
Act,  Public  Law  89-97,  which  states :  "Free  choice  by  patient  guaran- 
teed." 

It  is  a  short  section ;  it  states : 

Any  individual  entitled  to  insurance  benefits  under  this  title  may  obtain  health 
services  from  any  institution,  agency  or  person  qualified  to  participate  under 
this  title  if  such  institution,  agency  or  person  undertakes  to  provide  him  such 
services. 

We  believe  strongly  that  psychologists  are  independently  qualified 
to  provide  those  services  for  which  they  are  licensed  in  44  States  and 
in  the  District  of  Columbia  to  provide,  providing  they  are  function- 
ing with  the  scope  of  their  practice,  within  the  scope  of  their  license, 
and  providing  the  service  which  medicare  and  medicaid  has  under- 
written. 

In  principle,  we  believe  every  individual  has  the  right  to  health 
benefits  regardless  of  age,  area  of  residence,  ability  to  pay,  and  that 
the  primary  determinant  should  be  need  for  sendee.  But  we  also 
strongly  believe  that  those  in  need  of  health  services  should  have  the 
right  to  choose  from  licensed  professionals  functioning  within  the 
scope  of  their  practice  which  ps}7chologists  by  training  are  well  quali- 
fied to  provide. 

All  laws  that  have  been  passed  to  regulate  the  practice  of  psycholo- 
gists call  for  a  minimum  of  a  doctorate  from  a  recognized  university, 
internship  in  an  approved  setting,  and  postdoctoral  training.  We  have 
every  evidence  to  believe  that  our  controls  over  the  profession  are 
sufficient  to  insure  our  continued  functioning  as  an  independent  pro- 
vider of  health  benefits. 

The  effectiveness  of  the  control  over  our  profession  and  the  ethical 
functioning  of  psychologists  is  reflected  in  the  fact  that  while  the  cost 
of  malpractice  insurance  for  most  medical  specialties  has  continued  to 
rise  to  astronomical  heights  as  the  public  has  sought  redress  through 
the  courts,  the  cost  for  malpractice  insurance  for  psychologists  has 
continued  to  decline.  At  present,  a  private  practicing  psychologist  can 
receive  professional  liability  insurance  in  the  amount  of  $300,000  to 
$900,000  per  year  for  a  cost  of  $40  per  year. 

In  15  years  that  psychologists  have  had  malpractice  insurance,  there 
has  not  been  one  case  that  has  gone  to  the  courts. 

There  is  significant  evidence  that  suggests  that  early  intervention 
in  the  treatment  of  mental  health  disorders  reduced  overall  costs  of 
medical  expenses.  Studies  by  Cummings  and  Follette  at  Kaiser-Per- 
manente  clearly  show  that  early  intervention  and  utilization  of  psy- 
chotherapeutic services  tend  to  reduce  overall  medical  costs. 

In  this  connection,  we  wonder  how  man}^  aged  people  are  seeing 
physicians  for  a  variety  of  physical  ailments  which  really  reflect  their 


2436 


need  for  someone  to  talk  to,  someone  to  listen  to  them,  someone  who 
will  given  them  interest  and  concern  and  professional  treatment.  How 
many  dollars  are  spent  for  purported  medical  care  that  might  be 
treated  less  expensively  and  more  productively  as  a  mental  health 
problem  ? 

Surely  if  any  group  were  to  be  singled  out  for  having  emotional 
problems  concomitant  with  conditions  outside  their  control,  the  poor 
and  the  aged  fit  this  category. 

The  committee,  I  am  sure,  is  concerned  always  about  fiscal  matters 
and  costs  and  I  would  like  to  bring  your  attention  to  the  precedent  of 
the  Civil  Service  Commission  in  providing  health  benefits  to  the  civil 
service  employees  under  the  Aetna  plan,  a  major  provider  for  mental 
health  benefits.  Psychologists  are  included  as  independent  providers 
of  mental  health  services  and  the  experience  reported  by  Aetna  has 
been  clearly  favorable.  As  a  matter  of  fact,  the}7  have  been  one  of  the 
carriers  that  have  not  increased  their  costs. 

The  CHAMPUS  program  for  civilians,  the  civilian  health  and  medi- 
cal program  for  uniformed  servicemen,  covers  about  6  million  lives  of 
servicemen  and  their  benefits  also  include  psychologists  as  independ- 
ent providers  of  health  services.  Their  recent  findings,  and  I  quote 
Mr.  McKenzie,  were :  "Laudable." 

We  feel  very  strongly  there  should  be  no  limitation  in  the  law  that 
places  psychologists  licensed  in  44  States  and  ancillary  to  another 
profession;  namely,  medicine,  and  as  such,  adds  additional  costs  per- 
haps to  the  Government  as  one  gets  certified  and  recertified  with  no 
evidence  whatever  there  is  any  fiscal  savings  and,  in  fact,  there  is  con- 
siderable evidence  that  it  may  add  to  the  costs. 

Dr.  Wiggins.  Thank  you. 

I  am  on  the  executive  committee  of  the  Council  for  the  Advancement 
of  Psychological  Professions  and  Sciences.  In  addition,  I  am  the  chair- 
man of  the  Committee  on  Health  Insurance  of  the  American  Psy- 
chological Association,  although  I  am  not  at  present  speaking  for  the 
APA,  which  organization  will  submit  a  statement  to  the  committee 
consonant  with  our  testimony  today. 

The  American  Psychological  Association  has  32,000  members  and 
represents  both  the  science  and  the  profession  of  psychology.  About 
15,000  of  our  members  are  supplying  mental  health  services  directly  to 
the  public.  The  remainder  of  the  membership  have  teaching  positions 
in  universities  and  medical  schools,  are  conducting  research  or  serve 
in  an  administrative  capacity. 

The  APA  Committee  on  Health  Insurance  strives  to  assure  that: 
high  quality  mental  treatment  services  are  available  to  the  public 
through  their  insurance  contracts.  One  of  the  major  objectives  of  this 
committee  is  to  remove  from  health  insurance  contracts  those  provi- 
sions which  interfere  with  mental  health  treatment  or  availabilitv  of 
services.  We  share  this  objective  in  common  with  the  council — CAPPS. 

Medicare  contains  some  built-in  limitations  which  restrict  the  pat- 
terns of  care  and  availability  of  services  for  individuals  suffering  from 
mental,  psychoneurotic  or  personality  disorders.  While  there  are  pro- 
visions for  the  diagnosis  and  treatment  of  mental,  psychoneurotic  and 
personality  disorders  under  Part  E,  they  must  either  be  provided  by 
a  doctor  of  medicine  or  a  doctor  of  osteopathy  or  incident  to  his  serv- 


2437 


ices.  The  result  of  these  provisions  has  been  to  restrict  the  delivery  of 
mental  health  services  to  the  point  that  less  than  1  percent  of  the 
patients  served  by  psychologists  are  65  years  of  age  or  over. 

In  effect,  this  has  excluded  the  diagnostic  and  treatment  service  of 
psychology  to  recipients  of  medicare  benefits.  This  is  contrary  to  the 
intent  of  H.R.  1,  which  is  to  make  fullest  use  of  health  personnel. 

Psychology  has  established  itself  as  an  independent  health  profes- 
sion through  its  training,  public  acceptance  of  its  sendees  provided 
and  through  statutory  regulations.  Our  training  leading  to  the  Ph.  D. 
degree  and  experience  at  hospitals,  clinics  and  other  service  facilities 
has  qualified  psychologists  to  provide  direct  services  to  the  public. 
Psychologist  practice  without  medical  certification,  direction  or  super- 
vision according  to  professional  practice  statutes  in  44  States  and  the 
District  of  Columbia.  In  the  remaining  six  States,  psychologists  prac- 
tice without  medical  direction  or  supervision  using  voluntary  controls. 

State  legislatures  have  recognized  the  inequities  in  private  insur- 
ance contracts  which  have  denied  the  claims  of  policyholders  for  the 
diagnosis  and  treatment  of  mental,  psychoneurotic  and  personality  dis- 
orders when  the  policyholder  was  attended  by  a  psychologist,  Ten 
States  have  now  enacted  laws  which  require  insurance  carriers  to  re- 
imburse their  policyholders  for  the  diagnosis  and  treatment  of  nervous 
and  mental  disorders  whether  the  services  are  rendered  by  a  psycholog- 
ist or  a  psychiatrist. 

To  our  knowledge  this  has  not  resulted  in  any  additional  premiums 
to  the  policyholders  or  exceptional  increases  in  utilization.  These  laws 
have  been  well  received  by  the  public. 

Several  insurance  carriers,  recognizing  this  inequity,  have  volun- 
tarily included  psychology  as  a  qualified  provider  of  services  as  a 
physician  for  the  purposes  of  their  contract  for  the  treatment  of  mental 
disorders.  Therefore,  we  believe  that  continuing  the  practice  of  re- 
quiring that  mental  health  services  for  the  recipient  of  medicare  be 
provided  only  by  psychiatrists  causes  an  unnecessary  hardship  on  the 
beneficiaries  of  medicare  and  creates  an  unnecessary  artificial  short- 
age of  qualified  providers  of  service  for  nervous  and  mental  conditions. 
Failure  to  include  psychological  services  without  medical  referral 
produces  a  condition  of  featherbedding  physicians'  fees.  The  cost  of 
certification  and  recertification  by  doctors  of  medicine  or  osteopathy 
only  can  require  an  extra  visit  to  the  doctor  and  produce  another 
fee  chargeable  to  the  medicare  program. 

However,  the  reality  is  that  because  of  the  cumbersome  reimburse- 
ment procedure,  psychological  services  are  little  used  and  the  treat- 
ment of  the  mentally  ill  becomes  a  private  preserve  of  organized 
medicine. 

In  addition  to  these  potential  costs,  it  must  be  noted  that  by  reducing 
the  number  of  providers  of  services  arbitrarily,  you  create  an  infla- 
tionary imbalance  between  supply  and  demand  for  services.  The  pres- 
ent restriction  upon  the  availability  of  psychological  services  is  such  an 
inflationary  procedure  because  it  reduces  the  access  of  the  public  to 
qualified  providers  of  services.  This  is  totally  unacceptable  to  the 
profession  of  psychology. 

We  concur  with  the  American  Psychiatric  Association ;  there  must 
be  multiple  methods  of  referral. 


2438 


Furthermore,  several  studies  including  those  of  Drs.  Cummings  and 
Follette  and  the  Group  Health  Association  of  Washington,  D.C.,  have 
demonstrated  that  medical  utilization  tends  to  decrease  if  adequate 
counseling  services  are  included  in  health  insurance  plans.  If  I  may, 
Mr.  Chairman,  without  unduly  burdening  the  record  of  these  hearings, 
I  would  like  to  introduce  at  this  point  in  my  remarks  these  studies  for 
the  record. 

To  summarize  these  studies,  they  demonstrate  that  short-term  inter- 
vention and  psychotherapeutic  counseling  not  only  reduce  diagnostic, 
X-ray,  and  laboratory  studies  but  also  reduce  the  incidence  of  hos- 
pitalization. Thus  the  cost  of  additional  counseling  services  would  be 
more  than  offset  by  the  reduction  of  costs  of  hospitalization  and  un- 
necessary laboratory  and  X-ray  studies. 

This  has  been  clearly  demonstrated  in  health  maintenance  organi- 
zation. The  cost  savings  in  the  health  maintenance  organization's 
concept  tend  to  be  the  result  of  reduction  in  hospital  utilization.  We 
wish  to  point  out  that  psychological  services  tend  to  be  outpatient- 
based  rather  than  hospital-based  services.  Thus  the  diagnostic  and 
counseling  services  of  psychology  could  serve  as  a  deterrent  to  over- 
utilization  of  medical  services  which  are  already  in  short  supply  and 
hospital  beds  of  which  there  is  a  chronic  shortage.  Our  crises  inter- 
vention studies  show  that  the  prompt  effective  counseling  with  people 
tends  to  reduce  the  number  of  people  entering  mental  hospitals,  as  well. 

We  believe  that  utilization  control  must  occur  through  peer  review 
mechanisms  rather  than  through  the  source  of  referral.  The  profession 
of  psychology  has  established  its  own  peer  review  mechanism  which  is 
accepted  by  the  health  insurance  industry. 

For  the  reasons  cited,  we  ask  that  H.E.  1  be  amended  so  that  psy- 
chologists will  be  listed  as  physicians  for  the  purpose  of  providing 
diagnostic  and  treatment  services  for  mental,  psychoneurotic,  and  per- 
sonality disorders  as  well  as  for  the  diagnosis  and  treatment  of  mental 
retardation,  vocational  rehabilitative  services,  and  child  care  services. 

