U.S. Reportedly Will Offer Elderly Choice on Medicare

NEW YORK —  The Reagan Administration plans to propose changes in the Medicare program to encourage elderly people to choose private health insurance plans instead, it was reported Sunday.

Under a proposal to be sent to Congress next month, Medicare beneficiaries would be able to opt for private insurance offered by Blue Cross and Blue Shield and other commercial insurance companies, or choose to remain with Medicare, the New York Times reported in its Sunday editions.

Federal funds would pay for whichever health insurance coverage was chosen. In the fiscal year ending Sept. 30, the federal government spent $71.4 billion on Medicare.

Help Curb Health Costs

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, the report said.

The proposal was described in a letter written by Secretary of Health and Human Services Margaret M. Heckler, to be sent to Congress next month with draft legislation.

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% of what it would have paid if the beneficiary had elected traditional Medicare coverage.”

Thus, Administration officials told the newspaper, the proposal could help limit the cost of Medicare, which finances health care for 30 million elderly and disabled people.

Under the proposal, elderly people could retain the health insurance coverage they have under Medicare, but could also choose to “enroll in private health plans as an alternative to traditional Medicare coverage,” with the government paying for their enrollment, Heckler said.

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 that, and would have to absorb costs exceeding the federal payment, the story said.

The potential advantage to an individual would be a more comprehensive package of health benefits than Medicare now provides, officials said.