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The original documents are located in Box H50, folder "President Ford Committee
Leadership Mailings, 2/11/76 - Older Americans" of the President Ford Committee
Campaign Records at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the
United States of America her copyrights in all of her husband's unpublished writings in National
Archives collections. Works prepared by U.S. Government employees as part of their official
duties are in the public domain. The copyrights to materials written by other individuals or
organizations are presumed to remain with them. If you think any of the information displayed
in the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential
Library.
President Ford Committee
1828 L STREET, N.W., SUITE 250, WASHINGTON, D.C. 20036 (202) 457-6400
February 11, 1976
MEMORANDUM FOR:
PFC LEADERSHIP gwt
FROM:
FRED SLIGHT
Director of Research
SUBJECT:
President Ford's Special
Message on Older Americans
In his recent special message to Congress, President Ford re-
affirmed his commitment to the needs of older Americans, and
&
to draw on their strengths in resolving the problems of America
FORD
He asked Congress to:
GERALD
"
help our nation demonstrate by its deeds a deep
LIBRARY
concern for the dignity and worth of our older persons.
By doing so, our nation will continue to benefit from
the contributions that older persons can make to the
strengthening of our nation."
President Ford noted that the single greatest threat to the quality
of life of older Americans is inflation. His first economic pri-
ority has been to fight inflation -- and his programs have cut
nearly in half the double digit inflation experienced in 1974.
But, he said,
the retired, living on fixed incomes, have been
particularly hard hit, and the progress we have made
has not benefited them enough.'
To meet this problem, President Ford has included in his budget
request for 1977 a full cost of living increase in Social Security
benefits, that will help bolster the purchasing power of 32
million Americans. Because the President is determined that the
Social Security system will remain fiscally sound, he has also
requested legislation to increase payroll taxes by three-tenths
of one percent to cover these added costs.
To alleviate the burden of catastrophic illness, President Ford
has proposed:
*
Extending Medicare benefits by providing coverage for
unlimited days of hospital and skilled nursing facility
care for beneficiaries, and
Limiting the out-of-pocket expenses of beneficiaries
for covered services, to $500 per year for hospital
and skilled nursing services, and $250 per year for
physician and other non-institutional medical services.
The President Ford Committee, Howard H. Callaway, Chairman, Robert Mosbacher, National Finance Chairman, Robert C. Moot, Treasurer. A copy of our
Report is filed with the Federal Election Commission and is available for purchase from the Federal Election Commission, Washington, D.C. 20463.
-2-
The President closed his message with the below statement which
may best reflect his commitment to resolving the problems and
making use of the talents of our older citizens:
"Today's older persons have made invaluable contributions
to the strengthening of our nation. They have provided
the nation with a vision and strength that has resulted
in unprecendented advancements in all of the areas of
our life. Our national moral strength is due in no small
part to the significance of their contributions."
The President's special message on older Americans, and a fact sheet
describing his programs, are attached.
Attachments
President Ford Committee
1828 L STREET, N.W., SUITE 250, WASHINGTON, D.C. 20036 (202) 457-6400
February 11, 1976
MEMORANDUM FOR:
PFC LEADERSHIP THE
FROM:
FRED SLIGHT
Director of Research
SUBJECT:
President Ford's Special
Message on Older Americans
In his recent special message to Congress, President Ford re-
affirmed his commitment to the needs of older Americans, and
to draw on their strengths in resolving the problems of America.
He asked Congress to:
"
help our nation demonstrate by its deeds a deep
concern for the dignity and worth of our older persons.
By doing so, our nation will continue to benefit from
the contributions that older persons can make to the
strengthening of our nation. "
President Ford noted that the single greatest threat to the quality
of life of older Americans is inflation. His first economic pri-
ority has been to fight inflation -- and his programs have cut
nearly in half the double digit inflation experienced in 1974.
But, he said,
"
the retired, living on fixed incomes, have been
particularly hard hit, and the progress we have made
has not benefited them enough. "
To meet this problem, President Ford has included in his budget
request for 1977 a full cost of living increase in Social Security
benefits, that will help bolster the purchasing power of 32
million Americans. Because the President is determined that the
Social Security system will remain fiscally sound, he has also
requested legislation to increase payroll taxes by three-tenths
of one percent to cover these added costs.
To alleviate the burden of catastrophic illness, President Ford
has proposed:
*
Extending Medicare benefits by providing coverage for
unlimited days of hospital and skilled nursing facility
care for beneficiaries, and
Limiting the out-of-pocket expenses of beneficiaries
for covered services, to $500 per year for hospital
and skilled nursing services, and $250 per year for
physician and other non-institutional medical services.
Report is filed with the Federal Election Commission and is available for purchase from the Federal Election Commission, Washington, D.C. 20463.
The President Ford Committee, Howard H. Callaway, Chairman, Robert Mosbacher, National Finance Chairman, Robert C. Moot, Treasurer. A copy of our
-2-
The President closed his message with the below statement which
may best reflect his commitment to resolving the problems and
making use of the talents of our older citizens:
"Today's older persons have made invaluable contributions
to the strengthening of our nation. They have provided
the nation with a vision and strength that has resulted
in unprecendented advancements in all of the areas of
our life, Our national moral strength is due in no small
part to the significance of their contributions.'
The President's special message on older Americans, and a fact sheet
describing his programs, are attached.
Attachments
EMBARGOED FOR RELEASE
February 9, 1976
UNTIL 12 P.M. (EST)
MONDAY, FEBRUARY S, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
I ask the Congress to join with me in making improvements
in programs serving the elderly.
As President, I intend to do everything in my power to
help our nation demonstrate by its deeds a deep concern for
the dignity and worth of our older persons. By so doing,
our nation will continue to benefit from the contributions
that older persons can make to the strengthening of our
nation.
The proposals being forwarded to Congress are directly
related to the health and security of older Americans.
Their prompt enactment will demonstrate our concern that
lifetimes of sacrifice and hard work conclude in hope
rather than despair.
