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1774
THE NEW ENGLAND JOURNAL OF MEDICINE
Dec. 28, 1995
3. Philip AG. Neonatal mortality rate. J Pediatr 1995;126:427-33.
10. Papiernik E, Bouyer J. Dreyfus J. et al. Prevention of preterm births: a per-
4. Low birth weight. The Future of Children 1995;5(1):1-231.
inatal study in Haguenau, France. Pediatrics 1985;76:154-8.
5. Chalmers I. Enkin M. Keirse MJNC. Effective care in pregnancy and child-
11. Emanuel 1. Filakti H. Alberman E. Evans SJ. Intergenerational studies of
birth. New York: Oxford University Press. 1989.
human birthweight from the 1958 birth cohort. I. Evidence for a multigen-
6. Romero R. Mazor M. Wu YK. et al. Infection in the pathogenesis of preterm
erational effect. Br J Obstet Gynaecol 1992;99:67-74.
labor. Semin Perinatol 1988;12:262-79.
12. Klebanoff MA. Graubard BI. Kessel SS. Berendes HW. Low birth weight
7. Hillier SL, Nugent RP. Eschenbach DA, et al. Association between bacterial
across generations. JAMA 1984;252:2423-7.
vaginosis and preterm delivery of a low-birth-weight infant. N Engl J Med
13. Wang X. Zuckerman B, Coffman GA, Corwin MJ. Familial aggregation of
1995;333:1737-42.
low birth weight among whites and blacks in the United States. N Engl J
8. Hauth JC. Goldenberg RL, Andrews WW, DuBard MB. Copper RL. Re-
Med 1995;333:1744-9.
duced incidence of preterm delivery with metronidazole and erythromycin
14. Barker DJP. Winter PD. Osmond C. Margetts B. Simmonds SJ. Weight
in women with bacterial vaginosis. N Engl J Med 1995;333:1732-6.
in infancy and death from ischaemic heart disease. Lancet 1989;2:577-
9. McGregor JA. French JI. Parker R. et al. Prevention of premature birth by
80.
screening and treatment for common genital tract infections: results of a
15. Baird D. Changing problems and priorities in obstetrics. Br J Obstet Gynae-
prospective controlled evaluation. Am J Obstet Gynecol 1995;173:157-67.
col 1985;92:115-21.
Gail Wilensky ed tsrial
HCFA Administrator
SOUNDING BOARD
deductibles and payments are largely ineffective as cost-
containment measures because more than 85 percent
THE SCORE ON MEDICARE REFORM -
of Medicare beneficiaries have supplementary private
MINUS THE HYPE AND HYPERBOLE
insurance or are also covered by Medicaid. Physicians
WITH charges and countercharges about impending
and hospitals also have few incentives to limit spending
Medicare reforms at a feverish pitch, the substantive is-
on services for older adults. Medicare's payment policy
sues in the debate have become increasingly obscured.
currently encourages hospitals to "game" the way pa-
This highly charged climate has left most Americans
tients' illnesses are coded to increase their revenues and
confused about the consequences of the proposed chang-
to switch services from the inpatient to the outpatient
es and needlessly fearful about the future of a program
setting, where Medicare has considerably less direct
that, by most measures, has been immensely popular
control over payments. Medicare also rewards physi-
with older adults and their families.
cians for doing more rather than less, even when less
With Medicare's trust fund facing insolvency by the
may be as good or better. The result is that the existing
year 2002 and pressure on the federal budget from the
incentives for both beneficiaries and providers of health
costs of Medicare Part B, which covers physicians' and
care services have driven Medicare to the brink of
outpatient services and is primarily funded directly from
bankruptcy.
general revenue, the Republican leadership in Congress
Most discussions of Medicare reform have centered
has rightly recognized the need for reforms in the pro-
on the impending insolvency of the Hospital Insurance
gram. There is much that is good in the reform propos-
Trust Fund that finances services provided under Medi-
als. There are also important policy options that, if
care Part A, including inpatient hospital care, home
adopted, could assuage some of the concern that has
care, and skilled nursing care. Actuaries estimate that,
been aroused about the proposals. Unfortunately, in the
at present rates of spending, we will exhaust the trust
increasingly partisan bickering that has developed over
fund's surplus in seven years. Because there is no le-
the reforms, bickering that will only get worse as we ap-
gal authority for the government to continue funding
proach the 1996 presidential election, it is unlikely that
Medicare under such conditions, the impending bank-
these remedies will receive much serious attention, par-
ruptcy forces a decision - either to reduce inflation in
ticularly from Democrats.
Medicare spending or to increase contributions to the
trust fund.
MEETING A NEED, BUT OUT OF CONTROL
Supplementary Medical Insurance, or Medicare Part
Since its inception more than 30 years ago, Medicare
B, which covers physicians' services, outpatient hospi-
has been enormously popular for two main reasons.
tal services, clinical laboratory services, and medical
First and foremost, this federal program has basically
equipment, is much less discussed but, in some ways; is
solved the problems it was designed to address. Before
an even more serious issue. Part B represents 40 per-
1965, large numbers of older adults had difficulty pur-
cent of total Medicare spending, and because 70 per-
chasing health insurance and receiving adequate health
cent of its funding comes directly from the U.S. Treas-
care. Medicare gave all elderly people an entitlement to
ury, its effect on the federal budget is even more direct
a package of benefits covering a wide range of acute
than that of Part A. In addition, spending on Medicare
care services. Second, Medicare has placed far fewer
Part B is growing 50 percent faster than spending on
constraints on older adults' use of health care than is
Part A. Consequently, it is futile to consider reforms of
the case with most private health insurance policies.
Medicare Part A while ignoring Part B.
The irony is that the seeds of the program's current
In the short run, the problem is how to achieve a sus-
fiscal woes are grounded in its popularity. Currently,
tainable level of overall per-person spending on Medi-
there are few incentives for the elderly to seek cost-
care. The current rate of growth in spending is 10.5
effective care. Although Medicare does not cover all ex-
percent per year, which represents an increase of 9 per-
penses in the areas for which it provides coverage, the
cent per person covered. (The increase in the Medicare
Vol. 333 No. 26
SOUNDING BOARD
1775
population accounts for the other 1.5 percent of the
tial shift away from traditional Medicare, the program
growth in spending.) By contrast, the rest of the federal
must change the incentives for the elderly, the provid-
budget is growing at a rate of less than 4 percent per
ers, or both.
year, exclusive of health care and interest on the debt.
STRUCTURE AND STRATEGIES FOR A REFORMED
The Medicare growth rate is thus a major drain on the
budget and exacerbates the federal deficit at a time
MEDICARE PROGRAM
when Congress and the President have promised to
The present Medicare program has relied on direct
reduce the deficit drastically or even eliminate it. In the
cost control - government-administered pricing or
long run, the problem is not only achieving a sustain-
pricing limits and direct controls on overall physician
able level of spending per beneficiary but also accom-
spending. One possible strategy is to continue with the
modating the impending large-scale spending increas-
current system but extend it to home care, skilled nurs-
es that will be caused by the retirement of the baby
ing facilities, clinical laboratories, and other parts of
boomers.
Medicare. Although such changes would curtail spend-
ing more effectively than in the past, older adults and
COST-CUTTING LESSONS FROM THE PRIVATE
the people who provide them with services would con-
SECTOR
tinue to have incentives to increase the amount of care
The growth in Medicare spending continues at dou-
provided.
ble-digit rates at a time when spending on health care
A second and far preferable strategy is to offer Medi-
in the private sector appears to have slowed. According
care beneficiaries more choice in the health care plans
to the latest figures from the Congressional Budget Of-
available to them and to ensure that the government
fice, private-sector spending on health care grew at
pays the same amount no matter what plan a benefici-
about 5 percent in 1994, while the growth in Medicare
ary chooses. Older Americans who want to receive care
spending exceeded 10 percent.
in more expensive settings or who want to buy more
Although there is much that we do not yet under-
benefits than come with the basic plan may do so, but
stand about the changes occurring in the private sector,
at their own expense. The example that comes closest
we can observe that employers have used a variety of
to this strategy is the Federal Employee Health Bene-
strategies to reduce the rate of growth in health care
fits Plan (FEHBP). Under FEHBP, the federal govern-
spending. These include a number of managed-care
ment sets its dollar contribution to the premium, offers
and intcgratcd-delivery-system strategies and medical
a large choice of plans to its employees during an an-
savings accounts, even while old-fashioned indemnity
nual open-enrollment period, makes information avail-
insurance has been retained. Whether these changes
able to its employees to help them choose wisely (sup-
will permit lower rates of spending to be sustained is a
plemented by information on the plans that is put
matter of dispute. But the current experience of the pri-
together by private entrepreneurs and available to em-
vate sector offers some promise and points to directions
ployees at a modest price), and monitors the plans to
for productive reforms in Medicare.
make sure they are fulfilling their contractual obliga-
Unlike the private sector, Medicare remains primar-
tions.
ily an a la carte, fee-for-service program with govern-
Although they by no means fit this description per-
ment-administered pricing and expenditure controls on
fectly, the Republican plans for Medicare recently
physicians. There is both limited availability of alterna-
passed by the House and Senate closely approximate
tives to fee-for-service medical care and limited partic-
the second strategy. With a few limited, but politically
ipation in the managed-care plans that are available.
difficult, changes, the plans could resemble an im-
Projections for 1995 indicate that 6.6 percent of Medi-
proved FEHBP. The Republican legislation would sub-
care enrollees, or 2.5 million elderly people, will be en-
stantially expand the types of health care plan that can
rolled in health maintenance organizations (HMOs),
be offered to elderly people. The government's per-per-
the only available alternative to fee-for-service care.
son payment to these plans would be fixed according
The growth in enrollment in HMOs has been rapid
to the beneficiary's age, sex, geographic location, and
over the past several years. Still, in both absolute and
supposedly, health status. Medicare would provide in-
relative terms, the vast majority of beneficiaries remain
formation to elderly people regarding enrollment and
in traditional Medicare.
disenrollment rates, consumer satisfaction, benefits,
An increasing number of new Medicare beneficiaries,
medical outcomes, and the quality of care. The princi-
of course, have workplace experience as members of a
pal omission from the proposals is that the plan does
managed-care plan. Such people are likely to be more
not call for a similar equivalent payment for beneficiar-
comfortable than others about choosing managed care
ies who want to stay in the traditional Medicare pro-
when they enroll in Medicare. But if beneficiaries are to
gram. Since this group now accounts for more than 90
migrate in substantially greater numbers to managed-
percent of the elderly, it is not a minor omission.
care plans and away from traditional fee-for-service
The reason for the omission is clear and is politically
programs, then several barriers must be removed. Most
charged. Even before Republicans introduced their
important, there needs to be an increase in the types of
plan, Democrats claimed that Republican reform ef-
non-HMO managed-care plans and other options avail-
forts would force the elderly out of fee-for-service Medi-
able to the Medicare population. But availability alone
care or make their payments higher if they stayed in
is unlikely to be sufficient. If there is to be a substan-
the traditional program. Democrats reasoned that be-
1776
THE NEW ENGLAND JOURNAL OF MEDICINE
Dec. 28, 1995
cause the capitation rate is projected to grow at about
The problem is not risk selection but the failure to
5 percent per person per year over the next seven years,
adjust for it. The question is whether Medicare can find
because the traditional Medicare program is projected
ways to adjust its payments to plans according to the
to grow at about 9 percent per person per year under
distribution of the health risks among the plans' enroll-
current law, and because incentives under the tradi-
ees. If Medicare cannot make adequate adjustments,
tional program would remain the same, elderly people
any choice will undo the risk pooling fundamental to in-
would undoubtedly have to pay more over time if they
surance plans. Both the administration and Congress
stayed in traditional Medicare and were assigned a cap-
are sponsoring work in this area, but more needs to be
itation payment equal to the amount available for other
done. The importance of the effort cannot be overem-
plans.
phasized. Locking people into their choices for a spec-
To avoid this political trap, Republicans have adopt-
ified period of time will help mitigate problems caused
ed what they term "fail-safe" spending enforcement
by risk selection.
that affects both the traditional program and its al-
A second concern involves potential marketing abus-
ternatives. If spending under fee-for-service Medicare
es that could arise with new choices among plans. Hav-
started to exceed the projected spending goal in a par-
ing the government review and approve marketing
ticular year, reimbursement rates would be reduced to
information is current practice and is expected to con-
keep spending at projected levels. Spending would thus
tinue. Marketing abuses would be a smaller issue if the
be kept the same in both the managed-care sector and
federal government undertook the actual enrollment
the traditional sector. A crucial difference is that in the
process, as it does with the FEHBP, instead of having
traditional program, any excess spending would come
the plans market themselves directly to the elderly,
from the providers' pockets; in the managed-care sec-
although this might substantially slow the growth of
tor it would come from beneficiaries' pockets.
some capitated plans.
Republicans expect that if beneficiaries are offered
A third concern has to do with the status of the low-
more choices, substantial numbers of them will opt to
income elderly, given proposed congressional reforms
leave the traditional Medicare program, where they
in Medicaid. Suffice it to say that most states are ex-
have full freedom of choice of providers but where they
pected to continue to fund Medicaid programs that fill
also typically pay $1,000 per year for supplemental
gaps in traditional Medicare coverage for the states'
Medicare insurance. If that does not happen, there is a
lowest-income populations, but to restructure these pro-
good chance that, over time, many of the physicians
grams. Ultimately, this concern or the pressures from
and hospitals who provide care to the elderly will put
the baby boomers may cause policy makers to recon-
together different kinds of plans under which they as-
sider whether the universal entitlement to health care
sume full financial risk and will take their patients with
without regard for means that is embodied in Medicare
them into such plans. In any case, the fail-safe mecha-
is best. For now, no one stands ready to make that de-
nism ensures that the spending goals will be met even
cision.
if most Medicare beneficiaries choose to remain in fee-
A fourth concern is whether the 5 percent per person
for-service Medicare.
per year rate of growth in health care spending is ade-
quate to deliver the benefits Medicare has promised
FOUR KEY ISSUES
to elderly people. Assuming an inflation rate of 2.5 to
The direction of change embodied in the Republican
3 percent, this means a growth in real spending of 2 to
Medicare reforms will improve the program. Still, there
2.5 percent per person. That is not unreasonable, but it
are four areas of concern, even for those of us who sup-
is a lower rate of growth than in the past. In the short
port the proposed changes.
run, eliminating some of the excess capacity in the
The most serious concern has to do with risk selec-
health care sector can help lower spending rates. In the
tion and the need to find adequate factors for adjusting
long run, a central question is whether the changes
risk beyond the ones currently used by Medicare (i.e.,
in financial incentives and purchasing pressure in the
age, sex, and institutional status). Risk selection occurs
public and private sectors will help produce new forms
when people considered to be at better-than-average or
of medical technology that reduce costs rather than
worse-than-average risk for health problems end up in
mainly those that increase health care capabilities and
particular health plans, including traditional Medicare.
costs.
Risk selection can occur by the actions of either benefi-
ciaries or plans, or it can occur in the short term just
THE POLITICS OF REFORM
by bad luck.
In the current high-stakes political battle over Med-
Health care spending is very concentrated. In Medi-
icare reform, Republicans appear to understand the
care, 10 percent of beneficiaries account for about 50
need to keep tabs on the congressional vote count, to in-
percent of the costs. If Medicare pays a plan as if all the
volve major stakeholders (or special-interest groups) in
beneficiaries had average health risks when, in fact,
devising the final plan, and to influence and use public
they may be either generally healthier or generally sick-
opinion to support their efforts at reform. Republicans
er than average, the plan will find itself making money
also understand the power of a presidential veto.
or losing money - not because of how efficiently it runs
Opposition to Republican reform efforts remains
its business but because of its enrollees' health status.
strong among Democrats and some stakeholders, how-
Vol. 333 No. 26
SOUNDING BOARD
1777
ever. Democrats understand the political importance of
rather than philosophy, final passage may be easier to
having a Republican majority poised to make the most
accomplish than it would be otherwise.
substantial changes to Medicare since the program's in-
The second Medicare reform package that emerges
ception. Politically, the President had to veto the Medi-
from Congress will be fundamentally similar, in terms
care bill at least once, as he did early this month.
of scope and magnitude, to the first version. To the
The most interesting question involves the dynamics
extent that Medicare reforms are made part of a com-
of the political situation after the inevitable first pres-
prehensive budget-reconciliation bill, the President will
idential veto. Congress will produce a somewhat al-
find it increasingly difficult to veto the legislation, al-
tered second bill. It is unclear whether there will be
though Medicaid may become a more serious stum-
much Democratic involvement in the deliberations fol-
bling block.
lowing the veto. Democrats were only minimally in-
My bottom-line prediction: President Bill Clinton
volved the first time, and it is not likely that they will
will sign - reluctantly - a second or third Medicare
have an appreciably larger role in late negotiations.
reform bill, and Medicare reform will become a major
Even if the Republican leadership wanted to consider
issue in the 1996 election, along with deficit reduction,
substantial compromises in order to escape a veto, it is
the balanced budget, and the economy. It is a high-risk
unclear whether Republicans could keep their right
strategy for the Republicans to press their reform pack-
wing on board with anything other than relatively mi-
age, but theirs is not a bad Medicare reform bill.
nor chages. But since the fight between Republicans
Project Hope
and Democrats is mainly about money to be saved,
Bethesda, MD 20814-6133
GAIL R. WILENSKY, PH.D.
