Catastrophic Care Puts Congress in Overtime : Medicare: Extended benefits will end unless a compromise is reached. Both House and Senate postpone adjournment to try to save at least part of the program.

WASHINGTON —  Congress on Sunday began a last-ditch effort to salvage part of Medicare’s controversial catastrophic care program.

Although eager to adjourn for the year, the lawmakers will make a “final good faith effort . . . to achieve a compromise,” between those who favor repeal and those who want to retain some of the extended benefits, Senate Majority Leader George J. Mitchell (D-Me.) told the Senate Sunday.

“Some senior citizens who are very old and very sick will be hurt if we have total repeal,” Senate Minority Leader Bob Dole (R-Kan.) said.

Congress had hoped to complete its work for the year with the unusual Sunday session, but the controversy over catastrophic care proved an insurmountable obstacle and the lawmakers will come back today.

The House on Sunday approved, on a vote of 349 to 57, a conference report calling for repeal of catastrophic care. The Senate rejected the report on a voice vote, thus setting the stage for another bargaining session between House and Senate conferees.

Negotiators from both chambers were to continue working today toward a compromise on the Medicare package, and also on a separate measure to reduce the federal budget deficit.

Members of Congress universally agree that the catastrophic care surtax on persons 65 and older, the main source of revenue for the program passed by the last Congress, will be repealed before adjournment. The surtax, which would have been levied on the 40% of Medicare beneficiaries who pay federal income taxes, ranges from $22 a year to $800 a year.

“We don’t want the surtax to go into effect,” Dole said.

Congress will choose either the House approach, repeal of catastrophic care, or the Senate’s plan for a pared-down program. The Senate would use the $4 monthly premiums paid by all beneficiaries to cover unlimited hospital stays after the patient pays for the first day. Other benefits, including partial payments for women’s breast cancer screenings, also would be saved under the Senate plan.

On Saturday, Senate negotiators had bowed to House demands for repeal of catastrophic care and accepted a conference report calling for repeal. Then Senate supporters of the expanded Medicare program refused to accept the action of the conference and threatened a filibuster if the Senate voted for repeal.

The dissenting senators insisted that the Senate hold fast to its original vote last month and retain a modified version of catastrophic care with extended hospital benefits.

“We cannot allow weariness to inflict pain on seniors. . . ,” said Sen. John McCain (R-Ariz.). He chastised the Congress for its “blind stampede to adjournment.”

In other action, congressional negotiators revealed further details of the deficit reduction bill on which they reached agreement early Saturday. The bill aims to raise about $5.3 billion in revenues this year, and $23 billion over a five-year period. It relies largely on forcing corporations to speed up payment of payroll taxes.

Under the payroll provision, which will raise about $2.45 billion during the current fiscal year, all companies will be required to forward to the government the taxes they take out of employees’ pay as soon as revenues in their possession exceed $100,000. Under current law, corporations can wait as long as seven days, earning extra interest all that time, before they send on their payroll taxes. The new provision will be effective Aug. 1, 1990.

The bill also aims to raise money by paring back tax breaks for employee stock ownership plans, which have been used extensively in recent years by managers seeking to prevent unfriendly takeovers of their companies. The new ESOP rules will raise $1 billion this year and about $8 billion over a five-year period, largely by taking away a tax break for banks that lend to ESOPs, unless the plan calls for employees to own more than 50% of the company.

The bill continues the 8% airline ticket tax and doubles, to $6, the departure tax on foreign trips, effective on tickets purchased after Dec. 31. Cruise ship passengers who spend at least one night in a foreign port also will have to pay the $6 tax.

On the other side of the ledger, the measure includes a handful of revenue losers that will cost about $2.2 billion this year. It extends for one year a number of tax credits that were scheduled to expire at the end of this year. These include a tax credit for investors in low income housing, credits for investing in solar, geothermal and ocean-thermal alternative energy projects and a credit for corporate expenses in research and development. The plan also reduces tax penalties imposed by the IRS and eases the minimum tax burden on corporations.

The House early in the day sent the $286-billion military package for fiscal 1990 to President Bush for his signature. The measure cuts $1.1 billion from the $4.9 billion that Bush had proposed spending on the “Star Wars” missile defense program.