Box 7, Folder 8, Document 58

http://allenarchive.iac.gatech.edu/originals/ahc_CAR_015_007_008_058.pdf

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Box 7, Folder 8, Document 58

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FACTS AND COMMENTS ON THE MAJOR PROVISIONS
OF THE SOCIAL SECURITY AMENDMENTS OF 1967
INTRODUCTION:
The following is a comparison of the Administration's proposals _ for
amending the Social Security Act and the amendments to that Act passed
by the House of Representatives.
This analysis will be limited to major issues and policy variables
i n the areas of social security, medicare, medicaid, and public
assistance .
Social Security and Public Assistance Background: Social Security
constitutes a wage-related income insurance program to guard against
loss of income due to death, disability or old age of a wage earner.
Be n efi ts are the right of the wage earner, his spouse, or his children ,
d e p ending on the need situation of any one or combination of two
or more possible beneficiaries . Benefits are paid as a matter of right
and specific taxes are collected in a relatively progressive manner to
fund the program. The tax does not take, nor does the benefit structure
give, an amount totally adequate to meet all the financial needs
gene ra ted t hrough death, disability or old- age.
It does, however ,
provide a basic "floor of protection" on which the majority of the
Ameri can people can build a financia l ly secure future .
Public Assis tan ce , has neither the contributory nor the ea r ned r ight
aspe cts o f s ocia l secu r ity .
It is pa i d on the basis of n eed de f ined
by statute and admin i strat ive r egulation .
The £ ecip i e n ts o f
public assistance are such beca use of the conscience of , r ath e r than
their contribu t i o ns to s ociety . The r e f o r e , Fe d eral , s ta t e , and local
governments have s et down a n d enforce ce r tain mode s o f b ehavior on
the part of recip ients wh ich wil l preve n t the abu s e of public assistance laws and wo rk to mov e , whe nev er poss ible , r ec ip ients up from
welfare to more prod uctive pla ces in soc ie t y. Philosophically, these
enforced behavioral modes, or welfare ru l es, are s e t down not only to
help those persons on th e welfare rolls, but also to limit the burden
they place on the more fortunate, more productive members of the society.
The Social Security Act deals with both the Federal social security
system and the Federal contributory and management aspects of public
assistance .
�I.
FACTS AND COMMENTS - SOCIAL SECURITY
Administration
Proposed
1.
(H.R. 5710)
House of Representatives (H.R.12680)
Passed
Benefit Increases
General Benefit Increase of 15%
Minimum benefit of $70
General benefit increase of
12-1/2%
Minimum benefit of $50
Benefit increase for persons
72 and over, from $35 to $50 for
singles; from $52.50 to $75 for
couples.
Benefit increase for persons 72
and over, from $35 to $40, for
singles; from $52.50 to $60 for
couples.
Special minimum benefit for
long-term employment--$100 minimum
for 25 years work.
No provision
Benefits for disabled widows-82-1/2% of workers benefit for
those disabled within 7 years of
husband's death.
Benefits for severely disabled
widows age 50 and over paying
from 500/4 to 71% depending on
age at onset of disability.
Comment: Both sets of benefit increases actuarially sound under the tax
increase schedUle in the respective bills.
However , the urban and suburban beneficiary po~ulation has experienced the phenomena of combined inflation, population explosion,
and resultant property tax increases. One but need look at the mortgage foreclosures in reti rement areas such as Dade County, Florida,
to realize the impact of this combination on persons with fixe d
incomes. It has outstripped the planning a nd saving of much of the
beneficiary population.
Near adequate benefit increases help not only their recipients but the
communities in which they live and the businesses and individuals
t hose communities tax. Actuarially sound increases:
(a) reduce
welfare payment at the local level, (b) reduce existing welfare
c aseloads, (c) prevent new processing of welfare clients , and (d)
h elp maintain the aged, the disabled, and the widowed in viable
economic units that are tax- paying and not tax- taking .
(2)
�2.
SOCIAL SECURITY TAX INCREASE (INCLUDING MEDICARE}
Year
Present
Law
1967
4.4
1968
4.4
1969- 70
1971-72
4.9
4.9
1973-75
5.4
By 1987
5.65
Comment:
3.
. Administration
(H.R. 5710)
4.4 (wage base
$6600)
4.4 (wage base
$7800)
5.0
5.0 (wage base
$9,000)
5.5 (wage base
$10,800)
5.8
House of R.epresentatives
(H.R. 12080)
4.4 (wage base $6600)
4.4 (wage base $7600)
4.8
5.2
5.65
5.9
The Administration proposal compared with the House bill:
(a)
provides a more progressive tax,
(b)
provides a lower ultimate tax rate f or both employer and
employee,
(c)
spreads the tax for both employer and employee in the majority
of cases by taxing wages above those usually paid in
industry,
MEDICARE
(a)
Depreciation allowance - hospitals
Administration (H.R. 5710 )
Require full loading in
d e p r eciati on of capital
and physic al plant when
ing s ystem is i n a ccor d
mended State p lan .
costs of
equipment
cost accountwith r e c om-
House of Representatives
(H.R. 12080)
No provision
Comment : La ck of a prov i s ion mea ns taxpayer s (for municipal.hospitals
and payers of ins urance p remi ums (for a ll hos pitals) carry the depreciation loads for medicare recipients. The Administration proposal provides both a real istic overhead loading mechanism and an
i n centive to apply modern accounting and cost effectiveness techniques in an area which has long burdened c ities, employers, and
o t hers who must pay for hospital services .
(3)
�(b)
Tax Rate
Administration (H.R. 5710)
House of Representatives (H.R. 12080)
No provision
Increase tax rate by 0.1% on employer
and employee above present schedule
beginning 1969.
Comment: The cost of the various liberalizations of medicare
suggested in the House bill can not be determined until the medicare program has had time to work. Tax adjustment can be made as
actual experience determi nes.
II.
FACTS AND COMMENTS - PUBLIC ASSISTANCE (WELFARE)