Thank  you.  This  concludes  my  remarks  and  if  you  have  any  ques- 
tions we  would  be  glad  to  respond. 

The  Chairman  (now  presiding).  Any  questions,  gentlemen? 

Senator  Fannin.  Mr.  Chairman,  Dr.  Shapiro,  when  you  were  talk- 
ing about  in  15  years  psychologists  have  had  malpractice  insurance 
there  has  not  been  one  case  that  has  gone  to  court,  are  you  familiar 
with  a  case  in  Flagstaff,  Ariz.,  a  recent  case,  where  there  was  a  mal- 
practice case  ?  I  do  not  know  whether  it  was  a  psychiatrist  or  psycholo- 
gist, but  I  know  there  was  a  case  where  they  had  the  patient  under 
extreme  tension  and  what  they  refer  to  as  a  fit  of  rage  and  she  had  a 
heart  attack  and  passed  away  and  there  was  a  lawsuit  and  about  a 
$50,000  settlement. 

Dr.  Shapiro.  I  really  do  not  know.  My  figures  which  are  relatively 
recent,  indicate  no  case  has  come  to  court.  There  have  been,  as  you 
probably  know,  some  types  of  services  generally  referred  to  as  en- 
counter groups  or  that  kind  of  thing  which  are  done  by  psychiatrists 
and  by  some  psychologists  and  apparently  there  have  been  oases  that 
have  come  up  because  of  that. 

Senator  Fannin.  This  is  recent  and  very  widely  publicized  because 
the  license  of  that  practitioner — I  do  not  know  whether  it  was  a  psy- 
chologist or  a  psychiatrist — but  I  would  like  to  know  because  of  your 


2439 


statement  her©  and  I  will  check  into  this  matter  and  I  wish  you  would, 
because  I  would  like  to  be  inf  ormed. 

Dr.  Shapiro.  I  am  sure  we  would  get  our  feedback  through  the 
association. 

Senator  Fannin.  I  believe  the  name  was  Miller  but  I  am  not  sure 
of  the  name.  I  know  it  was  a  recent  case  and  the  license  of  the  practi- 
tioner was  canceled  but  they  were  able  to  get  the  patient  into  a  very 
high  tension,  extreme  tension,  and  caused  a  fit  of  rage  and  a  heart 
attack. 

Dr.  Shapiro.  Well,  I  really  don't  know  and  I  certainly  will  look 
into  it.  All  I  know  is  we  right  now  can  get  $300,000  and  $900,000 
liability,  malpractice  insurance,  at  a  cost  of  $40  a  year. 

Now,  this  is  like  no  experience,  so  if  there  have  been  cases,  and  even 
this  one,  it  has  not  affected  my  premium  rate.  If  it  goes  up  next  year 
it  would  be  a  psychologist;  if  it  does  not  it  was  a  psychiatrist.  But 
our  record  has  been  

Senator  Bennett.  Do  you  speak  to  each  other  ? 

Dr.  Wiggins.  Yes,  sir ;  as  a  matter  of  fact,  I  practice  with  a  psy- 
chiatrist ;  we  have  a  joint  practice. 

Dr.  Shapiro.  Generally  speaking,  the  roles  of  psychologists  and 
psychiartrists  are  quite  friendly.  Very  often  we  overlap  more  with  one 
another  than  they  do  with  their  own  medical  brethren. 

Senator  Bennett.  This  is  what  I  would  think. 

Senator  Fannin.  Thank  you. 

The  Chairman.  Thank  you  very  much,  gentlemen. 

Dr.  Shapiro.  Thank  you. 

(The  prepared  statements  with  attachments  of  Dr.  Wiggins  and  Dr. 
Shapiro  and  a  statement  of  the  American  Psychological  Association 
follows.  Hearings  continues  on  p.  2479.) 

Prepared  Statement  and  Reports  by  Dr.  Jack  G.  Wiggins 
Mr.  Chairman  and  Members  of  the  Committee : 

My  name  is  Dr.  Jack  G.  Wiggins.  I  am  a  psychologist  from  Cleveland,  Ohio 
and  am  a  member  of  the  Board  of  Governors  of  the  Council  for  the  Advancement 
of  Psychological  Professions  and  Sciences  (CAPPS),  and  serve  on  its  Executive 
Committee.  One  of  the  objectives  of  the  Council  is  to  insure  that  there  are  an 
adequate  number  of  psychologists  available  to  serve  the  health  and  mental  health 
needs  of  the  public  and  to  insure  that  the  public  has  ready  access  to  psychological 
services. 

In  addition,  I  am  Chairman  of  the  Committee  on  Health  Insurance  of  the  Ameri- 
can Psychological  Association  though  I  am  not  at  present  speaking  for  the  APA, 
which  organization  will  submit  statement  to  the  committee  consonant  with  our 
testimony  today.  The  American  Psychological  Association  has  32,000  members 
and  represents  both  the  science  and  the  profession  of  psychology.  About  15,000 
of  our  members  are  supplying  mental  health  services  directly  to  the  public.  The 
remainder  of  the  membership  have  teaching  positions  in  universities  and  medical 
schools,  are  conducting  research,  or  serve  in  an  administrative  capacity.  The 
APA  Committee  on  Health  Insurance  strives  to  assure  that  high  quality  mental 
treatment  services  are  available  to  the  public  through  their  insurance  contracts. 
One  of  the  major  objectives  of  this  committee  is  to  remove  from  health  insur- 
ance contracts  those  provisions  which  interfere  with  mental  health  treatment 
or  availability  of  services.  We  share  this  objective  in  common  with  the  Council 
(CAPPS). 

Medicare  contains  some  built  in  limitations  which  restrict  the  patterns  of 
care  and  availability  of  services  for  individuals  suffering  from  mental,  psycho- 
neurotic or  personality  disorders.  While  there  are  provisions  for  the  diagnosis 
and  treatment  of  mental,  psychoneurotic  and  personality  disorders  under  Part  B, 
they  must  either  be  provided  by  a  doctor  of  medicine  or  a  doctor  of  osteopathy 


2440 


or  incident  to  his  services.  The  result  of  these  provisions  has  been  to  restrict  the 
delivery  of  mental  health  services  to  the  point  that  less  them  1%  of  the  patients 
served  by  psychologists  are  65  years  of  age  or  over.  In  effect,  this  has  excluded 
the  diagnostic  and  treatment  service  of  psychology  ro  recipients  of  medicare 
benefit?.  The  intent  of  H.R.-l.  according  to  the  House  Ways  &  Means  Committee, 
is  to  make  fullest  use  of  public  health  personnel.  I  quote  Page  107,  Union  Calendar 
No.  S6  :  "Your  committee  believes  that  failure  to  make  the  fullest  use  of  com- 
petent health  personnel  is  of  particular  concern  because  of  the  shortage  of  such 
personnel."  H.R.-l  does  not  provide  remedy  of  this  shortcoming  of  the  original 
Medicare  Act.  Therefore,  we  are  requesting  HR-1  amend  its  definition  of  the 
term  "physician"  to  include  services  of  a  psychologist  for  the  diagnosis  and 
treatment  of  mental,  psychoneurotic  and  personality  disorders  as  well  as  for 
the  providing  of  diagnostic  and  treatment  services  for  the  mentally  retarded, 
vocational  rehabilitative  services  and  child  care  counseling. 

Psychology  has  established  itself  as  an  independent  health  profession  through 
its  training,  public  acceptance  of  its  services  provided  and  through  statutory 
regulations.  Our  training  leading  to  the  Ph.D.  degree  and  experience  at  hospi- 
tals, clinics  and  other  service  facilities  has  qualified  psychologists  to  provide 
direct  services  to  the  public.  Psychologists  practice  without  medical  certification, 
direction  or  supervision  according  to  professional  practice  statutes  in  44  states 
and  the  District  of  Columbia.  In  the  remaining  6  states,  psychologists  practice 
without  medical  direction  or  supervision  using  voluntary  controls.  The  problem 
in  the  existing  legislation  was  pointed  out  eloquently  by  Senator  Harris  of 
Oklahoma  in  his  comments  on  the  Senate  floor  on  November  23.  1967.  when  the 
Senate  voted  to  amend  the  Social  Security  Act  Amendments  of  1965  regarding 
Medicare :  "The  present  defects  in  existing  legislation  arise  from  the  fact  that 
two  independent  but  equally  well-qualified  professions,  psychiatry  and  clinical 
psychology,  offer  similar  and  frequently  identical  services  to  the  public.  How- 
ever, present  regulations  require  that  the  services  of  clinical  psychologists  be 
reimbursed  only  if  included  in  a  physician's  bill  or  as  part  of  the  charges  of  a 
clinic  directed  by  a  physician.  This  restriction  denies  the  patient  direct  access 
to  the  many  qualified  clinical  psychologists  who  are  independent  practitioners 
and  unaffiliated  with  clinics  or  private  physicians." 

State  legislatures  have  recognized  the  inequities  in  private  insurance  con- 
tracts which  have  denied  the  claims  of  policyholders  for  the  diagnosis  and 
treatment  of  mental,  psychoneurotic  and  personality  disorders  when  the  policy- 
holder was  attended  by  a  psychologist.  Ten  states  have  now  enacted  laws  which 
require  insurance  carriers  to  reimburse  their  policyholders  for  the  diagnosis 
and  treatment  of  nervous  and  mental  disorders  whether  the  services  are  rendered 
by  a  psychologist  or  a  psychiatrist.  To  our  knowledge,  this  has  not  resulted  in  any 
additional  premiums  to  the  policyholders  or  exceptional  increases  in  utilization. 
These  laws  have  been  well  received  by  the  public.  Several  insurance  carriers, 
recognizing  this  inequity,  have  voluntarily  included  psychology  as  a  qualified 
provider  of  service  as  a  physician  for  the  purposes  of  their  contract  for  the  treat- 
ment of  nervous  and  mental  disorders.  Please  include  such  companies  as  Pru- 
dential. Occidental.  Liberty  Mutual,  and  Massachusetts  Mutual.  The  Aetna 
Life  &  Casualty  Insurance  Company  has  included  psychologists  as  qualified 
physicians  under  the  mental  health  benefits  for  its  federal  employees  contract. 
Another  form  of  similar  recognition  of  psychological  services  was  initiated  by 
the  Civilian  Health  &  Medic-aerogram  for  Uniformed  Servicemen  (CHAMPUS  | 
in  July.  1970.  Mr.  Vernon  McKenzie.  Special  Assistant  to  the  Asst.  Secretary  for 
Health  and  the  Environment  of  DOD.  stated  before  the  Senate  Post  Office  and 
Civil  Service  Committee  on  November  23.  1971  that  the  inclusion  of  psychological 
services  without  medical  referral  has  been  well  received  by  the  dependents  of 
military  servicemen. 

At  the  inception  of  Medicare,  there  was  considerable  concern  about  over- 
utilization  of  services  and  it  was  felt  that  one  of  the  cost  control  factors  would 
be  that  all  services  would  be  at  the  direction  or  incident  to  a  physician's  services. 
The  experience  of  private  insurance  carriers  in  regard  to  inclusion  of  psy- 
chological services  for  the  treatment  of  nervous  and  mental  disorders  has  indi- 
cated that  this  provision  has  not  materially  affected  their  cost  experience. 
Therefore,  we  believe  that  continuing  the  practice  of  requiring  mental  health 
services  for  the  recipients  of  Medicare  be  provided  only  by  psychiatrists  onuses 
an  unnecessary  hardship  on  the  beneficiaries  of  Medicare  and  creates  unneces- 
sary artificial  shortage  of  qualified  providers  of  service  for  nervous  and  mental 


2441 


conditions.  In  fact,  failure  to  include  psychological  services  without  medical 
referral,  in  effect,  produces  a  condition  of  "featherbedding"  physician's  fees.  The 
cost  of  certification  and  recertification  by  doctors  of  medicine  or  osteopathy  only 
can  require  an  extra  visit  to  the  doctor  and  produce  another  fee  chargeable  to  the 
Medicare  program. 

