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The original documents are located in Box 1, folder "Aging - White House Press Releases"
of the Spencer C. Johnson Files 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United States of America her copyrights in all of her husband's unpublished writings in National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.
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
OFFICE OF THE VICE PRESIDENT
wASHINGTOn, D.C.
February 6, 1976
TO:
SPENCER C. JOHNSON
FROM:
GRADY E. MEANS
For your information.
Madine Mufinol
FORD & LIBRARY GERALD
FORD & LIBRARY GERALD
MEDICINE HEALTH
Washington Report on
A McGRAW-HILL PUBLICATION
Dale R. Bauer, Publisher
Jerome F. Brazda, Editor
February 2, 1976 - Vol. 30, No. 5
CONGRESS OVERRIDES PRESIDENT'S VETO OF 1976 HEW MONEY BILL (p.1)
HOUSE AND SENATE SUBCOMMITTEES MOVE RIGHT INTO 1977 BUDGET (p.1)
MUCH WORK REMAINS IN WRITING CATASTROPHIC INSURANCE PROPOSAL (p.2)
HIBAC MEMBERS HAVE DIFFERING VIEWS OF MEDICARE RESOLUTION (p.2)
HEW'S MATHEWS EVADES MOSS SUBCOMMITTEE PUNCHES IN FIRST ROUND (p.3)
**By the comfortable margins of 310-113 in the House and 70-24 in
the Senate, Congress last week overrode President Ford's veto of the
fiscal 1976 appropriations bill for the Departments of Labor and HEW.
After several failures during the Nixon and Ford Administrations, it
was the first time Congress has overridden an HEW appropriations veto.
The vote clears up some of the confusion over the amount of money
available during the current fiscal year, which ends June 30, and the
subsequent transition quarter. But even before the vote last week,
the Office of Management and Budget muddied up the waters anew by
sending Congress more requests to rescind or defer spending of HEW
health monies (see p.3). Congress is not likely to go along with the
requests, but the Administration is expected to continue efforts to
delay spending the funds. (For details on the funds now available,
see the special insert in this week's WRMH).
**Determined to meet the April 14 deadline set by Senate Appropria-
tions Committee Chairman John McClellan (D-Ark.), the subcommittee of
Warren Magnuson (D-Wash.) last week opened hearings on the HEW budget
request. Secretary David Mathews presented the initial testimony but,
because of the veto override only the day before, didn't have updated
comparative figures to present. Although the reception for Mathews'
first appearance before the subcommittee was cordial enough, Magnuson
wondered aloud why the Administration continues to send proposed
rescissions and deferrals when it has "lost 35 cases in a row."
**In view of the lack of post-override cost figures, Magnuson can-
celled scheduled appearances of HEW's Office of the Assistant Secretary
for Health, NIH, the Center for Disease Control and the Health Services
Administration. Other health agencies may meet the same fate this week.
Magnuson instructed the health leaders to send him written budget pre-
sentations and said he planned to proceed without verbal testimony in
order to meet the April 14 deadline. The House HEW subcommittee of
Rep. Daniel Flood (D-Pa.) meanwhile opens this week with Labor Depart-
ment witnesses and has scheduled HEW to begin in two weeks.
Your News and Service Bureau in the Nation's Capital
Washington Report on Medicine & Health - 2
CATASTROPHIC INSURANCE PLAN CHANGING
It is becoming increasingly
clear that President Ford's
AS EXPERTS WORK OUT THE FINE PRINT
plan for "catastrophic"
health insurance coverage
under Medicare was not one of the better thought-out proposals in his
State of the Union message. With only a week left to get a draft bill
on paper before the beginning of Ways & Means Health Subcommittee
hearings, Administration legislative technicians still have some big
loopholes to close.
The idea of putting a catastrophic "cap" on Medicare beneficiary
cost-sharing has been kicking around the Executive Branch think tanks
for some time. But it was dusted off rather hurriedly by Office of
Management and Budget officials for inclusion in the State of the
Union and the fiscal 1977 budget request. The first sign that the
plan was less than complete came several days after the State of the
Union when HEW officials called a hasty press briefing to emphasize
that Mr. Ford had meant to include elimination of Medicare spell of
illness limitations. That required revision of original cost estimates.
Now being examined are such problems as whether physicians will
accept assignment of Medicare fees (meaning payment in full by the
insurance program) under a proposed 4 percent limitation on increases,
as the President said he thought they would. Signals from organized
medicine indicate that they will not. If physicians refuse to accept
assignment then only the part of their fees paid by Medicare Part B
would qualify for the $250 cap on doctor bills; charges over and
above that would not, meaning some beneficiaries could have to incur
liabilities well over $250 before becoming eligible for catastrophic
coverage. Also giving HEW experts pause is the realization that the
catastrophic plan could act to bring heavy emphasis on the more expen-
sive acute care end of the health industry.
HIBAC MEMBERS ARE CONFUSED
When the Health Insurance Benefits Ad-
OVER WORDING OF RESOLUTION
visory Council (HIBAC), charged with
advising the Secretary of HEW on Medi-
care and Medicaid policy, resolved 15-2
at its Jan. 23 meeting in favor of trading patient cost-sharing for
increased protection against catastrophic expenses, it appeared the
group had endorsed President Ford's new budget plan. But a spot poll
of some HIBAC members by MEDICINE & HEALTH indicates some confusion
over what the resolution meant and what those who voted for it intended
it to mean.
In a letter to HEW Secretary David Mathews, dispatched shortly
after the meeting, HIBAC Chairman Stanley A. Miller, a Harrisburg, Pa.,
businessman, said the resolution states that HIBAC "supports legisla-
tive efforts to re-orient the financial liability and protection
included in the Medicare program achieved by trading off increased
initial patient cost-sharing for increased protection against catas-
trophic expenses." But one HIBAC member said he meant only to say "if
you're going to charge them more, give them something in return."
Another said he agreed with the principle of last-dollar coverage but
found the resolution poorly worded and did not intend it to specific-
ally endorse the President's proposal. One member didn't think the
wording put down on paper by Miller was what had been voted on. The
resolution was offered by Paul Ginsburg of the Michigan State University
Washington Report on Medicine & Health - 3
PRESIDENT FORD SENDS CONGRESS SECOND REQUEST
Only days before
FOR RESCISSION AND DEFERRAL OF HEALTH FUNDS
Congress voted to
override his veto of
the fiscal 1976 HEW
appropriations bill, President Ford sent (on Jan. 23) a proposed
rescission of $266.3 million in HEW health funds and a request to
defer spending of $13.9 million. The proposal followed another request
to defer spending of $82 million in health program funds (WRMH 1-26-76).
In both cases, Congress is expected to reject the requests that were
made under the new budget control law enacted to prevent impoundment
of appropriated funds.
