Catastrophic Care May Become Voluntary

Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), facing a full-scale political revolt against the surtax used to pay for the new Medicare catastrophic care benefit, said Saturday his committee will consider allowing senior citizens to drop out of the program.

“I’ve set a hearing for July . . . to decide whether it should be made voluntary,” said Bentsen, who remains a strong supporter of the program. However, he and other backers are under great pressure from retirees and a restive Senate, which has voted twice this year to review the catastrophic care law passed by Congress less than a year ago.

Wants Reduction

Even if the Finance Committee decides to keep the program intact, Bentsen wants a reduction in the size of the surtax, which will begin next year and ranges up to $800.

The catastrophic care provision provides unlimited days of hospital care after the Medicare beneficiary has paid $560 for the first day. It also places a ceiling on out-of-pocket spending for doctors’ services and will offer Medicare coverage of prescription drugs for the first time.

A deficit-wary Congress in 1988 decided on a new financing method for a social program, requiring that the 33 million Medicare recipients pay the cost of their new benefit. All of them will pay $4 a month.

40% Will Face Surtax

In addition, the 40% of the beneficiaries who pay federal income taxes will pay a supplemental premium. It is actually a surtax. Starting next April, with the payment of taxes on 1989 income, the Medicare enrollee must pay $22.50 for every $150 in federal income taxes. The surtax rises with income, reaching a maximum of $800 for a single person and $1,600 for a married couple.

The prospect of paying higher taxes touched off angry protests among groups of retirees who already have medical insurance coverage in addition to Medicare. These include retired civil servants and military personnel and retired union members, who believe they will be paying substantial sums of money without getting significant new benefits.

For the great majority of those on Medicare, the new catastrophic coverage is “really a bargain,” Bentsen said. But the 40% of Medicare recipients who will be paying most of the new benefit’s cost through the surtax have been vociferous in their protests, arguing that it is unfair to ask them to subsidize the rest of the elderly population. It is not clear if a voluntary program would have enough participants to pay for the full benefits.

When Bentsen learned earlier this year that the surtax might produce a $3.8-billion surplus in five years, he called for a reduction in the surtax premium, hoping to defuse some of the attacks on the program.

Bush Opposes Change

However, President Bush declared his strong opposition to any change in the financing of the catastrophic program. The amount of the future surplus is uncertain, he said, because it is hard to estimate how much will be spent for the new drug benefit, which does not take full effect for several years. Administration experts believe that partial government payment for prescription drugs will increase the consumption of medicines.

The Senate is the most sensitive arena for those opposed to the financing mechanism. Proposals to alter, or kill, the catastrophic program can be attached as amendments to virtually any piece of legislation at any time.

House Backers Hold Ground

But such changes must be included in a new law and approved by both houses of Congress and signed by the President. In the House, the defenders of catastrophic care, led by Ways and Means Chairman Dan Rostenkowski (D-Ill.), have been successfully ignoring the critics. Unlike the Senate, the House has strict rules and procedures making it very hard to bring a repeal of catastrophic care to the floor without going through normal committee channels. And Rostenkowski, whose committee prepared the bill in 1988, has said the law should not be revised this year.