However,  the  reality  is  that  because  of  the  cumbersome  reimbursement  proce- 
dure, psychological  services  are  little  used  and  the  treatment  of  the  mentally 
ill  becomes  a  private  preserve  of  organized  medicine.  In  addition  to  these  poten- 
tial costs  it  must  be  noted  that  by  reducing  the  number  of  providers  of  services 
arbitrarily,  you  create  an  inflationary  imbalance  between  supply  and  demand  for 
services.  The  present  restriction  upon  the  availability  of  psychological  services 
is  such  an  inflationary  procedure  because  it  reduces  the  access  of  the  public  to 
qualified  providers  of  service.  This  is  totally  unnacceptable  to  the  profession  of 
psychology.  We  concur  with  the  American  Psychiatric  Association  that  this  re- 
sults in  unnecessary  delays  in  treatment  which  in  the  long  run  may  be  more 
costly  and  damaging  to  the  patient.  The  American  Psychiatric  Association  in 
their  testimony  submitted  to  the  House  Ways  &  Means  Committee  on  National 
Health  Insurance  in  November,  1971  stated  as  follows: 

"With  reference  to  the  psychiatric  services  that  should  be  covered,  the  APA 
Board  of  Trustees  stressed  its  opposition  to  any  provision  whereby  psychiatric 
care  would  be  covered  under  insurance  only  when  such  care  is  received  upon 
referral  by  the  family  physician  or  general  practitioner.  We  based  this  opposi- 
tion on  the  grounds  that  such  a  provision  is  not  compatible  with  early  detection 
of  psychiatric  illness  and  easy  access  to  psychiatric  care.  Experience  indicates 
the  necessity  for  direct  accessibility  of  the  patient  to  such  care  and  for  multiple 
mechanisms  of  referral.  Self-referral,  frequently  upon  the  suggestion  of  the 
foreman,  teacher,  or  clergy,  or  referral  by  a  community  agency  frequently  leads 
to  early  diagnosis  and  treatment,  and  may  prevent  or  reduce  the  disability  that 
might  otherwise  occur." 

Furthermore,  several  studies  including  those  of  Drs.  Cummings  and  Follette 
and  the  Group  Health  Association  of  Washington,  D.C.  have  demonstrated  that 
medical  utilization  tends  to  decrease  if  adequate  counseling  services  are  included 
in  health  insurance  plans.  If  I  may,  Mr.  Chairman,  without  unduly  burdening  the 
record  of  these  hearings,  I  would  like  to  introduce,  at  this  point  in  my  remarks, 
these  studies  for  the  record. 

To  summarize  these  studies,  they  demonstrate  that  short-term  intervention 
and  psychotherapeutic  counseling  not  only  reduce  diagnostic,  X-ray,  and  labo- 
ratory studies  but  also  reduce  the  incidence  of  hospitalization.  Thus,  the  cost  of 
additional  counseling  services  would  be  more  than  offset  by  the  reduction  of  costs 
of  hospitalization  and  unnecessary  laboratory  and  X-ray  studies.  This  has  been 
clearly  demonstrated  in  Health  Maintenance  Organization.  The  cost  savings 
in  the  Health  Maintenance  Organizations  concept  tend  to  be  the  result  of  reduc- 
tions in  hospital  utilization.  We  wish  to  point  out  that  psychological  services  tend 
to  be  out-patient  based  rather  than  hospital  based  services.  Thus,  the  diagnostic 
and  counseling  services  of  psychology  could  serve  as  a  deterrent  to  overutilization 
of  medical  services  which  are  already  in  short  supply  and  hospital  beds  of 
which  there  is  a  chronic  shortage.  Our  crises  intervention  studies  show  that  the 
prompt  effective  counseling  with  people  tends  to  reduce  the  number  of  people 
entering  mental  hospitals,  as  well. 

We  believe  that  utilization  control  must  occur  through  peer  review  mecha- 
nisms rather  than  through  the  source  of  referral.  The  profession  of  psychology 
has  established  its  own  peer  review  mechanism  which  is  accepted  by  the  health 
insurance  industry. 

For  the  reasons  cited,  we  ask  the  HR-1  be  amended  so  that  psychologists  will 
be  listed  as  physicians  for  the  purpose  of  providing  diagnostic  and  treatment 
services  for  mental,  psychoneurotic  and  personality  disorders  as  well  as  for  the 
diagnosis  and  treatment  of  mental  retardation,  vocational  rehabilitative  serv- 
ices, and  child  care  services. 

Thank  you  very  much. 


Prepared  Statement  of  Dr.  A.  Eugene  Shapiro 

Mr.  Chairman  and  Members  of  the  Committee :  I  am  grateful  for  this  opportu- 
nity to  share  my  thoughts  with  you  on  this  important  issue.  I  am  Dr.  A.  Eugene 
Shapiro,  a  Diplomate  in  Clinical  Psychology  and  in  private  practice  for  close 


2442 


to  twenty  years.  I  am  also  a  Consultant  in  Psychology  to  St.  Michaels  Hospital  in 
Newark,  New  Jersey,  a  General  Hospital,  and  I  have  a  Staff  Appointment  to  an- 
other General  Hospital,  the  Newark  Beth  Israel  Medical  Center. 

I  have  also  been  involved  with  the  professional  affairs  of  psychology.  I  have 
been  Chairman  of  the  Insurance  Committee  of  the  New  Jersey  State  Psycho- 
logical Association  for  approximately  five  years.  For  the  past  three  years  I  served 
on  the  Committee  on  Health  Insurance  of  the  American  Psychological  Associa- 
tion. I  am  on  the  Board  of  Governors  of  the  Council  for  the  Advancement  of  the 
Psychological  Professions  and  Sciences  and  on  the  Board  of  Directors  of  the 
New  Jersey  Psychological  Association,  an  organization  of  one  thousand  psychol- 
ogists in  our  State,  and  I  am  Past  President  of  the  Essex  County  Psychological 
Association  in  New  Jersey.  Thus,  in  addition  to  my  professional  activities  and 
my  involvement  with  professional  organizations,  my  primary  concern  has  been 
to  work  toward  providing  health  services  to  all  of  the  citizens  of  the  United 
States  in  an  equitable,  non-discriminatory  fashion. 

Our  basic  principle  reflects  contemporary  thinking  that  health  is  a  "right" — 
and  should  be  provided  to  all  regardless  of  age,  area  of  residence,  i.e.  rural  or 
urban,  or  ability  to  pay.  The  primary  determinant  should  be  need  for  service.  We 
also  strongly  believe  that  those  in  need  of  health  services  should  have  the  right 
to  choose  from  licensed  professionals  functioning  within  the  scope  of  their  prac- 
tice. We  believe  that  any  legislative  limitation  which  precludes  this  privilege 
of  free  selection  is  not  in  the  best  interests  of  the  patient,  prevents  innovative 
approaches  to  treatment  and  is  often  poor  economics.  My  primary  interest,  of 
course  is  in  the  mental  health  field.  In  the  context  of  this  hearing,  it  would  be  in 
terms  of  those  eligible  for  Medicare  and  Medicaid,  although  the  basic  interest 
goes  beyond  these  groupings.  As  a  psychologist,  I  of  course,  will  focus  on  the 
importance  of  licensed  or  certified  clinical  psychologists  independently  providing 
mental  health  services. 

Although  many  in  this  room  are  aware  of  what  psychologists  are — their  train- 
ing, where  they  function,  and  the  restraints  and  restrictions  that  are  legally 
and  professionally  applied  to  insure  ethical  and  competent  behavior — there  may 
be  some  factors  that  this  Committee  is  not  aware  of,  and  I  should  like  to  take 
this  opportunity  to  acquaint  you  with  this  background  material. 

Psychology  is  relatively  unique  among  the  providers  of  health  services  in  that 
the  majority  of  psychologists  do  not  provide  direct  services  to  the  public.  Of  the 
thirty  thousand  members  of  the  American  Psychological  Association,  only  about 
forty  percent  view  their  functioning  primarily  in  the  health-related  area.  The 
major  portion,  the  sixty  percent  are  involved  primarily  in  scientific  research  or 
in  the  academic  field.  Of  the  forty  percent  who  function  in  the  health  delivery 
area,  most  are  employed  in  institutional  settings,  that  is  hospitals,  mental  hy- 
giene clinics  or  related  institutions,  such  as  prisons,  homes  for  the  mentally  re- 
tarded, or  other  public  health  agencies.  Only  about  seven  percent  of  the  member- 
ship of  the  American  Psychological  Association  are  primarily  engaged  in  the 
private  practice  of  psychology.  However,  many  psychologists  who  are  employed 
in  clinical  or  institutional  settings  do  have  part  time  private  practices  and  pro- 
vide a  necessary  service  to  the  public  supplemental  to  their  primary  employment. 
An  interesting  note  is  that  approximately  eighteen  hundred  psychologists  teach 
in  medical  schools. 

It  is  unnecessary  to  reiterate  to  this  Committee  the  major  mental  health  prob- 
lems that  confront  the  poor  and  aged.  Surely  if  any  group  were  to  be  singled  out 
for  having  emotional  problems  concommitant  with  conditions  often  outside  their 
control,  the  poor  and  aged  fit  this  category. 

Psychologists  have  the  training  and  credentials  and  controls  to  function  as 
independent  practitioners  to  supply  this  public  need.  Psychologists  are  now 
licensed  or  certified  to  function  independently  as  providers  of  mental  health  serv- 
ices in  forty  four  states  and  in  the  District  of  Columbia.  In  fact,  this  very  Con- 
gress passed  the  act  to  license  psychologists  for  independent  practice  in  Wash- 
ington, D.C.  In  the  few  States  in  which  psychologists  do  not  have  statutory  regu- 
lation, the  State  Association  has  set  up  non-statutory  regulations  to  control  the 
profession. 

Psychologists  are  well  trained.  All  laws  that  have  been  pasised  that  regulate 
the  practice  of  psychologists  call  for  a  minimum  of  a  Doctorate  from  a  recog- 
nized University,  internship  in  an  approved  setting  and  post-doctoral  training. 
We  have  every  evidence  to  believe  that  our  controls  over  the  profession  are 
sufficient  to  insure  our  continued  functioning  as  an  independent  provider  of 
health  benefits.  In  addition  to  the  regulations  imposed  by  law,  the  American 


2443 


Psychological  Association  has  a  strong  ethical  code  and  each  State  has  its  own 
ethical  procedures,  usually  consistent  with  that  of  the  parent  organization. 
Furthermore,  the  American  Psychological  Association  has  established  ten  Re- 
gional Review  Committees,  coinciding  with  the  ten  regional  areas  of  H.E.W. 
where  questions  involving  matters  of  third  parties,  psychologists  or  insurance 
carriers  can  be  adjudicated.  These  Insurance  Review  Committees  are  consistent 
with  those  of  other  professional  organizations  such  as  medicine,  dentistry, 
optometry,  etc 

The  effectiveness  of  the  control  over  our  profession  and  the  ethical  functioning 
of  psychologists  is  reflected  in  the  fact  that  while  the  cost  of  malpractice  insur- 
ance for  most  medical  specialties  has  continued  to  rise  to  astronomical  heights  as 
the  public  has  sought  redress  through  the  Courts — the  cost  for  malpractice  insur- 
ance for  psychologists  has  continued  to  decline.  At  present,  a  private  practicing 
psychologist  can  receive  professional  liability  insurance  in  the  amount  of  £300,000 
to  $900,000  per  year  for  a  cost  of  $40.00  per  year.  In  fifteen  years  that  psychologists 
have  had  malpractice  insurance,  there  has  not  been  one  case  that  has  gone  to 
Court.  Why  then  have  psychologists  not  been  included  in  Medicare-Medicaid 
provisions  in  any  meaningful  way?  Perhaps  because  at  the  time  of  passage 
of  Public  Law  89-97  in  1965  the  Congress  had  insufficient  knowledge  of  the  scope 
and  function  of  psychologists.  But  since  that  time  psychology  has  been  accepted 
as  an  independent  provider  of  mental  health  services  by  many  insurance  carriers 
and  many  providers  of  benefits  to  constituents  or  employees. 

