Lower Rio Grande Valley Chamber of Commerce (Texas). Virginia State Chamber of Commerce. STATEMENT OF JAMES A. MANN FOR THE ILLINOIS STATE CHAMBER OF COMMERCE My name is James A. Mann. I am personnel manager for Wyman-Gordon Co., Ingalls-Shepard Division, Harvey, Ill., producers of drop-forgings for the automotive aircraft, truck and tractor industries. Currently, I am chairman of the Social Security Committee of the Illinois State Chamber of Commerce. This statement is presented on behalf of the Illinois State Chamber of Commerce, a statewide civic organization with a membership of over 20,000 businessmen, representing over 8,000 individual business enterprises in Illinois. Since 1952, I have been a member of the Illinois State Chamber's Social Security Committee which is comprised of 91 individuals, representing all types of business in our State, ranging from the self-employed to some of the Nation's largest corporations. Our committee has constantly studied and reviewed matters relating to social security, and the policies which we recommend are approved by the State chamber's 71-member board of directors. Thus, my presentation and the viewpoints expressed in this statement, I am sure, are broadly representative of Ilinois business. On November 21, 1963, representing the Illinois State Chamber of Commerce, I appeared before the House Committee on Ways and Means in opposition to the King-Anderson proposals (H.R. 3920 and S. 880) which would provide limited hospital benefits for the aged under the social security program. The House Ways and Means Committee, as you know, rejected proposals to provide hospital and medical care for the aged through the social security system. Rather, in favorably recommending H.R. 11865, which your committee is now considering and which expands social security and increases benefits and taxes, the House committee recognized the actuarial deficiencies in the social security program. Today, with the apparent need to improve the financing of social security as indicated in H.R. 11865, there appears more reason than ever to reject any proposal that would place an additional tax burden on social security taxpayers and further threaten the solvency of the system with unpredictable future costs. In this statement, I will not attempt to present, in great detail, reasons for the Illinois State chamber's opposition to a medical and hospital care program under social security. Volumes of testimony are already available to your committee. However, I would like to point out, in general, our basic objections to the King-Anderson proposals as I indicated in my presentation before the House Committee on Ways and Means. They do, I believe, apply to the various similar proposals that are now being presented to your committee. HOSPITAL AND MEDICAL CARE FOR AGED UNDER SOCIAL SECURITY UNNECESSARY It is our firm conviction that at present there are sufficient Federal and State statutes to provide medical and hospital care for the aged who need it. Combining these Federal-State programs with voluntary insurance coverage precludes the need for a compulsory system under social security. Kerr-Mills-Public assistance The Illinois State Chamber of Commerce urges the continued improvement and expansion of the Kerr-Mills program, public law 86-788, which became effective on October 1, 1960. This program provides an essential working partnership between local, State, and Federal Governments to provide help to all who need help and it has had a remarkable degree of success where it has been given a chance to operate. However, it is disturbing to us to note an apparent laxity on the part of the Federal administration to encourage implementation of this program to the fullest extent. We suggest that the Federal administration encourage the development of this program in all States and expansion of the services provided in these programs. The experience of some 40 States that are providing medical assistance under Kerr-Mills will encourage expansion of this program and it can be safely expected that the States will continually improve its operation by developing eligibility rules and benefits that will match the need of older people. This program which provides local administration, local determination of benefits, and local designation of eligible beneficiaries places administration with those who are most familiar with local conditions and local needs and gives greater assurance that medical care will be provided for those financially unable to pay for it themselves. As an example, let me refer you to Illinois. Here, the State chamber has encouraged the development of the Kerr-Mills program. The Illinois law provides for medical services that correspond to the full spectrum authorized under the Kerr-Mills law. The department of public aid is to determine which of these services will be provided. At present the department has authorized the following services: (1) Hospital care, (2) care by a physician during hospitalization, (3) care by a physician for 30 days after the patient's release from the hospital, and (4) necessary drugs for 30 days after the patient's release from the hospital, (5) 90 days of convalescent care or rehabilitative treatment in a nursing home, if necessary after release from the hospital, with continued payment of drugs and physician's services as needed. These services, as you can see, exceed those provided in the King-Anderson proposals. For the current biennium ending June 30, 1965, the Illinois General Assembly approved $20.8 million to cover anticipated medical needs of the aged under the Kerr-Mills program. In addition, it is estimated that nearly $60 million will be paid for medical costs of old-age recipients under the Federal-State old-age assistance program. Improvements can be made in this program but it is questionable what will happen if a similar program under Social Security is enacted. Voluntary insurance No doubt your committee will receive conflicting testimony on the extent to which our elderly are now covered by health insurance. It is not my intention to enter into this battle of national statistics. It is undeniable, however, that private insurance has made tremendous progress in providing protection to the aged. In 1952, a Social Security Administration study reported that 3.4 million persons over age 65 had health insurance. This was 26 percent of the noninstitutionalized aged. In 1962, the Health Insurance Association of America reported that 60 percent of noninstitutionalized persons over 65 were so insured. Without