Catastrophic Care Tax Is Firm: Bentsen

Blaming wealthy retirees for most of the complaints, Sen. Lloyd Bentsen (D-Tex.) said today that he anticipates no changes in a new tax on older Americans that pays for protection against costs of catastrophic illness.

“There’s a vocal minority sounding off” about the tax, Bentsen, the chairman of the Senate Finance Committee, told reporters, adding that the outcry will subside once details of the program, which took effect Jan. 1, are better known.

Mail and phone calls are coming chiefly from “wealthy people who want it (the cost of the catastrophic protection) to be more heavily subsidized by taxpayers” in general, he said.

Bentsen was asked if the clamor would lead to repeal or modification of the tax. “I don’t think that’s going to happen,” he said, recalling that similar complaints were heard when Social Security and Medicare were enacted.

Although dozens of members of Congress have signed bills to repeal or change the tax, Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, has taken a stand similar to Bentsen’s.

Congress is hearing few complaints about the basic catastrophic protection program, which helps elderly and disabled Americans who are eligible for Medicare bear the cost of illnesses that otherwise would threaten their financial stability. The complaints are directed at the method of financing the program.

The lion’s share of the cost is paid by a surtax that falls on all those eligible for Medicare whose incomes are high enough that they pay at least $150 a year in federal income taxes. The surtax is 15% of the income tax in 1989. Next year it will rise to 25%, and each year after it could climb by as much as one percentage point a year.

Congressional aides estimate that about 40% of people over the age of 65 will pay the surtax on their 1989 income.

The maximum surtax on any person is $800 this year, or $1,600 for a couple if both spouses are eligible.