Reagan OKs Expansion of Medicare Aid : Adds Warning About Necessity to Keep Costs Under Control

Associated Press

President Reagan today signed a major expansion of Medicare to provide insurance against lingering major illnesses but warned future Presidents and Congresses to keep the cost down lest it grow into “a program we can’t afford.”

“Every Administration since the Medicare program was passed has worried about the seemingly uncontrollable cost increases in our government health care programs,” Reagan said at a ceremony in the White House Rose Garden.

“Whoever the President in office, program costs have exceeded the best congressional budget estimates,” he said. “Unless we are careful, it is possible that aspects of this legislation will do the same.”


First Overhaul Since ’65

The bill is the first substantial expansion of Medicare since it was established in 1965.

Reagan, a longtime foe of Medicare expansion, noted that the legislation provides new benefits for the nation’s 32 million Medicare recipients, including prescription drugs and care provided to patients in their homes.

“We have no real way of knowing how much these services will cost,” he said. “So if future Administrations and Congresses aren’t diligent, these new benefits could contribute to a program we can’t afford.

“This could be more than a budget problem. It could be a tragedy. The program, after all, is to be paid for by the elderly themselves. So we must control the costs of these new benefits or we’ll harm the very people we are trying to help.”

Social Security Hikes

Medicare enrollees will pay for the additional benefits through a flat increase in monthly Social Security premiums and an additional premium on the approximately 40% of the elderly who pay federal income tax.

The flat increase will be $4 a month in 1989, climbing to $10.10 in 1993. The sliding scale premium is projected to rise from a maximum of 15% of regular income tax liability in 1989 to about 28% in 1993.

The new program provides full hospital coverage after a once-a-year deductible. The deductible is estimated at $564 in 1989 and is designed to rise with hospital inflation. Medicare now pays full charges for no more than 59 days a year. The recipient is subject to a deductible for each hospitalization.

Payments to Doctors

Medicare now pays 80% of approved doctor bills after a $75 deductible. This will continue to be the case for the first $1,370 a year, but above that the legislation provides that Medicare will pay the approved bills in full. The recipient will still have to pay any amount over the fee approved by Medicare.

The measure also provides a new benefit in which Medicare will pay half of outpatient prescription drug costs in 1991 after a $600 deductible is met. The government share rises to 60% in 1992 and 80% in 1993.

Another new benefit is so-called respite care, covering up to 80 hours a year for a nurse or home health aide to relieve a family caring for a patient at home. It will be available to those who exceed the limit on out-of-pocket expenses for doctors’ care or the prescription drug deductible.