Costs would be eased to the elderly, farmers Medicare premiums would still go up

October 09, 1990|By Richard H. P. Sia | Richard H. P. Sia,Washington Bureau of The Sun

WASHINGTON -- The latest five-year blueprint for cutting the federal deficit would require less sacrifice by the nation's senior citizens, farmers and users of home heating oil than the original budget plan rejected by the House last Friday.

But that still means the elderly would have to pay more for Medicare health insurance than they do now, lawmakers and budget analysts said yesterday.

The latest plan -- approved early yesterday by the House and to be voted on late last night by the Senate -- also would lay the foundation for higher income tax rates for affluent taxpayers and, for investors, a lower rate at which capital gains are taxed. But it remained unclear what other taxes would go up or down, even though the new deficit-cutting plan could require $10 billion more in new revenues than the $134 billion contained in the old plan.

Although changes in Medicare premiums and deductibles were not spelled out in writing, the current $28.60 monthly premium could increase to $47 a month by 1995, analysts said. This compares with the $54.30 increase sought by the earlier plan, which stirred up public protest that rank-and-file lawmakers said they could not ignore.

The amount senior citizens would have to pay from their own pockets before Medicare kicks in to cover their medical bills is now expected to increase from $75 to a cap of $100 this fiscal year, which started Oct. 1, analysts said. The original plan proposed an increase over the next five years to $150.

What distinguishes the latest package of revenue increases and spending cuts from the failed one negotiated by the White House and congressional leaders is its lack of details. The new plan leaves most key decisions to the House Ways and Means and Senate Finance committees -- both responsible for writing tax laws -- and other panels.

Democratic lawmakers reported an informal agreement to eliminate the 2-cent home heating oil tax proposed by the original plan. But that tax and other controversial proposals -- such as the 12-cent per gallon gasoline tax, and higher taxes on alcohol, cigarettes and luxury goods -- could survive if endorsed by the tax-writing committees.

Lawmakers also cited a consensus for a smaller initial cut in farm subsidies -- $1 billion instead of $1.4 billion this fiscal year -- although the savings to come from the farm sector over five years may still amount to $13 billion.

In the latest package, Medicare cuts would be limited over the next five years to $42 billion, rather than the $60 billion in the original plan voted down by the House. The smaller cut would be achieved by reducing the extra burden of Medicare costs senior citizens would have to pay to between $10 billion and $12 billion over five years instead of the $30 billion in the old plan.

Medicare payments to health care providers would still be cut to save between $30 billion and $32 billion.

"We're glad older Americans will have to pay less out-of-pocket expenses," said LeeAnn Steinberg, a spokeswoman for the American Association of Retired Persons. "We also recognize that older Americans have to contribute to deficit reduction, but not disproportionately from other Americans."

The AARP, which rallied with other groups in opposition to the old plan, recommended the $100 limit on Medicare deductibles, elimination of a proposed 20 percent co-payment for lab tests and other alternatives, all of which were accepted by lawmakers in their informal deals.

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