WHEN PRESIDENT REAGAN was deciding whether to propose a catastrophic health insurance amendment to Medicare, advisers warned that if he gave the Democrats the inch they'd take a mile. They were right, except that it hasn't been a mile, only a furlong or two. The president's proposal was to cap the patient's share of Medicare costs, but not to take the program into new territory.

Committees of both houses have now approved bills with tighter caps, so that the patient would pay less and the government more. They would also broaden the program by adding several minor items to the list that it will pay for -- and now the House Ways and Means and Energy and Commerce committees are proposing to add a major item as well. They would have the government help meet not just hospital and doctor bills as now, but the cost of prescription drugs.

In deference to the deficit and the political climate the president has engendered, the drug benefit is tidily drawn. There would be a high deductible, so that the government would become involved only in serious cases, where drug bills exceeded $500 a year (the Energy and Commerce version) or $800 (Ways and Means). The Ways and Means bill would also require beneficiaries to continue to pay 20 percent of the covered costs. The benefit would come with what amounts to its own tax; the program would not add to the deficit. Just as important, the tax would be only on beneficiaries, in the form of additions to the so-called Part B premium, which most now pay to have their doctor bills insured. The rest of the catastrophic program would also be financed this way. There has been some restiveness in recent years about how much the rest of society is having to pay to support the elderly. Here the elderly would support themselves. Finally, the added premium would be partly progressive, so that those with higher incomes would pay more than those with low.

The drug industry, fearing federal regulation will follow the federal funds, opposes the drug provision. Our problem is not with the drug provision itself, which Congress should enact, but with the circumstances of its birth. As much as is spent on health care in this country, there continue to be large gaps in coverage. Neither this administration nor Congress has an orderly plan for filling them. Here the president made a motherhood-and-apple-pie proposal to benefit the elderly; the advocacy groups quickly and predictably seized and ran with it. Fair enough. The elderly, only an eighth of the population, consume about a third of the prescription drugs; they need some help. But elsewhere Sen. Edward Kennedy points to the nearly 40 million uninsured; presumably they need help even more. Still other champions point to defects in the Medicaid program for the poor; they want to beef that up.

Which in this world of limited means should come first? What is a coherent way to proceed? The political system is good at ginning up a drug bill but, sadly, not at producing the broader scheme of which such bill should be a part