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OFFICE PRESIDENT
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
November 19, 1991
(House)
STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)
H.R. 3595 - Medicaid Moratorium Amendments of 1991
(Waxman (D) CA and 135 others)
The Administration strongly opposes H.R. 3595. If it were
presented to the President, his senior advisers would recommend a
veto.
H.R. 3595 would extend through September 30, 1992, the moratorium
on Medicaid regulations pertaining to the use of provider-
specific taxes and donations to increase Federal funding for
State Medicaid programs. The current moratorium would otherwise
expire on December 31, 1991. H.R. 3595 would also allow
voluntary contributions to be used as the State share for
Medicaid through December 31, 1992. In addition, a new and
permanent moratorium would be applied to any regulation changing
the treatment of intergovernmental transfers of funds as a source
of the State share of Medicaid costs.
H.R. 3595 is unacceptable legislation because:
-- Inappropriate State spending through these schemes, if
unchecked, could increase the Federal deficit -- adding an
estimated $5.5 billion this year and $40 to $50 billion for
FYs 1992 through 1996.
-- The bill violates the Budget Enforcement Act of 1990 (BEA).
It designates the provisions of the bill as emergency
requirements under the BEA and prohibits the added costs
from being counted under the pay-as-you-go provisions of the
BEA. In addition, H.R. 3595 includes a "directed
scorekeeping" provision that specifies the dollar amounts
that are to be used in estimating costs under the bill.
The President has stated previously that he would veto any
legislation that contained such a provision.
-- The moratorium on provider-specific taxes and donations was
established in 1988 and has been extended twice in
Administration-opposed provisions in OBRA 1989 and OBRA 1990
that received little congressional attention. Congress and
the States have been on notice since 1988 that the Federal
Government was planning to act in this area. Yet Congress
has twice extended the moratorium, declaring that more time
is needed to examine the issue. During this time, the
number of States with provider-specific taxes, donations
programs, or both has skyrocketed from seven States and $200
2
million in 1990 to over 40 States and an estimated $5.5
billion in 1992. Last year's moratorium alone resulted in
at least a tenfold increase in Federal funding associated
with States' use of provider tax and contribution programs.
Many more billions of dollars will be provided to the States
inappropriately through a distorted match system under
another moratorium.
-- A permanent moratorium on changing the treatment of
intergovernmental transfers is unnecessary and unwise. The
Health Care Financing Administration (HCFA) is not
eliminating the use of traditional intergovernmental
transfers in Medicaid. Under the HCFA regulation, public
funds transferred between different levels of local
government will continue to be matched by the Federal
Government.
State donation and provider-specific tax programs, if unchecked,
will undermine a basic premise of the Medicaid program -- that
States have a stake in the costs of the program. The
Administration cannot condone the alteration of the Medicaid
program through financing mechanisms that go beyond the
conventional matching rate structure. States are accountable for
the appropriate management and financing of their programs and
the Federal Government is responsible for holding them
accountable to operating fairly and appropriately in the Medicaid
partnership.
*******
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
November 25, 1991
(Senate)
STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)
H.R. 3595 - Medicaid Moratorium Amendments of 1991
(Bentsen (D) TX)
The Administration strongly supports the agreement that was
reached with the National Governors Association. This agreement
allows the Medicaid program in every State to continue their pre-
September 30, 1991 policies until at least October 1, 1992, and
in some cases through June 30, 1993. Further, the agreement
equitably addresses the individual fiscal concerns of the States
while assuring the long-term structural integrity of the Medicaid
program.
The compromise agreement should be passed this year before
Congress adjourns. This is a major health and fiscal policy
problem for Federal and State governments. The States and many
legislatures need clear legislative or regulatory policy guidance
before State legislatures meet next spring.
The Administration opposes any temporary moratorium that would
leave these issues unresolved until March 1992 or later. Should
legislation be presented to the President that includes a "two-
sided" moratorium that precludes Federal regulatory activity, and
State program expansions, the President's senior advisers would
recommend that he veto it if it is not consistent with the Budget
Enforcement Act.
*******
CATASTROPHIC
CURRENT LAW: The new catastrophic benefit is financed by two
premiums. The first is a flat amount paid by all Medicare
beneficiaries. This year it is $4.00 per beneficiary per month;
in 1990 it will be $4.90 per month.
The second premium, called the supplemental premium, is a
surcharge on income tax liability above $150. The surcharge is
15% of the tax liability above $150, up to maximum of $800 for an
individual and $1600 for a couple. The amounts would rise to 28%
and $1,050 for an individual by 1993.
GEORGE BUSH ON THE RECORD: Last mention was April 21 letter to
Rep. Rostenkowski: "I have supported the implementation of the
Medicare Catastrophic Coverage Act on schedule, as enacted. I
continue to do so. It would be imprudent to tinker with Medicare
catastrophic insurance literally in its first few months of life.
We should not now reopen the legislation."
WAYS AND MEANS PROPOSAL: Make the program voluntary, but not
taking catastrophic means you can't have part B (insurance for
doctors' bills.) Cut the supplemental premium in half but leave
the maximum premium the same. (Ups the point where the maximum is
reached.) Make up the revenue loss in variety of ways: the flat
premium would be increased for 1990 --- 1993 by $3.50 in 90 rising
to $4.10 in 1992. Deductible for the drug benefit goes up from
$600 to $800 in 1991; $650 to $950 in calendar 1992.
TALKING POINTS:
We respect the Ways and Means Committee's desire to adjust
the distribution of the revenue raising to finance the
benefit package, and our technical experts are working with
the committee staff.
-
As secretary Sullivan said, "we will only support changes which improve the original
-
We're still going over what the committee has done, legislation."
and haven't concluded Whether its an impovement.
But note:
Our first priority is to have a financially sound program.
Even if the package is financially neutral with respect to
the current law, our actuaries indicate the program does not
have a stable financial future.
Physician payment reform will help maintain access to care
and help provide the security that Medicare will continue to be
there for people like that San Diego teacher, his 86 year old
mother, the 30 million more Americans who today count on the
financial viability and security of Medicare, and the millions of
Americans in the future who will need Medicare.
CATASTROPHIC CARE
Perhaps this would be a good time to address recent changes
which are being considered in Congress concerning the scope of
Medicare benefits available for our elderly citizens.
Last year Congress passed the Medicare Catastrophic Care
Coverage Act, which provided an expansion of acute catastrophic
care benefits for older Americans, including a cap on personal
expenditures and a drug benefit.
There has been much discussion about the legislation in
recent weeks. Tuesday's vote by the House Ways and Means
Committee is one example of efforts to change the legislation.
In that vote, the Committee approved changes in the financial mix
of the surtax on the elderly and the premium paid by all
enrolleees in catastrophic coverage. The changes would also
allow beneficiaries to opt out of the catastrophic coverage
program.
15
2117
00:11 ДЭМ 68-92-1
van 08-9
I would like to reassure each one of you that the Bush
Administration remains committed to the objectives of the
legislation preventing an acute illness from having a devastating
financial effect on the family. We will only support changes
SULLIVAN
which improve the original legislation, allowing it to more fully
SPEECH meet its objectives.
TO
AARP
I am certain that the debate on the Act is far from
THIS
finished. I know that the membership of AARP is concerned about
WEEK
the course of this debate. Again, I would reiterate that the
President and I will carefully look at each proposed change on a
case-by-case basis to provide the best benefits package and
financial arrangements possible.
CONCLUSION
In conclusion, your work today will help to shape and mold
the future of many of America's older minorities. Please
remember that my department supports and encourages your work.
This is a vital program to assist efforts to reach our older
citizens. As for the Department of Health and Human Services, we
will do everything possible to help you make this Initiative a
big success.
16
P.18
11:01 ДЭМ 68-92-1
Proposed
July 26, 1989
Administration Position on Catastrophic Health Insurance(CHI)
The Administration support the objectives of the Catastrophic Health
Insurance - - so that the elderly are not impoverished when they become
acutely ill.
We recognize that Congress, the Congressional Budget Office and others
too
now recognize that the CHI was not adequately funded, particularly the
drug benefits.
detailes
fr
The Ways and Means Committee has taken action to realign the financing
and the benefits to meet the concerns of solvency, and permit
Pres.
elective. beneficiaries to elect Part B coverage and CHI. Part B has always been
The Administration recognizing the committees desire to retain rather
than repeal CHI supported the modification. In light of the BiPartisan
Budget Agreement, the Administration will work to eliminate the
artificial change in the timing of Medicare payments to meet certain
Congressional rules.
We will look at other proposals as the legislative process considers the
Ways and Means amendments.
096373SS
Document No.
WHITE HOUSE STAFFING MEMORANDUM
12/11/89
COB, WED., DEC. 13
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
ENROLLED BILL H.R. 3607 -- MEDICARE CATASTROPHIC
COVERAGE REPEAL ACT OF 1989
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
ROGICH
BATES
UNTERMEYER
CARD
BOSKIN
CICCONI
CLERK
DEMAREST
FITZWA
GRAY
HAGIN
REMARKS:
Please provide comments/recommendations on the attached
enrolled bill memo directly to my office no later than
COB, WEDNESDAY, DECEMBER 13. Thank you.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF management AND BUDGET
STATE
WASHINGTON, D.C. 20503
THE DIRECTOR
December 11, 1989
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Enrolled Bill H.R. 3607 - Medicare Catastrophic
1983 DEC 11 PM 7: 44
Coverage Repeal Act of 1989
Sponsors - Rep. Donnelly (D) MA and four others
Last Day for Action
December 19, 1989 - Tuesday
Purpose
Repeals the Medicare provisions in the Medicare Catastrophic
Coverage Act of 1988 (P.L. 100-360), effective January 1, 1990;
retains the Medicaid improvements for pregnant women and infants,
and elderly and disabled individuals; and makes various
conforming and technical amendments.
Agency Recommendations
Office of Management and Budget
Approval
Department of Health and Human Services
Approval
Department of the Treasury
Approval
Council of Economic Advisers
Approval
Discussion
H.R. 3607 is the congressional response to the strong and
vocal objections by Medicare beneficiaries to having to pay the
entire cost of the benefits enacted in the Medicare Catastrophic
Coverage Act of 1988 (MCCA).
The bill culminates a year-long debate on the MCCA and
represents an unprecedented rollback of a major social welfare
program so soon after its creation. Initially, the
Administration had preferred that no changes be made to the MCCA.
However, as bipartisan legislation to reform or repeal the MCCA
gained momentum in Congress, the Administration did not take an
official position in favor of any one of the competing
substantive amendments.
H.R. 3607 in its final form is the product of extensive
congressional deliberation. It passed by voice vote in the
Senate and by a vote of 352-63 in the House.
Background
The MCCA of 1988 was approved on July 1, 1988, and
represented the largest expansion of Medicare since the program's
inception in 1965. The new law was intended to protect elderly
and disabled Medicare beneficiaries from "catastrophic" hospital
and doctor bills for acute (i.e., not long-term) care. It
provided full coverage of all hospital inpatient care costs, no
matter how many hospital stays, after payment of one deductible a
year ($592 in 1990, rising annually). All hospital copayment
amounts were to be eliminated.
The MCCA also limited the amount beneficiaries pay
out-of-pocket each year for physician services. The maximum
deductible and coinsurance charges were to be $1,370 in 1990,
indexed in future years to ensure that a constant 7 percent of
beneficiaries would receive benefits.
Under the MCCA, the Medicare program was to be expanded to
cover, for the first time, outpatient prescription drugs,
mammogram screening, and respite (in-home) care. Medicare
benefits were increased for home health care, extended care
skilled nursing services, and hospice care.
The new and expanded benefits in the MCCA were to be financed
by a combination of a flat premium and an income-related surtax
(supplemental premium) paid by Medicare beneficiaries. The
surtax provoked the strongest protest from senior citizens, and
is the main reason for the repeal of the MCCA contained in
H.R. 3607.
Description of the Enrolled Bill
H.R. 3607 would repeal all of the Medicare benefits contained
in the MCCA as well as the provisions financing those benefits.
The enrolled bill does not, however, repeal certain Medicaid
improvements enacted in the MCCA. These require State Medicaid
programs to:
-- pay Medicare premiums, copayments, and deductibles for
all beneficiaries with incomes below 100 percent of
poverty level, on a phased-in basis.
-- cover the prenatal care expenses of pregnant women and
infants (up to one year old) whose family incomes are at
or below the poverty level.
-2-
-- allow the spouse of an individual who enters a nursing
home for long-term care to keep a certain amount of
income per month ($1,000 by 1993), and at least $12,000
but no more than $60,000 in liquid assets (excluding home
ownership).
H.R. 3607 includes transition provisions for individuals who
started receiving inpatient hospital and extended care services
under the MCCA before January 1, 1990. The bill also contains
authority to make adjustments in Medicare payments to hospitals
because of the repeal of the MCCA. Finally, H.R. 3607 requires
insurers of Medigap plans (insurance designed to supplement
Medicare's coverage) to offer to restore coverage to people who
were covered at the end of 1988 but who cancelled their plans in
1989 because of the MCCA.
