WASHINGTON -- Seeking to fill gaps in America's patchwork system of health insurance, President Clinton unveiled a plan yesterday to lower the age of eligibility for Medicare, the nation's vast insurance network for retirees.
Clinton characterized his plan as an important safety net for the roughly 3 million Americans ages 55 to 64 who have no health insurance but are too young to enroll in Medicare.
"For many Americans, access to quality health care can mean the difference between a secure, healthy and productive life and the enormous burden of illness and worry, and enormous financial strain," the president said.
"The proposals I am making are designed to address the problems of some of our most vulnerable older Americans."
Administration officials said the proposal would be fully paid for by premiums imposed on the younger Medicare beneficiaries and by other, unspecified changes in Medicare and thus would require no further government spending. That assertion was greeted with skepticism from Republicans in Congress and Medicare experts supportive of Clinton's goals.
The plan would offer the option of government health coverage for three groups of "near elderly":
Americans ages 62 to 65 who lack adequate health care. They could opt into Medicare by paying premiums of $300 a month. Once they turn 65, they would pay a monthly surcharge of $10 to $20 for every year they had enrolled in Medicare early.
Displaced workers 55 and older who lose their jobs because of downsizing.
Retirees who lose health care when their former companies decide to cut off benefits after the employees leave the work force.
Though roughly 3 million Americans come under one of those three headings, administration officials estimated that only about of them would choose to join Medicare before they turn 65.
White House officials conceded that they were targeting a small fraction of the estimated 40 million Americans who lack health coverage. But officials cited statistics that show the near elderly, in particular, have difficultly landing new jobs once they are displaced. They are also prone to life-threatening medical problems.
In some ways, the Clinton plan runs counter to the prevailing winds in Washington. Medicare, as now constituted, is headed for insolvency unless drastic changes are made. One change under consideration by a panel studying the issue is to raise the age requirement from 65 to 67.
Business leaders were wary. Some said they feared that Clinton's assertion that the program is self-sustaining was overly optimistic and that higher payroll taxes would inevitably result. They also said they found his timing curious.
"It doesn't make sense," said Neil Trautwein, manager of health policy for the U.S. Chamber of Commerce. "The Medicare commission is just getting started trying to figure out how the baby boom generation can be covered by Medicare. Why on earth expand the program now?"
Some Medicare experts said the plan's workability would depend on developments no one can predict. These factors include the reaction of private insurers and the shape of the structural changes that will be necessary to ensure Medicare's solvency.
Robert D. Reischauer, a former director of the nonpartisan Congressional Budget Office, said Clinton's plan could have unforeseen consequences. Reischauer said the program might encourage early retirements just when the nation would need employees to work longer to help defray the cost of programs such as Medicare for retiring baby boomers.
But if there was uncertainty about the practicality of the Clinton plan, there was little doubt that he had made a deft political move. Appealing to a loyal constituency -- the elderly -- the White House is once again casting itself as the guardian of Medicare, a stance it has used successfully against Republicans in the past.
"Republicans don't like traditional, fee-for-service Medicare programs to begin with," asserted Tom Scully, president of the Federation of American Health Systems, a hospital trade association. "They're not going to expand it, but it's terrific politics in an election year for the Democrats to go out and argue they want to provide more benefits to a vulnerable population."
On Capitol Hill, Republican leaders seemed to recognize that Democrats had put them in a sensitive position.
"We'll take a look at any detailed proposal the president finally offers, but if the era of big government is over, why is the president proposing all these government expansions?" Rep. Bill Archer, a Texas Republican who chairs the House Ways and Means Committee, asked defensively.
"The proposed expansion puts taxpayers at risk of seeing their taxes hiked, and Medicare beneficiaries are at risk of having their benefits reduced," Archer added.
Some experts wondered how the $300 premiums proposed by Clinton would support the Medicare expansion he has in mind.
"That's the one thing I really question," said Paul Fronstin, a health care economist with the Employee Benefit Research Institute. "I think with $400 premiums, it might cover the costs. But if only the sickest people opt in, that might not even be enough."
Another question is how affordable the program would be for those at the bottom of the middle class. Government figures show that one-third of the near elderly live in poverty or conditions close to poverty, indicating that they might be unlikely to budget an additional $300 a month.
Gene Sperling, Clinton's senior economic adviser, conceded that affordability was a concern and suggested that if the president could achieve the mechanisms he proposed, the administration would try to institute sliding scales on premiums for the poor.
This answer satisfied most liberal groups that have pushed for expanded health care for the poor.
"We are in the era of incrementalism -- and incrementalism means small, multiple steps," said Ron Pollack, executive director of Families U.S.A., which led the fight in the 1980s to subsidize Medicare premiums, deductibles and co-payments for the poor.
Pollack said he considered yesterday's announcement "an extraordinarily important step" and urged patience for those who want more for poor people.
"If we load this proposal with so much freight that it's too costly," he said, "it will be dead on arrival in Congress."
But such expectations raise a final potential problem: whether the government might unwittingly heighten the incentive for employers to drop their own health plans. Donna E. Shalala, secretary of health and human services, acknowledged that this was a concern. But she also said private insurers were not meeting the needs of many Americans now.
She pointed to the case of a woman who attended yesterday's announcement by Clinton, a Missouri housewife named Ruth Kain whose husband is on Medicare. Kain herself is months shy of her 65th birthday and unable to find private health insurance because of a heart condition.
Kain told the president that she avoided seeing a doctor recently because she feared that if she were hospitalized, her husband would have to sell the family farm to pay her bills.
"My husband said that if that's what it takes, then that's what we'll do," she recalled, adding that her subsequent hospital visit cost them $14,000 in out-of-pocket expenses. "Mr. President, my husband should not have to choose between a wife and a home."
Pub Date: 1/07/98