The  Civilian  Health  and  Medical  Program  of  the  Uniformed  Services  ( CHAM- 
PUS),  covering  five  and  one-half  to  six  million  lives,  about  a  year  and  a  half 
ago  accepted  psychologists  as  independent  providers  of  mental  health  benefits.  In 
recent  testimony  before  the  Subcommittee  on  Compensation  and  Employees 
Benefits  of  the  Senate  Committee  on  Post  Office  and  Civil  Service,  Mr.  Vernon 
McKenzie,  Special  Assistant  Secretary  of  Defense  for  Health  and  Environment 
testified  that  all  comments  regarding  the  utilization  of  psychologists  as  providers 
of  mental  health  services  were  "laudable".  At  the  same  hearing  Mr.  Malcolm 
Mclntyre,  Coordinator,  Aetna  Life  and  Casualty,  the  second  largest  carrier  under 
the  Federal  Employees  program  testified  that  in  the  year  they  have  recognized 
psychologists  as  independent  providers  of  health  benefits  to  federal  employees 
who  come  under  their  plan  they  have  had  no  problem  whatever.  Mr.  Andrew 
Ruddock,  Director,  Bureau  of  Retirement,  Insurance  and  Occupational  Health, 
United  States  Civil  Service  Commission,  stated  to  this  Subcommittee  that  the 
Civil  Service  Commission  favors  the  inclusion  of  psychologists  as  independent 
health  practitioners  in  its  contracts  for  health  benefits  for  Federal  employees. 
Major  insurance  carriers  such  as  Massachusetts  Mutual,  Occidental  Life  In- 
surance Company  and  the  Prudential  Life  Insurance  Company  of  America  have 
indicated  that  utilizing  licensed  and  certified  psychologists  as  independent  pro- 
viders of  mental  health  benefits  does  not  increase  utilization  costs,  nor  does 
it  significantly  add  to  any  actuarial  costs. 

Although  there  is  no  evidence  that  including  psychologists  as  independent 
practitioners  increases  costs  or  utilization,  there  is  significant  evidence  that  sug- 
gests that  early  intervention  in  the  treatment  of  mental  health  disorders  reduces 
overall  costs  of  medical  expenses.  Studies  by  Cummings  and  Follette  at  Kaiser- 
Permanente 1  clearly  show  that  early  intervention  and  utilization  of  psycho- 
therapeutic services  tend  to  reduce  overall  medical  costs.  In  this  connection  we 
wonder  how  many  aged  people  are  seeing  physicians  for  a  variety  of  physical 
ailments  which  really  reflect  their  need  for  someone  to  talk  to,  someone  to  listen 
to  them,  someone  who  will  give  them  interest  and  concern.  How  many  dollars 
are  spent  for  purported  medical  care  that  might  be  treated  less  expensively  and 
more  productively  as  a  mental  health  problem?  What  price  do  we  pay  when  a 
poor  deprived  youngster  who  needs  care  for  emotional  problems  does  not  receive 
help  and  later  acts  out  his  problem  in  an  antisocial  way  ?  Psychologists  of  course 
do  not  have  all  the  answers — no  one  does — but  we  can  and  should  be  available  to 
provide  the  help  we  can. 

Under  Title  XVIII — Health  Insurance  for  the  Aged,  page  6  of  Public  Law 
89-97,  Section  1801  deals  with  "Prohibition  Against  Any  Federal  Interference" 
and  Section  1802  pertains  to  "Free  Choice  By  Patient  Guaranteed".  We  believe 


1  Cummings,  N.  A.,  and  Follette,  W.  T.  Psychiatric  Services  and  medical  utilization  in 
a  prepaid  health  plan  setting ;  Part  II.  Medical  Care,  1968,  6(1).  Follette,  W.  T.,  and  Cum- 
mings, N.  A.  Psychiatric  services  and  medical  utilization  in  a  prepaid  health  plan  setting. 
Medical  Gave,  1967,  5,  25-35. 


2444 


strongly  in  these  two  statements.  We  believe  that  they  have  inherent  in  them  the 
great  traditions  of  freedom  of  choice  for  individuals  with  minimal  external  reg- 
ulatory control.  We  ask  that  the  profession  of  psychology  also  be  guaranteed  a 
prohibition  against  Federal  interference  and  that  patients  be  given  free  choice. 
As  stated  on  page  6  Section  1802  "Any  individual  entitled  to  insurance  benefits 
under  this  title  may  obtain  health  services  from  any  institution,  agency,  or  per- 
son qualified  to  participate  under  this  title  if  such  institution,  agency,  or  person 
undertakes  to  provide  him  with  such  services."  Licensed  or  certified  psychologists, 
functioning  within  the  scope  of  their  practice  are  competent  to  provide  such 
services  and  by  doing  so,  will  meet  a  social  need,  increase  the  number  of  qualified 
providers  of  mental  health  benefits  and  may  provide  new  and  innovative  ap- 
proaches to  the  treatment  of  psychological  conditions  of  the  groups  that  we  are 
all  concerned  about. 


2445 


Reprinted  from 
Medical  Case 

January-February  1967,  Vol.  V,  No.  1 


Reprinted  with  permission 
of  the  publisher  and  authors 


Psychiatric  Services  and  Medical  Utilization  in 
a  Prepaid  Health  Plan  Setting 

William  Follette,  M.D.,* 
Nicholas  A.  Cummings,  Ph.D.** 


In  two  previous  studies5'  6  the  psychiatric 
practitioner's  contention  that  emotionally 
disturbed  patients  do  not  seek  organic 
treatment  for  their  complaints  following 
the  intervention  of  psychotherapy  have 
been  investigated.  Although  it  has  long 
been  recognized  that  a  large  number  of  the 
physical  complaints  seen  by  the  physician 


*  Chief  Psychiatrist,  Kaiser  Foundation  Hos- 
pital and  the  Permanente  Medical  Group,  San 
Francisco,  Cal. 

**  Chief  Psychologist,  Kaiser  Foundation  Hos- 
pital and  the  Permanente  Medical  Group,  San 
Francisco,  Cal. 

Presented  at  one  of  the  Contributed  Papers 
Sessions  sponsored  by  the  Medical  Care  Section 
at  the  94th  Annual  meeting  of  the  American  Pub- 
lic Health  Association,  San  Francisco,  Cal,  Oc- 
tober 31-November  4,  1966. 

This  study  was  primarily  financed  by  Grant 
PH  108-64-100  (P),  U.  S.  Public  Health  Service. 
The  authors  gratefully  acknowledge  the  assistance 
and  cooperation  of  Mr.  Royal  Crystal,  Deputy 
Chief,  Health  Economics  Branch.  Secondary  fi- 
nancial support  for  this  study  was  through  Grant 
No.  131-7241,  Kaiser  Foundation  Research  Insti- 
tute. 

This  paper  is  a  report  of  the  first  of  two  investi- 
gations seeking  to  develop  and  test  methods  of 
assessing  the  effect  of  psychiatric  services  on 
medical  utilization  in  a  comprehensive  medical 
program.  Part  II  deals  with  prospective,  rather 
than  retrospective,  methodology,  and  will  be  re- 
ported later. 


are  emotionally,  rather  than  organically, 
determined,  the  more  precise  relationship 
between  problems  in  living  and  their  pos- 
sible expression  through  apparent  physical 
symptomatology  has  been  difficult  to  test 
experimentally.  As  noted  in  the  previous 
study,  the  GHI  Project1  demonstrated  that 
users  of  psychiatric  services  were  also  sig- 
nificantly frequent  users  of  medical  serv- 
ices, but  the  Project  was  not  able  to  answer 
the  question  of  whether  there  is  a  reduc- 
tion in  the  use  of  medical  services  follow- 
ing psychotherapy. 

Because  the  facilities  and  structure  of 
the  Kaiser  Foundation  Health  Plan  accord 
an  experimental  milieu  not  available  to 
Avnet,  the  original  pilot  project  in  San 
Francisco  was  able  to  demonstrate  a  sig- 
nificant reduction  in  medical  utilization 
between  the  year  prior  to  psychotherapy, 
and  the  two  years  following  its  interven- 
tion. Certain  methodologic  problems  in- 
herent to  the  pilot  study  indicated  caution 
and  the  need  for  refinement  and  replica- 
tion to  avoid  arriving  at  premature  conclu- 
sions. The  lack  of  a  control  group  of  what 
might  be  termed  psychologically-disturbed 
high-utilizers  who  did  not  receive  psycho- 
therapy was  a  serious  omission  in  the  first 


72-573  O  -  72  -  pt.  5-15 


2446 


experiment,  f  Furthermore,  an  error  in  the 
tabulation  of  inpatient  utilization  was  dis- 
covered after  the  experiment  had  been 
concluded. ft  In  addition,  the  question  was 
raised  whether  the  patients  studied  might, 
subsequent  to  the  two  years  following 
psychotherapy,  revert  to  previous  patterns 
of  somatization  or,  as  a  new  pattern, 
merely  substitute  protracted  and  costly  psy- 
chotherapy for  previous  medical  treatment. 

The  Problem 

This  study  investigated  the  question  of 
whether  there  is  a  change  in  patients' 
utilization  of  outpatient  and  inpatient  med- 
ical facilities  after  psychotherapy,  compar- 
ing the  patients  studied  to  a  matched 
group  who  did  not  receive  psychotherapy. 

Psychotherapy  was  defined  as  any  con- 
tact with  the  Department  of  Psychiatry, 
even  if  the  patient  was  seen  for  an  initial 
interview  only.  The  year  prior  to  the  initial 
contact  was  compared  with  the  five  subse- 
quent years  in  both  groups. 

The  problem  can  be  stated  simply:  Is 
the  provision  of  psychiatric  services  associ- 
ated with  a  reduction  of  medical  services 
utilization  (defined  as  visits  to  other  medi- 
cal clinics,  outpatient  laboratory  and  x-ray 
procedures,  and  days  of  hospitalization)? 

Methodology 

The  setting:  The  Kaiser  Foundation  Health 
Plan  in  the  Northern  California  Region  is 

t  The  authors  acknowledge  their  debt  to  Dr. 
M.  F.  Collen  for  this  and  other  suggestions,  and 
to  Mr.  Arthur  Weissman,  Medical  Economist, 
Kaiser  Foundation  Medical  care  entities,  for  his 
expert  consultation. 

ft  At  that  time  days  of  hospitalization  per 
patient  and  by  year  were  tabulated  from  each 
patient's  outpatient  medical  records.  Subsequent 
investigation  has  revealed  that  only  about  a 
third  of  the  outpatient  charts  reviewed  contained 
summaries  of  hospital  admissions,  and  that  tabu- 
lation of  inpatient  utilization  must  be  made  di- 
rectly through  the  separately-kept  inpatient 
records. 


a  group-practice  prepayment  plan  offering 
comprehensive  hospital  and  professional 
services  on  a  direct  service  basis.  Profes- 
sional services  are  provided  by  the  Per- 
manente  Medical  Group — a  partnership  of 
physicians.  The  Medical  Group  has  a  con- 
tract to  provide  comprehensive  medical 
care  to  the  subscribers,  of  whom  there  were 
more  than  a  half  million  at  the  time  of  this 
study.  The  composition  of  the  Health  Plan 
subscribers  is  diverse,  encompassing  most 
socio-economic  groups.  The  Permanente 
Medical  Group  comprises  all  major  medical 
specialties;  referral  from  one  specialty 
clinic  to  another  is  facilitated  by  the  or- 
ganizational features  of  group  practice, 
geographical  proximity  and  use  of  common 
medical  records.  During  the  years  of  this 
study  (1959-1964),  psychiatry  was  essen- 
tially not  covered  by  the  Northern  Cali- 
fornia Health  Plan  on  a  prepaid  basis,  but 
in  some  areas  of  the  Northern  California 
region  psychiatric  services  were  available 
to  Health  Plan  Subscribers  at  reduced 
rates.  During  the  six  years  of  the  study,  the 
psychiatric  clinic  staff  in  San  Francisco 
consisted  of  psychiatrists,  clinical  psycholo- 
gists, psychiatric  social  workers,  resident 
psychiatrists  at  the  third-  or  fourth-year 
level,  and  psychology  interns,  all  full-time. 
The  clinic  operates  primarily  as  an  out- 
patient service  for  adults  (age  eighteen 
or  older),  for  the  evaluation  and  treatment 
of  emotional  disorders,  but  it  also  provides 
consultation  for  non-psychiatric  physicians 
and  consultation  in  the  general  hospital 
and  the  emergency  room.  There  is  no 
formal  "intake"  procedure,  the  first  visit 
with  any  staff  member  being  considered 
potentially  therapeutic  as  well  as  evalu- 
ative and  dispositional.  Regardless  of  pro- 
fessional discipline,  the  person  who  sees 
the  patient  initially  becomes  that  patient's 
therapist  unless  there  is  a  reason  for  trans- 
fer to  some  other  staff  member,  and  he 
continues  to  see  the  patient  for  the  dura- 


2447 


tion  of  the  therapy.  An  attempt  is  made  to 
schedule  the  first  interview  as  soon  as  pos- 
sible after  the  patient  calls  for  an  appoint- 
ment. There  is  also  a  "drop-in"  or  non- 
appointment  service  for  emergencies  so 
that  patients  in  urgent  need  of  psychiatric 
help  usually  can  be  seen  immediately  or  at 
least  within  an  hour  or  two  of  arrival  at 
the  clinic. 