The benefit repeals included in H.R. 3607 are effective
January 1, 1990; the repeal of the surtax is retroactive to the
beginning of calendar year 1989.
Budget Impact
The following table, which was prepared by the HHS Medicare
program actuary, shows the projected five-year budget impact of
H.R. 3607. (The figures represent changes from the FY 1990
Mid-Session budget estimates to reflect various re-estimates,
mainly for the MCCA's skilled nursing care benefit) :
(Fiscal Years - $ in billions)
1990
1991
1992
1993
1994
Outlay
savings
4.2
11.3
15.3
16.9
18.5
Revenue
losses
9.0
10.2
10.7
11.7
13.6
Increase
(Decrease) in
deficit*
4.8
(1.2)
(4.5)
(5.2)
(4.9)
* Due to rounding, does not always equal difference.
Agency Views
The Department of Health and Human Services (HHS) recommends
approval of H.R. 3607. In its views letter on the bill, HHS
states that the benefits contained in the MCCA provide needed
financial protection to millions of elderly Americans. The
Department further states that the benefits focus acute care
coverage on extraordinary expenses while maintaining appropriate
levels of beneficiary expenses for more routine costs. HHS
believes that repeal of these benefits is a regrettable step.
-3-
HHS points out, however, that the repeal of these benefits
has enjoyed overwhelming support in Congress, and among major
segments of the elderly population. The Department also
believes that disapproval of H.R. 3607 would almost certainly
lead to the rapid repassage of a similar measure.
The Department of the Treasury states that repeal of the
catastrophic program and the unpopular supplemental premium
would enable Congress in the future to consider alternatives.
which might win broader public acceptance. Accordingly,
Treasury recommends approval of H.R. 3607.
The Council of Economic Advisers (CEA) recommends approval
of the enrolled bill, but advises that it does not believe the
issue of catastrophic insurance will disappear. The CEA
suggests that it may be useful for the Administration to develop
its own position regarding specific elements of catastrophic
insurance for the elderly it would like to see enacted.
Conclusion and Recommendation
As indicated above, H.R. 3607 is the response by Congress to
the very strong opposition expressed by Medicare beneficiaries
to the financing arrangement for the catastrophic coverage
enacted last year. We join HHS, Treasury, and the CEA in
recommending approval of this bill.
Num Damn
Richard G. Darman
Director
Enclosures
-4-
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
December 13, 1989
The President today signed the following legislation:
H.R. 3607, which repeals the Medicare provisions in the Medicare
Catastrophic Coverage Act of 1988 (P.L. 100-360), effective
January 1, 1990; retains the Medicaid improvements for pregnant
women and infants, and elderly and disabled individuals; and
makes various conforming and technical amendments.
# # #
- 8 -
Sept12
MR. FITZWATER: In the meeting this morning with
Republican members of Congress, they discussed with the President
administration position on a number of pieces of legislation. But
certainly, one of the foremost of concern to them is the catastrophic
bill. And the President assured them that we share their concern for
mitigate this situation for the last couple of months.
its impact on senior citizens, that we have been looking for a way to
that this bill, as you know, would add some $6 billion to the
We have not found an answer yet. Our primary concern is
Treasury, and without that income we would automatically trigger the
budget for agreement. So we have financial concerns, but we are looking
sequester under Gramm-Rudman-Hollings and violate the congressional
ways to deal with this problem.
Q
good way -- remember in the debates last year --
thing that he said was not a tax when it happened. He said it was a
Marlin, as you know, the President supported this
MR. FITZWATER: Right.
Q
premium.
-- a good way to provide services. It was a
MR. FITZWATER: Yes.
Q What does it portend for this whole process if when
we the pass a small premium for an added service, catastrophic -- which
rebellion and that elderly people who are middle and upper income
Reagan administration wanted to put on -- that suddenly there's a
now we'll mitigate it for these people, we'll take it back? Is his
don't want to pay for it? Is the President going to essentially say
mind set to repeal this piece of legislation?
the Congress has learned -- when this passed the Senate only 11
MR. FITZWATER: His mind set is that we have learned, as
people voted against it -- that you need to be very careful and
they are passed. And that the President did agree with this.
considerate of the cost of these kinds of entitlement programs before
suggest, the message is clear that when you pass this kind of
President Reagan signed it; indeed, he had proposed it. And as you
legislation you'd better know what it costs before you do it.
And so, we're looking at --
Q
So does the President want to repeal it? Does he --
MR. FITZWATER: Well, that's what we haven't decided
But, obviously, many members of Congress are pushing for repeal. yet. But
our problem is that repeal has rather devastating effects on the
deficit side with regard to triggering a sequester.
Q
Is that the only real concern, Marlin?
Q
know, right?
But he's obviously changed from support to "I don't
the bill and we are concerned about the program -- about the taxes
MR. FITZWATER: No. We have always said that we support
and the impact on the deficit. But we recognize this impact on the
of elderly, we recognize their concern, and we are working with members
Congress now to try to develop some kind of solution.
Q
President want to repeal it, and you said he hasn't decided. He has
But you just said -- someone asked you, does the
changed from outright support, obviously.
MR. FITZWATER: Yes, but repeal implies a solution that
we don't have yet. A lot of congressmen just want a straight out
repeal, but we're not sure that that's the best way to approach it.
MORE
#100-09/12
- 9 -
9/12
Q
fight for keeping it the way it is, either?
But President Bush is not going to stand up and
MR. FITZWATER: Well, he says at the moment our position
is that we support it and we don't see any change. But we are
looking for alternatives.
Q
Does the President think this is a necessary
program, Marlin; the problem is just he doesn't know how to pay for
it? or is he not so sure it's a good idea now?
MR. FITZWATER: Well, the administration thought it was a
good program in the past, as did most of the Congress. People still
think it's got good objectives, but they have felt the heat. And the
people at home in the August recess obviously made their views
clear about paying for this benefit. So they're taking another very look
at the financing and see what can be done.
Q
But, Marlin, you're talking about -- you say the
cost before you pass it. It seems in fact -- are you saying that in
present Congress has learned that you'd better know what these things
fact there are cost overruns here that the President, when he was
Vice President, didn't foresee, or are you really saying that the
President is feeling the heat, too, from the elderly lobby?
MR. FITZWATER: Everybody is, sure. I hope there is not
any misapprehension about the political aspects of this program. I
proportions. mean, the elderly complaints are rolling in in tidal waves of immense
--
Q Well, is that what the President has really learned
certainly not members of Congress and not the administration. And
MR. FITZWATER: And that has not been lost on anyone --
our point being that we need to be very -- our point is -- what the
lesson for the future is, when you've got these entitlement programs
that provide a service that everyone agrees is needed, you'd better
be sure you understand the financing. And in this case we didn't.
Not the administration, not the Congress.
Q
get from the elderly?
And did you also underestimate the reaction you'd
MR. FITZWATER: Absolutely.
Q
I want to see if I can pin you down on whether the
President's primary concern on repeal -- in fact, only major concern
on repeal -- is triggering the sequester? Were it not for that,
would the President repeal this program? Would he support repeal?
we'd like to provide the benefits. We thought it was a good program,
MR. FITZWATER: Well, I can't say that because obviously
and so forth. But we have to look at all the aspects of it.
Q
Are you searching now for a way to repeal the
program and avoid the sequester? Is that the focus of your search?
financial problems.
MR. FITZWATER: We're searching for a way to mitigate the
Q
of repealing the program?
MR. FITZWATER: And saving the program. And that's where
we've been for the last couple of months.
Q
Well, I'm sorry. I really don't understand whether
you're aiming to save the program or whether you're aiming to repeal
and save the budget.
MR. FITZWATER: Well, we're saving the program. We have
testified that we support the program and we don't see any need for
MORE
#100-09/12
- 10 -
9/12
possible changes. We continue to do that.
change, but we have also been searching for a couple of months for
Q
On another subject -- back on --
Q
No. Marlin.
Q
Wait a minute.
Q
No, let's kick this around a little longer.
Q
switchboard been flooded and the mail way up?
this rolling in of complaints? I mean, how many -- has the
Marlin, Marlin, do you have a quantitative count of
Q
What is the income distribution of this tidal wave?
MR. FITZWATER: Probably 535 to zero.
Q
Congress and not from elderly citizens? They have not been calling?
No, the complaints you've heard are directly from
probably have been elderly concerns directly to the --
MR. FITZWATER: Oh, there may have been elderly there
meetings it has been relatively unanimous.
through HHS and other places, but certainly in the Congressional government
Q
Marlin, are you saying that this tidal
that objections is from all elderly across the board or primarily wave those of
are paying taxes and would have to pay the surtax?
morning several members of Congress emphasized that in terms of
MR. FITZWATER: I don't know specifically, although this
categories of the elderly.
constituents and the people they talked to in August, it was from their all
Q
the primarily all the elderly recipients. And this would not increase
just cut that in half and raise the premiums which affect all people, -- to
One of the suggestions is to have the surtax
would since change the mix. Is the administration willing to consider that
deficit in any way. Primarily it would be budget-neutral but
there's no difference in --
know Paula, but obviously we're looking at whatever can be done. And
MR. FITZWATER: Well, I can't comment on various options,
until that's one of them, but we don't want to commit at this point I
we've reached some kind of an agreement.
Q
that they -- the administration would prefer that we just keep the
Well, last week your OMB Deputy Director testified
program as is and, as you said, the concern for sequester and
only on condition that that $6 billion in revenue loss be offset?
triggering the deficit. If you were to consider repeal, would it be
position is to keep the program, but it's also true that we have
MR. FITZWATER: Well, as you correctly point out, our
discuss what we might do or what we might not do.
agreed to look at various alternatives, but I'm just not free to
Q
mean, if you were to go with repeal, you'd lose $6 billion, so would I
But would any of them have to be budget-neutral?
you have to offset that?
MR. FITZWATER: But I don't want to signal that in
negotiating process.
advance, Paula. We'll have to -- something we'd work out in the
Q
about no program reductions at all? No reductions in services?
But when you say "keep the program," are you talking
kind of detail because when you get into discussions of how the
MR. FITZWATER: Well, there again I can't specify that
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#100-09/12
- 11 -
9/12
to other the public one, SO at the moment our policy is to continue
up to than negotiation. And we just don't want to make any commitments are
program might be altered or financing changes, those things all
support the program.
Q
because you need it for budgetary reasons?
Well, do you want to keep it for its own sake or
sake, first of all, and secondly, to make changes, there are
MR. FITZWATER: Both. We want to keep it for its own
significant budgetary problems.
Q
side of the equation.
It sounds like you're just hung up on the budget
very difficult issue.
MR. FITZWATER: No, we're hung up on all sides. It's a
Q
proposal? White House surprised by the Democratic response to the President's was the
Back to another difficult issue, drugs,
surprised Was it more critical than you expected, and were you
that some Democrats talked about raising taxes?
the Democrats thought raising taxes was a viable response, yes.
MR. FITZWATER: I'd say we were a little surprised that
because you think Q Were that's you -- pleased that that was their response
fighting drugs and they're for raising taxes.
MR. FITZWATER: Well, it did make it clear that we're for
Q Is this what you call stopping the partisan --
Q Is there any possibility that --
MR. FITZWATER: (Laughter. Hey, she asked the question.
Nick, go ahead.
Q
available to the press while he's here on the White House grounds? be
Is there any possibility that Yeltsin would
MR. FITZWATER: I don't know. You'd have to ask him.
Q Can we find out --
Q I mean, which way is he coming out?
driveway, or where is his limo?
Q Will you allow him to go out and talk in the
MR. FITZWATER: He's free to do whatever he wants.
Q Marlin, before you leave, what's the purpose --
minutes?
MR. FITZWATER: What time is the speech? We've got 15
Q What's the purpose of the Hassan visit?
issues, primarily, however, economic assistance.
MR. FITZWATER: He's here to talk about a wide range of
Q To who? To who? Economic assistance --
MR. FITZWATER: To Jordan.
prices are down? Is that why?
Q To Jordan? For what purpose? Just because the oil
MR. FITZWATER: Yes, they're having significant economic
MORE
#100-09/12
9/14
that be done without busting the budget? And is it your view now
that the White House is going to have to take a far more active role
in this if this program is to be saved?
MR. FITZWATER: On catastrophic? Well, we are working
with the Senator and others on the Hill on a solution. We don't want
to commit to any one course of action at this point.
Q How do you feel about making it voluntary? He's
commiting to a solution.
MR. FITZWATER: Well, he is, but we've got a lot of
people to discuss it with and we don't want to take a public position
until we can reach a greater consensus.
Q
Can it be made voluntary and not bust the budget?
MR. FITZWATER: I don't know.
Q I mean there are a lot of senators and congressmen,
as you well know, up on the Hill who insist that short of a very
active White House position -- presidential position on this, that
he'll be steamrolled and the thing will be repealed outright. That
came up the other day when Gingrich and company were in here.
MR. FITZWATER: Well, we are --
Q
Yet there still seems to be no well -- clearly
defined White House position on this thing, and I'm curious as to
why.