In the new proposed rescission, President Ford is asking that
much of the funds provided in a second supplemental appropriation bill
last December be returned to the Treasury. Included is $103.2 million
of $437 million appropriated for health services plus $24.7 million
appropriated for services for the transition quarter from June 30
until Oct. 1 when fiscal 1977 begins under a new arrangement whereby
fiscal years begin Oct. 1 and end Sept. 30. Amounts the President
wants rescinded for fiscal 1976 include $41.5 million for Community
Health Centers, $22.5 million for grants to states, $3.8 million for
hypertension projects, $21.8 million for family planning, $5.8 million
for migrant health services, $2.5 million for the National Health
Service Corps, $3 million for home health services and $3 million for
a new hemophilia program.
Other proposed rescissions include $5.3 million for the Indian
Health Service, $7.7 million for rat control project grants, $56.5
million for Community Mental Health Centers and $67 million for nurse
training. The $13.9 million spending deferral requested by the Presi-
dent is earmarked for Indian Health Service facilities.
MATHEWS AND MOSS TANGLE
HEW Secretary David Mathews made his
IN FIRST ROUND OF HEARINGS
first appearance before a hostile Con-
gressional committee last week when he
and department aides testified before
the House Commerce Subcommittee on Oversight and Investigations
chaired by Rep. John Moss (D-Calif.) Despite several hours of sub-
committee attempts to nail the voluble Secretary with subcommittee
pique over his refusal to implement Medicaid penalties against states
for failure to institute utilization review, Mathews was not notice-
ably bruised. In his opening statement, the Secretary said he feels
the penalty statute is unjust but said he has invoked a $1.1 million
legal penalty against the State of Pennsylvania "for shortcomings in
its early screening program under Medicaid."
Because of errors in the survey of state performance during fiscal
1974, Mathews said he will impose no penalties for that year. He
added, however, that a new survey is underway "to determine state com-
pliance with selected aspects of utilization control during FY 1975.
Much of Mathews' time before the subcommittee was spent hassling over
the meaning of the law, part of the 1972 Social Security Amendments.
A return bout is expected on the subjects of unnecessary surgery,
childhood screening, hospital accreditation and health planning.
Among other things, Moss said the subcommittee wants to know if Profes-
sional Standards Review Organizations are an appropriate alternative
to Utilization Review.
BRIEFLY THIS WEEK:
More detailed material on the Ford Administration's fiscal 1977
budget request is found in a 233-page book, "Seventy Issues, Fiscal
Year 1977 Budget,' published by the Office of Management and Budget.
The book contains sections on Health Income Security and other HEW
budget categories. The book essentially is a compilation of budget
briefing documents issued by various departments. For a copy send
$5.20 to the Government Printing Office, Washington, D.C. 20402.
AMA officials met with President Ford for nearly an hour last
week in what was described as a cordial discussion of issues of mutual
concern.
The National Association of Counties has advised members to sit
tight on President Ford's block grant proposals until draft legisla-
tion is completed. "Discussions with Administration officials raise
several preliminary questions" about the block grant plan, NACO's
newspaper "County News," reported. Administration experts say they
believe more counties will find the plan favorable than will find it
unfavorable.
-Hearings on a Federal Trade Commission complaint against AMA that
is aimed at opening the AMA code of ethics to permit physician adver-
tising have been delayed. Originally scheduled for Feb. 9, the hear-
ings now are set for Feb. 25.
--The Public Service Administration is the new name of HEW's Com-
munity Services Administration that administers programs of social
services under Title 20 of the Social Security Act. The name change
avoids confusion with the Community Services Administration that is
the successor agency to the Office of Economic Opportunity.
--President Ford has promoted James H. Cavanaugh, PhD, former HEW
health official, to Deputy Assistant to the President for Domestic
Affairs. Cavanaugh continues as deputy director of the Domestic
Council, which he has been for more than a year. In both positions
he is deputy to James Cannon. Although also involved in other domes-
tic policy areas, Cavanaugh is the Ford Administration's top-ranking
health official. Newly appointed to the Domestic Council as assistant
director for health, Social Security and welfare is Spencer Johnson,
until recently administrative assistant to Rep. James Hastings (R-N.Y.),
who resigned from Congress effective with the start of the second
session.
Two contracts for biomedical studies related to possible health
hazards of energy have been awarded by the Energy Research and Develop-
ment Administration (ERDA) to Cornell University's New York State
Veterinary College. The contracts total $117,337.
FORD & LIBRARY GERALD
LOUISE B. ELLIOTT
JAMES T. FULLERTON
LAURA V. WANEX
Production Manager
Circulation Director
Circulation Manager
Washington Report on Medicine & Health is published each Monday, 457 National Press Building, Washington, D. C. 20045, Telephone 202-347-4424.
$95 a year. additional copies mailed in same envelope $23 a year each.
@ 1076 McGraw-Hill Inc
WASHINGTON REPORT ON MEDICINE & HEALTH
Special Budget Report
2-2-76
Following is a chart comparing the amounts provided for selected
health programs during the fiscal year ended last June 30 with the
amounts provided for in the fiscal 1976 appropriations bill passed by
Congress over the veto of President Ford and with the Ford Administra-
tion requests for comparable programs for fiscal 1977.
(Figures in Millions)
1975
1976
1977
Actual
Appropn.
Budget
HEALTH SERVICES ADMINISTRATION
Community Health Centers
$196.6
$196.6
$155.2
Health Grants to States
90.0
90.0
--
Maternal and Child Health:
-Grants to States
267.0
295.7
193.9
--Sudden Infant Death Syndrome
2.0
2.5
--
--Research and Training
25.9
23.7
17.5
Family Planning
100.6
100.6
79.4
Migrant Health
23.8
25.0
19.2
Health Maintenance Organizations
7.2
18.6
18.6
National Health Service Corps
17.1
15.0
24.5
Hemophilia Treatment Centers
--
3.0
--
Hypertension
--
3.7
-
Home Health Services
--
3.0
Medical Care Standards
4.7
5.2
4.2
Professional Standards Review
36.1
47.6
62.0
Patient Care & Special Services
108.3
118.0
107.0
Emergency Medical Services
37.0
33.6
25.1
CENTER FOR DISEASE CONTROL
VD Control
28.0
--
19.8
Immunization
6.2
--
5.0
Rat Control
13.1
13.1
5.4
Lead-based Paint Poisoning
FORD
9.0
--
3.5
&
Disease Surveillance
2.2
43.4
Laboratory Improvement
Health Education
,IBRAR
43.4
GERALD
9.6
10.6
15.0
3.0
3.5
3.0
Occupational Health
32.0
39.5
37.1
HEALTH RESOURCES ADMINISTRATION
National Health Statistics
22.0
25.6
24.0
Planning & Resources Development
98.2
90.0
90.0
Health Services Research
27.9
26.0
24.0
Health Manpower:
Institutional Assistance
159.7
--
124.0
Student Assistance
68.4
33.5
35.0
Special Educational Assistance
155.2
17.5
124.0
Nurse Institutional Assistance
59.3
64.0
26.0
Nurse Student Assistance
41.9
42.5
10.0
Health Facilities Construction
138.0
84.8
--
(Over, please)
(Figures in Millions)
1975
1976
1977
Actual
Appropn.
