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Mr. BALL. To an extent that is true, too, because you have a larger group at risk, a larger exposed group. Remember I referred to the fact there are about 53 million who are insured for disability. You have to meet a special test and the number who meet it is growing. Senator CURTIS. My question was on a percentage basis.

Mr. BALL. As a rate of disability related to the insured population I don't think

Mr. MYERS. Not significantly, no.

Senator CURTIS. What does the King-Anderson bill, as now written and which you support, do for civil service retirees who, we will assume, do not have social security retirement?

Mr. BALL. They are not covered, Senator, on the assumption that there is a Government-supported voluntary plan available for retired Federal civil servants in the area of health care if they wish to take

it.

Senator CURTIS. How about railroad?

Mr. BALL. Railroad employees are included.

Senator CURTIS. How about the individual who had to leave the work force before his category of employment was ever covered by social security, so he has little or no social security record; will he be covered by King-Anderson.

Mr. BALL. He is covered for the benefits of the King-Anderson bill, Senator, with the costs being paid from general revenues.

Senator CURTIS. But for the other people who contributed nothing to this new insurance program, so-called, general revenues does not pay it.

Mr. BALL. That is correct; for social security beneficiaries it comes out of social security contributions.

Senator CURTIS. So, how many of those people are there who have no social security, little or no social security record of employment? Mr. BALL. The total number of those who would be brought in by the general revenue provisions of the King-Anderson bill, at the time it would go into effect, is right around 2 million, Senator, perhaps 2.2. Senator CURTIS. I used an illustration which was said was an extreme case. I cited the lawyer who had millions of dollars and the highest income of his life and not retired but would come in under the benefits of King-Anderson.

We won't make that a situation of someone that high on the ladder, but suppose there is someone well able to pay their own medical bills and hospital bills even though they are not extremely rich and they are part of this 13.4 million. Their benefits will be paid by the workers and the self-employed and the employers who are now working and will be working in the future, will they not?

Mr. BALL. Senator, I think it perhaps depends on how you look at the financing of the social security program. I certainly think the way you say it is one perfectly proper way.

Ordinarily, we have thought that the employer's contribution was the one that was available to the system for the various situations in which individual workers did not fully pay their own way. That that was the source of the

Senator CURTIS. As a matter of fact, the employers' taxes are never segregated and bookkeepingwise attributed to the individual worker, are they?

Mr. BALL. Right. That is my point, that we tend to think of the employer contribution as being used generally but, of course, the law does not say that.

Senator CURTIS. Now, I was interested in the allusion yesterday in the hearing and today to the contention that many States are unable to have good Kerr-Mills programs because the sources of local and States taxes were dwindling and thus they were unable to fully participate in the matching program of Kerr-Mills.

It has also been indicated that the passage of the King-Anderson bill would free as much as 40 percent of these State funds for other purposes, possibly improvement of Kerr-Mills. Realizing that all taxes come from the people, the worker or producer of income who has to pay it to the local unit, the State government or to the Federal Government and what he is faced with is this total amount of taxes. So, I have just examined that contention with respect to a State that has a good Kerr-Mills law. I refer to the State of Michigan. My information indicates that Michigan has a relatively good KerrMills program. I do not have the figures for 1963 but in 1962 they spent over $20 million on that program, which included the Federal contribution which amounted to more than half of that.

Now, I find that if you impose King-Anderson and the nearest most accurate estimate I could find is if the King-Anderson bill were passed this year, that taxpayers of Michigan would be hit for more than $120 million in extra King-Anderson taxes.

In fact, the King-Anderson taxes on the people of Michigan would be more than that since these figures don't take into account the present plans for raising the wage base to $5,400 instead of $5,200 in the original bill.

Nor do they take into account the testimony in the Ways and Means Committee were Chairman Mills asserted that and I think Mr. Myers was there and agreed, that the original estimates of the cost of the King-Anderson program might be 50 to 100 percent higher.

Mr. COHEN. Senator, can I say something on that since I am a resident of Michigan?

First, let me say that I am glad you call it a good law since when I was at Michigan I drafted the Michigan Kerr-Mills law.

Senator CURTIS. Good for you. That is a good law, that takes care of the people very well.

Mr. COHEN. Well, the fact of the matter is that Michigan hasn't a very adequate Kerr-Mills law because the legislature

Senator CURTIS. You wouldn't have drafted that.

Mr. COHEN. I tried to persuade the legislature to pass a better program but they refused to do so.

Senator CURTIS. You are very persuasive to this committee.

Mr. COHEN. I was not as persuasive as I would like to be with the Michigan Legislature in 1960. The fact of the matter is, Senator, that there are large elements excluded from the Kerr-Mills law in Michigan, and the income and asset provisions and the relatives' responsibility provisions exclude a great many needy people in Michigan, and the legislature itself at the time we discussed it said they didn't want to change those provisions because otherwise the cost would go up so much.