ASSESSING THE PROPOSED MEDICARE
fect Part B, anyway. The changes are thus unrelated to
REFORMS
what is necessary to "save" Medicare. Instead, they are
needed to make up for - that is, to "save" - Republi-
THE mid-November Republican budget would have
can-sponsored changes to the tax code. Whether this
reduced federal Medicare expenditures by $270 billion
tradeoff is worthwhile requires an analytic discussion
over the next seven years. That target was not the
of values, which regrettably has not taken place. Nor
product of an analysis of the benefits and costs of Med-
has any other serious and extensive set of hearings, dis-
icare. There was no examination of Medicare that
cussions, and debates taken place. The days when Pres-
concluded that during the next seven years the feder-
ident Lyndon Johnson said, "Come, let us reason to-
al government could or should reduce expenditures by
gether" are long gone. Conservatives would do well to
$270 billion or, for that matter, by any other number.
remember that without hearings, debate, and above all,
The $270 billion figure was an artifact. It was deter-
time, something like the Clinton health program might
mined by considerations unrelated to Medicare. Had
well have been enacted. Surely, the lesson drawn should
the Republican leadership decided to balance the budg-
not be that proponents of particular legislation should
et in, say, five years instead of seven (even with the sug-
avoid hearings and debate. Public discussion may have
gested $245 billion reduction in tax revenues), the
its costs - now for one side, tomorrow for the other -
Medicare "savings" would have had to be even larger.
but the benefits of the sometimes inefficient democratic
Had the leadership decided to achieve a balanced budg-
process far exceed its costs.
et in the year 2004 rather than 2002, smaller savings
Hearings and debate would be called for even if all
would have sufficed. Had the proposed tax reductions
the suggested changes in Medicare were beneficial. In
been postponed or eliminated, Medicare would not have
fact, however, they are not. Why do many analysts be-
had to face such deep cuts.
lieve the changes would be harmful to the public's
The $270 billion figure was determined by the desire
health? What substantive criticisms can be offered?
to reduce tax payments by $245 billion rather than
The first point concerns the size of the cuts. I write
some other amount, the desire to achieve a balanced
"cuts," though we should understand that even with the
budget by 2002 rather than some other year, and the
proposed changes, Medicare will grow during the next
political desires that ruled out substantial cutbacks in
seven years. Nevertheless, the tradition of budget dis-
various other government programs and activities. The
cussions permits us (as it permitted those who were
very size of Medicare and the fact that without new leg-
troubled when Defense Department appropriations did
islation the Part A trust fund would be depleted shortly
not keep pace with inflation) to speak of cuts. The pro-
after the turn of the century made Medicare extremely
posed changes to Medicare would reduce the rate of
vulnerable (even to changes that have nothing to do
growth that has been projected as a consequence of in-
with Part A trust funds but much to do with the federal
flation, increases in the number and average age of ben-
budget).
eficiaries, and changes in the intensity of care (largely
Thus, a number was plucked out of the air and pre-
related to the expansion of technological capabilities).
sented as if it were necessary to ensure the survival of
Thus, the projected increases in Medicare expenditures
Medicare. The proposed changes far exceed what would
are not tied to an expansion in benefits or program cov-
be necessary for the program's survival and largely af-
erage. Rather, they are the product of exogenous forces
FYI
THE NEW YORK TIMES, SUNDAY, SEPTEMBER 3, 1995
From
Chris Jennings
Look Who's Talking Health
C
HIS FALL THE COUNTRY WILL BE TALK-
T
ing health care again - or at least should
be talking about it - as Congress moves
to change the principles on which Medi-
care and Medicaid were established 30 years ago.
A writer with a taste for irony could scarcely
conceive a better plot, and as one of those who
wrote the Clinton plan, I confess it strikes
me as more than ironic.
Two years ago, Republicans were de-
nouncing the secrecy surrounding the Pres-
ident's health care task force. This summer,
Republicans have been meeting "behind
closed doors" on a Medicare proposal
scheduled to be released later this month,
only a few weeks before Congress votes on
it, thereby avoiding independent analysis of
the costs, mobilization by opponents and
other inconvenient aspects of a long
national debate. Two years ago, the Re-
publicans rang alarms about the Clinton
plan's emphasis on managed care. Now
the Republicans' own plans for Medicare
and Medicaid emphasize managed care.
But superficial similarities are deceiving.
The reform plans of 1993 generally aimed to
extend rights to health coverage and health care;
the Republican proposals this year would retract
rights that already exist The debate two years
ago reflected a widespread belief that the health
care system needed reform. The Republicans, like
many in the business world, now begin with the
happy thought that the system is reforming
itself and that Government needs to be more
like the private sector.
The health care system is certainly going
through profound change. Health mainte-
nance organizations and other forms of man-
aged care are expanding rapidly. As managed
care grows, demand for hospital care shrinks.
Hospitals are merging, closing beds and cutting
jobs; some new buildings stand vacant.
H.M.O.'s are limiting specialty referrals and
lucrative procedures; the incomes of specialists
in some areas are dropping, and prima-
ry-care practitioners are in demand.
In a stunning shift, once stubbornly
independent physicians are selling
their practices to hospitals and insur-
ers or taking a fixed payment per
enrolled patient and accepting the disci-
pline of the corporation.
Partly as a result of these developments,
health care seems less of a problem to
employers. Companies that five years ago
faced double-digit inflation in health bene-
fits have seen costs go flat. The success of
Paul Starr, a sociology professor at Princeton Univer-
sity, is co-editor of The American Prospect magazine.
42
ILLUSTRATION BY PETER DE SEVE
THE NEW YORK TIMES. SUNDAY, SEPTEMBER 3, 1995
Reform Now
An author of the Clinton plan welcomes
Republicans to the problem. A bigger problem:
Their solution. BY PAUL STARR
managed care in controlling costs confirms a key
have consequently paid a hidden "tax" in their bills.
Many Republicans want to cap Medicare expendi-
premise of the Clinton plan and other managed-
Managed-care plans, however, refuse to pay that
tures but uncap provider charges. Those policies
competition proposals: substantial savings are fea-
tax; they demand discounts, and if one hospital
alone would make it impossible to assure that the
sible. The aim of reform, however, was not merely
refuses, the plans contract with another. The hospi-
elderly continue to receive Medicare's package of
to hold down costs, but to give people better value
tal and clinic that provides charity care now com-
benefits. Instead of defined benefits, the elderly
for their money.
mits an economic sin: it risks making itself uncom-
would get a fixed amount of money - often
Whether that is happening is hard to say; there is
petitive. During the national debate, opponents of
described as a voucher - which over time might
no national index of the quality of care. The shift to
reform often said lack of insurance didn't matter
not buy the insurance they now receive as an
managed care has disrupted many Americans' rela-
much because doctors and hospitals still took care
entitlement. Ending Medicare as we know it was
tionships with their doctors. Many employers have
of the uninsured. This was never entirely true -
not, I recall, a campaign slogan, but it is plainly
also cut costs simply by requiring their employees
the uninsured get less care - but the emerging
where this policy is headed.
to pay a larger share of the bill, and some have
market makes our old Robin Hood system impos-
Ending Medicaid as we know it is an immediate
stopped covering dependents. A big part of the
sible to maintain.
prospect. Republicans want to replace Medicaid
problem has always been lack of coverage for
The emerging market also isn't going to satisfy
with block grants that would give states an average
millions of Americans. Now, declining employer-
concerns about individual choice. About half the
of 30 percent less money in the year 2002 than
provided coverage has left more people uninsured
workers who receive coverage (including most
Medicaid would. Welfare is currently the basis on
- nearly 41 million at any one time, up by 2
insured employees in small businesses) have no
which many of the poor now qualify for Medicaid.
million in 1994.
choice among alternative health plans. In the old
The clear prospect is that many of the poor who
Under the Clinton plan and other reform
days, it hardly mattered that the employer picked
lose eligibility for welfare would also lose eligibility
proposals, hospitals and specialists would also
the insurer since the plans pretty much covered all
for medical coverage.
have borne the brunt of cost containment. For
providers. But when employers now adopt man-
The big losers would also include teaching
decades, hospitals had overbuilt and physicians
aged care, they effectively choose doctors and
hospitals and medical schools. They are being hit
had overspecialized; a correction, unavoidably
hospitals for workers and their families. My em-
by what is technically known as a double wham-
painful, was coming. The changes taking place
ployer doesn't determine where I shop, live or send
my. First, the rise of managed care threatens their
today, however, do not embody the values of
my children to school. Why should my employer
clinical revenues; managed-care plans use hospi-
progressive reform. The savings from rationaliz-
pick my health plan and my doctor? But, increas-
tals less but also shift patients to lower-cost
ing the system are not being applied to make it
ingly, that's how Americans get their health care -
institutions. Second, Republican budget plans
more inclusive. A new system of corporate health
and not through a system of unlimited free choice,
would end subsidies for medical education that
care is emerging without the new framework of
which critics of reform often conjure up as if it
have come with Medicare hospital payments. Dur-
rights and obligations that reform would have
described the present.
ing the debate over the Clinton plan, the medical
brought; corporate interests consequently have
schools and teaching hospitals clamored that they
the field almost entirely to themselves.
NFORTUNATELY, THE OLD SYSTEM OF
weren't being treated well enough. Actually, they
Employers have no obligations to pay any
U
unconstrained health insurance that COV-
did quite well, especially compared to the re-
share of health insurance or to offer their em-
ered almost all costs is gone. The Clin-
trenchment they now face.
ployees a range of choices. Insurers can still
ton plan would have shifted the choice
Budget plans come and go. The historic impor-
cherry-pick the healthy and shun the sick, and
of health plans from employers to families and
tance of what is happening is the shift in legal
for the most part, they have no obligation to
required plans and providers to disclose informa-
rights. Health care reform would have given Amer-
cover pre-existing conditions. They do not have
tion that would help people choose sensibly. The
icans a right to coverage and a variety of other
to disclose to doctors, let alone patients, their
Clinton plan also sought to open up a wide menu
rights in relation to employers, insurers and health
rules OF denying coverage, and when they refuse
of options at different prices, including fee-for-
care providers. Converting Medicare into vouchers
to approve a service or a provider, patients find
service plans. The irony is overwhelming Many
and Medicaid into block grants eliminates the legal
their rights are limited.
people who opposed reform because they believed
rights to medical benefits that the elderly and some
And the root problem of health coverage re-
it would restrict their choices now face a system
poor currently have.
mains unsolved. Employment-based health insur-
that is becoming far more restrictive.
This movement to eliminate rights is not a
ance is now in its second decade of steady decline,
Perhaps nowhere is the irony greater than for
cautious version of reform; it is the opposite,
reflecting a broader decline of real wages and
Medicare. Many of the elderly also opposed
reverse reform, a radical version of that. During the
increasing reliance on contingent workers. If it
reform for fear they would lose benefits and
debate over the Clinton plan, many of its critics
weren't for the expansion of Medicaid during the
freedom of choice: "Don't let the Government
said that we should control costs and only then
1980's, we would have 50 million uninsured now.
get hold of my Medicare" was one beneficiary's
extend coverage to the uninsured. The thrust of
During the rest of the 90's, employer-provided
much-reported plea to a Congressman. In fact,
policy now, however, is to cut costs by retracting
coverage is likely to decline further, and Medicaid
while adding prescription drug benefits, the Clin-
rights to coverage.
will contract. Americans will then have even less
ton plan did not fundamentally change the struc-
There is still talk of legislation that would set
security than they do now about affording health
ture of Medicare.
some minimal Federal standards for health insur-
care when illness strikes.
Such a change is exactly the aim, however, of a
ance, which might benefit people with pre-existing
Only by ignoring these realities is it possible to
Republican Congress now committed to cutting
conditions. But there is no money, at least not in
say that the private health system is reforming
$270 billion from the program over seven years. A
the current Congress, for extending coverage to
reself. The emerging health care marketplace, in
draft Republican proposal would encourage the
the uninsured. In opinion polls, Americans keep
tact, 15 likely to reduce access to care for the
elderly to join H.M.O.'s by charging them more
saying that health care reform is a high priority. I
uninsured. Hospitals and clinics have traditionally
for both Medicare and the supplementary (Medi-
cannot believe that reverse reform is what they
shifted the cost of charity to insured patients, who
gap) plans they buy to cover out-of-pocket costs.
have in mind.
THE NEW YORK TIMES MAGAZINE / SEPTEMBER 3. 1995 43
1.
Businesses Worried About Republican Medicare Plan. Yesterday's Wall Street Journal
reported that the Business Roundtable, the National Association of Manufacturers and other
business leaders are concerned about the Republican Medicare proposal.
Under the proposal, workers in company-sponsored managed care plans would be
given the option to stay in those plans rather than join Medicare after retirement.
Medicare would give businesses a fixed amount of money to pay their employees'
health care bills.
But if those bills were bigger than the government share, businesses would lose. And
the government's share is sure to fall short -- because, in order to cut $270 billion
from Medicare, Republicans would limit Federal spending way below the private
sector. Companies worry that, "payments, over time, will fall short of rising medical
costs, and that they will end up footing a mushrooming bill for retirees' health care."
(Wall Street Journal, 8/10/95)
Families Would Also Lose Under Republican Medicare Plan. That's what the Republican
proposal means for families too. As the amount Medicare spends decreases over time, people
on Medicare would either pay more or get less. Costs would be shifted to Medicare
beneficiaries -- 75% of whom live on incomes of less than $25,000 -- and many simply could
not afford to pay.
Senate Clears Bill With Fewer Cuts for the Arts
By DAVID ROGERS
Service funding would be effectively frozen
the cut was a "glaring mistake" and
Staff Reporter of THE WALL STREET JOURNAL
at $1.96 billion, but the Bureau of Indian
threatened the "termination of Indian self-
WASHINGTON - The Senate approved
Affairs would be cut 16%. or more than $220
determination.'
a nearly S12.1 billion natural-resources bill
million below what the House has pro-
Nonetheless, on a 61-36 roll call, the
after agreeing to soften House cuts from
posed.
Senate rejected a Domenici amendment to
government funding for the arts and hu-
shift $200 million from other accounts to
The same give-and-take about spending
manities.
priorities is seen in a larger $36.6 billion
the Bureau of Indian Affairs. By an almost
The National Endowments for the Arts
transportation bill brought to the floor last
equal margin, members later killed a
and Humanities would each receive $110
night by the Senate Appropriations Com-
second attempt by his New Mexico col-
million for the fiscal year beginning Oct.
mittee. To help build a reserve for educa-
league, Democratic Sen. Jeff Bingaman, to
1 - a one-third cut from current levels, but
tion and environmental programs else-
Please Turn to Page A10, Column 6
about $10.5 million more than the House
where in the budget, the panel goes much
Continued From Page A2
approved last month for each agency.
further than the House in scaling back
restore $26.6 million for the Office of Indian
Moreover, the Senate would strike re-
highway, transit and airport funds. In an
Education.
strictions making the NEA funds available
early test, the chamber voted 68-30 to
The debate was striking given Mr.
only when the House has passed a separate
override the objections of two Pennsylva-
Domenici's standing as one of the leading
reauthorization bill. Across the political
nia Republicans and uphold a nearly 44%
architects of the GOP drive to balance the
spectrum. individual Republicans showed
cut in mass-transit operating assistance.
budget. The New Mexico Republican was
little appetite for the House leadership's
plan to terminate funding in 1997.
Within the natural-resources bill, the
matched against one of his early proteges
on the budget panel, Sen. Slade Gorton (R.,
Adopted 92-6, the underlying bill re-
cuts from Indian programs fall hardest on
Wash.), who chairs the appropriations
flects the strong influence of Western
those accounts funding hundreds of often-
subcommittee overseeing the annual natu-
senators who won concessions for ranch-
small tribal governments. Again Republi-
ral-resource bill.
ing, timber and mining interests even as
cans were among those protesting, and
"We are distributing reductions that
the chamber voted to impose deep cuts on
Senate Budget Committee Chairman Pete
were forced on us," said Mr. Gorton. While
Indian-related programs. Indian Health
Domenici (R., N.M.) angrily complained
reminding all sides of their enduring
friendship, the two men waged a testy war
THE WALL STREET JOURNAL THURSDAY, AUGUST 10, 1995
of charts and conflicting numbers that
seemed almost a satire of the larger budget
debate.
lower federal spending. This will ulti-
In related action, the Senate:
Medicare Plan
mately shift the responsibility and costs of
Approved a 90-day moratorium to
retiree health care from Medicare to em-
block federal grazing-land regulations due
ployers."
to take effect this month.
By GOP Leaves
The complaints seem to be having
Amended an existing law to toughen
an impact. A Republican aide acknowl-
penalties in cases of "tree-spiking" - a
edged yesterday that support for the idea
practice used by some antilogging pro-
Business Cold
is "lukewarm" in the business community,
testers in the West. The provision would
and that it may not be included in the
make it easier for timber companies to
Medicare-overhaul plan to be unveiled in
show the economic damages needed to
mid-September. "It's not SO much that
meet the threshhold for criminal prosecu-
By LAURIE MCGINLEY
business doesn't like the idea, as a con-
tion. In cases that result in serious bodily
Staff Reporter of THE WALL STREET JOURNAL
cern that future Congresses won't live up
injury, the provision allows for imprison-
WASHINGTON - Republicans who are
to their end of the bargain," he said.
ment of up to 40 years.
trying to redesign the Medicare system are
Still, enthusiasm for the idea remains'
Voted to end the moratorium on gov-
touting a proposal to let workers stay in
high among congressional Republicans.
ernment processing of "patent" applica-
company health plans after they retire.
