THE SUCCESS AND REPEAL OF THE MEDICARE CATASTROPHIC COVERAGE ACT - A PARADOXICAL LESSON FOR HEALTH-CARE REFORM

Congress intended the Medicare Catastrophic Coverage Act (MCCA) of 198 8 to reduce the risk for illness-related catastrophic financial losses in the elderly. The act was short-lived, facing repeal just one year after passage. Many elderly persons were convinced that the costs of t he program outweighed the benefits. However nursing home payment provi sions of the MCCA may have affected out-of-pocket expenses paid by the elderly for long-term care more than consumers realized at the time o f repeal. A transmittal memorandum, issued by the Health Care Financin g Administration independent of Congressional action, enhanced consume rs' ability to qualify for Medicare nursing home benefits. We investig ated the effects of the Medicare policy change on nursing home payer m ix and out-of-pocket expenses in 489 Pennsylvania nursing homes. We fo und that substantial shifts in payer mix from self-pay to Medicare pay ment sources occurred, reducing out-of-pocket expenses. Unfortunately the debate over the MCCA's repeal did not include discussion of the im proved nursing home benefit structure. These findings, and the fate of the MCCA legislation, reinforce the importance of comprehensive infor mation and clear communication in promoting health care reform.