After months of study, Health and Human Services Secretary Richard S. Schweiker has sent the Cabinet five proposals for restructuring the complicated system under which the nation buys its health care.
One proposal would have the government issue vouchers to persons eligible for Medicare--in effect give them premium money to go out and buy their own health care insurance from private insurance companies or group health organizations. The theory is that this might restrain skyrocketing health care costs by inducing more price competition among hospitals and insurers and by discouraging excess use of medical services.
For private health insurance, Schweiker outlined three other possibilities, which are not mutually exclusive and could all be implemented at the same time. They would:
* Limit the health insurance premiums an employer could deduct as a business expense to $150 a month per worker whose family is also covered and $60 for a worker covered alone.
The idea is to discourage workers from demanding and companies from providing excess coverage. Administration strategists think some companies do, and that this leads people to buy more medical care than they need. At present, the Treasury indirectly pays a large portion of the costs of such policies because employer outlays are all deductible. A deductibility cap might lead companies and workers to seek leaner, cheaper policies.
Under the proposal outlined by Schweiker, the dollar limits would rise automatically each year, in accord with increases in the medical care component of the consumer price index. Companies already paying more than the limit would be allowed to continue doing so for now, and would only gradually be brought under the cap. In 1984, this proposal would increase tax revenues by $1.3 billion; by 1986, the figure would be $3 billion a year.
* Give tax credits to employers who offer their workers a range of competing health plans. Some plans would offer a rich assortment of benefits and cost more, others a leaner mix and cost less. The employer would have to make the same contribution to each plan.
If the worker felt a leaner plan was adequate, he could choose it and where it cost less than the employer contribution, the worker could pocket part of the saving (up to $50 a month) tax-free. At least one of the employer's plans would have to be a low-premium plan in which workers would have to pay 20 percent of their bills.
The employer would also have to offer at least one group-health (health maintenance organization) plan. Moreover, all plans would have to include a "catastrophic illness" feature under which a family's total out-of-pocket costs would not exceed $3,500 a year, a limit that would be increased annually as prices go up.
The aim of this multiple-choice plan is also to induce workers to choose only the health care coverage they need. Moreover, it would also mean competition between insurance companies and HMOs; this, in turn, would cause them to try to hold prices down and to pressure doctors and hospitals to do the same. The theory is that the pressure of the market place instead of direct federal regulation would hold down increases in hospital, doctor and labor costs.
Because of the tax credits given to employers initially to put this system in place, it would cost the Treasury a few hundred million dollars a year at first.
* Increase excise taxes on alcohol and cigarettes--now totaling $8 billion a year--to help cover this tax loss. The excise tax for wine, liquor and cigarettes hasn't been increased since 1951 and since 1964 for beer.
For Medicare, the Social Security health insurance program for people over 65, Schweiker offered two possibilities, one involving a voucher plan, the other changes in the existing system:
* Under the voucher option, a person eligible for Medicare would be given a government voucher worth about 95 percent of Medicare's average per capita cost. He could use the voucher to buy a private health insurance policy with benefits no less than offered under the two parts of Medicare (hospital insurance and out of hospital doctor-care), and with some protection also against catastrophic costs.
The individual would have to pay the difference between the value of the voucher and the private plan cost. If he wanted a very rich plan, his premium would rise accordingly. The voucher value would be increased each year to reflect cost increases. The present Medicare program would remain in existence and the indivuidual could rejoin during an open-enrollment period each year if he chose.
One aim of the voucher plan would be to enhance competition, particularly through the use of HMOs. The voucher plan reportedly would have little impact on Medicare outlays the next two years.
* Another option would make Medicare patients pay 10 percent of the cost of each hospital day from the second day in hospital on; at present, after the patient pays an initial payment for the first day ($260), he pays nothing for the next 59 days and Medicare picks up the entire cost for those days in hospital.
This would reduce government costs substantially, since most Medicare hospital stays are less than 60 days. These savings would more than cover the cost of a second feature of the plan: installation of a "catastrophic illness" cap, so that any patient's out-of-pocket costs under either part of Medicare would be limited to $2,500 a year.
Moreover, the current limit of 90 days of Medicare payments per spell of illness would be eliminated. Under this plan, net Medicare outlays would drop by $500 million in fiscal 1983 and $950 million in 1984.
An alternative, which would save a bit more, would make the catastrophic cap lower, $1,000, but apply it only to the hospital care part of Medicare. There would be no limit on the patient's outlays under the out-of-hospital doctor-care portion of Medicare.