Ross Perot encouraged the Republican-led Congress on Wednesday to proceed with plans to place a tight lid on future Medicare spending but said that any radical changes in the delivery of medical services should be tested on a small scale before being adopted nationwide.
The billionaire businessman and former presidential candidate, who accumulated much of his fortune by providing computer processing of Medicare claims, said changes must be made so the program’s 37 million beneficiaries themselves play a more active role in controlling costs.
Under the current system, “they have no incentive to look at the bill,” Perot told members of the Senate Finance Committee.
Perot has written a book listing many options for saving money in the Medicare program but he has not endorsed a specific plan. At the hearing, he backed in principle the Republican concept of placing a strictly enforced ceiling on future Medicare spending. But he stopped far short of embracing some of the specific changes that many experts believe will be needed to implement the GOP plan to reduce the growth of outlays by $270 billion over seven years.
Such changes might include significantly higher co-payments or deductibles that would force beneficiaries to pay more out of their own pockets for health care.
“Let’s tiptoe into the water with some of these things and see if they work,” Perot said. “Let’s not jump into a dark pool at night and break our necks.”
Medicare’s hospital trust fund will run out of money in seven years, and partisan debate rages fiercely over the best way to assure financial solvency for the programs.
Congressional Republicans want to trim future spending by $270 billion. This would rescue the fund and also serve as a key component of the GOP plan to balance the federal budget over seven years.
But congressional Democrats and President Clinton contend that the proposed GOP savings number is too large, and say that it would be used to help pay for a tax cut. Instead of a $270-billion target, Clinton has called for Medicare savings of $125 billion over 10 years, targeted at hospitals and doctors.
The debate will intensify when Congress returns from its summer recess next week, with Republicans committed to carry out their balanced-budget plan through major savings from Medicare, which serves those over 65 and the disabled, and Medicaid, a health program for the poor.
Sen. Bob Packwood (R-Ore.), the committee chairman, said that the combined taxes for Social Security and Medicare could rise as high as 23% of payroll in the year 2025 unless spending is controlled. The current total is 15.3%. For Social Security, the tax rate is 6.20% each for worker and employer on the first $61,200 of salary; for Medicare, it is 1.45% for worker and employer on all salary.