Printer Friendly

What Clinton could learn from the catastrophic health care catastrophe.

Of the myriad health care plans being Fed-Exed and faxed to Bill Clinton's policy experts, the one that may serve them best has already failed: the 1988 Medicare Catastrophic Coverage Act. That's not because we need catastrophic care insurance any more than universal coverage, but because the catastrophic care bill's tortured collapse can provide the new administration with a road map of exactly what to avoid in tackling the tougher task of overhauling the entire health care system.

On the universal list of Good Ideas That Bombed, the catastrophic care act ranks near the top. Designed to protect elders from the financial and mental trauma of ever-growing medical fees, the bill was enacted by Congress and signed by President Reagan with grand expectations. But within a few months, it came under sure attack from geriatric rabble-rousers who believed they were getting a raw deal. The pressure worked: Congress, fearing the wrath of hoards of angry, politically active seniors, repealed the act, ending, for all practical purposes, the effort to provide seniors with security against the exorbitant costs of long-term or debilitating illness. In the years since, Congress and the executive branch, both badly burned by the episode, have made virtually no effort to revive catastrophic care.

The biggest losers in the fiasco were, of course, the nation's 31 million seniors. But there is a silver lining if we are smart enough to see it: The debacle shows us how to avoid the same mistakes in trying to create and pass legislation to fulfill another important reform, universal health care for all.

The lessons of catastrophic care legislation begin with how the bill failed. The story begins in 1986, when Republicans lost control of the Senate after the Reagan administration attempted to reduce cost-of-living adjustments on Social Security benefits. Chastened by the experience, Reagan and Republican congressional leaders moved to recapture the "compassion agenda" by extending an olive branch to the elderly.

Enter then-secretary of Health and Human Services Otis Bowen. Bowen's wife had spent the last three months of her life in a hospital with terminal bone cancer. That experience introduced him to the plight of many elderly couples who, although entitled to Medicare benefits, were often left destitute after a serious illness. Because Medicare automatically reduces payments after 60 days of hospital care and eliminates them entirely after 90 days, the only way elders were able to protect themselves financially in the event of long-term hospitalization was to purchase "Medigap" insurance to fill in the gaps where Medicare leaves off. Bowen thus urged Reagan to address the problem of major hospital costs incurred after 60 days. This was key not only because long stays often bankrupted seniors, but because the possibility of facing such financial trauma was a burden in itself. The President backed Bowen's agenda, but with a major caveat: No taxes could be raised to finance the plan.

Bowen's plan called for an extension of benefits financed by a mandatory, flat rate annual premium of $59 assessed against all Medicare enrollees. In return, beneficiaries would enjoy 100 percent coverage for treatment of serious illness after a $2,000 per year deductible. A few Democrats thanked Bowen and Reagan for their proposal, but also realized that they had been upstaged in the eyes of the powerful seniors' bloc. The Democrats also noted that the flat rate was regressive, forcing a disproportionate share of the burden upon the elderly poor for whom the $2,000 deductible created an already catastrophic burden.

Thus the Democrats disparaged the Bowen proposal and, egged on by the seniors' lobby, claimed that a new, more expansive plan was needed. It wasn't long before a compassion-rest erupted in Washington, with now the White House, now Congress, now the White House claiming that we, not they, had the interests of the elderly at heart. A good concept was slowly ballooning out of control.

On July 1, 1988, Reagan signed the Medicare Catastrophic Coverage Act--the biggest expansion of Medicare since its introduction in 1965. The final version provided all seniors with: full coverage for hospital stays of any length after a $560 deductible for hospital costs and a $1,370 deductible for doctor bills; 80 percent of prescription drug costs after a $600 deductible; 150 days of skilled nursing care; 38 days of home health care; and 80 hours of respite care to ease the burden on family members caring for disabled elderly, among other benefits.

Gray matter

But all these goodies had to be paid for somehow. Congress' solution was to replace Bowen's flat rate premium with a "supplemental premium." All Medicare recipients who earned enough to pay more than $150 a year in federal income tax would be required to pay a special 15 percent surtax, capped at $800 per person. In short, the poorest seniors would pay nothing and the wealthiest would pay the most. People earning under $25,000 a year would pay about $58 a year for catastrophic coverage; those earning about $40,000 would be required to put in $400 a year; and those in the highest income brackets would pay the maximum $800--clearly a far cry from the $59 tax called for in the original Bowen plan. Aside from the elderly rich, there was another set of losers--those who were already receiving Medigap insurance free as part of their pensions, namely retired federal employees, teachers, and union members.

Such groups clearly had a legitimate gripe. Asking upper income seniors to pay perhaps $100 or $200 more than poorer counterparts for equal coverage was one thing. But to ask them to put up $700 or $800 a year while others were paying absolutely nothing was demanding a bit much. The same holds true for the retired federal employees and union members. Sacrifice by some for the good of all--whether to create catastrophic insurance or universal insurance--is necessary, but that sacrifice must be reasonable. And herein lies lesson number one for the Clinton administration: Regardless of the plan Clinton adopts for national health care reform, there will be those who will seek to use it to gain political points, turning a smart idea into sloppy legislation.

