Pressed by a coalition of 28 federal employe groups, senators have drafted amendments to insulate millions of retired federal, state and local government workers against extra-heavy premiums under the "catastrophic" health insurance bill.
The amendments, being put together by Sens. David H. Pryor (D-Ark.), Pete V. Domenici (R-N.M.), Ted Stevens (R-Alaska), Donald W. Riegle Jr. (D-Mich.), John Melcher (D-Mont.) and others, will be offered when the bill hits the Senate floor, probably next week.
The amendments would:Direct that for retired federal workers having both Medicare and federal retiree health benefits, as the majority have, the Office of Personnel Management develop retiree health plans that cover only those needs not covered by the new catastrophic-illness health insurance proposals. The retirees -- there are 1.5 million retired workers in federal health plans, though some are too young to qualify for Medicare -- could then buy the cheaper supplemental plans and avoid paying twice for the same coverage. This plan has been worked out by Pryor and Stevens with union backing.
State and local governments and private employers, such as the auto manufacturers, could do the same. Riegle proposes that private employers be directed for one year to give any savings back to the workers or use them for new benefits.
Allow federal, state and local government retirees whose main income is from non-Social Security pensions to pay a somewhat lower premium for their catastrophic benefits than in the current version of the bill. This proposal, also endorsed by unions, is being circulated by Pryor and Domenici.
Catastrophic health insurance would be an add-on to current Medicare coverage, and a substantial portion of the financing for the proposed benefit would come from a new income-based premium.
While most Social Security benefits are not considered income, and would not be counted in computing the premium, that is not true for federal, state and local government pensions. They are taxable, and federal employe unions have argued that the tax is unfair.
As a result, Pryor and Domenici have worked out a plan under which, in effect, a portion of the federal-state-local government pension would not be counted as income for the purpose of computing the new Medicare premium. For a person with $21,000 annual income from a non-Social Security government pension, the plan would cut the catastrophic premium by $61 a year and leave it at the same level as for a person whose pension came in part from Social Security.
Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), sponsor of the catastrophic insurance measure, has not endorsed any specific amendment but has indicated that he understands the problems and wants a solution.
Under the House-passed bill, Medicare beneficiaries would get up to 365 days of free hospital care a year. At present, 60 days are free.
In addition, no Medicare beneficiary would have to pay more than $1,850 out of pocket annually in deductibles and copayments for any non-drug Medicare-covered service. There is no limit at present.
Moreover, under an amendment Bentsen has indicated he will accept once details are set, Medicare would pay 80 percent for outpatient prescription drugs in excess of $600 a year. Medicare does not currently pay for outpatient drugs.
The new benefits would be financed by increased Medicare premiums, based in part on income, of up to $800 a year initially.