net result of that is that ultimately and often much too soon, it is the taxpayer and the overburdened social security system that picks up the slack for the lack of an insurance program, that continues into retirement.

Now, we are very fortunate because the negotiations of contracts, where I come from in Springfield, have included medicomp and other supplementary insurance programs for retirees. But I believe in Vermont that is the exception and not the rule.

So any thought that is given to pension reform, I would strongly urge you to include that crucial health care component, and just not to overburden you with statistics, but just to show you what happens is I know you are aware of already to a great extentthat here in this State we started 14 years ago with a $16 million medicaid program. We are now up to $84 million in the year that begins July 1.

Medicaid is the insurer of last resort. When there is no insurance anywhere, it is ultimately the taxpayers who pay for the insurance program, which is medicaid, that is taking over. And we are picking up as taxpayers the lack of the insurance programs in the workplace. And that needs to be remedied.

I am not talking about national health insurance, I am not talking about putting the entire burden on the employer. I am talking about employee-employer shared cost insurance. We find, and experts in the health field, that even those who have the opportunities to pick up on their own steam the insurance program, that premiums are just too much to carry, and after the first year they tend to drop it. And nongroup insurance in this State, in the Blue Cross area alone in the past year and a half increased by 60 percent, the premiums. And that kind of situation must be addressed it seems to me in any kind of pension reform.

Second, and lastly, as far as social security is concerned, it is really time to stop the rhetoric about regulatory reform, and let's start doing it. We have been hearing more and more talk for the last 2 or 3 years that regulations are at the bottom of the problem, and they are, in many ways. We are squandering and wasting money today because of the regulatory burdens that are placed on us, regulations that don't make any sense. And we are wasting a substantial part of that $84 million in this little State of ours where we don't need to do that.

Let me give you just a microexample, because I am sure you are tired of listening to these global figures. With the help of the visiting nurses, I have reduced the issue to its smallest component.

We have in Springfield 132 senior citizens in two buildings. Last year in those two buildings, 24 persons received reasonably regular visits from the visiting nurse. We have incidentally 400 such communities in Windsor County, at 12 different locations. So it applies countywide as well as in Springfield.

Of those 24 people who were seen in their individual units by a visiting nurse at $32 per visit, at least half did not need to be seen in their own apartments. And the conservative estimate on the part of the visiting nurse director indicates that eight, without any question, didn't have to be in those apartments, at $32 a visit, plus mileage, plus the time that it took.

We could run a clinic once a week in a room that already exists in both of these senior citizen housing units, and every one of the other 10 in Windsor County, and do it for $15 an hour.

Now, she costed out for me the microexample of the 24. We spent last year $4,544 providing a service that identically could be provided for $2,130. So we threw away more than half of those dollars. Precious health care dollars, we threw away $2,414, we wasted them. And I use the word very specifically. We wasted them-not through administrative foul-ups, not through incompetence, not through somebody putting the money in their pocket. But we wasted them because the visiting nurses service will not be reimbursed by medicare or medicaid in a clinic, nor will other insurance carriers reimburse what they do in a clinic.

This kind of luxury has got to stop. It has just got to stop. Because they are going bankrupt in the health care system, because of these kinds of examples. That little microexample of $2,414 going down the tubes, can be quantified throughout our county, our State, and our country.

Anything you can do to help assist from the Federal level, to bring some logic, some sense, to this issue would be appreciated, because we already have the compassion, the skill, the know-how, and the dedication to do the task at home.

Congressman, I thank you for the time, the opportunity, and I hope I have not gone over my 5 minutes.

Mr. JEFFORDS. No, you have not. Thank you.

I want to say that you have put your finger on a very, very critical issue. That is that we have to provide health care to those people who need it in the best way we can. But there are many ways that things have gotten out of control, where a lot of those very valuable dollars are not being used to the best extent possible. And it is very important that we try and take care of that. There is a little bad news.