The single greatest threat to the quality of life of
older Americans is inflation. Our first priority continues
to be the fight against inflation. We have been able to
reduce by nearly half the double digit inflation experienced
in 1974. But the retired, living on fixed incomes have
been particularly hard hit and the progress we have made
in reducing inflation has not benefited them enough. We
will continue our efforts to reduce federal spending,
balance the budget and reduce taxes. The particular
vulnerability of the aged to the burdens of inflation
however, requires that specific improvements be made in
two major Federal programs. Social Security and Medicare.
GERALD FORD LIBRARY
We must begin by insuring that the Social Security
system is beyond challenge. Maintaining the integrity of
the system is a vital obligation each generation has to
those who have worked hard and contributed to it all their
lives. I strongly reaffirm my commitment to a stable and
financially sound Social Security system. My 1977 budget
and legislative program include several elements which I
believe are essential to protect the solvency and integrity
of the system.
First, to help protect our retired and disabled citizens
against the hardships of inflation, my budget request to the
Congress includes a full cost of living increase in Social
Security benefits, to be effective with checks received in
July 1976. This will help maintain the purchasing power
of 32 million Americans.
Second, to insure the financial integrity of the Social
Security trust funds, I am proposing legislation to increase
payroll taxes by three-tenths of one percent each for
employees and employers. This increase will cost no worker
more
2
more than $1 a week. and most will pay less. These additional
revenues are needed to stabilize the trust funds so that
current income will be certain to either equal or exceed
current outgo.
Third. to avoid serious future financing problems I will
submit later this year a change in the Social Security laws
to correct a serious flaw in the current system. The current
formula which determines benefits for workers who retire in
the future does not properly reflect wage and price fluctuations.
This is an inadvertent error which could lead to unnecessarily
inflated benefits
The change I am proposing will not affect cost of living
increases in benefits after retirement and will in no way
alter the benefit levels of current recipients. On the other
hand, it will protect future generations against unnecessary
costs and excessive tax increases.
I believe that the prompt enactment of all of these
proposals is necessary to maintain a sound Social Security
system and to preserve its financial integrity.
Income security is not our only concern. We need to
focus also on the special health care needs of our elder
citizens. Medicare and other Federal health programs have
been successful in improving access to quality medical care
for the aged. Before the inception of Medicare and Medicaid
in 1966, per capita health expenditures for our aged were
$445 per year. Just eight years later, in FY 1974, per
capita health expenditures for the elderly had increased
to $1218, an increase of 174 percent. But despite the
dramatic increase in medical services made possible by
public programs, some problems remain.
There are weaknesses in the Medicare program which must
be corrected. Three particular aspects of the current
program concern me: 1) its failure to provide our elderly
with protection against catastrophic illness costs, 2) the
serious effects that health care cust inflation is having on
the Medicare program, and 3) lack of incentives to encourage
efficient and sconomical use of hospital and medical services.
My proposal addre. ses each of these problems.
In my State of the Union Message I proposed protection
against catastrophic health expenditures for Medicare bene-
ficiaries. This will be accomplished in two ways. First, I
propose extending Medicare benefits by providing coverage
for unlimited days of hospital and skilled nursing facility
care for beneficiaries. Second I propose to limit the
out-of-pocket expenses of beneficiaries, for covered services,
to $500 per year for hospital and skilled nursing services
and $250 per year for physician and other non-institutional
medical services.
This will mean that each year over a billion dollars of
benefit payments will be targeted for handling the financial
burden of prolonged illness. Millions of older persons live
in fear of being stricken by an illness that will call for
expensive hospital and medical care over a long period of
time. Most often they do not have the resources to pay the
bills. The members of their families share their fears
because they also do not have the resources to pay such
more
3
large bills. We have been talking about this problem for
many years. We have it within our power to act now so that
today's older persons will not be forced to live under this
kind of a shadow. I urge the Congress to act promptly.
Added steps are needed to slow down the inflation of
health costs and to help in the financing of this catastrophic
protection. Therefore, I am recommending that the Congress
limit increases in medicare payment rates in 1977 and 1978
to 7% a day for hospitals and 45 for physician services.
Additional cost-sharing provisions are also needed to
encourage economical use of the hospital and medical services
included under Medicare. Therefore, I am recommending that
patients pay 10% of hospital and nursing home charges after
the first day and that the existing deductible for medical
services be increased from $60 to $77 annually.
The savings from placing a limit on increases in
medicare payment rates and some of the revenue from increased
cost sharing will be used to finance the catastrophic illness
program.
I feel that, on balance, these proposals will provide
our elder citizens with protection against catastrophic
illness costs, promote efficient utilization of services,
and moderate the increases in health care costs.
The legislative proposals which I have described are
only part of the over-all effort we are making on behalf of
older Americans. Current conditions call for continued and
intensified action on a broad front.
We have made progress in recent years. We have responded,
for example. to recommendations made at the 1971 White House
Conference on Aging. A Supplemental Security Income program
was enacted. Social Security benefits have been increased in
accord with increases in the cost of living. The Social
Security retirement test was liberalized. Many inequities
in payments to women have been eliminated. The 35 million
workers who have earned rights in private pension plans now
have increased protection.
In addition we have continued to strengthen the Older
Americans Act. I have supported the concept of the Older
Americans Act since its inception in 1965, and last November
signed the most recent amendments into law.
A key component of the Older Americans Act is the
national network on aging which provides a solid foundation
on which action can be based. I am pleased that we have
been able to assist in setting up this network of 56 State
and 489 Area Agencies on Aging, and 700 local nutrition
agencies. These local nutrition agencies for example
provide 300,000 hot meals a day five days a week.
The network provides a structure which can be used to
attack other important problems. A concern of mine is that
the voice of the elderly, as consumers, be heard in the
governmental decision-making process. The network on aging
more
4
offers opportunities for this through membership on advisory
councils related to State and Area Agencies on Aging,
Nutrition Project Agencies and by participation in public
hearings on the annual State and Area Plans. Such involvement
can and will have a significant impact on determining what
services for the aging are to be given the highest priorities
at the local level.
The principal goal of this National Network on Aging
is to bring into being coordinated comprehensive systems
for the provision of service to the elderly at the community
level. I join in the call for hard and creative work at all
levels -- Federal, State and Area in order to achieve this
objective. I am confident that progress can be made.
