Secretary CELEBREZZE. No; I have not. Mr. Ball may be familiar with it. I have not had an opportunity to study it.

The CHAIRMAN. Mr. Ball, do you wish to express your opinion on the Javits bill, S. 2431, as modified in amendment No. 1163?

Mr. BALL. Mr. Chairman, as the Secretary said, our position would be first in favor of the cash benefits in the House bill, plus the benefits in the King-Anderson bill, with sufficient financing to cover them both, either through an increase in the contribution rate or a combination of an increase in the contribution rate and a further wage base increase. The basic feature in the new Javits approach is to offer people over 65 an option for the election of hospital insurance in place of the cash benefit increases in the House bill. Although we believe that the way the Javits bill carries out this idea has some serious defects in it, the basic idea of an option in place of a cash benefit, although not as good as our first position, would certainly be preferable from our standpoint to the House bill alone. The idea of an option for hospital insurance, modified to make it more practical than it is in the Javits proposal, would be our second choice.

The CHAIRMAN. Then, you favor a part of the Javits amendment, you say?

Mr. BALL. It would come, Mr. Chairman, as a second choice, and it should be modified. The way the Javits amendment does it would not be, I think, acceptable to us.

The CHAIRMAN. Are you concerned about the fact that the staff says that the ultimate cost of the Gore amendment 1178 would increase the tax rate by 10.4 percent in 1971? In other words, do you agree with Senator Ribicoff that it should or should not exceed 10 percent?

Mr. BALL. Well, Mr. Chairman, speaking for myself, I don't believe that there is any magic in the figure of 10 percent that should detemine for all time into the future what the contribution rates in social security should be. There are many systems providing protection, such as the railroad retirement system and the civil service retirement system, that go beyond a 5-percent contribution rate on the employee. There is much to be said, however, in favor of some increase in the wage base instead of increases in the contribution rate. But to answer your question directly, it does not seem to me that there is an absolute ceiling for the long-range future exactly at 10 percent on this.

The CHAIRMAN. In other words, you are not disturbed if it goes over 10 percent? I think those who pay the tax would be disturbed. That is a very heavy tax. Now, is it not true that all of the medical care bills have required upward adjustment: the Forand bill, the Kennedy-Anderson amendment in 1960, the King-Anderson bill in 1962 and 1964? In other words, the history is that they have gone up above the estimates that were made at the time the legislation was proposed; is that not right?

Mr. BALL. Mr. Chairman, if it is agreeable to you, I would like to ask our chief actuary, Mr. Robert Myers, if he would comment on the basic conditions that have led to the revision in these cost estimates at this point. Would that be agreeable?

The CHAIRMAN. Well, let me ask you again about the King-Anderson bill as reintroduced by Senator Gore in amendment 1178 and the

House bill. You would favor those two bills, enacted together, without change?

Mr. BALL. That is, the benefit provisions of the King-Anderson bill added to the House bill with changes to provide for sufficient financing to cover the combined bills. You would have to change the financing.

The CHAIRMAN. And then, the Javits bill?

Mr. BALL. No; if that were done, Mr. Chiarman

The CHAIRMAN. You would only favor the Javits bill as a single bill, is that it, or a part of H.R. 11865.

Mr. BALL. Well, the option approach that is in the Javits bill, Mr. Chairman, is clearly a second choice. You wouldn't have it in addition to the King-Anderson bill, but rather in place of it. The Javits bill in its present form, I think, would need rather substantial changes. I am only referring to the idea of an option.

The CHAIRMAN. Do you favor the optional feature?

Mr. BALL. As a second choice, Mr. Chairman. I think that hospital insurance for the aged is so important that if it were not possible in the time left this year to get agreement on the financing provisions that would be necessary to add the benefits of King-Anderson to the House bill, putting the two together, it would be much better than just passing a cash benefit increase to allow people to elect, instead of some of the cash, protection under hospital insurance. That is a second choice.

The CHAIRMAN. As far as the Gore amendment is concerned, you would be willing to take it just as it is?

Mr. BALL. The benefit provisions; yes, sir.

The CHAIRMAN. And then, you would put it on top of the other bill. Now, do you think that there is any validity to the doctors' opposition to social security coverage as proposed under the House bill? In other words, should their wishes be followed by Congress?