Administration (H.R. 5710)
House of Representatives
(H. R. 12080)
(a) Assistance payments
No provision
Re qui res states to meet
full need a s the y determi ne
it with some additional
financial aid. Cash
assistance standards must
be at least 2/3 of income
level s fo r medical ass i sta nce.
(b) Wo r k incentives
Requires states to allow $50 Requires states to allow $30
monthly income without r educ ~ mo nthly i n c ome without r educti o n
i n a ss i stance . Fo r each
t i on in a ssis tance f o r AFDC
adul ts.
additional $ 3 earned, assistance
would be r educed $ 2 .
(c) Community work and training
Requ ires States to u se wo rk
and training programs provided by Dept. of Labor for
all appropriat e AFDC recipients.
Requires stat es to establish
community work and training programs (75% Federal matching) for
v irtually al l appropriate
AFDC adults and children over
16 not attending school to be
administered by welfare agencies.
(d) Unemployed parent program
Makes permanent present
provisions.
(4)
Covers children of unemployed
fathers only. Unemployment
definition requires substantial
prior connection with the labor
force, excludes recipients of unemployment compensation.
�In addition to the above, the House bill included provisions not
proposed by the Administration. These include requiring states to:
(a)
develop employment programs for AFDC families where
appropriate;
(b)
provide day care for AFDC mothers working or training;
(c)
provide family planning services;
(d)
attempt to determine paternity and obtain support from
the father;
(e)
inform courts of unsuitable homes, one criterion of which
is a parent who refused employment or training; and
(f)
freeze the rate of child dependency due to absence
of parent as of January 1967 for purposes of Federal
matching.
Comment : The major purpose of the House bill is to increase
employment and training of welfare recipients and thereby reduce
p r ogram costs . The House approach would:
1 . Combine responsibility for payment , social services, training ,
and j ob placement within one agency. A single agency and , more
practically , a single caseworker, would have the right to wi thhold
payment if a family does not take what that caseworker deems
" appropri ate 11 action with regard to training , employment , famil y
plan ni ng , and liv i ng arrangement.
2. Dup licate g ove r nment functions through the placement of
respo ns ibi l i t y fo r train ing i n an a g ency unprepar ed to handle
it. The We lfa r e Admin i s trat i on has r u n limi ted t r a i n ing prog rams
for we l f ar e c li e n ts in t he past , but a l ways with a n e nro l lme nt o f
less than 50 , 000 . Unde r the Hous e passed b i l l it wi l l b e ma ndatory by 196 9 for that o r gan i z ation a nd i ts sta t e counterparts
to be prepare d t o handl e 500 , 000 t rainees annually. A more prac tical approach would be to add a n ew are a of emphasis to ongoing programs of the Manpower Administration of the Labor Department than to build a who l e n ew bure aucracy.
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�\
3. Economic impact of Corrununity training programs. The House
Ways and Means Corrunittee estimates a saving by 1972 of $130 million
"for persons trained who become self-sufficient". This is 7%
of the 1972 program cost, indicating a reduction in the rolls of ·
approximately that number of recipients. However, that same
Corrunittee estimates that the 1972 cost of day-care for children
whose mothers are in the work and training program will.be $470
million and that the program itself will cost another $270 million.
This $695 million is more than five times the savings in welfare
payments.
4.
Increase in state and local costs by imposing an AFDC ceiling.
Freezing proportionately the number of AFDC children eligible for
Federal matching monies does not take into account either the possibility of changing economic conditions or heavy in-migration into
certain states. Either occurance would result in the states being
forced to bear the entire burden of increased AFDC costs. The alternatives to increased burden on the taxpayer are to make eligibility
requirements more stringent or to lower benefits even further.
The prime victim in either situation is the child of the AFDC
family and, ultimately, the society he enters.
III
FACTS AND COMMENTS - MEDICAID .
Administration (H.R. 5710)
1.
Limitation on Federal Matching Funds
No Federal matching for families
whose income exceeds 150% of the
highest state cash standard
2.
House of Repres entatives
(H.R . 12080)
No Federal matching for
families whose income is
more than 133% of the highest cash assistance payment ordinarily made to family
or AFDC
Required Services
No provision - maintains schedule
of required services
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Removes graduated services
requirement and allows states
to provide any 7 of the 14
medical services listed in
the Act.
�Comment: The House amendments J aise eligibility requirements and
lower service standards. By setting eligibility at cash payment levels
instead of required services levels, the bill denies coverage to those
marginal poor who are functioning as independent economic units except for medical care support. This increases the probability of
their going on welfare roles at the time of their first medical crisis.
By removing current service requirements, the bill allows elimination of
such items as physician services and in-patient hospital care. This
means that cities and states th3.t already offer these services are
penalized for their progress by forcing them to carry the full cost
of such services. Although the Federal government would save by these
amendments, the cities would still have to provide adequate medical
services. The reduction in Federal funds and required supplement through
city funds in New York City alone would be $70 million in fiscal 1 69.
Communities penalized in other progressive states would include those
in California, Connecticut, Delaware, Illinois, Iowa, Kentucky,
Maryland, Michigan, Nebraska, Oklahoma, Pennsylvania, Rhode Island
and Wisconsin.
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