Budget
ALCOHOL, DRUG ABUSE, & MENTAL HEALTH
General Mental Health Total
$420.5
$404.2
$264.2
Research
93.2
92.9
83.0
Training
94.2
70.3
30.0
Community Center Construction
14.3
--
--
Community Center Staffing
170.8
135.4
110.5
Mental Health of Children
28.1
26.8
20.3
Mental Health Center Operation
--
53.5
--
Rape Prevention Program
--
3.0
--
Management & Information
19.9
22.3
20.4
Drug Abuse Total
220.2
71.0
247.8
Research
34.1
34.0
34.0
Training
14.0
9.8
4.0
Project Grants and Contracts
122.0
12.9
160.0
Grants to States
35.0
:
35.0
Management & Information
15.0
14.3
14.8
Alcoholism Total
134.0
138.4
98.0
Research
11.0
11.8
10.0
Training
7.8
6.6
2.0
Project Grants & Contracts
52.9
56.4
33.5
Grants to States
52.0
55.5
45.6
Management & Information
10.3
8.1
7.0
NATIONAL INSTITUTES OF HEALTH *
National Cancer Institute
691.4
744.5
687.7
Heart and Lung Institute
324.4
349.4
342.9
Dental Research
50.0
45.9
52.2
Arthritis, Metabolism, Digestive
173.4
175.5
180.8
Neurological Diseases & Stroke
142.0
136.8
146.5
Allergy & Infectious Diseases
119.4
119.2
135.6
General Medical Sciences
187.3
146.5
193.4
Child Health & Human Development
126.5
127.0
129.9
Institute on Aging
15.7
17.6
26.2
Eye Institute
44.0
45.6
47.0
Environmental Health Sciences
35.2
36.0
46.1
Research Resources
128.3
130.0
92.3
Fogarty International Center
5.4
5.7
7.5
Library of Medicine
28.8
29.2
35.2
Office of the Director
18.0
14.9
16.2
Total, Biomedical Research
2,089.8
2,123.9
2,139.6
*
1976 appropriation column excludes estimates for training, not
considered in Labor-HEW bill due to lack of authorizing legislation
--training funds are included in all other columns ($154 million in
1975 and $105 million 1977 request).
FORD LIBRARY is GERALD
Washington Report on Medicine & Health
2-2-76
Washington Post Staff Writer
President Ford's budget-
Medicare recipients, doctors
cutting Medicare changes -
and hospitals.
under attack for different
For the first time, under the
reasons from doctors,
President's proposals, the
hospitals and the elderly -
elderly and disabled would
took a beating on Capitol Hill
have to pay 10 per cent of
yesterday.
hospital bills after paying, as
After
hearing
ad-
they do now. $104 for the first
By James K.W. Atherton-The Washington Post
Mathews talks with reporters after hearing.
ord Proposals
Medicare Hit
By Stuart Auerbach
FORD & LIBRARY GERALD
EMBARGOED FOR RELEASE
February 9, 1976
UNTIL 12:00 NOON (EST)
(Corrected
February 10, 1976)
Office of the White House Press Secretary
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
12
Description, by Title
12
FORD is LIBRARY GERALD
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:
more
FORD & LIBRARY GERALD
2
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
11
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 0.3 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
more
GERALD FORD LIBRARY
3
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
895.05
965.25
1,014.75
49.50
The following table shows the Social Security tax rates for
OASDI for 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
1/ $15,300 for 1976; projected to increase automatically
under present law to $16,500 for 1977 under 1977 budget
assumptions.
more
GERALD FORD LIBRARY
4
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.
more
GERALD FORD LIBRARY
5
make available a wide range of funds for educational support.
Savings to the Social Security system from thi: 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.
more
GERALD FORD LIBRARY
6
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.
more
GERALD LIBRARY GERALDR. FORD
7
- 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 1977, increased in
future years in pro-
portion 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)
more
GERALD FORD LIBRARY
8
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.
more
GERALD FORD LIBRARY
9
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 1977,
year.
and increased in
future years in pro-
portion to increases
in cash 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 1977.
dar year
deductible.
Coinsurance
None.
10% of charges.
more
GERALD FORD LIBRARY
10
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 estimatec
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.
more
GERALD FORD LIBRARY
11
FY 77 (in millions
Costs
of dollars)
--- Additions based on
+590 to 890
refinement of cost
of $500 limit.
b. Supplementary Medical Insurance
-- $250 limit
+208*
Total Cost
+$1,128 to $1,428
* 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)
(-) 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 (-)$1,641 to (-)$1,341
*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
more
BERALD FORD LIBRARY
12
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.
more
FORD & LIBRARY GERALD
13
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.
more
BERALD FORD LIBRARY
14
- 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.
####
BERALD FORD LIBRARY
EMBARGOED FOR RELEASE
February 9, 1976
UNTIL 12:00 NOON (EST)
(Corrected
February 10, 1976)
Office of the White House Press Secretary
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
12
Description, by Title
12
BERALD 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:
more
FORD & LIBRARY GERALD
2
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
11
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 0.3 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
more
GERALD FORD LIBRARY
3
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 for 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
1/ $15,300 for 1976; projected to increase automatically
under present law to $16,500 for 1977 under 1977 budget
assumptions.
more
GERALD FORD LIBRARY
4
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 2/
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.
more
GERALD LIBRARY GERALDR. FORD
5
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.
more
FORD & LIBRARY GERALD
6
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.
more
GERALD FORD LIBRARY
7
-- 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 1977, increased in
future years in pro-
portion 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)
more
BERALD FORD LIBRARY
8
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.
more
GERALD FORD LIBRARY
9
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 1977,
year.
and increased in
future years in pro-
portion to increases
in cash 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 1977.
dar year
deductible.
Coinsurance
None.
10% of charges.
more
GERALD FORD LIBRARY
10
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 estimatec
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.
more
GERALD FORD LIBRARY
11
FY 77 (in millions
Costs
of dollars)
-- Additions based on
+590 to 890
refinement of cost
of $500 limit.
b. Supplementary Medical Insurance
--- $250 limit
+208*
Total Cost
+$1,128 to $1,428
* 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)
(-) 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 (-)$1,641 to (-)$1,341
*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
more
GERALD FORD LIBRARY
12
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.
more
BERALD FORD LIBRARY
13
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.
more
BERALD FORD LIBRARY
14
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.
####
FORD i LIBRARY GERALD
EMBARGOED FOR RELEASE UNTIL
FEBRUARY 9, 1976
12:00 NOON, FEBRUARY 9, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
PRESS CONFERENCE
OF
DAVID MATHEWS
SECRETARY OF THE DEPARTMENT OF
HEALTH, EDUCATION AND WELFARE
STANLEY THOMAS, JR.
ASSISTANT SECRETARY FOR HUMAN DEVELOPMENT
OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE
ARTHUR FLEMMING
UNITED STATES COMMISSIONER ON AGING
AND
JAMES BRUCE CARDWELL
UNITED STATES COMMISSIONER OF SOCIAL SECURITY
THE BRIEFING ROOM
10:15 A.M. EST
MR. NESSEN: Let me just tell you that you have
received a copy of the message, I believe. The fact sheets
are being collated now and will be ready in 15 minutes, or
at the end of the briefing.