One  of  the  unique  aspects  of  this  kind 
of  associated  health  plan  and  medical  group 
is  that  it  tends  to  put  a  premium  on  health 
rather  than  on  illness,  i.e.,  it  makes  pre- 
ventive medicine  economically  rewarding, 
thereby  stimulating  a  constant  search  for 
the  most  effective  and  specific  methods  of 
treatment.  The  question  of  how  psychiatry 
fits  into  comprehensive  prepaid  medical 
care  is  largely  unexplored;  there  are  not 
many  settings  in  which  it  can  be  answered. 
Another  feature  of  group  practice  in  this 
setting  is  that  all  medical  records  for  each 
patient  are  retained  within  the  organization. 

Subjects:  The  experimental  subjects  for 
this  investigation  were  selected  system- 
atically by  including  every  fifth  psychiatric 
patient  whose  initial  interview  took  place 
between  January  1  and  December  31,  1960. 
Of  the  152  patients  thus  selected,  80  were 
seen  for  one  interview  only,  41  were  seen 
for  two  to  eight  interviews  (mean  of  6.2) 
and  were  defined  as  "brief  therapy,"  and 
31  were  seen  for  nine  or  more  interviews 
(mean  of  33.9)  and  were  defined  as  "long- 
term  therapy." 

To  provide  a  control  group,  the  medical 
records  of  high  medical  utilizers  who  had 
never  presented  themselves  to  the  Depart- 
ment of  Psychiatry  were  reviewed  until  a 
group  was  selected  which  matched  the 
psychotherapy  sample  in  age,  sex,  socio- 
economic status,  medical  utilization  in  the 
year  1959,  Health  Plan  membership  in- 
cluding at  least  the  years  1959  through 
1962,  and  criteria  of  psychological  distress. 


Thus,  each  experimental  patient  was 
matched  with  a  control  patient  in  the 
criteria  above,  but  without  reference  to 
any  other  variable.  Both  samples  ranged 
in  age  from  24  to  62,  with  a  mean  of  38.1. 
Of  these,  52  per  cent  were  women  and 
63  per  cent  were  blue-collar  workers  or 
their  dependents.  The  satisfaction  of  so 
many  criteria  in  choosing  a  matched  con- 
trol group  proved  to  be  a  tedious  and 
time-consuming  procedure. 

Review  of  the  medical  records  of  the 
psychiatric  sample  disclosed  consistent  and 
conceptually  useful  notations  in  the  year 
prior  to  the  patients'  coming  to  psychother- 
apy, which  coud  be  considered  as  criteria 
of  psychological  distress.  These  consisted 
of  recordings,  made  by  the  physicians  on 
the  dates  of  the  patients'  visits,  which  were 
indicative  of  those  patients'  emotional  dis- 
tress, whether  or  not  the  physicians  recog- 
nized this  when  they  made  the  notations. 
These  (38)  criteria  were  assigned  weights 
from  one  to  three  in  accordance  with  the 
frequency  of  their  appearance  in  medical 
records  and  in  accordance  with  clinical 
experience  about  the  significance  of  the 
criteria  when  encountered  in  psychothera- 
peutic practice.  The  criteria,  with  weights 
assigned,  are  presented  in  Table  1.  In 
comparing  the  charts  of  the  psychiatric 
patients  with  those  of  Health  Plan  patients 
randomly  drawn,  it  was  determined  that 
although  some  criteria  were  occasionally 
present  in  the  medical  records  of  the  latter, 
a  weighted  score  of  three  within  one  year 
clearly  differentiated  the  psychiatric  from 
the  non-psychiatric  groups.  Accordingly, 
therefore,  in  matching  the  control  (non- 
psychotherapy)  group  to  the  experimental 
(psychotherapy)  group,  the  patients  se- 
lected had  records  which  indicated  scores 
of  three  or  more  points  for  the  year  1959. 
The  mean  weights  of  the  three  experi- 
mental groups  and  the  control  group  in 
terms  of  the  38  criteria  of  psychological 


2448 


Table  1.    Criteria  of  Psychological  Distress  with  Assigned  Weights 


One  point 

1.  Tranquilizer  or  sedative  re- 
quested. 

2.  Doctor's  statement  pt.  is 
tense,  chronically  tired,  was 
reassured,  etc. 

3.  Patient's  statement  as  in 
no.  2. 

4.  Lump  in  throat. 

*5.  Health  Questionnaire:  yes 
on  1  or  2  psych,  questions. 

6.  Alopecia  areata. 

7.  Vague,  unsubstantiated 
pain. 

8.  Tranquilizer  or  sedative 
given. 

9.  Vitamin  B12  shots  (except 
for  pernicious  anemia). 

10.  Negative  EEC 

11.  Migraine  or  psychogenic 
headache. 

12.  More  than  4  upper  respira- 
tory infections  per  year. 

13.  Menstrual  or  premenstrual 
tension;  menopausal  sx. 

14.  Consults  doctor  about  diffi- 
culty in  child  rearing. 

15.  Chronic  allergic  state. 

16.  Compulsive  eating  (or  over- 
eating). 

17.  Chronic  gastrointestinal  up- 
set; aereophagia. 

18.  Chronic  skin  disease. 

19.  Anal  pruritus. 

20.  Excessive  scratching. 

2 1 .  Use  of  emergency  room :  2  or 
more  per  year. 

22.  Brings  written  list  of  symp- 
toms or  complaints  to  doc- 
tor. 


Two  points 

23.  Fear  of  cancer,  brain  tu- 
mor, venereal  disease,  heart 
disease,  leukemia,  diabetes, 
etc. 

*24.  Health  Questionnaire:  yes 
on  3  or  more  psych,  ques- 
tions. 

25.  Two  or  more  accidents 
(bone  fractures,  etc.) 
within  1  yr.  Pt.  may  be 
alcoholic. 

26.  Alcoholism  or  its  compli- 
cations: delirium  tremens, 
peripheral  neuropathy,  cir- 
rhosis. 

27.  Spouse  is  angry  at  doctor 
and  demands  different 
treatment  for  patient. 

28.  Seen  by  hypnotist  or  seeks 
referral  to  hypnotist. 

29.  Requests  surgery  which  is 
refused. 

30.  Vasectomy:  requested  or 
performed. 

31.  Hyperventilation 
syndrome. 

32.  Repetitive  movements 
noted  by  doctor:  tics, 
grimaces,  mannerisms,  tor- 
ticollis, hysterical  seizures. 

33.  Weight-lifting  and/or 
health  faddism. 


Three  points 

34.  Unsubstantiated  complaint 
there  is  something  wrong 
with  genitals. 

35.  Psychiatric  referral  made 
or  requested. 

36.  Suicidal  attempt,  threat, 
or  preoccupation. 

37.  Fear  of  homosexuals  or  of 
homosexuality. 

38.  Non-organic  delusions 
and/or  hallucinations;  par- 
anoid ideation;  psychotic 
thinking  or  psychotic  be- 
havior. 


*  Refers  to  the  last  4  questions  (relating  to  emotional  distress)  on  a  Modified  Cornell  Medical  Index — a 
general  medical  questionaire  given  to  patients  undergoing  the  Multiphasic  Health  Check  in  the  years 
concerned  (1959-62). 


Table  2.  Scores  for  Criteria  of  Psychological  Distress, 
for  the  Experimental  Groups  and  the  Control  Group 
during  the  Year  Prior  to  Psychotherapy  {1959) 


Group 

Total 
score 

No.  of 
patients 

Average 
score 

One  session  only 
Brief  therapy 
Long-term  therapy 

264 
134 
246 

80 
41 
31 

3.30 
3.27 
7.94 

All  experimental 
( psychotherapy ) 
groups 

644 

152 

4.24 

Control  (non- 
psychotherapy) 
group 

629 

152 

4.13 

distress  are  presented  in  Table  2:  note 
that  there  was  no  significant  difference 
between  this  dimension  of  the  two  groups 
in  1959. 

In  order  to  facilitate  comparison  of  the 
experimental  (psychotherapy)  and  control 
(non-psychotherapy)  groups,  one  last  cri- 
terion for  inclusion  in  the  matched  group 
was  employed.  Each  subject  in  the  control 
group  had  to  be  a  Health  Plan  member 
for  the  first  three  consecutive  years  under 
investigation  inasmuch  as  the  experimental 
group,  though  demonstrating  attrition  in 


2449 


Table  3.     Utilization  of  Outpatient  Medical  Services  {Excluding  Psychiatry)  by  Psychotherapy  Groups  for 
the  Year  Before  (1-B)  and  the  Five  Years  After  {1-A,  2-A,  3-A,  4-A,  5-A)  the  Initial 
Interview,  and  the  Corresponding  Years  for  the  Non-psychiatric  Group 


Group 

1-B 

1-A 

2-A 

3-A 

4-A 

5-A 

... 
One  session  only,  unit  score 

O  1  1 

0  1 1 

OIL 

oL  1 

217 

No.  of  pts. 

80 

80 

80 

57 

53 

49 

Average 

11. 

4 

10. 

2 

7. 

7 

6.5 

6. 1 

4.4 

Brief  therapy,  unit  score 

778 

471 

354 

202 

215 

155 

No.  of  pts. 

41 

41 

41 

32 

30 

27 

Average 

19 

o 

j  j 

g 

6  3 

7.2 

5  7 

Long-term  therapy,  unit  score 

359 

323 

279 

236 

151 

108 

No.  of  pts. 

31 

31 

31 

27 

24 

19 

Average 

11 

6 

10. 

4 

9. 

0 

8.7 

6.5 

5.7 

All  experimental 

687 

(psychotherapy)  groups,  unit  score 

2048 

1609 

1245 

810 

480 

No.  of  pts. 

152 

152 

152 

116 

107 

95 

Average 

13. 

5 

10. 

6 

8. 

2 

6.4 

6.4 

5.1 

Control  (non- 

psychotherapy)  group,  unit  score 

1726 

1743 

1718 

1577 

1611 

1264 

No.  of  pts. 

152 

152 

152 

127 

111 

98 

Average 

11. 

4 

11 

5 

11 . 

3 

12.4 

14.5 

12.9 

continued  membership  after  that  time,  re- 
mained intact  for  those  years. 

Dependent  variable:  Each  psychiatric  pa- 
tient's utilization  of  health  facilities  was 
investigated  first  for  the  full  year  preced- 
ing the  day  of  his  initial  interview,  then 
for  each  of  the  succeeding  five  years  begin- 
ning with  the  day  after  his  initial  inter- 
view. 

The  corresponding  years  were  investi- 
gated for  the  control  group  which,  of 
course,  was  not  seen  in  the  Department  of 
Psychiatry.  This  investigation  consisted  of 
a  straightforward  tabulation  of  each  con- 
tact with  any  outpatient  facility,  each 
laboratory  report  and  x-ray  report.*  In  ad- 
dition a  tabulation  of  number  of  days  of 
hospitalization  was  made  without  regard  to 
the  type  or  quantity  of  service  provided. 
Each  patient's  utilization  scores  consisted 
of  the  total  number  of  separate  outpatient 
and  inpatient  tabulations. 


*  These  procedures  were  counted  as  one  even 
if  there  were  more  than  one  laboratory  or  x-ray 
procedure  per  report  in  the  chart. 


Results 

The  results  of  this  study  are  summarized 
in  Table  3,  which  shows  the  differences  by 
group  in  utilization  of  outpatient  medical 
facilities  in  the  year  before  and  the  five 
years  after  the  initial  interview  for  the  psy- 
chiatric sample,  and  the  utilization  of  out- 
patient medical  services  for  the  correspond- 
ing six  years  for  the  non-psychotherapy 
sample. 

