Averting financial catastrophe

OTIS Bowen is perhaps one of the least known among the Reagan administration Cabinet officials. That is about to change, and for good reason. As secretary of health and human services, Mr. Bowen - a former governor of Indiana as well as a physician - presides over the federal agency that probably deals with more individuals on a direct basis than any other department in government. And suddenly, he is finding himself in the spotlight. Bowen has proposed a comprehensive national program designed to protect Americans against so-called ``catastrophic illness.'' He recommends that the federal government provide tax and other incentives to make such insurance widely available.

Medicare, he recommends, should be expanded to limit total individual expenses to no more than $2,000 a year. The 28 million beneficiaries of medicare would pay an additional $4.92 a month to get such a cap. In other words, once they have the cap, they would be protected for out-of-pocket expenses for acute care above the $2,000 level. He also proposes that younger Americans be allowed to set up tax incentive plans patterned somewhat along the lines of individual retirement accounts to save for nursing home care.

Bowen's recommendations, which grew out of a study requested by President Reagan, obviously have a long way to go before being enacted into law. Congress and private insurers will understandably give the program close scrutiny. Still, the program will probably get a boost by having been recommended by a key official in a conservative Republican administration with links to business.

Proponents, not unexpectedly, will note that most major industrial democracies provide for such coverage for their older citizens. In the United States, more than 800,000 elderly Americans annually find themselves responsible for health costs exceeding $2,000. In many cases, such sudden outlays are financially overwhelming.

Opponents of catastrophic insurance will argue that such insurance is merely the opening gun for ``national health insurance,'' which many conservatives and business leaders have long opposed. They will seek - at the least - to hold down federal costs and government red tape. And surely, there is much to be said for making such plans voluntary.

Bowen's proposals on medicare, in particular, have much to commend them. Many older Americans find themselves unable financially to handle the formidable outlays involved in acute-care programs. So far as providing tax incentives for younger Americans, however, it seems dubious that Congress - which has just closed off many deductions under tax reform - would suddenly do an about-face and provide for a brand new tax incentive program.

At the least, Secretary Bowen's proposal deserves a fair hearing, given the concern of many Americans that financial catastrophe could compound a health challenge in their later years.

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