Farming is one of the most hazardous of occupations and young beginning farmers who become disabled would be among the victims of this bill. They would be condemned to a lifetime of poverty and desperation.

Disability insurance, as it has been managed by the Social Security Administration, has been a conservative program with only those who are permanently and totally disabled qualifying for benefits. There is usually no hope that the disabled person can be rehabilitated and return to an occupation that would provide sufficient income for the disabled worker and a family.

The reduction in benefits proposed in H.R. 3236 may save some money for the U.S. Treasury, but it would be at the expense of the young families of disabled workers. It would be a severe handicap in the maintenance of stable homes and families.

The Board of Directors of the National Farmers Union approved a resolution on June 14, 1979, at a meeting in St. Paul, Minnesota, opposing the passage of H.R. 3236. In their resolution, Board Members stated that they felt that, although there might be some savings to the Social Security system as a result of this bill, the savings were not sufficient to justify the severe hardships which it would bring to the lives of disabled workers, those most in need of help.

NATIONAL MULTIPLE SCLEROSIS SOCIETY,
Washington, D.C., October 11, 1979.

Hon. RUSSELL B. LONG,

Chairman, Finance Committee,
U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: Enclosed is the testimony of the National Multiple Sclerosis Society concerning H.R. 3236. The denial of our request to testify surprised us, but we accept the assurance in the telegram indicating that our written statement will be "given the same consideration as though delivered orally".

We have concentrated our statement on what we oppose in H.R. 3236 because the issue of the cap on family benefits and the reduction of low earning dropout years would have such a harsh and discriminatory impact on persons who become disabled by Multiple Sclerosis. We intend to communicate with you and other members of the Finance Committee prior to markups concerning our support of many of the legislative changes as proposed in H.R. 3464, H.R. 3236, S. 591, S. 603, and S. 1643, especially as they focus on the partial removal of present work disincentives. Our separation of testimony and subsequent communications is for the purpose of conveying our view that no bill with Sections 2 and 3 of H.R. 3236 is supportable, even if it contains the best of all the other sections and bills.

The National Multiple Sclerosis Society is proud of its 34 year record on behalf of the one half million citizens who have MS or closely related neurological disorders. We have received splendid support from the public because we commit most of these charitable contributions to biomedical research concerning the cause and cure, and to direct services to persons affected by MS. We have chapters serving every county in the Nation, and send a newsletter to about half of our estimated 900,000 contributors. Our National Board of Directors includes some of the Nation's most prominent business and community leaders.

Persons who have MS, family members, voluntary leaders and staff of our Society, have been substantially involved in formulating and communicating the position of our Society on this issue. The matter is of extraordinary importance to us.

Sincerely yours,

SYLVIA LAWRY,
Executive Director.

WRITTEN TESTIMONY BY THE NATIONAL MULTIPLE SCLEROSIS SOCIETY, MISS SYLVIA LAWRY, EXECUTIVE DIRECTOR

Mr. Chairman and members of the Committee, on behalf of the National Multiple Sclerosis Society and the estimated one-half million citizens of this country who have been, or will be, affected by MS, as well as their families, and including citizens and their families afflicted with closely related neurological disorders, we appeal for your attention and careful consideration of amendments to the Social Security Disability Insurance law. If you take sufficient time on this matter, we believe you will discover that:

1. Sections 2 and 3 of H.R. 3236 are insensitive and inappropriate remedies to the problem of work incentives and will not produce the desired results.

2. There is no need to rush legislation which reduces future benefits. It does not produce savings in fiscal year 1980, and the DI trust fund is presently estimated to be in good shape for the next 75 years.

3. When the real facts finally break through, some of the misleading rhetoric on the positions which are defendable before the general public as well as before disabled constituencies will not include the contention that DI beneficiaries would earn more (net or gross) by not returning to work if they are able. Such a situation is almost impossible in the present law except in some unusual instances when the maximum family benefits result in an income which is less than one-half of the poverty level and also below what an employed individual would earn at the "minimum wage" level.

4. Disabled citizens and representative organizations are very strongly in favor of removing the work disincentives and improving the Social Security laws so that disabled individuals can contribute to their family income when and as they are able. We feel equally strongly about disabled individuals receiving insurance benefits sufficient to survive in a dignified manner when they are simply unable to be employed. H.R. 3236 does not meet this simple balance.

