GOP Medicare reform plan to boost premiums

September 10, 1995|By New York Times News Service

WASHINGTON -- In a Medicare plan to be unveiled this week, Republicans expect to propose increasing most premiums, imposing annual limits on the growth of the program and reducing payments to doctors, hospitals and suppliers.

Republicans said their plan would also propose slowing the growth of Medicare by encouraging elderly people to join health maintenance organizations.

In interviews last week, the Republicans provided a fairly full account of their proposals. They said that beneficiaries would have a much wider choice of health plans and that the government would contribute a fixed amount to the plan chosen by each beneficiary.

Republicans said they had backed away from their initial proposals to create strong financial incentives for elderly people to join HMOs and other forms of managed care, which seek to control costs by limiting patients' choice of doctors and hospitals. Democrats had said that those incentives would amount to financial coercion. Republicans said they would still try to encourage the voluntary use of HMOs.

Although the political stakes for both parties are immense, Republicans say the risks for them are smaller than they once thought because they believe that many elderly people have been convinced that Medicare is not sustainable in its current form and must be thoroughly redesigned.

Lawmakers say the real battle lies ahead, as Republicans set forth details of their plan to cut projected spending on Medicare by $270 billion, or 14 percent, in the next seven years.

Republicans and Clinton administration officials agree that if there is no change in current law, Medicare's Hospital Insurance Trust Fund, which pays hospital bills for the elderly, will probably run out of money in 2002. That is nine years before members of the huge baby boom generation begin to qualify for Medicare.

But Democrats say the Republican plan goes far beyond what is necessary to preserve the trust fund.

They assert that much of the money squeezed from Medicare would be used by the Republicans to help balance the budget and to finance tax cuts for affluent people.

House Democratic leaders say they will not negotiate on Medicare until Republicans abandon the idea of cutting taxes for people with annual incomes of more than $100,000.

The Democrats, who failed to pass sweeping health care legislation last year, when they controlled both houses of Congress, have not offered a comprehensive alternative to the Republicans' Medicare proposals this year.

Tony Blankley, press secretary for House Speaker Newt Gingrich, said the Republicans would introduce their proposals in a comprehensive Medicare bill late this week.

About 10 percent of the 37 million Medicare recipients are in HMOs, and the Republicans say they still want to encourage the use of such health plans. "But we don't intend to force people into managed care, directly or indirectly," said Rep. James C. Greenwood of Pennsylvania, one of eight House Republicans drafting the party's proposals with Mr. Gingrich.

House Republicans are seriously considering several proposals that would directly affect Medicare recipients.

One would increase premiums for more affluent beneficiaries. Another would increase premiums for all beneficiaries except those with very low incomes.

Republicans have also drafted proposals that would require beneficiaries to pay some of the cost of home health care and clinical laboratory services and more of the cost of doctors' services and nursing homes.

Political pressures have prompted them to soften the impact of their proposals on beneficiaries. As a result, more of the proposed savings will be extracted from doctors and hospitals.

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