Secretary CELEBREZZE. Mr. Chairman, the coverage of the doctors was included by the Ways and Means Committee. It was not an administration proposal, though we have no objection to it. The reason that the committee gave in their report for including the doctors was that about half of them are now covered, and that many of the communications of the committee-and I am relying upon the committee's statements-were from doctors who wanted to be included. The CHAIRMAN. But you are indifferent as to whether the doctors go in or out?

Secretary CELEBREZZE. I think it is best to put them in.

The CHAIRMAN. If the majority of the doctors want to stay out and not get the benefits and pay in on it, do you think the committee would be justified in eliminating the coverage provision for doctors?

Secretary CELEBREZZE. Again, Mr. Chairman, this is a question of opinion. At the Ways and Means Committee, their information was that the majority of the doctors wanted to come in, and that is the reason they are included.

The CHAIRMAN. Going on the assumption that the majority don't want courage, what then?

Secretary CELEBREZZE. We have on the social security records now perhaps 100,000 physicians who have some coverage. For example,

there are doctors spending 1 hour a day in a plant, and for that work they are covered under social security. The feeling of the committee was, if you have that high a number, you might as well make it universal, since partial coverage creates certain inequities.

As I say, this was the recommendation of the committee and not of the administration.

The CHAIRMAN. You say the majority of them do want coverage? Secretary CELEBREZZE. I believe that was the committee's opinionthat a majority of them wanted to be covered.

The CHAIRMAN. Senator Long?

Senator LONG. Mr. Secretary, you say quite a bit here about the desirability of covering people and providing for their needs on the basis of right rather than on the basis of need, charity, or whatever you want to call it. Why don't we simply blanket under social security those various people who are not covered by the social security system for the minimum amount of payment available under the system? I think it would be about $42.50 under this bill, wouldn't it? Why don't we simply blanket under this bill those people, from age 72, who are not covered and include them in the program? Financing is something else, but as a practical matter, leaving the financing aside, which is a detail which would have to be worked out, why don't we do that for those people? Aren't they generally a class that need it? Secretary CELEBREZZE. One of the basic purposes of social security in addition to the humanitarian reason is that it reduces the cost against general revenues. If you blanket these people into the program it would be a charge against general revenues rather than a charge aaginst the specific individuals that contribute to the program.

Senator LONG. Let us just discuss that a moment.

Secretary CELEBREZZE. All right.

Senator LONG. Let us suppose that during my working years I had been a domestic servant or a waiter or a farm laborer not covered by social security, scratching out a living as best I could. Now, as a practical matter, would it not be correct to say that if I was able to buy an automobile or even so much as a suit of clothes, every time I bought one of those commodities, into the cost of that was figured the hidden cost of this social security program. If the manufacturer had added that on to his cost of manufacturing, and so had his competitor, and even the retailer had made that a part of his cost of doing business and put his markup on top of that to cover overhead and to allow for profit, then I would be paying part of the cost of the program. In the last analysis, would not I as a consumer have been one of those paying that tax?

I ask that question, based on the same theory I explained on the Senate floor no later than yesterday, or the day before yesterday, when we were talking about who pays for this tax on these foreign securities on which we just got through levying a tax. We say the incidence falls on the American buyer of that bond. He is the fellow against whom we have levied the tax, but the fellow who is really paying it is the foreigner who issues that bond, because the tax is going to reduce what he can make on the bond. He has to set it up for that, that net price, because of the tax.

Don't we have a similar situation here? We levy this tax, and certainly, as far as the employer is concerned, he is the one who pays

for it directly, but in the process passes the burden right on to the consumer, just as though it were a sales tax levied on the general public. Secretary CELEBREZZE. Yes, in part, but that individual has not contributed any part of the social security tax. In other words, the covered worker is also paying the general tax on top of that. He is also paying part of the employer's tax if he buys the employer's product, naturally. On top of that, then, we get from him an additional social security tax, so that he is paying much more for his protection than an individual would pay who was blanketed in. There are hidden taxes on everything that we buy, of course. You can't get away from it.

The CHAIRMAN. We have Dunkards and Mennonites in the valley of Virginia who insist upon being strictly independent. In no way will they accept funds from the State or Federal Government.

