Plan to Expand Medicare Sparks Health Skirmish


With the controversy over health care reform focused largely on universal coverage and employer mandates, a little-noticed proposal that would dramatically expand Medicare is emerging as a potential congressional time bomb.

The complex health care bill being assembled by the House Democratic leadership contains a provision that would cover millions of uninsured Americans by creating a new “Medicare Part C” program.

The plan, endorsed earlier by the House Ways and Means Committee, is intended as an alternative to the mandatory health care alliances proposed by President Clinton to cover unemployed Americans, part-time or seasonal workers, independent contractors and others who would not be eligible for employer-paid benefits.


Initially overlooked amid the clamor over universal coverage and employer mandates, Part C is now provoking a behind-the- scenes brawl among competing interest groups and their allies in Congress.

“There’s going to be a big fight and we’ll be in the midst of it,” said Dick Davidson, head of the 5,000-member American Hospital Assn.

The escalating dispute may be one reason that House Majority Leader Richard A. Gephardt (D-Mo.) missed a self-imposed deadline for producing a bill by Friday for House debate.

Although the wrangling over the proposal is continuing, Part C will be a central element of the Gephardt bill, said Rep. Sam Gibbons (D-Fla.), acting chairman of the Ways and Means Committee.

“It’s a done deal,” he said in an interview Friday.

Critics say the proposed program would be another big-government, budget-busting social program but backers hail it as the logical expansion of a program that is working well for 37 million elderly and disabled Americans.

The skirmishing broke into the open Friday with a new advertising campaign by the influential Health Insurance Assn. of America, which attacked Part C as potentially “the largest entitlement program in history” and one that its president, Willis D. Gradison Jr., predicted would lead to “massive tax increases.”


Backers of Part C dispute such assertions, saying that the proposal is the most feasible way to reach universal coverage even if Congress imposes a requirement that employers pay for a portion of their workers’ health insurance.

“Even with an employer mandate, you’ve got to have a way to deal with all the people who are not connected to the work force,” Rep. Jim McDermott (D-Wash.), the chief congressional advocate of a government-run single-payer system, said in an interview Friday.

It is unclear how--or whether--a health care bill being crafted by Senate Majority Leader George J. Mitchell (D-Me.) for debate in the upper chamber would cover seasonal workers, independent contractors, part-timers and dependents of workers.

“The private insurance industry has never been able to serve that market. And when they do, it’s at such an exorbitant price that nobody can afford it,” Gibbons said.

The notion of expanding Medicare to cover the uninsured is not new. Several years ago, it was proposed by the Bipartisan Commission on Comprehensive Health Care, better known as the Pepper Commission after its chairman, the late Rep. Claude Pepper (D-Fla.).

The idea also has the support of the influential American Assn. of Retired Persons, whose members are well satisfied with Medicare.


As a way to reach universal coverage, the President originally proposed pooling most consumers into regional cooperatives that would buy insurance for members at less-expensive group rates, with the needy receiving government subsidies.

As the debate evolved, Part C emerged in a bill by the House Ways and Means health subcommittee chaired by Rep. Pete Stark (D-Hayward). It was then adopted by the full committee and Gephardt now has incorporated the proposal into his House leadership bill.

The price tag of Part C is difficult to determine because it depends on key details that are not yet known, such as the scope of a benefits package and eligibility requirements.

And, as with much else in the health care debate, what may be appealing about Part C to some is precisely what makes it unattractive to others.

Sen. David Durenberger (R-Minn.), an influential voice on health care issues, has derided the proposal as “just a back-door single-payer plan.”

The program would create, in essence, a new “fee-for-service” arrangement, like Medicare, in which beneficiaries may go to any provider they choose. But that approach flies in the face of a nationwide trend toward managed-care systems in which consumer choice is limited.


“Part C is like a dinosaur. It perpetuates all the things wrong with the current system,” Davidson said.

Part C insurance could be 20% cheaper than a comparable private insurance plan, according to McDermott. But the problem is that Medicare already pays providers at below-market rates, thus forcing them to recoup their losses by upping fees for insured patients--one major reason for overall escalating health care costs.

Part C would accelerate such “cost-shifting,” Gradison said.

And because Part C coverage would be likely to cost less than private insurance plans, many employers, especially small businesses, would channel workers into the program, said Richard I. Smith, health policy director for the Assn. of Private Pension and Welfare Plans.

“We hate Part C,” he said. “All it does is cut prices and shifts costs to private payers.”

But “if Part C works,” McDermott said, “the private insurers will be really threatened.”

The Part C debate emerged as the escalating struggle to influence public opinion before Congress approaches its climatic health care debate in the coming weeks.