THE HOUSE this week is scheduled to take up a catastrophic health insurance bill that is the most important expansion of Medicare since that program's enactment 22 years ago. The bill owes its existence to the president, who proposed a much more modest plan earlier this year. At the time, he was warned that Congress would take advantage of his offering and expand it. So it has, to the point that the administration is threatening a veto. But this is a good bill which the House should pass and the administration warmly embrace.
Medicare at present helps a person pay the early costs of an illness. Then it tails off, so that a person with a serious illness can face catastrophic costs. The bill would limit these through a cap, after which the government would pick up costs again. The cap in the bill is lower than in the president's proposal, which makes the bill more generous. In addition the bill proposes for the first time to defray high prescription drug costs.
The Congressional Budget Office says the bill would cost $10 billion a year by fiscal 1992, $2 billion of it for the drug provision. The administration fears the drug provision could cost much more, and in any case says the bill now goes too far; its own proposal would have cost only $3.4 billion by 1992. But the bill would not add to the deficit or to the burden on the population as a whole. It carefully includes its own financing mechanism, and the beneficiaries are the ones who would pay -- through additions to premiums already charged. The new premiums would also be progressive, rising with income; the president had proposed that everyone pay the same. The states would further be required to pay the premiums and other costs of their poor people through Medicaid. This is in return for the Medicaid money the states would save by the federal government's picking up catastrophic costs that Medicaid now pays.
The drug industry doesn't like the drug provision because it fears the federal funds will be followed by federal regulation, particularly in the form of pressure to buy lower-cost generic drugs. That sounds just fine to us. There may be a skirmish on this issue on the floor; a section of the bill that the industry would like to overturn would require pharmacists to use generic drugs except where doctors prescribe otherwise. But that's a good idea.
Some 33 million people are now enrolled in Medicare, a seventh of the population that almost by definition has extraordinary health-care costs. The bill before the House would mercifully limit these in a fiscally responsible way. There are a lot of areas of unmet need in health care nationally; this is one of the largest. It ought to be an easy aye