The message and the fact sheets and the briefing
are embargoed for noon, which is the time that the message
goes to Congress.
The briefers for today are primarily HEW Secretary,
David Mathews -- and he has brought along with him the U.S.
Commissioner of Social Security, Bruce Cardwell; the Assistant
Secretary for Human Development at HEW, Stan Thomas; and
the U.S. Commissioner on Aging, Dr. Arthur Flemming, who
many of you know. He has been in Washington and served under
five Presidents and did a great deal of the work on this
project.
So, Mr. Secretary, why don't you come and say
whatever you want to at the beginning and then can take
whatever questions there may be.
SECRETARY MATHEWS: I have no additional state-
ment other than the statement that is here, and I think
your time probably will be better used just to go right
into the questions.
MORE
GERALD FORD LIBRARY
- 2 -
MR. NESSEN: The Secretary has to catch a train
to Philadelphia at 11 o'clock, so he is going to have to
leave in about 15 minutes.
Q
Mr. Secretary, how soon is this proposal
on decoupling going to go up?
SECRETARY MATHEWS: We are in the process of
drafting that legislation. As you might imagine, that is
a most complicated piece of legislation. I talked to
the man who has the responsibility for doing the drafting.
He said at best it would take him about one month to get
that completed.
We are hoping that we will have it ready some-
time around the 1st of March.
Q
Mr. Secretary, several people who represent
groups for the elderly have said they don't like those
Social Security proposals. Would you like to comment on
that? They feel it is going to cost 99 percent of the
elderly more in order to give catastrophic benefits to
1 percent of them. Would you comment on this?
SECRETARY MATHEWS: Yes, we keep in mind that this
is an insurance program and that it properly has all of the
features and characteristics that are axiomatic for an
insurance program. The function of insurance is to protect
people from the truly disabling, catastrophic, overwhelming
kinds of disability, and insurance programs characteristically
are those that accommodate individuals' payments for what-
ever the initial problem and reserve their strength for
those major financial claims that would be truly disabling.
This particular program is -- in comparison with
other kinds of insurance programs -- really backwards
because it protects at the low end of the scale now and
affords no protection at the high end. What this proposal
would do would be to make the Medicare insurance program
consistent with the basic principles of insurance
generally, and it has its merits in that it deals with the
bills that would be frightfully disabling which would come
at the point in time when a person was least able to pay for
them.
Q
But wouldn't this stop the elderly from
going to the doctor at the beginning of an illness because
of the payments they would have to make?
SECRETARY MATHEWS: It is not anticipated that
the rate of increase that is proposed here would have
that effect at all.
MORE
GERALD FORD LIBRARY
- 3 -
Q
Mr. Secretary, could you give me a dollar
figure for the cost to employers of the increase of the
three-tenths of 1 percent, and since this almost inevitably
will be passed on in the way of higher prices, will not this
have an inflationary impact on the economy?
SECRETARY MATHEWS: The dollar figures that we
have used are for workers, I think.
Q
For employers, I am speaking of.
SECRETARY MATHEWS: The $22 is for the $7,500
employee.
MR. OARDWELL: It would cost $2.2 billion.
Q To the employers?
MR. CARDWELL: Yes.
Q Could you also comment on the inflationary
impact this would have on the economy?
MR. CARDWELL: It is a relative matter. It is
no question that it will increase cost for employers. If
anything, it would tend to have a depressing effect
rather than stimulatory effect because it would be taking
money out of circulation rather than adding money into
circulation.
Q I am talking about prices, Mr. Cardwell.
The producers will pass on the costs in the form of higher
prices, won't they?
MR. CARDWELL: Some of the costs would be passed
on in the form of higher prices. That is a correct
assumption.
Q
So it will have an inflationary impact on
the economy?
MR. CARDWELL: That is not my expertise. I cannot
speak to that question.
Q Can somebody, please?
SECRETARY MATHEWS: We will furnish you a resident
economist. I don't think Mr. Cardwell was denying that to
the extent it was passed on it would. That is saying
the same thing. I think his quibble was over how much
would be passed on.
MORE
FORD & LIBRARY GERALD
- 4 -
Q
Can you tell us why it was decided to go to
an increase in payroll tax rather than increasing the
base?
SECRETARY MATHEWS: Yes, I can.
First, you need to remember that there already
is in law provision for increasing the base.
Secondly, if you increase the wage base further
rather than achieving what you want to achieve -- namely,
the stability of the funds over the long term -- you achieve
the opposite effect because you include more people at
higher incomes and, therefore, you increase your payout
over a longer period of time and you would not have the
effect that you wanted to have by proposing the legis-
lation in the first place, which was to correct the long-
term deficit or medium range deficit.
MORE
FORD is LIBRARY GERALD
- 5 -
Q Mr Secretary, how does it protect the
middle income gro up which really seems to carry the burden
for everything?
SECRETARY MATHEWS: As I look at this particular
proposal in the breakdowns that I have seen by income groups,
it seems to me rather favorable to the middle income group,
by the figures that I have seen as it is broken out.
Q Mr. Secretary, have you balanced out the
cost of the increases and the reductions in this program for
the elderly and whether its overall effect will be to reduce
the budget or to increase it?
SECRETARY MATHEWS: Let me comment on that. If
you look at the overall figures, they are, as the President
is recommending them for 1977, lower than the current figures,
because there was a decision not to -- it does not affect the
service program, but rather the training programs.
The training programs generally are reduced or,
in fact, taken out. The service programs, however, propose
to continue at the same level the nutritional programs,
the programs of assistance to States for the operation of
various service programs that they provide. So our concen-
tration has been on service aspects. We intend to give priority
to those.
Q Do you have a net figure of how much
you are going to be saving?
SECRETARY MATHEWS: I do. What we really need
to give you is the differential between the President's
budget proposal and the total budget.
MR. THOMAS: I think in terms of the Older Americans
Act which is the Act the Secretary is speaking to, I think
the net reduction from our fiscal 1975 budget request is
somewhere around - it is about the same as the fiscal 1975
budget request. In terms of the overall budget, I expect
Mr. Cardwell can speak to that in terms of Social Security.
MR. CARDWELL: I would guess the question is driven
toward the matter of what happens under the catastrophic,
the cost of that coverage as an offset to the additional cost
to the consumer, to the beneficiary of the co-insurance.
The current estimates -- the best estimates we have on the
cost of catastrophic is, when it is all over, it will
probably add up to between $1.1 billion and $1.4 billion.
Remember when the budget was filed several weeks
ago, that estimate stood at $503 million and we, since then,
have doubled the potential cost of that particular provision.
Offset against that are gross additional costs to consumers
of about $2 billion.
Could I come back to the question about the
impact on the economy of the $2.2 billion?
MORE
FORD & LIBRARY GERALD
- 6 -
Q
I wish you would.
MR. CARDWELL: I cannot answer the economic theory of
it,but I would point out some facts that would let you draw
your own conclusions. We are talking about $2.2 billion as
against annual payroll in excess of $600 billion, so we are
really talking about one-third of one percent impact.
