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House Approves Republican Bill to Overhaul Medicare : Legislation: GOP says package of higher premiums, cost controls would save $270 billion by 2002. It faces an uncertain future in the Senate, promise of a Clinton veto.

TIMES STAFF WRITER

Taking a giant step toward its goal of producing a balanced budget in seven years, the GOP-controlled House approved a Medicare bill Thursday that would reshape the 30-year-old health insurance program for older Americans.

The complex legislation--debated and passed without public hearings--would yield $270 billion in savings by 2002, Republicans say, largely by curtailing payments to doctors and hospitals, increasing out-of-pocket payments for beneficiaries and channeling many seniors into less expensive managed-care systems.

The bill would directly affect beneficiaries in several ways:

* It would nearly double monthly premiums for the voluntary, Part B doctor insurance. Those premiums, now $46.10, would rise to about $90 by the year 2002. The projected monthly premium would be $54 in 1996, $58 in 1997, $63 in 1998, $69 in 1999, $77 in 2000 and $84 in 2001. The Senate Medicare measure, approved by the Finance Committee, has a similar schedule.

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* It would require an additional Part B premium from single beneficiaries with annual incomes above $75,000 and couples with incomes of $125,000 or more. The added payments also would be phased in over seven years and would be assessed on a sliding scale, with those in higher income brackets paying higher premiums. In 2002, a single person with an annual income of $100,000 or a couple with an income of $175,000 would pay the full amount--a total of about $120 a month.

The Senate bill would begin requiring couples making $100,000 or more to make an additional contribution.

* It would require an additional Part B premium from single beneficiaries with annual incomes above $75,000 and couples with incomes of $125,000 or more. The Senate bill would begin requiring couples making $100,000 or more a year to make an additional contribution.

* It would create tax-free medical savings accounts to allow beneficiaries to buy their own low-cost, high-deductible catastrophic insurance, with the rest of the funds being available for out-of-pocket medical expenses. Funds left over after a defined period could be used for non-medical expenses, but they would be subject to taxation and a penalty of 10%.

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House Speaker Newt Gingrich (R-Ga.) called the vote “a big step in the right direction.” Even so, the plan faces many obstacles in the weeks ahead. The debate now shifts to the Senate, where it will run up against an array of powerful special interests that have chosen to make their fight in that more deliberative body.

It also faces a veto threat that President Clinton renewed even before the House vote.

“I will not let you destroy Medicare and I will veto this bill,” he warned Republicans at a White House press conference. “I have to do that to protect the people of the United States and to protect the integrity of this program.”

The White House argues that the Republican revisions would restrict payments to doctors and hospitals so severely that many will become unwilling to treat Medicare patients. Clinton has proposed $124 billion in Medicare cuts over 10 years.

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The bill was approved on a largely party-line vote of 231 to 201, with all but six Republicans supporting it and all but four Democrats voting against it.

“We are proud that we’ve stepped up to the plate and didn’t shy away from a tough, controversial issue,” said Rep. David Dreier (R-San Dimas). He echoed Republican predictions that the plan would extend the solvency of Medicare’s hospital trust fund until 2010--a claim disputed by Clinton Administration officials, who have argued that the GOP plan would extend the fund’s life only to 2006.

The final hours of debate leading up to the vote were filled with harsh rhetoric, reflecting rising acrimony between Republicans and Democrats over reforming Medicare.

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Gingrich criticized the Democrats for perpetuating a “spirit of misinformation” in the Medicare debate.

When he spoke of the importance of preserving the program for future generations, Gingrich listed at some length his many relatives. That prompted Rep. Sam Gibbons (D-Fla.)--one of the few remaining House members who voted 30 years ago to create Medicare--to shout out derisively: “Does the gentleman have a dog?”

A short while later, many Democrats in the packed House chamber began chanting, “Hearings! Hearings!” even as Gingrich spoke--a reminder that Republicans did not permit public hearings on their proposal.

That issue dogged Republicans much of the day. Rep. Thomas J. Bliley Jr. (R-Va.), chairman of the House Commerce Committee, conceded at an informal morning session with reporters that not one House panel has conducted a hearing on the specific GOP proposals. “There comes a time for action,” he explained.

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Bliley also noted, as did Gingrich later, that members have convened “thousands” of town hall meetings throughout the country on Medicare reform.

“We listened and we learned,” Bliley said. He added that Republicans stand ready to take any remedial actions should problems emerge as the plan is carried out.

Rep. Bill Thomas (R-Bakersfield), chairman of the House Ways and Means health subcommittee, circulated a press release listing 16 Medicare hearings by his panel. Those hearings came before details of the plan were known, however.

Democrats are expected to use the absence of hearings to press their case as the Medicare fight moves to the Senate, where it will encounter powerful special interests vehemently opposed to the GOP plan.

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Led by lobbyists for hospitals, nurses and the elderly, many organizations have been husbanding ammunition for the battle in the upper chamber--where some moderate Republicans are known to have reservations about the deep cuts projected for Medicare’s spending growth rate.

