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Gop To Propose Medicare Overhaul Gingrich Promises That All Savings Will Be Reinvested In Program

Sat., April 29, 1995

House Speaker Newt Gingrich, R-Ga., promised on Friday that congressional Republicans will devote all future savings from Medicare to assure the future solvency of the imperiled health care program rather than to balance the federal budget, and challenged President Clinton to offer proposals “to save Medicare for a generation.”

Gingrich predicted Congress will undertake a major reform of Medicare, offering other options to the current fee-for-service system. One alternative would be a voucher program, in which beneficiaries could choose among several competing private health plans. However, he pledged that “anyone who wants to” can stay in the present system, which allows unrestricted choice of doctors and hospitals.

He also proposed that Medicare beneficiaries be encouraged to check for errors in their doctor and hospital bills, “and if they save the government money, they will get 10 percent.”

In an gesture to gain a political advantage from the administration, Gingrich called on the president to make recommendations “no later than May 15” to save Medicare, which is headed for bankruptcy in seven years.

The White House had no formal response to Gingrich’s speech. “It’s time for them (Congress) to come up with a budget - the ball is in their court,” said a White House official.

After taking a pounding in last year’s unsuccessful drive for a major health reform bill, the White House has declined to offer any comprehensive Medicare plan this year. Instead, administration officials hope to accuse the Republicans of threatening to take away freedom of choice in access to Medicare doctors and hospitals, turning the tables on the GOP, which a year ago, claimed the Clinton health plan would limit Americans’ freedom of choice in picking physicians.

When Congress considers the budget, “Medicare will be put in a separate box,” Gingrich said in a speech outlining his proposals to the Seniors Coalition, a conservative seniors organization.

The legislation to save Medicare will be “standing by itself … not tied into balancing the budget by 2002,” Gingrich said. Congress should, “by September, bring in a bill that will save Medicare for a generation,” he said. This is the first time Gingrich has said Medicare savings will not be used as tool to balance the budget.

Vouchers, long a free market approach to social programs, would bring increased competition to the Medicare market and broaden the now-limited HMO aspect of Medicare, Gingrich believes.

Currently about 9 percent of Medicare beneficiaries are enrolled in health maintenance organizations. Under special contracts, the government pays HMOs 95 percent of the average annual cost of caring for a Medicare beneficiary. People who enroll give up their freedom to select any doctor or hospital. In return, HMOs often eliminate Medicare’s co-payments and deductibles and offer prescription drugs, which are not covered by Medicare.

Under a voucher plan, each beneficiary could take a voucher for the value of the annual average benefits and buy private insurance from any health organization, including HMOs or private insurance companies. Gingrich envisions companies entering this market, offering several plans, which would provide a wide range of benefits. The GOP is confident that the ensuing competition would ensure good benefits while keeping down costs.

Gingrich did not offer any detailed proposal for ways to guarantee Medicare’s long-range fiscal solvency. It would cost approximately $300 billion in the form of increased revenues, or a reduction in the rate of spending, or a combination of both, to avert Medicare bankruptcy and assure a healthy trust fund for the next 25 years.

To generate a national debate over Medicare, Gingrich said he will ask all members of the House to hold hearings in their districts about Medicare, in addition to hearings planned by in Washington by various House committees.

Gingrich’s speech and letter to Clinton will make Medicare the key topic for discussion at the White House Conference on Aging, which opens Tuesday. The bipartisan event, the first one held since 1981, will draw 2,259 delegates from around the country to discuss key issues affecting the nation’s fast-growing senior citizen population.


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