Yesterday we passed a budget which will increase the share the State has to pick up. So there is going to be an increasing emphasis by the State on trying to bring these things under control. I know the Governor is deeply upset at what we did yesterday in the medicaid area and the food stamp area, increasing the demands upon the State in many ways. You are going to have to grapple with those problems. I know you will do the best you can.

Thank you very much for coming.

Mr. MAY. I appreciate again the opportunity. I hope I will have the opportunity to grapple with those problems next January in another capacity.

Thank you, Congressman.

STATEMENT OF JOSEPH HOWRIGAN, PROJECT DIRECTOR,
SENIOR COMMUNITY SERVICE EMPLOYMENT PROGRAM

Mr. HOWRIGAN. I am Joe Howrigan, the project director for the senior community service employment program. Mr. Chairman, I would like to express my appreciation to you for holding these hearings today, especially here in Vermont, in tandem with our sister State, New Hampshire.

The elderly in rural New Hampshire and Vermont seem to want and need Congressmen who can demonstrate their ability to stay in close touch with them. I can vouch of the voluminous mail I receive from Jim Jeffords and also the participants in the community service employment program about the problems being addressed here today. Countless reports from Presidential Commissions and Conferences, Senate and House committee hearings have been held. And I must presume on my part anything I might say today has not already been said before and much more eloquently.

Benjamin Disraeli once said there are lies, damned lies, and statistics. Those of us who have been around for a little while are not in the least surprised by these madly confusing reports originating in Washington these days about the concerns of our elderly. We know that being elderly is a roller coaster ride, full of heady highs and heart sinking-lows.

We have heard that song before, generally sung the loudest by the most ill informed. The Reagan administration issued last week the final report of last year's White House Conference on Aging, concluding that the problems of the Nation's elderly were overemphasized and the social security system should be strengthened. The document did not suggest how to do that. The report went on to say that older Americans are "the wealthiest, best fed, best housed, healthiest, most self-reliant older population in our history."

I, as an observer to the White House Conference on Aging, from Vermont must have attended another conference, for these were not my conclusions nor my impressions working with the 250 elderly participants of my program, the senior community service employment program.

The final report of the White House Conference on Aging seems to be in complete contradiction of the survey of delegates prepared by the staff of the U.S. Senate Special Committee on Aging. Among the report's final recommendations are a call for a long range effort to keep the social security system from becoming insolvent and an tend to forced retirement at any age, which is the reason we are here today to address.

How sensitive a political issue social security is was demonstrated again last month when Congress backed away from considering a proposal endorsed by the White House to save $40 billion in the system. Yet unless Congress acts in the next 12 months, the monthly checks that now go to 36 million Americans may not get sent out. After decades of overambitious expansion, social security is quite simply out of ready cash to get through the 1980's.

By July 1, 1983, the trust fund will be nearly empty, and the social security checks that our elderly Vermonters receive, many of whom depend on these checks for most or all of their income, would fall behind in paying rent, food, and fuel bills. Incidentally, the very first social security check, No. 1, went to a lady in Brattleboro, Vt., in January 1940, in the amount of $22.54.

Despite widespread alarm over the impending financial crisis in the social security system, one has to conclude that its problems are more political than economic. Else why instead of focusing on reforms, the Congress has decided to do nothing until after the No

vember elections, on social security. Unless Congress acts then, the social security trust fund could well run out of money by July 1983. Since social security is ultimately a political issue, a few issues should be addressed; one, bring all the Government workers into the social security system. Two, stop double dipping. Three, provide incentives for people to work longer by building up their credits or benefits so that you can induce people to work longer. People are better off if they stay in the mainstream and work longer or be provided part-time work such as the senior community service employment program.

Reform medicare costs, to come out of the general revenues, since the benefits you get are not wage related, they depend on how sick you get. Stop pushing the elderly into the underground economy. Abolish the means test program. Put a Federal income tax on benefits for those people who don't rely on social security as their only income. Tax employers' contributions. Currently the employers' contribution is not included in the employee's income and the benefits from these contributions are not taxed.