Although I am not an economist, my assumption is that could be
absorbed by the economy without distorting it one way or the
other, but that is a matter for economic judgment.
Q Would you clarify -- did you say the cost on
catastrophic would be $1.1 to $1.4 billion?
MR. CARDWELL: Somewhere between $1.1 and $1.4
billion.
Q
I still don't have a net figure. Were you
able to arrive at one?
MR. CARDWELL: In the fact sheet, if you would turn
to it --
MR. NESSEN: They don't have the fact sheet yet.
MR. CARDWELL: You can do your own arithmetic.
It shows gross reductions of $1.860 billion for the cost
sharing reforms. Another $909 million reduction on reimburse-
ments. The $1.8 billion would represent additional cost
to the consumen offset against that $1.8 is a figure of some-
where between $1.1 and $1.4 billion in additional Medicare costs.
Q Mr. Secretary, would you talk about Page 2,
Number 3, lack of incentives to encourage efficiency and
economical use of hospital and medical services? Will you
talk about this specifically in language that somebody like
myself can understand? Did you promise the hospital people
when they were in town recently you would give them any help?
I believe some of them said they were waiting for 19 months
and another six months to get the money back from the
Government and there were oppressive regulations that added
to their costs.
SECRETARY MATHEWS: I generally said some things
about regulations, none of them favorable, that would apply
in this situation. However, I did inquire about the differential,
cr the difference, rather, in time, and I understand that we
are required by law to complete certain audits before we can
make reimbursements, and I believe we have to allow a year to
pass, as I remember that legislation, before we can reimburse.
MORE
FORD & LIBRARY GERALD
- 7 -
So part of the time involved in the 19 months is
a requirement in the law that an audit must be completed
before we can reimburse, but in general I have said to this
group and to other groups that I think we should do everything
we can to speed up time.
As to your first question about the initial cost,
that is what I was talking about when I said that this program
is really, as it now stands, the insurance program, is back-
wards when compared to all other insurance programs. That is
if it affords protection for the initial cost, but no protection
for the catastrophic costs at the far end or the truly
problematic cost.
What this proposal would do would essentially turn
that around and it would, by our candid admissions, cost more
initially, but its virtue would be it would protect you
against the cost -- not you but the persons in the program --
for costs over $500 for hospital care, $250 for covered
services, physicians fees.
Q Are you going to recommend that Congress change
the part in the law that requires a year for an audit?
SECRETARY MATHEWS: I have no plans to at the present
time.
Bruce, do you want to talk to that?
MR. CARDWELL: I have nothing to add.
Q
Is that a result of Congress' actions or a
result of your past recommendations?
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FORD i LIBRARY GERALD
- 8 -
SECRETARY MATHEWS: Since I did not make the
past recommendations, I don't know. Bruce will speak
to that point and, as the line goes, I have to catch a
train to Philadelphia.
Bruce, why don't you elaborate on that?
Q The hospital people, when they were
in, complained that it would be unfair to hold their
increases down if you are not holding their expenses down,
if inflation drives up the cost of the things they have
to purchase. Can you answer that?
MR. CARDWELL: The number one problem in medical
care today is the rapid rise in prices, whether those
prices be charged against Medicare or against the public
at large.
The Congress itself decided several years ago
they wanted to put pressure on the Medicare portion of the
delivery system and they require the Secretary of HEW
and the Commissioner of the Social Security to put limits
on the rate at which Medicare reimbursements can increase in
a given year, and that is designed to put pressure on the
system.
True, it puts the manager, operator, of the hospital
in between an inflationary spiral for labor and for
material, but it also says to him, "You have to take some
action of your own, improve your efficiency of your opera-
tions. You have to absorb some of the shock. You can't
continue to pass it on to Medicare."
That concept would probably be more effective.
It would affect the entire delivery system. But, as the
law now stands, it affects Medicare only.
Q In other words, we are not going to get
anywhere? We are not going to get any relief at all? We
are just going to have continuation of this problem?
MR. CARDWELL: I think the entire system will
continue to reflect higher inflationary rates than general
consumer index cost. In other words, hospital and medical
prices are going to go up faster than other prices. That
has been the history of the entire American system now
for several years.
Q
Why don't you ask them to change the law to
put the pressure on the entire system?
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FORD & LIBRARY GERALD
- 9 -
MR. CARDWELL: That is entirely another matter.
We are administering the Medicare program, and this provision
deals with Medicare. We are going to try to take care of
our own costs.
Q What portion of the hospitals and doctors
refuse to take Medicare assignments, and won't this make it
worse?
MR. CARDWELL: About 55 percent last year of the
bills processed by Medicare were processed under assign-
ment. Seven or eight years ago that figure was as high as
60 percent. It has been declining actually rather slowly.
There is an assumption that most people make that
any pressures you put from the top will cause the physicians
or the hospital to pass the cost on to the consumer. Under
the Medicare law, anyone who takes assignment must settle
for our reimbursement level.
Our estimate is, however, that this will not be
a dramatic downward shift. We do think, though, there is a
downward pressure in place, and it has been in place for
several years, and it is the result of the Federal Govern-
ment trying to resist prices more than the private sector
generally.
Q
Mr. Cardwell, in view of the stepped-up
activity in the Congress, is there any possibility
that you will change your strategy and send a national
health insurance bill to the Hill this year?
MR. CARDWELL: I do not think SO.
Could I go back to an earlier question I was
asked about the impact of the Social Security tax rate
on the middle income worker. The statement was made the
middle income worker carries the brunt of the rising
cost of the system.
Really, the policy-making here has to choose
between the effect on increased cost on various classes
of earners. Most of our experience so f ar in the last ten
days in Congress has been that they seem more concerned
about the impact of the tax rate on the lower wage earner
and less concerned about the middle wage earner.
We think our proposal is an attempt to spread
the cost between the two. For example, the person at the
so-called wage base -- a person who will be making $16,500
in 1977 will be paying additional Social Security tax
burden of about $119.
MORE
GERALD FORD LIBRARY
- 10 -
His brethren at the low end of the scale, say
working for the minimum wage, will be paying a net
additional burden of about $15. Now, that $119 is split
for the middle income worker into two parts.
The first part is the result of an increase in
the wage base that is already in law and will take place
automatically in 1977. That adds $70 to his bill. The
three-tenths of 1 percent adds $49 to his bill, in round
figures.
So, the wage base is already driving up the cost
at a faster rate for the middle income worker than is the
President's tax proposal. But, in sum, our attempt is to
spread the load over the two extremes, the low wage earner
and the middle wage earner.
The middle wage earner is suffering fairly big
bites as the result of the automatic provisions already in
law to increase the wage base and increase the tax rate
applied to that wage base.
Q
Mr. Cardwell, wouldn't your Social Security
plan have an adverse impact on recovery from a recession
inasmuch as you are increasing withholding so there would
be less spending?
MR. CARDWELL: Yes, your question centers on
impact on the economy. Economists have examined the
question of Social Security impact on capital formation,
on stimulation or depressing effects on the economy. We
think at this stage that these figures, the three-tenths
of 1 percent, is relatively modest when compared to the
gross figures the system works against, and they should
not be so significant as to distort the economy one way or
the other. That is the only answer we have.
