`Catastrophic' Insurance Debated
Elderly launch tough campaign in Washington to protest high tax levied to pay costs. CARING FOR THE AGED
AN embattled Congress is retreating before the relentless pressure of elderly Americans. They are up in arms about the new tax many of them pay under the health-care law that Congress approved last year to cover catastrophic illness. The money is being raised to finance a new government program that pays for expensive medical and surgical procedures. It's too early to say whether Congress will capitulate entirely. At the very least the Senate is likely to vote to lower the tax. The Senate has just asked its Finance Committee to consider a reduction, and to think about making voluntary the participation of elderly Americans in the catastrophic care program - tax included.
The elderly have sought both changes. Their third major complaint about the law is that despite the amount of money they must pay, the new law does not pay for their most frequent cause of high medical bills: long-term nursing care at home or in nursing homes.
The Bush administration thus far has opposed cutting the tax.
Last year Congress emphasized to elderly Americans the benefits that the new program would provide: government payment of some extremely expensive medical procedures to Americans of all ages; and, in two years, government payment of a portion of prescription drug costs for the elderly. How much all this would cost the elderly was soft-pedaled, inasmuch as last year was an election year.
This year the elderly are learning how much they are paying for what they get. The most affluent 40 percent are paying a surtax on their federal income tax. The current annual maximum is $800 per person, depending on income; in four years it will rise to $1,050.
For months the elderly have been protesting to Congress. It's ``a firestorm'' of anger, says Sen. David Pryor (D) of Arkansas, chairman of the Senate Aging Committee.
The elderly say that participation in the program should be voluntary, noting that it duplicates the private insurance some already have.
The current debate over whether to reduce the tax centers on new forecasts that the elderly actually will be paying between $2 billion and $5 billion more a year than previously estimated. Some senators say that is more money than necessary, so the tax should be reduced; others caution that no cut should be made, because this is a new program and Congress is still dealing mostly with estimates.
The real basis for Congress's ultimate decision will be politics rather than finances, says Douglas Besharov, a resident scholar at the American Enterprise Institute. He notes the pressure that the elderly have been exerting on Congress to reduce or repeal the tax.
At every district public meeting he and many other members of Congress have held, Senator Pryor says, ``generally the first question we get deals with'' this tax. ``But we haven't even seen the beginnings of that anger'' if the federal government collects more money than necessary and in effect uses it to reduce the overall budget deficit, Mr. Pryor adds.
Last week the Senate came within one vote of postponing the tax altogether for a year.
Whether it ultimately will decide to reduce the tax likely depends on whether the influential American Association of Retired Persons favors a reduction, Mr. Besharov says.
AARP now is talking about a lower tax. ``It appears that there is a substantial amount of revenues'' already being collected from the new tax, says John Rother, legislative director of the organization.
If that assessment proves correct there should be ``a fairly substantial amount of reduction in the premium,'' he says.