The supplemental premium imposed by the Medicare catastrophic insurance bill passed by the House July 22 is expected to average $381 in 1988 and proximately $666 in 1992 for the 40 percent of Medicare beneficiaries who will actually have to pay the supplemental premium. Lower figures were cited in a July 23 story on House passage of the bill. (Published 8/1/87)

The House defied a veto threat yesterday and overwhelmingly approved a landmark bill to protect the nation's 31 million elderly and disabled Medicare beneficiaries against "catastrophic" hospital and doctor bills.

"It shows we can overrride a veto in the House," said Rep. Fortney H. (Pete) Stark (D-Calif.), chief sponsor of the bill, which passed 302 to 127.

The bill does not provide long-term nursing-home benefits. But it "removes egregious gaps" in Medicare coverage, said Rep. Henry A. Waxman (D-Calif.), the other key sponsor.

An individual would have to pay no more than $1,800 a year for non-drug Medicare-covered services.

The new benefits -- which would cost $34 billion over the next five years -- would be financed by raising the Medicare premium -- now $17.90 a month but scheduled to rise in steps under existing law to about $26 by 1992 -- by another $2.60 a month in 1989. The premium increase would rise to $5.50 by 1992.

In addition, enrollees would pay a "supplemental," income-related premium of about 7 percent on their adjusted gross income in excess of $6,000 a year per person, to a maximum of $580 in 1988 for those with incomes $15,000 or over. The maximum would gradually rise to $1,117 by 1992 -- an amount Republicans called a large outlay for many. However, the average supplemental premium for those subject to it -- about 40 percent of Medicare enrollees -- would be $155 a year in 1988 and $271 in 1992.

The measure -- proposed by Secretary of Health and Human Services Otis R. Bowen and President Reagan but greatly enlarged over administration objections by the Democratic-controlled legislative committees -- would mandate what Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) called "the most significant and far-reaching expansion of Medicare" since 1965, when the program was enacted.

Medicare patients would be guaranteed unlimited free hospital care after payment of an initial annual deductible of approximately $544 in 1988 and $580 in 1989. Under existing law, only the first 60 days in hospital are free after payment of the deductible, and Medicare does not pay anything after 150 days.

The bill also guarantees that no Medicare patient need pay more than $1,043 out of pocket for covered doctor and outpatient bills in 1989. Like other dollar figures in the bill, the maximum payment would rise to keep pace with inflation. At present there is no limit on out-of-pocket expenditures. The provision only covers Medicare- allowed amounts for doctor bills. If a doctor's charges exceed those limits, the patient would be responsible for the excess.

Under the bill, Medicare would pay 80 percent of a beneficiary's outpatient prescription drug costs above $500 a year. Medicare now does not pay for outpatient drugs.

In addition, coverage for stays in a skilled nursing home would be increased to 150 days a year, with the patient paying $24 for each of the first seven days.

A beneficiary's total out-of-pocket hospital, doctor and other costs for all covered benefits except drugs would be limited to just under $1,800 annually. If the patient had high outpatient drug bills, the cost would be about $2,300 plus 20 percent of drug charges exceeding $500.

The estimated cost of the new benefits between 1988 and 1992 would be $34 billion, according to the Congressional Budget Office. Nearly all the new benefits are designed to be self-financed by Medicare beneficiaries -- through the monthly premium increase and the "supplemental" premium based on income.

Before passage, the House defeated, on a 242 to 190 nearly party-line vote, a GOP substitute by House Republican Leader Robert H. Michel (Ill.) that would have provided fewer benefits. It was based on Bowen's original plan and would have cost $18 billion over five years and provided outpatient drug assistance only to the poor and near-poor.

In a letter to House leaders, the administration charged that based on its estimates, the program contained in the bill would not be self-financed and would add "$20 billion to the deficit" by the year 2005.

But Stark said the bill as a whole "does not cost the Treasury one red cent; the bill is paid for entirely by the beneficiaries."

Rep. William E. Dannemeyer (R-Calif.) and others said the drug benefit, which would go to all Medicare beneficiaries including those under 65 who are on Social Security disability, could balloon into a huge costly drug benefit for AIDS patients on disability, with most of the premiums paid by Social Security retirees over 65 who do not have AIDS.

Waxman countered that a disability pensioner must wait 29 months after the onset of a disease to get Medicare and that the average AIDS patient lives less than a year after diagnosis.

The bill now goes to the Senate, where the Finance Committee has approved a catastrophic bill with no drug benefit.

In a major Medicaid provision, the House bill requires the state Medicaid programs to pay all Medicare premiums, copayments and deductibles for elderly and disabled Medicare beneficiaries below the poverty line.

Another provision would prevent the spouse of a person who goes to a nursing home from being thrown into poverty before Medicaid starts picking up the bills. Assets and income could be split to guarantee the at-home spouse assets of $12,000 and income of $925 a month, without loss of Medicaid eligibility by the institutionalized spouse.

Other benefits include: increasing the maximum number of consecutive days of allowed home health care to 35; increasing the limit on Medicare payments for outpatient mental health care from $250 a year to $1,000; extending hospice payments beyond 210 days; and providing up to 80 hours a year of home health aid and personal care services for chronically dependent homebound persons.

By a vote of 265 to 161, the House retained a provision allowing a pharmacist, when filling a prescription under the drug benefit, to substitute a lower-cost generic unless the doctor wrote that a brand-name drug must be used.