Reagan Scores House Medical Plan

Times Staff Writer

President Reagan on Saturday accused the House of passing a catastrophic illness plan that threatens to bankrupt the elderly and the Medicare trust fund, but he said nothing about a veto--perhaps because of the lopsided margin of the House vote.

“I think the American people are doing a slow burn over Congress’ failure to face up responsibly to the problems” confronting the nation, Reagan said in his weekly radio speech.

“The public’s temperature is going to rise even higher when it understands that Congress has been trifling with a plan to provide elderly Americans with insurance against catastrophic illness--a plan that can work without taxing the elderly into servitude.”


Sees Medicare Shortfall

Democratic sponsors of the measure contend that their plan would pay for itself through higher premiums charged better-off recipients, but Reagan predicted that it would cause a $20-billion shortfall in the Medicare trust fund by the year 2005.

As passed Wednesday by the House, the so-called catastrophic care bill calls for the biggest expansion of Medicare benefits since the program was begun in 1965. The 302-127 vote was well over the two-thirds of the House that would be needed to override a veto. The Senate Finance Committee has cleared a less generous bill, and a tough fight is expected when the full Senate takes up the legislation after the August recess.

Reagan, in using his weekly talk to rally public support for the Administration’s more modest package of health insurance, once again avoided mention of the Iran- contra hearings in Congress, which during the week revealed bitter divisions and intense Administration infighting over the making of foreign policy.

The Administration’s health insurance proposal would limit an individual’s outlays for Medicare’s “acute” services to $2,000 a year, with doctor and hospital bills above that figure to be paid by Medicare.

Coverage Would Increase

The House measure would set a lower maximum of $1,043 a year on doctor bills outside the hospital, and would require Medicare patients to pay for only one day of hospital care each year, no matter how many times they entered the hospital. Current law requires them to pay for the first day of each stay.

Reagan said the cost of his program would be less than $6 a month, or $70 in Medicare premiums next year.


“Although premiums as the years go by would rise to keep pace with program costs, they would remain affordable,” he said.

Reagan said the House replaced his $6-a-month premium with a surtax of up to $580 a year on a beneficiary’s income tax . He contended that the House plan would cost more than $10 billion in 1989, and nearly $100 billion by 2005.

“That means an elderly person with a $6,000-to-$14,000 income would have his or her marginal tax rates raised from 15%, as promised in last year’s tax reform, to 22% in a single year, and by 1992, to 25%” Reagan said.

Many Would Be Exempt

About 60% of Americans over 65 pay no federal income tax and thus would be exempt from the variable premium in the House plan--a fact that Reagan did not mention. Others would pay between $10 and $580 annually.

“A Medicare recipient with monthly income as low as $1,200 could have his or her income tax increased by $580 per year,” Reagan said. While neither the Reagan plan nor the one approved by the Senate Finance Committee covers any of the cost of medicines, the House measure would cover prescription drugs used outside the hospital. Under the House bill, a beneficiary would pay the first $500 a year of drug bills and Medicare would cover 80% of any additional drug costs.

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

Reagan said the “huge increase in taxes” required by the House measure still will not cover the program’s costs.


Sees Threat to System

“By 1995, the costs will be so great they will threaten the entire Medicare trust fund,” he said. “And, just after the start of the next century, in 2005, there will be a $20-billion shortfall--a shortfall that will have to be made up by more tax increases.”

In the Democrats’ weekly radio reply, Sen. Frank R. Lautenberg of New Jersey said the Administration’s budget is starving the nation’s transportation system, jeopardizing its air travelers and choking its roads.

Air control towers “are understaffed because the government has not invested in our air system,” Lautenberg said.

“While the skies threaten, our roads are choking--choking the circulation of people and goods that keep our economy healthy and productive. We need to rebuild our roads and bridges and renew our railroads.”

Lautenberg said that Reagan should reduce his speaking schedule and work with Congress on the budget. “This is where the budget mess was made,” he said. “This is where we have to clean it up.”