MR. FITZWATER: The reason for that is that we are
discussing it with any number of members and there are a number of
different ways to approach it. And we are not wedded to any single
one, but to working out the best solution. And as we have said here
before, there are a lot of people who feel strongly on both sides,
and there are different alternative financing mechanisms. So it
doesn't pay us to take a position on voluntary implementation or
whatever until we work out a consensus.
Q
Marlin, when you talk about the best solution, are
you talking about the best solution for all the elderly or for
keeping any alternative within the budget?
MR. FITZWATER: The best solution for the elderly, in
terms of preserving the benefits, making the premiums realistic, and
preserving the fiscal aspects of it in terms of the budget.
Q
Are you willing to preserve the progressivity of the
payments?
MR. FITZWATER: We'd like to preserve the benefits, but
the payments and progressivity, all those are aspects that are under
discussion.
Q
You're not trying to keep that principle in there?
MR. FITZWATER: Well, we're not going to say. We're
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#102-09/14
specifics. saying we're willing to discuss it, but we're not committing to any
Q
current --
Do you want to preserve all the benefits under
MR. FITZWATER: That's our initial position, sure -- that
we think it's a good program, we proposed this program, and we'd like
to keep it.
10/3
Q
Is the President making any calls on the
catastrophic before the catastrophic vote today?
MR. FITZWATER: I don't believe so, no.
Q
Do you have a preference among the three
alternatives they will be considering?
MR. FITZWATER: Our position is the same as it's always
been, that we prefer to maintain the benefits while finding some way
to mitigate the cost of the premiums.
Q Well, they have three actual alternatives they're
going to choose from. Can we presume from that that you like the
Ways and Means approach the best?
MR. FITZWATER: We wouldn't want to specify publicly
which we favor until we see the final product.
- 6 -
Oct 3
or
But you are against the repeal amendment, aren't
>u?
MR. FITZWATER: Yes. We've opposed repeal.
10/2
Q
Do you have a position on the various options taken
about catastrophic health in the House tomorrow?
MR. FITZWATER: That's another case where there are still
a number of options in the works. Our position is clear, but we'll
work with various peoples.
or Why are there options in the works? I mean, we know
what amendments will be offered on the floor. You don't have a
position on the bill or one of those amendments?
MR. FITZWATER: Well, our position, basically, is that we
want to retain the benefits and mitigate the premium cost. But there
are some ways that some of the bills want to reduce all the benefits,
some want to eliminate the premium entirely, some want to eliminate
the surtax. I mean, there's any number of different approaches.
Q But there's three approaches the House is going to
vote on. Do you have a position on those?
MORE
#106-10/02
MR. FITZWATER: No. We'll wait and work with them still.
We haven't reached a final point yet.
Q Don't want to get out in front on this one, huh?
MR. FITZWATER: Nope. We're right where we want to be.
(Laughter.)
Q Obscure.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF management AND BUDGET
STATE
STATE
WASHINGTON, D.C. 20503
THE DIRECTOR
October 5, 1989
TEXT OF A LETTER ADDRESSED INDIVIDUALLY TO SENATORS DANFORTH,
DURENBERGER, McCAIN, AND ROTH
We understand that you intend to offer an amendment to
legislation pending in the Senate that would modify the
Catastrophic Health Insurance (CHI) program.
You have provided us a copy of your amendment (description
attached) and asked whether or not adoption of your amendment
would yield a revised G-R-H deficit estimate that would require
sequester. As we approach the crucial October 15 deadline, there
are several new elements in the calculus that I would call to
your attention. The DOD paydate shift, which had been a subject
of dispute, has now been overtaken by events. It has already
taken place. In addition, the House includes Medicare scoring
language, which we did not support but which is now moving
forward in the reconciliation bill. If enacted, this language
would direct us to score certain shifts in Medicare payments
between fiscal years that we would otherwise be prohibited from
scoring. And if the emerging reconciliation bill, including the
language dealing with the scoring of Medicare payment shifts, is
enacted, our current estimate of the G-R-H baseline deficit would
be reduced by approximately $12 billion. This would then yield a
revised G-R-H deficit estimate that could accommodate your
amendment without triggering sequester.
Let me be clear: This CHI amendment would unquestionably
have a serious adverse effect on the actual fiscal year 1990
deficit. But in view of the scoring issues I've noted, it is now
the case that your CHI amendment would not trigger a sequester if
reconciliation, including the Medicare payment shift language,
continues on its present course, and is passed by the Congress
and signed by the President before October 16th.
I write this letter in response to your inquiry on this
matter. Nothing in this letter should be construed as an
expression of support for or opposition to one CHI substantive
amendment as opposed to another. Indeed, the Admnistration is
not taking an official position in favor of any one of the
competing CHI substantive amendments as opposed to the others.
The purpose of this letter is to report on the relationship of
scoring issues to a possible sequester -- as currently estimated
-- and to clarify that we are not officially choosing among the
competing CHI substantive amendments.
With best regards,
Richard G. Darman
FROM
10. 5.1989 4:40
P. 2
THE SECRETARY OF HEALTH AND HUMAN SERVICES
1
WASHINGTON, D.C. 20201
The Honorable Lloyd Bentsen, Chairman
Committee on Finance
OCT 5 1989
United States Senate
Washington, D.C. 20510
Dear Mr. Chairman:
The purpose of this letter is to clarify this Administration's
position on Medicare catastrophic legislation pending before the
Senate.
As I have emphasized on other occasions, our preference has been
that no changes be made to the program, and that it be
implemented as crafted. However, the Congress, under pressure
from what we believe is a relatively small and in many cases
misinformed group, is moving toward repealing or drastically
changing this new benefit.
I believe the House action yesterday will be regretted. I wish a
proposal could have been offered in the House that would have, at
a minimum, preserved the core benefits of the program as
originally outlined in President Reagan and former Secretary
Bowen's plan. It is my understanding the Senate may still have
such an opportunity. It is critical that we preserve a
catastrophic program that offers financial protection to the
millions of Americans who do not have this protection.
I am aware that Senator Durenberger has a compromise that
incorporates our mutual priorities. This plan has also addressed
the concerns of many others by significantly lowering the
supplemental premium.
Our nation's health policy cannot afford the set-back repeal
would cause. It is an undisputed fact that our Medicare system
needs a catastrophic program if it is to remain sound.
Catastrophic continues to be confused with the issue of long term
health care. Our nation must address both of these urgent
health care priorities but we cannot and should not attempt to
address them as if they were one. If the Senate chooses to
ignore this proposal which preserves the core and essential
components of a catastrophic benefit program, our dilemma in
providing appropriate health care for our nation's elderly will
reach a magnitude that is almost unmanageable.
I appreciate all that you have done to move this issue forward.
Thank you for your continued assistance towards a sound health
policy for our nation.
Sincerely,
Louis W. Sullivan, M.D.
FROM
10. 5.1989 4:41
P. 4
IMPORTANTLY, ESSENTIAL SERVICES PERFORMED CURRENTLY BY THE
SOCIAL SECURITY ADMINISTRATION WILL MOST LIKELY BE DISRUPTED
IN THE NEAR TERM AND IMPORTANT IMPROVEMENTS IN SERVICES THAT
HAVE BEEN MADE RECENTLY WILL BE REVERSED. AS WELL, OVER THE
LONG TERM, INDEPENDENT AGENCY STATUS WILL ACTUALLY INCREASE
THE COST OF PROVIDING SOCIAL SECURITY SERVICES AT A TIME
WHEN COST SAVINGS ARE AN INCREASINGLY IMPORTANT PRIORITY.
EXAMPLES OF RECENT IMPROVEMENTS IN SERVICE DELIVERY, WITH
SUPPORT FROM HHS STAFF, INCLUDE A SHORTENING OF THE TIME IT
TAKES TO RECEIVE SOCIAL SECURITY CARDS, THE TIME IT TAKES
FOR SENIOR CITIZENS TO RECEIVE SOCIAL SECURITY CHECKS, AND
THE TIME REQUIRED TO COMPLETE THE EARNINGS TEST ELIGIBILITY.
THESE ARE CRUCIAL IMPROVEMENTS IN SERVICES THAT RESULT, IN
MANY INSTANCES, IN THE ELDERLY BEING SAVED FROM DIRE
PERSONAL CIRCUMSTANCES. THE PROCESS OF EXTRACTING SSA FROM
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES IS SURE TO
REVERSE THESE GAINS IN THE NEAR TERM, IF NOT, OVER THE LONG
TERM AS WELL.
FURTHERMORE, MAKING SSA AN INDEPENDENT AGENCY WILL ELIMINATE
THE CONSIDERABLE BENEFIT TO THE ELDERLY OF BEING ABLE TO
OBTAIN INFORMATION AND DIRECTION ON SOCIAL SECURITY AND
MEDICAL PROGRAMS IN ONE LOCATION, THE SO-CALLED "ONE-STOP
SHOPPING" BENEFIT. IT WILL CERTAINLY LENGTHEN THE AMOUNT OF
TIME IT TAKES TO PROCESS BOTH SOCIAL SECURITY AND MEDICARE-
MEDICAID PAYMENTS. IT WILL DELAY DISABILITY DETERMINATION.
FOR THESE REASONS, IT SEEMS WITHOUT QUESTION THAT
DISMANTLING THE SOCIAL SECURITY ADMINISTRATION'S
RELATIONSHIP WITH HHS IS PROFOUNDLY BAD HEALTH AND SOCIAL
SERVICES POLICY. IT IS ASTOUNDING TO ME THAT SUCH
SIGNIFICANT REVERSAL OF HEALTH AND SOCIAL POLICIES IS
OCCURRING AT THE ELEVENTH HOUR, AND WHOLLY IN THE DARK.
THERE HAS BEEN NO SIGNIFICANT DEBATE ON THIS IMPORTANT
MATTER EITHER IN THE MEDIA OR IN THE CONGRESS. IN THE
SENATE, FOR EXAMPLE, THE COMMITTEE HAVING THE MOST
SIGNIFICANT JURISDICTION HAS NOT HELD ANY HEARINGS OR EVEN
WEIGHED IN ON THIS MATTER. THIS ISSUE DESERVES MORE SERIOUS
TREATMENT.
THIS ADMINISTRATION, IN THE STRONGEST POSSIBLE TERMS,
OPPOSES ANY EFFORT TO DISLODGE THE IMPORTANT RELATIONSHIP
BETWEEN SSA AND HHS. AT THE VERY LEAST, THE CONGRESS HAS
THE RESPONSIBILITY TO CONSIDER DISMANTLING THIS RELATIONSHIP
THOROUGHLY AND DELIBERATELY. THE PRECIPITOUS AND POORLY
CONSIDERED ACTION CURRENTLY BEING CONSIDERED IS SURE TO BE
DISASTROUS TO AMERICA'S GROWING ELDERLY POPULATION.
FROM
10. 5.1989 4:40
P. 3
ADDITIONAL REMARKS
IN PRESS CLUB SPEECH
October 5, 1989
0
AS IMPORTANT AS THE AIDS PROBLEM IS, I AM SURE MOST OF YOU
HERE ARE ALSO QUITE INTERESTED IN THE DEBATE IN THE SENATE
ON CATASTROPHIC HEALTH INSURANCE. IN ANTICIPATION OF
QUESTIONS YOU MAY HAVE ON THAT ISSUE, I HAVE A FEW THINGS I
WOULD LIKE TO SAY
0
TO TAKE BACK FROM TENS OF MILLIONS OF ELDERLY AMERICANS THE
COMFORT OF KNOWING THAT SERIOUS ILLNESS WILL NOT CAUSE THEM
FINANCIAL RUIN WOULD NOT ONLY BE UNWISE HEALTH POLICY, BUT.
WOULD SIMPLY BE AN UNFORGIVABLE ACT OF POLITICAL EXPEDIENCE
O
THE NEED OF THE ELDERLY FOR SECURITY AGAINST FINANCIAL
DEVASTATION FROM ILLNESS IS DENIED BY NO ONE. YET, THE RUSH
FOR REPEAL OF THE CATASTROPHIC BILL IS SHOCKING. THERE ARE
CLEARLY PROBLEMS WITH THE LAW THAT NEED TO BE ADDRESSED, BUT
THE SAFETY NET OF BASIC PROTECTION AGAINST FINANCIAL RUIN
CANNOT BE IGNORED
O
FOR THESE REASONS, I AM NOW REDOUBLING MY EFFORTS AND WILL
BE WORKING VIGOROUSLY WITH SENATORS DURENBURGER, DOLE,
BENTSEN, AND OTHERS TO URGE THE SENATE TO PASS A MEASURE
THAT CONTAINS THE CARE PROVISIONS OF THE CURRENT LAW WHILE
REDUCING THE COST TO THOSE WHO HAVE TO PAY FOR IT. I HAVE
NO DOUBT THAT ADEQUATE COVERAGE CAN BE PROVIDED WITHOUT
STRAIN TO THE BUDGETS OF THE ELDERLY OR TO THE NATIONAL
BUDGET.