Rep. John Linder (R., Ga.) said that
tions to allow mining companies to take
But business is giving it the Bronx cheer.
allowing retirees to stay in their compa-
title of federal lands where they have
Under the concept, which has been
nies' health plans would compel businesses
staked mineral claims.
talked up by House Speaker Newt Gingrich
to use the same kind of cost-control strate-
Restored $4.5 million for Fish and
(R., Ga.) and Ways and Means Health
gies that they employ for their under-65
Wildlife endangered-species programs and
Subcommittee Chairman William Thomas
population. "The companies would be con-
upheld funding for the release of wolves in
(R., Calif.), employees in company-spon-
trolling expenses, and watching for frau-
the West and Southeast.
sored managed-health plans would be per-
dulent billing and hospital overcharges."
mitted to stay in those plans after they
Currently, companies that provide
retired; they wouldn't have to drop out and
health benefits to retirees generally pro-
sign up for Medicare. The companies
vide supplemental coverage to Medicare,
would receive annual stipends from the
in which they pick up costs that the federal
government to pay for the retirees' health
program won't cóver.
bills, and assume the risk of covering the
Republicans have said that if they went
workers.
forward with the proposal, it would be an
One of the goals is to promote the
option for companies, not a requirement.
use of lower-cost managed-care programs
But companies are worried that "once the
among retirees. Rep. Thomas says that it
government makes it available as an op-
makes little sense for a worker who is
tion, expectations among employees grow,
satisfied with a managed-care plan to feel
and it's going to be very hard to say no,"
compelled, upon retirement, to switch back
said NAM's Ms. Canner.
to the costlier fee-for-service arrangement
Walter Maher, Chrysler Corp.'s direc-
that dominates the traditional Medicare
tor of federal relations, said that the auto
program. Under managed-care programs,
maker took a look at devising a health plan
which include health maintenance organi-
that would cover retirees in the late 1980s.
zations, participants agree to limits on
But the company, after having several
their choice of doctors in exchange for
discussions with the United Auto Workers
lower costs.
and the Health Care Financing Adminis-
But, said Sharon Canner. a vice presi-
tration, which runs Medicare, concluded
dent at the National Association of Manu-
that it wasn't interested in "increasing our
facturers, the idea "presents some real
risk in this area. There were SO many
problems for employers.' The main ques-
unanswered questions that both we and the
tion, she said, is: "Will the payments
union didn't think it was a good idea to pro-
[from the government) keep up with infla-
ceed." he said.
tion?" Companies are worried that the
But he and others said there was an-
payments, over time, will fall short of
other way to encourage increased use of
rising medical costs. and that they will end
managed-care plans. Under this scenario,
up footing a mushrooming bill for retirees'
the government would enter into contracts
health care.
with managed-care companies that pro-
The Business Roundtable. which repre-
vide coverage to particular employers. The
sents more than 200 chief executive offi-
employers could make contributions to
cers, also strongly opposes the idea. The
cover supplemental coverage and handle
group said in a statement that while the
some of the paperwork. But they wouldn't
payments may be adequate at first, "there
be assuming the risk of covering the
is nothing to prevent future Congresses
retired employee. That would rest with the
from reducing these payments in order to
managed-care companies.
Clinton to Declare Nicotine in Cigarettes
Continued From Page A3
every state, but enforcement is generally
whether the administration regulates to-
lax.
bacco. In a statewide poll, published
Supporters of the plan had argued
A Drug That Can Be Regulated by FDA
in yesterday's Charlotte Observer, Mr.
that it could achieve more immediate
Clinton loses overwhelmingly in a two-way
effects, since the tobacco companies have
race against Senate Majority Leader Rob-
said they will fight any effort at federal
ert Dole, the leading contender for the
regulation in court. While the tobacco
ing states, the White House is also consid-
do at the government level" to curtail
Republican presidential nomination, 56%
industry was initially unenthusiastic about
Rules Would Be Withheld
ering steps that can be taken to assist
teenage smoking, he declared. Surrounded
to 35%.
the Wyden-Rose proposal, the companies
tobacco farmers if the antismoking initia-
by big tobacco's friends, such as North
If Congress Approves
tives create an economic hardship.
Carolina Gov. Jim Hunt, Mr. Clinton didn't
Recognizing the steep odds against Mr.
expressed a new interest in negotiating
Under the regulatory process the presi-
give details of his plan, but he declared
Clinton in tobacco-growing states, Dick
with the administration after a Wall Street
dent is expected to initiate, the FDA will
that government can't ignore "the evi-
Morris, the president's new political guru,
Journal report that the White House had
Curbs on Teen Smoking
has been pushing a political argument for
decided to pursue a regulatory course. But
publish a proposed regulation in the Fed-
dence that one of the greatest threats to the
eral Register, probably as early as today.
health of our children is teenage smoking
why the policy should be tough: It's the
friends of the companies on Capitol Hill
A public comment period of 90 days will
and it is rising."
right thing to do, he contends, and the
said the administration had shunned the
By MICHAEL K. FRISBY
follow. Then, after further review, the FDA
broad support it has in many states would
companies' overtures.
And HILARY STOUT
Moreover, the president declared that
overshadow the fallout in a few tobacco
will publish a final regulation.
smoking by minors has been increasing
Gore's Example
Staff Reporters of THE WALL STREET JOURNAL
states.
CHARLOTTE, N.C. - President Clinton
But during the standard comment pe-
"steadily and rapidly" since 1991. He said
In addition to the Oval Office cere-
will declare today that nicotine in ciga-
riod, aides said, Mr. Clinton would give
that smoking by eighth-graders jumped
Nevertheless, some political advisers
mony and a scheduled news conference
tobacco's legislative friends an opportu-
30%, while smoking by 10th-graders is up
worry that going after cigarette companies
rettes is a drug that can be regulated by the
this afternoon, President Clinton will hold
Food and Drug Administration and will ask
20%. And he maintained that reducing
could make Mr. Clinton seem elitist and
a 10 a.m. briefing on the tobacco plan for
the agency to draft a federal rule aimed at
Don't Just Say No
teenage smoking would be the "cheapest,
out of touch with Joe Sixpack.
top officials of the American Medical Asso-
curtailing smoking by minors.
Towns attempting to curb sales of ciga-
easiest" way to slash health-care costs.
In pushing Congress to pass legis-
ciation, the American Cancer Society, the
Mr. Clinton will unveil his proposal to
rettes to minors find that sweeping rules
Highlighting the pressure that Mr.
lation cracking down on teen smoking, the
American Lung Association, the American
don't have much effect unless they're
curb teenage smoking surrounded by chil-
Clinton has faced on this issue, Gov. Hunt
president hopes to place himself in a
Heart Association and the American Acad-
backed by specific penalties and detailed
dren in an Oval Of-
greeted the president at the airport here
no-lose situation. Since the Republican
emy of Pediatrics.
enforcement plans. Article on page B1.
fice ceremony. But
but told reporters he hoped to convince the
leadership so abhors the notion of regulat-
What Mr. Clinton hopes to achieve is
while he plans to as-
president that tobacco should not be regu-
nity to gather support for a legislative
ing the tobacco industry, administration
the same kind of success that Vice Presi-
sert the FDA's au-
lated. "We don't need big government
approach to the teenage smoking problem.
officials argue that it may be inclined to
dent Al Gore has enjoyed over the course of
thority to regulate
trying to run our lives," Mr. Hunt said.
If-that failed, the FDA regulations would be
approve legislation restricting cigarette
his career in raising health concerns of
Instead, he suggested an aggressive pub-
cigarettes, he is ex-
companies just to head off an FDA rule.
implemented.
tobacco, but maintaining a friendship with
lic-relations campaign aimed at teenage
pected to suggest
A draft of the proposed regulation,
On the other hand, if the GOP rejects
tobacco growers. Mr. Gore had to strike
that he is willing to
smoking. "We just need to do it in a
dated Aug. 7, would, according to a person
the legislation, the president may have
that balance to survive - not only did he
back away from fed-
voluntary way that works instead of over-
who has seen it, limit cigarette sales to
forced Republican leaders to vote against a
grow tobacco on his farm and receive
eral regulations if
regulation from Washington," Mr. Hunt
bill favored by the public.
THE WALL STREET JOURNAL THURSDAY, AUGUST 10, 1995
face-to-tace transactions and require proof
federal subsidies for it, but he had 10,000
told reporters.
Congress passes a
of age for sales; ban outdoor cigarette
Move Clear for Weeks
tobacco farmers in his congressional dis-
law aimed at re-
advertising within 1,000 feet of schools or
Mr. Clinton's decision to push forward
trict.
playgrounds; require outdoor advertising
with FDA regulation of tobacco is a politi-
It has been clear for several weeks
stricting youths' ac-
that the White House was heading toward
Mr. Gore, who grew up on a to-
cess to cigarettes.
and "point of sale" ads, near checkout
cal gamble. Polls show strong public sup-
some type of regulation of the tobacco
bacco farm but stopped growing the crop 11
The main thrust
counters, to be black and white and text-
port for taking on the tobacco companies,
President Clinton
only; ban companies from giving away
but the move clearly would hurt Mr.
industry. Officials had considered a plan
years ago after his sister died of lung
of the president's
initiative is the landmark extension of FDA
cigarettes or nontobacco items; require
Clinton in the South, particularly in North
proposed by Reps. Ron Wyden (D., Ore.)
cancer, has been one of the strongest
jurisdiction to nicotine. The regulation to
Carolina, where annual cash receipts from
and Charlie Rose (D., N.C.) under which
advocates for federal regulation during the
a label on all cigarette packages declaring
tobacco farming total nearly $1 billion and
the tobacco companies would have entered
administration's recent deliberations.
be unveiled today is likely to contain
the product to be a "nicotine delivery
into a binding agreement with the govern-
When he was a congressman and senator
restrictions on cigarette vending machines
device," and allow tobacco companies to
the industry helps create jobs ranging
sponsor events only in the corporate name,
from farm work to convenience-store cash-
ment to finance a campaign against teen-
from Tennessee, Mr. Gore brokered deals
.as well as curbs on certain types of
advertising aimed at youths and other
iers.
age smoking, curtail advertising directed
between the tobacco industry and health
not in the brand name of a cigarette.
at youths and help fund state efforts to
enthusiasts on cigarette-warning labels.
measures aimed at preventing teenagers
Speaking to the National Baptist Con-
But aides realize that North Carolina,
enforce laws prohibiting underaged smok-
from buying cigarettes.
which Mr. Clinton barely lost in 1992, will
Timothy Noah contributed to this arti-
vention here in the heart of tobacco coun-
ing. Smoking by minors is outlawed in
cle
But to ease the blow of the controversial
try yesterday, the president hinted at his
be difficult to win in 1996 regardless of
new policy on the Southern tobacco-grow-
new policy. "There are some things we can
Please Turn to Page A4. Column I
PM-GA--Gingrich-Medicare, 3rd Ld-Writethru, 820
Republicans Go to Georgia to Talk About Medicare
Eds: Leads with 11 grafs to UPDATE with protest. Picks up 5th graf pvs,
Gingrich, appearing Edits throughout and cuts at bottom to tighten
By CHRISTOPHER CONNELL= Associated Press Writer=
ATLANTA (AP) A Democratic congressman and more than 100 chanting labor
activists disrupted today's launch of House Speaker Newt Gingrich's crusade to
convince Americans the GOP can fix Medicare without harsh cutbacks.
After Rep. John Lewis, D-Ga., and the activists marched into the hotel
ballroom, Gingrich, who had been in a waiting room, left without delivering
his speech. Organizers of the town meeting said he would try again later in
the day.
Where is Newt!'' the demonstrators began shouting after 20 minutes of
standing at the back of the room. Some marched up the aisle and sat on the
stage, waving fists and shouting, Newt is scared!''
The demonstrators left en masse and Lewis addressed them outside the
ballroom.
We must tell the Speaker, Mr. Gingrich, and we must tell the Republicans
to take their greedy hands off of Medicare, he said.
Recalling the civil rights march to Selma, Ala., 30 summers ago, Lewis
said this is our march to November 1996.
We have a group of radical
extremists in Washington under the leadership of this speaker who want to take
us back to another period, undo what Roosevelt did, what Truman did, what
Kennedy did, what Lyndon Johnson did.
We must say we are not going back and will not go back, Lewis shouted.
This is one day Newt Gingrich didn't get his way, gloated Stewart
Acuff, president of the Atlanta Labor Council.
Earlier, on television, Gingrich said the Republican plan to save $270
billion from Medicare over seven years will simply limit the rate of
growth'' and that actually, every year Medicare (spending) will go up.
Sen. Paul Coverdell, R-Ga., who spoke at the town meeting before the
disruption, said, Those voices who say nothing is required should be muted
and frankly ignored.
If you're 58 and nothing is done, there will be no
Medicare program.
Lewis, like the rest of the Georgia delegation to Congress, had been
invited to share the stage with Gingrich and other Republicans at the public
meeting sponsored by the Congressional Institute, a conservative policy group.
Gingrich, appearing on NBC's Today' show, said the Clinton
administration's own Medicare trustees have concluded the program starts to
go broke next year and is bankrupt in seven years. What we want to do is
limit the rate of growth.
He dismissed criticism that the plan could cost seniors an addition $1,000
a year, calling that a scare tactic from our political opponents. He
acknowledged, however, that senior citizens already expect a traditional
pattern of slight increases each year
to fit the inflation rate.
Irate Democrats are mounting their own forums and launching petition
drives to avoid what Rep. Sander Levin, D-Mich., claims is the Medicare
Pearl Harbor'' looming when Congress returns from its August recess.
Addressing charges that the GOP was concocting a stealth'' plan that
will mean higher costs for seniors and less freedom to choose their doctors,
Gingrich said Sunday he expects to unveil his plan by the first or second week
of September.
Gingrich, on CNN's Late Edition, said, A stealth plan beat (s) nc
plan at all. They don't seem to have any plan.
Gingrich and House Majority Leader Dick Armey, R-Texas, sent their troops
home for the August recess with slide shows and thick packets explaining
options the GOP is considering to revamp Medicare, the $178 billion health
program for 33 million senior citizens and 4 million disabled workers.
Gingrich promised that if senior citizens like Medicare the way it is,
they can keep their current fee-for-service coverage, which allows then U.
to any doctor they wish.
Seniors now must pay $716 for the first day in the hospital, a $100 annual
deductible for doctors' bills and 20 percent copayments, and $46 a month
premiums for their Part B coverage.
An options paper leaked from the House Ways and Means Committee
a month ago spoke of sharply increasing the deductible and making the elderly
pay as much as 25 percent of doctors' bills if they refused to switch to
managed care.
Other options, according to Gingrich, include allowing senior citizens to
stay in the group plan they were in before turning 65, or letting them open
medical savings accounts.
But Democrats warn that Republicans may try to convert Medicare into a
voucher where the government would pay a certain sum each year, and no more.
Gingrich says the GOP belt-tightening moves will allow Medicare spending
per beneficiary to grow from $4,800 now to $6,700 by 2002, assuming the
program grows at 6.4 percent a year.
Democrats warn that $6,700 may not be enough, with inflation and increased
demand for services.
****
filed by: APW- (GA)
on 08/07/95 at 11:53EDT ****
**** printed by: WHPR (LMCH) on 08/07/95 at 12:06EDT ****
Republicans Go to Georgia to Talk About Medicare
EDs: LEADS with 6 grafs to UPDATE with Gingrich comments today. Picks up 4th
graf, Irate Democrats
Prenoon lead planned
By CHRISTOPHER CONNELL= Associated Press Writer=
ATLANTA (AP) House Speaker Newt Gingrich today launched a Republican
crusade to convince Americans that the GOP can fix Medicare without the harsh
cutbacks that Democrats claim are inevitable.
Gingrich said the Republican plan will simply limit the rate of growth'
and that actually, ever year Medicare (spending) will go up. He also
defended the plan against criticism it lacks specifics, saying on Sunday that
a stealth plan beats no plan.
Gingrich, R-Ga., Sen. Paul Coverdell, R-Ga., and other Republican
lawmakers, including Rep. Nathan Deal of Georgia, a recent Republican
convert, were leading a public meeting here today on the theme of avoiding
bankruptcy in the Medicare program.
No Democrat accepted the Congressional Institute's invitation to share the
stage with Gingrich and the other Republicans, who will be holding dozens of
town meetings across the country this month to sell the public on the
necessity of their plan to squeeze $270 billion from projected Medicare
spending over seven years.
Gingrich, appearing on NBC's Today' show, said today that the Clinton
administration's own Medicare trustees have concluded the program starts to
go broke next year and is bankrupt in seven years. What we want to do is limit
the rate of growth.
He dismissed criticism that the plan could cost seniors an addition $1,000
a year, calling that a scare tactic from our political opponents. He
acknowledged, however, that senior citizens already expect à traditional
pattern of slight increases each year
to
fit
the
inflation
rate.
Irate Democrats are mounting their own forums and launching petition
drives to avoid what Rep. Sander Levin, D-Mich. claims is the Medicare
Pearl Harbor'' looming when Congress returns from its August recess.
Addressing charges that the GOP was concocting a stealth' plan that
will mean higher costs for seniors and less freedom to choose their doctors,
Gingrich said Sunday he expects to unveil his plan by the first or second week
of September, giving lawmakers several weeks to scrutinize it before any final
vote.
Gingrich, on CNN's Late Edition, said, A stealth plan beat no
plan at all. They don't seem to have any plan'' for avoiding bankruptcy in
Medicare's hospital fund by 2002.
Gingrich and House Majority Leader Dick Armey, R-Texas, sent their troops
home for the August recess with slide shows and thick packets explaining
options the GOP is considering to revamp Medicare, the $178 billion health
program for 33 million senior citizens and 4 million disabled workers.
Gingrich repeated his promise that if senior citizens like Medicare the
way it is, they can keep their current fee-for-service coverage, which allows
them to go to any doctor they wish.
We're saying that those senior citizens who want to can stay in the
current program, said Gingrich. Their copayments and deductibles are likely
to go up at about the same rate'' they have over the last eight years.
Seniors now must pay $716 for the first day in the hospital, a $100 annual
deductible for doctors' bills and 20 percent copayments, and $46 a month
premiums for their Part B coverage.
An options paper leaked from the House Ways and Means Committee
a month ago spoke of sharply increasing the deductible and making the elderly
pay as much as 25 percent of doctors' bills if they refused to switch to
managed care.
Managed care got a bad name in last year's debate over President Clinton's
doomed universal health insurance plan, and Gingrich now likes to talk about
coordinated care options.
It is a catchall phrase covering health maintenance organizations,
point-of-service plans and other plans that try to manage all of a person's
health care needs for a fixed price usually with some restriction on the
patient's use of specialists or doctors outside the plan's network.
Other options, according to Gingrich, include allowing senior citizens to
stay in the group plan they were in before turning 65, or letting them open
medical savings accounts to pay their own bills, usually in conjunction with a
high-deductible, catastrophic policy.
We want senior citizens to have the right to choose, Gingrich said.