The reason this Congress and this administration cannot take a comprehensive interrelated approach to the problem is that the Democratic leadership wants to make social security a 1982 campaign issue. What is needed is a centrist coalition of liberals and conservatives which was demonstrated in the 1977 congressional legislation and the Budget Reconciliation Act of 1981.

Someone has remarked that present debate over social security is more like two men at the end of a straw, one blowing and the other sucking. The only real question left is when will Congress face up to social security reform, when will Congress decide that the problem today is not financial, but political, and which congressional Member is willing to bite that bullet.

Thank you very much.

Mr. JEFFORDS. Thank you. Very excellent words. I am sure you have expressed the feelings of many that we must deal with the issue. I think Congress recognizes that. Many thanks.

Mr. JEFFORDS. Mr. Clark now is a New Hampshire witness. We are glad to have you here. You missed the New Hampshire people who testified. We are pleased to let you testify now.

STATEMENT OF JOHN J. CLARKE, JR., BALDWIN & CLARKE, PENSION CONSULTANTS, INC., BEDFORD, N.H.

Mr. CLARKE. Thank you. I appreciate very much your giving me the right to make this statement. I think all of us today are quite concerned about the retirement system. My remarks are going to address legislation that currently is before the House Ways and Means Committee, specifically the Pension Equity Act of 1982, which Representative Rangel has entered into.

Mr. JEFFORDS. You will be pleased to know we had four witnesses with similar expertise as you that went over it tooth and nail. But you go right ahead.

Mr. CLARKE. Well, my attempt is not necessarily to deal with all the specific provisions of the bill but to deal with the philosophical basis of the bill and discuss it and its inadequacies as bad legisla

tion. I will be brief and not necessarily read from the text verbatim, but primarily try to give you the essence.

Mr. JEFFORDS. Your entire statement will be made part of the record.

Mr. CLARKE. First of all, Representative Rangel did not consider in drafting this legislation the idea of enlightened self-interest which really motivates whom and action, being involved in the capitalist system. His legislation primarily is designed to remove incentives and motivations from people investing capital and trying to create qualified retirement or pension programs for its employ

ees.

By his legislation, imposing restrictions upon the pension field today, he is going to hamper a great deal employers from wanting to maintain or install qualified retirement plans. There will be no motivation for the employer to enter into an overhead program such as a retirement plan is.

It is my contention that when ERISA was passed we saw many pension plans-the Employment Income Security Act of 1974when that was passed, many employers, because of the liabilities that law placed upon them decided to terminate such plans. There were tens of thousands of people who lost benefits they had accrued under those programs. This bill in its current form if passed would clearly triple or quadruple the effects ERISA created at that time. We are now getting employers getting back into retirement programs, now that they understand they are not as onerous as they seemed to be when ERISA was first passed.

The second premise of bad legislation has to do with one of capital formation. This country has worked very hard to try to create means for generating capital that can be used to be invested back into the economy to create jobs and services which the business community provides. And by removing the incentive from the qualified planner, employers are not going to be putting capital back into the system. And it will not be available to be used to provide jobs and support the capitalist system as we currently provide for it today.

Third, the bill practices discrimination of the worst kind. It singles out a type of business form, specifically a corporation that would be utilized by architects, attorneys, accountants, sales representatives, medical and dental profession, and treats them differently under this proposed legislation.

The only basis why this particular group of individuals should be singled out for special treatment is to politically try to make this legislation more palatable to the electorate or their representatives to support such legislation.

Finally and most disturbing to one who is directly involved in the administration of qualified retirement plans is the fact that the bill is unworkable from an administrative standpoint. It requires that employers maintain records of the accrued social security benefits which the employees have earned when they transfer from one employer to another. Currently, the social security system cannot provide, except within 1 to 2 years of normal retirement, exactly what the projected benefit will be for a retiring employee. The only thing the social security system is able to provide you with today is if in fact they have recorded the correct amount of