Report on the Implementation of the 1965 Amendments

In December, 1965 Bob Ball gave this talk to top SSA staff reporting on the accomplishments to date of the Agency's work to implement the 1965 Amendments--especially the new Medicare program. (Delivered to the Central Office Staff, Regional Assistant Commissioners, and Regional Representatives of the Social Security Administration, in Baltimore, Maryland.)


By Robert M. Ball
Commissioner of Social Security

This report summarizes the progress that has been made in putting into effect the Social Security Amendments that were signed into law on July 30, 1965.

No other Social Security Amendments have approached these in scope. The increase in social security benefits, including both cash benefits and health insurance, will be about $6 billion in the first full year of operation--$25 billion in 1967 as compared with an expected expenditure of $19 billion for 1967 under the old law.

But no matter how far-reaching a law may be, it is at first only words on paper. To translate those words into a program takes the hard work, imagination, and devotion to duty of thousands of people. And the people in the Social Security Administration have been doing a lot and have been doing it well.


Our First Big Task Accomplished--and on Time.

The payment of retroactive checks for 21 million beneficiaries was accomplished accurately and on time. So was the conversion of the going rate for the continuing beneficiary roll.

I believe it is safe to say that no other job like this, in terms of volume, has ever been done before anywhere. No beneficiary roll was ever before this large.

The job could not have been done without our having planned ahead for conversion of the benefit payment process from punchcard to electronic processing; it could not have been done, either, without the skillful and imaginative work of those in charge of the equipment and those charged with the planning.

This was our first big task--to get out the retroactive amounts and change the going rate for the one out of every 10 Americans who depend upon social security benefits.

But other parts of the job could not be delayed while we performed this task. For example, the children who were preparing to go to school again in September had to file applications, and we had to develop proof of school attendance and make determinations on their claims for payment. By the end of October over a quarter of a million applications for children in the 18-21 age group had been filed.

Reaching the People

A second important job in the very beginning was to get the right people to come to our 618 offices around the country; and without seeming unfriendly, to suggest to other people that they could be well taken care of without visiting the offices at a time when they might have overwhelmed the facilities and made it impossible for us to serve the people well.

Our information program has been of critical importance during this period. One of our first efforts at widespread informational activity under the amendments was the story of the do's and don't's for the potential beneficiaries, stressing that those who were already beneficiaries would get their increases without contacting us. It was important to get out the stories of rights and responsibilities under the new amendments to all who were affected; and we were ready to go with two basic leaflets. One of those described the new health insurance program, and the other described, as briefly as possible, all the amendments.

To date, over 25 million of these leaflets have been distributed throughout the country. Television and radio spots, newspaper articles, magazine pieces, speeches--all of these were in high-gear production as soon as the law was signed.


Even had there been no health insurance program among these amendments, the other provisions would have constituted a tremendous challenge. But the challenge of the new health insurance program dwarfs everything else. So I would like to report to you more specifically on the various aspects of the administration of that program.

As I hope most Americans are learning, there are really two separate health insurance programs for older people in these amendments. One, the basic hospital insurance program, has to do with hospital and related care; the other, the voluntary supplementary medical insurance program, has to do mainly with the payment of doctors' bills.

We have one set of administrative problems for the hospital insurance part of the program, and we have a different set of problems for the voluntary supplementary medical insurance part.

I think it would be helpful if I organized my report on the health insurance program into five major topics:

  1. Getting applications from potential beneficiaries and determining their eligibility;
  2. Getting the providers of service and the fiscal intermediaries under the basic hospital insurance program ready to do their part;
  3. Working with the carriers and the providers of other health services under the voluntary program so that they will be ready to do their part;
  4. Taking the necessary administrative actions that are internal to the Federal Government; and
  5. Assuring wise and expeditious policy development.

I. On the Matter of Applications

The hospital insurance program is automatic in its protection of most people 65 and over in the sense that they will not have to pay specifically for the protection. They will receive it either because they have been covered by social security or railroad retirement, or they will have it paid for from general revenues. Those not on the benefit rolls of either the social security program or railroad retirement will need to file applications to establish their eligibility, as contrasted to social security and railroad retirement beneficiaries, who do not need to establish eligibility for that part of the protection. Eligibility for the voluntary supplementary protection must be established in every case.

