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Of far more concern to most Americans are the recommended revisions in Medicare, for the elderly, and Medicaid, for the poor. The Government currently foots hospital bills for these patients from the second through the 59th day of an illness. Reagan proposes making patients pay part of that cost, an average of 8%, or $28 a day, through the 15th day and 5%, or $17.50, thereafter. The Administration also proposes standardizing Government reimbursements to doctors and hospitals for each case, rather than allowing them to bill Uncle Sam for whatever fees they think proper, as is done now. These ideas are explosive: doctors, hospitals and old people make up an exceptionally potent combination of lobbies.
The Administration's immediate tax proposals are relatively minor. Apart from a speedup in Social Security tax boosts, the most important is a recommendation that employees pay income tax on medical insurance premiums paid by their employers in excess of $2,100 a year, or $175 a month. The revenue that would be raised would be $2.5 billion in fiscal 1984. The real aim of this idea, in combination with Reagan's suggested changes in Medicare-Medicaid benefit formulas, is to curb medical inflation by persuading doctors, hospitals and patients to watch costs be cause the Government and employers can no longer be relied on to pay nearly the entire bill.
Far more significantly, the budget recommends stand-by tax increases of $5 per bbl. on crude oil, both domestic and imported, and a surcharge of perhaps 5% on individual and corporate income taxes; the additional levies would raise $40 billion to $50 billion a year.
Chances are that the budget Congress finally enacts will bear only a passing resemblance to the one that Reagan is now proposing. The Administration's plans are best seen as an opening bid in a poker game. Unlike last year, when the Administration bluffed for months with a weak hand, Reagan has cards good enough to keep him in the game during the budget bargaining ahead. The outcome depends on whether the final product will reduce deficits enough to remove a major obstacle to American prosperity. — By George J. Church. Reported by Laurence I. Barrett and David Beckwith/Washington
*This rate might be called civilian unemployment, since it does not count as part of the labor force the 2.1 million members of the armed services. The Government this week will begin issuing a second set of figures that counts men and women in uniform as being employed; it will show a jobless rate one-or two-tenths of a percentage point lower than the civilian rate.