Medicare Expansion for Acute Coverage Urged

Health and Human Services Secretary Otis R. Bowen Thursday proposed a $1.8-billion expansion of Medicare, various tax breaks and other “options” aimed at increasing insurance protection for those hit with catastrophic medical expenses.

The long-awaited proposals for filling gaps not now covered by Medicare and private health insurance are expected to generate intense controversy within the Reagan Administration because in some cases they would enlarge the federal deficit and replace private insurance.

A Positive Step

Several key Democratic leaders in Congress, while saying that they think the government should do much more than Bowen suggested, nevertheless called the proposals a positive step and said they might give impetus to far-reaching legislation.

In a 117-page report, Bowen listed numerous options that President Reagan’s domestic advisers will consider in shaping final recommendations.

One major proposal calls for a boost in Medicare premium payments of $4.92 a month to finance expanded coverage. Medicare recipients, who now face unlimited out-of-pocket expenses for unreimbursed hospital and doctor bills, would be protected by a new $2,000-a-year cap on these expenses. The reimbursement Medicare patients receive frequently falls short of their actual bills because of an assortment of deductibles and payment limits.

At a news conference, Bowen described the proposed increase in Medicare premiums--totaling $1.8 billion a year--as “a very modest price to pay for increasing the elderly’s peace of mind.” He said that about 800,000 of the nation’s 28 million elderly Medicare beneficiaries currently have to pay more than $2,000 a year in out-of-pocket medical expenses.

To improve financial protection against long-term illness--particularly for nursing home residents, whose residential care is not now covered by Medicare--Bowen suggested the creation of tax-sheltered individual medical accounts to encourage people to save for the future. He also proposed other tax breaks to encourage people to buy long-term-care insurance--and to encourage insurance companies and employers to offer it.

He noted that nursing home expenses now average $22,000 a year per individual, with patients or their families having to pick up the entire cost unless the patient is poor and covered by Medicaid.

However, Bowen provided few specifics on how the individual medical accounts, similar to individual retirement accounts, or other tax breaks would work or estimates of how much tax revenue the federal government would lose through them.

The secretary also made proposals for offering protection to millions of Americans under 65 who are uninsured or underinsured. Options include financial incentives to encourage state-run insurance pools and offering full tax deductions for all employers who include catastrophic protection in their health plans. Currently, only partial deductions are permitted for unincorporated businesses and the self-employed.

Bowen said the problem of getting people to plan for long-term-care insurance is increasingly urgent because the number of Americans over 85 is projected to be 8.6 million in the year 2030, contrasted with only 2.7 million now.

Sen. Edward M. Kennedy (D-Mass.), incoming chairman of the Senate Labor and Human Resources Committee, called the proposals “a major step” that, if embraced by Reagan, would reverse Administration efforts to cut federal health-care programs. A Kennedy aide said the proposals, though “feeble,” might “provide the foundation for something that will really make a difference.”

Rep. Edward R. Roybal (D-Los Angeles), chairman of the House Aging Committee, praised Bowen’s “great personal courage” in advancing the proposals and said his panel will hear testimony about them as soon as possible.

A spokesman for the American Medical Assn. said that “we congratulate” Bowen for proposing the expanded coverage of acute illness.

Two other groups--the American Assn. of Retired Persons and the Blue Cross-Blue Shield Assn.--had mixed reactions.

An AARP spokesman said the proposed Medicare expansion is “a step in the right direction” but complained that the long-term insurance proposals address future problems, not critical present ones.

Conversely, a Blue Cross-Blue Shield spokesman supported the long-term proposals but criticized the suggested Medicare expansion, which would take away business from the 78 Blue Cross and Blue Shield agencies across the nation.

“We believe that the private Medigap market (for acute coverage) is generally working well,” the spokesman said.