Ideology in Health Care

An ideological debate within the Administration threatens President Reagan’s commitment to reduce the devastating economic effect of catastrophic illness.

In his State of the Union message, Reagan ordered a study to find “how the private sector and government can work together to address the problems of affordable insurance for those whose life savings would otherwise be threatened when catastrophic illness strikes.”

But now Beryl W. Sprinkel, chairman of the Council of Economic Advisers, has mounted an assault on a plan to do just what the President proposed. The plan is a task force proposal for a low-cost government-sponsored extension of Medicare to protect at least some of the people who are threatened with economic ruin by long-term illnesses. Such government intervention would be “inconsistent with the Administration’s policies to strengthen competitive markets, to restrain the growth of federal spending, to use private-sector solutions whenever possible and to support the recently exacted tax reform,” Sprinkel wrote in a memorandum made public by the New York Times. Furthermore, Sprinkel asserted that “private insurance for nursing-home care now appears to be developing into a viable market.”

The facts argue otherwise. Of the 28 million Americans covered by Medicare insurance, only 170,000 have long-term catastrophic-care protection, according to an official of the Health Insurance Assn. of America. Only about 25% of the Medicare population now can afford the high cost of the private catastrophic-care insurance, according to an executive of the company offering the largest program. And even for that program 15% to 20% of the applicants are rejected because of negative health indications. Private health-industry experts have suggested publicly that their programs, at best, are not likely to be affordable by more than 50% of the population over 65. There will always be a role for private insurance to fill the gap left by federal programs, but it is clear that the only way to provide universal protection is through a voluntary federal program offered as part of Medicare.

That is precisely what the task force has proposed and what Dr. Otis R. Bowen, secretary of health and human services, is advocating. It would be a major first step, offering at a premium of less than $60 a year protection for all older Americans against health-care expenses in excess of $2,000 a year. That falls short of what is needed for those for whom even a $2,000 bill would bring financial ruin. But it is a starting point.

Bowen also is struggling against moves from the President’s budget office to reduce Medicare and Medicaid (Medi-Cal in California) without even consulting the experts in the Department of Health and Human Services. At a time when Medicare and Medicaid are falling far short of the goals originally set for them, any cuts must be resisted vigorously.