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
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
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. …