House Panels Approve GOP Plan to Overhaul Medicare : Congress: Controversial proposal advances on straight party-line votes. Demonstration by senior citizens disrupts one committee meeting.

The House Ways and Means Committee on Wednesday approved a major Republican initiative to reduce spending on Medicare by $270 billion over seven years and move millions of elderly beneficiaries into health maintenance organizations and other managed-care systems.

The measure was adopted on a straight party-line vote of 22 to 14 amid highly partisan debate.

Both sides in the Medicare reform struggle used the final day of committee work on the bill to hone the arguments they will use when they take their case directly to the American people during the coming weeks of legislative fighting.

“The most important thing we’re going to do here is save Medicare,” said Rep. Sam Johnson (R-Tex.), who turned 65 on Wednesday, becoming eligible for the federal health program that serves 37 million Americans. “We don’t need Medi-scare tactics,” said Johnson, accusing the Democrats of frightening senior citizens by claiming they would face far higher bills under the GOP proposal.

But President Clinton will veto the bill, warned Rep. Benjamin L. Cardin (D-Md.), claiming that the GOP plan “will hurt our seniors.” Democrats hammered away at their favorite theme--that the Republicans want to take money out of Medicare to pay for the $245-billion tax cut they promised in the “contract with America.”

If the GOP plan becomes law, it would for the first time impose strict growth limits on Medicare, slowing the growth rate of spending from the current 10% a year to 6.5% annually.

A second key House committee, Commerce, added its endorsement of the plan late Wednesday night on a party-line vote of 27 to 22. The committee’s work was delayed for about an hour earlier in the day when the session was disrupted by a demonstration staged by a group of senior citizens, including some in wheelchairs.

More than a dozen of the protesters were arrested by Capitol police after they demanded to be heard.

“What are you afraid of?” yelled Theresa McKenna of the Virginia branch of the National Council of Senior Citizens. “Why won’t you let us speak?” She was later identified by House Republicans as a former professional staff member and spokeswoman for the seniors group.

The demonstrators criticized the Republican majority for not having held any hearings on the Medicare proposal. Members of the group also protested before the Ways and Means Committee last month.

The full House will vote next week on the GOP plan, which would engineer the most sweeping changes in Medicare since its creation in 1965. The Senate Finance Committee has approved a different version of the measure. The two bills will be blended and placed into a giant legislative package that includes changes in Medicaid--the federal-state health program for the poor--and the GOP tax-cut proposal as well as other key Republican initiatives.

Medicare has become the key budget battleground for Clinton and the Republican majorities in the House and Senate. The $270 billion in Medicare savings is the largest single component of the GOP plan to balance the federal budget by the year 2002.

Democrats insist that number is too large, and they offered their own package of $90 billion in savings, with all the reductions coming from reduced payments to doctors, hospitals and other health care providers. The Ways and Means Committee rejected that plan by a vote of 22 to 14, following party lines.

Democrats say their smaller package would provide enough money to add another four years of solvency to Medicare’s hospital trust fund, which is scheduled to run out of funds in 2002 at current rates of spending. The GOP says its plan would assure solvency until 2011, when the first of the huge baby boom generation becomes eligible for Medicare benefits.

A key part of the GOP success was the enthusiastic support for the Medicare plan by freshmen Republicans.

“Our proposal is specific, it’s realistic and it expects sacrifice from everyone,” said Rep. Jennifer Dunn, a freshman Republican from Washington. “My parents and their friends who are seniors would never forgive me if I did not do my best to save Medicare.”

The bill adopted Wednesday would:

* Increase Medicare premiums for Part B coverage of doctor bills, now $46.10 a month, to about $90 by 2002 for all beneficiaries. An additional premium would be charged to those individuals with annual incomes over $75,000 and couples with more than $125,000 in income.

* Provide an annual open enrollment period, allowing beneficiaries to choose among HMOs and other health plans. The federal government would pay the premiums. Beneficiaries would be free to remain in the current fee-for-service Medicare system, which has an unrestricted selection of doctors and hospitals.

* Create new medical savings accounts, combining insurance and a savings mechanism. If the government pays $4,000 for an average beneficiary, for example, that person could pick an insurance plan costing just $2,000, with an annual deductible of $2,000. The $2,000 saved this way could be placed in a tax-free account, available to pay medical bills.

* Provide deep reductions in payments to hospitals that train doctors, and those caring for large numbers of poor people.

* Reduce sharply the growth rate in payments to doctors and other providers.

The Senate Finance Committee’s bill, approved last month, takes a somewhat different approach and asks more of a sacrifice from beneficiaries. It would boost the annual deductible for doctor bills, now $100, to $150 next year, and then add another $10 a year until 2002. It also would allow enrollees to get rebates if they can obtain insurance coverage for less than the premiums allowed by the government.

Rep. Bill Thomas (R-Bakersfield) said his party’s blueprint is a “bold initiative” that will “protect, preserve and strengthen Medicare.”

The GOP Medicare juggernaut has all but obscured the unprecedented degree of unity that Democrats have achieved in recent days--speaking with one voice in a way that they have not done all year. Some are predicting that this cohesion, however ephemeral, could nevertheless cause a reduction in the spending cuts that Republicans want to impose.

“They’ve finally coalesced our group--we’re united,” said Rep. Sam Gibbons (D-Fla.), the top Democrat on the Ways and Means Committee.

“We’re hoping it’s a defining issue in the elections next year,” added a top aide to the House Democratic leadership. “It’s rare for Democrats in the House, the Senate and the White House to all be singing from the same page.”

“This is an important issue that we can unite around,” said Rep. Blanche Lambert (D-Ark.). “I’m for cuts, but this is going too far.”

Several other members of Congress, however, warned that such unity is unlikely to endure.

“Most Democrats have come around to believing that we’ve got to fix Medicare. But there are major differences over how far to go [in cutting Medicare’s growth rate],” warned Rep. Tim Roemer (D-Ind.).

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MEDICARE: WHAT HAPPENS NEXT

Now that the congressional committees have completed their work on Medicare legislation, the full House and Senate will vote on their respective bills, which will then go to a conference committee to work out differences. Each house will then vote on the final version of the bill. That measure will be included with key GOP initiatives on Medicaid, taxes and other issues in a single reconciliation bill. The reconciliation bill will then be attached to the legislation raising the federal debt ceiling next month. The legislation then goes to President Clinton, but the White House has indicated Clinton will veto the measure if it contains cuts that he considers to be too severe.