But Democrats warn that Republicans may try to convert Medicare from a
defined benefit program where everyone 65 and older gets the same package of
benefits, regardless of health or wealth to a voucher or defined contribution
plan, where the government would pay a certain sum each year, and no more.
Gingrich says the GOP belt-tightening moves will allow Medicare spending
per beneficiary to grow from $4,800 now to $6,700 by 2002. That assumes the.
program will grow at just 6.4 percent a year instead of the current 10 percent
rate.
Democrats warn that $6,700 may not be enough in seven years, with
inflation and increased demand for services.
THE WALL STREET JOURNAL FRIDAY, JULY 28, 1995
HMOs to Get Big Medicare Rate Increase
By GEORGE ANDERS
helped send HMO stocks higher yesterday
little bureaucratic snafu." She said there
and Wednesday. Among the biggest
wasn't any connection between the delay
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON-Seems like everybody
gainers was PacifiCare Health Systems
in releasing the report and political argu-
Corp., which operates the largest Medicare
ments about the fate of Medicare.
is trying to slash health-care costs except
HMO. Its Class B shares climbed 5.7%
the U.S. government.
HCFA officials noted that county-by-
The government's Medicare program is
during the two-day span, finishing yester-
county rates for Medicare HMOs won't be
getting ready to boost what it pays HMOs
day at $60.25 a share on the Nasdaq Stock
released until September, and that those
Market.
to care for the elderly by at least 7%, three
rates may vary from the national average.
times what HMOs are getting from private
Officials of the Health Care Financing
They also said that further data on Medi-
industry. The 7% figure comes from people
Administration, which runs the Medicare
care costs this year may cause the HMO
familiar with a closely watched federal
health program for the elderly, declined to
reimbursement date to be adjusted
formula due to be released today.
say exactly how much HMO rates will rise.
slightly.
Rumors about the pending increase
But one HCFA executive said Wall Street
Margo Vignola, an HMO analyst at
estimates of a 7% to 10% increase were
Merrill Lynch & Co., said investors may be
"well-informed speculation.'
McDermott Blasts GOP
reacting too fast to Medicare-rate news.
A 7% increase would be the biggest
"There's a formula, and then there's poli-
After Gingrich's Testimony
Medicare boost in three years for HMOs,
tics," she said. She contended that Medi-
and would come even as HMOs face consid-
care HMO rates might rise as little as 3% in
By a WALL STREET JOURNAL Staff Reporter
WASHINGTON - After listening to
erable price pressure in their main, under-
major markets next year, once various
Speaker Newt Gingrich testify yester-
age-65 markets. Many big corporations
adjustments have been made. She also
day, the House Ethics Committee's top
negotiated price cuts this year from HMOs.
argued that the federal government may
Democrat said the panel was vulnerable
For the coming year, HMO executives are
want to see HMOs SO deeply involved in
to charges of a coverup because Republi-
predicting average rate increases as low as
Medicare that even if subsequent rate
cans have resisted appointing a special
2%.
increases become much stingier the health
counsel to probe complaints against the
The government's hefty increase is
plans would have to keep providing cover-
House speaker.
likely to be seized on by critics of the
age in years ahead.
Washington Rep. Jim McDermott's
current Medicare system. "I think it's
For now, though, the Medicare-rate
blistering criticism of the panel's work
going to be awfully tough for the Clinton
news "has a serious impact on the stocks,"
added to partisan tensions, and
administration to come out and protect the
said Eleanor Kearns, a Boston-based ana-
prompted a curt reply from Ethics Chair-
status quo when these rates are going up,
lyst with Alex. Brown & Sons. "They've
woman Nancy Johnson (R., Conn.) 'We
while in the commercial HMO market
been up all week on anticipation of a
are doing the work that needs to be done
you're seeing some rates actually going
good number."
SO we can make the judgment that needs
down," said Ken Laudan, an analyst at
to be made."
Montgomery Securities, San Francisco.
Democrats allege Mr. Gingrich vio-
HMOs currently cover only about 10% of
lated ethics rules and tax laws with his
the 33 million Medicare recipients who are
multimillion dollar fund-raising opera-
age 65 or over. But many big HMOs are
tions. Critics also claim that his book deal
aggressively seeking to expand in that
with media baron Rupert Murdoch's pub-
market. Meanwhile, Republicans in Con-
lishing house, HarperCollins Publishing,
gress are looking seriously at ways to
Workers' Weekly Wages
constitutes a major conflict of interest.
increase HMOs' appeal to older Ameri-
cans, as part of an effort to get Medicare
Rose to $475 in Quarter
Mr. Murdoch has big stakes in matters
pending before Congress, and Mr. Gin-
costs under control.
By a WALL STREET JOURNAL Staff Reporter
HCFA had been scheduled to release
WASHINGTON - The weekly earn-
grich stands to earn upwards of $2 million
the Medicare HMO rates this Tuesday.
ings of the median full-time American
from his bestseller, "To Renew
America.'
Kathy Buto, HCFA's associate admin-
worker was $475 in the second quarter, up
istrator for policy, blamed the delay on "a
2.2% from the same period of 1994, the
Bureau of Labor Statistics said. The gain
wasn't enough to compensate for the 3.1%
increase in consumer prices.
Kodak Seeks U.S. Help
White House Sees Deficit
The data were collected as part of the
government's Current Population Sur-
To Crack Japan Market
For Year at $160 Billion
vey, which asks a sample of the nation's
89.5 million full-time workers what their
By a WALL STREET JOURNAL Staff Reporter
By a WALL STREET JOURNAL Staff Reporter
"usual wage" is.
ROCHESTER, N.Y. Eastman Kodak
WASHINGTON - The White House
The new data also illustrate the gap
Co. filed a request for remedies with the
budget office now projects that the fed-
between wages of educated workers and
U.S. Trade Representative outlining ac-
eral deficit for the current fiscal year will
those without degrees. Among full-time
tions it wants the government of Japan to
be around $160 billion, about $30 billion
workers 25 years old or older, the median
take to "ensure open access to these mar-
smaller than the administration pro-
wages for those without a high school
kets."
jected in February.
diploma was $309 a week in the quarter.
In May, Kodak filed a petition alleg-
If the projection proves correct, the
High school graduates without any col-
ing the Japanese photographic, mar-
deficit for the fiscal year that ends Sept.
lege earned $428 a week; those with some
ket is unfairly controlled by its main
30 will be the smallest since 1989 and will
college earned $593 a week. And the
competitor, Tokyo-based Fuji Photo Film
have declined for the third year in a row.
median wage among the 29% of work
Co. Fuji, which has denied Kodak's
The deficit last year was $203.2 billion.
force with college degrees was $757 a
charges, is expected to give a detailed
The improved deficit outlook is to be
week.
response to the allegations Monday.
released today with the administration's
Only 10% of all workers over age 25
In its request yesterday, Kodak said
midyear update of its budget and eco-
it wants the Japanese government to
earn more than $1,078 a week, the survey
nomic forecasts.
found.
direct Fuji to: end "activities that pro-
The deficit is less than the $192.5
Median earnings for black men work-
mote price fixing"; terminate exclu-
billion projected by the White House
ing full-time were $407, 72.4% of the $562
sive distribution agreements with its
budget office in February for several
median for white men. The racial differ-
wholesalers: end rebates that exclude
reasons. Among them: Revenues are
ences were much narrower for women.
competitors and induce-resale price
larger than anticipated, interest rates
Black women earned $354, 85.9% of the
maintenance: and end its monopoly pric-
are lower and spending on certain gov-
S412 median reported by white women.
ing.
ernment-benefit programs outside of
White House officials said they are
health care is rising less rapidly than
impressed with Kodak's case and are
projected.
expected to begin interagency discus-
The new estimates include the effects
sions in the next few weeks.
of the reductions in current-year appro-
priations recently agreed upon by the
Congress and President Clinton.
THE WALL STREET JOURNAL FRIDAY, JULY 28, 1995
GOP's Block-Grant Plan for Food Stamps Fades
By CHRISTOPHER GEORGES
grant for food stamps, conceded yesterday
Republicans.
Staff Reporter of THE WALL STREET JOURNAL
in an interview that "if we put a food-
While details of the Dole-Packwood bill
WASHINGTON - Senate Republicans,
stamps block grant in the [welfare] bill,
have yet to be finalized, congressional
working on a revised GOP welfare bill,
the vote to take it out will succeed. The
aides say it is likely to include block
have decided against turning the federal
Oregon Republican is drafting the revised
grants of several welfare programs, in-
food-stamp program into a block grant for
welfare bill along with Senate Majority
cluding the main child-support program,
states.
Leader Robert Dole of Kansas.
Aid to Families with Dependent Children.
Lawmakers have also agreed to bolster
The food-stamps provision is one ele-
But high-growth states in this program
welfare funding for high-growth states.
ment of a sweeping welfare-overhaul bill
would be allowed to draw on a special $863
The food-stamp proposal will likely call
expected to be debated on the Senate floor
million pool over five years. The added
for a sharp reduction in spending on the
starting next Friday. While the House
pool of money was offered as a concession
nutrition program,
passed a welfare-overhaul bill earlier this
to senators from states such as Florida and
about $16 billion
year, the welfare debate in the Senate has
Texas, who threatened to withhold support
less in outlays over
developed into a protracted battle between
from the final bill unless it adequately
the next five years
Republican moderates and conservatives.
accounted for their anticipated increase in
than currently pro-
The Senate Finance Committee ap-
population of poor people.
jected, by limiting
proved a welfare bill earlier this year, but
Other block grants would include child
the benefits avail-
conservative senators balked, in part be-
care, public housing and job training
able. But it will re-
cause it didn't go far enough to restrict
States are expected to be given broad
main an entitle-
payment of benefits to some current
authority to spend the money on welfare
ment program, al-
beneficiaries, such as unwed mothers un-
programs as they saw fit, but would be
lowing benefits to
der 18 and mothers on welfare who give
required to limit the amount of time recipi-
anyone who meets
birth to additional children. The opposition
ents could stay on welfare and would have
the program's qual-
has prompted Sen. Dole, a presidential
to require most beneficiaries to work.
ifications.
candidate, and Sen. Packwood to attempt
In an apparent attempt to appease
A previously dis-
Sen. Bob Packwood
to rework the bill to accommodate conser-
moderates and conservatives, the bill is
cussed option would
vatives-led by Sen. Phil Gramm of Texas,
expected to require some restrictions on
have made food stamps a block grant: the
another presidential candidate - while
unwed teenage mothers on welfare, for
federal government would have given each
keeping moderate Republicans on board.
example requiring them to live at home
state a pre-set amount to run the program.
Last week, Sen. Gramm unveiled his
and attend school to qualify for benefits.
If the money ran out during the year, no
own welfare-overhaul plan. While chances
The measure is also expected to give states
further federal funding would be forthcom-
appear slim for Senate passage of Sen.
an option to deny cash benefits to mothers
ing.
Gramm's proposal, it has drawn enough
on welfare who have additional children. A
Senate Finance Committee Chairman
support to provoke Sens. Dole and Pack-
number of other key issues, however,
Bob Packwood, who has supported a block
wood to offer concessions to conservative
remain unresolved.
House GOP Wins Bid to Put Waivers in EPA Bill
By DAVID ROGERS
deficit-reduction targets next year, and the
the Rules Committee who are closely iden-
Staff Reporter of THE WALL STREET JOURNAL
money will help pay for costs arising
tified with these issues.
WASHINGTON - Republicans, in a
from natural disasters as well as the
"I dare you to vote against this rule,"
show of political muscle, won House ap-
Oklahoma City bombing.
said Rules Committee Chairman Gerald
proval of a resolution enabling the GOP to
House and Senate negotiators agreed
Solomon, who painted the vote as a test of
wrap regulatory waivers for favored indus-
to terminate Congress's Office of Technol-
support for veterans funding. But the New
tries into a bill funding the Environmental
ogy Assessment as part of the Capitol's
York Republican had a stake as well in
Protection Agency.
budget.
provisions accompanying the bill that
The 230-189, near-party-line vote was
The Senate appropriations panel voted
would help paper mills in his district in
the opening shot in.what promises to be a
to terminate funding for the near decade-
dealings with the EPA.
two-day debate on a $79.4 billion spending
old White House "drug czar" office. The
bill that would take deep cuts from the EPA
$9.9 million cut dovetails with plans to shift
and housing programs for the new fiscal
another $147 million in antidrug programs
year beginning Oct. 1.
to the Treasury Department.
Oil refiners and cement and paper
The same committée granted a tempo-
companies are among those with a stake in
rary reprieve to a costly gas-turbine reac-
legislative riders attached to the pending
tor project that the Energy Department
bill. And in this season of budget cuts,
and the House have proposed to terminate.
Republicans have turned exemptions from
By a 15-8 vote, the panel called instead
federal rules into a new brand of pork-bar-
for an independent scientific assessment
rel politics, helping industry allies and
first. The sudden reversal reflects strong
solidifying business contributions to the
corporate lobbying and was a victory for
GOP.
the chief contractor, General Atomic Co.
Senate Appropriations Committee
The $79.4 billion bill before the House
Chairman Mark Hatfield yesterday spoke
now is the first - and more complex - of
out against the practice, urging his own
two massive domestic spending measures
panel to "clean up" the spending bills as
Republicans intend to pass before the
they come across the Capitol. But within
August recess. Apart from housing and
the House, yesterday's vote demonstrated
environmental programs, the bill also
the power of the new leadership and will
funds veterans, space and science agen-
shield the riders from parliamentary at-
cies. The mix of forces made it harder for
tack in the chamber.
Democrats to maintain unity as they tried
To solidify support, Republicans first
to shift funds between accounts.
had to make concessions to appease mod-
As part of the compromise with GOP
erates and senior members of the House
moderates. the House agreed to switch at
Rules Committee. But the victory set the
least $600 million back into assorted hous-
tone for subsequent votes into last night as
ing programs, primarily those targeted to
Democrats struggled vainly to restore
the elderly, homeless and AIDS patients.
funds to housing and environmental pro-
But the spending priorities mostly reflect
grams.
the influence of core conservatives who put
In related developments:
greatest emphasis on space and veterans
President Clinton signed a landmark
programs.
spending-cut bill that cancels $16.3 billion
The appropriations panel earlier had
from prior appropriations approved by
spoken holdly of challenging the veterans
past Democratic Congresses for the cur-
lobby. But in yesterday's procedural fight,
rent and earlier fiscal years. The savings
the GOP sought to harness the veterans'
give Congress a leg up toward meeting
cause and relied on two senior members of
Date: 07/28/95 Time: 20:34
G-O-P, White House Trade Charges On Medicare
(Washington) - - The battle over Medicare reform is heating up.
Republican lawmakers today drove an ambulance with a 'Rescue
Medicare'' sign up to the Capitol, accusing Democrats of standing
by idly while the health program for the elderly goes broke.
The White House launched its own salvo. A spokesman for
President Clinton accused the Republican National Committee of
making ''outrageous and dishonest claims'' in an ad about Medicare.
The ad promised Republicans 'won't let Medicare go bankrupt.
The White House also unleashed a volley of press releases
estimating how much seniors and the poor stand to lose in each
state from the Republican plan to find (B) billions of dollars in
savings in Medicare and Medicaid. The estimates ranged from a high
of 44 -hundred dollars per person in Florida to a low of 800 dollars
in Wyoming.
APNP-07-28-95 2041EDT
07/27/95 09:30
94562878
NO. 886 P002
AP G0387 rw pol-- GOP-Medicare,380
07-27 7:30a
GOP Ads Says Clinton Ignoring Medicare Financial Crisis
By JOHN KING
AP Political Writer
WASHINGTON (AP) - Returning the White House's fire in the Medicare debate, the Republican
Party says in a new newspaper advertisement that President Clinton "knows Medicare is dying"
yet refuses to offer a plan to bolster the program's finances.
"Too Young To Die," is the headline over the ad, which is scheduled to run Friday in USA
Today at a cost of $69,000 to the Republican National Committee.
The text of the ad recounts the Republican argument in the debate with Clinton and his fellow
Democrats over Medicare. As the program celebrated its 30th birthday this week, Clinton and allies
criticized Republican plans to find roughly $270 billion in Medicare savings over seven years as part
of their plans to balance the federal budget. Clinton favors a smaller reduction in Medicare spending,
about $124 billion over 10 years.
To counter Clinton's arguments that the Republicans Medicare savings would help pay for tax
cuts, the GOP ad reminds readers that the Medicare trustees - including several Clinton appointees -
have warned that the program will go bankrupt in seven years without a financial fix.
"Republicans think Medicare is too young to die," the ad text reads. We won't let Medicare go
bankrupt. And we won't let seniors go bankrupt paying for health care. That's why Republicans are
saving Medicare."
In an interview, GOP Chairman Haley Barbour said the ad was part of the party's overall
communications strategy stressing that even with $270 billion in savings, the Republican budgets call
for Medicare spending to increase over the next seven years.
"If people know that Medicare will be bankrupt in seven years and it is the Clinton
administration, not Republicans, that says so, then people think it would be irresponsible not to do
what is necessary to prevent Medicare's collapse," Barbour said.
He said Clinton had demonstrated the "height of hypocrisy" this week in leading a celebration of
Medicare's 30th anniversary but making no mention of the financial crisis. "So far Clinton just seems
content to let Medicare go under," Barbour said.
The White House, however, has said it soon will be more specific about how it would address the
problem and has held back because it wanted Republicans to answer for reductions the administration
considers too steep.
Gingrich uses Iowa trip
07/25/95
to push Medicare plans
14:43
GOP leader
"Cheap Shot"
During stops in Des Moines and-
7/25/95 DMR
challenges
Waterloo, Gingrich said it was a
"cheap shot" for Clinton to suggest
that he is not serious about cam
president
paign finance reform. Gingrich said
Congress would get to that refurm
later.
Medicare is forecast to run out of
The House speaker wants
money In seven years, and Gingrich
used his trip to lowa, a state with
a commission to come up
one of the highest elderly popula
tions In the country, to blast Clinton
with alternatives to the
on the issue.
current system.
