Gingrich Vows to Assure Solvent Medicare Future


House Speaker Newt Gingrich (R-Ga.) promised Friday that congressional Republicans would devote all future savings from Medicare to assure the solvency of the imperiled health care program rather than to balance the federal budget.

And he challenged President Clinton to offer proposals “to save Medicare for a generation.”

Gingrich predicted that Congress would undertake a major reform of Medicare, offering other options to the current fee-for-service system. One alternative would be a voucher program, in which beneficiaries would choose among several competing private health plans. However, he pledged that “anyone who wants to” would be permitted to stay in the present system, which allows unrestricted choice of doctors and hospitals.

He also proposed that Medicare beneficiaries be encouraged to check for errors in their doctor and hospital bills “and, if they save the government money, they will get 10%.” In a gesture to gain a political advantage from the Administration, Gingrich called on the President to make recommendations “no later than May 15" to save Medicare, which is projected to fall into bankruptcy in seven years.


The White House had no formal response to Gingrich’s speech. “It’s time for them (Congress) to come up with a budget. The ball is in their court,” said a White House official.

After taking a pounding in last year’s unsuccessful drive for a major health reform bill, the White House has declined to offer a comprehensive Medicare plan this year. Administration officials apparently hope to accuse Republicans of threatening to take away freedom of choice in access to Medicare doctors and hospitals. A year ago, the GOP claimed that the Clinton health care plan would limit Americans’ freedom of choice in choosing physicians.

When Congress considers the budget, “Medicare will be put in a separate box,” Gingrich said in a speech outlining his proposals to the Seniors Coalition, a conservative organization of senior citizens.

The legislation to save Medicare will be “standing by itself . . . not tied into balancing the budget by 2002,” Gingrich said. Congress should, “by September, bring in a bill that will save Medicare for a generation,” he said. This is the first time that Gingrich has said Medicare savings should not be used to help balance the federal budget.


Vouchers, long touted as part of a free-market approach to social programs, would bring increased competition to the Medicare market and induce more senior citizens to join health maintenance organizations, according to Gingrich.


Currently, about 9% of Medicare beneficiaries are enrolled in health maintenance organizations. Under special contracts, the government pays HMOs 95% of the average annual cost of caring for a Medicare beneficiary. People who enroll give up their freedom to select any doctor or hospital. In return, HMOs often eliminate Medicare’s co-payments and deductibles and offer prescription drugs, which are not covered by Medicare.

Under a voucher plan, each beneficiary would be given a voucher for the value of annual average benefits and buy private insurance from any health organization, including HMOs or private insurance companies. Gingrich said that he envisions companies offering several plans, which would provide a wide range of benefits. The GOP is confident that the ensuing competition would ensure good benefits while keeping down costs.


Gingrich did not offer a detailed proposal for ways to guarantee Medicare’s long-range fiscal solvency. It would cost about $300 billion in increased revenues or reduced spending--or a combination of both--to avert Medicare bankruptcy and assure a healthy trust fund for the next 25 years.

The hospital trust fund, called Part A of Medicare, is financed by a payroll tax of 1.45% of earnings, paid by both employers and employees. The fund will begin spending more than it takes in at the end of next year and gradually will exhaust its reserves, going bankrupt in the year 2002, according to the annual trustees’ report issued earlier this month.

“We believe there is no excuse to ignore the problem of Medicare,” Gingrich said in a letter sent to Clinton on Friday. “I write to you out of deep concern for the future of Medicare,” he wrote.

His letter also sounded the alarm about Part B of Medicare, which helps pay doctor bills. The monthly premiums paid by beneficiaries, now $46.10 monthly, cover about 25% of the outlays, with the rest coming from general tax revenues.


At current rates of spending, the Part B outlays, $2,046 per beneficiary last year, will jump to $4,430 in the year 2002, Gingrich noted. “This is obviously an unsustainable rate of growth, yet your most recent budget . . . contained no new proposals other than minor extensions of current law to limit the growth of the Part B program,” Gingrich said in the letter to Clinton.

To generate a national debate over Medicare, Gingrich said, he will ask all members of the House to conduct hearings in their districts about Medicare in addition to the hearings planned by various House committees in Washington.

Gingrich’s speech and letter to Clinton is likely to make Medicare the key topic at the White House Conference on Aging, which opens Tuesday. The bipartisan event, the first since 1981, is expected to draw 2,259 delegates from around the country to discuss issues affecting the nation’s fast-growing senior citizen population.



Reaction to Gingrich’s speech was guarded.

“We would like to be constructive in working with this process, but we want to know, what will the numbers be,” said Mary Grealy, executive vice president of the Federation of American Health Systems, which is comprised of investor-owned hospitals. “I think it is positive that he is not talking about Medicare to reduce the deficit,” she said. “The place we may differ is how large a number they will come up with for savings.”

John Rother, director of public policy for the American Assn. of Retired Persons, said: “I don’t see anything new at all in terms of policy. The Administration has been saying: ‘You didn’t like my plan last year. You go first.’ And now Gingrich is saying: ‘You go first.’ ”