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Plan would be funded by monthly fee from participants

President Reagan's proposed catastrophic health insurance plan would provide recipients of medicare coverage with an unlimited number of days in hospitals for acute illness. Further, the proposal would limit the out-of-pocket payments of the nation's elderly to $2,000 for all services covered by medicare, the government's program for aiding elderly Americans with their medical costs. As envisioned by the President, medicare recipients would have to take positive action in order to be covered for catastrophic illnesses in hospitals: They would have to participate in the so-called ``Part B'' of medicare. This is the optional medicare section that now covers physicians' medical fees. It reimburses recipients for what the government considers ``reasonable'' fees. More than 95 percent of all medicare recipients now subscribe to Part B.

As set forth by the White House, the new program would be self-financing. Funds would be raised by adding $4.92 a month to the current $17.90 charge for Part B.

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Government officials expect that some 30 million medicare recipients would pay this additional sum, which they say would be sufficient to finance the program.

In the future the $4.92 monthly charge would be expected to rise, roughly to keep pace with inflation. So, too, would the $2,000 cap on out-of-pocket expenses, according to government officials.

The plan would not cover the costs of several services often sought by the elderly: custodial nursing-home care, prescription drugs, dental or eye care. Nor would the proposal cover another major medical cost - the portion of physicians' fees that is higher than what medicare considers ``reasonable.'' Medicare pays only up to the sum it judges to be ``reasonable.''

It is legal for physicians to charge higher fees, and elderly patients pay the difference.

The portion of medicare that pays hospital bills is called Part A. It is financed by social security tax deductions from wage-earners' salaries; recipients are not required to contribute to it. Under the President's proposal there would be no change in the financing of Part A.

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