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Health Reform Now Gop’s Problem Republicans Look For Ways To Trim Medicare Without Being Hounded Out Of Office

Sun., Feb. 12, 1995

The painful, complicated struggle over health care is beginning anew on Capitol Hill.

This time it is Republicans, not Democrats, who are leading the charge. And this time it is the huge Medicare program for the elderly that is the target, not the private health-care system.

But the Clinton health care battle of 1993-94 and the Republican sequel are alike in at least one respect. They were and are fueled by the rising costs of health care.

Despite a general moderating trend in recent months, Medicare spending is still projected by the administration to grow at an average rate of 9.1 percent a year over the next five years.

Republicans feel those pressures all the more acutely, because of the web of promises they have made to balance the budget in seven years while passing nearly $400 billion in tax cuts to families and businesses.

Republicans have been looking at options to control the growth of Medicare spending, including creating a Medicheck voucher that would allow the elderly to buy private benefits, raising Medicare premiums for upper-income recipients and encouraging the use of health maintenance organizations.

When asked how much they wanted to save, Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Subcommittee on Health said, “As much as possible without any diminution in the quality of care for seniors.”

Critics in the Democratic Party and among advocacy groups for the elderly are skeptical and wary.

Republicans bristle at comparisons between their plans and the Clinton administration’s ill-fated efforts.

Clinton was trying to extend the heavy hand of government to business, the Republicans say, and they maintain they are trying to turn a 30-year-old program into something more flexible, less bureaucratic and much more cost-efficient.

“We have a government-run fee-for-service system that’s running at twice the rate of medical inflation, and we need to transform it,” John Kasich of Ohio, chairman of the House Budget Committee, said in an interview last week.

The Health Subcommittee held hearings all week on Medicare, capped by a session on Friday that focused on encouraging the elderly to join HMOs and other forms of managed care.

Such networks can achieve significant savings, experts say.

But Medicare continues to be a last bastion of fee-for-service medicine, under which doctors have an incentive to perform more, not fewer services, experts add.

Just 9 percent of Medicare recipients are in managed-care plans, according to the government.

Bruce Vladeck, head of the Health Care Finance Administration, which runs Medicare, came under considerable fire from Republicans for not opening up the system more to managed care and other new ideas.

“I’m just concerned about the timidity, about the failure of you folks to be anywhere near as bold as you were in the last Congress,” Thomas said at the hearing on Friday.

Vladeck replied, “The place where one should be most risk-averse is the one segment of the population that has universal health care and is quite satisfied with it.”

If Republicans do seek fundamental changes in the financing and delivery of health care for the elderly they will be stepping onto treacherous political ground.

In the last health wars, policymakers in both parties studiously avoided abrupt changes in Medicare, mindful of the vulnerability and sensitivity of its more than 36 million beneficiaries.

The operative political image for many lawmakers when they think about changing Medicare continues to be the elderly who banged on Rep. Dan Rostenkowski’s car in 1989, when the catastrophic health insurance program went down in flames.

“Medicare needs to be approached with a good deal of caution,” said Bill McInturff, a pollster who specializes in health issues and advises the Congressional Republican leadership.

“Before we begin, this Republican caucus had better lock down that we’re a party that cuts stupid spending, wasteful spending, and convince people that we’re going after our own sacred cows.”

Some of the alternatives discussed by Republicans like the push to managed care are ideas some Republicans criticized in the last go-round, when the Democrats were backing them.

Some conservatives, in particular, passionately defended the right to be treated by the physician of one’s choice, which is often restricted in managed care but which is considered to be particularly important to the elderly.

“Seniors are very high specialist users,” Bob Blendon, an expert on polling and public health at Harvard, said. “And when you have a chronic illness you develop a relationship with a set of doctors.”

Unless new managed-care systems are offered as purely voluntary options, without penalties for people remaining with fee-for-service medicine, “they will be highly threatened, and that will open up just enormous political battles,” Blendon said.

That explains why most Republicans are speaking in generalities.

“They do realize this is a third rail,” said Robert Reischauer, director of the Congressional Budget Office.

Republican leaders say their ideas for Medicare would be purely voluntary, a means of opening choices and improving benefits. Their argument is that health plans would vigorously compete for Medicare patients, adding benefits as inducements.

The deliberations among House Republicans, who will probably set the pace for the issue, are proceeding down two tracks.

They are looking at short-term proposals to squeeze savings from the program and they are looking at making fundamental changes to slow growth by changing basic incentives.

Among the short-term options is raising the charges for higher-income participants in the Part B section of Medicare.

Another proposal from the past and quite likely to receive fresh consideration is instituting copayments on the fastest-growing part of Medicare, home health care.

Republicans could also turn to the traditional method of squeezing money out of Medicare by restricting payments to hospitals, doctors and others.

But down the road, at least some Republicans are clearly hoping to rein in costs by tapping the forces that have brought savings for businesses, competition among big managed-care plans that would, the argument goes, have a financial incentive to keep their patients satisfied, healthy and not using unnecessary services.

But, analysts and advocates have concerns about moving Medicare participants too quickly or without adequate regulation to managed care. The elderly are an exceedingly vulnerable population, those people say, and 20 percent of the recipients are over 85 or severely disabled.

Rep. Jim McDermott, D-Wash., said a major concern was pushing the elderly to profit-making networks that decide which services are necessary and which are not. “There are some very big ethical questions that are getting swept under the rug in this discussion of getting everybody into a managed-care system,” said McDermott, a physician who supports a Canadian-style system.

Republicans say sustaining the Medicare status quo is simply not possible, given the status of the hospital trust fund, which Thomas described as “a black hole” by the year 2001. Perhaps remembering the administration’s battles on health, Vladeck said Friday:

“I think we’re seeing some frustration from some of the Republican members. They’re learning what it feels like to have responsibility for proposing rather than opposing.”


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