October 21, 1995 in Nation/World

Medicare Winners And Losers Here’s A Look At How The Proposed Reforms In Health Care Programs Would Affect Our Society

R.A. Zaldivar Knight-Ridder
 

As taxpayers, average Americans stand to gain from the Republican Medicare and Medicaid reforms moving through Congress. But as consumers, they may not like what they get.

“As consumers, we lose because Big Daddy was giving us this fantastic benefit and paying whatever it took to finance it,” said Bob Laszewski, a consultant to insurers. “As taxpayers, we’re way ahead. We’ve put this on much more rational financing.”

The House approved its Medicare bill Thursday and the Senate is scheduled to begin debate on its plan as early as Tuesday. Already, analysts are tallying up the winners and losers if Republican proposals become law.

The GOP wants to squeeze $452 billion over seven years from the health care programs for the elderly, disabled, and poor by holding down annual increases in cost.

In the health care industry - a giant that’s roughly the size of the Italian economy - experts say losers will outnumber winners.

“It’s the big squeeze,” said Ken Abramowitz, a health care market analyst with the New York investment firm of Sanford C. Bernstein & Co.

Though the American Medical Association would get malpractice laws it likes and looser regulation of doctors’ business, and though hospitals are trying to cut a better deal on payments, that won’t change the bottom line by much.

“What the doctors want is favorable to them, but in a bad climate,” said Gerald Anderson, a health economist at Johns Hopkins University in Baltimore. “It’s clearly not the best of all worlds.”

Health industry lobbyists are winning concessions worth millions of dollars, but their clients still stand to lose billions. For now, the only clear-cut industry winners seem to be managed-care insurers. They could see millions of new patients join their cost-conscious plans.

Here’s how the GOP plans would affect different segments of society and the health care industry:

Taxpayers - Working-age people - some of them without health insurance - foot most of the bill for Medicare and Medicaid. Eventually, workers will probably have to pay higher taxes to cover baby-boomer retirees. But holding down the cost of those programs now should mean less-onerous tax increases in the future.

Beneficiaries - The elderly will have more health care plans to choose from than they do now. Out-of-pocket costs will vary from plan to plan. Medicare premiums will go up modestly, but there won’t be a heavy-handed effort to push beneficiaries into health maintenance organizations (HMOs) and other costconscious insurance plans. Over time, however, traditional Medicare will become less affordable for many. Families of Medicaid beneficiaries in nursing homes may have to pay more for care.

Uninsured - Researchers at the Urban Institute think tank in Washington have warned that the number of Americans without health insurance will increase as states cut back Medicaid spending on the poor and as hospitals have less money available to cover charity cases.

Consumers - Republicans would repeal federal quality standards for nursing homes. The House bill would also loosen oversight of clinical labs in doctors’ offices, and limit awards to victims of medical malpractice. “These measures are aimed directly at medical consumers and do nothing to improve the quality of care,” said Mike Donio, policy analyst for Peoples Medical Society, a patient rights group based in Allentown, Pa.

Hospitals - Doctors won a guarantee from House Speaker Newt Gingrich, R-Ga., that their fees would not be cut below today’s levels. Hospitals are seeking the same thing, but that won’t stop inflation from eating away at their payments. Children’s hospitals, inner-city hospitals and rural hospitals are the most vulnerable. Hospitals that already have lots of managed-care contracts should do better. The American Hospital Association says some hospitals might be forced to close and others will have to lay off staff and scale back services.

Doctors - While the AMA has endorsed the Republican effort, smaller medical societies are opposing it. Doctors have won quite a few concessions, including their version of malpractice reform, looser regulation of their business, and the right to form their own insurance plans. The latter is being touted as a breakthrough that will let physicians preserve their independence from insurers. But many analysts are skeptical that doctor-run plan can succeed. “Doctors are not the greatest business people in the world,” said insurance industry consultant Laszewski.

Nursing homes - Since Medicaid pays the bills for about 70 percent of nursing home patients, the industry is worried about GOP plans to turn the program over to the states. Republicans would repeal a law that now requires states to pay nursing homes “reasonable and adequate” rates to cover their costs.

Insurers - Insurance companies that sell high-deductible “catastrophic” coverage will get to market their plans to Medicare beneficiaries, in conjunction with medical savings accounts. HMOs and other managed-care plans will get access to millions of new potential customers. Plans that can sign up healthy beneficiaries stand to make a handsome profit.

Drug manufacturers - Companies have won concessions that include Medicare coverage of experimental medical devices, limits on damages in lawsuits over government-approved drugs, and repeal of a program that required them to pay rebates to Medicaid.

Employers - As government pushes down on payments to hospitals and doctors, providers will try to shift costs to privately insured patients. In the past, cost-shifting was the way America paid for charity care. With businesses switching to managed care, it will be more difficult for doctors and hospitals to shift costs, but they may try nonetheless.


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