Our first big job is to get applications from those older people who have to file to establish their eligibility for the basic hospital insurance program; and the second and concurrent job is to get applications for the voluntary supplementary plan. On the latter score, we have to get to as many as possible of the 19 million people who will be 65 or over when this program goes into effect in July 1966. We have an obligation to inform virtually every person 65 or over that he is eligible for coverage under the voluntary supplementary medical insurance part of the program and to tell him about his rights under the basic hospital insurance part.

We have until March 31 of next year to get this story across; the first enrollment period ends at that time. The penalties for failure to act on time under the voluntary plan are severe. In general, unless people who are 65 or over sign up for the voluntary plan by March 31, they will have to wait two more years before they can sign up; and when they do sign up, they will have to pay higher premiums.

You will be interested to know that we have worked out ways to reach individually, either by personally addressed letters or, in some few instances, through small groups, all but 600,000 or 700,000--that is, all but about 4 percent--of the 19 million people who will be 65 or over on July 1 of next year.

That is just the beginning, because there is nothing that guarantees that all those we reach will understand their rights and what they should do; but it does mean that we can be sure of putting the information, and in most cases an application, into the hands of all but about 4 percent of the potential beneficiaries. Between September 1 and October 15 we mailed a special punch-card application form, together with a background pamphlet, to 15 million social security and railroad retirement beneficiaries on the rolls.

We now have returns from 9.5* million in this group on this first mailing; and nine out of ten of them have indicated that they want the supplementary insurance. I rather doubt that at any time in history more than 8 million people, in the course of about 12 weeks, have ever before signed up to pay $3 a month on a continuing basis for anything.

*As of December 9, 1965.

We plan to make a second mailing, no later than January 10, to those we have not heard from, and we are studying on a sample basis why it is that some people whom we have contacted have not responded, and why others have indicated that they do not want the coverage. We would not want someone to miss an opportunity because of misunderstanding. Of course, if we find out that people do understand and still do not want the program, that is their right and we would have no concern.

There is a total of nearly 4-1/2 million people who need to file applications for the basic hospital insurance protection (and also, if they elect to do so, for the supplementary voluntary protection). We have worked out a variety of ways of reaching these people.

For example, 800,000 of the group will be reached- -largely through personal interviews --because they will be filing applications for cash benefits between now and the time the program goes into effect.

Another 1.1 million will be reached on an individual basis because they are welfare recipients. We have a special program, which will be operated State by State, in cooperation with the Welfare Departments. They will contact each of these 1.1 million people to explain to them what the State Welfare program intends to do about the voluntary coverage--either buying in for the whole group or otherwise, usually, allowing the $3 premium payment in the assistance allowance. They will also tell the assistance recipients what they need to do to get the hospital insurance protection, to which they are entitled without any payment.

We have a joint project in process with the Civil Service Commission in which information will be mailed to the over 300,000 civil service annuitants over the age of 65 who are not social security beneficiaries.

Also, on November 29 we began a direct mailing to another 1.2 million people over 65. We have searched our magnetic tape records and obtained names and addresses of people over 65 who are insured under social security but who have not filed applications for benefits, presumably because they are still at work and so could not have gotten cash benefits if they did apply. We will now be telling them that they are entitled to hospital insurance whether they retire or not and that they need to consider whether they want the supplementary medical insurance. We will also be stressing that they will not lose under the cash benefits part of the program through filing promptly.

The various mailings that I have referred to so far account for all but about 1 million of the people who will be age 65 when the program goes into effect. We are also working with State and local retirement systems about mailings to their beneficiaries.

To try to reach the rest, we are going to mail to the executives of all the homes for the aged and skilled nursing homes of the country information about the program for their residents, with an indication that our district office personnel would be glad to go to the homes in order to take applications. And we have in mind preparing special material for physicians to have in their offices to answer inquiries from older patients. Then we have about ready to go a joint project with the Office of Economic Opportunity in which they will hire older people to assist in arranging group meetings for hard-to-reach older people, in locating shut-ins, and so on.

All in all it would seem reasonable to expect that we can reach on an individual basis all but about 600,000 or 700,000 of the approximately 19 million we have to reach. Perhaps we will directly reach even more. In addition to the direct contacts, our information program is moving ahead vigorously. We are putting out information every day through mass media--through the press, radio, television, magazines, pamphlets, speeches, posters, and so on. We will keep this large-scale informational program going in order to fill any gaps and to supply additional reminders to those who have heard from us directly.