Toward this end, the Administration on Aging and a
number of Federal Departments and agencies have signed
agreements which will help to make available to older
persons a fair share of the Federal funds available in
such areas as housing, transportation, social services,
law enforcement, adult education and manpower resources
which can play a major role in enabling older persons to
continue to live in their own homes.
Despite these efforts, however, five percent of our
older men and women require the assistance provided by
skilled nursing homes and other long term care facilities.
To assist these citizens, an ombudsman process, related
solely to the persons in these facilities, is being put
into operation by the National Network on Aging. We
believe that this program will help to resolve individual
complaints, facilitate important citizen involvement in
the vigorous enforcement of Federal, State and local laws
designed to improve health and safety standards, and to
improve the quality of care in these facilities.
Today's older persons have made invaluable contributions
to the strengthening of our nation. They have provided the
nation with a vision and strength that has resulted in un-
precedented advancements in all of the areas of our life.
Our national moral strength is due in no small part to the
significance of their contributions. We must continue and
strengthen both our commitment to doing everything we can
to respond to the needs of the elderly and our determination
to draw on their strengths.
Our entire history has been marked by a tradition of
growth and progress. Each succeeding generation can measure
its progress in part by its ability to recognize, respect and
renew the contributions of earlier generations. I believe
that the Social Security and Medicare improvements I am
proposing, when combined with the action programs under
the Older Americans Act, will insure a measure of progress for
the elderly and thus provide real hope for us all.
GERALD R. FORD
THE WHITE HOUSE,
February 9, 1976.
#####
President Ford Committee
1828 L STREET, N.W., SUITE 250, WASHINGTON, D.C. 20036 (202) 457-6400
February 11, 1976
MEMORANDUM FOR:
PFC LEADERSHIP
FROM:
FRED SLIGHT
Director of Research
SUBJECT:
President Ford's Special
Message on Older Americans
In his recent special message to Congress, President Ford re-
affirmed his commitment to the needs of older Americans, and
to draw on their strengths in resolving the problems of America.
He asked Congress to:
"
help our nation demonstrate by its deeds a deep
concern for the dignity and worth of our older persons.
By doing so, our nation will continue to benefit from
the contributions that older persons can make to the
strengthening of our nation. "
President Ford noted that the single greatest threat to the quality
of life of older Americans is inflation. His first economic pri-
ority has been to fight inflation and his programs have cut
nearly in half the double digit inflation experienced in 1974.
But, he said,
"
the retired, living on fixed incomes, have been
particularly hard hit, and the progress we have made
has not benefited them enough.
"
FORD & GERALD LIBRARY
To meet this problem, President Ford has included in his budget
request for 1977 a full cost of living increase in Social Security
benefits, that will help bolster the purchasing power of 32
million Americans. Because the President is determined that the
Social Security system will remain fiscally sound, he has also
requested legislation to increase payroll taxes by three-tenths
of one percent to cover these added costs.
To alleviate the burden of catastrophic illness, President Ford
has proposed:
Extending Medicare benefits by providing coverage for
unlimited days of hospital and skilled nursing facility
care for beneficiaries, and
Limiting the out-of-pocket expenses of beneficiaries
for covered services, to $500 per year for hospital
and skilled nursing services, and $250 per year for
physician and other non-institutional medical services.
The President Ford Committee. Howard H. Callaway Chairman, Robert Mosbacher. National Finance Chairman, Robert C. Moot, Treasurer. A copy of our
Report is filed with the Federal Election Commission and is available for purchase from the Federal Election Commission, Washington, D.C. 20463.
-2-
The President closed his message with the below statement which
may best reflect his commitment to resolving the problems and
making use of the talents of our older citizens:
"Today's older persons have made invaluable contributions
to the strengthening of our nation. They have provided
the nation with a vision and strength that has resulted
in unprecendented advancements in all of the areas of
our life. Our national moral strength is due in no small
part to the significance of their contributions."
The President's special message on older Americans, and a fact sheet
describing his programs, are attached.
Attachments
EMBARGOED FOR RELEASE
February 9, 1976
UNTIL 12 P.M. (EST)
MONDAY, FEBRUARY S, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
I ask the Congress to join with me in making improvements
in programs serving the elderly.
As President, I intend to do everything in my power to
help our nation demonstrate by its deeds a deep concern for
the dignity and worth of our older persons. By so doing,
our nation will continue to benefit from the contributions
that older persons can make to the strengthening of our
nation.
The proposals being forwarded to Congress are directly
related to the health and security of older Americans.
Their prompt enactment will demonstrate our concern that
lifetimes of sacrifice and hard work conclude in hope
rather than despair.
The single greatest threat to the quality of life of
older Americans is inflation. Our first priority continues
to be the fight against inflation. We have been able to
reduce by nearly half the double digit inflation experienced
in 1974. But the retired, living on fixed incomes have
been particularly hard hit and the progress we have made
in reducing inflation has not benefited them enough. We
will continue our efforts to reduce federal spending,
balance the budget and reduce taxes. The particular
vulnerability of the aged to the burdens of inflation
however, requires that specific improvements be made in
two major Federal programs Social Security and Medicare.
We must begin by insuring that the Social Security
system is beyond challenge. Maintaining the integrity of
GERALD LIBRARY GERALDR. FORD
the system is a vital obligation each generation has to
those who have worked hard and contributed to it all their
lives. I strongly reaffirm my commitment to a stable and
financially sound Social Security system. My 1977 budget
and legislative program include several elements which I
believe are essential to protect the solvency and integrity
of the system.
First, to help protect our retired and disabled citizens
against the hardships of inflation, my budget request to the
Congress includes a full cost of living increase in Social
Security benefits, to be effective with checks received in
July 1976. This will help maintain the purchasing power
of 32 million Americans.
Second, to insure the financial integrity of the Social
Security trust funds, I am proposing legislation to increase
payroll taxes by three-tenths of one percent each for
employees and employers. This increase will cost no worker
more
2
more than $1 a week, and most will pay less. These additional
revenues are needed to stabilize the trust funds so that
current income will be certain to either equal or exceed
current outgo,
Third, to avoid serious future financing problems I will
submit later this year a change in the Social Security laws
to correct a serious flaw in the current system. The current
formula which determines benefits for workers who retire in
the future does not properly reflect wage and price fluctuations.