Of course, compromise will be necessary, but there is a real distinction between a plan driven by the nation's health care needs and one driven by political gamesmanship. With a Democrat in the White House and a Democratic Congress, it will be tempting to fall into the same Santa Claus mode of the framers of the catastrophic care act. Inevitably, some will benefit less from health care reform than others. In the case of national health care reform, they are likely to be overpaid doctors, hospitals that overbill, and bloated insurance companies. But unlike the framers of the catastrophic care act, the writers of universal care legislation should remember that a good bill is also a fair one.

Not long after the catastrophic care bill became law, the media, with the help of some seniors' lobbies, quickly shifted its attention to the losers under the new legislation. A collective gasp could be heard in Congress as Democrats considered how they had alienated perhaps the most politically active segment of the older American population.

Geezer displeaser

It is here that the odious National Committee to Preserve Social Security & Medicare (NCPSS&M), the Conservative Caucus and other lobbies of their ilk slink into view. As Paul Hewitt of the National Taxpayers Union explains, "Whipping up the elderly is a billion-dollar industry." Indeed, many seniors' lobbies looked upon the complex, front-loaded, not entirely adequate act as just the sort of legislation that could be easily misrepresented for profit. And so, the NCPSS&M sent fliers to its 5.5 million members, 97 percent of whom voted in the previous election, urging them to help fund the campaign against the "Seniors Only Income Tax Increase."

In short time, both the Conservative Caucus and the United Seniors of America also targeted millions of seniors through their own direct mail campaigns asking for donations to help fight the act. Within weeks Congress was inundated with more than 2 million letters and thousands of phone calls from elderly citizens condemning Congress for passing the bill. Senator John McCain pointed to 20,000 letters, 10 of which were in support of the act. It was reported that one Congressman's mother so berated her son over the matter that he refused to take her calls.

By the fall of 1988, House and Senate members started backpedaling--not on the benefits, of course, as this would only further incite the special interests-but just on the financing. Instead of attacking the problem at its root, which would have meant showing the courage to peel back some of the overloaded benefits, and thus eliminating the need for unfair financing methods, Congress had taken the easy way out and simply upped the tax rates. This brings us to lesson number two for the Clinton administration and the new Congress: Special interests such as doctors and insurance companies will continue to fight tooth and nail to protect their wallets against health care reform. The easy way out will be to appease them. Doctors may not like the fact that health care reform means they'll have to hold onto their Volvo a couple more years before buying that Jaguar, but that's not a valid reason to buckle to their demands.

As important as remaining wary of the well-connected will be remaining mindful of the least organized, who are also most in need; namely, the 37 million Americans without health insurance. When the catastrophic care act was repealed, the soft voice of the elderly poor was, not surprisingly, drowned out by their wealthier counterparts. Only strong political leadership could have prevented this.

Simply stated, the people most likely to benefit from the act, the elderly poor and the spouses of the elderly ill, lacked the financial wherewithal to effectively voice their concerns. This, combined with the fact that they do not vote as dependably as their more affluent contemporaries, made them a lower priority in the eyes of many lawmakers. The effort by Congress and the Bush administration to defend the act on behalf of these people proved to be laughably inadequate. At first, seniors nationwide received pamphlets filled with all but indecipherable bureaucratese describing the complex components of the act. What's more, there were no longer any defenders with enough visibility or credibility to stop the repeal effort. Senator Claude Pepper, the great defender of the elderly, had died, Reagan was gone, and President Bush didn't lift a finger to save the act.

That's a mistake Clinton cannot afford to make --which provides the third and most important lesson: While both Reagan and Bush supported the plan, neither made it his mission to sell it to the American people. Clinton--not a Cabinet secretary, not leaders of Congress--must step forward to speak for the millions most in need. If Clinton uses his presidential bully pulpit to emphasize the need for doctors, hospitals and insurers to make a legitimate sacrifice in income so that the nation is not bankrupted by health care costs, he may not win over the American Medical Association, but at least Congress and the rest of the country will be encouraged to stand up to it. Then, when patients get an earful from their doctors about how they'll suffer from health care reform, they'll be ready to fight back.

For Clinton, this may mean returning to town meetings, Larry King, and the radio talk shows he used so effectively during the campaign. Perhaps it means calling a "health care summit," or even relying on the more traditional, but still powerful, tools of the presidency, like the State of the Union Address. (One role model is Franklin Roosevelt, who was noted for going over the head of Congress, straight to the American people, to push his agenda when necessary.) The exact method matters less than the message. Clinton has shown skill in connecting with the people, which should make selling the nation on his health care reform plan more a matter of will than ability.

Greg Monfils is an Oakland, California, writer.
COPYRIGHT 1993 Washington Monthly Company
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:President Bill Clinton, Medicare Catastrophic Coverage Act of 1988
Author:Monfils, Greg
Publication:Washington Monthly
Date:Mar 1, 1993
Words:2021
Previous Article:Beat the press: death threats and bullying tactics follow AIDS journalists who contradict the conventional wisdom.
Next Article:Debt 101: our system now saddles students with loans that make low-paying but meaningful work impossible. Here's how to fix it.
Topics:


Related Articles
Long-term care reform: will consumers sign on?
National health reform advocates retrench and prepare for Medicare.
What will future historians say about the Clinton health reform act.
Elements of the American Health Security Act of 1993.
The Republican task force health reform proposal: loyal opposition or bipartisan collaboration?
Nyah, nyah, so there.
Insurance salesmen.
Congressional prescriptives.
Reality check.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters