Congress is moving ahead rapidly to complete action on legislation that would save Medicare patients billions of dollars in doctor, hospital and prescription-drug costs. It would be the most extensive expansion of Medicare benefits since the program was established in 1965. And the most novel.
In both House and Senate versions all of the increased benefits would be paid for by Medicare beneficiaries themselves, both through increases in existing Part B premiums and through a special supplemental premium based for the first time on the income of the individual.
The legislation would cap out-of-pocket hospital and doctor expenses at less than $2,000 a year--$1,700 in the bill approved by the Senate Finance Committee and now awaiting floor action, and $1,587 in the more generous legislation that has already cleared the House. Because both bills go beyond the proposals originally made by Dr. Otis R. Bowen, secretary of health and human services, and subsequently endorsed by President Reagan, the President threatens a veto.
There are significant differences between the House-passed bill and that approved by the Senate Finance Committee, but the Senate is expected to use floor amendments to add some of the services provided by the House. That is a good idea.
Perhaps the most controversial element is the coverage of prescription-drug expenses for outpatient care. Under the House bill, 80% of the cost of these prescriptions would be paid by Medicare after $500 had been expended in any calendar year. The Senate bill does not provide for this coverage. The President, armed with what appear to be inaccurate estimates, has based his veto threat on this proposal, arguing that it would be a budget buster. The sponsors, however, are confident that it can be funded through the increased Part B Medicare premium proposed in the bill, and their arguments appear sound. Costs of this protection will indeed rise, but that is a solid argument in favor of providing this protection.
The conference committee that will iron out differences between the Senate and House bills will need to look carefully at the drug issue from two aspects. One is the problem that would be created as AIDS patients become eligible for Medicare; the cost of AIDS-related drugs is as high as $1,000 a month, and would require supplemental federal funding if it were not to bankrupt the program funded under Part B of Medicare. A second consideration is what to do about the prescription-drug benefits now paid by some companies, along with other benefits, for their retired employees. These employees would suffer a real loss in benefits if they had to participate in a pay-as-you-go federal program, which eventually would cost higher-income retirees more than $1,000 a year in premiums. They also would lose equal, or better, benefits now paid by employers.
The various bills are called catastrophic health insurance. In fact, none of them address the ultimate catastrophe: the cost of long-term nursing-home care for persons with such diseases as Alzheimer's. But that does not diminish the importance of this legislation as a useful step, providing at least protection against catastrophic costs for doctors, hospitals and prescription drugs--a $6-billion-a-year burden.