Democrats have criticized Repub-
licans for wanting to cut the govern-
By DAVID YEPSEN
ment-sponsored health care program
for seniors But there is a clear edu-
WHITER
cational misfunction among liber.
94562878
House Speaker Newt Gingrich said
als," Gingrich said. "We take a Medi-
Monday that senior citizens should
care program which this year is at
noe worry about Republican plans to
$4,800 per senior citizen. Over the
revamp Medicare, and he challenged
course of a'seven-year budget proj-
President Clinton to offer a plan to
ect to HCL to a balanced budget, we
reform the system.
move that program to $6,700.
The Georgia Republican, in lowa
Virtually all of you have figured out
to raise campaign money for Repub-
by now this is a $1,900 Increase
lican U.S. Reps. Greg Ganake and Jim
"What's the guiling part of this?
Nussle, also said he'll start thinking
This la an increase," he said
about a presidential bid in mid-
Gingrich said the White House
November.
GINGRICH Please turn w Page 4A
NO.836
P002/006
THE REGISTER
Gingrich pushes
GINGRICH QUOTES
HERE ARE
SAMPLES of
remarks House
Medicare plans
Speaker Newt
Gingrich made
during his visit
to lows on
GINGRICH
trying to turn the tables on Clinton,
Monday.
who used his weekly radio address
Life, liberty and
Continued from Page 1A
Saturday to demand that Gingrich
the pursuit of
produce a campaign finance reform
happiness. Notice:
plans 8 celebration this year to mark
Pursuit of
plan.
Medicare's 30th anniversary.
The two men shook hands in New
happiness. Not
"The president's own trustees re-
happiness stamps,
Hampshire on 8 promise to reform
not happiness
ported about 10 weeks ago that
campaign financing, Clinton noted,
entitlement, not
Medicare starts to run out of money
but nothing's happened since then.
guarantee of happiness.
next year and goes broke in about
seven years. We have waited for
"I think the people of this country
not equal happiness.
want us to move forward with polici-
YOU can't pursue
about 10 weeks for the president to
cal reform," Clinton said. "He have
happiness if you don't have
come up with a proposal to save
the habit of work.
an obligation to get this done and not
"
Medicare." he said.
"I want to challenge him and say:
walk away. If we're going to restore
Yes. we'll give you 28 weeks (af
It's not enoligh just to celebrate the
a spirit of civility to American poli-
unemployment compansation) if
ties, a handshake has to mean in
last 30 years. You have to help the
you are unemployed. We're not
1995 what it meant when I was
going 10 give you 26 weeks for
country to understand what's to
growing up we have to be as good
deer hunting and bass fishing.
happen in the next 30 years. How
"
as our word."
are we going to save it? What are we
going to do to make sure it's still
Gingrich called that a cheap shot
"
Just because I believe every
student st every age level should
there? And how are we doing to do it
"I was about as offended by his com-
do at least two hours of homework
in a way that keeps every person in
ments Saturday as I've ever been.
every night, I don't then say we
this room from going broke?" Ging-
They were totally uncalled for
need 8 federal department of
rich asked.
He attacked me by name on the radio
homework checkers.
"
Gingrich said he wanted to ap-
program."
point a commission to study alterna-
Congress is working on passing a
"
We need to say to anybody who
tives. such as creation of a "medical
budget before the start of the fiscal
brings in a commercial quantity of
savings account" that would enable
year and is trying to help the presi-
drugs: You are doing that to get
dent on Bosnia. Gingrich said, but
rich by addicting and killing our
Americans to set aside pre-tax in-
Clinton's remarks don't help those
children. If you do that, we will kill
come for health care. The accounts
would make Americans better con-
efforts.
you."
sumers of medical care because they
While Gingrich was holding the
Every time we say to a poor child
could keep what they don't spend.
door open to a presidential bid, he
'You don't need to learn English.'
Gingrich also said he liked the idea
did not sound like a man preparing
we are increasing the likellhood
of vouchers consumers could use to
to walk through it
they stay poor.
"
shop for health care, and the idea of
"We will assess all that in mid-
allowing workers to remain in their
The slogan of the state of New
November," he said, when he would
Hampshire is Live Free or Die. It is
employers' group health plans after
-
they retire.
ask himself, "Is there a big enough
not Live Free or Whine
desire for another candidate at that
155 very hard to be a passive
Republican leaders are jittery
point? Is it something I need to do be
American. It's not now our society
about the issue because the party
cause frankly being speaker of the
works.
has lost elections to Democrats over
House is a very big job and at the
senior citizens' benefits.
present time we're having a lot of
"In our plan. we keep the current
fun, getting a lot of things done and
rich speak at a breakfast fund-raiser.
structure for anybody who wants to
having a reasonable impact as
for Ganske at the Des Moines
stay in iL" Gingrich stressed. "If you
speaker. so I'm not sure we need to
Marriott Hotel. About 600 attended
are 85 or 95 years old, your govern-
doit
his luncheon appearance on behalf
ment probably shouldn't harass you.
"If the race is fairly locked up by
of Nussle at the Five Sullivan
It shouldn't come to you and say
mid-November, the easy thing is to
Brothers Convention Center in Wa
we're going to compel you to change,
relax. be speaker of the House and
terioo.
we're going to force you out of a sys-
do what we are doing, which is
tem you are used to.
frankly an awful lot of work," he
THIS STORY includes reports from
By demanding a Medicare plan
said.
Jack Housleon in The Register's Water
from the president, Gingrich was
About 1,000 people heard Ging-
loo Bureau.
NO.836 P003/006
94566289
07/25/95 14:43
Speaker de er ds farr 1 prograr 1
as necessary for food security'
7/25/95 DMR
other activity which we engage in
continuation of farm income and
'Every part of the world I
is an unpredictable and uncertain oc-
price support programs "because
07/25/95 14:43
know of has tremendous
cupation, that has challenges of
family farmers are good for society
weather and world markets, vaga-
but they can't stand the bad
government involvement' in
ries which are different from a lot of
years" resulting from market and
agriculture, he says
industries
weather disruptions. Clinton said his
Gingrich discussed agrícultural
chief aim in farm policy changes was
By GEORGE ANTHAN
and rural issues during a meeting
to "do no harm."
with Des Moines Register reporters
Or THE RECISTER'S WASHINGTON BUREAU
The House speaker, who emerged
and editors. He said critics of agricul-
from last fall's election as the most
tural programs are mainly, "urban
charismatic - and perhaps most in-
House Speaker Newt Gingrich on
politicians" whose opposition is
fluential - Republican leader in
Monday defended federal farm sub-
based both on left-wing and right-
Washington, called farm programs
sidies, saying il would be a mistake
wing Ideology.
essential "for our food security" and
to wipe out farm programs in the
Gingrich appeared to generally -
"for a counterbalance against efforts
face of subsidized competition from
agree with President Clinton on farm
like the European Common Market
abroad.
policy, even though he criticized the
to massively subsidize French and
The Republican leader supported
president last year as being "anti-
German farmers.
farm-state legislators' plans for a
agriculture."
"Every part of the world I know. of
new farm bill this year and said agri-
During'a visit to The Register in
culture "far more than virtually any
April, Clinton also strongly endorsed
RURAL Please lurn to Page 4A
94562878
NO.836 P004/006
- THE Drs MOINER REGISTER TI:
House
speaker
supports
Roberts contends Republicans
jcopardize their majority status by
discounting the farm vote. Almost
subsidies
half the 73 GOP freshmen elected
last fall are from farm districts, Rob-
erts said, and the overall rural vote
is broad and still based partly on
RURAL
farm issues.
Five-Year Plan
Continued from Page 1A
Gingrich said the Republican-
has tremendous government in-
controlled House and Senate have
volvement," he added.
approved & five-year budget plan
If the U.S. "were to unilaterally
which "does not in any way end
drop all the programs, that would
(farm) programs. It has a substantial
put American farmers at the risk of
amount of money for all those pro-
having to take on the European Com-
grams."
mon Market without having any
A House-Senate budget agreement
government involvement," he said.
calls for reductions in farm pro-
"You clearly would drive down
grams by a total of $8.5 billion over
American farm income in 1 way
the next five years, with about
which would not only be unfair to
$1 billion to be cut in 1996. In recent
farmers but make no sense in the
years, farm programs have cost from
long run," Gingrich added.
about $7 billion to $15 billion a year.
Gingrich bridled when asked
If Congress backs an effort by
whether his chief adviser on farm
lowa's Grassley, the farm CUES would
policy issues would be Majority
total no more than about $6 billion
Leader Richard Armey of Texas, a
over five years. Clinton has called
leading critic, or Agriculture Com-
for $4.2 billion less for agriculture in
milloe Chairman Pat Roberts of Kan-
the 1996-2000 period.
sas, 2 farm program booster.
Farm program critics also include
Gingrich also stressed that Repub-
Democrats Charles Schumer of New
lican efforts to balance the federal
York and Barney Frank of Massa-
budget would reduce interest rates
chusetts, Gingrich said, and Republi-
by up to two points and save state
cans are best represented on the is-
and local governments, consumers
sue by lows Reps. Tom Latham, Greg
and farmers large amounts of money
Ganske, Jim Ross Lightfoot, Jim
and result in "an enormous infusion
Leach and Jim Nussle, and by Sen.
of capital back into society,"
Charles Grassley.
He also said that despite some cuts
Gingrich also emphasized the clout
in rural development efforts, emerg-
Sen. Bob Dole, R.Kan, has on farm
ing electronic networks would revi-
issues. "I somehow doubt that in a
talize small towns and cities.
year in which Dole is the majority
leader of the Senate and front runner
for (the GOP nomination for) presi-
dent
that we are somehow going
to do something which is radically
disadvantageous to lows farming."
Al the same time. Gingrich did
state that since Armey is "the chief
operating officer of the House, one
always has to pay a fair amount of
attention to him."
NO.836 P005/006
94562878
14:44
OMAHA WORLD-HERALD Tuesday, July 25, 1995
07/25/95
14:44
Gingrich Draws Iowa Crowd
Des Moines (AP) - They don't think
House Speaker Newt Gingrich will run
for president - this time - but Sows
GOP activists were quick to pay anyway
anske
for a glimpse of the Georgia Republican
About 1,000 turned out Monday for &
$100-a-plate breakfast to hear the speak-
or challenge President Clinton to come
up with o plan to fix Medicare.
Skirting his trip's political overtones,
nn
ress
Gingrich said the visit to towa was to
counter Cliston, who this work will be
observing the 30th anniversary of the
signing of Medicare with events around
the Dountry.
"I wanted to come to Des Moines
today, quite frankly, to challenge the
president," Gingrich said al the fund-
raising event for lowa Rep. Greg
Ganska "We don't have any evidence
THE ASSOCIATED PRESS
94562878
that the president has any plan M all
BREAKFAST BUDDIES: Ierve Gov. Beansted, left, and House Speaker Newt
other than to attack us and wait for in to
Gingrich appear at a Des Moines fund-raiser Menday for Rep. Greg Ganake.
fobroke.
"Tell us what you would da 10 is not
After causing a political stir with a
not this time, then in four years.
enough to just attack Republicans,"
visit to New Hampshire, home of the
lowa Republican Chairman Brian
Gingrich said.
nation's first primary, Gingrich was set
Kennody said be doesn't view Gingrich
Organizers of Cingrich's sour say not
for a daylong swing across lowa The
as B potential candidate in the 1996
being a candidate gives thim unique
state product cancuses in February begin
election but as a "visionary with an
appeal
the process that will produce a Republi-
agenda."
"News's a funge draw. the bottest
can nominee to oppose President Clip-
political property right now in the Ro-
ton.
Organizens said interest was high and
publican Party,' said Keith Fortman,
The public cover for Giagrich's trip is
rooms would be packed for Gingrich's
who is organizing some of the events.
visit.
to raise money for two congressmen, but
"No dight to the presidential candidates,
most of the spocalation is about the
Prices for the events range up to
but chey' re coming in all the time."
Georgia Republican's ambitions - if
$1,000.
NO.836 P006/006
EXECUTIVE OFFICE OF THE PRESIDENT
24-Jul-1995 04:54pm
TO:
(See Below)
FROM:
Jason S. Goldberg
Office of Cabinet Affairs
SUBJECT: Clinton Vows to 'Act Alone' With Veto To Stop GOP Budget Cuts
Date: 07/24/95 Time: 16:28
Clinton Vows to 'Act Alone' With Veto To Stop GOP Budget Cuts
WASHINGTON (AP) Trying to get off the sidelines, President
Clinton threatened a veto blitz Monday against GOP cuts in popular
domestic programs. ``I will continue to act, alone if necessary,'
he declared.
Clinton castigated Republicans for not taking his 10-year budget
balancing plan more seriously. And he said appropriations bills now
moving through the GOP-led Congress would unravel bedrock
education, health and environmental programs.
'`There are a lot of things being done here which will violate
and undermine our chances to achieve common ground, Clinton said.
He used a White House speech to delegates from Boys Nations a
high school good-government program in which he once participated
to wield his latest veto threats.
``The haste of their schedule and the scope of their tax cuts
are luxuries, and this is not a time for luxuries,' Clinton said
of GOP plans to eliminate the deficit in seven years while offering
a $250 billion tax cut.
The president said he didn't want to create a fiscal crisis this
fall. But he suggested Republicans might give him little choice but
to veto fiscal 1996 appropriations bills.
Republicans scoffed at Clinton's latest ultimatum.
'`Instead of all this rhetoric and all these veto threats, Bill
Clinton ought to sit down and propose a budget that really does
eliminate the deficit,' said Republican Party chairman Haley
Barbour.
`Clinton doesn't have a 10-year plan to balance the budget.
Republicans cannot compromise with a phantom plan,' Barbour said.
It was a reference to a Congressional Budget Office analysis
that suggested Clinton's plan would result in a $209 billion
deficit in the 10th year.
The administration has rejected the CBO conclusions as
misleading and inaccurate, despite Clinton's 1993 claim that CBO
figures would henceforth be used by the administration.
White House officials billed Monday's speech as the beginning of
a concerted two-week effort by Clinton to raise his profile in the
budget debate and to get off the sidelines.
The GOP-controlled Congress ignored his June appeal for a
10-year plan and has been marching ahead with a series of 1996
spending bills to reach its own seven-year goal.
Clinton said the Republican juggernaut is threatening government
programs some decades old that have long enjoyed bipartisan
support.
Specifically, he cited proposed GOP cuts in the student loan and
other educational programs, in Medicare, Head Start, job training
and in the Clean Air Act.
' ' I invite senators and members of Congress from both parties to
join me in balancing the budget while protecting our common
ground, he said. ``I will work hard to get their support. But if
they refuse, I must continue to act, alone if necessary.
White House Chief of Staff Leon Panetta has said that none of
the appropriations bills before Congress are acceptable to Clinton
in their present form.
Failure of 13 appropriations bills to be signed by Oct. 1 could
result in a shutdown of government agencies and services. This
happened several times during the Bush and Reagan administrations
in clashes with Congress, but not Clinton's presidency.
Presidential spokesman Mike McCurry said the administration does
not want to ''go though this silly game in which we shut down the
federal government.'
But there also seemed little prospect this late in the budget
cycle that GOP leaders would take Clinton up on his invitation to
join him in a 10-year plan that makes smaller domestic cuts.
So far, Clinton has only vetoed one bill, cutting $16.5 billion
from current spending. Congress did not attempt to override the
veto but reached an agreement with the White House on a new $16.3
billion version Clinton is expected to sign Thursday.
Clinton told his youthful audience, dressed in red and black
Boys Nation shirts, he had been a Boys Nation delegate to the White
House on July 24, 1983, and had met President John F. Kennedy.
``I would never have made it here, and gone from that day to
this one, without the benefit of the shared beliefs and convictions
and opportunities that made up the America of my youth
These opportunities are threatened by the GOP budget plans, he
said.
' 'We mustn't throw over, in a moment of partisan zeal, the
common sense and bipartisan conclusions of our fathers and
mothers, he said.
APNP-07-24-95 1634EDT
Distribution:
TO: [email protected]@INET
TO: John C. Angell
TO: Jeremy D. Benami
TO: Erskine Bowles
TO: Emily Bromberg
EXECUTIVE OFFICE OF THE PRESIDENT
24-Jul-1995 04:51pm
TO:
(See Below)
FROM:
Jason S. Goldberg
Office of Cabinet Affairs
SUBJECT: DEMOCRATS LAUNCH SERIES OF ATTACKS ON GOP MEDICARE PLANS
Date: 07/24/95 Time: 16:42
Democrats Launch Series of Attacks on GOP Medicare Plans
WASHINGTON (AP) In a campaign timed for Medicare's 30th
anniversary, Democrats launched a weeklong attack Monday on
Republican plans to save $270 billion from the health care program
for the elderly.
'`The Republican cuts would cause $1,000 additional cost to the
average senior citizens and their family,'' House Democratic leader
Dick Gephardt of Missouri said at a news conference with Senate
Democratic leader Tom Daschle of South Dakota.
'`They're doing it not to balance the budget, not even to fix
Medicare, but to give a tax break to people who don't need a tax
break, Gephardt said.
President Clinton takes up the attack on Tuesday at a Medicare
'`birthday celebration'' event on Capitol Hill. Gephardt, Health
Secretary Donna Shalala and other Democrats will attend a ceremony
marking the anniversary of Medicare on Saturday in Independence,
Mo., where President Lyndon Johnson signed the legislation creating
the program three decades ago.
The Democratic attacks drew a quick rebuttal from House Speaker
Newt Gingrich. `They plan a week of cheap shots and nostalgia,'
he said of Clinton and the Democrats. ''We're not cutting anything,
we're increasing.'
While no Medicare legislation is expected on the floor of the
House or Senate until September, the Democratic decision to seize
on the anniversary of the program reflects the political importance
of the issue in the 1996 elections.
Republicans are drafting legislation to save $270 billion from
Medicare by 2002 as part of their attempt to balance the budget a
blueprint that also envisions $245 billion in tax cuts. Pointing to
a report issued by Medicare's trustees, including members of the
administration, they intend to slow the project rate of growth, and
say savings are essential to preserve the program.