Q
In expanding the tax rate -- you were talk-
ing about spreading it more equitably -- implicit in your
remarks is the feeling that low income wage earners were
not carrying enough of the burden. Is that correct?
MR. CARDWELL: No, it is not. One of the most
controversial issues about Social Security throughout its
40-year history has been this issue of the tax rate and
whether it should not be made more progressive, whether
it should be graduated more so that everyone pays pro-
portionate to his income.
It is true that on the tax side of the system
the low wage earner does pay proportionately more than
the higher income worker. On the other hand, the benefits
structure of the system from its origin have been deliber-
ately designed with a weighted benefit in favor of the low
wage earner.
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FORD & LIBRARY GERALD
- 11 -
One of the propositions to deal with this
controversy, of course, is to put in general revenues.
We opposed that for two reasons.
First, we believe that general revenues will
eventually erode the basic concept that every worker,
regardless of his earnings, participates in the system by
reason of having paid in, and the only ones who can
participate are those who paid in.
We think general revenues invite an erosion of
that principle.
Secondly, it is our belief that general revenues
invite the Congress, oftentime, to enlarge the system and
to increase its long-term costs rather than stabilize
them.
MORE
FORD & LIBRARY GERALD
- 12 -
Q
Sir, I'm sorry. It seems to me you can't have
it both ways. If you are saying you are trying to spread
this tax rate -- instead of spreading the base and going to
the rate instead -- you are trying to spread this more
equitably -- it seems you must be saying the low income
wage earner --
MR. CARDWELL: Let me try one more time. We are not
dealing with the tax progressivity question which is a long-
term question. We are saying for this one time increase,
we tried to spread the load as it would land on different
classes of workers at this point in time. We are not
denying that the low wage earner is proportionately paying
more than the high wage earner, but he always has been.
Q
And?
MR. CARDWELL: We are not taking any steps at this
time, in this one time short-term financing move to deal
with that. The Congress in the past has not either.
Q
Sir, how would you compare the commitment by
the Federal Government to the elderly embodied in this program
of the 1960's? Is there a retreat in the Federal commitment
to the elderly here?
MR. FLEMMING: Definitely there is not. I would like
to respond in part to that question by coming back to the
issue that has been under discussion. As all of us know,
the Social Security system has been under attack over a period
of the last few months in terms of its integrity, in terms
of its stability. Older persons have been concerned about
this attack. As I have gone out and met with them, they
asked me many, many questions about it and I have assured them
that this Government, the Executive Branch and the Legislative
Branch, would see to it that the Social Security system was
maintained on a sound basis.
The recommendations that the President is making to
the Congress indicate very clearly his commitment to the Social
Security system, to the maintenance and the soundness of
the system, and because of developments, it is clear that in
order to get additional revenue, in order to maintain the
soundness of the system, it is going to be necessary for
some people to carry a heavier load.
But I think the main thing about this is that it
says to the older people of this Nation, the Executive Branch --
and I am sure in one way or another the Legislative Branch
will respond also -- is going to see to it that the soundness
of this system is maintained.
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GERALD FORD LIBRARY
- 13 -
Persona ly, to take the second P rt of your
question, in the sixties, we did not have any such thing
as the Older icans Act. We now have got in place a new
national network on aging that involves 50 :tates' agencies
on aging, close 0 500 areas' agencies on aging, 700
nutrition projects, and all of that has been put in place in
the last year ard one-half or two years. Wh reas in the
sixties we were talking about a few million dollars we made
available to States and communities to help them on the
delivery of ser ices to older persons, we are now up over the
$250 million mark.
In other words, the Government is really implementing
the objective o : the Older Ameircans Act; namely, to step
up services for older persons to be given or to be made
available to them, oftentimes in their own homes, but to
step up the kind of service that will enable older persons
to continue to live in their own homes rather than going into
institutions.
The President's Message gives strong backing to
that network and to the development and evolution of the net-
work. We did not have anything like that in the sixties.
This represents substantial progress in responding to the needs
of older persons.
Q
What is the maximum that a single person
and a couple can get under Social Security now?
MR. CARDWELL: For a couple, it would be something
slightlyunder $400 a month, and for a single person, something
under $250 a month.
Q
Does this affect just the people in hospitals
or would it also help people who go to nursing homes or stay
at home?
MR. CARDWELL: It would help people in hospitals,
the catastrophic coverage. It would benefit people who go
to hospitals, people who obtain services from physicians
without hospitalization. It would also affect long-term
care, including nursing homes and home health care.
I would point out, however, that Medicare is not
a heavy financer of extended health care -- Medicaid is.
Q
So what does a person do if they don't have
Medicaid?
MR. CARDWELL: He would be eligible for Medicare
and the Medicare, now under these provisions, would have an
open-ended catastrophic coverage.
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FORD & GERALD LIBRARY
- 14 -
Q Would that apply to nursing homes?
MR. CARDWELL: Nursing homes and home health.
Q
I had a question for Dr. Flemming. You mentioned
going around the country talking to older people. Did you
see any signs of increased political activity on the part of
older groups this year, say than four years ago?
MR. FLEMMING: Sure. I had the responsibility for
the first White House Conference on Aging in 1961 when I
was Secretary. At that time the number of older persons that
belonged to organizations of older persons was about 250,000.
Today it is about 11 million and they are organized at the
local level, the State level, and they are in a position to
put pressure on in order to achieve some of their objectives.
So there is not any question at all but that they are
playing a more significant role in the political system
than they did a few years ago.
THE PRESS: Thank you.
END
(AT 10:45 A.M. EST)
FORD & LIBRARY GERALD
EMBARGOED FOR RELEASE
February 9, 1976
UNTIL 12 P.M. (EST)
MONDAY, FEBRUARY 9, 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
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
BERALD FORD LIBRARY
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
GERALD FORD LIBRARY
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
FORD & LIBRARY GERALD
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.
#####
FORD & LIBRARY GERALD
FOR IMMEDIATE RELEASE
FEBRUARY 9, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
AT THE SIGNING CEREMONY
OF THE
OLDER AMERICANS MESSAGE
THE OVAL OFFICE
10:05 A.M. EST
Today I am sending a Message to the Congress that
expressed my confidence and support of older Americans, my
very deep concern about the problems of the aging and my
proposals for dealing with the problems involving them.
Society owes a very deep debt of gratitude to all older
persons who have worked hard and contributed significantly
to our Nation's progress.
Older Americans continue to enrich our lives with
their vision, strength and experience. They have earned the
right to live securely, comfortably and independently. The
proposals that I am sending to the Congress offer significant
improvements in the quality of life for all older Americans.
We all have a great stake in fighting inflation,
but older Americans living on fixed incomes are especially
hard hit. I pledge to continue the fight against inflation,
to provide special relief to the elderly.
I am requesting in my budget for fiscal year 1977
that the full cost of living increase in Social Security
benefits are paid during the coming year. The value of the
Social Security system is beyond challenge. I am concerned,
however, about the integrity of the Social Security Trust
Fund that enables people to count on this source of retirement
income. I am concerned because the system now pays out more
in benefits than it receives in tax payments.
