Feds to Urge Medicare Beneficiaries to Use Private Insurance Companies

Article excerpt

WASHINGTON - The Reagan administration will soon propose changes in the Medicare program to encourage beneficiaries to use federal funds to sign up for private insurance offered by Blue Cross and Blue Shield or by commercial insurance companies.

Administration officials said the proposal would help control health costs by promoting competition among insurance companies and would advance President Reagan's goal of giving private enterprise a larger role in providing government services.

Margaret M. Heckler, secretary of health and human services, described the administration's proposal in a letter to be sent to Congress next month with draft legislation. Copies of the letter and the proposed bill were obtained last week from federal health officials.

Private health insurance plans would have to provide coverage whose overall value ""was equal to or greater than Medicare's,'' Heckler said in her letter. ""Medicare would contribute an amount equal to 95 percent of what it would have paid if the beneficiary had elected traditional Medicare coverage.''

Thus, administration officials said, the proposal could help control the cost of Medicare, which finances health care for 30 million elderly and disabled people. In proposing the 95 percent reimbursement level, the officials said it would reduce the rate of growth of Medicare spending but probably not the total amount.

Under the proposal, elderly people could retain the health insurance coverage they now have under Medicare. But they could also choose to ""enroll in private health plans as an alternative to traditional Medicare coverage,'' with the government paying for their enrollment, according to Heckler.

Under such alternatives, the government would pay private insurers about $200 a month for each beneficiary. The insurers could keep the difference if the beneficiary's health-care costs were less than the federal payment.

The potential advantage to an individual would be a more comprehensive package of health benefits than Medicare now provides without a reduction in the quality of care, officials said.

The insurers would have to absorb any costs exceeding the federal payment. The insurers might include corporate health plans, non-profit Blue Cross and Blue Shield plans and commercial carriers.

In Reagan's effort to expand the role of private enterprise in public programs, he has proposed giving poor people vouchers that they could use to help pay for housing or for the cost of sending their children to private schools.

As part of his effort to reduce the size and scope of government, he has also urged federal agencies to contract with private businesses for data processing, transportation, laundry and hundreds ofother services. …