At the same time, Republicans identified Medicare months ago as
a potential political land mine for their efforts to balance the
budget in seven years. An estimated 37 million seniors are enrolled
in the program, and Gingrich, in Iowa, said during the day, ' ' I
think Medicare is the most difficult and delicate issue that we're
dealing with.
In an eight-page memorandum circulated last month to House
Republicans, pollster Frank Luntz outlined several tips for
maintaining the political high ground in a politically treacherous
debate. 'Republicans must be seen as the part of hope; the party
that took on the problems of Medicare head-on, he wrote.
For
our efforts to be successful, we have to make the status quo a
worse option than change.
For their part, Democrats have been cheered in recent weeks by
polls suggesting that GOP policies are losing support. Mark
Mellman, a Democratic pollster who has advised both Gephardt and
Daschle, said Republicans proceed at their own peril. While
people want to cut spending they are not willing to sacrifice
Medicare on the altar of deficit reduction, he said.
Clinton, countering the GOP balanced-budget plan, proposed $124
billion in savings over 10 years from Medicare, but said the money
would come from providers rather than beneficiaries.
Asked about the political stakes, Gephardt said: ``If they
(Republicans) do what they want to do or what they hope to do, I
think they' be in the minority for a long, long time.
The details of the Republican plan have yet to be thrashed out,
although they are expected to offer seniors several alternatives.
One would preserve the current fee-for-service program, although at
a higher cost; others would be designed to encourage seniors to
enroll in less costly programs, including HMOs or plans that couple
tax-deductible savings to be applied to routine health costs and
insurance for catastrophic coverage.
Whatever details finally emerge, Democrats aren't waiting.
``I don't think that there is an issue pending which
characterizes the philosophical difference between Democrats and
Republicans more ably than Medicare does, Daschle said at the
Democrats' news conference.
'`That was the case 30 years ago, when Democrats fought to
create Medicare and Republicans opposed it
The Democrats have scheduled a full week of commemorative
events, all designed to underscore their points.
Tuesday's schedule includes a presidential visit to Capitol Hill
and Democratic appearances on talk radio programs. On Wednesday,
Democrats intend to release a report that will predict devastating
impact on hospitals if Republicans pursue their plans.
The event Friday will be held at the Truman Library. Johnson
signed the measure their in a tribute former President Harry
Truman, who first proposed health care for the elderly.
APNP-07-24-95 1648EDT
Distribution:
TO: [email protected]@INET
TO: John C. Angell
TO: Jeremy D. Benami
congressional Memo
In Budget 5/30/95 Battle, a Side Skirmish Over Medicare
By ROBIN TONER
Medicare, the program for the eld-,
Behind all this advertising is a
WASHINGTON, May 28 - The
erly, in addition to $175 billion or
simple concept: Congress responds
attle of the budget is often pre-
more from Medicaid, which is for the
to public opinion. Move that, and you
ented as a highly stylized and
poor.
may move Congress, or at least the
tripted clash between two parties
Rick Wade, senior vice president
relevant members.
the floor of the House and Senate.
for the hospital association, replied:
The quick response of House Re-
ut away from the official show, as
"We're expressing a strong point of
publican leaders to blunt the hospi-
eal-life constituencies defend real-
view over a number. We think it's a
tals' campaign suggests that they
ie programs, the struggle is more
proper role for us to point out that we
are keenly aware of that truism as
ubtle, more sophisticated and
think the number is too big."
well. "In order to defeat this and
ometimes more like a political
From the beginning, the Medicare
future attacks on our proposal, each
ampaign than a legislative process.
proposal has been considered the
member office needs to be both pre
There is no better case study
most politically vulnerable part of
pared and proactive," the Republi-
nd perhaps no better indication of
the Republican plan. Party leaders
can response plan declares.
hat the next few months will bring
have tried hard to defend these huge
Hospital officials argued that they
than the confrontation between
cuts in projected spending as a
tried a more conciliatory approach,
ongressional Republicans and the
means of preserving the solvency of
accepting the political reality that
ospital industry.
the Medicare program, but many
some reductions would come in the
So far, this rift, which centers on
analysts say the reductions far ex-
Medicare program and offering to
e Republicans' proposal to extract
ceed what is necessary on that score.
work with Republicans on long-term
undreds of billions of dollars from
Tom Scully, a former Bush advis-
restructuring. "Our whole attitude
he Medicare program, has brought
er and president of the Federation of
in dealing with Republicans on this
wave of angry newspaper advertis-
American Health Systems, a trade
was we wanted to work with them
g from the American Hospital As-
group for about 1,400 hospitals, said
cooperatively," said Rick Pollack
ociation, warning, "Everyone will
it was "almost impossible to find a
the hospital association's executive
el the impact if community hospi-
serious health care or budget ana-
vice president for Federal relations.
als have to reduce their services or
lyst who thinks this level of cuts is
But he said, "When they went to
lose their doors." It has also
justified by rational health policy."
the floor with their plan, we felt we
rompted summit meetings, stern
Representatives of the hospitals,
had an obligation to make sure peo-
etters from Republican leaders,
moreover, maintain that these new
ple knew this type of proposal was
narges and countercharges.
spending controls would be nothing
very dangerous to hospitals and the
It has even prompted the House
short of devastating, resulting in
communities they serve."
epublican Conference to produce a
hospital shutdowns, curtailments of
Now, Mr. Pollack said, with both
Response Plan to the American
services and a general disruption of
the House and Senate adopting budg-
ospital Association's Attack on
the health care system. As the Re-
et resolutions with upward of $250
ouse Republicans." That docu-
publican budget resolution moved to
billion in Medicare savings, the
nent, which was circulated on Capi-
the floor of the House and Senate
struggle enters a new phase: how
ol Hill, offered sample news releas-
earlier this month, the A.H.A. took
those savings will be achieved. The
S, talking points and suggested let-
this message to the country in the
hospitals want to help Republicans
ers to local hospital officials to de-
newspaper advertisements, run na-
"reach those numbers in a responsi-
end the Republican budget and cast
tionally and in selected Congression-
ble way," he said.
he debate in different terms.
al districts.
But Barry Jackson, executive di-
"A.H.A. has launched a vigorous,
"Hospitals are successfully con-
rector of the House Republican Con-
Il-out campaign to defeat the bal-
trolling costs, but these reductions
ference, suggested the conciliatory
nced budget," one of the suggested
go beyond what is reasonable," one
phase had yet to flower fully. The
etters declares. "Using your re-
advertisement declared. "They're
hospitals "probably misstepped
ources and invoking your name, it
going to hurt, not just folks on Medi-
there on their first step," he said,
working to insure that the budget
care, but anyone who may need the
"Rather than engaging in a dialogue
not balanced and Medicare is not
high quality care that only a hospital
about the program, they went into
aved from bankruptcy." The sam-
can give."
attack mode and they now find them-
!e news release, "to use if A.H.A. ad
There is ample precedent for this
selves on the outside looking in."
uns in your district," declares,
kind of effort; interest groups in
The ads run in today's paper are
major legislative struggles have in-
art of a nationally orchestrated
creasingly moved toward the trap-
ear campaign, designed by Wash-
pings and technologies of a political
ngton lobbyists to scare Americans
campaign, from polling to advertis-
nto believing that Medicare should-
ing.
't be improved or protected."
Most recently, in 1993-94, groups
The heat of this dispute, in short,
including the American Medical As-
as rivaled anything generated by
sociation and the Health Insurance
ne more traditional face-off here
Association of America ran adver-
etween Democrats and Republi-
tisements to express their concerns
ans. Representative John R. Kasich
about the Clinton Administration's
Ohio, the chief architect of the
health plan. The insurance associa-
tepublican budget as chairman of
tion's "Harry and Louise" commer-
ne House Budget Committee, de-
cials, about a 40-something couple
lared in an interview last week that
fretting over the dangers of health
the hospital association is absolute-
care restructuring, became a major
1, totally and completely irresponsi-
theme in the ensuing debate.
le" and "out of control."
Given the stakes, the heat is not
urprising. The Republican drive to
alance the budget and cut taxes by
002 is premised on extracting more
nan $250 billion in savings from
Date: 07/20/95 Time: 18:54
Parties Trade Barbs Over Medicare Overhaul
WASHINGTON (AP) A Republican senator advanced the first
Medicare voucher proposal Thursday while Democrats charged that the
GOP's "stealth" reforms would force the elderly to pay more and
get less.
Sen. Judd Gregg, R-N.H., said his 'Choice Care'' Act would let
seniors keep their traditional coverage, but offer incentives to
get them to switch to less expensive health maintenance
organizations and managed care plans.
Gregg said the expanded choice of health plans wouldn't cost
seniors anything extra and would produce savings in the form of
rebates for those who chose HMOs.
The Clinton administration's Medicare chief, Bruce C. Vladeck,
said that barring miracles, it would be impossible for Republicans
to save $270 billion over seven years without inflicting pain on
the elderly.
Vladeck charged that converting Medicare into a voucher program
with seniors getting fixed amounts each year to buy private
insurance 'would put all the risk of increased medical care
costs on the beneficiaries.
Even with the $124 billion in savings that President Clinton is
seeking from Medicare, `either somebody's paying a lot more or
somebody's receiving a lot less,' Vladeck told the House Ways and
Means health subcommittee. The amount of pain grows exponentially
with the dollars involved.
Ways and Means Republicans have been thrust on the defensive by
the leak of a staff document outlining ways to achieve the $270
billion in savings, including sharp increases in premiums and
deductibles.
But Rep. Bill Thomas, R-Calif., chairman of the Ways and Means
health subcommittee, accused Vladeck of jumping to conclusions. ' ' I
can assure you there is no (Republican) plan' yet on how to
achieve the savings, Thomas said.
He accused the Clinton official of raising 'nightmare
scenarios, and said Medicare will go broke without change.
'Republicans want to change the program, said Thomas. ``If
you don't do it, the next administration will
Laura Tyson, chairman of President Clinton's National Economic
Council, said the Republicans would let Medicare grow just 4.9
percent per capita each year, less than the 7.1 growth in the
private sector with all of the managed care innovations and a
less sick population.
Rep. Nancy Johnson, R-Conn. promised ample protection for
consumers in any reforms and reminded Vladeck, `Medicare is on the
skids. The program's hospital trust fund is facing bankruptcy by
2002.
Judd's `Choice Care'' proposal, which he plans to introduce
next week, does not include any higher charges. He would require
private plans to enroll all applicants, no matter how sick, on a
first-come, first-serve basis up to their capacity.
But he acknowledged it would produce only a portion of the $270
billion, and Congress would have to find other ways to slow
Medicare spending.
Gregg, as chair of a Republican entitlements task force, has
proposed automatic spending cuts if moves to managed care fail to
slow Medicare's growth rate from 10 percent to 6.5 percent
annually.
'Pay more or get less, that's the Republican Medicare plan,
Senate Minority Leader Tom Daschle, D-S.D. told a news conference.
He called vouchers ''a ticket to disaster.
`There's a stealth bomber coming at the elderly of America in
the form of
Medicare cuts, warned Sen. Bob Graham, D-Fla.
Sen. Edward M. Kennedy, D-Mass. , asserted that the GOP may make
elderly couples pay ''a whopping $6,600 more'' over the next seven
years.
Gregg dismissed the Democrats' barbs.
'`The administration continues to be locked into its view that
the only people who can manage health care are bureaucrats here in
Washington and Hillary Clinton, he said.
APNP-07-20-95 1900EDT
Chicago Tribune, July 11, 1995
"They really want to make it a
voluntary program,' said
table and there ought to be an hon-
Gephardt, whose Democratic col-
est debate over it," said Dick
leagues were incensed last month
Davidson, president of the hospital
when President Clinton undercut
group. "You can't get an honest de-
their attacks on the GOP budget
bate over the next 90 days."
plan when he endorsed slowing the
Floor action on changes in Medi-
rate of Medicare growth.
care and Medicaid is expected in
"They [Republicans] weren't for
September.
Medicare when it was born, and
they believe the revolution of the
last elections gives them license to
change it," Gephardt said in an in-
terview.
Ed Gillespie, Armey's spokes-
man, sought to play down his
boss's personal feelings about one
of the most sensitive and explosive
of American political institutions.
"The fact is, we inherited this
thing that's about to go bust," Gil-
lespie said, citing reports by Medi-
Rep. Richard Armey says the
care trustees that the federally sub-
challenge on Medicare is to com-
sidized health insurance plan for
bat "60 years of a government
the elderly will become insolvent
that has done nothing but teach
early in the next century.
the lessons of dependence."
Revamping Medicare is essential
to the Republican pledge to bal-
ance the federal books by 2002.
GOP leader
They must find $270 billion in
Medicare savings over seven years,
and contend they will achieve
lashes out
those savings by reducing the rate
of growth in Medicare from about
10 percent annually to 6.4 percent.
at Medicare
Last weekend, the conservative
Washington Times reported that
GOP House leaders had settled on
the outlines of a strategy to retool
By Steve Daley
Medicare, one which turns on of-
WASHINGTON BUREAU
fering the elderly more medical
choices from the private sector.
WASHINGTON-House Majority
Leader Richard Armey told report-
Under the GOP plan, which will
ers Monday that he "deeply resents
be taken up by three committees
the fact that when I'm 65 I must
this month and next, Medicare re-
enroll in Medicare."
cipients could choose to stay with
While the Texas Republican
the current system, but would
made it clear he backed GOP ar-
have to pay higher monthly
guments that Medicare must be re-
premiums.
structured to keep it solvent into
Recipients would receive an an-
the next century, he maintained
nual lump-sum payment to pur-
chase health insurance from health
that one element of his party's
small-government vision included
maintenance organizations
"trying to allow people to re-learn
(HMOs), and beneficiaries could
the lessons of freedom, and they're
choose to open medical savings ac-
counts.
scary lessons."
He characterized the GOP chal-
Armey, a brash, former econom-
lenge as combating "60 years of a
ics professor who is the second
government that has done nothing
most powerful member of the
but teach the lessons of depen-
House and highly regarded by
dence," and said that, speaking
younger GOP members, has a his-
only for himself, he believed Medi-
tory of controversial remarks.
care was "a program I would have
He was an early advocate of mil-
no part of in a free world."
itary base-closing commissions
Americans must sign up for
and has attacked farm subsidy
Medicare when they reach age 65,
programs and the minimum wage.
but are not required to accept
On Monday, the head of the
benefits.
American Hospital Association
Rep. Dick Gephardt of Missouri,
called on Congress to form a bipar-
the Democratic leader, character-
tisan commission to reconfigure
Armey's remarks
"the
Medicare.
[GOP] agenda."
"Every issue ought to be on the
07/19/95
09:43
202 690 5673
HHS-PUBLIC AFFAI
002
Medicare, 500
Administration Criticizes GOP's Medicare Voucher Proposals
WASHINGTON (AP) Elderly and disabled Americans will be digging
deeper into their pockets to keep health benefits if Congress moves
ahead with plans to overhaul Medicare, the Clinton administration
says.
The Republican effort to reform Medicare would turn back the
clock 30 years to a time when the elderly and disabled struggled in
a discriminatory and expensive insurance market to buy decent
coverage with limited funds, Judith Feder of the Department of
Health and Human Services, told a House subcommittee Tuesday.
The budget plan approved by Congress last month would pare the
growth in Medicare spending by $270 billion over the next seven
years.
House Republicans are considering a draft plan that would revamp
the program by creating financial incentives to encourage people to
join health maintenance organizations or other types of
managed-care plans that are designed to reduce the growth in
medical costs.
Participants would be given government-funded vouchers that
could be used to pay for a variety of private health insurance
plans, such as HMOs.
House leaders, however, have also pledged that Medicare
recipients and future retirees who wish to remain in the
traditional fee-for-service program, in which the government pays
for each doctor's visit or hospital stay, may continue to do so.
Ari Fleischer, a spokesman for the House Ways and Means
Committee, said the draft plan was an internal staff document
describing a `wide spectrum of options available to
policy-makers'' and that it was far too soon to say which would be
adopted.
But administration officials, including HHS Secretary Donna
Shalala, were quick to attack the plan.
shalala said it would force Medicare beneficiaries to reach
deeper and deeper into their own pockets to maintain their current
coverage.'
And Feder, a deputy assistant secretary of HHS, told the House
Commerce subcommittee on health that moving into a voucher system
as Medicare spending is being reduced by $270 billion can only be
disastrous' for the people who depend on it.
she said Medicare participants under a voucher system probably
would have to pay more to keep the coverage they have today. But
since three-fourths of them have incomes below $25,000, she said,
it is likely that many seniors would not be able to pay more.
At worst, beneficiaries would be forced to buy coverage that
is insufficient to meet their needs,'' Feder said. `That's not
choice, it's financial coercion.'
Fleischer, however, said Shalala and Medicare's other trustees
have warned that unless reformed, the system will be gone,
bankrupt, insolvent'' in seven years.
We are prepared to move forward and make the decisions to save
Medicare for present retirees and future retirees, and in doing so,
seniors will have choices and all reforms will be done with an eye
toward what is doable and what affordable,'' he said.
APWR-07-19-95 0848EDT
pWall St. Jrnl : 7-19-95
Plan to Revise Medicare
May Raise Recipients' Costs
By a WALL STREET JOURNAL staff Reporter
WASHINGTON - A draft plan by
House. Republicans to revemp Medicare
could result in substantially higher costs
for beneficiaries who stick with standard
Medicare coverage.
The plan became the focus of a bit-
terly partisan House Commerce subcom-
mittee hearing yesterday.
Democratic panel members de-
nounced the notion of increasing costs to
beneficiaries while Republicans argued
that it is essential to restrain Medicare
growth.
Judith Feder, chief aide on health
issues to Health and Human Services
Secretary Donna Shalala, testified at the
hearing that preliminary estimates indi-
cate the average beneficiary in 2002
would pay as much as $400 more in
premium increases under the blueprint
than under President Clinton's budget.
in addition. she said, those who use home
health services and skilled nursing facili-
ties would pay. on average, $1,000 for
each service in 2002.