To prevent a rapid decline in the Trust Fund over
the next few years I had to make a very difficult decision.
I am proposing a small payroll tax increase of three-tenths
of one percent each for employees as well as employers of
covered wages. The alternative would have been to limit
expected increases in retirement and disability payments.
This proposed tax increase will help to stabilize the Trust
Fund so that current and future recipients will be fully
assured of receiving the benefits they are entitled to.
MORE
BERALD FORD LIBRARY
Page 2
I am also very concerned about the effect of
catastrophic illnesses. I want to lighten the financial
burden which now strikes after prolonged hospitalization --
when the elderly and their families can least afford it.
Therefore, I am proposing catastrophic health insurance
for the more than 24 million Americans and disabled Americans
protected by Medicare.
No one who is covered by Medicare would have to pay
more than $500 a year for covered hospitalization or nursing
home care. No one who is covered by Medicare would have
to pay more than $250 for one year's doctor bills. Beneficiaries
and their physicials now have little incentive to limit the
duration of hospitalization for less serious conditions.
To encourage economic use of covered health services
I am also proposing changes in cost sharing arrangements.
As under the current system, a beneficiary who is in the
hospital will pay $104 a day for the first day of hospital
services. In addition, he or she will pay ten percent of
additional charges up to an annual maximum of $500. For
covered services my proposal would increase the annual
deductible from $60 to $77 and would continue the current
20 percent cost sharing.
To help finance the added protection, I am proposing
to limit Medicare reimbursement rates to 7 percent for
hospital services and 4 percent for physician services. These
proposals are of particular importance in achieving my goal of
helping all Americans live in dignity, security and good
health.
I hope you will join me in efforts to secure
Congressional passage of these important proposals.
We must show our commitment to a cause that is
often too long neglected--the dignity and well-being of
America's older generations.
I will now sign the Messages to the Congress -- one
to the House and one to the Senate urging that they undertake
the enactment of this necessary legislation.
Thank you very much.
END
(AT 10:20 A.M. EST)
FORD is LIBRARY GERALD
FOR IMMEDIATE RELEASE
FEBRUARY 9, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
AT THE SIGNING CEREMONY
OF THE
OLDER AMERICANS MESSAGE
THE OVAL OFFICE
10:05 A.M. EST
Today I am sending a Message to the Congress that
expressed my confidence and support of older Americans, my
very deep concern about the problems of the aging and my
proposals for dealing with the problems involving them.
Society owes a very deep debt of gratitude to all older
persons who have worked hard and contributed significantly
to our Nation's progress.
Older Americans continue to enrich our lives with
their vision, strength and experience. They have earned the
right to live securely, comfortably and independently. The
proposals that I am sending to the Congress offer significant.
improvements in the quality of life for all older Americans.
We all have a great stake in fighting inflation,
but older Americans living on fixed incomes are especially
hard hit. I pledge to continue the fight against inflation,
to provide special relief to the elderly.
I am requesting in my budget for fiscal year 1977
that the full cost of living increase in Social Security
benefits are paid during the coming year. The value of the
Social Security system is beyond challenge. I am concerned,
however, about the integrity of the Social Security Trust
Fund that enables people to count on this source of retirement
income. I am concerned because the system now pays out more
in benefits than it receives in tax payments.
To prevent a rapid decline in the Trust Fund over
the next few years I had to make a very difficult decision.
I am proposing a small payroll tax increase of three-tenths
of one percent each for employees as well as employers of
covered wages. The alternative would have been to limit
expected increases in retirement and disability payments.
This proposed tax increase will help to stabilize the Trust
Fund so that current and future recipients will be fully
assured of receiving the benefits they are entitled to.
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I am also very concerned about the effect of
catastrophic illnesses. I want to lighten the financial
burden which now strikes after prolonged hospitalization --
When the elderly and their families can least afford it.
Therefore, I am proposing catastrophic health insurance
for the more than 24 million Americans and disabled Americans
protected by Medicare.
No one who is covered by Medicare would have to pay
more than $500 a year for covered hospitalization or nursing
home care. No one who is covered by Medicare would have
to pay more than $250 for one year's doctor bills. Beneficiaries
and their physicials now have little incentive to limit the
duration of hospitalization for less serious conditions.
To encourage economic use of covered health services
I am also proposing changes in cost sharing arrangements.
As under the current system, a beneficiary who is in the
hospital will pay $104 a day for the first day of hospital
services. In addition, he or she will pay ten percent of
additional charges up to an annual maximum of $500. For
covered services my proposal would increase the annual
deductible from $60 to $77 and would continue the current
20 percent cost sharing.
To help finance the added protection, I am proposing
to limit Medicare reimbursement rates to 7 percent for
hospital services and 4 percent for physician services. These
proposals are of particular importance in achieving my goal of
helping all Americans live in dignity, security and good
health.
I hope you will join me in efforts to secure
Congressional passage of these important proposals.
We must show our commitment to a cause that is
often too long neglected--the dignity and well-being of
America's older generations.
I will now sign the Messages to the Congress -- one
to the House and one to the Senate urging that they undertake
the enactment of this necessary legislation.
Thank you very much.
END
(AT 10:20 A.M. EST)
GERALD FORD LIBRARY
FOR IMMEDIATE RELEASE
March 23, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
Section 208 of the 1973 Amendments to the Older
Americans Act (Public Law 89-73) provides that the
Commissioner on Aging shall prepare and submit to the
President for transmittal to the Congress a report on
the activities carried out under this Act.
The Secretary of Health, Education, and Welfare
has forwarded the Annual Report of the Administration
on Aging for the fiscal year 1975 to me, and I am pleased
to transmit this document to the Congress.
GERALD R. FORD
THE WHITE HOUSE,
March 23, 1976
#####
FORD LIBRARY & GERALD
FOR IMMEDIATE RELEASE
APRIL 5, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON SIGNING THE PROCLAMATION FOR
OLDER AMERICANS MONTH - 1976
THE ROSE GARDEN
3:06 P.M. EST
Secretary Mathews and distinguished guests:
It is especially fitting this year that we set
aside a period to honor our older citizens. Their insight
and experience, their wisdom and their courage has contributed
beyond measure to the developments of our 200-year-old Nation.
We must make it possible for older Americans to continue
their involvement in our national life.
One of the best ways we can draw upon their
strengths and skills is in the job and volunteer markets.
Too often older and even middle-aged Americans are the
victims of myths and prejudices regarding their capabilities.
Americans must repudiate these myths and prejudices, as we
have repudiated others, and assure our older Americans the
chance to prove that time has only enhanced their demonstrated
abilities.
It is important that our Nation makes every effort
to recognize the worth and the dignity of our older citizens.
To this end, the Federal Council on Aging has prepared a
Bicentennial charter for our older Americans. This charter
sets forth principles to guide us in evaluating our Nation's
response to the problems facing older persons and appreciating
the response to the problems now confronting our Nation.
One of these principles is the right to an adequate
standard of living in retirement. Let me reaffirm that older
Americans have earned the right to live securely, comfortably
and independently.
