February 9, 1989 | Executive Memorandum on Social Security
Means C ommittee ranking minority member, would delay implementation of the law by one year while a commission studies its impact. Freezing at 1989 Levels. One problem with such "time out" bills is that because the law has already gone into effect, on January I o f this year, some Medicare patients have been receiving the new benefits. As a result, if Congress were simply to repeal the entire law, it would have to cancel benefits already being received. A better alternative would be for the new benefits to be froze n at 1989 levels, while retaining the flat $4 increase in the monthly premium (rising to $7 in 1993) needed to fund them. Congress could then repeal the income surtax and buy time to consider further changes in the catastrophic legislation without reducing benefits currently being received by patients. As the law now stands, this could be done without undermining Medicare finances because the whole package of new benefits is to be phased in over several year& The most desirable but least expensive benefits, which expand hospital and skilled nursing coverage, take effect this year, and could be funded by the monthly premium increases aIonej according to projections by the Congressional Budget Office. The less important, but much more expensive benefits, such a s the cap on total physician expenses and the new prescription drug coverage, do not take effect for at least another year. Better Proposals. After freezing the new benefits at 1989 levels and repealing the surtax, Congress could take a serious look at re s tructuring the Medicare program to provide the elderly with more appropriate health care protection. Numerous proposals for doing just that were advanced during the two years in which Congress and the Reagan Administration developed the catastrophic legis l ation. Among these: * * Restructure the deductibles and coinsurance in Medicare so that middle - and upper-class retirees pay a greater share of their routine medical expenses out-of-pocket. Medicare could then use the resulting savings to increase covera g e for the poor elderly and finance catastrophic hospital care for all retirees needing it - without resorting to increased premiums or new taxes. * * Change the minimum standards for Medicare supplemental (Medigap) policies, as set forth in the 1980 Baucu s Amendment, to require coverage for catastrophic hospital stays of more than 60 days. To cover the cost of this new benefit, insurers should be allowed to charge higher deductibles for such non-catastrophic services as out-patient physician care. In their haste to buy the votes of elderly Americans with an expansion of Medicare, Congress and former Health and Human Services Secretary Bowen repeatedly rejected such sound ideas. This failure to consider alternatives produced legislation that was not only bad policy but bad politics. The Bush Administration and the new Congress should learn from the debacle and calm the anger of America's elderly by giving the nation real Medicare reform. Edmund F. Hais1maier Policy AnalystF or futher information: Edmund F. Hai simaier, "Catastrophic Health Legislation: Congress's Case of Medicare Malpractice," Heritage Foundation Issue Bulletin No. 139, April 18,1988. Sandra Christensen and Rick Kasten, "The Medicare Catastrophic Coverage Act of 1988," Congressional Budget Offi ce Staff Working Paper, October 1988.