The  data  of  Table  3  are  summarized  as 
percentages  in  Table  4,  which  indicates  a 
decline  in  outpatient  medical  (not  includ- 
ing psychiatric)  utilization  for  all  three 
psychotherapy  groups  for  the  years  follow- 
ing the  initial  interview,  while  there  is  a 
tendency  for  the  non-psychotherapy  pa- 
tients to  increase  medical  utilization  dur- 
ing the  corresponding  years.  Applying 
t-tests  of  the  significance  of  the  standard 
error  of  the  difference  between  the  means 
of  the  "year  before"  and  the  means  of  each 
of  the  five  "years  after"  (as  compared  to 
the  year  before),  the  following  results  ob- 
tain. The  declines  in  outpatient  (non- 
psychiatric)  utilization  for  the  "one  ses- 


2450 


Table  4.    Comparison  of  the  Year  Prior  to  the  Initial  Interview  with  each  Succeeding  Year,  Indicating 
Per  Cent  Decline  or  Per  Cent  Increase  (Latter  Shown  in  Parentheses)  in  Outpatient  Medical 
{Non-psychiatric)  Utilization  by  Psychotherapy  Grouping,  and  Corresponding 
Comparisons  for  the  Control  Group,  with  Levels  of  Significance 

]UA  2-A  3-A  4-"a  S^A 


%  %  %  %  % 

Group  change   Signif.     change    Signif.    change    Signif.     change    Signif.     change  Signif. 

One  session  only  10.5       NS        32.8       .05        44.75       .05        46.5       .05         61.4  .01 

Brief  therapy  39.5  .05  53.2  .05  66.8  .01  62.1  .01  70.0  .01 
Long-term 

therapy  10.0       NS        22.3       .05        25.0         .05        43.0       .05        50.9  .05 

All  experimental 
(psychotherapy) 

groups  21.4       .05         39.2        .01        48.2        .01         52.3       .0/         62.5  .01 

Control  (non- 
psvchotherapy) 

group  None       —         None       —        (8.8)       NS       (27.2)       .05       (13.2)  NS 


sion  only"  and  the  "long-term  therapy" 
groups  are  not  significant  for  the  first  year 
following  the  initial  interview  while  the 
declines  are  significant  at  either  the  .05  or 
.01  levels  for  the  remaining  four  years.  In 
the  "brief  therapy"  group,  there  are  statis- 
tically significant  declines  in  all  five  of  the 
years  following  the  initial  interview.  As 
further  indicated  in  Table  4,  there  is  a 
tendency  for  the  control  group  to  increase 
its  utilization  of  medical  services,  but  this 
proved  significant  for  the  "fourth  year 
after"  only. 

The  question  was  raised  as  to  whether 
the  patients  demonstrating  declines  in 
medical  utilization  have  done  so  because 
they  have  merely  substituted  protracted 
psychotherapy  visits  for  their  previous 
medical  visits. 

As  shown  in  Table  5,  the  number  of 
patients  in  the  one-session-only  group  who 


return  in  the  third  to  fifth  years  for  addi- 
tional visits  is  negligible.  Comparable  re- 
sults are  seen  in  the  brief -therapy  group. 
In  contrast,  the  long-term-therapy  group 
reduces  its  psychiatric  utilization  by  more 
than  half  in  the  "second  year  after,"  but 
maintains  this  level  in  the  succeeding  three 
years.  By  adding  the  outpatient  medical 
visits  to  the  psychiatric  visits,  it  becomes 
clear  that  whereas  the  first  two  psycho- 
therapy groups  have  not  substituted  psy- 
chotherapy for  medical  visits,  this  does 
seem  to  be  the  case  in  the  long-term 
psychotherapy  group.  These  results  are 
shown  in  Table  6,  and  indicate  that  the 
combined  outpatient  utilization  remains 
about  the  same  from  the  "year  before" 
to  the  "fifth  year  after"  for  the  third  psy- 
chotherapy group,  while  declines  are  evi- 
dent for  the  first  two  psychotherapy 
groups.  As  regards  the  combined  (medical 


Table  5.    Average  Number  of  Psychotherapy  Sessions  per  Year  for  Five  Years  by  Experimental  Group 


Group 

1- 

A 

2-A 

3-A 

4-A 

5-A 

One  session  only 

1 

00 

0.00 

0.00 

0.02 

0.06 

Brief  therapy 

6 

22 

0.00 

0.09 

0.57 

0.52 

Long-term  therapy 

12 

33 

5.08 

5.56 

5.88 

5.05 

2451 


Table  6.    Combined  Averages  (Outpatient  Medical  plus  Psychotherapy  Visits)  of  Utilization  by  Years 
Before  and  After  Psychotherapy  for  the  Experimental  Groups,  and  Total  Outpatient 
Utilization  by  Corresponding  Years  for  the  Control  (Non-psychiatric)  Group 


Group 

1-B 

1-A 

2-A 

3-A 

4-A 

5-A 

One  session  only 

11.4 

11.2 

7.7 

6.5 

6.1 

4.5 

Brief  therapy 

19.0 

17.7 

8.6 

6.4 

7.7 

6.2 

Long-term  therapy 

11.6 

22.7 

14.1 

14.3 

12.4 

10.8 

All  experimental 

(psychotherapy)  groups 

13.5 

15.3 

9.2 

8.3 

7.9 

6.2 

Control  group 

11.4 

11.5 

11.3 

12.4 

14.5 

12.9 

plus  psychiatric)  utilization,  the  long-term 
psychotherapy  group  is  not  appreciably 
different  from  the  control  (non-psychi- 
atric) group. 

Investigation  of  inpatient  utilization  re- 
veals a  steady  decline  in  utilization  in  the 
three  psychotherapy  groups  from  the  "year 
before"  to  the  "second  year  after,"  with 
the  three  remaining  "years  after'  main- 
taining the  level  of  utilization  attained  in 
the  "second  year  after."  In  contrast,  the 
control  sample  demonstrated  a  constant 
level  in  number  of  hospital  days  through- 
out the  six  years  studied.  These  results 
are  shown  in  Table  7,  which  indicates  that 


the  approximately  60  per  cent  decline  in 
number  of  days  of  hospitalization  between 
the  "year  before"  and  the  "second  year 
after"  for  the  first  two  psychotherapy 
groups  is-  maintained  to  the  "fifth  year 
after";  this  decline  is  significant  at  the  .01 
level.  The  inpatient  utilization  for  the 
"long-term  therapy"  group  in  the  "year 
before"  was  over  twice  that  of  the  non- 
psychiatric  sample,  and  about  three  times 
that  of  the  first  two  psychotherapy  groups. 
The  significant  (.01  level)  decline  of  88 
per  cent  from  the  "year  before"  to  the 
"second  year  after"  is  maintained  through 
the  "fifth  year  after,"  rendering  the  inpa- 


Table  7.    Number  of  Days  of  Hospitalization  and  Averages  by  Psychotherapy  Group  for  the  Year  Before  and 
the  Five  Years  After  Psychotherapy,  and  the  Corresponding  Period  for  the  Non-psychotherapy  Group 
(Note:  Health  Plan  average  is  .8  per  year  for  patients  20  years  old  or  older.) 


Group  1-B  1-A  2-A  3-A  4-A  5-A 


One  session  only,  days /year  117  78  52  32  33  31 

No.  of  pts.  80  80  80  57  53  49 

Average  1.46  0.98  0.65  0.56  0.62  0.63 

Brief  therapy,  days/year  66  44  31  24  23  23 

No.  of  pts.  41  41  41  32  30  27 

Average  1.61  1.07  0.76  0.75     /    0,77  0.85 

Long-term  therapy,  days/year  153  37  19  18  16  13~ 

No.  of  pts.  31  31  31  27  24  19 

Average  4.94  1.09  0.61  0.67  0.67  0.68 


All  experimental 

(psychotherapy)  groups,  days/year  336            159  102             74  72  67 

No.  of  pts.  152           152  152           116  107  95 

Average  2.21          1.05  0.68          0.64  0.67  0.71 

Significance  .05  .  02            .  05  .  05  .  05 

Control  (non- 
psychotherapy)  group,  days/year  324           307  477           255  208  197 
No.  of  pts.  152           152  152           127  111  98 
Average  2.13          2.02  3.07          2.02  1.87  2.01 
Significance  NS  .05       NS  NS  NS 


2452 


tient  utilization  of  the  third  psychotherapy 
group  comparable  to  that  of  the  first  two 
psychotherapy  groups. 

In  terms  of  decline  in  use  of  inpatient 
services  ( days  of  hospitalization ) ,  however, 
the  long-term  psychotherapy  group  and 
the  control  group  are  different,  in  that  the 
former  patients  significantly  reduce  their 
inpatient  utilization  from  the  "year  before" 
to  the  "fifth  year  after."  However,  the 
small  size  of  the  samples  limits  the  con- 
clusions that  can  be  drawn. 

Discussion 

The  original  pilot  study  of  which  this 
project  is  an  outgrowth  was  proposed  by 
the  senior  author  as  an  aid  in  planning  for 
psychiatric  care  as  part  of  comprehensive 
prepaid  health-plan  coverage.  It  had  long 
been  observed  that  some  of  this  psychiatric 
clinic's  patients,  as  well  as  many  patients 
in  the  hospital  for  whom  a  psychiatric 
consultation  was  requested,  had  very  thick 
medical  charts.  It  was  also  repeatedly 
noted  that  when  these  patients  were  treated 
from  a  psychiatric  point  of  reference,  i.e., 
as  a  person  who  might  have  primarily  emo- 
tional distress  which  was  expressed  in 
physical  symptoms,  they  often  abandoned 
their  physical  complaints.  It  seemed  rea- 
sonable to  expect  that  for  many  of  these 
people,  psychiatrically-oriented  help  was 
a  more  specific  and  relevant  kind  of  treat- 
ment than  the  usual  medical  treatments. 

This  would  be  especially  true  if  the  ef- 
fects of  psychiatric  help  were  relatively 
long-lasting,  or  if  a  change  in  the  patient 
affected  others  in  his  immediate  environ- 
ment. In  the  long  run,  the  interruption  of 
the  transmission  of  sick  ways  of  living  to 
succeeding  generations  would  be  the  most 
fundamental  and  efficient  kind  of  preven- 
tive medicine.  It  therefore  seemed  imper- 
ative to  test  the  intuitive  impressions  that 
this  kind  of  patient  could  be  treated  more 
effectively  by  an  unstructured  psychiatric 


interview  technique  than  by  the  more 
traditional  medical  routine  with  its  di- 
rected history. 

The  Balints2' 3  have  published  many 
valuable  case  reports  which  describe  the 
change  in  quantity  and  quality  in  patients' 
appeals  to  the  general  practioner  after 
the  latter  learns  to  listen  and  understand 
his  patients  as  people  in  distress  because 
of  current  and  past  life  experiences.  It 
would  be  difficult,  however,  to  design  a 
statistical  study  of  those  patients  and  of  a 
matched  control  group  treated  for  similar 
complaints  in  a  more  conventional  manner. 

Psychiatry  has  been  in  an  ambivalent 
position  in  relation  to  the  rest  of  medicine: 
welcomed  by  some,  resented  by  others, 
often,  however,  with  considerable  polite- 
ness which  serves  to  cover  up  deep-seated 
fears  of  and  prejudices  against  "some- 
thing different."  In  a  medical  group  associ- 
ated with  a  prepaid  health  plan,  conditions 
are  favorable  for  integrating  psychiatry 
into  the  medical  fraternity  as  a  welcomed 
and  familiar  (therefore  unthreatening ) 
member  specialty.  The  inherent  ease  of 
referral  and  communication  within  such 
a  setting  would  be  much  further  enhanced 
by  the  factor  of  prepayment,  which  elim- 
inates the  financial  barrier  for  all  those 
who  can  afford  health  insurance.  For 
many  reasons,  then,  this  setting  provides 
both  the  impetus  and  the  opportunity  to 
attempt  an  integration  of  psychiatry  into 
general  medical  practice  and  to  observe 
the  outcome.  In  the  past  two  decades, 
medicine  has  been  changing  in  many  sig- 
nificant ways,  among  which  are  prepaid 
health  insurance,  group  practice,  increas- 
ing specialization,  automation,  and  a  focus 
on  the  "whole  person"  rather  than  on  the 
"pathology." 

Forsham7  and  others  have  suggested  that 
at  some  not-too-distant  date  the  patient 
will  go  through  a  highly  automated  process 
of  history,  laboratory  procedures  and  phys- 


2453 


ical  tests,  with  the  doctor  at  the  end  of  the 
line  doing  a  physical  examination  but  oc- 
cupying mainly  the  position  of  a  medical 
psychologist.  He  will  have  all  the  results 
of  the  previously  completed  examinations 
which  he  will  interpret  for  the  patient, 
and  he  will  have  time  for  listening  to  the 
patient,  if  he  wishes  to  do  so.  The  "Multi- 
phasic Health  Check,"4  which  has  been 
used  for  many  years  in  the  Northern  Cali- 
fornia Region  in  the  Kaiser  Foundation 
Medical  Clinics  and  which  is  constantly 
being  expanded,  is  just  such  an  automated 
health  survey,  and  Medical  Group  doctors 
are  in  the  process  of  becoming  continually 
better  psychologists.  Eventually  many  more 
of  the  patients  who  are  now  seen  in  the 
psychiatric  clinic  will  be  expertly  treated 
in  the  general  medical  clinics  by  more 
"compleat  physicians." 