As I said before, the value of our Social Security
system is beyond question. I will do all that I can to insure
the integrity of the trust fund so that future generations
of retirees may continue to rely on it.
With these thoughts and commitments in mind, I am
happy today to join in this annual proclamation designating
an 0lder Americans Month. I urge all organizations concerned
with employment and volunteer services to observe this month
with ceremonies, activities and programs designed to increase
opportunities for older persons, and I urge that such programs
include public forums for discussion of the Bicentennial charter
for older Americans.
I ask all Americans to join me in reflecting upon
the achievements and the needs of our older citizens.
GERALD FORD LIBRARY
END (AT 3:10 P.M. EST)
FOR IMMEDIATE RELEASE
APRIL 5, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
OLDER AMERICANS MONTH, 1976
BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION
Among our Nation's most precious natural resources
are the collective wisdom, experience and abilities of
our older citizens.
In recent years we have become more aware of the
important contributions older Americans have made in the
past and in the tremendous potential they hold for the
future. We are increasing our efforts to ensure that
they have the opportunity for independent living through
security of income, maintenance of health and continued
useful involvement in the life of our Nation.
America's older citizens have earned the gratitude
and respect of our society, as well as our recognition
of their worth and dignity. In this spirit, the Federal
Council on Aging has prepared the Bicentennial Charter for
Older Americans expressing their rights and obligations.
The job market and the area of volunteer services
provide some of the best opportunities to draw on the
strengths and talents of older Americans. Unfortunately,
older, and even middle-aged workers, are too often the
victims of myth and prejudice regarding their capabilities.
Our society needs the know-how, experience, judgment and
eagerness to serve that these citizens bring to the job.
NOW, THEREFORE, I, GERALD R. FORD, President of the
United States of America, do hereby designate the month
of May, 1976, as Older Americans Month.
I urge all State and Area Agencies on Aging and
other private and public organizations that are related
to the field of aging to observe this month by arranging
public forums where the Bicentennial Charter for Older
Americans will be discussed and recommendations developed
for implementation.
I urge all organizations concerned with employment
to observe this month with ceremonies and programs de-
signed to increase employment opportunities for older
workers.
I urge all organizations engaged in the delivery of
services to persons in need to observe this month by in-
creased emphasis on efforts to recruit, train and place
older volunteers.
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2
And I urge all Americans to observe this month by
focusing on the achievements of older persons and supporting
programs to make the last days of life the best days for
increasing numbers of our older Americans.
IN WITNESS WHEREOF, I have hereunto set my hand this
fifth
day of April in the year of our Lord
nineteen hundred seventy-six, and of the Independence of
the United States of America the two hundredth.
GERALD R. FORD
#####
FORD LIBRARY & GERALD
FOR IMMEDIATE RELEASE
AUGUST 3, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
I am transmitting herewith the Annual Report of the
Federal Council on Aging, together with two studies
undertaken by the Council as required by sections (f-h)
of the Older Americans Act (P.L. 93-29).
Last year I indicated that I was looking forward to
receiving then two studies from the Federal Council on
Aging. The Council recognized its responsibilities and
undertook the task in a forthright manner. I appreciate
the fine work that the Council has done, particularly
with the severe time constraints imposed upon it.
The Council's report and studies provide documentation,
from the viewpoint of our elderly citizens, which support
the need for legislation along the lines of my proposed
Financial Assistance for Health Care Act and the Income
Assistance Simplification Act which I will be proposing
shortly. My proposals would permit both Federal and State
programs to be simplified and integrated into a coordinated
system that would best meet the needs of our citizens.
Council Recommendations
With respect to the Supplemental Security Income (SSI)
program, the Council has recommended in its program report
that legislation be passed that mandates continuance of a
specific State supplementation for certain recipients. The
Federal Government took over this program from the States on
January 1, 1974, and provided a basic payment level to
recipients. For those individuals who received benefits
under the State programs in December 1973 that were larger
than the basic Federal payment level, and who continue to
be eligible for SSI, States are required to supplement the
basic Federal payment up to the level of the December 1973
payment to such recipients. The requirement does not apply
to new recipients who became eligible after December 1973.
The Council's legislative proposal would require that the
size of the State supplementation to recipients carried
over from the State programs on January 1, 1974, could not
be reduced. Thus, whenever the basic Federal payment level
is increased, this proposal would allow States to continue
to maintain a disparity in the benefits for the carried-over
recipients versus those recipients who came on the rolls
after December 1973 a disparity equal to the amount of
the original State supplementation.
Adoption of this recommendation would have two effects.
First, it would dictate to the States how they should spend
the taxes they assess on their residents. Such action would
distort the original concept of the program of separate but
complementary roles of the States and the Federal Government.
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2
Second, it would require the States to maintain payments to
people based on the date they started receiving assistance,
even though other residents of the States may have equivalent
needs and incomes.
The Council also recommends that the Veterans' Administration
(VA) be directed to study the problem of benefit reduction
rates caused by simultaneous receipt of benefits from pensions
for veterans with nonservice-connected disabilities and other
Federal programs. We share the concern of the Council. This
problem is being studied by the Veterans' Administration within
the context of total reform of the veterans' pension program.
The Agency has discussed pension reform with both the House
and Senate Veterans' Affairs Committees, and is committed to
continuing these discussions with Congress this year. The
relationship of veterans' pensions to other Federal benefits
can best be addressed in the course of these discussions.
To assess the tax burden on the elderly, the Older
Americans Act also required the Council to undertake a study
of the combined impact of all taxes on the elderly. Since
many of the tax recommendations of the Council are directed
towards State and local government, consistent with the en-
abling authority I am also transmitting this study to the
Governors and legislatures of the States for their
consideration.
In recognition of the Bicentennial and the many
contributions made by older Americans to the welfare of the
nation, the Council's annual report requests the promulga--
tion of a Bicentennial Charter for Older Americans. I have
asked Secretary Mathews of the Department of Health, Education,
and Welfare, in consultation with the Administration on
Aging, to promote discussion of these vital matters at forums
of older persons organized by Advisory Committees to the
Area Agencies on Aging.
The Federal Council on Aging Annual Report and attendant
studies reflect an earnest effort to deal with the lack of
equity and efficiency in the present patchwork of income
security programs. This unfortunate situation, which has
developed over the years, presents problems not only to the
elderly and other population groups, but to the taxpayer
who must pay the added costs resulting from such inefficiency.
My legislative proposals reflect careful consideration of how
best to resolve these issues, and I urge prompt action on
them by the Congress.
Additional mention should be made of the substantial
contribution of the two studies undertaken by the Federal
Council on Aging. The efforts of those that participated in
the studies will contribute to our effort to provide
necessary income and services to our less fortunate elderly
citizens in an efficient manner.
These reports will be sent for review and analysis to
those Federal agencies serving older persons. After this
review, decisions on the recommendations contained in the
Council's report will be reflected in future legislative
proposals and administrative actions of this Administration.
GERALD R. FORD
THE WHITE HOUSE,
AUGUST 3, 1976
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