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The Fine Print On Debate Facing Medicare Overhaul

Fri., July 11, 1997, midnight

Here are some areas of controversy as Congress works on the most extensive changes in Medicare since it was created in 1965.

Means test

Current law: All beneficiaries except those near and below the federal poverty level pay the same amount in premiums. The premium covers 25 percent of the program’s cost, and the rest is subsidized by general tax revenues.

House: Same as current law.

Senate: Individuals with incomes above $50,000 and couples above $75,000 would gradually pay a greater share of Medicare Part B until they paid 100 percent of the program’s cost (four times the basic premium level) at $100,000 for individuals and $125,000 for couples. About 1.3 million beneficiaries would be affected initially, but the number would increase over time because the thresholds are not indexed for inflation.

Eligibility age

Current law: Elderly beneficiaries are eligible for Medicare when they reach 65.

House: Same as current law.

Senate: Would gradually increase the eligibility age beginning in 2002 until it reached 67 in 2027. That is the same schedule currently in the law for Social Security.

Comment: Clinton, as well as advocates for the elderly, labor and big business, are adamantly opposed to the Senate plan because it does not provide insurance coverage for those who retire before reaching 67. That group is among the most difficult to insure.

Medical savings accounts

Current law: Medicare medical savings accounts (MSAs) would involve Medicare giving beneficiaries a fixed amount of tax-free money to purchase catastrophic health insurance and pay for their health care. Any money left over could eventually be used for any expenditure, although subject to taxes if not used for health care. Currently, MSAs are not allowed.

House: Would create a pilot program of 500,000 MSA accounts.

Senate: Would create a pilot program of 100,000 MSA accounts.

Comment: Clinton is cool to the MSA concept but has indicated he would accept a pilot program.

Home health co-payment

Current law: Beneficiaries can receive an unlimited number of home health care visits per year totally paid by Medicare.

House: Same as current law.

Senate: Would impose a $5 co-payment for each home health care visit after 100 visits if the person was hospitalized for at least three days prior to the visits.

Comment: Home health care is one of the fastest growing areas of Medicare, growing at an annual rate of nearly 30 percent. Clinton and congressional budget negotiators did not envision a home health copayment and elderly groups are lobbying hard against it. Without Clinton’s support, prospects are slim for its adoption.

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