Secretary CELEBREZZE. Yes; we have the same thing in Ohio among the Amish, and they have it in Pennsylvania, too.

The CHAIRMAN. There aren't many of that class of people left in this country, who won't accept benefits from the Government.

Secretary CELEBREZZE. But there is nothing to prevent them from accepting benefits or not accepting benefits. It is the tax that is compulsory.

The CHAIRMAN. They refused to pay the tax, they refused to accept the benefits, and then the Federal Government went in and sold their horses in order to collect the tax which they wouldn't pay. Do you think that was a fair action?

Secretary CELEBREZZE. I am familiar with the cases of selling the horses, and I certainly would not have sold the horses. That happened some time ago.

The CHAIRMAN. In other words, they wanted to be independent and not accept anything from the Government. I think they should have the right to do it. This is a free country, I think.

Secretary CELEBREZZE. Senator, you must agree with me that if all of us had an option as to whether we paid taxes or whether we did not, I am sure large numbers would choose not to pay the taxes. That is the problem we run into on this type of thing.

Senator LONG. Mr. Celebrezze, let me just discuss with you briefly the point you are making. You are saying you don't think we should do anything for a fellow under social security who, while he was paying that tax as a part of the cost of the product, was not contributing part of his pay into the fund. You are reluctant to try to do something for that person, who is among the most poor we have in this country and among those who need it the most; but on the other hand, you are coming in here and placing your first priority on assisting these people who have no need whatsoever to show, who because they were covered by social security during their working days and are presently retired. You would like to give them this expensive medicare benefit even if they don't need it. Even if they are well able to pay for it themselves, you would propose to take care of those people, take them and provide them medical care in a hospital, even though they have a family available to look after them, and the sickness might not be one that a family could not easily care for in the home. You would do that for them, even though here is someone else who needs it immeasurably more, and you wouldn't give him so much as a crust of bread on medicare.

How do you justify that position?

Secretary CELEBREZZE. Now, that isn't an accurate statement, because these people are covered under an assistance program in their State.

Senator LONG. Oh, yes, sir. You say they are covered under the general assistance programs.

Secretary CELEBREZZE. Yes, sir.

Senator LONG. But in some States, the requirements are such that if you have a relative who could help you, even though that relative will not help you, you can't get 5 cents from that State. And in some States, sir-and I am sure you know that-there is a requirement that before you can get the first nickel out of that State welfare agency, you have got to sign your little old home away so that when you die, the sheriff sells the home under the hammer and gets his money back. Senator DOUGLAS. Will the Senator yield?

The Senator from Louisiana has just made a very eloquent case against Kerr-Mills.

Senator LONG. Let me say that we don't have that requirement in Louisiana. You may have it in Illinois, but in some States that is the

case.

How do you justify saying that you should do nothing for these people who need it the worst, and recommend these big benefits for people who pay nothing for them, and have no real need of them?

Secretary CELEBREZZE. You were speaking about placing under the social security program people who have never paid social security taxes. Would you charge the cost of doing so against the trust fund? If you do, then you are going to throw the trust fund out of balance. Senator LONG. Well, now, Mr. Secretary, you can do it one way or the other. But you have been changing the law to put additional people under it who have made some minor contribution to the trust fund already.

Secretary CELEBREZZE. Yes.

Senator LONG. And I would first like to bypass the question of how you raise the money for it and talk about whether it is right or wrong. I am talking about why don't we blanket under those programs those unfortunate people who are not covered by social security, who generally are the most in need of it of all. You present almost a full page here, talking about the desirability of these people getting some benefits as a matter of right rather than a matter of need and getting them under social security rather than public welfare. Why don't we just put them under social security?

Secretary CELEBREZZE. The King-Anderson bill does blanket them in for medical insurance.

Senator LONG. Some of these poor folks would be better off sick. They may starve between now and the time they become ill. Why don't we proceed to put them in at least for a minimum somewhere under this program? If you can't afford it at age 65, why not age 72, somewhere along that line?

Senator DOUGLAS. Would it irritate my dear colleague if I asked him to yield at this point?

Senator LONG. Let me just ask this question first.

Secretary CELEBREZZE. You want them blanketed in for cash and for health insurance. If this committee is willing to get the general tax structure to cover the cost, we will go along with it.