Bowen Says Plan Would Ease Health Costs for Elderly : HHS Secretary-Designate Proposes Use of ‘Individual Medical Accounts’ Similar to IRAs

Otis R. Bowen, health and human services secretary-designate, Tuesday proposed the creation of “individual medical accounts,” similar in structure to Individual Retirement Accounts, as a long-term solution to the economic burden of catastrophic health care costs on the elderly.

“This is the type of program for the future,” Bowen told members of the Senate Finance Committee considering his nomination. “It would have to be almost in the next generation, but you have to start sometime.”

Annual Contributions

Bowen, a onetime “country doctor” who served as Republican governor of Indiana from 1973 to 1981, suggested that the program be designed similar to IRAs. He urged that an individual be permitted to make annual tax-sheltered contributions beginning between the ages of 35 and 45 “where money could be paid in during the highest earning years” to an account administered by the federal government, the private sector or a so-called “health bank.”

“The IMA would ensure that a person’s estate would remain safe, regardless of his ultimate health outcome,” Bowen said. “In the event of death before age 65, the amount could be returned to the estate. The tax revenue loss would be minimal.”

He noted: “This is one of my main priorities, to attempt to ease the burden on senior citizens in acute catastrophic care and also long-term care, such as for those with Alzheimer’s disease.”

He said he had not yet evaluated the costs of such a plan, adding: “It’s just an idea, but something that should be thought about.”

Nominee Praised

Bowen, 67, in his first public appearance since his nomination, was universally praised by senators deliberating his confirmation.

“The man does not have a blemish or an enemy,” Sen. Bob Packwood (R-Ore.), the committee chairman, said. “That is very unusual for someone in politics.” Packwood said the committee is expected to vote on the nomination today and predicted that confirmation “was all but assured.”

Bowen was nominated by President Reagan on Nov. 7 to succeed Margaret M. Heckler, who is leaving the Cabinet at the President’s request to become ambassador to Ireland.

In discussing the financial health care burden on the elderly, Bowen also referred to a recently published paper he has written proposing a program to expand Medicare coverage without increasing government costs. Under his plan, Medicare premiums would be increased by about $12 a month to provide full coverage against catastrophic illnesses for the elderly.

Patient Responsible

Medicare now covers the full cost of only the first 60 days in a hospital, with gradually increasing fees up to 150 days, after which the patient is responsible for the full cost.

Many recipients now purchase so-called “Medigap” supplemental insurance policies to protect against that risk, costing what Bowen said was “considerably more than the $12 a month additional (Medicare) premium.”

Under the new proposal, he said, the costs “would be spread over all 28 million Medicare beneficiaries.”

In response to other questions, Bowen said he opposes making the Social Security Administration, now part of the Health and Human Services Department, a separate agency because “there are so many programs in Social Security that are administered by HHS that it makes sense to keep them together.”

Also, he said, “the elderly need a Cabinet-level official to speak for them.”

Expenditures ‘Proper’

Bowen also said that government expenditures to assist low- and moderate-income individuals with family planning is “a proper and wise” use of government funds.

Bowen, who spent most of his career as a small-town physician, maintained a family practice during the 14 years he served in the state Legislature, including four terms as House Speaker.

He also was a clinical professor of family medicine at the Indiana University School of Medicine and served as chairman of Reagan’s Advisory Committee on Social Security, which in 1984 proposed major changes in Medicare to keep it from bankruptcy.