Identification Cards

In late January or early February we expect to start mailing identification cards to those people who have by that time had their eligibility for the basic hospital plan determined. The card will show that the person is eligible for the hospital insurance and also show whether the person is covered for the voluntary plan. It will be similar in purpose to Blue Cross-Blue Shield cards.

II. Getting Providers and Fiscal Intermediaries Ready to Do Their Part under the Hospital Insurance Program

There is a tremendous amount of work to be done to get the hospitals, nursing homes, and home health agencies ready to participate in the program when it becomes effective next July.

We first mailed a general information pamphlet and a question-and-answer booklet to the 10,000 institutions in this country that are listed as hospitals, to 15,000 nursing homes and to about 1,000 home health agencies. And three weeks ago we mailed to the same institutions another pamphlet which focuses on their rights, working through their associations or groups to nominate fiscal intermediaries to perform major administrative functions under the program. These fiscal intermediaries, rather than the Social Security Administration itself, will handle the actual dealing with these institutions under the hospital insurance program in most instances; they will generally be either Blue Cross or commercial insurance carriers. They will have the primary function of paying the bills. If we agree that a nominated intermediary can carry out the job in a way that is efficient and effective for the total program, it will be given this function and in some cases additional functions as well.

An individual hospital does not have to go along with the nomination of a fiscal intermediary made by its association or group; it can decide to select some other intermediary that has been approved or to deal directly with us.

The next step for the providers of service is for the provider to file an application asking that a determination be made as to whether it is eligible to participate in the program. The law sets certain minimum standards; and the Secretary may establish certain additional standards in the area of health and safety. A hospital that meets accreditation standards of the voluntary accreditation procedure is automatically included if it meets one additional requirement--that of having a utilization review committee.

The task of looking at the individual institutions--nursing homes, hospitals, and home health agencies--will be done by State agencies under contract with the Federal Government. We have written the Governors of the 55 jurisdictions--States and territories--asking each one to identify a State agency for the purpose of carrying out this work; and I am happy to report to you that we have designations from 53 jurisdictions at this point. We have already signed 32 agreements with State agencies and agreements with other agencies are very near completion.

So, as soon as we get out applications to the providers of service so that they can indicate their desire to have eligibility determinations made, we will be ready to go in this area.

One final step will be necessary: Once we have received an application and have established the eligibility of an institution, we will write back informing the institution of its eligibility and whether or not any association or group of which it is a member has designated a fiscal intermediary--and whether or not the fiscal intermediary has been approved.

Also at this point we will include an agreement for the institution to sign, in which it will agree not to charge people for the services we are reimbursing it for and to abide by the nondiscrimination requirements of Title VI of the Civil Rights Act.

III. The Voluntary Program--Working with Carriers and Providers

In the voluntary medical part of the program, too, major administrative functions--notably the handling of claims and the payment of doctors' bills--will generally be performed by third parties.

Here we will undoubtedly have a combination of the commercial insurance companies, Blue Shield organizations, and group health prepayment plans. These will be paid administrative costs for performing defined functions for the Government.

We have published a statement of the broad criteria which these third parties will be expected to meet to be considered for work in this area, and we have invited formal proposals from those interested.

We are also putting together a pamphlet to be sent to the 200,000 physicians in the country, since they will be operating in connection with both the basic hospital insurance part of the program and the supplementary medical insurance part.

They will need to understand the rights of their patients, the payment process in the voluntary part of the plan, the alternatives that are available to them, their role as certifying physicians in relation to hospital and nursing home care, the function of utilization review committees, and other pertinent matters.

Medical groups and physicians throughout the country have already been most helpful to us. As you know, we are leaning very heavily upon them for advice and counsel every step of the way as we bring this program into being.

IV. Internal Administration Matters

As you know, the President had announced an internal reorganization of the Social Security Administration just a few days before the signing of the amendments. This reorganization was for the purpose of putting the organization in a position to take on its additional responsibilities and to accomplish certain other purposes, both centrally and in the field.

Because the task we face is so great, we cannot possibly accomplish all the work without more money and more staff. We expect by next July 1 to have on duty a net increase of some 8,000 employees over and beyond the 35,000 who were on duty when these amendments were signed into law. About 5,500 have already been hired and are at work. More are coming on each day.