BOSTON GLOBE
June 14, 1995
GOP may have solution to Medicare's budget problems
covering all expenses above a high
much larger savings than are targeted for
same services and treatments as Medi-
PETE du PONT
threshold, say $3,000 per year. The re-
Medicare in the House and Senate budget
care, and private plans would also have to
maining funds would be saved in the MSA
resolutions. Consequently, the MSA op-
accept anyone from Medicare who chose
WASHINGTON
and used to pay medical expenses below
tion can achieve the Medicare budget tar-
them, not just healthy people.
re the Republicans about to
the deductible. The retiree could then
gets through improved incentives and
Finally, to solve the Medicare budget
A
shock the Democrats, the bu-
withdraw any remaining MSA funds at
competition rather than cutting benefits
problem, spending for people who choose
reaucrats, the Washington es-
the end of the year and use them for any
for the elderly.
to remain in Medicare would be indexed
tablishment and status quo
purpose.
More important than costs, though,
to grow no faster than 5 percent to 7
naysayers everywhere? Have they devel-
Health insurance actuaries have al-
are services. The MSA option would actu-
percent annually (compared with 10
oped a Medicare reform concept that will
ready estimated that the amounts the el-
ally offer better benefits and health care
percent today) by adding an up-front de-
meet the budget targets while actually
derly could withdraw
for the elderly than
ductible to the program that would be
improving benefits for the elderly?
from Medicare, plus the
Medicare does today.
automatically set each year at whatever
Perhaps they are, and maybe they
amounts they are al-
A GOP idea is to
For example:
amount is sufficient to keep program
have. Today, Medicare and its funds are
ready paying out-of-
The MSA cata-
controlled by the government. But a bub-
pocket for health care
shift power and
costs within the targets. The elderly could
strophic insurance
privately insure against the deductible,
bling Republican idea is to shift power
and supplemental pri-
control of
would provide coverage
and the poor could be shielded from it al-
and control over the program's funds to
vate insurance, would
Medicare's funds
for all expenses over
together through low-income vouchers.
the elderly themselves.
be enough to pay for
the insurance thresh-
Under the proposal being discussed,
the catastrophic insur-
to the elderly.
These reforms essentially address the
old, unlike Medicare
problems of Medicare by shifting power
elderly people would be free to withdraw
ance and put $3,000 in
benefits, which are
from the government bureaucracy to indi-
95 percent of their share of Medicare
the MSA for expenses
limited in duration and
viduals. That is what Republicans prom-
spending each year and use it to purchase
below the deductible.
do not provide full catastrophic coverage.
ised in the last election. That is what the
private coverage of their choice instead.
Since the elderly choosing the MSA
Also, unlike Medicare, the MSA would
voters demanded. That is what the Re-
These private options would include
option would be in control of their health
cap all annual out-of-pocket expenses by
Medical Savings Accounts (MSAs),
publican plan under discussion delivers.
expenses below $3,000 per year, they
the elderly, since once the catastrophic
Health Maintenance Organizations
would avoid unnecessary or overly costly
threshold is reached there are no more
Providing broad new advantages and
(HMOs), Preferred Provider Organiza-
care, or any care where the costs exceed
benefits to the elderly while reducing
expenses.
tions (PPOs), or traditional individual or
the benefits. Because of this new consum-
With an MSA the elderly could pur-
costs to the government sounds like very
group insurance. They could also choose
er cost-consciousness, doctors and hospi-
chase pharmaceutical medicines which
good news.
to remain in Medicare. What is most ap-
tals would compete to reduce costs to at-
are not currently covered by Medicare.
The Republicans may make sweet po-
pealing about these private options, how-
tract consumers trying to get the best
Through the MSAs, the elderly could
litical lemonade out of a sour welfare
ever, are the opportunities offered by
value for their funds.
avoid the increasing rationing under
state lemon.
MSAs.
MSAs have already proven to be pow-
Medicare, which is reducing the quality of
Under the MSA option, the retiree
erful cost-cutting tools. Companies offer-
their care and their access to care. All the
Pete du Pont, the former governor of Dela-
would use part of:the funds from Medi-
ing MSAs for their employees are reduc-
private plans offered as an alternative to
ware, is policy chairman of the National
care to purchase catastrophic insurance
ing or eliminating annual cost increases,
Medicare would have to at least cover the
Center for Policy Analysis.
PAGE
1
LEVEL 1 - 1 OF 1 STORY
Copyright 1995 Globe Newspaper Company
The Boston Globe
June 14, 1995, Wednesday, City Edition
SECTION: NATIONAL/FOREIGN; Pg. 1
LENGTH: 1442 words
HEADLINE: President offers plan to balance the budget;
Takes on goal of GOP, draws Democrats' ire
BYLINE: By Peter G. Gosselin, Globe Staff
DATELINE: WASHINGTON
BODY:
President Clinton aligned himself with the Republican drive to balance the
budget last night, but said the painful cutbacks should be made over 10 years
rather than the seven that the GOP proposes and should protect the elderly,
students and the economy.
In a nationally televised address, the president said public clamor for a
balanced budget and a threatened stalemate between Republicans and Democrats had
grown so great that he had little choice but to offer his own plan for erasing
the deficit by 2005, rather than the GOP's goal of 2002. Clinton's budget last
February left the annual deficit hovering around $ 200 billion indefinitely.
"It took decades to run up this deficit. It's going to take a decade to wipe
it out," Clinton said in his five-minute Oval Office address. "We could do it in
seven years as congressional leaders propose. But the pain we'd inflict on our
elderly, our students, our economy just isn't worth it."
Clinton asserted that he was protecting key Democratic progams such as
education, research and government-provided health benefits for elderly and the
poor even as he was seeking to trim federal spending by more than $ 1 trillion
over seven years.
But his claims seemed to fall on deaf ears as Democratic congressional
leaders openly attacked the president for giving too much ground to the
Republicans too early in the budget battle.
"If you can follow the White House on this budget, you're a whole lot
smarter than I am," said Democratic Rep. David R. Obey of Wisconsin.
Many Democrats believe that Republicans will be brought down by the
unpopularity of their proposed cuts, and that the party's best strategy is to
stand aside and let them fall. But it was clear from Clinton's new budget
proposal that he is no longer of that camp. Instead, he appears ready to do much
of what Republicans want to do with the budget, only at lower levels or more
slowly.
For example, he proposed cutting Medicare and Medicaid $ 181 billion over
seven years (and more over 10 years), and using some of the money to expand
health coverage for others. The Republicans want to slash the two big
PAGE
2
The Boston Globe, June 14, 1995
government health programs by as much as $ 475 billion.
The president proposed cutting welfare spending in much the same way as the
GOP, by restricting what legal immigrants can collect in benefits. But aides
said he would drop the most punitive elements of the Republican welfare measures
and reduce the amount to be cut by almost two-thirds, to $ 38 billion, compared
with the GOP's $ 116 billion to $ 130 billion.
He retained a proposal for a middle-class tax cut that he made shortly after
last fall's Republican electoral rout. But aides said the $ 500-per-child tax
credit would only go to working families and would cost the government $ 105
billion in lost tax revenues over seven years, compared with the House
Republicans' proposed $ 354 billion tax cut.
In a prepared response to the president, Senate Majority Leader Bob Dole, the
Kansas Republican and presidential candidate, said that with the president now
jumping into the budget process, the nation could begin "a debate of historic
proportion." But he cautioned that the negotiation would be tough he said
Clinton's speech had been little more than "a defense of the status quo,
recycled reasons why government can't become smaller and why agencies can't be
eliminated."
White House officials insisted that Clinton was still ready to fight
Republicans over what to cut and what to keep. But they carefully avoided
brandishing a veto threat, and independent observers said that, having accepted
the balanced-budget goal, there was little the president could do to block the
GOP budget drive.
"The reality is that we are not going to accept a budget that does not
maintain our investment in education. We're not going to accept a budget that
doesn't include reforms and reduces the hit on beneficiaries with regard to
Medicare. We're not going to accept their tax cut," White House Chief of Staff
Leon Panetta told reporters shortly before Clinton's speech.
Almost all of official Washington viewed Clinton's decision to join the
budget-balancing effort as a likely turning point in this year's legislative
struggle, and a big boost for House Speaker Newt Gingrich, who has led the
conservative charge. Clinton's move followed a cordial public meeting between
the two Sunday in Claremont, N.H. All four major television networks, which
recently have refused to carry some presidential speeches, aired the address.
"With this, there's no longer a debate about whether we should balance the
budget. Now it's just how long we should take and how we should do it," said
Robert D. Reischauer, former director of the Congressional Budget Office.
Word of Clinton's decision and his hastily scheduled address spread through
Washington in a rush yesterday, producing consternation among congressional
Democrats and wry smiles among Republicans.
House Minority Leader Richard A. Gephardt issued a statement critical of the
president's move. "Opening the door to deep Medicare cuts while the Republicans
are struggling to pay for their huge tax breaks threatens to make Medicare a
political football. The real losers will be the elderly and the families that
support them," Gephardt said.
PAGE
3
The Boston Globe, June 14, 1995
"He's just seen a fast-moving train leaving town, and he's managed to catch
up fast enough to catch the caboose, " House Majority Leader Dick Armey,
Republican of Texas, said of the president.
White House officials were short on many specifics last night, saying that
the 24-page document they handed out should be seen as describing the
president's broad goals rather than being a detailed budget proposal.
Officials took special pains to paint Clinton's health care proposals in as
sweeping a fashion as possible, in part to remind voters of his ambitious, if
unsucccessul health overhaul campaign and in part to justify statements earlier
this year that he would not agree to Medicare cuts unless they were part of a
broader effort to fix the nation's the health care system.
"The Clinton administration is back to health care reform," budget director
Alice C. Rivlin told reporters.
Rivlin said the president wants to use $ 29 billion of the $ 181 billion in
Medicare and Medicaid cutbacks to subsidize health insurance for up to six
months for people who lose their jobs and to pay for two new benefits. One would
give those caring for victims of Alzheimer's disease a break and the other would
eliminate the current copayment on mammograms.
She said Clinton also wants new legislation to protect people from losing
coverage when changing jobs and to allow small busineses to join
insurance-buying pools.
However, independent analysts said that it may be precisely on health care
that Clinton is at his weakest because the president has almost no power to
enforce the link between the cutbacks and his new proposals.
"There's little compelling connection between the Medicare and Medicaid cuts
and the health system reforms the administration is proposing," said Reischauer.
"It will be tough to get the Republicans to consider" most of the reforms, he
said.
Indeed, the question of whether Clinton can - or even will try - to force
Republicans to agree to any of his proposals hung over his speech like a cloud
last night, leaving many with the impression that he has given up the fight.
Clinton acknowledged that his proposasl would slice into many federal
programs "Make no mistake there will be big cuts and they'll hurt, he
said. But he asserted that his plan, as opposed to Republicans, would protect
key government programs for the middle class.
Clinton and his aides pleaded with Republicans to begin negotiations over
what should be included and what should be cut from the budget for the next
fiscal year. But it was already clear last night that GOP leaders will pay
precious little attention to the president's numbers as they they assemble their
compromise House-Senate budget plan in the coming weeks.
Embracing a charge that Democrats had hurled against Republicans earlier
this year, Republican National Committee Chairman Haley Barbour said that
Clinton plan was thin on details.
PAGE
4
The Boston Globe, June 14, 1995
White House aides, meanwhile, asked Democrats to be understanding of the
president, saying his proposals would protect key Democratic initiatives. "I
would ask" Democrats "to keep their powder dry
because the reality is that
this budget reflects" Democratic priorities, Panetta said.
Comparison of deficit reduction plans
Seven year totals, in billions. (Negatives mean the amount is reduced).
GRAPHIC: PHOTO CHART, President Clinton offers his deficit plan last night in a
nationally televised address. / REUTERS PHOTO VIA TV
LANGUAGE: ENGLISH
LOAD-DATE: June 15, 1995
de. Naturally, the Americans deny this. They react
in diplomatic flur
n Japanese negotiators say that America is demand-
America and
brink of
erical targets" for the number of showrooms selling
previous trade wars. That may
pan will
cars, or for car makers' purchases of American-made
surely call the WTO'S dispute-settlement system mo action,
parts. The Americans prefer euphemisms: "business forecasts"
and the new body will probably pronounce the Americans'
have now joined "voluntary agreements" in the weasel's lexi-
sanctions wrong. Fine-unless such a result further weakened
con. But America's own words suggest that Japan's claim is
America's already infirm commitment to free trade. And if
more or less right. From the start, the Americans have said that
America wins its case? Fine, too: sorting out trade conflicts is
they want a "results-oriented" agreement. That ugly phrase
what the WTO is for. It would have been much better if the Clin-
means, simply, that there will be no deal without the promise
ton administration had remembered that months ago-and
of higher American exports of cars and car parts to Japan. But
better still if it had simply shut up its domestic protectionists
how much higher? The answer to that, however it is dressed up
from the start.
Under the knife
Medicare spending
CBO projections; Sbn
The best way for America to reduce its excessive spending on Medicare
YET.
is to embrace broader health-care reform
W
HATEVER happened to America's health-care crisis? It
Medicare picks up the bills from day one, but is subject to a
would be tempting to conclude that, since Bill Clinton's
ceiling beyond which the patient must pay (most do so through
national health plan collapsed last year, it has gone away; per-
private "medigap" insurance). It would be more equitable,
haps seen off, as right-wing Republicans predicted all along, by
and probably cheaper, to turn the programme round: the pub-
market forces. Tempting, but wrong. Witness the current rum-
lic purse should be called on only after patients have borne a
pus over Medicare, the federal health programme for the el-
reasonable cost themselves.
derly, with Republicans and Democrats vying to avoid the
The second option is means-testing. Elderly Americans are
blame for cuts that both parties know to be essential.
on average richer than the young, which makes their indis-
Congressional Republicans put themselves into this
criminate subsidy from taxpayers through Social Security and
predicament. By promising, fatuously, to balance the budget,
Medicare questionable public policy. A good start would be to
reduce taxes and protect defence and Social Security, they have
confine Medicare subsidies to the needy. Medicare could then
n forced to chop the next-biggest entitlement programme:
be merged with Medicaid, the federal/state health programme
dicare. Spending on Medicare is projected to rise from $180
for the poor, a more deserving case for public support.
billion this year to nearly $350 billion by 2002, at which point
The lobby for the elderly would naturally scream blue mur-
the trust fund that funnels payroll taxes to the programme will
der if these proposals came close to adoption. The precedents
go bust. Reform will be politically testing. Medicare is hugely
are bad; in 1990 the old folk even defeated an attempt to add
popular with old people, who not only vote in greater numbers
(not substitute) catastrophic coverage to Medicare, because
than the young, but also contributed a big part of last Novem-
they were expected to pay for it themselves. Fear of the elderly
ber's swing to the Republicans.
explains why Senate Republicans this week suggested a biparti-
san commission to propose the necessary surgery-the last ref-
Send for the doctor
uge of the political coward.
Newt Gingrich, the House speaker, offers a seductive-sounding
Even if the Republicans were braver, however, there is a
treatment: simply slice a seventh off Medicare without affect-
problem about tackling Medicare on its own. Although the fed-
ing any of its beneficiaries. It is a splendid idea. Except that all
eral budget would benefit, these savings could be offset by
the easy savings in Medicare-cuts in overgenerous hospital re-
higher costs in private health care-as happened when Medi-
imbursements and doctors' fees-were made long ago. More-
care adopted DRGS. Some of those costs could land back on the
over, with one exception, they have failed to slow Medicare's
government through bigger tax reliefs or a rise in the numbers
growth; cuts in one area (eg, lower doctors' fees) have been off-
of uninsured Americans. Thus the best way to cut Medicare
set by higher spending elsewhere (eg, more treatment).
(and, incidentally, to make doing so politically feasible) would
The exception was "diagnosis-related groups" (DRGS), pre-
be to subsume them within broader health-care reforms.
fixed price controls for hospital treatments that were intro-
This is what Mr Clinton has been saying; but it also hap-
duced in 1983. That points to one sensible reform of Medicare
pens to be true. The president's plan failed because, although it
now: to push its recipients into managed-care programmes
rightly embraced managed care, it was too bureaucratic and
that offer comprehensive health care at pre-fixed prices. Only
relied too much on regulation instead of the market. But the
7% are enrolled in health-maintenance organisations (HMOS),
underlying problems it sought to tackle, notably out-of-control
the best-known type of managed care; in contrast, half of pri-
costs and patchy coverage that leaves 37m Americans (includ-
vately insured Americans are now covered by managed care.
ing 12m children) with no insurance at all, remain unsolved.
Changing Medicare rules to encourage managed care will
For America's long-term health-and, now, for the sake of the
not produce big savings quickly enough, however. So Congress
federal budget-the Republicans should put together a market-
1 go for two more radical options. One is to switch the
oriented alternative to the Clinton health reforms.
Lmme to offer "catastrophic" coverage only. At present
18
THE ECONOMIST MAY 13TH 1995
May Zō-June 5
When Health Care Cuts Cost More
or receiving all but the most necessary
By ROBIN TONER
services if they are forced to pay for part of
}
the costs.. And that some of the services
WASHINGTON
being rendered are indeed unnecessary or
EPUBLICANS have boiled down their Medicare
)
could be paid for by the beneficiaries.
R
proposals to a number and a sound bite: They
But there are big demographic and tech-
can wring more than $250 billion from the
nological forces behind the rise in home
national health insurance program for the eld-
health costs, which are unlikely to change
erly over the next seven years, they say, even while
much as a result of simply requiring the
"preserving, protecting and improving" it.
client to pay a fee.