The National Multiple Sclerosis Society with chapters covering every county in the Nation, is a not-for-profit organization which will raise about 30 million dollars this year and spend nearly all of it on biomedical research related to finding the cause/cure, and for services to persons with MS. We have a proud and distinguished record among the major national health agencies. We have been and are the primary national group directly representing the interests of the estimated 500,000 persons with MS and closely related neurological conditions.

In this instance, we stand alongside every other agency we know representing disabled citizens in firm opposition to the proposed Social Security Disability Insurance Amendments as they come to you from the House, namely H.R. 3236.

Since MS is usually misunderstood, we are usually inclined to describe in some detail how Multiple Sclerosis affects people. We are goind to skip most of that and focus directly on how the proposed cap and the reduction of dropout years would affect future beneficiaries with MS.

We have opposed Sections 2 and 3 of H.R. 3236 because we feel they would be especially harsh on persons with MS and similar disabling conditions. While Section 2 (the cap on family benefits) would reduce benefits of "only" 25 percent of all future disabled beneficiaries, it would affect more than one-half of future beneficiaries, disabled by MS-and the reason is simple: MS usually strikes in the 20 to 45 year age bracket after people have started a career and begun a family.

Section 3 of H.R. 3236 (the reduction of dropout years) greatly diminishes one of the present laws' important adaptations to the clinical course of multiple sclerosis and other erratic and often progressively debilitating diseases. While this "adaptation" was completely unintentional-that is, dropout years were introduced for another purpose-it has tended to bring greater fairness to the calculation of benefit levels for those citizens whose diagnosis is MS. What often happens is that people with MS work an erratic pattern as the unpredictable exacerbations and remissions and resultant functionally disabling conditions permit. This obviously tends to produce some additional low earning years. Not infrequently, people with MS will accept employment substantially below their skill level to compensate for the effects of the disease or because of the general pattern of job discrimination. This, too, reduces the basis for computing "averaged indexed earnings." Eliminating or reducing the dropout years for people with MS would have the effect of creating a new work disincentive-in total contrast to the basic focus of the legislation. We favor a provision in the law which would protect persons diagnosed with MS from the potential of reducing their future benefit level by continuing to work after the disease begins to affect their capabilities; we believe such a provision could be devised to cover many other "permanent" disabilities.

Most workers do not pay much attention to the benefit levels of Social Security Disability Insurance because the chances are slight that they as individuals will need to apply for disability benefits. And most conditions which cause disability do not give direct warning or notice. Thus, most of the people who will be affected by H.R. 3236 are presently non-disabled and are represented in this matter by their labor union or church or organization looking out for their retirement and security program in general or by people and groups who bring expertise and experience to the field of Social Security law and regulations and programs. We represent people, may of whom have already had several attacks from MS and who contemplate the probabilities of their own future disability and need for these benefits.

For purposes of demonstrating how this proposed combination of cap on family benefits and reduction of dropout years will affect persons disabled with MS, we

constructed a realistic but hypothetical case. It follows a young male college graduate who married at age 24, has two children by age 28, has steady career progress, and then is hit by his first attack of multiple sclerosis. He works for another seven years on an erratic basis as the disease permits. At the age of 35, with two preteenagers, a wife not yet in the labor force, substantially increased medical and other related expenses, and an absolute inability to hold a job or even function by himself, he applies for Social Security Disability Insurance benefits. In nine of the last 15 years, he has paid into the Social Security at the maximum amount, and was very close to the maximum amount in another two of those years. Lower earnings in the remaining four years were associated with attacks of MS and the need to shift jobs several times as a direct result of the effects of MS, and possible to some degree the job discrimination he faced as a result of MS. He applies for DI benefits in January 1980, when he becomes unable to work or care for himself.

On a separate sheet, we are submitting the earning pattern of this case and the various figures necessary to calculate what the man would be entitled to receive in 1980 in maximum family benefits according to the present law and also if H.R. 3236 becomes law. It shows that under present law he would receive $806.42 per month in maximum family benefits (which will still be under the "poverty level" for a family of four in 1980). If H.R. 3236 became law, he would receive maximum family benefits of $677.58 per month; the difference between the present law and that proposed by H.R. 3236 is $128.84 per month, even though no amount of benefit reduction can be an effective incentive for this man to return to work since he simply cannot.

