Senate Republicans, in a sharp disagreement with House leaders that could complicate Medicare reform efforts, are preparing a plan to charge seniors significantly more for Medicare services, government and industry sources said Monday.
The preliminary plan, under consideration by the Senate Finance Committee, would raise the annual deductible for doctors' service to $150 from the current level of $100, sources said Monday. The plan also could require Medicare patients to make co-payments for the first time for home health care services and laboratory fees.
Both House and Senate Medicare planners agree that monthly payments by beneficiaries for doctor services, now $46.10, should go to $90 by 2002. But the House leaders do not want to impose any more burdens on beneficiaries, projecting that the government can gain as much as $90 billion in savings as people move into managed care plans in increasing numbers.
The mood in the Senate is much less optimistic about savings from managed care. Senate health planners estimate that the government can save $30 billion to $50 billion.
On both sides of Capitol Hill, Republicans are searching for a combination of savings that meets the GOP target for Medicare of $270 billion over seven years.
If managed care savings are less than expected, the money must be made up elsewhere, either from higher payments by the 37 million Medicare beneficiaries, or from reduced government reimbursements to the HMOs and to doctors, hospitals and other health care providers.
"They are having trouble making things add up," a knowledgeable source said about the delay in issuing a specific plan by the Senate. The Finance Committee's preliminary plan has been sent to the Congressional Budget Office, which will determine officially what savings would be under the proposal.
Also under consideration are provisions requiring Medicare patients to make substantial new co-payments, possibly as high as 20%, for home health care, laboratory fees and--for those recovering from serious illnesses--the first 20 days of care in skilled nursing facilities. There are no co-payments for these services under the current Medicare system.
And, to control managed care spending, the Senate Finance blueprint would limit HMOs to 5% annual increases in the amounts they charge the government for providing health care for Medicare enrollees. This provision is likely to be opposed by the HMO industry as an arbitrary government effort to restrain the private market.
The proposal to require Medicare beneficiaries to pay an additional $50 a year for doctors' fees--and perhaps to impose the 20% co-payment on other services--has irked House Republicans. House Speaker Newt Gingrich (R-Ga.) has been privately urging GOP senators to abandon the increase in the deductible.
"My strong advice is not to do it," Gingrich said in an interview late last week.
The potential revenue from the move might be as much as $50 billion over seven years. Such a sum would be "a significant step in the right direction" toward the GOP goal of $270 billion in savings, Gingrich said. But he argued against any new direct burden on beneficiaries, insisting that there are other ways to obtain the savings.
"There are enough reforms you can build into the system that, rather than increase revenues, can encourage the evolution of the system toward a dramatically more efficient and effective system," Gingrich said.
Currently, about 9% of Medicare beneficiaries are enrolled in HMOs. House Republicans hope that the percentage will climb to 40%, but they have not added any new financial incentives to encourage people to move to managed care.
Gingrich and other GOP leaders are concerned about a possible backlash from seniors if the Senate imposes additional financial burdens on beneficiaries. Senate and House Republican health planners already agree on raising a significant amount, $50 billion or $60 billion, by increasing the monthly payment for physician coverage under Part B of Medicare from $46.10 to $90.
Medicare covers those over 65 and the disabled of all ages. Outlays will exceed $170 billion this year, making it the fourth-largest federal spending program. Republicans say that their plan would cut the growth rate in outlays, now 10% a year, to 6.5% and avert the bankruptcy of Medicare's hospital trust fund, which is projected to run out of money in the year 2002.
President Clinton, offering his own plan to trim the growth of spending by $125 billion, has said that the GOP wants to reach the higher number--$270 billion--to help finance tax cuts.
Senate Democrats--stung by GOP charges that they are naysayers with no Medicare savings plan of their own--have begun working on a counterproposal that would save about $89 billion over seven years, according to Minority Leader Tom Daschle (D-S.D.). "We're putting it together now," he said Monday.
Medicare savings are a central component of the GOP effort to reach a balanced budget by 2002. The second-biggest chunk of savings would come from Medicaid, the $156-billion-a-year, federal-state health program for the poor.
House GOP staff members are racing to complete that plan in time for a meeting Wednesday by the House Commerce Committee, sources said Monday evening. The plan would reduce Medicaid's current 10% annual rate of growth to about 4% by 2002. The latest version of the Medicaid restructuring plan, sources said late Monday, calls for reducing the growth of spending by about $182 billion over seven years.
In addition, the GOP plan would convert future federal contributions to the states into block grants. States would decide eligibility for specific groups, such as families now receiving welfare under the Aid to Families With Dependent Children program, the disabled and impoverished residents of nursing homes.