question, increasing numbers of self-reliant Americans are choosing voluntary self-protection as opposed to compulsion under a Government program. This protection for the aged is provided in a number of ways-through individual policies, extension of Blue Cross-Blue Shield plans, group insurance plans and individual employer plans, many of which have come about through the collective-bargaining process between unions and management. Under these programs, individuals and groups of individuals can determine the types of policies they wish to buy, the benefits they desire, and the premiums they can afford. This growth and expansion under private enterprise clearly indicates the lack of need for further Federal legislation such as the proposed KingAnderson bills-legislation that would disrupt and confuse present plans and most certainly discourage their further expansion. I have mentioned the growth of individual employer plans where, through collective bargaining, specific plans particularly suited to the employer and employee have been developed. At present there are many Illinois-based firms providing both hospital and medical care protection for their retired workers and many new plans are being developed every day. I am sure this Illinois experience is representative of the Nation as a whole. Here is an area which I sincerely believe deserves your committee's deep concern. You, I am sure, will want to encourage the continued growth of this type of hospital and medical care protection for retired workers rather than discourage it with passage of legislation compelling what in many instances would be less favorable protection under the social security system. As an example of what is occurring in this field, may I relate what has hap pened in my own company? Through the process of collective bargaining with three international unions— namely, the International Association of Machinists, the International Brotherhood of Electrical Workers, and the International Brotherhood of Boilermakers— retired employees and participants of the Wyman-Gordon benefit plan, a voluntary plan, are provided with 365 days of Blue Cross protection, $375 maximum Blue Shield, and major medical expense benefits for the duration of their retirement at no cost to the pensioner. The same coverage is provided, at no cost, to the dependents of pensioners. At the death of the pensioner, Blue Cross-BlueShield and major medical benefits are provided the spouse until her death or remarriage, and again at no cost. In addition, group life insurance is provided the pensioner at no cost to him. Pensioners of the Employees' Independent Union are provided 120 days Blue Cross, $375 maximum Blue Shield, and major medical coverage at no cost to them. That same coverage is extended to dependents of the pensioner at no cost to the pensioner. Pensioners of our fifth union, the International Die Sinkers Conference, are provided with 120 days Blue Cross and $375 maximum Blue Shield coverage at no cost to them. These same benefits are extended to dependents of the pensioner, and again at no cost to the pensioner. Identical coverages are also provided nonunion employees, retiring under our retirement program. COSTS AND TAXES Social security should not be considered an insurance program. Essentially, it is a tax program wherein today's workers pay for the benefits of today's retired workers. Increasing this tax to provide the limited hospital benefits your committee is considering would place a new and onerous burden on already overburdened taxpaying workers, workers who have homes to buy, automobiles to pay for, children to educate, along with real estate, sales and income taxes to pay. It is indeed surprising and alarming to us that serious consideration is being given to legislation that would place an additional tax burden on the working population after our Government in the interests of spuring our economy and increasing purchasing power recently enacted an income tax reduction. H.R. 11865, alone, will about cancel out the decrease in income taxes most employees are to receive in 1965. For example, the present law calls for a social security tax of $174 for the worker who earns $5,400 in 1965. H.R. 11865 will increase that tax to $205.20. Of course, the employer will pay a like amount and the self-employed tax will be increased from $259.20 to $307.80. It should also be pointed out that under this bill, a worker earning $5,400 in 1971 will pay $259.20 in social security taxes compared to a presently scheduled tax of $222. This, by the way, represents about a 17 percent increase in taxes, for which the individual is promised a 5-percent increase in benefits. To impose an additional social security tax for hospital care might well jeopardize the entire social security system. Will not these workers begin to ask the question, "Who's getting the benefits?" Will they not rebel when they realize that thousands of individuals well able to provide this care for themselves will be the beneficiaries of their tax dollars? Experience with social security here and abroad shows that costs are invariably underestimated. The costs of medical and hospital care under the social security program are almost impossible to predict and could rise to staggering proportions. When Great Britain began its medical care program, costs were estimated at $475 million a year. But for 1959, the costs had soared to over $2 billion annually. Proposals before your committee would provide only limited hospital care. It is estimated that the King-Anderson bills would pay about 25 percent of the medical and hospital costs for an elderly benficiary. Even for this limited care, it is fair to question if the costs have been forecast with any degree of accuracy. It can be forecast that the future costs would not be confined to these limited benefits. Once a hospial or medical care program is established, the unrelenting pressure for more and greater benefits could not be resisted. The way would be open to expansion and extension of benefits not only to the elderly but to the development of a national health program to cover every man, woman. and child in the Nation. SUMMATION Everyone agrees that hospital and medical care should be provided the elderly who need it. The question is, "How shall this care be financed?" In the American tradition, this responsibility should first fall on the individual, then his family, then on voluntary community agencies and finally on local, State, and Federal governments. In line with this philosophy, the Illinois State Chamber of