Democrats Would Halt Catastrophic Care Except for Drugs, Kill Surtax

House Democratic leaders, in a desperate bid to save some semblance of Medicare’s catastrophic care program, offered a plan Wednesday to eliminate a controversial surtax on the elderly while dropping most key benefits except prescription drug coverage.

“The best part is the prescription drug program, and that’s what we’re saving,” said Rep. Pete Stark (D-Oakland), an author of the new plan.

The shrunken version of catastrophic care will be offered as an amendment on the House floor next week with the blessings of House Speaker Thomas S. Foley (D-Wash.) and Majority Leader Richard A. Gephardt (D-Mo.). It represents a last-ditch effort by catastrophic care supporters in both parties to avoid total repeal of the legislation enacted by Congress just a year ago.

The core of the original catastrophic care plan--364 days a year of free hospital care and a ceiling on personal spending for doctor bills--would be eliminated under the new Democratic plan. The benefit cuts would save enough money to eliminate the controversial surtax, ranging from $22 to $800 a year, to be levied on Medicare beneficiaries who pay federal income tax.

The surtax has generated a tremendous outburst of protest among older persons, causing many members of Congress to join a veritable stampede for repeal. About 40% of Americans over the age of 65 would pay the surtax.

Opponents of the legislation were not placated by the truncated proposal. “They’ve taken catastrophic health occurrences out of the catastrophic care bill,” said Rep. Harris W. Fawell, (R-Ill.) a leader of the repeal forces. “They are still obtusely and obstinately wrong.”

The new Democratic plan is carefully crafted to give House members a chance to vote on both sides of the controversial issue.

When the current House Ways and Means Committee catastrophic care bill is taken up on the House floor, members first will consider an amendment calling for total repeal, a popular position with senior citizens who are angered by the surtax.

Next, the new version of catastrophic care will be offered as a final, “king-of-the-hill” substitute amendment. Members can vote for that amendment and restore catastrophic care.

The new proposal depends for its financing on the flat premium, $4 a month this year and rising to $10.20 in 1993, paid by all 33 million Medicare beneficiaries. The flat premium is far less controversial than the surtax and furnishes enough funds to pay for prescription drug benefits.

Starting in 1991, Medicare would pay for 50% of drug costs after a beneficiary pays the first $800. The government’s share would rise annually, reaching 80% in 1994.

The plan retains other benefits from the current catastrophic care law, including an expansion of home care benefits for the acutely ill, some financial protection for the spouse of a person in a nursing home and Medicare payments for mammography screenings for breast cancer.

The proposal was prepared by Stark, chairman of the health subcommittee of the House Ways and Means Committee; Rep. Bill Gradison (R-Ohio), the subcommittee’s ranking Republican member, and Rep. Henry A. Waxman (D-Los Angeles), chairman of the health subcommittee of the House Energy and Commerce Committee.

The proposed mini-version of catastrophic care would bear little resemblance to the package hailed last year by big majorities in Congress as the biggest expansion of health benefits since Medicare was created in 1965. The legislation’s key features dealt with limiting a beneficiary’s out-of-pocket spending on hospital and doctor bills during a major illness.

But supporters of catastrophic care indicated that they would accept the scaled-down plan as a better choice than total elimination of the expanded health benefits that they won last year.

“Those guys made us an offer we couldn’t refuse; the alternative was repeal,” said John Rother, director of legislation for the 30-million-member American Assn. of Retired Persons, a staunch supporter of the current catastrophic care legislation. “It is better than nothing, and it moves us in the right direction toward meeting chronic care needs” of people with long-term health problems, he said.

The National Committee to Preserve Social Security and Medicare, a vociferous opponent of the surtax, welcomed the new plan. The House should “go forward with this proposal . . . as definitely better than repeal,” wrote Martha A. McSteen, president of the 5-million-member national committee, in a letter to Rep. Sander M. Levin (D-Mich.).

Lawrence T. Smedley, executive director of the National Council of Senior Citizens, said that the new plan “preserves some of the most important protections of the current law while ridding it of its worst feature--the supplemental premium--which imposed an unfair tax burden on the elderly.”