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Senate Passes Controversial Increase in Medicare Age

By Robert A. Rosenblatt
Los Angeles Times

In a historic step intended to shore up the financial health of Medicare, the Senate voted Tuesday to require affluent seniors to pay substantially more for the benefits they receive.

Taking another politically risky move, the Senate also decreed that members of the baby-boom generation must wait until age 67, an increase of two years, to qualify for Medicare coverage.

The Senate move poses a political challenge for President Clinton and House leaders, who had hoped to avoid immediate consideration of major Medicare reforms by handing the issue to a special commission for study.

The changes, if signed into law, would deal an immediate financial blow to the 1.6 million Medicare beneficiaries whose incomes exceed $50,000 for individuals and $75,000 for couples.

The premiums they pay to receive coverage of doctors bills would increase on a sliding scale, from the current $525 a year to a maximum of $2,102 per person for individuals with incomes of $100,000 and couples with $125,000.

The age of Medicare eligibility, now 65, would begin climbing in the year 2003, reaching 67 in 2027. Anyone who is 59 or older now would not be affected by the change.

Both proposals were endorsed Tuesday by substantial majorities as the Senate took up amendments to a key budget bill scheduled for a final floor vote Wednesday. The measure also makes other changes affecting Medicare and restores welfare benefits for some legal immigrants.

The House begins debate Wednesday on its own Medicare bill, which does not contain the bigger premiums or higher eligibility age.

The conflicting positions on Medicare reform presage a potentially explosive political struggle. A Senate-House conference committee will be appointed to resolve the differences, with the Clinton administration and the House on one side of the issue and the Senate on the other.

Advocates for the elderly were quick to denounce the Senate plan. "We are shocked and disappointed by the action taken by the Senate today," said Martha McSteen, president of the National Committee to Preserve Social Security and Medicare.

"The Senate's means-testing plan will divide Americans based on their income, set senior against senior and put Medicare on a dangerous road toward becoming a welfare program in the eyes of the public instead of a unifying, national endeavor," said McSteen, whose organization has some 5 million members.

In 1988, Congress approved a major expansion of Medicare, including unlimited hospital and pharmaceutical coverage, to be financed by a special tax on the affluent elderly. The tax, which would have topped out at $800 a year, sparked a revolt among affluent seniors. Congress repealed the law in 1989 before it could even take effect.

The premium payments approved by the Senate on Tuesday would be far bigger, rising as high as $2,102 for affluent seniors and $4,204 for couples.

More significant than the numbers, however, is the dramatic policy change embodied in the Senate action. The proposal to "means-test" premiums represents a fundamental shift in the basic nature of Medicare, a program that traditionally has provided equal benefits at equal cost to the rich and poor alike.

Only 1.6 million of today's 38 million Medicare beneficiaries have incomes above $50,000 a year. The change would save an estimated $3.9 billion over five years, a comparatively small amount for a program with annual expenses of $200 billion.

The Senate proposal, if signed into law, would set a clear precedent for linking Medicare premiums to income, with richer beneficiaries paying more for coverage.

The Senate has "done something truly worthy of being remembered," said Sen. Phil Gramm, R-Texas, a backer of the sliding-scale premium payments as well as the higher eligibility age.

It was a stinging defeat for liberal defenders of the traditional Medicare program, who characterized it as a threat to beneficiaries of the massive health program.

The Senate approved the income-related premium by a vote of 70-30, rejecting a proposal by Sen. Edward M. Kennedy, D-Mass., to strip the special premium from the budget legislation.

As originally drafted by the Senate Finance Committee, the bill would have imposed the income text on the actual payment of doctor bills.

All beneficiaries now pay the first $100 of doctor bills each year, a payment known as a deductible. After the deductible is satisfied, Medicare pays 80 percent of approved charges.

Under the Finance Committee bill, the deductible would have been linked to income. But the idea was confusing, and had never been fully debated before the committee devised it in several hours of private meetings. "As a consequence of it being untested, we changed it back to a premium," Sen. Bob Kerrey, D-Neb., said during Tuesday's debate.

Medicare's 38 million beneficiaries - those over 65 and the disabled of all ages - currently pay $43.80 a month, or $525.60 a year, for the "Part B" insurance that covers doctor bills and other outpatient medical expenses.