Commerce urges rejection of legislation to establish a compulsory program of hospital and medical care benefits under social security for the following reasons: (1) This legislation is unnecessary. Such care is now available through private health insurance plans and voluntary programs which have shown remarkable growth in recent years and through the Federal-State public assistance and Kerr-Mills programs which provide superior protection for those who need it. (2) This legislation is a "foot in the door" providing limited benefits which would be expanded with a "snowballing" of costs. While the initial costs are staggering, the unpredictable potential costs might well jeopardize the entire social security program. The recognized limit of a 10-percent social security tax may soon be levied (H.R. 11865 provides for a 9.6-percent combined employeremployee tax by 1971). (3) This legislation is unfair to our working generations who will be taxed to pay benefits for millions who do not need them. (4) Inleusion of hospital and medical care benefits under social security would endanger the ability of the social security system to pay higher future cash benefits that might be required. (5) Such a mandatory program would destroy individual initiative and would promote development of a philosophy contrary to the traditional American philosophy of letting government do only what the citizens cannot do better for themselves. Hon. HARRY FLOOD BYRD, INDIANA STATE CHAMBER OF COMMERCE, Chairman, Senate Finance Committee, DEAR SENATOR BYRD: Since H.R. 11865, the Social Security Amendments of 1964, is now in the Senate Finance Committee, I would appreciate your considering the following views of the Indiana State Chamber of Commerce concerning this bill. The Indiana State Chamber of Commerce recognizes the need for improving the actuarial soundness of the old-age and survivors insurance phase of the social security program. Such improvement should be based on careful appraisal of experience with the actual operation of the program, including the still unsolved problems that (1) no consistent relationship exists between amounts of tax contributions of individuals and the amounts of benefits they ultimately may receive; (2) the program is one of sharply rising costs and a major portion of costs of pension rights being earned now is being postponed for future generations to bear, and (3) the cost-deferment characteristic hides from public consciousness the future cost impact of obligations being incurred currently. H.R. 11865, the Social Security Amendments of 1964, while increasing and extending benefits under the program, attempts to finance these provisions by rolling the tax rate schedule back for the years 1966 through 1970 and expanding the taxable wage base from $4,800 to $5,400. These financing provisions of the bill would result in a substantial discrimination against these persons earning more than $5,000 and would have the effect of making this class of workers and their employers shoulder the costs of the 5-percent across-the-board benefit increase and other liberalizations provided in the bill for the next 8 years. In other words, Congress would be providing additional benefits and at the same time reducing the taxes (which already are insufficient to meet the benefit schedule) on more than one-half of covered workers. The Indiana State Chamber urges that any increasing OASI costs should be accomplished directly by commensurate tax rate increases in order to create a clear public understanding of the cost impact, rather than through the hidden method of an expansion of the taxable wage base. Since under the bill all beneficiaries would get bigger benefits, needed additional financial support should be provided by all who work, through a higher tax rate. Cordially yours, JOHN V. BARNETT. GREENSBORO CHAMBER OF COMMERCE, Hon. HARRY F. BYRD, DEAR SENATOR BYRD: Attached is a copy of the action taken by our board of directors and this is how the business community feels toward medicare. We would appreciate your efforts on behalf of the business community in seeing that this measure is not passed. Very truly yours, ROBERT VIDAL, Chairman, Congressional Action Committee. GREENSBORO CHAMBER OF COMMERCE, REPORT OF CONGRESSIONAL ACTION COMMITTEE COMMITTEE ON TAX REVISION AND SPENDING CONTROL-BILL NO. H.R. 3920 Subject: Medicare. Basic provisions Although the House Ways and Means Committee moved to defer action on legislation establishing health care for the aged financed by increased social security taxes, it is believed that House passage of any legislation dealing with social security could provide a vehicle for medicare amendments in the Senate. Impact of bill locally (1) The administrative expenses involved would be extremely burdensome and would only serve to increase the already rising costs in the present social security program. (2) According to statistical surveys, at the present 60 percent of the public is covered under private health insurance plans, and it is projected that within a relatively short period of time, this coverage would increase beyond 90 percent. There seems every likelihood of success for programs such as VirginiaCarolina 65 Plus plan. (3) The Kerr-Mills plan is already existent and has proven successful in States that have adopted the plan. (4) Evidence from other countries which have had experience with socialized medicine in one form or another seems to indicate that the results are less than satisfactory. Committee recommendation The committee recommended to the board of directors that the Greensboro Chamber of Commerce oppose medicare. The board of directors did oppose medicare at its July 16 meeting and asked that the committee alert the membership on this issue, asking them to state their views to the following: Senator Sam J. Ervin, Jr., Senate Office Building, Washington, D.C., 20025; Senator B. Everett Jordan, Senate Office Building, Washington, D.C., 20025. Please let your public affairs department know that you have written by sending carbon copies or a statement of the number of letters written on this bill. The CHAIRMAN. The next witness is Dr. Ira Leo Schamberg, committee on social security for physicians. Take a seat Doctor, and proceed. STATEMENT OF DR. IRA L. SCHAMBERG, CHAIRMAN OF THE COMMITTEE ON SOCIAL SECURITY FOR PHYSICIANS, PHYSICIANS FORUM, INC. Dr. SCHAMBERG. Mr. Chairman, and members of the committee, my name is Ira Leo Schamberg. I am a physician. With me is Mrs. Gertrud Rost, the wife of a physician in Orange, N.J. I am in the |