Senior citizens not ready to back health reform plan funding questioned

September 09, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- Though enticed by proposed new prescription drug and long-term care benefits, the nation's largest senior citizen group is not ready to endorse the president's health care reform plan -- which would severely limit spending for the elderly's favorite federal program, Medicare.

"I think it certainly looks promising," John Rother, a lobbyist for the American Association of Retired Persons, said of the plan. "But we still have some things to work through before we do anything."

Administration officials have been describing the plan to reporters, congressional aides, lawmakers and outside groups such as the AARP in advance of a formal presidential announcement expected around Sept. 22.

While such briefings are designed to help build support, they have provoked doubts about its financing. The biggest question concerns the administration's proposal to help pay for its plan by severely limiting the annual increases in federal spending for Medicare and Medicaid, the health care programs for the elderly and poor.

Spending would increase no more than the general rate of inflation, plus 1 percent, with an adjustment made for increases in the number of beneficiaries. Administration officials say that such spending ceilings would restrain the rapidly rising cost of these programs -- which together cost $250 billion last year -- and produce $238 billion in savings from 1996 through 2000.

Comparable ceilings would be imposed on the private sector, in the form of annual limits on insurance premium increases.

But the AARP, some lawmakers and economists worry that spending ceilings for Medicare and Medicaid would result in reduced services to beneficiaries. Although administration officials insist that this won't occur, they have not yet spelled out how the big savings would otherwise be possible.

"Until people see how the money flows, sometimes it's a little hard to believe," Mr. Rother said.

The Clinton administration hopes that the proposed new drug and long-term care benefits will encourage the powerful senior citizens lobby to support the reform plan.

All people would receive drug coverage as part of a federally mandated set of health benefits. And disabled people of all ages would be entitled to long-term care.

Mr. Rother estimated that the drug benefit would be worth $32 to $35 a month for the average senior citizen. "That looks like a good benefit," he said. Medicare currently doesn't pay for outpatient drugs, which for senior citizens sometimes add up to thousands of dollars a year.

To help pay for this benefit, the government would increase the monthly premiums the elderly pay for doctor and outpatient services under the Medicare Part B program. Now $36.60 a month, the premiums would increase about $8. All people would pay the first $250 of drug bills each year -- the annual deductible -- plus 20 percent of each prescription.

The long-term care benefit would provide home and community services, which Medicare generally doesn't pay for now.

More details of these and other features of the president's plan are to be revealed in the coming days. Today, Republican senators are among those scheduled to be briefed by the White House.

Next week, Senate hearings on the reform are scheduled to begin. And Hillary Rodham Clinton, who headed the president's task force on health care reform earlier this year, will begin traveling to other parts of the country to promote the plan. A week from tomorrow she'll be in Minnesota, joining Sen. Dave Durenberger, a Republican, at a forum for providers of health care.

Meanwhile, a Gallup Poll released yesterday by the Employee Benefit Research Institute, a non-profit group, showed that 83 percent of Americans support the linchpin of the president's plan: a requirement that all employers pay for health care and that employees pay a share.

"The concept of shared sacrifice being espoused by the Clinton administration may be beginning to take hold," said institute president Dallas Salisbury. Mr. Clinton is proposing that employers pay at least 80 percent of premiums, with workers paying up to 20 percent.

The poll was conducted in June.

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