Catastrophic Care Cost Projections Soar

The Congressional Budget Office will soon report that estimated five-year costs for catastrophic-illness coverage under Medicare will soar to $45 billion, or $15 billion more than expected when the bill passed last year, Rep. Harris W. Fawell (R-Ill.) said Wednesday.

The Bush Administration, which has projected greater costs than the budget office, has raised its five-year estimate to more than $55 billion, sources said Wednesday.

Increases of this scope would compound the problems of the beleaguered program. Many elderly Americans have protested the surtax some of them must pay to help finance the measure. The surtax can rise to $1,600 a year for higher-income couples.

Revision, Repeal Efforts

Republicans on Capitol Hill have led efforts to revise or even repeal the 1988 law. Reps. Fawell and Bill Archer (R-Tex.) and Sen. John McCain (R-Ariz.) have demanded suspension of the surtax. Rep. Brian Donnelly (D-Mass.) wants to kill the law altogether.

Leading Democratic sponsors of the measure, such as Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) and Rep. Pete Stark (D-Oakland), until recently had resisted the idea of making changes, but in the last few months agreed to lower the surtax.

With five-year costs of $45 billion, it would be far more difficult for Congress to cut the surtax without jettisoning major program benefits or repealing the law. When the House Ways and Means Committee voted recently to cut the surtax to allay criticism from the elderly, it was assuming much lower five-year costs.

A big cost increase also would make it more difficult for Congress and the Administration to meet overall federal budget targets.

The budget office had no comment on Fawell’s statement, saying that the new estimates have not been released. But sources familiar with its latest calculations said the cost rise to $45 billion “is in the ballpark.”

A House Ways and Means Committee aide said the budget office estimates are not final and could be offset somewhat by reduced Medicare hospital costs and savings on Medicaid resulting from the 1988 law.

Until recently, the law’s congressional backers had expected that revenues from the surtax and from a monthly Medicare premium designed to cover catastrophic-illness benefits would exceed program costs over the first five years.