While such a person as this case proposes would be at the high end of the benefits level, under even the present law he would have an income which in gross dollars is less than one-third of what he probably would have been earning if MS had not hit him, and in this particular case, would have an income in real dollars of slightly more than half of the average gross amount he earned in the previous years. After one looks at the reduced expenses as a result of non-taxable benefits income and elimination of work related expenses, as well as the increased expenses unique to the disabling condition, including attendent care, transportation, barrier removal, etc., a comparison of the "net" incomes to support his family are probably close to the same proportion as the gross figures. The difference would be even greater if the same man had earned some money after school and during the summer during high school and/or college. The reason is that he would have more low earning years which he could not "dropout.'

The lower benefits resulting from the cap and/or the reduction of dropout years also would affect persons with MS who have earned at average and moderate wage rates. It would impact in a particularly destructive fashion on many young mothers whose employment, family and personal lives have been greatly altered as a result of MS; this is the case in spite of the provision related to dropout years while mothers are caring for children under the age of six.

We believe the Committee members and staff should request of the Social Security Administration case descriptions and actual earning records and benefit level provisions for a number of somewhat typical disability situations. It is our very strong conclusion that the more you are exposed to the real facts, the less acceptable as public policy you will find the proposed changes of H.R. 3236.

We believe you will discover:

1. It is almost impossible to receive higher DI benefits than wages from returning to work at the type of job one previously held. This is true even when all reasonable assumptions about net income are considered.

2. People receiving DI benefits are among the most severely disabled citizens; reducing benefits will not work as an incentive for most since they are simply unable to be employed on a full time basis. What is needed is a stronger public policy and program which enables such individuals to benefit from rehabilitation whenever possible and subsequently to work part time or as their disability permits without the threat of loss or reduction of future benefits. Removal of the disincentives is only one aspect of a complete plan for dealing with this very difficult problem.

3. Disabled individuals in general have incomes of about one-half the level of nondisabled persons. Moreover, most severely disabled persons have incomes below the poverty level, but would still be better off working than collecting DI benefits when or if they are able to work.

4. For people with MS there are a number of work disincentives in the Social Security Act, some of which would be reduced by the changes proposed in H.R. 3236. But these improvements do not ameliorate or counterbalance the especially harsh results which Sections 2 and 3 would have on persons with MS.

Much of the rhetoric and even some of the studies and reports on this subject are misleading or inaccurate or deceptive. For example, numbers of decision makers and staffers in the House still believe it was necessary to support H.R. 3236 in order to preserve the financial integrity of the trust fund, despite the fact that the trustees and even the Committee Report clearly indicate that is not the case. Reducing benefits has been supported by some people primarily as another addition to the cost reductions for the fiscal year 1980 budget estimates. In fact, it is not until subsequent years when savings would occur according to the Committee Report. The net effect of the bill for fiscal year 1980 is an increase of $25 million according to the Congressional Budget Office cost estimate in the House Committee's Report. Therefore, consideration of this bill does not need to be rushed to satisfy a budget resolution.

In conclusion, we want to reiterate the extraordinary concern we have with this matter on behalf of people with multiple sclerosis and their families. We urge you to outright reject H.R. 3236 and call for a new set of hearings in the second session of the Congress with the purpose of devising a legislative remedy which will deal with the problems in the present law without also doing real harm to many persons who are very severely disabled and their families.

We believe there are better solutions. We are prepared now, or within the next several months, to help devise better solutions. We appeal to this Committee to take the time to get the true facts before you propose to change the Social Security Disability Insurance benefit levels affecting some of the most severely disabled citizens in ths Nation.

HYPOTHETICAL CASE OF A DI BENEFICIARY WITH MULTIPLE SCLEROSIS WHO QUALIFIES FOR BENEFITS AFTER JANUARY 1, 1980

Assume a male college graduate, married at age 24, with two children by age 28, who experiences his first attack of MS at age 28. He continues to work when he is physically able thereafter as he experiences periods of exacerbations and remissions. He becomes more disabled and at age 35 he can no longer work or even care for himself. He is eligible for Social Security Disability Insurance benefits; in fact, he and his employer have contributed to the fund at the maximum amount during nine years and at nearly the maximum amount for an additional two years. The other four years his lower earnings were the result of the effects of multiple sclerosis.