O
AS CONCERNED AS I AM ABOUT THE CATASTROPHIC BILL, I AM
TERRIBLY TROUBLED ABOUT PENDING ACTION IN THE CONGRESS THAT
CAN CAUSE EVEN GREATER HARM TO MILLIONS OF AMERICANS. IN
THE HOUSE RECONCILIATION BILL AND, MOST LIKELY, IN THE
SENATE RECONCILIATION BILL IS A PROVISION TO MAKE THE SOCIAL
SECURITY ADMINISTRATION A SEPARATE AGENCY. IF THESE
PROVISIONS BECOME LAW, IT WILL BE DEVASTATING TO ELDERLY
AMERICANS.
FOR THE SOCIAL SECURITY ADMINISTRATION TO BE DOWNGRADED TO
JUST ANOTHER INDEPENDENT AGENCY MEANS THAT THE SERIOUS AND
LEGITIMATE CONCERNS REGARDING THE CARE AND SUPPORT OF OUR
SENIOR CITIZENS WILL LOSE CABINET LEVEL ADVOCACY. MORE
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF management AND BUDGET
WASHINGTON, D.C. 20503
THE DIRECTOR
October 4, 1989
Honorable Leon Panetta
Chairman, House Budget Committee
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
We understand that the House has just voted to support
an amendment to the Omnibus Budget Reconciliation Act that
would exempt the Catastrophic Health Insurance (CHI) program
from scoring under the Gramm-Rudman-Hollings (G-R-H)
legislation. The Administration strongly opposes this
exemption from G-R-H scoring. We have opposed exemptions to
G-R-H consistently in the past. The most recent case was
the exemption proposed, but not enacted, as part of the
financial institutions reform and recovery legislation. We
believe that the fiscal discipline imposed by the G-R-H
legislation -- admittedly imperfect, but nonetheless
important -- would be substantially weakened if exemptions
to it were allowed.
Further, in this particular case there does not now
appear to be a need to grant a G-R-H exemption for the
purpose of avoiding sequester. As we approach the crucial
October 15 deadline, there are several new elements in the
calculus that I would call to your attention. The DOD
paydate shift, which had been a subject of dispute, has now
been overtaken by events. It has already taken place. In
addition, the House includes Medicare scoring language,
which we did not support but which is now moving forward in
the reconciliation bill. If enacted, this language would
direct us to score certain shifts in Medicare payments
between fiscal years that we would otherwise be prohibited
from scoring. And if the emerging House reconciliation
bill, including the language dealing with the scoring of
Medicare payment shifts, is enacted, our current estimate of
the G-R-H baseline deficit would be reduced by approximately
$12 billion. This would then yield a revised G-R-H deficit
estimate that could accommodate the CHI roll-back without
triggering sequester.
IDENTICAL LETTER SENT TO HONORABLE BILL FRENZEL
Let me be clear: The CHI amendment would unquestionably
have a serious adverse effect on the actual fiscal year 1990
deficit. But in view of the scoring issues I've noted, it
is now the case that without the undesirable G-R-H exemption
the CHI amendment would not trigger a sequester if the House
version of the reconciliation bill, including the Medicare
payment shift language, were passed by the Congress and
signed by the President before October 16th.
I write this letter in response to your inquiry on this
matter. Nothing in this letter should be construed as an
expression of support for or opposition to one CHI
substantive amendment as opposed to another. The sole
purpose of this letter is to report on the relationship of
scoring issues to a possible sequester -- as currently
estimated.
With best regards,
Dich Danne
Richard G. Darman
W endld-Writethru 10-04
^PM-Catastrophic Insurance. 2nd Ld-Writethru. 0622 <
^House Votes to Repeal Catastroohic Health Insurance Program<
Eds: Combines pvs <
By JERRY ESTILL=
Associated Press writer=
WASHINGTON (AP) - The House, responding to a firestorm of
protest from elderly Americans against having to pay for expanded
Medicare benefits. voted 360-66 today to repeal the catastrophic
health insurance program.
It then turned to consideration of a proposal to salvage a small
piece of the year-old Medicare expansion.
However, Red. Fortney Stark, D-Calif., chairman of the House
Ways and Means Committee's nealth subcommittee, said the outright
repeal was likely to stand.
Stark was one of the main authors of the catastrophic program,
signed into law last summer with great fanfare by then-President
Reagan and nailed as the most significant expansion of Medicare in
its two-decade existence.
Today's vote to repeal it was a startling reversal of last
year's 328-72 vote to pass the original measure.
Despite the repeal vote, nowever, the final judgment on
catastrophic health insurance is far from over.
The action now shifts to the Senate, where repeal sentiment is
also strong but where Finance Committee Chairman LLoyd Bentsen,
D-Texas, 18 looking for ways to save the framework of the program.
Complicating the final cecision was the Fact that both the House
and Senate wave the catastrophic health issue in with a massive
deficit-reduction bill containing a number of other controversial
topics - including a capital gains tax reduction, child care and
taxes on ozone-depleting cnemicals.
In the end. the massive compromise measure will return as one
big package to both chambers for at single up or down vote.
The feature in last year's legislation that prompted the cries
for repeal stemmed from a Dipartisan agreement that the cost of the
expanded benefits must be born fully by the 33 million elderly and
disabled people covered by Medicare.
Congress structured the increased fees SO those in higher income
brackets would Day a larger share in proportion to their tax
liability - up to a maximum of $800 this year.
But that financing feature generated a firestorm of protest and
overshadowed the Dig expansion in benefits for hospitalization,
doctor bills and other costs.
The cry for repeal came mainly from three quarters:
-Retirees who complained their former employers were already
giving them additional benefits they were being forced to purchase
from Medicare.
-Upper-income retirees who objected to having to pay a
disproportionate share of the costs to make up for the modest
$4-a-month assessment on the estimated 56 percent of Medicare
beneficiaries who don't have enough money to owe any income taxes.
-Those who complained that the program did not address the main
need of elderly Americans: insurance for nursing homes and other
long-term care.
With repeal or a massive rollback a virtual certainty,
congressional health bolicy leaders said they anticipate even
greater difficulty in the future in winning support for expan d
health programs for the elcerly.
Future programs are going to have to be more carefully
considered, " House Speaker Thomas S. Foley told reporters Tues -У.
Formally called the Medicare Catastrophic Coverage Act, the
program WAS designed to protect the elderly and disabled from
financial ruin in the event of a prolonged hospital stay or other
high medical costs.
It would pay for unlimited hospitalization after a once-a-year
deductible of $560 in 1989. Previously. Medicare charged at
deductible for each nosoital stay during a year and provided full
payment of hospital bills only UD to 59 days a year.
The olan also would cap, starting Jan. 1, the amount that
beneficiaries must pay for onysician services and. beginning Jan.
1, 1991. would phase in a new prescription drug benefit.
AP-TV-10-04-89 1423EDT (+
^Catastropnic Care
^By RITA BEAMISH=
^Associateo Press Writer=
SAVE - otherts
WASHINGTON (AP) - The Bush administration, facing tidal waves'' of
file
complaints from the elderly, says it is willing to consider replacing
an unpopular surtax to finance catastrophic health insurance.
As the Senate Finance Committee searched Tuesday for last-ditch ways
to prevent repeal of the program, administration officials said a
repeal is unacceotable because of the revenue loss it would cause.
The administration is listening and learning'' to what Congress
proposes in the way of alternatives to finance the insurance program,
said William Diefenderfer III, deputy director of the Office of
Management and Budget.
The surtax, paid by the wealthiest 40 percent of all retirees, is
the chief financing mechanism for the catastrophic insurance program
enacted a year ago as an expansion of Medicare.
Bush supported the plan during his presidential campaign last year.
The administration thought it was a good program when it passed''
during the Reagan administration. said White House Press Secretary
Marlin Fitzwater.
But now. ne saio, the 'political aspects'' of the program have
become clear.
"The elderly complaints are rolling in tidal waves of immense
proportion. Fitzwater salo. We recognize the impact on the elderly
... We recognize their concern. We're working with Congress
searching for a way to mitigate the financial problems and save the
orogram.'
Most of the complaints come from middle and upper income retirees
who contend they are bearing most of the cost of the program, and those
who are covered by orivate insurance plans.
But Diefenderfer said repeal of the entire program --- and the loss of
its $4 billion to $7 billion in surtax revenue - probably would force
automatic spending cuts in other federal programs, including those that
benefit the elderly and needy Americans.
Sen. Lloyd Bentsen. D-Texas, chairman of the Senate Finance
Committee said after a alosedadcon session of the panel Tuesday that,
There is no question in my mind that we are going to face an
amendment on the (Senate) floor to repeal catastrophic.'
He said the committee 15 working to strip away all but basic
elements of the program to reduce costs to the minimum. This could lead
to elimination of payments for prescription drugs and for skilled
nursing care.
The House Ways and Means Committee already has voted to reduce
benefits and the two taxes that finance the program.
Strong sentiment from House members for repeal was conveyed to Bush
on Tuesday in di meeting with GOP congressional leaders.
House Republican Whip Newt Gingrich of Georgia said after the
meeting that he had noted ' a cramatic shift'' in the administration's
willingness to amend the program.
The Senate Finance Committee agreed informally last week that the
surtax would be cut significantly, that the flat monthly premium would
not be changed and that beneficiaries would have to pay a bigger share
of expenses for drugs and coctors' bills before reimbursement under the
catastroohic care orogram begins.
Everyone eligible for Medicare is required to pay into the
catastroonic care program. About two-thirds of the costs are paid by
retirees who make enough to pay more than $150 a year in federal income
taxes. Their surtax - of UD to $800 - is 15 percent of their income
taxes.
The remaining costs come from a flat $4 monthly premium paid by all
but the poorest of the 33 million peoole eligible for Medicare.
When catastroonic illness protection was enacted last year, it was
predicted to cost about $31 billion over five years. The latest
forecasts DUT that figure at $45 billion or more.
AP-TV-09-13-89 1011EDT :-
Alixe:
1. You might want to contact the person who was the contact at the
campaign
2. Materials:
- Pamphlet on the benefit structure.
- A discussion piece on why the Congress thought the supplemental
premium (read tax) was a good idea.
- A piece from the WSJ from the former chief actuary of the
Social Security Administration giving the simplest explanation
of the financing scheme for catastrophic.
- The material from the Jt Tax committee on catastrophic reform.
See the highlighted ite-s for info on premium amounts and how
many people are paying the supplemental premium/surtax.
If you have questions, I'm at 6563 or 6515.
Hanns Kuttner
balanced solution
dysciplined/
not a give away pros.
Reconeilliction make it
fit the bottom like -
KEEP benefit structure in bet
but w/in budget redities -
repeal means finding $6B.
fay cst. w/ih Econcilliation
George Bush for President
FOR IMMEDIATE RELEASE
CONTACT: Alixe Glen
THURSDAY, JUNE 9, 1988
(202) 842-1988
STATEMENT BY THE VICE PRESIDENT
I am glad that the House and Senate have passed the
Catastrophic Health Bill. I salute Health and Human Services
Secretary Otis Bowen who has long championed catastrophic
care. The legislation which passed yesterday will, for the
first time since the founding of Medicare, extend benefits
for our seniors. Now they do not have to live in fear that
their life's savings would be wiped out by a prolonged
hospitalization.
I was particularly pleased that the final bill contains
a provision to eliminate the threat of spousal impoverishment
from long term health costs. I have advocated this as a
major part of the solution to the problem of long term care.
No spouse should become broke paying the cost of his or her
partner's nursing home costs. I am pleased to see that this
will no longer be the case.
# # # #
733 15TH STREET, N.W., SUITE 800, WASHINGTON, D.C. 20005
TELEPHONE (202) 842-1988
Rational for the premium
2
Income Related Supplemental Premium;
In addition to providing for beneficiary financing of the
catastrophic benefit, the catastrophic legislation includes an income
related concept where beneficiaries at higher income levels will pay
a higher share of the premium costs through the introduction of an
annual supplemental premium in addition to the basic monthly premium
assessed all Medicare beneficiaries. As the benefit package was
developed and cost estimates for the new benefits increased, the need
for income related premiums became apparent. Factors influencing the
decision to include this additional method of financing included;
Initial Administration catastrophic proposal was intended to
provide basic Part A and B catastrophic protection and keep
anticipated program cost at low level. With relatively modest
changes in program structure financing through a modest
monthly premium paid by all enrollees was considered feasible.
In considering catastrophic proposals, the Congress was
persuaded that a more extensive benefit package was desired by
beneficiaries and would be appropriate. Beneficiary groups
also emphasized need for an increased benefit package.
Additional benefits were included under Part A and B of the
program and a new outpatient prescription drug benefit was
added to both the House of Representatives and Senate drafts.
These additional benefits were retained in the final
legislation approved and signed by the President.
The expanded benefits in the legislation resulted in
substantial increases in the revenues needed to finance the
bill. Financing through only a basic monthly premium paid by
all beneficiaries was not feasible. The monthly rate required
would have become excessive for many beneficiaries, especially
those in lower income categories not eligible for Medicaid
entitlement and premium buy-in.