This is an inadvertent error which could lead to unnecessarily
inflated benefits.
The change I am proposing will not affect cost of living
increases in benefits after retirement, and will in no way
alter the benefit levels of current recipients. On the other
hand, it will protect future generations against unnecessary
costs and excessive tax increases.
I believe that the prompt enactment of all of these
proposals is necessary to maintain a sound Social Security
system and to preserve its financial integrity.
Income security is not our only concern. We need to
focus also on the special health care needs of our elder
citizens. Medicare and other Federal health programs have
been successful in improving access to quality medical care
for the aged. Before the inception of Medicare and Medicaid
in 1966, per capita health expenditures for our aged were
$445 per year. Just eight years later, in FY 1974, per
capita health expenditures for the elderly had increased
to $1218, an increase of 174 percent. But despite the
dramatic increase in medical services made possible by
public programs, some problems remain.
There are weaknesses in the Medicare program which must
be corrected. Three particular aspects of the current
program concern me: 1) its failure to provide our elderly
with protection against catastrophic illness costs, 2) the
serious effects that health care cost inflation is having on
the Medicare program, and 3) lack of incentives to encourage
efficient and economical use of hospital and medical services.
My proposal addresses each of these problems.
In my State of the Union Message I proposed protection
against catastrophic health expenditures for Medicare bene-
ficiaries. This will be accomplished in two ways. First, I
propose extending Medicare benefits by providing coverage
for unlimited days of hospital and skilled nursing facility
care for beneficiaries. Second, I propose to limit the
out-of-pocket expenses of beneficiaries, for covered services,
to $500 per year for hospital and skilled nursing services
and $250 per year for physician and other non-institutional
medical services.
This will mean that each year over a billion dollars of
benefit payments will be targeted for handling the financial
burden of prolonged illness. Millions of older persons live
- in fear of being stricken by an illness that will call for
expensive hospital and medical care over a long period of
time. Most often they do not have the resources to pay the
bills. The members of their families share their fears
because they also do not have the resources to pay such
more
3
large bills. We have been talking about this problem for
many years. We have it within our power to act now so that
today's older persons will not be forced to live under this
kind of a shadow. I urge the Congress to act promptly.
Added steps are needed to slow down the inflation of
health costs and to help in the financing of this catastrophic
protection. Therefore, I am recommending that the Congress
limit increases in medicare payment rates in 1977 and 1978
to 7% a day for hospitals and 4% for physician services.
Additional cost-sharing provisions are also needed to
encourage economical use of the hospital and medical services
included under Medicare. Therefore, I am recommending that
patients pay 10% of hospital and nursing home charges after
the first day and that the existing deductible for medical
services be increased from $60 to $77 annually.
The savings from placing a limit on increases in
medicare payment rates and some of the revenue from increased
cost sharing will be used to finance the catastrophic illness
program.
I feel that, on balance, these proposals will provide
our elder citizens with protection against catastrophic
illness costs, promote efficient utilization of services,
and moderate the increases in health care costs.
The legislative proposals which I have described are
only part of the over-all effort we are making on behalf of
older Americans. Current conditions call for continued and
intensified action on a broad front.
We have made progress in recent years. We have responded,
for example. to recommendations made at the 1971 White House
Conference on Aging. A Supplemental Security Income program
was enacted. Social Security benefits have been increased in
accord with increases in the cost of living. The Social
Security retirement test was liberalized. Many inequities
in payments to women have been eliminated. The 35 million
workers who have earned rights in private pension plans now
have increased protection.
In addition we have continued to strengthen the Older
Americans Act. I have supported the concept of the Older
Americans Act since its inception in 1965, and last November
signed the most recent amendments into law.
A key component of the Older Americans Act is the
national network on aging which provides a solid foundation
on which action can be based. I am pleased that we have
been able to assist in setting up this network of 56 State
and 489 Area Agencies on Aging, and 700 local nutrition
agencies. These local nutrition agencies for example
provide 300,000 hot meals a day five days a week.
The network provides a structure which can be used to
attack other important problems. A concern of mine is that
the voice of the elderly, as consumers, be heard in the
governmental decision-making process. The network on aging
more
4
offers opportunities for this through membership on advisory
councils related to State and Area Agencies on Aging,
Nutrition Project Agencies and by participation in public
hearings on the annual State and Area Plans. Such involvement
can and will have a significant impact on determining what
services for the aging are to be given the highest priorities
at the local level.
The principal goal of this National Network on Aging
is to bring into being coordinated comprehensive systems
for the provision of service to the elderly at the community
level. I join in the call for hard and creative work at all
levels -- Federal, State and Area in order to achieve this
objective. I am confident that progress can be made.
Toward this end, the Administration on Aging and a
number of Federal Departments and agencies have signed
agreements which will help to make available to older
persons a fair share of the Federal funds available in
such areas as housing, transportation, social services,
law enforcement, adult education and manpower ---- resources
which can play a major role in enabling older persons to
continue to live in their own homes.
Despite these efforts, however, five percent of our
older men and women require the assistance provided by
skilled nursing homes and other long term care facilities.
To assist these citizens, an ombudsman process, related
solely to the persons in these facilities, is being put
into operation by the National Network on Aging. We
believe that this program will help to resolve individual
complaints, facilitate important citizen involvement in
the vigorous enforcement of Federal, State and local laws
designed to improve health and safety standards, and to
improve the quality of care in these facilities.
Today's older persons have made invaluable contributions
to the strengthening of our nation. They have provided the
nation with a vision and strength that has resulted in un-
precedented advancements in all of the areas of our life.
Our national moral strength is due in no small part to the
significance of their contributions. We must continue and
strengthen both our commitment to doing everything we can
to respond to the needs of the elderly and our determination
to draw on their strengths.
Our entire history has been marked by a tradition of
growth and progress. Each succeeding generation can measure
its progress in part by its ability to recognize, respect and
renew the contributions of earlier generations. I believe
that the Social Security and Medicare improvements I am
proposing, when combined with the action programs under
the Older Americans Act, will insure a measure of progress for
the elderly and thus provide real hope for us all.