Senator CURTIS. If they had given you what you asked for in Michigan instead of costing $20 million it would cost twice that much.

Mr. COHEN. I think probably in the neighborhood of maybe three times as much.

Senator CURTIS. $60 million. So they pay $60 million for KerrMills and if we pass King-Anderson the people of Michigan are going to pay an extra $120 million that is based on a $5,200 wage basis.

Mr. COHEN. May I follow Senator Bennett's point earlier? I don't think you are comparing two comparable things now. King-Anderson provides hospital coverage for all of the people over 65, and, as you pointed out, without any income or assets or relatives' responsibility provisions so obviously among the group of aged in Michigan who go to the hospital many more will get a payment for hospital care under King-Anderson.

Whereas under

Senator CURTIS. I will grant that. I am not talking about the benefits. I am talking about the matter of picking the pockets of the taxpayers by the tax collector. You are going to pick the pockets of the people of Michigan for $120 million more at a time when you say that their sources of revenue are dwindling away.

Mr. COHEN. We already have a 4-percent sales tax in Michigan, we have a very difficult financial situation, and I think on the basis of my experience that the State legislature there is not in a position at the present time to really take advantage of all of the provisions in KerrMills.

Senator CURTIS. Those are the same people whose pockets you are going to pick for King-Anderson.

Secretary CELEBREZZE. I would like to put in the record at this time, because I believe it is important to an understanding of the limitations of Kerr-Mills, that 74 percent of all the Federal funds under the Kerr-Mills bill in May 1964 went to five States with only 32 percent of the aged because these States have more liberal programs. Michigan is one of those States.

The five are New York, California, Massachusetts, Pennsylvania, and Michigan. I think that it is significant that 74 percent of the Federal expenditures under the Kerr-Mills Act went to five States representing only 32 percent of the aged population. The effectiveness of a Federal-State program depends on State initiative and what they can afford to do.

Senator LONG. What did you say, 74 percent?

Secretary CELEBREZZE. Seventy-four percent.

Senator LONG. Would you pass me the chart you might have on that to show-I would like to see where the Southern States come in on it. Unless I miss my guess Louisiana is doing pretty well because we had very little program to begin with.

In fact, unless I miss my guess, both Oklahoma and Louisiana did. pretty well.

Senator DOUGLAS. They generally do.

Senator LONG. Not everything. They don't make out as well. I am not going to apologize for Louisiana doing well, may I say to my good friends from Illinois. [Laughter.]

Go right ahead and answer his question.

Secretary CELEBREZZE. I just wanted to get that into the record. (The table referred to by Secretary Celebrezze follows:)

36-453-64-11

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Based on preliminary population estimated by Social Security Administration as of
Jan. 1, 1964.

2 Includes money payments to recipients not subject to Federal matching: Connecticut,
$920; Kansas, $11,084; Massachusetts, $97,253; New Jersey, $9,674; New York, $53,551;
North Dakota, $2,275,

Includes an unknown number of persons who received money payments only, causing average vendor payment to be slightly understated. able. Rate including States not making MAA pay

$ Represents medical assistance for the aged segment of program for aid to the aged, blind, or disabled and me lical assistance for the aged. • Less than 0.05 percent.

7 Average payment not computed on fewer than 50 recipients.

* Data for March; April and May data not available.

So aree: Department of Health, Education, and Welfare, Welfare Administration. Bureau of Family Services, Division of Program Statistics and Analysis.

73.46

69,527

534

56.38

40,874

1, 184

89.29

54.274

258

64.75

19, 584

123

50.00

4,146

50.00

1, 138

50.00

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Senator CURTIS. Mr. Chairman, may I insert four pages of tables from which I was drawing figures when I was speaking of Michigan? Senator LONG. I was going to ask I want this chart put in the record. Senator CURTIS. That is what I want to put in.

Senator LONG. They will be in the record then at this point. (The tables referred to by Senator Curtis follow:)

Medical assistance for the aged: Payments for vendor medical bills: Total amount and amount in all States reporting for specified type of service by State, fiscal year ended June 30, 19631

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1 For States operating pooled funds or other prepayment plans, data represent payments out of these funds to specified type of vendor. Totals do not agree with those shown in tables 2, 6, and 11 of "Source of Funds Expended for Public Assistance" which represent assistance payments into these funds. Program initiated in October 1960 under the Social Security Amendments of 1960.

2 Includes drugs dispensed by medical practitioners when these costs are not reported separately. Amount for the Virgin Islands not reported by type of service.

"Other practitioners' services" included in "Physicians' services."

Vendor medical program in operation less than 1 year.

Less than $500.

Source: U.S. Department of HEW, Welfare Administration, Bureau of Family Services, Division of Program Statistics and Analysis, Nov. 4, 1963.

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