Congress identified the income related supplemental premium as
an appropriate way to finance the catastrophic benefit. This
form of financing was included in the early House and Senate
versions of the legislation even prior to the addition of a
drug benefit.
The income related supplemental premium addressed the need for
additional revenues while keeping the cost affordable to lower
income beneficiaries, especially those above income levels
required for Medicaid eligibility.
Through the assessment of a supplemental premium,
beneficiaries who are in higher income levels will pay a
higher amount of the benefit cost, thus assisting those lower
income beneficiaries with paying for the cost of their
improved protection.
THE WALL STREET JOURNAL TUESDAY. JANUARY J. 1959
Medicare Entitlements: A Question of Fairness
A Catastrophic Act? It Depends
Let's examine the situation for high-in-
By ROBERT J. MYERS
come participants in 1993, when the new
Many elderly are dissatisfied with the
plan is first fully effective. The annual
Medicare Catastrophic Coverage Act of
maximum Supplemental Premium will be
1988, which phases into effect by 1993. But
$1,050. In addition, the monthly Flat Pre-
the question of whether the new law is in-
mium rate for catastrophic benefits will in-
equitable is like the fable of the blind men
crease to $10.20 for all participants (includ-
describing the elephant-it depends on
ing a portion that pays part of the cost for
what you examine.
the new Catastrophic Drug Insurance ben-
The plan's aged and disabled partici-
efits).
pants are, in the aggregate, intended to
Accordingly, the Medicare Catastrophic
pay the entire cost of the new benefit pro-
Coverage Act will increase premiums a
tection-a rare feature. Accordingly, what
maximum of $1,172.40 from their pre-act
causes discord is the nature of averages-
rates. Thus. this additional expenditure for
some (higher-income people) pay more
high-income people slashes (but does not
than their added protection is worth, while
eliminate) the tax-free subsidy of $1,515
others (lower-income people) pay less.
mentioned previously. It can be argued,
Furthermore, a special problem of eq-
when viewed from this angle. that high-in-
uity arises for those who have had supple-
come people are not, overall. being inequi-
mentary protection from post-retirement
tably treated. Rather. most of the tax-free
health plans established by employers-es-
windfall they have received under Medi-
pecially when such plans are comprehen-
care has been "taken back." Other recipi-
sive and the employers pay all (or most)
eats continue to receive a bigger chunk of
of the cost. Under such circumstances, in-
the windfall, however. so in that sense the
dividuals may end up paying much more
high-income people are being inequitably
for the same protection they had before. A
treated.
special temporary provision requires the
This situation is somewhat similar to
employer to make up the cost difference in
that of the "notch babies"-those born in
some cases, but this is not effective over
1917-21 who worked well bevond age 62.
the long run.
Such people receive equitable Social Secu-
Up to this point, the situation seems
rity benefits as compared with those born
very inequitable to many Medicare partici-
in later years but often far less than those
pants. However, let us look at the "ele-
born before 1917. And SO it depends on
phant" from another angle. More than 95%
which way one looks as to whether fair
of participants elect coverage
treatment is being given.
under Supplementary Medical Insurance-
Thus, on the average, high-income peo-
the optional Part B program that mainly
ple participating in all parts of Medicare
covers physicians' fees. Last year. they re-
will not have any "net" loss from their in-
ceived a tax-free subsidy of $893 from the
creased out-of-pocket costs. Such costs
General Treasury (i.e., from taxpayers of
merely partially offset bonanzas from the
all ages amounting to about three times
General Treasury that are provided under
the Supplementary Medical Insurance pre-
the provisions of previous law. Such people
mium they paid themselves. It is esti-
cannot avoid most of the new, increased
mated that in 1993 this tax-free payment
premium costs: if they drop out of Supple-
will amount to $1,515 per participant.
mentary Medical Insurance and Cata-
The new plan requires a so-called Sup-
strophic Drug Insurance ito avoid paying
plemental Premium to be paid by all peo-
the monthly Flat Premium), they must
ple eligible for the Hospital Insurance por-
still pay the annual Supplemental Pre-
tion of Medicare for more than six months
mium (and not receive any of the SMI and
in a calendar year if they have income-tax
CDI benefits that are partially financed by
liability of at least $150. The Supplemental
a portion of it).
Premium is a surcharge on the income-tax
P M E E X P A
Although high-income people without
liability, which starts at 15% this year and
employer-paid supplementary health insur-
reaches 28% in 1993. A per-capita limit on
ance "lose" most of the government sub-
the Supplemental Premium is also estab-
sidy they had received for many years.
lished-beginning at $800 this year and
they do have increased benefit protection
reaching $1,050 in 1993. These limits apply
(of a catastrophic nature Still. these peo-
to single people with incomes of $30,000 or
ple will not be convinced that they are not
more and to married couples filing joint
being inequitably treated when a bonanza
returns with incomes of $50,000 or more.
they have had for a long time is partially
Thus, high-income people will have to
taken away.
pay a substantial added charge not being
asked of lower-income people. The addi-
tional benefit protection is worth far less
Mr. Myers was chief actuary of the So-
than the additional premium.
cial Security Administration, 1947-70, and
deputy commissioner, 1981-82. He was ex-
ecutive director of the National Commis-
Social Security Reform. 1982-83.
TION of CURRENT LAW
9-8-89
(DTR)
TAXATION, BUDGET AND ACCOUNTING TEXT
(No. 173)
L-17
original liquidation) will not be taken into account. However,
(f) Effective date. Property imported by a taxpayer is
reliquidation under 19 U.S.C. section 1501 (voluntary reliqui-
subject to section 1059A and this section If the entry docu-
dation by the Customs Service within 90 days of the original
mentation required to be filed to obtain the release of the
liquidation to correct errors in appraisement, classification.
property from the custody of the United States Customs
or any element entering into a liquidation or reliquidation)
Service was filed after March 18, 1986. Section 1059A and
or reliquidation under 19 U.S.C. section 1520(c)(1) (to correct
this section will not apply to imported property where (1)
a clerical error, mistake of fact. or other inadvertance
the entry documentation is filed prior to September 3, 1987;
within one year of a liquidation or reliquidation) will be
and (2) the importation was liquidated under the circum-
taken into account in the same manner as, and take the
stances described in paragraph (c)(9) of this section.
place of. the original liquidation in determining customs
/s/Lawrence B. Glbbs
Commissioner of Internal Revenue
value.
(e) Drawbacks. For purposes of this section. a drawback,
that is, a refund or remission (in whole or in part) of a
Approved: June 26, 1989
customs duty because of a particular use made (or to be
made) of the property on which the duty was assessed or
/s/Kenneth W. Gideon
collected. shall not affect the determination of the customs
Assistant Secretary of Treasury
value of the property.
JOINT COMMITTEE ON TAXATION STAFF DESCRIPTION (JCX-45-89) OF PRESENT LAW
AND POSSIBLE REVENUE OPTIONS RELATING TO MEDICARE CATASTROPHIC INSURANCE
PROGRAM, AND SENATE FINANCE COMMITTEE STAFF OPTIONS TO REFORM MEDICARE
CATASTROPHIC BENEFITS, CONSIDERED BY FINANCE COMMITTEE SEPT. 7, 1989
(TEXT)
JCX-45-89
1. PRESENT LAW
A. Medicare Benefits
CONTENTS
In general
INTRODUCTION
Medicare is a nationwide health Insurance program for
I.
PRESENT LAW
the aged and certain disabled persons. Medicare consists of
three parts: the hospital insurance program (Part A), the
A.
Medicare Benefits
supplementary medical insurance program of Part B (SMI),
B.
Financing of Medicare Benefits
and the catastrophic drug insurance program of Part B
II.
DESCRIPTION OF POSSIBLE REVENUE OPTIONS
(CDI). Individuals who have attained age 65 and who are eligible
A.
Reduce Supplemental Premium Rates and Caps
for monthly social security or railroad retirement benefits
B.
Increase the Wage Base for the Medicare
are covered under Part A of Medicare at no cost. Part A
Hospital Insurance Tax to $60,000
coverage is also available at no cost to certain disabled
individuals who have not attained age 65 and to persons who
APPENDIX A: DISTRIBUTIONAL EFFECT OF THE
have end-stage renal disease. Persons who have attained age
SUPPLEMENTAL PREMIUM
65 and who are not eligible for social security or railroad
INTRODUCTION
retirement benefits may obtain Part A coverage providing
they pay for the coverage. The monthly premium for such
The Senate Committee on Finance has scheduled a mark-
coverage, as of January 1, 1989, is $156.
up on September 7, 1989, on the Medicare catastrophic
Within limits, Part A of Medicare provides coverage for
insurance program of the Medicare Catastrophic Coverage
Inpatient hospital care, skilled nursing facility care, home
Act of 1988.
health care, and hospice care.
This document.¹ prepared by the staff of the Joint Com-
Coverage under Part B, which includes the SMI and the
mittee on Taxation, provides a discussion of present law,
CDI programs, is voluntary. All persons age 65 or older and
possible revenue options proposed, and distributional effects
individuals eligible for Part A benefits by virtue of disability
of the supplemental premium and options.
or end-stage renal disease may elect to enroll in both these
Part I of the document provides a summary description of
programs by paying the monthly premium. Enrollees may
present law relating to Medicare benefits and financing of
not elect to enroll in only one of these programs.
the benefits. Part II describes possible revenue options. The
SMI covers doctor's services, other medical and health
Appendix provides data on the distribution of the current
services (e.g., laboratory and other diagnostic tests, ambu-
Medicare supplemental premium by income group.
lance services, outpatient services at a hospital). and certain
home health services not covered under Part A. SMI covers
This document may be cited as follows: Joint Committee on
80 percent of the reasonable charges for such services,
Taxation. Present Law ana Possible Revenue Options Relating
to the Medicare Catastrophic Insurance Program (JCX-46-89),
subject to a deductible. Beginning in 1990, enrollees in Part
B will also be eligible for prescription drug benefits.
September 7, 1989.
Published by THE BUREAU OF NATIONAL AFFAIRS. INC.. Washington, D.C. 20037
P.2/8
SEP 12 '89 17:05 WASH RGNL OFFICE
L 18
(No. 173)
TAXATION, BUDGET AND ACCOUNTING TEXT
(DTR)
9-8-89
Benefits under the Medicare Catastrophic Act of 1988
16.8 percent. Coinsurance requirements will be 50 percent of
The Medicare Catastrophic Act of 1988 (the "Act") signifi-
reasonable charges above the deductible in 1991, 40 percent
cantly expanded the benefits covered by Medicare. Major
in 1992, and 20 percent in 1993 and subsequent years.
changes to the benefits are described below.
Part A benefits
B. Financing of Medicare Benefits
Inpatient hospital care. - Under the Act, Medicare pays
all hospital inpatient costs above an annual deductible
Part A benefits
amount ($560 for 1989). Under prior law, the number of days
Part A benefits are financed through the Hospital Insur-
covered by Medicare was limited for a single spell of illness.
covered individuals paid a deductible for each spell of
ance Trust Fund. This trust fund is financed primarily
through payroll tax contributions paid by employers. em-
illness, and coinsurance amounts were payable after the
ployees, and the self-employed. The payroll tax rate for 1989
60th day of each spell of illness. The Act eliminated the
is 1.45 percent of compensation up to $48,000 per employee.
concept of a spell of illness, which began with a hospital
An equal amount is paid by the employer. Self-employed
admission and ended on the 61st day following discharge
individuals pay both the employers' and employees' portion
from the hospital or from a skilled nursing facility (SNF)
of the tax.
entered after the hospital stay.
Skilled nursing facility care. - Under the Act, the limit on
SMI benefits
SNF care is 150 days per year, and no prior inpatient stay is
SMI benefits are funded through the Supplementary Medi-
required for coverage. Coinsurance payments are required
cal Insurance Trust Fund (SMI Trust Fund) by premiums
for the first 8 days of care each year, at a rate of 20 percent
paid by enrollees in the Part B program and general rev-
of average SNF costs per day ($25.50 for 1989). Under prior
enues. In 1989 a temporary provision requires that enrollee
law. the limit on SNF care was 100 days per spell of Illness,
premiums provide 25 percent of the financing of Part B.
after a hospital stay of at least 3 days. Coinsurance pay-
Thereafter, premium rates will be derived annually based
ments were required for days 21 through 100 at a rate of
upon the projected costs of the program for the coming
1/8th of the deductible amount ($67.50 for 1988).
year, but premium increases will be limited to increases in
Home health care. - Under prior law and the Act. there
the social security cost-of-living adjustment. Therefore, the
is no limit on the overall number of covered home health
share of benefits financed by premiums is expected to drop
care visits and no coinsurance requirement. To be covered,
below 25 percent. while the general revenue share will grow.
home health care visits must be required on an intermittent
The basic Part B monthly premium for 1989 is $27.90,
basis. Under prior law, the intermittent requirement was
without regard to the additional premium added by the Act
interpreted to mean that there could be 5 to 7 visits a week,
(see below).
for 2 to 3 consecutive weeks. Under the Act, beginning in
1990, covered individuals may receive up to 38 consecutive
Financing of benefits under the Medicare Catastrophic Cove
days of home health care, 7 days a week.
erage Act of 1988
Hospice care. The Act eliminated the 210-day lifetime
In general
limit on hospice care.
