Although the deficit-reduction package accepted by Congress Oct. 27 will increase the beneficiary cost of Medicare by $10 billion over five years, it will shield the poor and near-poor from higher costs.
In fact, the package contains "the largest array of improvements in programs for low-income people in more than a decade," according to a just-released analysis by the Center on Budget and Policy Priorities. The center, which is based in Washington, D.C., is a non-partisan, non-profit research organization that studies government spending, programs and policies that affect low-income people.The plan cuts nearly $500 billion from the federal budget over five years ($42.6 billion the first year) through tax increases, increased user fees and reductions in entitlement programs, defense spending and interest payments on the national debt.
The report, "One Step Forward: The Deficit Reduction Package of 1990," says that doctors and hospitals will bear the bulk of the Medicare reductions - almost $32 billion over five years. Their Medicare reimbursement increases will not keep pace with inflation, and other changes will reduce those payments, too. Rural and inner-city hospitals are somewhat protected.
Although beneficiary deductibles and premiums will go up, increases were scheduled anyway, since beneficiaries are supposed to pay 25 percent of the cost of the Medicare Part B (physician) program. The new agreement sets the premiums through 1995, which may protect beneficiaries, because if costs rise above the projections, they might end up paying less than 25 percent.
The deductible will rise from $75 to $100 for Part B benefits. Premiums will rise from the current $28.60 to $29.90 in 1991. By 1995, the monthly premium will be $46.10. Medicare will still cover the cost of laboratory services. (The original summit agreement would have increased the deductible to $150, charged a fee for laboratory services and raised the premium to $55.40 by 1995.)
The package focuses on reductions but contains significant improvements, particularly for low-income people, the report says. Routine mammography will be added to Medicare. There are incentives for low-income beneficiaries to use preventive and primary-care services. And "near-poor Medicare beneficiaries are protected from the effects of the increases. . . . Over time, the law actually will reduce their out-of-pocket costs."
The package gave another medical program, Medicaid, a boost as well. State- and federally funded Medicaid programs will not only pick up Medicare premiums and deductibles for very-low income people; it will also pay the cost of premiums and co-insurance plans for recipients who qualify for an employer-sponsored health-care plan if it can be done at a savings to Medicaid.
Medicaid coverage for children over 6 is broadened as part of the package. The program will be phased in over a 12-year-period to cover children 6-18 in families with incomes below the poverty line. Medicaid is a categorical entitlement program and children now qualify only if their family is eligible for Aid to Families With Dependent Children. By Oct. 1, 2002, all poor children will be covered.
And there's more good news for elderly people, according to the report. States will have the option to split $580 million over five years to cover community-based and long-term care services for people who would otherwise live in a nursing home.
In Utah, most nursing-home placements are paid for by Medicaid, which draws down about $3 federally for every $1 in state funds.
Several advocates for the elderly, including Robert B. Maxwell, president of the American Association of Retired Persons, have praised the final budget plan as "humane and intelligent."