Conferees Scrap Means-Testing for Medicare

Congressional budget negotiators dealt Medicare reform a broad setback on Monday, killing Senate proposals that would have required wealthy seniors to pay higher premiums and increased Medicare’s eligibility age from 65 to 67.

The decisions removed a major obstacle to completion of the five-year balanced-budget accord reached this spring by the White House and Congress. That deal set the broad outlines of tax relief and spending cuts but left the details to lawmakers--including how to trim $115 billion in future Medicare spending.

All agreed that most of the Medicare spending cuts would be accomplished through reductions in reimbursements to doctors, hospitals and health maintenance organizations. But the Senate, in a surprising move late last month, voted to use the budget deal as a vehicle to enact long-term changes to control Medicare costs. Along with imposing “means-testing” for Medicare premiums and gradually raising the eligibility age, the Senate proposed requiring all recipients to pay $5 for visits by home health care personnel.

All these proposals were shelved Monday as House and Senate conferees continued negotiating an overall budget bill.

The demise of the Medicare reforms was a clear victory for House Republican leaders--who worried about the the potential political fallout of the proposals--as well as for many House Democrats, who objected to the changes on philosophical grounds.

Still, the victory may well prove ephemeral.

The balanced-budget legislation passed by both the Senate and the House calls for creating a commission to recommend long-term Medicare reforms to avert financial collapse of the massive health care program for the elderly and the disabled. There is virtually no dispute among Medicare experts that the Senate proposals are among the reforms that must be made.

“These issues are going to be around no matter what--and each one is worthy of serious and individual consideration,” a top White House health official said Monday night.

President Clinton from the outset opposed raising Medicare’s eligibility age, arguing that such a move could create a huge pool of uninsured elderly people who already are at high medical risk.

On the proposal to tie premiums to income, the administration initially was cool. Then it decided to publicly embrace the notion. But it continued to differ with the Senate proposals on some key specifics--including the maximum monthly premium for well-to-do seniors--and never made a secret of the president’s ambivalence toward making long-term Medicare changes a part of the balanced-budget process.

On Monday, White House Press Secretary Mike McCurry said: “The White House was quite clear from the beginning, saying the issue of means-testing was more appropriate to a long-term study of [federal] entitlements and Medicare in particular.”

The current monthly premium for Medicare’s Part B, which covers physician services and certain out-of-pocket expenses, is $43.80 for all, regardless of income or wealth. That fee is scheduled under existing law to increase to $45.10 next year.

The Senate’s sliding-scale plan would have required the wealthiest seniors--an individual with an annual income of at least $100,000, or a couple with a combined annual income of at least $125,000--to pay $180.40 in monthly premiums. Clinton wanted to cap the highest premium around $135.

An estimated 4 million of Medicare’s 38 million beneficiaries would have been affected by the higher premiums, which would have begun to increase for seniors with incomes above $50,000. The Senate provision would have raised about $4 billion over five years.

The Senate proposals had been controversial from the start, even though the Senate Finance Committee approved them by a vote of 18-2 and the full Senate followed up with a resoundingly bipartisan vote of 80-18.

Members of the House, all of whom face the voters every two years, proved far more averse to taking on the reforms--especially after the 1996 campaign in which virtually every GOP candidate for federal office was savagely attacked by Democrats for previous efforts to reduce the program’s growth.

As the budget negotiations proceeded, another major stumbling block was Clinton’s insistence that the Internal Revenue Service compute and collect the increased premiums--rather than leaving it to the Department of Health and Human Services, as called for in the Senate plan. Republicans feared that would cause the means-testing to be viewed by the public as a new tax.

Administration officials and congressional Republicans spent a good part of the last weekend trying to come up with an alternative, but without success, sources said.