The new benefits provided by the Act are financed
Part B benefits
through the combination of (1) an increase in the Part B flat
SMI benefits. - Beginning in 1990, the Act expands Part
monthly premium and (2) a new supplemental premium
B benefits. Each enrollee's annual liability for Part B copay-
based on income tax liability. It was anticipated that the
ments is capped. The cap is $1,370 for 1990, and will be
supplemental premium would finance approximately 63
adjusted each year to keep the proportion of enrollees
percent of the costs under the Act, and that the flat premi-
subject to the cap constant at 7 percent. Part B coverage is
um would finance the remaining 37 percent of costs.
expanded to include mammography screening for women,
Flat premium
subject to a maximum of $50 (Indexed) per screening and
The Act provides for increases in the monthly Part B
the usual copayment requirements. In addition, once suffi-
premium otherwise determined to finance the catastrophic
cient costs have been incurred to receive benefits under
coverage benefit and the prescription drug benefit. Through
either the copayment cap or the new drug provisions (see
1993, the amount of the increase is set by law. After 1993,
below). enrollees are eligible for respite benefits. Under this
the flat premium is adjusted through use of a formula
benefit, Medicare will pay 80 percent of reasonable costs for
designed to maintain a reserve for the catastrophic
up to 80 hours a year of in-home personal services, to give
program.
the usual caretakers of homebound enrollees a respite.
For 1989-1993, the additional flat monthly premium for
Catastrophic drug insurance. Effective January 1990.
Part B enrollees is as follows:
the Act provides coverage for drugs administered Intrave-
Total
nously at home and for immunosuppressive drugs after the
first year following a transplant, subject to an annual de-
Catastrophic
Prescription
Catastrophic
ductible amount of $550. Coinsurance of 20 percent will be
Coverage
Drug
Flat
Year
Premium
Premium
Premium
required on drugs administered intravenously, while coin-
surance will initially be 50 percent for newly-covered im-
1989
$4.00
$ .00
$ 4.00
munosuppressive drugs. (Medicare already covers 80
1990
4.90
.00
4.90
percent of the costs of immunosuppressive drugs in the first
1991
5.48
1.94
7.40
year following an organ transplant.)
1992
6.75
2.45
9.20
Effective January 1991, the CDI program will be expand-
1993
7.18
3.02
10.20
ed. Coverage will include all outpatient prescription drugs
and insulin, subject to an annual deductible amount ($600 in
; Residents of Puerto Rico, other U.S. commonwealth or territor-
1991) that will be adjusted each year to keep the proportion
ies, and individuals not entitled to or eligible for Medicare Part A
of enrollees paying the maximum deductible constant at
have different premium schedules.
Published by THE BUREAU OF NATIONAL AFFAIRS. INC., Washington, D.C. 20037
8/E'd
SEP 12 '89 17:06 WASH RGNL OFFICE
9-8-89
(DTR)
TAXATION, BUDGET AND ACCOUNTING TEXT
(No. 173)
L- 19
Supplemental premium
Revenue Effect
The supplemental premium is payable in a year by any
(Fiscal years: billions of dollars)
individual who is eligible for Part A of Medicare for at least
Proposal
1990
1991
1992
1993
1994
1990-1994
6 months during the year (except for those who pay the Part
1. 15 percent
-1.5 -2,7 -2.9 -3.5 -4.) -14.9
A primium), who has income tax liability for the year of at
rate/maximum
least $150, and who resides in one of the 50 states or the
premium of
6585
District of Columbia. Subject to a limit on the maximum
2. 10 percent
-2.7 -3.7 -3.8 -4.4 -5.2 -19.8
premium payable by an individual, the annual premium is
rate/maximum
determined by multiplying (1) the supplemental premium
premium of
6585
rate by (2) the amount determined by dividing the individ-
ual's adjusted income tax liability by $150.
1. 10 percent
-2.3 -2.7 -2.9 -1.5 -4.3 -15.7
rate for 1989,
For years 1989 through 1993, the supplemental premium
15 persent
rate is set by law. For years after 1993, the supplemental
thereafter/
maximum premium
premium rate will be adjusted by a formula that is designed
of 8583
to maintain a reserve for the catastrophic program.
B. Increase the Wage Base for the
The supplemental premium rate for 1989-1993 is equal to
Medicare Hospital Insurance Tax to $60.000
the sum of the catastrophic coverage premium rate and the
Present Law
prescription drug premium rate as follows:
FICA taxes are generally imposed on the employee and the
employer at equal races. The current tax rate for both the
employer and the employee is 7.51 percent of wages 17.69
percent in 1990 and thereafter consisting of 6.08 percent
Catas-
Prescip-
Total
(6.2 percent in 1990 and thereafter: for Old-Age, Survivors
trophic
tion
Supple-
Total
and Disability Insurance (OASDI) and 1.45 percent for
Medicare Hospital Insurance (MI). Corresponding taxes are
Coverage
Drug
mental
Percent
imposed on earnings from self-employment.
Year
Premium
Premium
Premium
Rate'
The amount of earnings from employment subject to both
1989
$22.50
$ .00
$22.50
15%
the OASDI and HI taxes are capped at $48,000 in 1989. The
earnings base increases each year based on the increase in
1990
27.14
10.36
37.50
25
average wages in the economy. The earnings case 18 currently
projected to be $50,700 in 1990.
1991
30.17
8.83
39.10
26
1992
30.55
9.95
40.50
27
Explanation of Proposel
1993
29.55
12.45
42.00
28
Beginning in 1990, the earnings base for the HI tax
would be increased to $50,000, or the earnings 0834 for the
The maximum annual supplemental premium is not to
OASDI tax, whichever 18 greater.
exceed the following amounts for 1989-1993:
Revenue Effect
(Fiscal years: billions of dollars)
In the case of taxable
Proposel
1990
1991
1992
1993
1994
1990-94
years beginning in:
The limitation is:
Increase
0.6
1.6
1.1
0.5
0.1
1.9
1989
$800
wage case
to 560,000
1990
850
1991
900
APPENDIX A:
1992
950
DISTRIBUTIONAL EFFECT OF THE SUPPLEMENTAL PREMIUM
1993
1,050
Table I
WHO
For years after 1993, the cap on the maximum supple-
Medicare Catestrophic Coverage Act of 1988
Distribution of Medicare Enrollees
PAYS
mental premium is increased through the use of a formula.
By Level of Supplemental Prémium
How MUCH
(Calender Year 1989)
in 1989
This column shows the total supplemental premium as a percent
of tax liability.
medicare
Supplemental Premium
Enrollees
percent
Per Enrolles
(Thousands)
Distribution
Not Subject To Premium
19,240
$8.8
am
% paying
III. DESCRIPTION OF POSSIBLE REVENUE OPTIONS
Less than $100
4,031
12.3
A. Reduce Supplemental Premium Rates and Caps
norms
100 to 199
2.024
8.6
Present Law
200 to 299
2,024
6.2
The supplemental premium rates are 15 percent of tax
liability in 1989. 25 percent in 1990, 26 percent in 1991, 27
200 to 399
1,093
3.3
percent in 1992. and 28 percent in 1993. The maximum
supplemental premium per enrollee is $800 in 1989, $850 in
400 to 499
625
1.9
1990, $900 in 1991, 5950 in 1992, and $1,050 in 1993.
500 to 599
335
1.0
Explanation of Proposals
500 to 699
460
1.4
..
The supplemental premium cate would be 15 percent of tax
liability and the MAXIMUM supplemental premium per enrollee
700 to 799
281
0.8
would be $585 through calendar year 1994,
Maximum Premium ($800)
1,840
4.6
2. Alternatively, the supplemental premium rate would be 10
percent of tax liability and the maximum supplemental premium
per enrollee would be $585 through calendar year 1994.
TOTALS
32,750
100.0
1. Alternatively, the supplemental premium rate would De 10
percent of tax liability for calendar year 1989 and 15
percent thereafter. The maximum supplemental premium per
enrollee would be $585 through calendar year 1994.
Joint Committee on Texation
Published by THE BUREAU OF NATIONAL AFFAIRS, INC., Washington, D.C. 20037
P.4/8
SEP 12 '89 17:07 WASH RGNL OFFICE
20
(No. 173)
TAXATION, BUDGET AND ACCOUNTING TEXT
(DTR)
9-8-89
Table 2
Medicare Catastrophic Coverage Act of 1988
Distribution of medicare Enrollees
By Level of Supplemental Premium
(Calendar Year 1993)
in 1993
Medicare
Supplemental Premium
Enrollees
Percent
Per Enrollee
(Thousands)
Distribution
Not Subject To Premium
18,387
52.4
Less chan $100
2,102
6.6
100 to 199
2,555
7.3
200 to 299
1,599
4.6
100 to
199
1,648
4.7
400 to
499
1,270
3.6
500 to
599
1,187
3.4
600 10
699
914
2.6
700 to
799
744
2.1
860 to
999
473
1.4
900 to
999
240
0.7
1,000 40 1,049
145
0.4
MAXIMUM Fremium ($1,050)
3,612
10.1
TOTALS
35,075
100.0
Joint Committee on Taxation
TABLE ,
MEDICARE CATASTROPHIC COVERAGE ACT OF 1990
[Celender Year 1999)
JOINT RETURNS
NON-JOINT RETURNS
Average
Average
Income
Income
Class
Average
Tax
Supplemental
Class
Avarage
Tax
Supplemental
Income
Liability
Premium
Income
Limbility
Promium
(Thousands of
Per
Per
Per
(Thousands of
Per
Per
Per
Return'
Return
Enrelleez
Dellars)
naturn'
Return
Enrollee2
Dellars)
$ 3,071
$
o
$ 0.00
$ 0 5
s
9 2,597
$
o
$ 0.00
$ 0
$ 5...
5
10
7,701
-14
0.00
5 -
:
10...
7,056
-1
0.00
15
12,556
.29
0.00
10 #
15...
12,376
105
0.00
10
17,514
13
0.00
10 -
20...
17,196
576
$0.40
15
20
22,516
390
29.70
20 -
25...
22,210
1,410
21.50
20
25
27,545
#30
69.75
25 -
30...
37,294
2.035
305.25
25
30
35
32,378
118.93
30 -
35
32.333
2,902
435.30
30
1,559
171.00
35 - 40...
37,254
4,773
715.95
35 -
40
37.599
2.251
40 45
42,374
3.057
229.20
40 - 45...
42,840
6,296
000.00
47,516
6,147
311.03
45 - 50...
47.076
7,637
800.00
45 50
50 -
55
52.052
4,991
374.33
so - 55...
$2,402
8,770
600.00
57.627
6,693
601.23
55 .
60...
56,538
9,932
800.00
55 -
60
62,809
8,204
$16.30
so - as...
60,929
10,200
800.00
60 *
65
57,491
9,549
730.80
as - 70...
67,200
9,603
600.00
05
70
70
75
12,097
10,166
782.45
70 -
7%
72,330
12,023
800.00
10,239
767.93
75 -
80...
76,002
13,422
800.00
75
80
77,757
88,227
14,299
500.00
80 - 100
68,987
17,625
600.00
80 100
136,677
25,315
800.00
100 . 200...
30,208
800.00
100 200
200 and UP...
800.00
200 and wp...
137,122
600.00
643,830
139,278
Joint Committee on Taxation
September 6. 1989
" defined. salely for purposes of presenting distributional information. as adjusted gress
Income is (AGI) plus untexed Income from: (1) untased social security benefits: (2) tsx-exampt 1170 interest,
proferences: insurance: and (8) pertien of omerive 100500 in - of minimum tax preferences to the
(3) employer (5) worners compensation (8) contributions to 1RA and Keegh accounts, minimum the extent tax
income contributions ver noalth plane and 1170 insurance: (a) inside build-up (7) on
losses are allowed in the computation of AGI,
2, Computed at average tax liability per return in income class.
Published by THE BUREAU OF NATIONAL AFFAIRS, INC., Washington. D.C. 20037
8/9/8
30I330 RGGL HSUM 80:21 68, 21 d3S
9-8-89
(DTR)
TAXATION, BUDGET AND ACCOUNTING TEXT
(No. 173)
L- 21
TABLE 4
MEDICARE CATASTROPHIC COVERAGE ACT OF 1968
[Celender Year 1993)
JOINT RETURNS
NON-JOINT RETURNS
Income
Average
Income
Average
Class
Average
Tax
Supplemental
Class
Average
TBS
Supplemental
Income
Liability
Premium
Income
Limbility
Premium
(Thousands of
per
Per
Per
(Thousands of
Per
Par
per
Dollars)
Return'
Return
Enrellee2
Dellars)
Return'
Return
Enrolles2
s 0 s 5
% 2,357
$
-9
$0.00
$ 0 . $
5
e 2.305
$
0
$0.00
5
10
7,930
-12
0.00
5
10
7,548
-1
0.00
10
15
12,771
-32
0.00
10
18
12,150
39
0.00
15
20
17,417
-21
0.00
15 -
20
17,333
378
105.28
20 25
22,449
200
33.60
20 - 2m...