Before passing the Medicare Preservation Act, the House rejected a Democratic alternative that would have cut $90 billion from the projected growth in spending over 10 years.

To counter Democratic charges that much of the GOP’s projected Medicare savings are intended to pay for a $245-billion tax cut, House Republicans incorporated into their bill a “lockbox” provision that bars any of the savings from the Part B doctors insurance fund from being used for the tax cut. Earlier, the Senate Finance Committee embraced a similar provision in the Senate GOP Medicare bill.

Even so, Senate Minority Leader Tom Daschle (D-S.D.) accused the Republicans of “raiding Medicare and Medicaid to dole out huge new tax breaks for the wealthiest individuals and corporations in the country.”

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Rep. Tom DeLay (R-Tex.), the House majority whip, said that the GOP reform agenda would “promote greater choices, give greater flexibility to seniors, crack down on fraud and abuse and put reasonable limits on Medicare growth.”

The House bill also would relax antitrust laws to permit doctors and hospitals to work together to create health care networks, thus bypassing insurance companies or other corporate enterprises that operate most managed-care systems.

And the bill would impose a cap of $250,000 for pain-and-suffering awards to victims of medical malpractice. Punitive damages would be limited to $250,000 or three times the amount of the economic loss, whichever is larger. The Senate bill, by contrast, does not address malpractice changes.

The House bill would derive most of its projected $270 billion in savings by reducing the annual rate of growth in payments to providers to 6.5%, down from the current 10%.

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Under the plan, per-capita Medicare spending, adjusted for regional differences, would be $4,816 in 1995, $5,081 in 1996, $5,283 in 1997, $5,525 in 1998, $5,772 in 1999, $6,003 in 2000, $6,354 in 2001 and $6,734 in 2002.

If, however, spending targets are not met, a “fail-safe” mechanism would force further reductions in payments to Medicare providers in the fee-for-service sector.

One difference in the House and Senate bills is that the Senate proposal would raise eligibility from 65 to 67 by the year 2027, increasing at a rate of one month a year, starting in 2003. The House would not alter the eligibility age.

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Another noteworthy difference is that the Senate bill would require participants in the Part B program to pay the first $150 in expenses in 1996, up from the current $100. Then the deductible would increase by $10 a year through 2002. The House bill would keep the $100 cap.

Times staff writer Janet Hook contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Medicare Recap

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The House and Senate versions differ in some key aspects, such as eligibility and deductibles. A look at differences between the proposals:

Eligibility

Currently: Persons 65 and over and disabled persons of all ages.

House bill: No change

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Senate bill: Age rises one month a year beginning in 2003 until it reaches 67 years in 20027.

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Doctor bills

Currently: Medicare pays 80% of costs after beneficiary pays the first $100.

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House bill: No change.

Senate bill: Deductible rises to $150 next year and then gradually to $200 in the year 2000.

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Managed care

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Currently: Health maintenance organizations and looser forms of managed care networks may serve Medicare beneficiaries if they meet sometimes strict state financial regulations and quality of care standards.

House bill: Easier federal regulations would govern doctors and hospitals that chose to form HMOs or looser forms of managed care networks serving Medicare recipients.

Senate bill: Basically equivalent to the House plan.

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Private plans

Currently: Allows recipients to use their Medicare contributions to enroll in HMO’s or other networks that provide all Medicare-covered services.

House bill: Same as current law, but changes to permit beneficiaries to buy insurance policies with deductibles as high as $10,000.

Senate bill: Same as current law, but allows total cost-sharing (deductibles, coinsurance and co-payments) as high as $6,000.

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Home health care

Currently: Pays according to “reasonable costs.”

House bill: Reduces such payments.

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Senate bill: Reduces such payments.

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Fee-for-service doctors

Currently: Bases payments on cost of service.

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House bill: Cuts annual growth ratesin payments to doctors.

Senate bill: Cuts annual growth rates to reduce payments by $22 billion.

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Medical savings accounts

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Currently: No special provision.

House bill: Beneficiaries may use their government Medicare allowance to buy a plan combining low-cost insurance with a special tax-free savings account. The money in the account can be used for future expenses.

Senate bill: Similar to House bill.

Source: National Academy on Aging, Times Washington Bureau

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Vote on Medicare Overhaul

WASHINGTON--Here is how members of the California delegation voted in the 231-201 roll call Thursday by which the Republican-led House approved an overhaul of Medicare:

Republicans for--Baker, Bilbray, Bono, Calvert, Cox, Cunningham, Doolittle, Dornan, Dreier, Gallegly, Herger, Horn, Hunter, Kim, Lewis, McKeon, Moorhead, Packard, Pombo, Radanovich, Riggs, Rohrabacher, Royce, Seastrand, Thomas

Democrats for--none

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Republicans against--none

Democrats against--Becerra, Beilenson, Berman, Brown, Condit, Dellums, Dixon, Dooley, Eshoo, Farr, Fazio, Filner, Harman, Lantos, Lofgren, Martinez, Matsui, Miller, Pelosi, Roybal-Allard, Stark, Torres, Waters, Waxman, Woolsey

Democrats not voting--Tucker


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