Senate Finance Committee Chairman Robert J. Dole (R-Kan.) said yesterday that he supports President Reagan's proposal to start taxing some employer-paid health insurance premiums. In a more general way he also approved the president's plan to restructure Medicare.
Dole's committee has jurisdiction over Medicare.
Dole, at an American Enterprise Institute health conference, endorsed Reagan's proposal to count as employe income, subject to federal income tax, all employer-paid health insurance premiums for each employe over $2,100 a year. All such premiums are counted as tax-free fringe benefits now. Reagan's proposal is intended to help curb use of medical services by making people more cost conscious.
Unions oppose the so-called tax cap. Studies show that the proposal would cost the average worker $141 a year in added federal taxes plus about $48 in state and Social Security taxes, while netting $2.3 billion a year in added federal income tax plus about $800 million in revenues for states and Social Security.
Dole said Reagan's $2,100 "seems reasonable," although he reserved the right to pick some other figure later.
On the other hand, he said he also believes Congress should consider giving some sort of special health insurance coverage to unemployed workers who lose group health coverage when they lose their jobs, and that it might be a good idea to use part of the proceeds from a health-premium tax to pay for this, perhaps through a Medicaid "buy-in." This might turn unions around on the tax cap, he suggested.
He also endorsed two other concepts included in the president's plan. One, prospective payments, would fix in advance how much the government would pay hospitals to treat Medicare patients with certain illnesses.
Another would raise the amounts Medicare patients are required to pay for routine care, but include a "catastrophic insurance" feature guaranteeing that when their out-of-pocket costs for all Medicare services exceeds a specified amount, perhaps $2,500 a year, the government would pay all the rest.
However, he seemed slightly less certain about a fourth presidential proposal to give Medicare beneficiaries the option of using government vouchers worth 95 percent of their Medicare coverage to buy private insurance.
In addition, Dole said he favored looking at a number of other areas to save money, such as curbing physician reimbursements from Medicare and finding alternatives to hospitalization and long-term institutional care.
But he said he sees little possibility of significant further cuts in Aid to Families With Dependent Children, food stamps, Medicaid or the Women-Infant-Child feeding program, and that it might be necessary to consider whether some medical block grants, such as maternal and child health, need more money.