22,300
1,020
285.60
25
30
27,450
554
77.56
25 - 30...
27,412
1,649
461.72
30 35
32.520
$11
127.54
30 - 35
32,373
2,295
642.60
35 40...
37.453
1,592
222.08
35 -
40
37.257
3,604
1,009.12
40 45
42,316
2,319
324.68
40 . as...
42.631
4,555
1,050.00
45 50
47,845
3,099
433.80
45 - 50
47,400
6,670
1,050.00
50 55
52,384
4.068
569.52
so - 75
60,898
9,044
1,050.00
55
60
57,230
4,958
694.12
7% - 100
07,203
14,592
1,050.00
60 65
62.303
8,530
914.20
100 - 200...
130,153
28,074
1,050.00
65 70
67.341
7,807
1,050.00
200 and up...
534,697
113,030
1,050.00
70 75
72,377
8,596
1,050.00
75 80
78.03?
9,598
1,050.00
80 03
83,181
10,781
1,050.00
05 - 100
81,755
13,675
1,050.00
100 200
137.632
23,312
1,050.00
200 and up
623.120
136,694
1,050.00
Joint Committee en taxation
September 6. 1989
Income is defined. salwly For purposes of presenting distributionel Information, " adjusted gress
income (AGE) plus untered income from: (1) untaled social security benefits (2) textexempt Interest:
(3) employer contributions for health plans and life insurance: (4) inside buildrup on 1990
insurance: (5) warhorg. compensation (6) centributions to IRA and Keegh accounts, (7) minimum tox
preferences: and (8) portion of Dessive in ****** of minimum 19. preferences 10 the extent the
105565 are allowed in the computation of AGI
2, Computed at overage tax liability per return in income class.
Senate Finance Committee
benefit would begin on January 1, 1992 with 50% coinsur-
STAFF OPTIONS TO REFORM MEDICARE CATASTROPHIC
ance and would be fully phased in on January 1. 1994 with
September 7, 1989 08:30 am
20% coinsurance (rather than 1991 and 1993 as currently
scheduled). Drug utilization review requirements would be
Option 1: Increase catastrophic cap on out-of-pocket ex-
delayed another year (until January 1, 1993). Increase pre-
penses from $1370 in 1990 (which affects 7% of enrollees) to
scription drug deductible to assure that 16.8% of beneficia-
$1600 (benefits 5.5% of enrollees). Increase prescription
ries (instead of 27% currently estimated) would qualify for
drug deductible to assure that 16.8% of beneficiaries (in-
the benefit. Under Part B opt-out. the decision to pay
stead of 27% currently estimated) would qualify for the
premiums and qualify for catastrophic benefits would be
benefit. Deductible would increase from $600 to $882 in
linked to the decision to enroll In Part B. which is currently
1991; from $652 to $984 in 1992; from $710 to $1092 in 1993).
voluntary.
Under Part B opt-out, the decision to pay premiums and
Option 3: Increase catastrophic cap on out-of-pocket ex-
qualify for catastrophic benefits would be linked to the
penses from $1370 in 1990 (which affects 7% of enrollees) to
decision to enroll in Part B. which is currently voluntary.
$1600 (benefits 5.5% of enrollees). Delay phase-in of pre-
Option 2: Increase catastrophic cap on out-of-pocket ex-
scription drug benefit by one year. except for home intrave-
penses from $1370 in 1990 (which affects 7% of enrollees) to
nous therapy and immunosuppressives (and
$1600 (benefits 5.5% of enrollees). Delay phase-in of pre-
chemotherapeutics as under current law) which would be-
scription drug benefit by one year, except for home intrave-
come effective in 1990 as scheduled. Prescription drug
nous therapy and immunosuppressives (and
benefit would begin on January 1. 1992 with 50% coinsur-
chemotherapeutics as under current law) which would be-
ance and would be fully phased in on January 1. 1994 with
come effective in 1990 as scheduled. Prescription drug
20% coinsurance (rather than 1991 and 1993 as currently
Published by THE BUREAU OF NATIONAL AFFAIRS, INC., Washington, D.C. 20037
8/9'd
SEP 12 '89 17:08 WASH RGNL OFFICE
22
(No. 173)
TAXATION, BUDGET AND ACCOUNTING TEXT
(DTR)
9-8-89
scheduled). Drug utilization review requirements would be
and 1993 as currently scheduled). Drug utilization review
delayed another year (until January 1, 1993). Increase pre-
requirements would be delayed another year (until January
scription drug deductible to assure that only enrollees who
1, 1993). Increase prescription drug deductible to assure that
incur catastrophic drug costs would qualify (10% of benefi-
16.8% of beneficiaries (instead of 27% currently estimated)
claries). Deductible would increase to $1355 in 1992 and
would qualify for the benefit. Under Part B opt-out, the
$1510 in 1993. Under Part B opt-out, the decision to pay
decision to pay premiums and qualify for catastrophic bene-
premiums and qualify for catastrophic benefits would be
fits would be linked to the decision to enroll in Part B, which
linked to the decision to enroll in Part B, which is currently
is currently voluntary.
voluntary.
Option 6: Increase catastrophic cap on out-of-pocket ex-
Option 4: The catastrophic cap on out-of-pocket expenses
penses from $1370 in 1990 (which affects 7% of enrollees) to
would be maintained at $1370 in 1990. The prescription drug
$1700 (benefits 5% of enrollees). Repeal prescription drugs
benefit and associated premiums would be repealed (other
except for home intravenous therapy and immunosuppres-
than home intravenous and immunosuppressive therapy
sives (and chemotherapeutics as under current law). Request
benefit (and chemotherapeutics as under current law) which
Prescription Drug Payment Review Commission study of
would become effective in 1990 as scheduled. Under Part B
"appropriate" catastrophic drugs and the means to finance
opt-out. the decision to pay premiums and qualify for cata-
them.
strophic benefits would be linked to the decision to enroll in
Option 7: Increase catastrophic cap on out-of-pocket ex-
Part B, which is currently voluntary.
penses from $1370 in 1990 (which affects 7% of enrollees) to
Option 5: The catastrophic cap on out-of-pocket expenses
$1700 (benefits 5% of enrollees). Retain the prescription
would be eliminated. Delay phase-in of prescription drug
drug benefit with the following modifications:
benefit by one year, except for home Intravenous therapy
a. The individual must have met the Part B catastroph-
and immunosuppressives (and chemotherapeutics as under
ic cap in order to be eligible for the drug benefit: and
current law) which would become effective in 1990 as
b. Prescription drug benefit claims would not be pro-
scheduled. Prescription drug benefit would begin on January
cessed until the individual incurred expenses equal to the
1. 1992 with 50% coinsurance and would be fully phased in
drug deductible in that year.
on January 1, 1994 with 20% coinsurance (rather than 1991
OPTIONS TO REFORM MEDICARE CATASTROPHIC
September 7, 1989 08:30
1989
1990
1991
1992
1993
Total
Option 1:
Part B Cap at $1600
0
-0.4
-0.6
-0.7
-0.8
-2.5
Drugs at 16.8%
0
0
-0.5
-1.1
-0.7
-2.3
Part B opt-out
0
0.1
0.6
0.3
0.3
1.3
Total
0
-0.3
-0.5
-1.5
-1.2
-3.5
Option 2:
Part B Cap at $1600
0
-0.4
-0.6
-0.7
-0.8
-2.5
Drugs at 16.8%, delayed
0
O
-1.4
-2.3
-1.4
-5.1
Part B opt-out
0
0.1
0.6
0.3
0.3
1.3
Total
0
-0.3
-1.4
-2.7
-1.9
-6.3
Option 3:
Part B Cap at $1600
0
-0.4
-0.5
-0.7
-0.8
-2.5
Drugs at 10%, delayed
O
0
-1.4
-2.7
-2.2
-6.3
Part B opt-out
0
0.1
0.6
0.3
0.3
1.3
Total
0
-0.3
-1.4
-3,1
-2.7
-7.5
Option 4:
Part B Cap at $1370
0
0
0
0
0
0
Repeal Drugs *
0
0.8
1
-0.7
-0.5
0.6
Part B opt-out
0
0.1
0.6
0.3
0.3
1.3
Total
0
0.9
1.6
-0.4
-0.2
1.9
Option 5:
Eliminate Part B Cap
O
-1,8
-3.2
-3.8
-4.3
-13.1
Drugs at 16.8%, delayed
O
0
-1.4
-2.3
-1.4
-5.1
Part B opt-out
0
0.1
0.6
0.3
0.3
1.3
Total
0
-1.7
-4
-5.8
-5.4
-16.9
Published by THE BUREAU OF NATIONAL AFFAIRS. INC., Washington, D.C. 20037
8/2'd
SEP 12 '89 17:09 WASH RGNL OFFICE
9-8-89 (DTR)
TAXATION, BUDGET AND ACCOUNTING TEXT
(No. 173)
L- 23
option 6:
Part B Cap at $1700
0
-0.5
-0.8
-0.9
-1.1
-3.3
Repeal Drugs **
0
0
-1.4
-3.3
-3.8
-8.5
Total
0
-0.5
-2.2
-4.2
-4.9
-11.8
Option 7:
Part B Cap at $1700
0
-0.5
-0.8
-0.9
-1,1
-3.3
Modified Drug Benefit
N/A
N/A
N/A
N/A
N/A
N/A
Total
N/A
N/A
N/A
N/A
N/A
N/A
Note: Estimates of Part B opt-out do not reflect any changes that
might be made to supplemental premiums. Estimates take into account
effects on Medicaid spending
* Assumes premium repeal. Repeal of benefits only is zero in FY90,
-1.4B in FY91, -3.3B in FY92, -3.83 in FY93
** Assumes flat premium retained
1990
1990
1993
1993
1989-93
1989-93
Cost
Percent
Cost
Percent
Cost
Percent
of Total
of Total
of Total
Part À Benefits
Hospital
1302
31.7%
1671
13.3%
6816
18.5%
Skilled Nursing Facility
381
9.3%
511
4.1%
2041
5.5%
Home Health
129
3.1%
208
1.7%
714
1.9%
Hospice
1
*
1
*
5
*
Part B Benefits
Part B Copayment Cap
1838
44.7%
4326
34.5%
13162
35.8%
Respite Care
67
1.6%
418
3.3%
909
2.5%
Screening Mammography
75
1.8%
147
1.2%
483
1.3%
Prescription Drugs
76
1.8%
4254
33.9%
9646
26.2%
Administrative Expenses
244
5.9%
1000
8.0%
3035
8.2%
TOTAL MEDICARE BENEFITS
4113
100.0%
12536
100.0%
36811
100.0%
* Less than .1 percent
NOTE: These estimates are the latest available from CBO as of 28 August.
They do reflect CBO's July reestimate of drug costs, but do not reflect
recent reestimates of skilled nursing facility (SNF) costs, or
other minor and technical reestimates of Part A benefits.
Published by THE BUREAU OF NATIONAL AFFAIRS. INC., Washington, D.C. 20037
8/8'd
OFFICE RGGL HSHM 12:09 68, 12 d3S
MEDICARFroued
Has W
don
Catastrophic
Protection
and
Other
New
Benefits
An Official Notice To Medicare Beneficiaries Explaining Benefits
2.U
Under The Medicare Catastrophic Coverage Act of 1988
AD
"Let us remove a financial specter facing
MEDICARE EXPANDED TO INCLUDE
our older Americans- the fear of an illness
CATASTROPHIC HEALTH INSURANCE
so expensive that it can result in having to
Medicare has been changed to better protect its
make an intolerable choice between
32 million elderly and disabled beneficiaries
bankruptcy and death."
from "catastrophic" hospital, doctor and
prescription drug bills. The changes, mandated
President Ronald Reagan
by the Medicare Catastrophic Coverage Act of
1986 State of the Union Message
1988 (Public Law 100-360), will be introduced
beginning January 1, 1989.
The new law limits the amount you as a
Medicare beneficiary must pay for hospital
care, physician services, medical supplies, and
DEAR MEDICARE BENEFICIARY:
outpatient drugs covered by Medicare. It
increases home-health, skilled nursing facility,
and hospice coverage, and adds breast-cancer
Beginning January 1, 1989, Medicare will be
screening and respite care benefits.
expanded to cover catastrophic health care
costs.
These new and improved benefits will be made
available to you automatically if you are a
This new plan meets President Reagan's call
Medicare beneficiary or when you become
to protect the elderly and disabled against
eligible for the program. You are not required
financial ruin in the event of a prolonged
to do anything to receive this coverage. If you
hospital stay or other high medical costs.
are enrolled in Part A only and want to enroll
in Part B so as to take advantage of all of the
benefits, you will be given a chance to do so
We are proud to provide this new coverage
during the general enrollment period from
as part of our continuing commitment to af-
January 1 through March 31 each year.
fordable quality health care.
