President Signs Bill Expanding Medicare Aid

President Reagan Friday signed a bill giving 32 million Medicare beneficiaries unlimited days of hospital care and putting a cap on spending for doctor bills, declaring that the law would replace “worry and fear with peace of mind.”

The catastrophic coverage law, the biggest expansion of Medicare in the program’s 23-year history, is the major piece of new social legislation enacted during the Reagan presidency.

The Medicare changes “will help remove a terrible threat from the lives of the elderly and disabled Americans, a threat of an illness requiring acute care, one so devastating it could wipe out the savings of an entire lifetime,” Reagan said during a bill-signing ceremony in the White House Rose Garden.

The ceiling for hospital and doctor bills that Reagan originally proposed was lowered by the Democratic-controlled Congress. Congress also added new benefits, including coverage of prescription drugs.

Warning about potential runaway expenses from the new benefits, Reagan said: “We have no real way of knowing how much these services will cost.” A jump in expenses “could be more than a budget problem; it could be a tragedy,” he said. “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’re trying to help.”

Medicare beneficiaries themselves--29 million persons over 65 and the disabled of all ages--will pay for the new program through higher monthly premiums and a special surtax. The current monthly premium, now $24.80, would rise by $4 next year, increasing by another $10.20 a month by 1993 to $39.

Taxpayers’ Heavy Burden

Those who earn enough to pay federal taxes, about 40% of the population over 65, will bear the heaviest financial burden, in the form of a special new tax beginning in April, 1990, for income earned during 1989. The new levy would be a surcharge of 15% on the person’s federal tax liability. For example, a person over 65 who owed $1,000 in taxes would pay another $150 for the new Medicare program. The maximum surtax payment would be $800 for an individual. The surtax rate rises to 28% by 1993.

Major features of the catastrophic coverage act:

--Unlimited days of hospital care, after the patient pays $560 for the first day, starting in 1989. Under current law, a Medicare enrollee pays $540 for the first day, gets the next 59 days free, and then pays $130 a day.

Ceiling on Doctor Bills

--An annual ceiling of $1,370 for the beneficiary’s share of payments for doctor bills. After the cap is reached, the government pays all additional charges. Under current law, the beneficiary pays 20% of doctor charges, with no limit on total payments during the year. (The patient is still responsible for charges in excess of the fees recommended by Medicare.)

--Medicare coverage of prescription drugs for the first time, with the government paying 50% of the charges in 1991, after the patient has paid the first $600 in a year. The government’s share will rise to 80% by 1993, with the deductible increasing with inflation.

--A new respite care benefit, with the government paying for the costs of 80 hours a year for a nurse or a health aide to come into the home to give the family some time off from caring for a patient.

--Unlimited days of care in a hospice for a terminally ill patient. The current benefit is limited to 210 days.

Coverage of Mammograms

--Coverage of routine mammograms, an important screening procedure for breast cancer in women, starting in 1990, with a payment up to $50. This is a new benefit.

--An expansion of skilled nursing care after an illness to 150 days, compared with the current limit of 100 days. A doctor must certify that medical care is needed.

However, the bill does not cover the potentially most devastating financial blow to the elderly, the prospect of an extended stay in a nursing home for custodial care. The cost averages $22,000 a year and is not covered by Medicare or most private insurance policies.

Custodial care typically is for the chronically ill who cannot care for themselves, such as a patient rendered helpless by strokes, or victims of Alzheimer’s disease, who suffer progressive mental and physical deterioration.

Acute Illnesses

For acute illnesses--those requiring treatment by doctors or hospitalization--the new law “completes the (financial) safety net Medicare was designed to provide,” said Rep. Pete Stark (D-Oakland), a key author of the legislation. The $10-billion annual cost is less than half the price tag that would have been required to offer the same protection from private insurance coverage, he said.

Rep. Henry A. Waxman (D-Los Angeles) said the new law is a good step forward but that Congress should now deal with devising protection against the financial burden of nursing home expenses and with the strain on families struggling to care for a patient at home.

Safeguards for Income

Besides expanding direct benefits for medical care, the new law also safeguards more of the income of a person whose spouse goes into a nursing home where the bills are paid by Medicaid, the federal health program for the poor. To qualify for that Medicaid program, now the couple must spend all their savings but $1,800 and devote almost all of their income to the nursing home bills.

The states now set the level of protected income for the spouse at home, which in some states is as low as $325 per month. Under the new federal law the spouse at home will be allowed to keep at least $786 a month of the family income, starting in 1989. Under current law in California, a spouse can get $534 a month in income.

The bill also helps about 2 million elderly and disabled persons who live below the federal poverty line--which is $5,410 for an individual--but currently have too much income to qualify for Medicaid, whose eligibility levels are set by the states. During the next four years, they would be given full, free Medicare coverage, without any personal expenses such as premiums or co-payments.