Conferees OK Big Medicare Benefit Hike

House and Senate conferees Wednesday agreed to the biggest expansion of Medicare benefits since the program began in 1965, voting for unlimited days of hospital care and a ceiling on elderly Americans’ bills for treatment by doctors.

Formal approval of the biggest social program enacted in the eight years of the Reagan Administration is expected next week in the House and Senate. Dr. Otis R. Bowen, secretary of health and human services, endorsed the bill and said he will recommend that President Reagan sign it.

“This will become the first new domestic dollar Ronald Reagan has spent on people, and I tip my hat to him,” Rep. Dan Rostenkowski (D-Ill.) said after the conference ended.

Beneficiaries to Pay Cost

The Medicare expansion would be paid for by the 32 million Medicare beneficiaries themselves--those over 65 and the disabled of all ages. The program is intended to be self-financing because Congress and the Administration wanted to avoid worsening the federal budget deficit.

The bulk of the financing burden would be borne by the 40% of the elderly who have enough income to pay federal taxes. They initially would pay, on a sliding scale, up to $800 a year for a single person.

The new program, known as the “catastrophic care” bill, would provide protection against financial ruin for those who suffer acute illness. However, it would not pay for expenses in nursing homes, the most common cause of financial impoverishment for the elderly and their families.

Under the plan, a Medicare enrollee who enters a hospital would pay $580 for the first day of care, starting in 1989. All succeeding days would be free, no matter how long the patient remains in the hospital. The first day’s payment would rise each year with inflation. Under current law, the patient pays $540 for the first hospital day. The next 59 days are free, then the patient pays $130 a day.

A limit of about $1,400 a year would be set for personal spending on doctors’ bills, beginning in 1990, under the legislation. Once a patient has spent the deductible amount in a year, Medicare would pay all additional doctor’s charges. The current system requires the patient to pay 20% of physicians’ bills after satisfying a $75 yearly deductible.

Prescription drugs would be covered by Medicare for the first time, as would mammography, a vital test for detecting breast cancer in women.

Payments for Drugs

The drug program would begin in 1991, with the government paying 50% of the cost after patients had spent $600 in a year. The government’s share of the payment would rise to 80% by 1993. The yearly deductible would increase with inflation.

Medicare would pay up to $50 toward the cost of mammography, the first time a preventive procedure has been covered.

The expansion of Medicare has been a long sought goal of senior citizens’ groups, including the 29-million-member American Assn. of Retired Persons.

“AARP members have repeatedly expressed concern about their needs for protection against high prescription drug costs, large doctor bills and long hospital stays,” said Horace Deets, the organization’s executive director. “This bill represents major improvements in Medicare coverage of those needs.”

Poor to Be Aided

In addition, the legislation breaks new ground in safeguarding the health of the poor elderly, according to Rep. Henry A. Waxman (D-Los Angeles). The government would pay the Medicare premiums, deductibles and co-payments for all persons over 65 whose incomes fall below the federal poverty line. This coverage, which would be phased in over four years, means that the elderly living in poverty would have complete Medicare coverage without spending any of their own funds.

The same hospital, doctor and drug benefits will be extended to pregnant women and to infants in families with incomes below the poverty line.

The Medicare expansion would be financed through premiums charged to those enrolled in the programs. All beneficiaries already pay $24.80 a month for inclusion in Part B, which finances physician coverage. Added to this cost, which increases each year with inflation, would be a new premium to pay for the expanded benefits.

Monthly Charge Rising

The monthly charge next year is expected to be $30.90, according to preliminary congressional staff estimates. It will rise to $42.60 by 1993.

In addition to the monthly charge, paid by everyone, there will be a supplemental premium linked to income.

About 40% of the elderly, generally individuals with incomes of $13,000 or more and couples with incomes of $20,000 or more, pay federal income taxes. They would pay a sliding-scale premium under the conferees’ legislation.

Starting next year, the premium would be 15% of the federal tax obligation. For example, a couple that owes the government $500 in taxes would have to pay an additional 15% or $75. The couple’s total tax bill thus would be $575.

$800 a Person in Taxes

The maximum premium would be $800 a person, or $1,600 for a couple. The premium, in effect, would be a new tax for the affluent elderly. They would be paying for their own expanded benefits and for a large share of the cost of extending the new benefits to their poor contemporaries. The 15% rate for the supplemental premium would rise in stages to 28% by 1993. In that year, the maximum premium would be $1,050 for a single person or $2,100 for a couple.

Rep. Pete Stark (D-Oakland), a prime author of the House version of the bill, said that the legislation completes protection of the elderly against the financial dangers of acute illness, conditions requiring treatment by a physician or a stay in a hospital. Except for “areas around the edge,” such as mental health coverage, the catastrophic protection is “as complete as needs be,” Stark said.

Brainchild of Bowen

The legislation, approved by large majorities in the Democratic-controlled House and Senate, was the brainchild of Secretary Bowen, the soft-spoken family doctor and former Indiana governor, who first proposed a catastrophic care plan and sold it to President Reagan. The Democrats added a drug benefit and lowered the ceiling on out-of-pocket spending, but the basic plan was Bowen’s idea.

“You launched us on this crusade,” Rostenkowski, chairman of the House Ways and Means Committee and co-chairman of the conference panel, told Bowen after the compromise had been reached. “I just think you’re a great American.”

The House and Senate conferees, Republicans and Democrats, all gave Bowen a spontaneous round of applause.