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TABLE 4.-Estimated cost of benefit payments under present law and under bill, intermediate-cost estimate, high-employment assumptions

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1 Taking into account lower contribution rate for self-employed compared with employer-employee rate. 2 Level-premium contribution rate for benefit payments after 1955 and into perpetuity, taking into account (a) lower contribution rate for self-employed as compared with employer-employee rate, (b) existing trust fund, and (c) administrative expenses. These level-premium rates assume that benefits and payrolls remain level after the year 2050. Based on 2.4 percent interest rate for present law and House-approved bill and on 2.6 percent rate for committee-approved bill.

NOTE.-Figures for House-approved bill are based on 1954 earnings level. Figures for present law and committee-approved bill are based on 1955 earnings level.

Table 5 presents the cost of the benefits under the committeeapproved bill as a percent of payroll for each of the various types of benefits and is comparable with table 1 of the previous section.

TABLE 5.-Estimated benefit payments as percent of taxable payroll for committeeapproved bill, by type of benefit, intermediate-cost estimate, high-employment assumptions

[In percent]

Monthly benefits

Calendar year

Lump

Disa- Total sum death bility bene

Old-age Wife's 2 Widow's Parent's Mother's Child's payments freeze

fits

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1 Taking into account lower contribution rate for self-employed as compared with employer-employee rate. 2 Includes husband's and widower's benefits, respectively.

3 At 2.6 percent interest. Level-premium contribution rate for benefit payments after 1955 and in perpetuity, not taking into account (a) existing trust fund, and (b) administrative expenses. These levelpremium rates assume that benefits and payrolls remain level after the year 2050.

Table 6 gives the estimated operation of the trust fund under present law, according to the intermediate-cost estimate using the revised earnings assumptions (based on 1955 levels) and with a 2.4percent interest rate. Contribution income exceeds benefit and administrative expense disbursements in virtually all of the next 30 years. Accordingly, it is estimated that the balance in the fund would increase steadily until reaching a maximum of about $140 billion about 60 years from now, with a decrease thereafter.

TABLE 6.-Estimated progress of trust fund under present law, intermediate-cost estimate, high-employment assumptions, 2.4 percent interest

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Table 7 shows the estimated operation of the trust fund under the bill according to the intermediate estimate (using a 2.6 percent interest rate) and is comparable with table 2 of the previous section. According to this estimate, contribution income exceeds benefit disbursements in almost every year during the next 3 decades (all years except 1959 and 1964 when such difference is small and is more than counterbalanced by interest receipts of the fund). As a result, the fund is estimated to grow steadily until reaching a maximum of about $100 billion about 55 to 60 years from now and then to decrease. This decline in the long-distant future indicates that, under the bill, the system is not quite self-supporting under a level-earnings assumption but is, for all practical purposes, sufficiently close so that it may be said to be actuarially sound. This general situation was also true for the 1950, 1952, and 1954 acts according to estimates made at the times they were being considered.

TABLE 7.-Estimated progress of trust fund under bill, intermediate-cost estimate, high-employment assumptions, 2.6 percent interest

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1 Including estimated effect of benefit changes in bill becoming effective in 1956.

Although the system under the benefit provisions of the bill is not quite in actuarial balance under the contribution schedule of present law, which is continued, it is very close to such balance. It would not seem advisable to have a higher ultimate employer-employee rate, such as 8 percent, which according to these estimates would overfinance the system.

E. SUMMARY OF ACTUARIAL COST ESTIMATES

The old-age and survivors insurance system as modified by the committee-approved bill has a benefit cost (on the basis of the continuation of 1955 earnings levels) that is about as closely in balance with contribution income as was the case for the 1950 and 1952 acts at the time they were enacted, and somewhat more nearly in balance than was the 1954 act. In other words, the system as it would be amended by the committee-approved bill is about as nearly in actuarial balance, according to the estimates made, as the previous acts when they were considered by the Congress. Although in all these instances, the system is shown to be not quite self-supporting under the intermediate estimate, there is very close to an exact balance, especially considering that a range of error is necessarily present in long-range actuarial cost estimates and that rounded tax rates are used in actual practice.

The committee-approved bill, in liberalizing the benefits of the program, would add somewhat to its cost, but most of the increase would be offset by the reductions in cost arising from the extension of coverage made and the revised interest basis for investments of the trust fund. The actuarial balance of the system under the committeeapproved bill would be virtually the same as that of the present law was last year when this bill was initially considered and would be substantially improved over the situation when the 1954 amendments were enacted. The slight change in the actuarial balance of the system as between the committee-approved bill and the present law is so small that there is no necessity for a change in the long-range financing of the program, through the scheduled tax rates in present law.

IX. PUBLIC ASSISTANCE

The amendments in the committee bill to titles I, IV, VII, X, XI, and XIV of the Social Security Act would

(1) Provide separate matching for medical-care expenditures on behalf of recipients of assistance;

(2) Make explicit that services to return recipients of aid to the blind and aid to the permanently and totally disabled to self-support or self-care are objectives of these programs and that services to strengthen family life are a major objective of the program of aid to dependent children;

(3) Make two small additional groups of children eligible for aid;

(4) Authorize grants for cooperative research; and for training of public-assistance personnel;

(5) Extend the present matching formulas to June 30, 1959.