A  study  such  as  this  raises  more  ques- 
tions than  it  provides  answers.  One  ques- 
tion alluded  to  above  is  whether,  with  an 
ongoing  training  program  such  as  Balint 
has  conducted  for  general  practitioners  at 
Tavistock  Clinic,  internists  might  not  be 
just  as  effective  as  psychiatric  personnel 
in  helping  a  greater  percentage  of  their 
patients.  A  training  seminar  such  as  this 
has  been  conducted  by  Dr.  Edna  Fitch  in 
the  department  of  Pediatrics  of  Perma- 
nente  Medical  Group  in  San  Francisco  for 
many  years  and  has  been  effective  in  help- 
ing pediatricians  to  treat,  with  more  in- 
sight and  comfort,  emotional  problems  of 
children  and  their  families  and  physical 
disorders  which  are  an  expression  of  emo- 
tional distress. 

Using  a  broader  perspective  than  the 
focus  on  the  clinical  pathology,  one  can 
wonder  what  social,  economic  or  cultural 
factors  are  related  to  choice  of  symptoms, 
attitudes  toward  being  "sick"  (mentally 
or  physically),  attitudes  toward  and  ex- 
pectations of  the  doctor,  traditions  of 
family   illness,   superstitions   relating  to 


bodily  damage,  child  raising  practices,  etc. 
How  often  is  the  understanding  of  such 
factors  of  crucial  importance  for  effective 
and  efficient  treatment  for  the  patient?  Of 
special  interest  in  general  medical  practice 
and  overlooked  almost  routinely  by  phys- 
icians (and  by  many  in  the  psychological 
field)  are  the  "anniversary  reactions"  in 
which  symptoms  appear  at  an  age  at  which 
a  relative  had  similar  symptoms  and/or 
died. 

Health  Plan  statistics  indicate  an  in- 
crease in  medical  utilization  with  increas- 
ing age  in  adults.  This  is  consistent  with 
the  relatively  flat  curve  seen  in  the  "med- 
ical utilization"  of  the  control  sample  over 
the  six  year  period  and  is  in  marked  con- 
trast to  that  of  the  experimental  sample. 
There  is  the  implication  in  this  that  some 
of  the  increasing  symptoms  and  disability 
of  advancing  years  are  psychogenic  and 
that  psychotherapeutic  intervention  may 
in  some  cases  function  as  preventive  med- 
ical care  for  the  problems  associated  with 
aging  as  well  as  preventive  medicine  in 
children. 

A  certain  percentage  of  the  long-term 
psychotherapy  group  seems  to  continue 
without  diminution  of  number  of  visits  to 
the  psychiatric  clinic;  these  patients  appear 
from  the  data  to  be  interminable  or  life- 
long psychiatric  utilizers  just  as  they  had 
been  consistently  high  utilizers  of  non- 
psychiatric  medical  care  before.  They 
seem  merely  to  substitute  psychiatric  visits 
for  some  of  their  medical  clinic  visits.  A 
further  breakdown  of  the  long-term  group 
into  three  parts,  e.g.,  less  than  50,  50  to 
150,  and  more  than  150  visits,  would  prob- 
ably help  to  sort  this  population's  utiliza- 
tion into  several  patterns.  More  precise 
data  on  these  groups  would  suggest  modi- 
fications in  classifications  and  methods  of 
therapy  or  might  suggest  alternatives  to 
either  traditional  medical  or  traditional 
psychiatric  treatment  in  favor  of  some  at- 


2454 


tempt  to  promote  beneficial  social  changes 
in  the  environments  of  these  chronically 
disturbed  people. 

Sources  of  Criticism 

(1)  One  problem  in  providing  a  con- 
trol group  comparable  to  an  experimental 
group  in  this  kind  of  study  is  that,  al- 
though undoubtedly  having  emotional 
distress,  and  in  a  similar  "quantity"  ac- 
cording to  our  yardstick,  the  control  group 
did  not  get  to  the  psychiatric  clinic  by 
either  self-  or  physician  referral.  The  fact 
that  the  control  patients  had  not  sought 
psychiatric  help  may  reflect  a  more  pro- 
found difference  between  this  group  and 
the  experimental  group  than  is  super- 
ficially apparent.  One  cannot  assume  that 
the  medical  utilization  of  this  control 
group  would  change  if  they  were  seen  in 
the  Psychiatry  Clinic.  (This  objection  will 
be  minimized  in  the  "prospective"  part 
of  this  study,  which  will  be  reported  in 
another  paper).  Although  the  average  in- 
patient utilization  for  the  three  combined 
psychotherapy  groups  is  the  same  as  that 
of  the  control  group  in  the  year  before 
(1959),  the  inpatient  utilization  of  the 
long-term  psychotherapy  group  is  two  and 
a  half  times  that  of  the  control  group. 
If  the  study  were  extended  to  several 
years  before,  rather  than  just  one  year,  it 
would  become  evident  whether  this  was 
just  a  year  of  crisis  for  the  long-term 
group  or  whether  this  had  been  a  longer 
pattern  of  high  inpatient  utilization. 

(2)  Patients  who  visit  the  psychiatric 
clinic  may,  for  one  reason  or  another,  seek 
medical  help  from  a  physician  not  associ- 
ated with  the  Medical  Group  so  that 
his  medical  utilization  is  not  recorded  in 
the  clinic  record,  the  source  of  informa- 
tion about  utilization.  In  the  long-term- 
therapy  group  the  therapist  is  usually 
aware  if  his  patient  is  visiting  an  outside 
physician,  and  although  it  is  an  almost 
negligible  factor  in  that  group,  there  can 
be  no  information  in  this  regard  for  the 
one-session-only  and  brief-therapy  groups 
without  follow-up  investigation. 

(3)  There  is  no  justification  in  assum- 
ing that  decreased  utilization  means  bet- 
ter medical  care,  necessarily.  Criteria  of 


improvement  would  have  to  be  devel- 
oped and  applied  to  a  significantly  large 
sample  to  try  to  answer  this  important 
question. 

(4)  Patients  may  substitute  for  physical 
or  emotional  symptoms  behavioral  dis- 
turbances which  do  not  bring  them  to  a 
doctor  but  may  be  just  as  distressing  to 
them  or  to  other  people. 

(5)  The  "unit"  of  utilization  cannot  be 
used  as  a  guide  in  estimating  costs,  stand- 
ing as  it  does  for  such  diverse  items.  In 
itself  the  units  are  not  an  exact  indicator 
of  severity  of  illness  nor  of  costs.  A  per- 
son with  a  minor  problem  may  visit  the 
clinic  many  times,  while  a  much  more 
severely  ill  person  may  visit  the  clinic  in- 
frequently. Even  more  striking  is  the 
variation  in  the  cost  of  a  unit,  varying 
from  about  a  dollar  for  certain  laboratory 
procedures  to  well  over  a  hundred  dollars 
for  certain  hospital  days  (with  admis- 
sions procedures,  laboratory  tests,  x-rays, 
consultations,  etc.)  each  worth  one 
"unit."  To  arrive  at  an  approximation  of 
costs,  the  units  have  to  be  retabulated 
in  cost-weighted  form. 

Suggested  Further  Studies 

(1)  The  question  of  treatment  of  pa- 
tients by  non-medical  professional  clini- 
cians has  been  argued  for  more  than  a 
half  century.  It  is  generally  recognized 
that  there  are  not  enough  psychiatrists 
now  and  that  there  will  not  be  enough  in 
the  foreseeable  future  to  treat  all  those 
persons  who  have  disabling  emotional  dis- 
orders. In  the  late  President  Kennedy's 
program  for  Mental  Health  this  lack  was 
recognized;  the  recommendation  for  pro- 
fessional staff  for  community  Mental 
Health  Centers  included  clinical  psychol- 
ogists, psychiatric  social  workers  and  other 
trained  personnel.  Having  little  distinction 
in  our  psychiatric  clinic  between  the  vari- 
ous disciplines  as  far  as  their  functions 
are  concerned,  it  would  be  feasible  and 
interesting  to  compare  therapeutic  results 
of  the  disciplines  as  well  as  individuals 
with  various  types  of  patients  and  vari- 
ous types  of  psychotherapy. 

(2)  Is  length  n)f  treatment  correlated 
with  diagnostic  category,  original  prog- 


2455 


nosis  by  therapist,  socio-economic  level 
of  patient,  discipline  and  orientation  of 
therapist,  or  "severity  of  pathology"? 

(3)  What  happens  to  the  spouse,  par- 
ents, and  children  of  the  patients  who 
are  seen  in  psychiatry? 

(4)  Are  there  distinguishing  patterns 
of  complaints  in  the  three  psychotherapy 
groups? 

(5)  How  do  blue-collar  patients  differ 
from  white-collar  or  professional  patients 
in  number  of  interviews,  diagnostic  label, 
use  of  medication,  recommendation  of 
hospitalization,  and  type  of  complaints? 

(6)  What  is  the  nature  of  the  illness 
that  resulted  in  hospitalization  before  the 
patient  came  to  psychiatry — and  after? 
How  often  was  this  a  diagnostic  work-up 
because  the  internist  could  not  find  "any- 
thing wrong"  in  the  clinic? 

Summary 

The  outpatient  and  inpatient  medical  uti- 
lization for  the  year  prior  to  the  initial  in- 
terview in  the  Department  of  Psychiatry 
as  well  as  for  the  five  years  following  were 
studied  for  three  groups  of  psychotherapy 
patients  (one  interview  only,  brief  therapy 
with  a  mean  of  6.2  interviews,  and  long- 
term  therapy  with  a  mean  of  33.9  inter- 
views) and  a  control  group  of  matched 
patients  demonstrating  similar  criteria  of 
distress  but  not,  in  the  six  years  under 
study,  seen  in  psychotherapy.  The  three 
psychotherapy  groups  as  well  as  the  con- 
trol (non-psychotherapy)  group  were  high 
utilizers  of  medical  facilities,  with  an  aver- 
age utilization  significantly  higher  than 
that  of  the  Health  Plan  average.  Results  of 
the  study  indicated  significant  declines  in 
medical  utilization  in  the  psychotherapy 
groups  when  compared  to  the  control 
group,  whose  inpatient  and  outpatient  uti- 
lization remained  relatively  constant 
throughout  the  six  years.  The  most  signifi- 
cant declines  occurred  in  the  second  year 
after  the  initial  interview,  and  the  one- 


interview-only  and  brief-therapy  groups 
did  not  require  additional  psychotherapy  to 
maintain  the  lower  utilization  level  for  five 
years.  On  the  other  hand,  after  two  years 
the  long-term-psychotherapy  group  attained 
a  level  of  psychiatric  utilization  which  re- 
mained constant  through  the  remaining 
three  years  of  study. 

The  combined  psychiatric  and  medical 
utilization  ©f  the  long-term-therapy  group 
indicated  that  for  this  small  group  there 
was  no  over-all  decline  in  outpatient  uti- 
lization inasmuch  as  psychotherapy  visits 
seemed  to  supplant  medical  visits.  On  the 
other  hand,  there  was  a  significant  decline 
in  inpatient  utilization,  especially  in  the 
long-term-therapy  group  from  an  initial 
utilization  of  several  times  that  of  the 
Health  Plan  average,  to  a  level  comparable 
to  that  of  the  general  adult  Health  Plan 
population.  This  decline  in  hospitalization 
rate  tended  to  occur  within  the  first  year 
after  the  initial  interview  and  remained 
generally  comparable  to  the  Health  Plan 
average  for  the  five  years. 

References 

1.  Avnet,  Helen  H.:  Psychiatric  Insurance: 
Financing  Short  Term  Ambulatory  Treatment. 
New  York,  Group  Health  Insurance,  Inc.,  1962. 

2.  Balint,  Michael.:  The  Doctor,  His  Patient 
and  the  Illness.  New  York,  International  Univer- 
sities Press,  1957. 

3.  Balint,  Michael,  and  Balint,  Enid:  Psycho- 
therapeutic Techniques  in  Medicine.  London, 
Tavistock  Publications  Limited,  1961. 