Assuming the following pattern of earnings, under the present law he would be entitled to receive maximum family benefits of $677.58 per month, a decrease of $128.54 per month.

His gross income under the present law would be less than one-third of the amount he would most probably have earned if MS had not disabled him. His gross income under the present law would be 67 percent of his average indexed monthly earnings; a careful examination of the chart demonstrates that the benefit level is about one-half of what the man was able to earn in a good year after he was stricken with MS.

Present law. AIME = $1202.99: PIA $469.30; Max Family Benefit = $806.42 Proposed law (H.R. 3236) AIME $1085.78; PIA $451.72: Max Family Benefit $677.58. The bottom line is a disabled father whose family benefits are 16 percent less under the proposed law even though t absolutely unable to return to gainful employment.

STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

The NAM is a membership organization of over 12,400 members of every size and industrial classification located in every state. An additional 158,000 businesses are affiliated with it through the National Industrial Council. Our members produce approximately 75 percent of the goods manufactured in the United States, and over 80 percent have 500 or fewer employees. On behalf of these members, this statement is submitted to the Senate Committee on Finance during its consideration of the disability Insurance System.

This statement will address topics which the NAM knows are of major interest to this Committee, but we also believe that a few brief comments about the Social Security system generally are in order to put this statement on the disability program in proper perspective.

During the hearings which preceded the 1977 Amendments, the NAM made specific recommendations for Congressional action to solve both the imminent shortrange financing problems as well as the long-range deficits facing the system. At that time it was the disability fund which was facing the more severe short-range problem, as compared with the old-age survivors fund. The eventual legislation passed by the Congress and signed by the President did substantially include many of the NAM proposals which were important in restoring the solvency of the system.

The NAM opposed reopening all of the issues involved in Social Security financing in 1978. It continues to believe that thorough and careful study of the system such as that being done by the Committee presently will provide the opportunity for appropriate legislative action for issues which should be addressed by Congress. We believe that it is appropriate for this Committee to take up the disability question at this time. In the report, "Actuarial Condition of Disability Insurance1978," prepared for the Subcommittee on Social Security of the House Ways and Means Committee and dated February 1, 1979, it is estimated in 1978 that the outgo from the fund will be approximately $300 million less than expected. This is an encouraging indicator that such factors as better economic conditions and better administration are resulting in a slowing down of the rapid expansion of the disability system. It is impossible to predict whether the favorable 1978 experience will continue into the future, and the NAM believes that further action by the Committee is appropriate at the present time, especially in the area of benefit amounts limitations in order to achieve further cost reductions and better system design.

The NAM previously testified before the Subcommittee on Social Security of the House Ways and Means Committee in support of H.R. 3236, the Disability Insurance Amendments of 1979. this bill was subsequently passed by the House of Representatives. The NAM believes that this proposal represents a major step in improving accountability in the disability program and in providing a proper balance between disability benefits and incentives for returning to the work force.

While it will not reduce any benefits of current beneficiaries, the NAM believes that H.R. 3236 will result in long-run cost savings to the system and improve the operation of the system in carrying out its purpose. Such savings will be achieved at a time when weakened public support for Social Security can be strengthened by improving the system's fiscal integrity.

Congressman Pickle, the Chairman of the House Subcommittee, noted in his remarks at the opening of the Ways and Means hearings that there is evidence that. in 1977, 6 percent of disability awards actually increased the disabled person's aftertax income and almost one-fifth of the awards produced earnings replacement ratios of more than 80 percent. Such benefit levels, we believe, are too high and result in unnecessary increases in claim costs. Private insurance statistics show that plans with replacement rates in excess of 70 percent have disability incidence rates twothirds higher than the average, and plans with replacement rates below 50 percent have incidence rates one-third below average. Congress now has before it various proposals to limit the amount of disability benefits. We believe that there is a need to place a cap in the law similar to this proposal, and we support it.

H.R. 3236 proposes an 80 percent cap on AIME and a limit of 11⁄2 times the primary benefit. We believe that there is a need to place a cap in the law similar to this proposal, and we support it.