MATCHING OF ASSISTANCE EXPENDITURES FOR MEDICAL CARE

In titles I, IV, X, and XIV of the Social Security Act, Federal participation in assistance is limited by maximums on the amount of monthly payments to or on behalf of an individual. These maximums are $55 for aged, blind, and disabled recipients and lesser amounts for recipients of aid to dependent children. Since medical expenses for an individual may be high in one month (sometimes running to several hundred dollars) and small or nonexistent in other

months, and since many of the individuals with the largest medical needs also have maintenance needs of $55 or more, there is frequently little or no Federal participation in payments made by States for medical care. This has lim'ted the amounts of medical care that many States have been able to make available to recipients, and has almost certainly discouraged many of the States with less than average per capita income from assuming substantial responsibility for the costs of medical care for needy people.

The bill would provide Federal matching of expenditures for payments to suppliers of medical care separate from money payments to assistance recipients and would use an average basis for determining Federal participation in payment to suppliers of medical care. Large expenditures of this kind made by a State on behalf of some recipients could be averaged with small expenditures or no expenditures for other recipients. The Federal Government would participate in one-half of the cost up to an average expenditure of $8 a month per adult receiving aid and $4 a month per child. This assurance of Federal participation on an averaging basis should stimulate States to secure necessary care for recipients, particularly in States with relatively limited resources. Under this legislation States would be free to purchase coverage from any medical insurance plan. Under the bill all payments to suppliers of medical care would be matched under the separate provision. States would still be able if they chose to do so to include in money payments to recipients amounts to meet medical needs within the maximums on money payments specified in titles I, IV, X, and XIV.

SELF-SUPPORT AND SELF-CARE

Individuals who receive assistance are materially affected by the extent to which appropriate welfare services are provided by assistance agencies. Services that assist families and individuals to attain the maximum economic and personal independence of which they are capable provide a more satisfactory way of living for the recipients affected. To the extent that they can remove or ameliorate the causes of dependency they will decrease the time that assistance is needed and the amounts needed. For these reasons the availability of such services to families and individuals is a part of effective administration of the public-assistance programs and therefore a proper administrative expenditure by States in which the Federal Government shares. Similarly, in the aid to dependent children program, services to strengthen family life are an investment in future citizens.

While some such welfare services have been provided effectively in many States, these amendments should stimulate States to expand their services. The bill would amend the titles for the blind and the disabled to make clear that the provision of welfare services to assist recipients to self-support and self-care are program objectives, along with the provision of income to meet current needs. Similarly, the aid to dependent children title would be amended to emphasize that services to strengthen family life are included in the programs' objectives. The amendments will also make explicit that the Federal Government shares in the States' cost in providing these services. These amendments, coupled with those for training and research, should do much to provide a more constructive emphasis in these programs.

No similar amendment has been included for title I for the needy aged. In view of the characteristics of the group of aged recipients as a whole, self-support or even self-care objectives are not as applicable to aged recipients as in the case of the recipients under the other State-Federal programs. Nonetheless, services to aged individuals have been provided under title I of present law. It is not the intent of your committee to alter present practices under which the cost of services for aged individuals are shared in by the Federal Government as administrative expenses.

EXTENSION OF AID TO DEPENDENT CHILDREN

Two amendments have been made to the aid to dependent children title neither of which affects large numbers of children but both of which make some additional needy children eligible for aid. The first would permit Federal participation in assistance to needy children who are deprived of parental support or care for the reasons now listed in the law and who are living in the homes of first cousins, nieces, or nephews, thereby extending the degree of relationship slightly beyond the present law. This will permit additional children to have the advantages of life in a home maintained by close relatives. The second would eliminate the requirement that for a needy child between the ages of 16 and 18 to receive aid, he be in regular attendance at school. This would permit Federal sharing in assistance to such children unable to attend school because of illness or handicap, or because school facilities are not available.

GRANTS FOR COOPERATIVE RESEARCH OR DEMONSTRATION PROJECTS

Over 5 million persons receive payments of public assistance amounting to about $2.5 billion annually. Prevention and elimination of the needs of these persons pays large dividends both in human and in monetary values. Research and demonstration projects in such matters as causes of dependency and methods of eliminating them are one important aspect of a more constructive emphasis in social security programs. Research and demonstration projects in the coordination of planning between private and public-welfare agencies or the more effective administration of social security and related programs can help to prevent and reduce dependency.

The bill would authorize $5 million for the fiscal year 1957 and such amounts thereafter as the Congress may find necessary for grants to States, public, and nonprofit institutions for paying part of the cost of such research and demonstration projects. These grants should stimulate research in universities and research facilities, thereby contributing substantially to knowledge of the nature and causes of these problems, and of most effective ways of dealing with them.

GRANTS FOR TRAINING OF WELFARE PERSONNEL

A small percentage of the staff of agencies administering publicassistance programs have had any formal training relating to the duties of the positions that they hold. Yet a worker, on the average, is responsible for authorizing the expenditure of about $100,000 per year of public funds. An increasing number of trained workers is needed for the administration of public assistance, particularly if

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