OTIS R. BOWEN, M.D.
Secretary
U.S. Department of Health and Human Services
1
NEW HOSPITAL BENEFITS:
PSYCHIATRIC HOSPITAL BENEFIT:
Medicare hospital insurance (Part A) helps pay
The 190-day lifetime limit on inpatient
for medically necessary care in a Medicare-
psychiatric hospital services remains
approved hospital, skilled nursing facility and
unchanged.
hospice. It also pays for certain home health
care.
SKILLED NURSING FACILITY CARE:
Beginning January 1, 1989, you will be
The new law provides for 150 days of care per
entitled to unlimited hospitalization for
calendar year in a Medicare-certified skilled
approved care after you pay a single annual
nursing facility starting January 1, 1989. If
deductible, estimated at $564 in 1989. (A
you are admitted to a skilled nursing facility,
deductible is an amount you must spend before
you will be responsible for copayments (a
Medicare begins paying for services and
share of the costs) for the first eight days of
supplies covered by the program.) Medicare
care each year. The copayment is estimated at
will pay for your hospital care only if you
$22 per day in 1989. Medicare pays all other
meet the following four conditions: (1) a
allowable charges for up to 150 days of
doctor prescribes inpatient hospital care for
covered care even if you are discharged and
treatment of your illness or injury, (2) you
readmitted to a skilled nursing facility more
require the kind of care that can only be
than once during a calendar year. The
provided in a hospital, (3) the hospital is
requirement that you be hospitalized at least
participating in Medicare, and (4) the
three days immediately before entering a
Utilization Review Committee of the hospital
skilled nursing facility to qualify for Medicare
or a Peer Review Organization does not
coverage will be eliminated for stays starting
disapprove your stay.
on or after January 1, 1989.
Once you meet these conditions and pay the
Skilled nursing facility care is not the same as
single annual deductible, Medicare pays 100
custodial nursing home care. Skilled nursing
percent of the approved charges for your care.
facility care is acute care while custodial
This is regardless of the costs, length of stay
nursing home care is long-term care. A skilled
or number of times you are admitted to the
nursing facility is a specially qualified facility
hospital in any one year. And if you pay the
which has the staff and equipment to provide
deductible during December, you do not have
skilled nursing care or rehabilitation and other
to pay it again if you are still a patient in or
related health services. Most nursing homes in
are readmitted to the hospital in January of the
the United States are not skilled nursing
following year.
facilities and many skilled nursing facilities are
While most hospital-related costs are covered
not certified by Medicare. While Medicare
by Medicare, you must pay for certain services
does not cover custodial care in a nursing
and conveniences, such as a private room
home, some insurance companies offer policies
(unless it is a medical necessity), private duty
that do.
nurses, a television, radio, or telephone in the
room.
2
3
HOME HEALTH CARE: Effective January
DOCTOR AND OTHER OUTPATIENT
1, 1990, if you qualify for home health care,
SERVICES (Part B): Medicare Part B helps
reasonable and necessary skilled nursing care
pay for medically necessary doctor services,
and/or home health aide care will be available
outpatient hospital services, home health care,
to you for up to six days a week for as long as
and various medical services and supplies not
it is prescribed by a doctor. If you need such
covered by the hospital insurance part of
home health care seven days a week, you will
Medicare. It is voluntary, and enrollees pay a
be entitled to 38 consecutive days of care. The
monthly premium.
38-day limit can be extended for a period of
Effective January 1, 1990, your share of
time under special circumstances.
approved charges for services and supplies
covered by Part B will be limited to $1,370 a
HOSPICE CARE: Beginning in 1989,
year. You will be required to pay the first $75
unlimited hospice care will be available to
(deductible) of charges approved by Medicare
beneficiaries who are recertified as terminally
and 20 percent of all approved charges after
ill after 210 days of care in a hospice.
that until these out-of-pocket expenses total
$1,370. It does not matter whether these
expenses are paid directly by you or by your
private insurance company. Once the $1,370
amount is reached, Medicare will pay 100
percent of all other approved charges under
Part B for the remainder of the calendar year.
(An approved charge is an amount Medicare
has determined to be a reasonable price for
physicians and other covered medical services.)
If a doctor or medical supplier charges more
than Medicare's approved charge, you must
pay the difference and it will not count toward
the $1,370 limit. You will continue to be
responsible for any charges over what
Medicare allows even after you reach the
$1,370 out-of-pocket limit. Some doctors and
suppliers agree to not charge more than the
Medicare-approved amount for services and
supplies. They are called participating
physicians and suppliers and their names and
addresses may be obtained from the Medicare
carrier for your area.
4
5
RESPITE CARE BENEFIT: This new
NEW PRESCRIPTION DRUG BENEFIT:
benefit, effective January 1, 1990, pays for the
Medicare already pays for prescription drugs
temporary services of a home health aide to
when you are in the hospital. Beginning
provide relief for an individual who normally
January 1, 1990, the benefit will be expanded
helps a Medicare beneficiary who requires
to cover a few outpatient prescription drugs in
assistance with essential daily personal care.
certain circumstances, and in 1991 it will cover
Medicare will pay for up to 80 hours per year
most prescription drugs as well as insulin.
of home health aide and personal care services.
In 1990, Medicare will help pay for certain
You can use this benefit only if you are
antibiotics and other drugs that are injected
chronically dependent and have met either the
into the veins (intravenous) and can be safely
annual deductible for outpatient prescription
used at home. Coverage also will be expanded
drugs or the $1,370 Part B catastrophic limit
in 1990 to include immunosuppressive drugs
for the year.
used in the second year and thereafter
following a Medicare-covered organ transplant.
MAMMOGRAPHY: This new benefit, which
Medicare already helps pay for
goes into effect January 1, 1990, will pay up
immunosuppressive drugs taken the first year
to $50 for X-ray screening for the detection of
following a Medicare-covered organ transplant.
breast-cancer. Women 65 or older can use the
benefit for a mammogram every other year,
In 1990, you will have to pay the first $550
while certain younger disabled women covered
for these covered drugs. Medicare will then
by Medicare can use it for more frequent
pay 80 percent of the cost of approved
examinations.
intravenous drugs and 50 percent of the cost of
immunosuppressives used after the first year
following a transplant. You will not have to
pay the $550 deductible if your intravenous
drug therapy began during a hospital stay and
is continued at home, or for
immunosuppressive drugs used in the first year
after a transplant.
Effective January 1, 1991, Medicare will cover
most other prescription drugs as well as
insulin. You will be responsible for an annual
deductible and copayments. In 1991 the
deductible will be $600 and the copayment 50
percent. This means that after you pay the first
$600 for covered outpatient prescription drugs,
6
7
Medicare will pay half of all other allowed
SUPPLEMENTAL PREMIUM: Besides the
drug charges for the remainder of the calendar
change in the basic premium, a supplemental
year. In 1992 the deductible is estimated to be
premium based on your income tax liability is
$652 and the copayment 40 percent. In 1993
to be paid on Federal tax returns for 1989.
and thereafter, if the new catastrophic coverage
You must pay the supplemental premium if
premiums have been sufficient to cover costs,
you are entitled to or eligible for Medicare
Medicare will pay 80 percent of all the
Part A for more than six full months in the
allowable drug charges in excess of the
taxable year and your Federal income tax
deductible. The deductible for 1993 is to be set
liability for the year is $150 or more. The only
at a later date.
exceptions are for certain Medicare-eligible
PAYING FOR CATASTROPHIC HEALTH
individuals living in a foreign country and
INSURANCE: Two new premiums are being
those who pay a monthly premium for Part A
added to pay for the catastrophic coverage.
coverage. You do not have to pay the premium
One will be an addition to the basic monthly
if your tax liability for the taxable year is less
Part B premium and the other will be a new
than $150.
annual income-tax-related premium. The extra
The supplemental premium rate is $22.50 for
charge to be added to the basic Part B
each $150 of Federal income tax liability for
premium will be $4 per month in 1989 and
the 1989 tax year. This means that if you pay
will gradually increase to $10.20 per month in
$150 in Federal income taxes for 1989, your
1993. It will be in addition to any increases in
supplemental premium will be $22.50. If your
the monthly basic Part B premium which is
tax is $300, the premium will be $45. The
$24.80 in 1988.
premium rate for each $150 of tax liability will
If you are a Social Security or Railroad
rise to $37.50 in 1990, $39 in 1991, $40.50 in
Retirement beneficiary, any increase to you in
1992, and $42 in 1993. There is, however, a
the Part B premium cannot be greater than the
limit on the amount you must pay each year.
cost-of-living adjustment in your monthly
For 1989, the maximum supplemental premium
benefit for the year. In other words, if at
is $800. It will increase to $850 in 1990, $900
sometime in the future the Part B premium
in 1991, $950 in 1992, and $1,050 in 1993.
were increased $6 per month and your cost-of-
The maximum is double for a married couple
living adjustment for the year amounted to $5
as long as both were eligible for Part A for
a month, the increase in your monthly
more than six full months during the taxable
premium would be limited to $5.
year.
While enrollment in Part B is still optional,
you cannot buy Part B without also buying the
new catastrophic benefits it provides. Everyone
enrolled in Part B will be required to pay the
new premium to be added to the basic Part B
premium. Part B premium payments will not
count toward the $1,370 out-of-pocket expense
limit.
8
9
Thus, a couple will pay a supplemental
Personnel Management will contact you
premium in 1989 at the rate of $22.50 for each
directly regarding these provisions. If you are
$150 up to a maximum of $1,600. In the case
not contacted by mid-September, you should
of a joint return where only one spouse is
write to the Office of Personnel Management,
eligible for Medicare, only one half of any tax
P.O. Box 275, Washington, D.C. 20044-0275.
liability is taken into account, and the $800
maximum applies. There are also special rules
MEDIGAP POLICIES: The new law requires
for governmental retirees to adjust for the fact
companies that issue insurance to supplement
that their government pensions are fully taxed
Medicare (Medigap policies) to send a letter to
while the pensions received by Social Security
their policyholders who are entitled to
are not.
Medicare explaining the changes in the
The supplemental premium will be
Medicare law and how it affects their policies'
administered through the Federal income tax
benefits and premiums. The letter is to be
system, with premium amounts computed from
mailed by January 31, 1989, to Medigap
a table included with income tax forms and
policyholders of record as of January 1, 1989.
collected along with income tax payments. You
Medigap policies must be revised to avoid
will be receiving information from the Internal
duplicating the new Medicare catastrophic
Revenue Service in your 1988 tax package. If
benefits. Contact your State insurance
you have a tax-related question about the
commissioner or insurance agent for additional
supplemental premium, you should call or visit
information about Medigap policies.
your local Internal Revenue Service office.
The supplemental premium does not count
WHERE CAN I GET MORE
toward the $1,370 out-of-pocket expense limit
INFORMATION? If you require additional
for Part B benefits.
information about Medicare, contact the
Medicare carrier that processes claims for your
PREPAYMENT PLANS: If you are enrolled
area. The carrier's telephone number is listed
in a health maintenance organization (HMO) or
in The Medicare Handbook. Information,
competitive medical plan (CMP), the new
including the carrier's telephone number, also
catastrophic coverage will be provided by your
may be obtained by calling 1-800-888-1998.
HMO or CMP. Additional information about
Questions about the supplemental premium
this coverage and how it is to be provided by
should be directed to the Internal Revenue
the plans will be mailed to you in the near
Service.
future by the Health Care Financing
Administration. If you are a federal retiree
enrolled in the Federal Employees Health
Benefits Program, special provisions of the
new law may apply to you. The Office of
10
11
SUMMARY OF NEW BENEFITS
*
Hospital Benefit (Part A): Effective January
1, 1989, beneficiary pays an annual
deductible of $564 (estimated for 1989) and
Medicare pays the balance regardless of the
number of days of hospitalization or the
costs.
*
Skilled Nursing Facility Care: Effective
January 1, 1989, 150 days of care per year
with 20% copayment for first 8 days.
*
Hospice Care: Effective January 1, 1989,
beyond 210 days of care if recertified as
terminally ill.
*
Home Health Care: Coverage extended as
of January 1, 1990, to provide for
intermittent care up to 6 days a week; daily
care for up to 38 consecutive days.
*
Medical Benefits (Part B): Beginning
January 1, 1990, beneficiary pays $75
deductible and 20% copayment up to
$1,370. Medicare then pays all other
allowable charges for the rest of the year.
*
Drug Benefit: Certain drugs covered in
1990. Most prescription drugs, insulin
covered in 1991 with Medicare paying 50%
of allowable charges over $600. In 1992,
Medicare pays 60% of allowable charges
over $652 (estimated) deductible. If finances
permit, Medicare pays 80% of allowable
charges over yet-to-be set deductible in
1993.
12
Department of
Health and Human Services
BULK RATE MAIL
Health Care Financing Administration
POSTAGE &
6325 Security Boulevard
FEES PAID
HHS
Baltimore, MD 21207
PERMIT NO. G28
Official Business
Penalty for Private use, $300
THIRD CLASS
BULK RATE