GERALD R. FORD
THE WHITE HOUSE,
February 9, 1976
#####
EMBARGOED FOR RELEASE
UNTIL 12:00 NOON (EST)
February 9, 1976
Office of the White House Press i ecretary
THE WHITE HOUSE
FACT SHEET
THE PRESIDENT'S MESSAGE ON OLDER AMERICANS
TABLE OF CONTENTS
PAGE
I.
Social Security Amendments of 1976
1
Background
1
Description
2
Tax Increase for Employees/Employers
2
Tax Increase for Self-Employed
3
Cost Effects
4
Other Provisions
4
II. Medicare Improvements of 1976
6
Background
6
Description
6
A. Catastrophic Cost Protection for
6
Health Care
B. Cost Sharing Modifications
6
C. Reimbursement Limits
7
Further Description of Elements of Program
7
A. Catastrophic Protection
7
B. Benefit Package
7
C. Cost Sharing
8
D. Provider Reimbursement
10
E. Cost Estimates
10
F. Number of Persons Covered
11
III. Older Americans Act
Description, by Title
12 12 FORD LIBRARY
THE PRESIDENT's MESSAGE ON OLDER AMERICANS
The President's message to Congress today referred to two
proposals dealing with income and health security for the
aged and stated his continuing support for programs delivering
services to the elderly under the Older Americans Act.
I.
SOCIAL SECURITY AMENDMENTS OF 1976
To assist in protecting the financial integrity of the Social
Security system, the President is proposing to increase the
Social Security Old Age, Survivors and Disability Insurance
(OASDI) tax rate by 0.3 percent each for employers and em-
ployees, and by 0.9 percent for the self-employed, beginning
January 1, 1977. This increase would be divided between the
OASI trust fund, which would receive 0.175 percent, and the
DI trust fund, which would receive 0.125 percent.
In addition, provisions are included to phase out benefits
for 18-22 year old full-time students, to change the Social
Security retirement test from a limit on monthly earnings to
a limit on annual earnings with no change in the amounts in-
volved, and to eliminate the payment of monthly Social Security
benefits for the months before a person files a claim if future
monthly benefits would be permanently reduced as a result.
BACKGROUND
The Old Age, Survivors and Disability Insurance (OASDI) trust
funds are paying out more in benefits than their current payroll
tax receipts. This is largely due to increased benefits in the
past few years and payroll tax receipts, which have lagged be-
cause of unemployment and slowed wage growth.
In 1975, the expenditures of the OASDI program exceeded income
to the program by $1.8 billion. Outgo is expected to exceed
income by more than $4 billion in 1976. Under present tax rates,
the OASDI funds will continue to pay out more than they take
in in all subsequent years until they are exhausted in the 1980's.
At present, it is possible to make up the shortfall in income
by spending assets of the trust funds. Additional income is
needed within the next few years, however, to prevent the trust
fund assets from falling below an acceptable level and
ultimately being exhausted.
The following table illustrates the projected status of the
combined OASDI trust funds under two different sets of economic
assumptions if no additional revenue is provided to the funds:
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Status of OASDI Trust Funds--Present Law
(Dollars in billions)
1977 Budget Assumptions
1975 Social Security
Trustees Report Assumptions
Assets
Assets
beginning of year
beginning of year
Calendar
Income
as % of outgo
Income
as % of outgo
Year
Minus
Outgo
during
year
Minus Outgo
during year
1977
$-4.1
46%
$--5.0
44%
1978
-4.3
37
-5.8
33
1979
-3.4
29
-6.2
25
1980
-2.6
24
-7.0
18
1981
--2.0
20
-9.0
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To prevent the rapid decline of the Social Security trust funds
over the next few years, the choices are either to restrain in-
creases in retirement and disability benefits or to increase
revenues.
DESCRIPTION OF PROGRAM
The President has included a full cost of living increase in
Social Security benefits in his FY 1977 budget. To improve
the future financial stability of the Social Security system,
the President proposed, effective January 1, 1977, a payroll
tax increase of percent each for employees and employers
of covered wages. Also, the OASDI tax rate for the self-
employed would be restored to a level equal to 1-1/2 times
the employee rate.
The current Social Security tax rate is 5.85% for each employee
and employer of covered wages. Under this proposal, the tax
rate in 1977 would be 6.15% on a maximum wage base of $16,500.
This increase will cost workers with the maximum taxable in-
come less than $1 a week and will help stabilize the trust
funds so that current and future recipients can be assured of
the benefits that they have earned.
The following table shows the Social Security tax rates for
employees and employers each under present law and under the
proposal. It includes the Medicare Hospital Insurance (HI)
tax in order to show the effect of the proposal on total
Social Security'tax rates.
Social Security Tax Rates
Present Law
Proposal
Calendar
Year
OASDI
HI
Total
OASDI
HI
Total
1976
4.95%
.9%
5.85%
4.95%
.9%
5.85%
1977
4.95
.9
5.85
5.25
.9
6.15
1978-80
4.95
1.1
6.05
5.25
1.1
6.35
1981-85
4.95
1.35
6.30
5.25
1.35
6.60
1986-2010
4.95
1.50
6.45
5.25
1.50
6.75
2011+
5.95
1.50
7.45
6.25
1.50
7.75
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The following table shows the additional income, over what would
be produced by present law tax rates, and the ratios of trust
fund assets to outgo that would result from the proposed 0.3%
rate increase. For purposes of comparison, the information is
shown on the basis of the economic assumptions used in the 1977
budget and also on the basis of the earlier assumptions used in
the 1975 Social Security Board of Trustees' Report.
Cost Effect of 0.3% Increase
(Dollars in billions)
1977 Budget
1975 Trustees
Assumptions
Assumptions
Assets
Assets
beginning of year
beginning of year
Calendar Additional as % of outgo
Additional
as % of outgo
Year
Income
during year
Income
during year
1977
$ 4.4
46%
$ 4.4
44%
1978
5.2
41
5.2
39
1979
5.9
39
5.7
36
1980
6.5
38
6.3
34
1981
7.1
40
6.9
32
The effect of the proposal on taxes paid by employers and em-
ployees is at maximum an increase of less than $1.00 per week.
