Backed by White House, Senators Vow Not to Repeal Catastrophic Care Program

WASHINGTON —  New life was breathed into the embattled catastrophic care program for senior citizens Thursday as the Bush Administration and key senators agreed that the new health benefit must be saved and began a renewed effort to curb its cost to taxpayers.

Lawmakers acknowledged that they face an intense backlash from senior citizens angered by the special surtax imposed to fund the new benefits. But in a session representing a key juncture for the program, members of the Senate Finance Committee vowed to resist pressure to repeal the law.

Backed by a new expression of support from the Bush Administration, committee members insisted that the dramatically increased coverage for hospital, doctor and drug bills is too important to abandon.

“I thought we did a wonderful thing” in creating the program, said Sen. Bob Packwood (R-Ore.), the ranking Republican on the committee.

Other members agreed. Congress should “neither repeal it nor should we shift the cost of the program to penalize those who can least afford it,” said Sen. Spark M. Matsunaga (D-Hawaii).

“My inclination is to change the program as little as possible,” said Sen. John D. (Jay) Rockefeller IV (D-W.Va.).

Will Seek to Cut Surtax

Sen. Lloyd Bentsen (D-Tex.), the committee chairman, said he would seek a substantial cut in the controversial surtax but warned that it inevitably would be combined with a reduction in benefits. A prime target for cuts is the new Medicare coverage of prescription drugs, scheduled to take full effect in 1991, when Medicare will pay 50% of bills in excess of $600.

“There’s going to have to be a lot of give and compromise before we bring back a consensus,” said Bentsen, who scheduled a closed-door meeting for today so senators can wrangle and negotiate in private.

The Administration wants the legislation untouched because the tax revenues it will generate in the early years will help with the budget deficit. Catastrophic care, like an insurance program, is “front loaded,” with more money collected in the early years to pay for benefits later. If Congress repeals the law, and the revenues aren’t collected, the deficit will breach the official spending limits for next year, according to the Administration.

“We oppose . . . any increase in the deficit,” said William M. Diefenderfer III, deputy director of the Office of Management and Budget, explaining why the President opposes changing the law. “The President wants the program to continue,” he told the Finance Committee.

However, the estimates of a surplus are “just a fantasy the Administration is hung up on,” said Rep. Harris W. Fawell (R-Ill.), one of the early leaders in the campaign to rewrite the law. Instead of a surplus, the catastrophic program will cost billions more than originally calculated because of sharply rising estimates of spending for drugs and skilled nursing care, Fawell said. The Administration is using old, unrealistic estimates in dealing with the fiscal 1990 budget legislation being prepared by Congress, he said.

After Oct. 15, when the budget legislation is scheduled for completion, “the fantasy will be over and we can go for repeal” on the House floor, Fawell said. The catastrophic care program provides unlimited days of hospital care after the patient has paid for the first day in the hospital, establishes a ceiling on out-of-pocket payments to doctors and offers Medicare coverage of drugs for the first time.

To finance the program, all Medicare beneficiaries pay a flat monthly premium, $4 this year, rising to $10.20 monthly in 1993. In addition, there is a special surtax, called a supplemental premium, paid by the 40% of Medicare beneficiaries who pay federal income tax.

Premium Tied to Taxes

The premium is equal to 15% of tax liability. For example, someone who owes $1,000 in federal taxes would pay another $150 for the special catastrophic premium.

This special premium rises with income to a maximum of $800 for an individual taxpayer and $1,600 for a married couple. It would be payable for the first time in 1990 on income earned in 1989.

Only 1.8 million of the 33 million beneficiaries would pay the maximum $800, according to figures issued Thursday by the Joint Taxation Committee of Congress. Some 19.2 million beneficiaries would pay no surtax, and another 6.8 million would pay less than $200 a year.

Nevertheless, the supplemental premium sparked a revolt among many elderly taxpayers, who gave members of Congress an earful of complaints during the August recess.