Democrats Shift, Decide to Offer Medicare Plan : Spending: Party had excoriated GOP proposals. Now, it will provide softer alternative to Republican ideas.

In a major tactical shift, congressional Democrats are developing their own alternatives to the GOP Medicare reform plan in an effort to markedly soften the drastic changes sought by the Republican majority.

The Democratic gambit--with White House backing--injects a new dynamic into the acrimonious and partisan debate just as it nears a crescendo in Congress. It is fraught with political perils for would-be Medicare reformers in both parties.

For the nation’s 37 million Medicare beneficiaries, the Democrats’ reversal all but ensures Congress will restructure a Great Society program with higher out-of-pocket costs and a distinct move toward managed-care delivery systems.

Although the plans are not complete, House Democrats are striving to limit reductions in future Medicare spending by $89 billion over 10 years. In the Senate, Democrats are working to find a somewhat greater level of savings, but still far less than would be required under the GOP’s goal of $270 billion over seven years.

Development of the Democratic proposals is tantamount to a deathbed conversion. For months, they have been accusing the GOP of “cutting” Medicare to pay for a broad tax cut.

But that argument simply did not catch on. Instead, Democrats have been excoriated by even some of their staunchest constituents for seeking to obstruct the Republicans and trying to frighten the elderly--and score political points in the process.

So congressional Democrats are about to leap aboard the Medicare reform bandwagon.

“We’re telling our members: we don’t have to fall into the Republican trap and be forced into doing things we don’t want to be doing,” one Democratic House staff member said Monday.

Amid broad agreement that Medicare’s hospital trust fund will be bankrupt by the year 2002, Republicans are proposing to save $270 billion in Medicare spending over the next seven years. The savings can be achieved, they say, largely by slowing the annual rate of growth in spending, from about 10% to just over 4%, and by channeling seniors into less expensive managed-care settings.

Similarly, President Clinton has said that his less drastic plan would achieve $124 billion in Medicare savings over 10 years.

Under both approaches, hospitals and physicians would encounter deep reductions in payments. And beneficiaries would pay more in monthly premiums for physician services--about $90 under the GOP formula and $82 under Clinton’s formula, by the year 2002.

Most Democrats in Congress have argued against any sharp payment reductions. But that argument has failed to resonate--and drawn sharp criticism. Even the liberal editorial pages of the Washington Post recently accused Democrats of engaging in “demagoguery, big time.” The searing critique quickly made its way into Republican ads promoting the GOP Medicare plan.

“The Democratic failure is that people now believe that the program is going bankrupt--and that Democrats didn’t address the issue,” said Prof. Robert Blendon, a Harvard University health policy polling expert.

The Democratic proposals are to be unveiled Wednesday--the same day the Senate Finance Committee and the House Ways and Means Committee are scheduled to approve their Medicare reform proposals.

What the Democrats are doing, said a White House staff member, “is trying to support the President’s contention that you need about $90 billion to deal with the short-term trust-fund problem.”

“Rather than just keep saying no, they now believe that, to be credible, they really need to come out and make some hard choices,” the White House aide said. “And we will be generally supportive.” Top White House health analysts have been helping with the congressional Democratic effort.

The House Democratic plan is being prepared primarily by Reps. Benjamin L. Cardin (D-Md.) and Jim McDermott (D-Wash.), a physician who played a prominent role in the health care debate of 1993-94.

The two men, members of the Ways and Means Committee, are nearing completion of a 22-page alternative that is said to be gaining broad support among other Democrats on the panel. Clinton is scheduled to meet with them today.

The Cardin-McDermott proposal would seek savings of about $89 billion over a 10-year period, according to sources. “We don’t need to make drastic changes,” one knowledgeable Hill staff member said Monday. By moving more slowly to reform Medicare, he added, “we can ensure that quality and access are not diminished.”

The Senate Democratic alternative is being drafted by David Kendall, senior health policy analyst at the Progressive Policy Institute, the research arm of the centrist Democratic Leadership Council.

The proposal is scheduled to be unveiled soon by Sens. Joseph I. Lieberman (D-Conn.), who is chairman of the leadership council; Bob Kerrey (D-Neb.) and John B. Breaux (D-La.).

As of late Monday, Kendall said, the proposal did not specify a savings amount. But in its final version, he said, it would achieve greater savings than the $124 billion proposed by Clinton--largely by relying on competitive market forces. It also would sharply reduce payments to Medicare providers.

Having won, seemingly, the debate over the need to reform Medicare, Republicans now are confronted with a different dilemma.

Their projected Medicare savings is by far the biggest chunk that would be carved out of the federal budget in the GOP pledge to erase the deficit by 2002.

Thus, Republicans must guard against making too great a concession on that score. For every Medicare dollar they surrender, they will have to find an offsetting cut somewhere else.

“Everybody is following a political strategy by the numbers,” said Blendon.

“The Democratic strategy has been to wait until the Republicans have a plan which shows seniors that there’s going to be pain, and then to shift to an alternative, a less Draconian proposal,” he said.

“And if the Democrats can say: ‘We can save Medicare for half the cost,’ people will get focused very fast.”