The following table shows the taxes paid by employees at various
earnings levels in 1976 and the amounts they would pay in 1977
under present law and under the proposal.
Social Security Taxes for Employers and Employees,
Each, under Present Law and under the Proposal
1976
1977.
Year's Increase
Earnings
over
Level
Present Law
Proposal
Present Law
$ 5,000
$292.50
$292.50
$
307.50
$15.00
7,500
438.75
438.75
461.25
22.50
10,000
585.00
585.00
615.00
30.00
Maximum
1
895.05
965.25
1,014.75
49.50
The following table shows the Social Security tax rates for
OASDI fdr employees and employers, each, and for the self-
employed under the present law and under the proposal.
Employees and
Calendar
Employers (Each)
Self-Employed
Year
Present Law
Proposal
Present Law
Proposal
1976
4.95%
4.95%
7.0%
7.9%
1977
4.95
5.25
7.0
7.9
1978-80
4.95
5.25
7.0
7.9
1981-85
4.95
5.25
7.0
7.9
1986-2010
4.95
5.25
7.0
7.9
2011 +
5.95
6.25
7.0
9.4
V $15,300 for 1976; projected to increase automatically
under present law to $16,500 for 1977 under 1977 budget
assumptions.
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The following table shows present and proposed allocation to
the DI trust fund for employees and employers combined and
for the self-employed.
Employees and Employers, Combined
Self-Employed
Calendar
Present
Present
Year
Law
Proposal
Law
Proposal
1977
1.15%
1.40%
0.815%
1.055%
1978-80
1.20
1.45
0.850
1.090
1981-85
1.30
1.55
0.920
1.165
1986.2010
1.40
1.65
0.990
1.240
2011+
1.70
1.95
1.000
1.465
COST EFFECT
The following table shows the additional income, over what
would be produced by present law tax rates, that would result
from the proposed 0.3% rate increase, on the basis of the
economic assumptions used in the 1977 budget.
Additional Income
as a Result of
Calendar
0.3% Increase
Year
(billions)
1977
$ 4.5
1978
5.7
1979
6.3
1980
7.0
1981
7.7
1977-81
31.2
The following table shows the yearly increase under the
proposed 0.9 percent rate increase for the self-employed
on the basis of the economic assumptions used in the
FY 1977 budget.
OASDHI Taxes for the Self-Employed
under Present Law and under a Proposal
to Increase the Rate to 1.5 Times the Employee Rate
1976
1977
Increase
Earnings
Over
Level
Present Law
Proposal
Present Law
$ 5,000,
$ 395.00
$
395.00
$
440.00
$ 45.00
7,500
592.50
592.50
660.00
67.50
10,000
790.00
790.00
880.00
90.00
Maximum
1,208.70
1,303.50
1,452.00
148.50
OTHER PROVISIONS INCLUDE:
--- Phasing out Social Security benefits for students aged
18-22 who are in school full time. The phase out would occur
over 4 years so that no student now receiving benefits would
be eliminated. Federal student grant and loan programs and
other student assistance programs enacted since the student
benefit was included in the Social Security Act provide and
27
$15,300 for 1976; projected to increase automatically to
$16,500 for 1977 under 1977 Budget assumptions.
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make available a wide range of funds for educational support.
Savings to the Social Security system from this phase out are
approximately $300 million in FY 1977.
- Changing the Social Security retirement test from a limit
on monthly earnings to a limit on annual earnings with no change
in the amounts involved. This change would eliminate current
inequitable treatment for those who receive earnings in some
months but not In others, as opposed to those who receive
comparable earnings spread equally in each month.
--- Eliminating the payment of monthly Social Security benefits
for the months before a person files a claim if future monthly
benefits would be permanently reduced as a result. Faced with
a choice between a large lump-sum payment and a reduction of
future benefits, beneficiaries in many cases prejudice their
longer run income. This result is considered inconsistent with
the purposes of the Social Security Act.
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II. MEDICARE IMPROVEMENTS OF 1976
The President is proposing significant modifications in the
Federal Medicare program to provide catastrophic health cost
protection to Medicare beneficiaries, changes in cost sharing
requirements, and limits on the annual cost increases which
will be reimbursed by Medicare.
BACKGROUND
The Nation's health care system continues to be one of the
most inflationary sectors of the economy. Hospital costs have
risen by more than 200 percent since 1965 (from $40/day to
$128/day), and physicians' fees have risen more than 85% in
the same period. Both rates of increase are significantly
higher than the corresponding increases in the consumer price
index.
Medicare is a major component of Federal health spending. It
provides protection to more than 24 million aged and disabled
Americans, and is expected to pay out more than $17 billion
for health care in 1976. However, Medicare has several
failings --- it does not provide protection against the catas-
trophic financial burden of extended illness, and it does not
include adequate restraints on the increases in the costs of
health care.
For hospital care, Medicare currently pays nothing for the
first day, 100% of costs from the 2nd through the 60th day,
a reduced percentage through the 150th day, and nothing at
all after that. This pattern serves to lengthen short-term
hospital stays, but can lead to financial ruin for persons
suffering serious, extended illness. Medicare also requires
a $60 deductible and co-payments of 20% for physicians'
services. Since there is no annual maximum, this provision
contributes to the financial burden of catastrophic health
costs.
An additional problem with Medicare is that it contains
inadequate mechanisms to control health inflation. Like
most health insurance plans, it reimburses largely on the
basis of actual costs or customary charges giving providers
insufficient cause to seek to limit cost increases.
DESCRIPTION OF PROGRAM
The major elements of the proposed Medicare Improvements of
1976 are the following:
A. Catastrophic Cost Protection for Health Care
For the first time, Medicare beneficiaries would be
provided protection against catastrophic health costs
by limiting the amounts an individual must pay an-
nually to $500 for covered hospital and nursing home
care and $250 for covered physicians' services. These
limits will be allowed to increase in future years in
proportion to increases in cash benefits.
