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GOP to Detail Its Plans for Leaner Medicare System

September 10, 1995|ROBERT A. ROSENBLATT | TIMES STAFF WRITER

WASHINGTON — Will the nation's Medicare beneficiaries still enjoy solid, comprehensive health care seven years from now if the government spends 20% less than current trends would dictate?

Or will millions of people be forced to pay big sums out of their own pockets to get benefits as good as those they enjoy today?

These questions will dominate the debate that will begin as early as this week, when House Republicans unveil their specific plans for trimming Medicare enough to both pull the program back from the brink of bankruptcy and balance the federal budget by the year 2002.

Since its creation in 1965, Medicare has always been open-ended; there have been no limits to how much the government would spend to pay the hospital and doctor bills covered by the program for the elderly and disabled.

Republicans appear ready to end that. In both the House and the Senate, they have already agreed in principle to cap annual spending growth at 6.5%--well below the current rate of 10%--for each of the next seven years. Their goal: to slice $270 billion out of projected Medicare spending growth in that seven-year period.

They have not yet settled on all the details of their plan, and House Speaker Newt Gingrich (R-Ga.) hopes to disclose their proposal as soon as Friday. But discussions with Republican legislators, staff members and experts reveal a general portrait of the GOP's slimmed-down Medicare program.

At its heart is a system of carrots and sticks designed to nudge the nation's 37 million Medicare recipients into health maintenance organizations and other forms of managed health care.

Nobody would be forced out of Medicare as it works today, with the government paying most of recipients' hospital and doctor bills. But the Republicans would make the elderly and disabled pay more for the privilege than they do now. At the same time, they would hold out the promise of reimbursement for medical services not now covered by Medicare for recipients who chose managed care.

Medicare already limits what it pays hospitals to treat each of 470 separate categories of illness. It also caps its payments to doctors.

Despite that, spending keeps rising at double-digit rates, driven both by advances in medical technology and by the growing elderly population. Coronary bypass surgery, for example, hadn't been devised when Medicare was created; today the procedure costs the program more than $5 billion a year, the biggest single category of Medicare spending.

Medicare now spends an average of $4,900 a year for each beneficiary, a figure that would rise to $9,500 in 2002 if the current growth rate continues. The Republicans' spending-growth cap would leave spending that year at $6,700.

GOP planners are optimistic that millions of beneficiaries can be induced to move into some form of managed care, where spending is closely controlled. At the same time, they believe that market competition will allow for first-rate care to be delivered for that $6,700.

If the House Republicans' plan becomes law, Medicare recipients would receive a pamphlet in the mail once a year, offering a choice of 10 or 12 government-approved health plans. "If you do nothing, you remain in Medicare as we know it," said Rep. Jim Greenwood (R-Pa.), one of the key GOP health care planners.

The other entries in the enrollment brochure might include:

* Health maintenance organizations. Patients would be restricted to using the cost-conscious doctors and hospitals that are part of the HMO. But the HMOs could offer benefits that Medicare now does not, such as prescription drugs, eyeglasses and dental care. Currently, just 9% of Medicare beneficiaries are enrolled in HMOs, but Republicans are confident there will be vast growth in this market.

* Preferred provider organizations. These are broad lists of doctors and hospitals--one network includes 80,000 physicians--offering more choice than HMOs. Beneficiaries could go outside the networks to select other doctors--but they would have to spend more to do so.

* Medical savings accounts. For those who chose this approach, the federal government, as of 2002, might pay $5,000 for a health insurance policy with a high deductible--$2,000, for example. Another $1,700--the rest of the government's total $6,700 contribution--would go into a tax-sheltered savings account that recipients could use to pay current medical bills or save to meet future medical expenses.

* Employers' health plans. Beneficiaries could continue in the health insurance plans at the place they worked before retirement, with the government picking up the first $6,700 of the cost.

In all cases, Medicare recipients could enroll only in those health plans certified by the federal government for quality care and financial solvency. Government Medicare payments would go directly to the plans.

"You put the form back in the mail and you are assigned to that program," Greenwood said.

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