Radio Address to the Nation on Proposed Catastrophic Health Insurance Legislation

My fellow Americans:

This afternoon I'd like to spend a few moments discussing a decision I made this week, a major decision that's likely to affect virtually every family in America. Our administration will propose to Congress a comprehensive plan to cover catastrophic illnesses. A catastrophic illness can strike anyone—the young, the old, the middle aged. The single distinguishing characteristic is simply this: Whatever form it takes, a catastrophic illness costs money—lots of it. The problem has grown in recent years as we've achieved medical breakthroughs enabling Americans to live longer lives. Come to think of it, I myself have already lived some 22 years longer than the life expectancy at the time of my birth. But longer lives for Americans involves the challenge of seeing to it that our older citizens have the financial security they need. With our new proposals, I'll be asking the Congress to join our administration in meeting that challenge.

In brief, this is how the proposals break down: First, we're asking Congress to legislate acute catastrophic illness insurance for Medicare beneficiaries, most of whom are 65 and over. Under this proposal, Medicare itself would be amended to provide unlimited Medicare coverage. Moreover, our proposal would establish a limit of just $2,000 for out-of-pocket Medicare expenses that can presently run into the many thousands. And we can do all this by adding just $4.92 to the Medicare monthly premium. This is a pay-as-you-go program, a program that requires no tax dollars. Now, what does this mean in practical terms? Well, the answer is simple: peace of mind for some 30 million older Americans. Suppose, for example, that someone over 65 fell and broke a hip. And then suppose that, while still recovering, she contracted pneumonia. A broken hip and pneumonia—that could mean two acute care hospitalizations within the same year, care that would cost thousands. Under Medicare as it stands today, the patient herself would have to pay a significant portion of these costs—and all but the very wealthy would be wiped out. But under our proposal, Medicare itself would pay most costs above $2,000, giving the patient financial security.

Regarding the cost of long-term care for older Americans, there are no easy answers. But in its second part of our initiative, our proposal calls for the Treasury Department and others to find ways of helping families meet these costs. Options we will examine include, for example, favorable tax treatment for savings accounts established to meet the costs of long-term care. Of course it's too early to predict what will work best, but the important point is that our proposal calls on the Government to start working. I'm confident that, working with Congress and private insurers, we can find a new and innovative way to ease the financial burden of long-term care.

But our proposal isn't just aimed at older Americans. In part three of our initiative, we will take steps to improve catastrophic illness coverage for all Americans, regardless of age. Under our plan, the Federal and State governments would work together to promote the formation of what are known as risk pools within the States—helping to provide insurance for those who could not otherwise obtain insurance. We will encourage the States to use their authority to require catastrophic coverage as part of the health insurance available through employers. And we'll work with Congress to change certain requirements, giving the States more flexibility in the management of Medicaid programs. And as in many matters related to health care, education is important. Under our plan, the Federal Government would work with the private sector to make widely available information about the risks, costs, and financing options of various forms of catastrophic illness insurance; and to encourage every American to plan for his health care in the future.

All of us have family, friends, or neighbors who have suffered devastating illnesses that threatened their financial security. For too long older Americans, in particular, have faced the possibility of sicknesses that might not only wipe out their own savings but those of their families. Our proposal would make available catastrophic medical insurance for every American eligible for Medicare. It would take steps to provide catastrophic illness coverage for Americans of all ages. And it would begin the search for ways to meet the costs of long-term care. As I said a moment ago, what it all comes down to is peace of mind. And I think you will agree—it's worth it.

Until next week, thanks for listening, and God bless you.