B. Cost Sharing Modifications
- Hospital Costs (Part A). Part A benefits would
be expanded to provide unlimited hospital and skilled
nursing facility (SNF) days. Under this proposal,
beneficiaries would be required to pay a deductible for
the first day of a hospital stay (as under current law),
and 10% of additional charges up to an annual maximum
of $500 for all covered Part A services.
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---- Physicians' Services (Part B). This proposal
would increase the current annual deductible of $60
to $77 and maintain the existing co-payment of 20%
for physicians' services. However, it would institute
a maximum of $250 a year. The deductible would in-
crease with Social Security benefit increases. It
would also establish a coinsurance of 10% of all
charges above the deductible for all hospital-based
physician and Part B home health charges.
C. Reimbursement Limits
Annual Medicare reimbursement increases would be
limited to 7% for Part A provided per diem or per
visit costs and 4% for physicians' service charges
in 1977 and 1978.
Detailed Explanation
A. CATASTROPHIC PROTECTION
Service
Current Law
President's Proposal
Part A
No maximum liability
$500 annual maximum
limit on out-of-pocket
liability limit for
expenses for covered
all covered services
services.
in 1976 and 1977, in-
creased in future
years in proportion to
increases in cash
benefits. All out-
of-pocket expenses
incurred in the last
month of calendar year
can be carried forward
to next year.
Part B
No maximum liability
$250 annual maximum
limit on out-of-pocket
liability limit for
expenses for covered
all covered services
services.
in 1976 and 1977, in-
creased in future
years in proportion
to increases in cash
benefits. Same one
month carry-over as
Part A. Out-of-pocket
expenses for charges
in excess of reasonable
charges do not count
toward the maximum
liability limit.
B.
BENEFIT PACKAGE
1. Medicare Part A
Service
Current Law
President's Proposal
a. Hospital
90 days per benefit
Unlimited days.
days
period plus 60 days
(except
of life-time reserve.
in psy-
chiatric
hospitals)
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b. Psychiatric
190 lifetime days.
Same as current law.
hospital
days.
C. Skilled
100 days per
Unlimited days.
nursing
benefit period.
facility
(SNF) days.
d. Post-
100 visits per
100 visits in year
hospital
benefit period
following hospital
home health
following hospi-
or SNF discharge.
visits.
tal or SNF
discharge.
2. Medicare Part B
No change in current coverage which has no upper
limits on most covered services.
Home health services would continue to be limited
to 100 visits per year and outpatient psychiatric
services to no more than $500 of reasonable charges
per year and out-patient physical therapy services
provided by a self-employed therapist to no more
than $100 in reasonable charges per year.
C. COST SHARING
1. Medicare Part A
Service
Current Law
President's Proposal
a. Hospital Services
Deductible
$104 for initial
$104 per admission,
hospitalization in
and allowed to rise
each benefit period
annually. Deductible
beginning in 1976
waived if Medicare
(based on average
covered inpatient
daily hospital
services were received
costs in 1974) and
within 60 days prior
rising annually to
to admission.
reflect increases
in hospital costs.
Coinsurance
An amount equal to
10% of hospital
1/4 of the deduc-
charges above the
tible for days
deductible.
61-90 in a benefit
period and 1/2 of
the deductible for
the 60 lifetime
reserve days.
b.' SNF Services
Deductible
None
None
Coinsurance
None for the first
10% of charges.
20 days. An amount
equal to 1/8 of the
hospital deductible
for days 21-100.
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Service
Current Law
President's Proposal
c. Home Health Services
Deductible
None.
None.
Coinsurance
None.
10% of charges.
d. Blood
Deductible
3 pints per benefit 3 pints per year.
period.
2. Medicare Part B
Service
Current Law
President's Proposal
a. Physician,
outpatient
hospital care,
outpatient
physical
therapy and
speech path-
ology,
laboratory
services,
medical
supplies and
most other
covered
services.
Deductible
$60 per calendar
$77 in 1976 and 1977,
year, increased
and increased in
in future years
future years in pro-
in proportion to
portion to increases
increases in cash
in cash benefits.
benefits.
Coinsurance
20% of reasonable
Same.
charges above the
deductible.
b. Hospital-
based
physicians
(inpatient
pathology
and radiology)
Deductible
None.
None.
Coinsurance
None.
10% of charges.
c. Home Health
Services
Deductible
Included among
Included among services
services subject
subject to $77 deduc-
to $60 per calen-
tible in 1976 and 1977.
dar year
deductible.
Coinsurance
None.
10% of charges.
more
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Service
Current Law
President's Proposal
d. Outpatient
50% of reasonable,
Same as current law.
psychiatric
charges (up to
services.
maximum reim-
bursement of
$250).
D. PROVIDER REIMBURSEMENT
Provider
Current Law
President's Proposal
Hospitals,
Reimbursed on
Places a 7% reimburse-
SNF's and
the basis of
ment limitation on
home health
reasonable costs.
the annual rates of
agencies.
(Level of reim-
increases in per diem
bursement for
hospital and SNF costs
hospital per diem
and home health visit
routine costs is
costs."
limited to the
80th percentile
of the per diem
routine costs of
similar hospitals.)
Physicians and
Reimbursed on the
Limits reimbursable
other medical
basis of customary
increases in reason-
services.
and prevailing
able charges (the
charges. (Rates
lesser of the cus-
of increase in
tomary and prevailing
prevailing charges
charges) to 4 percent
are limited by an
per year. #
economic index re...
flecting practice
costs and earnings
levels in the
economy.)
# Both the 7% cost and 4% charge increase limitations
are proposed for two years pending the development
of a. longer run cost containment policy.
E. COST ESTIMATES
The following are the estimated cost increases attributable to
the new catastrophic protection and the cost savings attribu-
table to reforms in cost sharing and limits in reimbursement.
The additional costs are estimated to range between $1.1
billion and $1.4 billion. The cost sharing reform is estimated
to save about $1.8 billion and the reimbursement limits to save
about $900 million. The savings from placing a limit on in.
creases in medicare repayment rates and some of the revenues
from increased cost sharing will be used to finance the
catastrophic program.
FY 77 (in millions
Costs
of dollars)
1. Catastrophic protection
a. Hospital Insurance
Initial estimate of cost
+330
of $500 limit in FY 77
budget.
