House OKs Wider Medicare Benefits : Catastrophic Care Bill Would Limit Hospital, Doctor Costs, Cover Drugs

The House, in what would be the biggest expansion of Medicare benefits since the program began in 1965, approved a bill Wednesday that would limit the cost of hospital and doctor care and cover the cost of some prescription drugs.

The so-called catastrophic care bill was passed by an overwhelming vote of 302 to 127, despite a veto warning by President Reagan, who called it much too costly.

All Medicare beneficiaries--27 million people over 65 and 3 million disabled people of all ages--would be entitled to the new benefits, but they would have to pay for them.

Premium Hike Proposed

The existing monthly premium, scheduled to reach $22.90 in 1989, would be increased by $2.60. And the 40% of Medicare beneficiaries who pay federal taxes would have to pay an additional premium.

“This is a proud day for senior citizens,” said California Rep. Pete Stark (D-Oakland), chairman of the subcommittee that prepared the legislation.

It seems virtually certain that some version of the catastrophic care legislation, which was initially proposed in more modest form by Health and Human Services Secretary Otis R. Bowen, will be enacted this year.

But there will be a tough fight in the Senate, where the Finance Committee has passed a less generous bill. The full Senate will take up the legislation after Congress’ recess in August.

As approved Wednesday, the House bill would require patients to pay only for the cost of the first day each year of hospitalization, now $520 and scheduled to rise to $544 next year. Starting next year, any additional days of care would be free, no matter how long a patient was sick.

Current law requires patients to pay for the first day of each visit to the hospital. The next 59 days are free and patients then pay $130 a day.

The change would benefit the 800,000 Medicare beneficiaries who are hospitalized more than once a year and the 150,000 who stay more than 60 days.

The House bill also would set an annual cap of $1,043 as of 1989 on payments by patients toward their doctor bills outside the hospital, provided those bills fall within the bounds of government-recommended fees. Medicare would cover 80% of the first $5,215, as it does now, but it would pick up all additional costs.

As under current law, patients would be required to pay all costs in excess of fee levels recommended by the government.

About 2 million people a year now spend more than the $1,043 cap in the House bill.

Covers 80% of Drug Costs

Medicare coverage would be broadened under the House bill to include prescription drugs used outside the hospital. The beneficiary would pay for the first $500 a year in drug bills; Medicare would cover 80% of any additional drug costs.

About 5 million Medicare beneficiaries now pay more than $500 a year for drugs.

Rep. Bill Gradison (R-Ohio), who helped develop the original version of the bill before the drug benefit was added, said that the House-approved bill “goes too far--it is weighted with costly add-ons. Congress must face the elderly and disabled and say, ‘resources are limited,’ ” he said.

In the Senate, the bill passed by the Finance Committee would not cover any of the costs of drugs. It would set a combined limit on hospital and doctor bills of $1,700, a less generous approach than the House bill’s limits of $544 on hospital costs and $1,043 on doctor bills.

The Reagan Administration proposal is less ambitious than either of the congressional versions. It calls for a $2,000 combined ceiling on hospital and doctor charges and does not include a prescription drug benefit.

Threatening a veto of the House bill, Reagan told Republican congressional leaders Tuesday that “one thing is clear: We are faced with a major Medicare expansion bill under cover of being called a catastrophic insurance plan for the elderly.” He said it would add $8 billion to the annual federal deficit by the year 2000 because the increased fee would not cover the rising costs of prescription drugs.

The Democrats who sponsored the final version of the House-passed bill stopped short of providing Medicare coverage for the most staggering financial burden for the elderly and their families--nursing home care, which may run $20,000 or $30,000 a year.

Neither Medicare nor most private insurance policies pay for the expenses of nursing homes. The legislation would establish a commission to study the issue.

Plan Would Ease Burden

But a provision developed by Rep. Henry A. Waxman (D-Los Angeles) would ease the financial burden on couples when one member enters a nursing home.

Medicaid, which covers medical costs of the poor, now pays nursing home costs when a couple has exhausted all but $1,800 of its assets, and the non-institutionalized spouse may be forced to live on as little as $200 a month. Under the bill passed by the House Wednesday, the spouse outside the nursing home could keep up to $12,000 in assets and $925 a month in earnings.

The House bill would also require all states to provide expanded Medicaid benefits for more than a million people over 65 who are living in poverty but do not have incomes low enough to qualify for welfare programs.

Waxman, who also played a pivotal role in developing the prescription drug provision, hailed the legislation as a “carefully tailored approach” that would close some “egregious gaps” in health protection for the elderly.

Republican opponents attacked the bill on grounds of cost. Rep. Judd Gregg (R-N.H.) called the Medicare expansion “the entitlement of the 1980s, and every decade seems to have one.”

Gregg said that the increase in the monthly premium would fall short of paying for the new benefits.

In addition to the $2.60 increase in the monthly premium of all Medicare beneficiaries, there would be a variable premium pegged to income. The elderly who pay no federal taxes--about 60% of all those over 65--would be exempt from the variable premium. Others would pay from $10 to $580 a year.

Several Republicans said that the House bill could become very costly because it would eventually pay for costly drugs for AIDS victims, who would become eligible for Medicare benefits as disabled persons.

If AZT, a new drug costing $1,000 a month or more, became “broadly prescribed, we have an obligation to provide this drug and it will be provided,” said California Rep. William E. Dannemeyer (R-Fullerton). “But we should not obligate the senior citizens to pay for it out of Medicare trust funds.”

Do Not Live Long Enough

Waxman said that most AIDS patients do not now live long enough to qualify for Medicare disability benefits, which are available only 29 months after diagnosis. As better drugs and therapies are discovered to prolong the lives of AIDS patients, Congress will decide the best way to pay for their drugs, Waxman said.

Before the House adopted its Medicare bill, it rejected by a vote of 242 to 190 a Republican substitute establishing a $2,000 cap on combined out-of-pocket spending and limiting the drug benefit to low-income people over 65.

The final vote for passage of the Democratic Medicare plan closely followed party lines, with 241 Democrats and 61 Republicans voting for the measure and 113 Republicans and 14 Democrats opposing it.