4.  Collen,  M.  F.,  Rubin,  L.,  Neyman,  J., 
Dantzig,  G.  B.,  Baer,  R.  M.,  and  Siegelaub,  A.  B.: 
Automated  multiphasic  screening  and  diagnosis. 
Am.  J.  Pub.  Health  54,  1964. 

5.  Cummings,  N.  A.,  Kahn,  B.  I.,  and  Spark- 
man,  B.:  Psychotherapy  and  Medical  Utilization. 
As  cited  in  Greenfield,  Margaret:  Providing  for 
Mental  Illness.  Berkeley,  Calif.,  Berkeley  Institute 
of  Governmental  Studies,  University  of  California, 
1964. 

6.  Follette,  W.  T.,  and  Cummings,  N.  A.:  Psy- 
chiatry and  Medical  Utilization.  An  unpublished 
pilot  project,  1962. 

7.  Forsham,  Peter  H:  Lecture  before  the  Per- 
manente  Medical  Group.  San  Francisco,  1959. 


2456 


Reprinted  from  _        .         ,      .  , 

Medical  Care  Reprinted  with  permission 

January-February  1968,  Vol.  VI,  No.  1  of  the  publisher  and  authors 


Psychiatric  Services  and  Medical  Utilization 
in  a  Prepaid  Health  Plan  Setting: 

Part  II 


Nicholas  A.  Cummings,  Ph.D.,  and  William  T.  Follette,  M.D.* 


Does  psychotherapy  alter  the  pattern 
of  medical  care?  Can  emotionally  distressed 
patients  who  might  benefit  from  psycho- 
therapy be  identified  by  screening  a  group 
of  patients  taking  a  health  checkup?  Will 
an  automated  psychological  test  be  useful 
in  such  a  screening  process?  These  are  the 
questions  we  set  out  to  answer  in  this 
study. 

The  first  question  has  been  studied  and 
the  results  reported  by  the  authors.7  It  was 


*  Chief  Psychologist  and  Chief  Psychiatrist,  re- 
spectively, Department  of  Psychiatry,  Kaiser 
Foundation  Hospital  and  the  Permanente  Medi- 
cal Group,  San  Francisco,  Calif. 

Presented  at  a  session  sponsored  by  the  Group 
Health  Association  of  America  at  the  95th  An- 
nual Meeting  of  the  American  Public  Health 
Association,  Miami  Beach,  Florida,  October  23-27, 
1967. 

This  study  was  financed  by  Contract  PH  108- 
66-235,  U.  S.  Public  Health  Service.  The  au- 
thors gratefully  acknowledge  the  cooperation  and 
assistance  of  Mrs.  Agnes  Brewster,  Chief,  Health 
Economics  Branch,  and  Mr.  Royal  Crystal,  Chief, 
Medical  Care  Data  and  Resources  Center.  The 
authors  also  acknowledge  their  debt  to  Dr.  M.  F. 
Collen,  whose  research  design  is  reflected  in  this 
study,  and  whose  Automated  Multiphasic  Health 
Clinic  made  possible  the  field  tests  employed. 

This  paper  is  Part  II  of  a  two-part  series  seek- 
ing to  develop  and  test  methods  of  assessing  the 
effects  of  psychiatric  services  in  a  comprehensive 
medical  program.  Part  I  involved  retrospective 
methodology,  while  the  present  paper  reports  a 
prospective  study. 


found  that  psychotherapy  patients  initially 
were  high  "utilizers,"  but  that  after  psycho- 
therapy their  utilization  declined  signifi- 
cantly. On  the  other  hand,  the  utilization 
of  the  matched  "control"  group  (not  re- 
ceiving psychotherapy)  did  not  decline. 
The  brief  therapy  and  one-session-only  psy- 
chotherapy groups  had  the  largest  decline 
in  outpatient  utilization,  which  theoretically 
helped  to  offset  the  cost  of  providing  the 
psychotherapy.  The  decline  in  outpatient 
utilization  of  the  long-term  psychotherapy 
group  was  not  enough  to  offset  the  cost  of 
psychiatric  and  non-psychiatric  treatment, 
being  greater  than  the  cost  of  prior  medical 
utilization  alone.  However,  this  group 
showed  considerable  decline  in  days  of  hos- 
pitalization, which  helped  to  make  their 
psychiatric  care  financially  less  costly  in 
this  setting. 

A  major  criticism  of  Part  I7  was  that,  al- 
though the  psychotherapy  and  "control" 
groups  were  matched  socioeconomically 
and  demographically,  in  medical  utilization 
and  in  degree  of  emotional  distress,  the 
groups  remained  different  in  one  crucial  re- 
spect: the  psychotherapy  sample,  whether 
self-  or  physician-referred,  voluntarily  pre- 
sented themselves  to  the  psychiatric  clinic. 
In  contrast,  the  matched  group  did  not 
come  to  the  psychiatric  clinic  even  if  re- 


2457 


Table  1.    Criteria  of  Psychological  Distress  with  Assigned  Weights 


One  point 

1.  Tranquilizer  or  sedative  re- 
quested. 

2.  Doctor's  statement  pt.  is 
tense,  chronically  tired,  was 
reassured,  etc. 

3.  Patient's  statement  as  in 
no.  2. 

4.  Lump  in  throat. 

*5.  Health    Questionnaire:  yes 
on  1  or  2  psych,  questions. 

6.  Alopecia  areata. 

7.  Vague,  unsubstantiated  pain. 

8.  Tranquilizer  or  sedative 
given. 

9.  Vitamin  B12  shots  (except  for 
pernicious  anemia). 

10.  Negative  EEC 

11.  Migraine  or  psychogenic 
headache. 

12.  More  than  4  upper  respira- 
tory infections  per  year. 

13.  Menstrual  or  premenstrual 
tension;  menopausal  sx. 

14.  Consults  doctor  about  diffi- 
culty in  child  rearing. 

15.  Chronic  allergic  state. 

16.  Compulsive  eating  (or  over- 
eating). 

17.  Chronic  gastrointestinal  up- 
set; aereophagia. 

18.  Chronic  skin  disease. 

19.  Anal  pruritus. 

20.  Excessive  scratching. 

21.  Use  of  emergency  room:  2  or 
more  per  year. 

22.  Brings  written  list  of  symp- 
toms or  complaints  to  doctor. 


Two  points 

23.  Fear  of  cancer,  brain  tu- 
mor, venereal  disease,  heart 
disease,  leukemia,  diabetes, 
etc. 

*24.  Health  Questionnaire:  yes 
on  3  or  more  psych,  ques- 
tions. 

25.  Two  or  more  accidents, 
(bone  fractures,  etc)  within 
1  yr.  Pt.  may  be  alcoholic. 

26.  Alcoholism  or  ts  compli- 
cations: delirium  tremens, 
peripheral  neuropathy,  cir- 
rhosis. 

27.  Spouse  is  angry  at  doctor 
and  demands  different 
treatment  for  patient. 

28.  Seen  by  hypnotist  or  seeks 
referral  to  hypnotist. 

29.  Requests  surgery  which  is 
refused. 

30.  Vasectomy:  requested  or 
performed. 

31.  Hyperventilation  syndrome. 

32.  Repetitive  movements 
noted  by  doctor:  tics, 
grimaces,  mannerisms,  tor- 
ticollis, hysterical  seizures. 

33.  Weight-lifting  and/or  health 
faddism. 


Three  points 

34.  Unsubstantiated  complaint 
there  is  something  wrong 
with  genitals. 

35.  Psychiatic  referral  made  or 
requested. 

36.  Suicidal  attempt,  threat,  or 
preoccupation. 

37.  Fear  of  homosexuals  or  of 
homosexuality. 

38.  Non-organic  delusions  and/or 
hallucinations;  paranoid  idea- 
tion; psychotic  thinking  or 
psychotic  behavior. 


*  Refers  to  the  last  4  questions  (relating  to  emotional  distress)  on  a  Modified  Cornell  Medical  Index — a 
general  medical  questionaire  given  to  patients  undergoing  the  Multiphasic  Health  Check  in  the  years 
concerned  (1959-62). 


ferred  by  their  physicians.  The  nature  of 
the  difference  between  the  two  groups 
made  conclusions  tentative.  The  question  is 
crucial,  because  it  may  be  that  the  group 
which  did  not  come  to  the  psychiatric  clinic 
is  unable  to  make  use  of  psychiatric  services 
in  a  meaningful  manner,  and  that  psycho- 
therapy would  not  decrease  the  medical 
utilization  of  this  group.  The  most  obvious 
way  to  provide  a  valid  control  group  would 
be  to  choose  a  large  sample  by  uniform 
criteria  and  randomly  divide  it  into  two 
parts,  then  treat  the  two  parts  differently 
and  observe  the  results.  The  present  paper 
is  a  report  on  such  a  prospective  study. 


Method 

The  setting:  The  Kaiser  Foundation 
Health  Plan  of  Northern  California  is  a 
group-practice  prepayment  plan  offering 
comprehensive  hospital  and  professional 
services  on  a  direct-service  basis.  Profes- 
sional services  are  provided  by  the  Perma- 
nente  Medical  Group — a  partnership  of 
physicians.  The  Medical  Group  has  a  con- 
tract to  provide  comprehensive  medical 
care  to  the  members  of  the  Plan,  of  whom 
there  were  three-quarters  of  a  million  at 
the  time  of  this  study.  The  composition 
of  the  Health  Plan  membership  is  diverse, 


2458 


encompassing  most  socioeconomic  groups. 
The  Permanente  Medical  Group  comprises 
all  major  medical  specialties;  referral  from 
one  specialty  clinic  to  another  is  facilitated 
by  the  organizational  features  of  group 
practice,  geographical  proximity  and  the 
use  of  common  medical  records.  During 
the  years  of  this  study  (1965-1966),  only  17 
per  cent  of  Health  Plan  members  were  eli- 
gible for  psychiatric  benefits  on  a  prepaid 
basis,  but  in  most  areas  of  the  Northern 
California  region  psychiatric  services  were 
available  to  Health  Plan  Subscribers  at  re- 
duced rates.  The  psychiatric  staff  in  the 
San  Francisco  Clinic,  where  the  present 
study  took  place,  consists  of  psychiatrists, 
clinical  psychologists,  psychiatric  social 
workers,  and  psychology  and  social  work 
interns.  The  clinic  operates  primarily  as  an 
outpatient  service  for  adults  and  children 
for  the  evaluation  and  treatment  of  emo- 
tional disorders,  but  it  also  provides  con- 
sultation for  non-psychiatric  physicians  and 
consultation  in  the  general  hospital  and  the 
emergency  room.  There  is  no  formal  "in- 
take" procedure,  the  first  visit  with  any  staff 
member  being  considered  potentially  thera- 
peutic as  well  as  evaluative  and  disposi- 
tional. Regardless  of  professional  discipline, 
the  person  who  sees  the  patient  initially 
becomes  that  patient's  therapist  unless  there 
is  reason  for  transfer  to  some  other  staff 
member,  and  he  continues  to  see  the  pa- 
tient for  the  duration  of  the  therapy.  An 
attempt  is  made  to  schedule  the  first  inter- 
view as  soon  as  possible  after  the  patient 
calls  for  an  appointment.  There  is  also  a 
"drop-in"  or  non-appointment  service  for 
emergencies  so  that  patients  in  urgent  need 
of  psychiatric  help  usually  can  be  seen  im- 
mediately or  at  least  within  an  hour  or  two 
after  arrival  at  the  clinic. 

One  of  the  unique  aspects  of  this  kind 
of  associated  health  plan  and  medical  group 
is  that  it  tends  to  put  a  premium  on  health 
rather  than  on  illness,  i.e.,  it  makes  pre- 


ventive medicine  economically  rewarding, 
thereby  stimulating  a  constant  search  for 
the  most  effective  and  specific  methods  of 
treatment.  Another  feature  of  group  prac- 
tice in  this  setting  is  that  all  medical  records 
for  each  patient  are  maintained  within  the 
organization. 

The  subjects:  The  source  of  the  population 
for  this  study  was  10,667  patients  who  vol- 
untarily presented  themselves  in  a  six- 
month  period  to  the  San  Francisco  Kaiser- 
Permanente  Automated  Multiphasic  Clinic 
for  a  health  check,  part  of  which  includes 
19  computerized  procedures,  ranging  from 
simple  bodv  measurements  to  complex  lab- 
oratory tests.2  A  routine  part  of  the  three- 
hour  series  of  examinations