Senate compromise provides for catastrophic health care. Burden would fall to elderly, but future costs would hit taxpayers

Barring the unexpected, there will be a major addition to United States domestic social laws this year. It is a compromise measure, approved Tuesday by the Senate, that will provide federal funds to meet some of the exceptionally high medical expenses that Americans face. Details of this so-called catastrophic health-care bill were thrashed out in recent weeks between Senate and White House officials; the House, which has approved a more costly bill, has little choice but to go along.

Yet a key issue remains: the cost. At a time of increasing concern over the size of the federal deficit, the bill's price tag is drawing much scrutiny from both backers and skeptics of the proposal.

Supporters insist it won't increase the deficit, because it requires that costs be paid by increased premiums on the elderly, expected to be the principal users of the law.

Skeptics say in a few years so many benefits will be added to this now relatively narrow measure that costs will escalate dramatically. Under this scenario expenses would become too high to be borne entirely by the elderly, thus causing part of the cost to be shifted back to the federal government and, as a consequence, to the American taxpayer.

One liberal calls the current measure, which primarily provides funds for high-cost hospital stays and for prescription drugs, ``a good start.'' But he quickly adds that more benefits should be added.

That's just what conservatives are concerned will happen, as several dubious conservative senators said during Tuesday's debate before Senate passage. They forecast that demand for the services the measure provides will be so heavy that costs will be far higher than expected.

Liberals have two major goals. One is to broaden the proposal so the federal government will pay a substantial amount of the costs of long-term care in nursing homes. Not covered by existing law or the new measure, these costs average more than $20,000 annually.

Rep. Claude Pepper, Congress's best-known spokesman on aging, estimates that a million Americans a year pay so much for nursing-home care that they wind up literally in poverty. Particularly at risk are widows who survive husbands who have had lengthy stays in nursing homes. Frequently the couple must spend almost all the money it has before medicaid takes over paying the nursing-home costs. As a result, the widow thereafter lives in poverty.

The Senate-White House compromise attempts to deal with this problem, at least in part. An amendment adopted by the Senate permits the spouse who is not in the nursing home to retain $12,000 in assets, and to have $750 in monthly income not taken into account in determining whether the spouse in the nursing home is eligible for medicaid.

Individual Americans pay approximately half of the annual national cost of nursing-home care, and medicaid - the government program to pay medical expenses of the poor - pays the other half. Medicare, the program to pay medical expenses of the elderly, pays less than 1 percent, although most nursing-home residents are elderly.

The second liberal concern: trying to keep from escalating too fast or too high the amount that each elderly person would have to pay to finance much of the approximate $7 billion annual cost of the compromise measure.

Stuart Butler doubts this can be done. Director of domestic policy studies for the Heritage Foundation, Mr. Butler noted, before Tuesday's Senate consideration, that the proposal would have the elderly themselves pay most of the cost through medicare premiums and payments, which are a kind of ``tax on the elderly.''

``There's really going to be no way of controlling the explosion of costs that will come from that,'' he said. ``Whenever you say you'll cover a cost without limit, you're inviting everyone to raise costs.''

Then there's the question of long-term nursing-home care, which Butler calls medicare's ``one big gap.'' Once the measure becomes law, he says, ``a lot of elderly people are going to wake up to the fact that [it] makes only a marginal difference to them. And there will then be enormous pressure'' to get Uncle Sam to pay much long-term nursing bills.