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FY 77 (in millions
Costs
of dollars)
-- Additions based on
+562 to 862
refinement of cost
of $500 limit.
b. Supplementary Medical Insurance
--- $250 limit
+208#
Total Cost
$1.1 to $1.4
(in billions)
# Shown in President's budget request.
FY 77 (in millions
Savings
of dollars)
1. Cost Sharing Reforms
a. Hospital Insurance
-- 10% coinsurance
(-)1,730*
b. Supplementary Medical Insurance
-- Dynamic deductible ($77 for
FY 77)
(-) 111#
-- Coinsurance on hospital
based physicians and
Part B home health services
(-) 19#
Subtotal
(-)1,860*
2. Reimbursement limits
a. Hospital Insurance
---- limited to 7% per diem increase (-)730*
b. Supplementary Medical Insurance
-- limited to 4% charge increase
(-)179*
Subtotal
(-)909*
Total Savings (-)$1,591 to (-)$1,741
*Shown in President's budget request.
F. NUMBER OF PERSONS COVERED, FY 77
Service
Current Law
President's Proposal
Part A
Enrollees
24,900,000
Same
Users
5,900,000
Same
Users Assisted by
$500 limit
NA
1,200,000
Part B
Enrollees
24,600,000
Same
Users meeting the
deductible
14,200,000
12,200,000
Users Assisted by
$250 limit
NA
2,000,000
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III. OLDER AMERICANS ACT
The Older Americans Act was initially enacted in 1965 and
has been subsequently amended in 1967, 1969, 1972, 1973,
1974, and the most recent amendments were signed into law by
the President in November, 1975,
BACKGROUND
The major objective of the Older Americans Act is to bring
into being a system of coordinated comprehensive services at
the community level designed to enable older persons to live
independent lives in their own homes or other places of
residence and to participate in the life of their community.
To achieve this objective, the Older Americans Act provides
authorization for a national network on aging. This national
network is composed of a State Agency on Aging in each State
and Territory and the District of Columbia 489 Area Agencies
on Aging, 700 nutrition projects and the advisory committees
to the State and Area Agencies on Aging and the nutrition
projects.
DESCRIPTION OF ACT
Major sections of the Act designed to achieve the Act's overall
objective include:
Title III: Provides support to State Agencies on Aging
and through them, Area Agencies on Aging for
the development of coordinated comprehensive
service systems designed to enable older
persons to live in their own homes or other
places of residence.
This Title provides funds (1) for the support of
State Agencies on Aging and (2) for the support
of Area Agencies on Aging and social services
provided by those agencies.
States receive funds under Title III on a formula
basis based upon approval by the Commissioner on
Aging of an annual State Plan submitted by the
Governor.
Primary emphasis is placed on meeting the needs
of low income and minority older persons. Prior
to submitting the annual State Plan, the State
must hold a public hearing on it. The State
Plan designates within the State planning and
service areas and identifies those areas in which
Area Agencies on Aging will be established.
Currently, States have identified 585 such plan
ning and service areas and indicated that 489 Area
Agencies will be in operation.
The Area Agencies which may be public or private
organizations receive their funds from the State
Agencies on Aging based on an annual area plan
approved by the State Agency. A public hearing
must be held on this plan before it can be sub-
mitted to the State.
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The States must utilize at least 20% of their
Title III funds for four national priority
services: transportation, home care, legal
services, and home repair. In addition, as
additional resources become available under
Title III States must use 50% of the new
funds for the priority services. This re.
quirement will no longer be operative when
the States reach the point where they are
utilizing 33-1/3% of their funds for these
four priority services.
Section 308 of Title III provides for a model
projects program designed to demonstrate new
or innovative means of meeting the needs of
older persons. This section of the law is
administered directly by the Administration
on Aging.
Title VII: Provides funds to the States for the operation of
nutrition programs designed to provide hot.
nutritious meals in congregate settings to older
persons.
States receive funds for this program on a
formula basis after the Commissioner on Aging
has approved their annual State Plan submitted
by the Governor. Primary emphasis is placed on
meeting the needs of low income and minority
older persons. Currently this program provides
support for 700 nutrition projects that serve
approximately 300,000 means a day, five days a
week, at over 4900 community sites located in
churches, senior centers, and schools.
Eighty seven percent of these meals are provided
in congregate settings; 13% are home delivered.
More than 60,000 volunteers provide their as
sistance to this program.
Surplus commodities are contributed to the
program at the rate of fifteen cents a meal
during this Fiscal Year. This rate will increase
to 25¢ a meal in Fiscal Year 1977.
An important provision in the 1975 amendments to the Act authorizes
State or Area Agencies on Aging to enter into agreements for the
purpose of meeting the common needs for transportation services
of older persons and other segments of the population.
Several other recent actions have taken place designed to help
meet these transportation needs.
--- The Administration on Aging and the Department of
Transportation have entered into a working agreement
which has resulted and will continue to result in im-
proved coordination of transportation services for
older persons.
--- $20.8 million of Fiscal Year 1975 Urban Mass Transporta-
tion Administration funds were allotted for capital
assistance grants to nonprofit corporations and
organizations to serve the transportation needs of
older persons and the handicapped. The Department of
Transportation will release $22 million for this
purpose in Fiscal Year 1976.
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- Approximately 45 projects in 31 States have been
selected under the Rural Highway Public Transportation
Demonstration Program in Fiscal Year 1975. A major
criterion for project selection is that the projects be
adaptable to the needs of older persons and the
handicapped.
---- The first formula allotments have been made to the
States under the Section 5 Capital Assistance Formula
Grant Program of the National Mass Transportation Act of
1974. A section of the Act specifies that recipients of
funds must provide for reduced fares for the elderly
and the handicapped.
The Administration on Aging has made awards to 47 State Agencies
on Aging for the purpose of promoting and developing ombudsman
services for residents of nursing homes. The objective of these
services is to establish a process at the community level which
will be responsive to complaints from residents or relatives of
older persons in Skilled Nursing Facilities and Intermediate
Care Facilities. Activities are now underway at the State and
local levels to achieve this purpose. The 1975 amendments to
the Act authorize the Administration on Aging to continue
such programs.
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