House GOP Outlines Medicare Reform Plan

House Republicans, still unable to agree on details of a plan to save $270 billion from Medicare over seven years, issued a general blueprint Thursday calling for expanded choices for beneficiaries, combined with tough government controls on payments to hospitals, doctors and health providers.

The GOP outline expressed confidence that millions of Medicare beneficiaries will save government revenues by moving into health maintenance organizations and other forms of managed care.

But the 60-page document did not offer dollar figures on how much of the $270-billion goal would come from managed-care savings and how much would be provided through higher payments by the beneficiaries themselves.

House Speaker Newt Gingrich (R-Ga.) admitted there is no way to know whether the GOP plan would sharply increase membership in HMOs, which typically cost less than traditional fee-for-service medicine. “We will find out in three years who is right,” he said, noting that the Congressional Budget Office may disagree with the GOP about the potential savings. In a bid to blunt Democratic criticism that the savings will hurt seniors, Gingrich said that Medicare’s total spending would rise every year under the GOP plan.

“This is an increase,” he said emphatically. Costs have been climbing at a rate of 10% annually. The GOP would restrict the growth to 6.5% a year.

The government now spends an average of $4,816 a year for each Medicare beneficiary, a figure that would rise to $6,734 in 2002 under the GOP plan. A central issue, however, is whether $6,700 in 2002 will buy the same package of Medicare hospital and doctor services that now costs $4,900.

Republicans say that costs will be controlled effectively through saving from managed care by government restrictions on payments to doctors and hospitals. Democrats insist that expenses will keep rising and that beneficiaries will have to spend much more out of their own pockets for medical services.

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“Our mission is to preserve Medicare, to protect Medicare and to strengthen Medicare,” Gingrich said at a news conference.

The House Ways and Means Committee is scheduled to begin work on the bill next week. It is not clear when the full House will consider it. Senate Republicans are expected to make their Medicare plan public today. They also want to start work on it next week in the Finance Committee.

In response, Senate Minority Leader Tom Daschle (D-S.D.) said that the Republican proposal is a “cruel hoax” on seniors. And House Minority Leader Richard A. Gephardt (D-Mo.) promised the “biggest fight and most controversial fight we’ve ever seen in Congress.”

Democrats say that the $270 billion in savings is far in excess of the amount needed to guarantee the solvency of Medicare in the short run, and they accuse Republicans of seeking money to finance tax cuts targeted heavily toward the rich.

The leading provisions of the GOP plan would:

* Offer all beneficiaries a once-a-year selection from among several government-approved plans, including HMOs, or other networks of doctors and hospitals, or special medical savings accounts. Under such an account, the government might spend $5,000 for Medicare coverage. The beneficiary could buy a low-cost, high-deductible policy for $3,000 a year. The other $2,000 would go into a savings account to be available to pay deductibles if the person were to get sick. The money could be rolled over for the next year if it is not used.

* Beneficiaries who select none of those choices would remain in the current fee-for-service system, which allows them to see any doctor or go to any hospital.

* Increase the monthly Part B premium paid by all beneficiaries for doctor services, now $46.10, to about $90 in 2002.

* Impose “means testing” on seniors making more than $75,000 a year, or couples with more than $125,000 in income, and require them to pay more for Part B coverage.

* Impose a limit of $250,000 for “pain and suffering,” in addition to economic damages, for those who win malpractice suits. Claims would have to be filed no more than two years after the incident.

The malpractice relief for doctors was designed to ease the burden of potentially drastic reductions in payments to physicians and hospitals under the Medicare program. The federal government would set a target each year for total payment under Medicare to doctors, hospitals, home health care agencies, laboratories and other providers.

If spending exceeds the targets, the government would cut the rate of reimbursement the next year to stay within the target. This could mean lower fees for surgeries, less money for an office visit and other measures to restrain spending. The Republican plan calls this a “fail-safe” mechanism to assure that it meets the budget targets.

Medicare spending, now about $170 billion, would be limited to a specific figure each year, reaching $280 billion in 2002. The GOP plan would convert Medicare from an open-ended entitlement--under which all eligible persons get benefits, with no ceiling on total national spending--to an entitlement with fixed outlays.

Gingrich said that payments to providers also would increase each year.

“Hospitals will get more. Doctors will get more. Laboratories will get more. Home health will get more. And specialized nursing facilities will get more,” Gingrich said.

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“Any lobbyist or special interest that comes to you and says: ‘Oh, we’re going to get less’ can’t do arithmetic,” Gingrich added. “They’re a sign of the early failure of the American education system. All of them get more. The problem is we’re actually asking them to manage what they get.

“There are no provider cuts. That [claim] is false. The provider increases are smaller than they’d like.”

During a question-and-answer period, Gingrich all but confirmed that the CBO, the arbiter of legislative costs, has tentatively concluded that the plan would fall tens of billions short of GOP calculations.

As late as last Friday, Gingrich said in an interview that $90 billion could be saved by channeling Medicare recipients into less expensive, managed-care settings.

But by Thursday, the Speaker had lowered his expectations markedly, saying that the GOP plan was “likely to save something close to $70 billion.”

Gingrich also acknowledged that the CBO is likely to substantially underestimate the savings likely from managed care. If the CBO did so, he said, it would be making a mistake.

“All the private sector people we talk to tell us that in the real world, where they deal with real customers every day, that their rate of people choosing one of these Medicare Plus systems would indicate to them a dramatically higher number, maybe three to five times the number, than the CBO bureaucrats are likely to score.

“We will find out in three years who’s right,” Gingrich said.

Republicans plan an intensive, nationwide education campaign, probably next summer, to hail the benefits of managed care for seniors, he said.

He also said that the Medicare bill is just one of “a continuing wave” of legislation that will be enacted by the Republican-controlled Congress to deal with health care reform. Among the other measures is a proposal by Rep. Bill Thomas (R-Bakersfield) to make insurance more portable as workers move to new jobs. It could reach the House floor as early as next month, Gingrich said.

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What Plan Would Do

Highlights of the House Republican plan to save $270 billion from Medicare through 2002:

Premiums: The current $46.10 monthly premium for Medicare Part B coverage would rise to between $90 and $93 by 2002. Under current law, that premium would climb to $60 by 2002, and under a White House plan it would increase to nearly $83.

Choice of plans: The elderly would be able to switch between different types of Medicare coverage--HMOs, medical savings accounts and traditional fee-for-service--every 30 days for the next two years. But after that, they would have to stick with the plan they chose for a full 12 months.

Medisave: Under a new Medisave option, private insurance companies would be allowed to charge deductibles as high as $10,000 to seniors who elect to switch to catastrophic-only Medicare coverage combined with a tax-sheltered medical savings account.

Malpractice: Medical malpractice lawsuit awards would be limited to a maximum of $250,000 for punitive damages and $250,000 for pain and suffering. Patients could still collect unlimited amounts equal to their actual medical bills and loss of income.

Source: Associated Press