Republicans Outline Medicare Rescue Plan : Congress: The elderly face premium hikes. Caps on payments to providers would provide most of the savings.

House Republican leaders offered a blueprint Thursday for keeping Medicare solvent by steadily increasing out-of-pocket costs for beneficiaries and setting severe new limits on government payments to doctors and hospitals.

The most affluent elderly--individuals with incomes of at least $75,000 and couples with income of more than $150,000--would be forced to bear a hefty increase in their monthly premiums. For the rest, the typical Medicare recipient would pay about $90 a month by 2002 for the insurance that covers doctors’ bills, compared with $46.10 now.

In an attempt to avoid antagonizing elderly voters, Republicans went elsewhere for the bulk of the total savings--$270 billion over the next seven years--to rescue Medicare and help balance the federal budget.

They said that they expect substantial savings as millions of people move into health maintenance organizations and other forms of managed care under their proposal.

But they proposed no direct incentives or pressures on recipients to switch from visiting the doctors of their choice to enrolling in health plans that would limit their choice. Contrary to expectations, they did not propose to add to the elderly’s share of payments to doctors.

The biggest share of savings would come from a strict system of annual, government-set ceilings on Medicare payments to hospitals, doctors, home health care agencies and laboratories. If spending exceeded the goal in any year, the government would cut payments to health care providers in the following year.

The 21-page Republican information packet, sketchy on details, offered no specific numbers on how the $270 billion in savings would be achieved.

House and Senate committees will begin meeting next week to add the additional details necessary to turn the leadership blueprint into legislation.

Democrats promptly charged that the Republican proposal would increase Medicare costs for the elderly and diminish the quality of their health care--all in the name of helping to finance an income tax cut.

The GOP plan “will destroy the Medicare system as we have known it--in a very few, short years,” said Rep. Henry A. Waxman (D-Los Angeles).

The House Democratic leader, Richard A. Gephardt of Missouri, predicted a political backlash. “When people understand they [Republicans] want to cut their Medicare for a tax break for the wealthiest Americans, they are outraged,” he said. “And you are going to see lots of it in the next few weeks.”

House Speaker Newt Gingrich (R-Ga.) retorted that Democrats are telling “lie after lie” about the GOP intentions. The House Republican leadership’s description of its plan cited “the shameless fear tactics” pursued by the Democrats.

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The Republican leaders said that their plan offers a vast new world of choices for those enrolled in Medicare--persons over 65 and the disabled of all ages. Each year, beneficiaries would receive a booklet listing government-approved health plans in their area.

“Beneficiaries will simply check off the plan of their choice,” the Republicans said. The options: Remaining in traditional fee-for-service medicine, switching to HMOs and other networks of doctors and hospitals, and establishing medical savings accounts that would combine insurance covering catastrophic health care costs with a tax-sheltered savings account that could be used to meet medical expenses.

The HMOs could be attractive if they offered benefits, such as prescription drugs, preventive care, eyeglasses and hearing aids, that Medicare does not cover. Currently, 9% of all Medicare enrollees are in HMOs; GOP planners hope that the figure will rise to 40% or more.

President Clinton and congressional Democrats had charged that Republicans would force the elderly into HMOs by making it costly to stay in the current Medicare system.

To defuse this charge, the Republican plan promised to leave unchanged the current deductible, with beneficiaries paying the first $100 in doctor bills each year, and the co-payment, which calls for patients to pay 20% of authorized charges.

Instead, the GOP targeted for financial stress health care providers, with the government assuming a substantial regulatory role over the costs of hospitals, physicians, home health care and medical laboratories. The Republicans called their proposal “fail-safe” in case the expected savings from managed care were not to materialize.

The GOP packet said that the bill, called the Medicare Preservation Act of 1995, would “preserve the system for current beneficiaries, protect it for future beneficiaries and strengthen it through reforms that have worked in the private sector.”

Democrats saw it differently. Sen. Edward M. Kennedy (D-Mass.) said that the Republican approach is “illogical and unfair” and would in effect “move Medicare off the federal budget onto the family budget.”

Clinton said that it is “morally questionable . . . to propose vast Medicare cuts” and raise Medicare premiums on the elderly to pay for tax cuts.

Clinton’s own Medicare proposals would let the monthly fee for insurance covering doctors’ bills rise to about $83 in 2002, about $7 less than the new Republican proposal. Clinton and other Democrats said that only $100 billion in savings are needed to assure several additional years of solvency for the Medicare hospital trust fund, which is headed for bankruptcy in 2002.

Republicans began the day with a rare, joint meeting of Senate and House members, where Gingrich and Senate Majority Leader Bob Dole (R-Kan.) exhorted their colleagues to retain their resolve to balance the budget and enact far-reaching Medicare reforms.

“Together, we’re going to get all this done,” Dole said. Jousting at the Democrats, Dole said that they seem “bent upon” frightening seniors.

Hailing the unusual gathering of Republicans as “a bicameral team committed to change,” Gingrich conceded that the coming fight would not be easy.

“Every one of us, including Bob Dole, is going to have good tactical reasons to vote no,” he said, urging members to hang tough.

Referring to Democrats, Gingrich said: “Medicare on the left is all about politics. It’s not about seniors. It’s not about health care.”

The Speaker urged members to dare to be candid with seniors, however painful the message.

“If we don’t have the courage to tell the truth, how can we blame them [the elderly] for not knowing the facts to make their decisions on?” Gingrich said to GOP members. “The big truth will beat the big lie.”