We have already planned the opening of some 80 additional offices around the country, and additional points at which people can get service. Many of these are already in operation. Our offices have established evening and Saturday hours, the better to serve the public.

All over the organization people are working overtime, and they are doing so because everybody recognizes that this is the only way to get the job done. We just could not do the job solely by hiring additional people.

The last point in the area of internal operation is that our systems planning for the health insurance program is proceeding rapidly. The decision has already been made that we will maintain the records centrally for both parts of the health insurance program, so that the records will be available to all third parties regardless of where the person moves, and so that we can rapidly give the information that is needed on such matters as prior use of services.

An extensive statistical program has been developed to get the information we will need to study these new programs; and we are confident we will be able to carry out the record-keeping part of the job well and on time when the program starts.

Who will do what and where, both in terms of our own role and that of the Blue Cross-Blue Shield and the private commercial companies, has been rapidly falling into place, and the design nears completion.

V. Policy Development

The final topic I want to comment on is the process of policy development.

In the new health insurance program, there are obviously a great many areas, both large and small, that require interpretation and development. Many of these are sensitive for the doctors, hospitals, nursing homes, and patients. And many of the policy decisions that must be made in these areas will have great influence on other organizations and other programs.

For these reasons, as well as because it is sound administration, we have taken great pains to consult with all the interested groups throughout the country as we have gone about developing policy.

First of all, the important policy areas have been the subject of intensive work by social security staff people, helped and backed by the staff of the Public Health Service and, where appropriate, the Welfare Administration.

Then there have been extensive consultations with groups with particular interests, and with outside consultants. The American Hospital Association and the American Medical Association have each established special committees to work directly with us on these policy matters.

Following these activities, we have convened nine working groups, representative in each case of the major professional and institutional interests. Typical groups will have on them people suggested by the American Medical Association, the American Hospital Association, the commercial insurance companies, Blue Cross, Blue Shield, the Public Health Service, the Welfare Administration, and the American Nursing Home Association, and will include representatives of the nursing profession, various specialists within the health professions, and experts that we ourselves have selected.

These nine groups have developed with us refined policy positions, alternatives, and background material in each of the most critical areas. They have worked on such matters as the conditions which hospitals will need to meet in order to participate in the program, what will be required of physicians in the way of certification, cost reimbursement principles, procedures for the payment of physicians, special questions connected with psychiatric services, and many, many others.

The contributions of all participants in these work groups have been given in a constructive and helpful spirit, and the people in all of the organizations are cooperating.

All of this in the area of policy formation is preliminary to consideration of the policy questions by the statutory Health Insurance Benefits Advisory Council.

This Council is charged with giving us advice on administration and regulations --The Council met with us for the first time on Friday and Saturday, November 12 and 13. We had some orientation sessions and then they went right to work on some of the most important policy issues. They met again on Sunday, November 21, and will reconvene on December 17, 18, and 19.

The Council is an outstanding group of leading experts and representatives of professional fields in the area of health care and health insurance. The Chairman is Kermit Gordon, Director of the Bureau of the Budget in the Kennedy and Johnson Administrations and now Vice President of the Brookings Institution, who is an outstanding economist. The Council met in a spirit of harmony and cooperation and has made good progress.


All in all, I think we are well on our way. What we have done so far is good; the organization has a right to be proud of itself. We could not have done what we have without the cooperation, and the willingness to put out with all one has, of hundreds and thousands of people throughout social security. It could not have been done without the spirit of "let's get the job done" rather than concern for who gets the credit.

In the days ahead we will need this spirit even more than in the days that have passed. We will need the support and help of each employee, of the union, and of management. We will need imaginative thinking and individual contributions from workers at every level. For the job ahead is greater than what we have so far done. We face great difficulties, but I have a confidence in our people that matches these difficulties.

Let us, as we work, remember that each has a part in the whole effort, and that the job cannot be done without the help of each, whether you are a punch-card operator in the Bureau of Data Processing and Accounts or whether your job is in the files, whether you have the responsibility to supervise others or to perform a journeyman's job, whether you write procedure or carry it out. Each job is essential. It is essential because it is needed to serve the American people, and particularly the elderly retired people, the widows and the orphans, and the disabled of the country.