No big, comprehensive, Clintonesque health care
One reason for the Increase in home
overhaul for them. Just smart, targeted, money-saving
health services was a decision by policy-
reforms of outmoded government programs. After all,
makers over the past 10 years to cut down
the Clinton Administration discovered the danger. of
on hospital stays. People are released from
over-reaching, right?
the hospital "quicker and sicker," as some
Right. But now the Republicans face the danger of
health planners put it, with the understand-
piecemeal reform, of trimming and tinkering with a
ing that they will get more cost-effective
program that covers 37 million beneficiaries and is the
care at home or in a skilled nursing facility.
lifeblood of many if not most of the nation's hospitals,
"When you have outpatient surgeries and
doctors and academic medical centers. It will, like it or
shorter inpatient stays, you'll have more
not, have big consequences, intended and unintended.
home health care," said Representative
Efforts to save money in one part of the program can
Nancy Johnson, Republican of Connecticut,
end up costing money somewhere else.
an influential member of the Ways and
Means subcommittee on health. "We need
to be very mindful of rising home health
Republicans may find that a
costs as a consequence of other actions
we've taken."
piecemeal approach has
Home health beneficiaries are getting
care for longer and longer periods of time.
unintended consequences.
The program's scope has expanded in part
because of a lawsuit in the late 1980's, in
which the Government was accused of ap-
plying this benefit far too narrowly and
"Physicians understand reimbursement realities
arbitrarily. But behind the increase, of
and they understand their patients," said Mike Brown,
course, is the growth in America's aging
THE NEW YORK TIMES, SUNDAY, JUNE 4, 1995
the administrator of a tiny, 30-bed hospital in Wahoo,
population. Hundreds of thousands of old,
Neb. "They do what is best for their patients."
disabled and chronically ill people need help
In other words, medical needs usually have a way
to stay in their homes.
of getting met. And, if they are not, those needs have a
Congress over the years has debated the
way of popping up later more serious, more ad-
establishment of a major new long-term
vanced, more expensive to treat. Unlike private em-
care program, but never passed it. Nonethe-
ployers, who are much praised on Capitol Hill these
less, home health care "has become sort of
days for controlling their health costs, the Government
a backdoor way of expanding long ferm
ultimately ends up with responsibility for the oldest,
care," said Stuart Altman, a health econo-
poorest, sickest Americans, which are the groups that
mist at Brandeis and a member of a Medi-
Medicare and Medicaid cover. Efficiencies do not come
care advisory committee.
easily. Miscalculations matter, immensely.
Call it the "push It down here, it pops up
As Republican leaders in Congress try to find the
there" phenomenon, which gives some ana-
huge savings they seek in Medicare and as states
lysts pause when they think about the impli-
struggle to control their own health care costs, nothing
cations of simply redefining the home health
exemplifies the challenge facing them more than Medi-
program to tighten its eligibility require-
care's home health program. It offers a case study in
ments. What if squeezing home health care
the potential ripple effects of seemingly simple little
ends up putting more people back into hospi-
money-saving reforms.
tals or into nursing homes, where their costs
Every policy maven who looks at Medicare's esca-
are picked up by Medicare, which is fully
lating costs jumps on the home health program as a
financed by Washington, and by Medicaid,
major culprit. Home health care accounts for about
which is only partly?
eight cents of every dollar spent on Medicare. But
And speaking of Medicaid, Joshua 'Wie-
spending on these services like physical therapy,
ner, an analyst at the Brookings Institution,
skilled nursing or the assistance of a lesser-skilled
warns that Republican cuts in projected
home health aide - has soared over the past five years,
spending for that program fail to take into
from $2.5 billion in 1989 to $13.7 billion in 1994. Not only
account the growth over the next five years
did the number of beneficiaries increase; the number of
in the population 85 and older. While Medic-
visits per beneficiary jumped from 27 in 1989 to 58 in
aid is usually thought of as a program for
1994.
low-income younger people, 30 percent of its
In 1995, an estimated 3.46 million people will re-
spending goes for nursing home and other
ceive home health care benefits from Medicare; the
long-term care, in part because people de-
plete their assets to qualify.
Continued on page 4
Continued from from 1
Kindest Cuts
It would be simpler if spending could be
average visit costs just under $65. Critics
reined in by cracking down on waste, fraud
warn that what began as a cost-effective
and abuse typically the most popular and
way of caring for and rehabilitating people
painless solution to budget-cutting. But that
after an illness or an operation has gotten
saves only so much.
dangerously out of control.
Actually reducing services is fodder for
One answer, to many on Capitol Hill,
the ripple effects game. What If Medicare
seems obvious: require clients of home
payment restrictions force some already
health care to pay part of the bill. As a
teetering rural hospitals into insolvency?
planning paper from Republicans on the
What if reducing the Medicare subsidy for
House Budget Committee put it, "Requiring
medical education is a body blow to the
beneficiaries to share the cost of these serv-
nation's big teaching hospitals? The ques-
ices would help to discourage over-utiliza-
tions spin on, and help explain, perhaps,
tion and reduce the Medicare subsidy."
what drove Ira Magaziner, the Clinton
That plan contemplates a 20 percent copay-
health czar, to produce a health plan that
ment, with an exclusion for those whose
filled 1,342 pages.
incomes are below 150 percent of the official
poverty line (meaning elderly couples, for
example, with incomes below $13,446).
'Quicker and Sicker'
This, of course, is sound economic theory;
it assumes that people will stop requesting
June 1995
Republicans ready
pitch to seniors on
Medicaid package
House GOP sees
Inside
major reforms
Welfare: Debate includes call
for federal money to fund
as do-or-die issue
religious charities
A6
Hands off: Congress finds it
easler to kill others' perks than
its own.
A6
By Major Garrett
On deck: Senate GOP Whip
THE WASHINGTON TIMES
Trent Lott has his eye on Bobso
After years of avoiding the in
Dole's job
A6
evitable task of reducing explod
ing Medicare costs, House Repub-
licans today will unleash an
ship effort on a day-to-day basis
aggressive campaign to sell their
Mr. Boehner conducted a
reforms to a nation of skeptical
closed-door briefing last, week on
seniors
a 39-page kit designed to maxi-
The 231 House Republicans rc-
mize positive media and con
ceived the same marching orders
stituent response to GOP plans to
from senior GOP leaders before
reduce projected Medicare bene
leaving Washington for this week's
fits by more than $282 billion A
Memorial Day recess: Sell your
follow up briefing with all, GOP
seniors on Medicare reforms or
press secretaries drove home the
we reall dead
urgency of_beating Democratic
Most of the members realize if
critics to the punch
they don't carry the message
Each and every House Repub
home they will jeopardize not only
lican must take the initiative and
themselves, but all of us," said Rep
go on offense on the issue that the
John A: Bochner of Ohio, chair-
other side thinks is our most vul-
man of the House Republican Con-
nerable - Medicare," advises the
ference This will cause a lot of
media kit obtained by The Wash
people to look in the mirror and
ington Times.
say, Do I have the courage or don't
We must getto our senior cen:
IN
ters, to our hospitals, to our edi
Mr. Boehner is in charge of
torial board rooms and to the liv)
packaging the pitch Republicans
ing rooms of our districts," the kit
will use on behalf of their unprec-
implores 'If we get to them first
edented overhaul of Medicare
with the facts, the lies the Demo
House Speaker Newt Gingrich has
crats and their allies are spread-
assigned Reps. Dan Miller of Flor-
ing will not be as effective as they
ida, Jim McCrery of Louisiana and
hope they will be."
James C. Greenwood of Pennsyl-
vania to monitor GOP salesman-
see REFORM, page A16
REF
ORM
austerity program, projected
the only party with a plan to pre-
Medicare benefits will rise by
serve Medicare for future genera-
$1,600 per person.
tions.
From page ^
The media kit does not say that
"We're arguing that, first of all,
people who stay in Medicare will
all you've have to do is hold up the
All in all, the GOP media pack-
pay $2,750 more per person over
trustees report of the Clinton ad-
age seeks to startic seniors into
the next seven years for the same
ministration trustees and point to
believing that maintaining their
health care.
the page where it says, "This will
benefits is more dangerous than
And it does not mention their
go broke;" Mr. Gingrich said.
having them reduced.
plan reduces the yearly growth in
"And then turn cheerfully to your
The GOP pitch emphasizes that
spending from 10 percent to 5.8
Democratic counterpart and say,
Medicare will to bankrupt in 2002
percent from now until 2002. The
'What's your plan?'
and uses quotes and charts from
average growth of private sector
Democrats doubt it will work
the Clinton administration's
health care costs is expected to be
and are eager to confront Repub-
trustees report to back them up.
nearly 8 percent, meaning fewer
licans on the propriety of reducing
Republicans are urged to repeat
services for Medicare recipients.
Medicare benefits at the same
words such as "protect," "pre-
Republicans believe the only
time taxes are being cut.
serve" and "Improve" - all of
way to sell the higher costs and
"This puts the details behind the
which were gleaned from exten-
reduced health care that their
bumper stickers," said Rep. Bob
sive focus-group research.
plans envision is to convince sen-
Wise, West Virginia Democrat.
Most important, Republicans
iors that cuts are inevitable. Once
"You just can't cut these things and
are reminded to repeat over and
that is done, Republicans hope
expect the problem to go away.
over again tha even under the new
they can convince seniors they are
We're being handed some things
and we're grateful for them."
preferably with a senior citizen as
errors in their bills or fraudulent
Democrats have guarded Medi-
chairman. (The kit provides a pre-
doctors.
care ferociousl since its creation
written press release, including a
The kit provides a script and
in 1965 and have numerous grass-
prepared quote from the new citi-
urges the lawmaker to record a
roots allies to assist them, includ-
zen chairman).
voice-mail message for the hot
ing the nation's most powerful
Freshman Rep. John Fox, Penn-
line. The script reads in part:
lobbying (inization - the
sylvania Republican, announced
"Your suggestions on how to com-
American Association of Retired
his task force last week to combat
bat Medicare fraud and how to im-
Persons (AARP).
negative publicity about Mcdicare
prove the current system will be
House Republican leaders met
changes in a district - where 19
very useful as the Congress con-
with AARP representatives last
percent of his constituents are 62
siders how to preserve and protect
week to discuss Medicare, but a
or older. Mr. Fox won his race with
Medicare."
truce was not reached and one is
less than 50 percent of the vote in
not anticipated
1994, and a groundswell against
Members also are advised to
The GOP media kit does not
Medicare could easily topple him.
hold a news conference on the hot
mention the "lies" Democrats are
line's creation. record public ser-
expected to use
Appointment of a congres-
vice announcements and purchase
If all goes as planned. Repub-
sional staffer to respond to all
advertisements in local newspa-
Medicare questions and com-
licans will soon attempt to hold
pers to promote it.
plaints. (Another pre-written
"news" events in congressional
press release is included).
Tour senior centers and con-
districts nation vide, built around:
duct "fact-finding" tours of dis-
Creation O a Medicare task
Creation of a Medicare hot
trict hospitals of health mainten-
force to discuss potential reforms.
line that seniors can use to report
ance organizations.
A Democratic 'Counter-Budget''
HE SENATE is about to join the House in
form of Medicare and Medicaid cuts, and the
T
adopting a resolution to balance the budget
president and the Democrats who are warning
by the year 2002. The measures will then
that such steps would be disastrous. The presi-
go, to conference, where the only important
dent, if only in deference to his own position of a
difference will be the tax cut that the House had
year ago, has lately begun to suggest that he too
THURSDAY, MAY 25, 1995
THE WASHINGTON POST
to struggle to accommodate and the Senate
would be willing to accept some lesser Medicare
would defer. On that one, the Senate is right.
and Medicaid constraints, but only in the context
These are gutsy resolutions. In trying to break
of broader "reform." What does that mean? If
the current mold of government while driving
these are in fact the principal budget engines,
down the deficit, they push in healthy directions.
what are his proposals for slowing them down
The Democrats complain that they go too far,
while minimizing the social cost? There's not a
and in some respects that's so. But the Demo-
single person in the administration who can
crats are hobbled in the debate because all
authoritatively answer that question right now.
they've found the strength to do so far is say
(3) The president says that before he'll negoti-
what they're against, not what they're for. The
ate, the Republicans have to back off their tax
president indicated last week that he might offer
a "counter-budget" sometime after the Republi-
cut. He'd be in a better position to make this
cans adopted theirs. This week he seemed to be
worthy argument if he hadn't bent to political
From
backing away even from that.
fashion and proposed a smaller cut of his own last
Tp play the role that they should in the
winter. Is he now for no cut (the right position)?
proceedings ahead, he and the Democrats need
Some cut? It's not enough to say merely that he's
to:answer at least four questions.
for a lesser cut than the other side.
(1) In 1993 Mr. Clinton rightly decided the
(4) The Republicans would make some of their
deficit needed reducing and took a strong first
deepest cuts in domestic appropriations, the sixth
step in that direction over Republican opposition.
of the spending pie that is the budget for the
His- health care plan last year was likewise
entire government after entitlements, interest
offered in part as a' way of bringing down the
and defense. It's the part that supports such
long-term deficit by containing health care costs.
programs as aid to education, which the presi-
This year, however, as part of a panicky response
dent says he wants to protect. How does he
to the election returns, he chose to make no
protect them and still suppress appropriations,
proposal with regard to the deficit, and the
and if he doesn't want to sit so hard on appropria-
Republicans stepped into the breach. Roles were
tions, what does he propose instead?
réversed. If he now agrees with them that a
The Republicans are having a lot of fun calling
further effort should be made to reduce the
Mr. Clinton AWOL ("Absent without leadership,"
deficit, how much of an effort? If a balanced
they happily explain). It's a tough, mean line, but
budget in seven years is the wrong goal, what is
Mr. Clinton invited it. The good news, from his
the right one? He won't say.
point of view, is that he can bring it to an end by
(2) It's the Republicans who this year are
getting back into the budget wars where he
proposing health care cost containment in the
belongs.
Way Behind on Summer Jobs
NEED A JOB, not a swing set. That was
I
businesses and federal agencies weigh in as good
the reply of 18-year-old Damian Scott last
corporate and public citizens and contribute sum-
month to Mayor Barry's promise of more
mer youth jobs of their own.
recreation opportunities.
The District government has already gone to
Mayor Marion Barry is lagging badly in fulfill-
extraordinary lengths to make sure that the city
ing his often-repeated campaign pledge to create
meets its share of jobs. The mayor ordered funds
5,000 jobs for young people this summer. As
shifted from adult job training and retraining
recently as a few weeks ago, Mr. Barry was
programs to help support the youth activity. To
promising that a job would be there for the asking
give work to as many youngsters as possible, the
for,every District resident between the ages of
14nand 21 who wants to work. "Do you want a
city has also reduced the hours that each young-
summer job?" Mr. Barry asked a teenage girl at
ster may work to stretch the limited dollar-e.g.,
Shaw Junior High School in March. "Did you sign
14- and 15-year-olds are reduced from 20 to 15
up? [Then] you're going to get a summer job," he
hours per week. Those steps should enable the
declared. Apparently a great many more
financially strapped local government to put
youths-and far too few prospective employ-
about 700 young people to work. To make the
ers-have taken Mayor Barry's words to heart.
program a success this year, however, city offi-
When summer job registration closed on April
cials hope the private and federal sectors will
14, the Shaw student had been joined by about
triple their contribution of a year ago. That
16,000 young people who also had signed up for
means business and the federal agencies should
the six-week program. Now there's an enormous
produce about 3,000 unsubsidized jobs, according
problem looming just over the horizon. With the
to D.C. Employment Services officials. With only
starting date less than five weeks away, Mayor
659 confirmed jobs in hand, it's easy to see how
Barry had rounded up only 659 private-sector
short of the mark they are.
and federal jobs as of noon yesterday. At that
It's worth remembering that this program isn't
pace, the outcome isn't hard to surmise: Thou-
about Marion Barry. The purpose is to give young
sands of District youngsters who have responded
people an introduction to the world of work, a start
to the mayor's call and are now banking on
on building good work habits, a solid skill-building
having a meaningful job and making a little
experience and a chance to become acquainted with
money this summer will, instead, end up out of
career opportunities. It is an investment that busi-
work and out of luck. That is, unless area
ness and public agencies should eagerly make.
What's News-
AI
Trade ministers ended an OECD
* *
meeting without censuring the U.S. for
threatened sanctions on Japanese lux-
versity. The Beijing government canceled a
Business and Finance
ury cars. The U.S. hailed the minis-
planned trip to Washington by a government
personnel and budget administrator. A day
ters' vague response to the sanctions
before, Beijing cut short the U.S. visit of its
D
URABLE-GOODS ORDERS fell
as a victory in the trade battle.
air force chief and his delegation.
4% in April, the biggest drop in
The U.S. is considering action
more than three years, suggesting the
against Japan for what American offi-
A U.S. Court of Appeals panel named a
economic slowdown has spread be-
cials consider violations of U.S. air-
Washington lawyer as independent counsel
yond weakening car and home sales.
lines' rights in Asian markets.
to investigate whether Housing Secretary
Bond prices surged on the news, with
Cisneros committed a crime by misleading
(Articles on Pages A10 and A16)
the 30-year Treasury bond gaining
the FBI about payments to his former mis-
*
*
tress. The lawyer appointed by the panel,
nearly 13/4 points. Stocks gyrated but
Matsushita Electric Industrial,
David M. Barrett, has raised money for GOP
ended the day little changed.
facing huge currency losses from sell-
candidates. (Article on Page B4)
(Articles on Pages A2, C1 and C21)
ing 80% of MCA, expects to post a loss
*
*
for its current fiscal year, but analysts
Much of the Superfund program could be
Merrill Lynch began talks with Or-
said its outlook remains strong.
turned over to the states, according to a plan
ange County in what some observers
(Article on Page A10)
weighed by the administration. Under the
believe may lead to a broad settlement
*
*
*
plan. devised by the EPA and members of
with other brokerage firms over the
GM's quality rating jumped in an
Gore's "reinventing government" team, 35
county's ill-fated investment strategy.
auto-defect study. GM scored better
states would take over most cleanup respon-
sibilities at Superfund hazardous-waste
(Article on Page A3)
than Ford and Chrysler but trailed top
sites in four years. (Article on Page A16)
Japanese and European auto makers.
The trustee liquidating the Foun-
GM plans to build engines for
Israel and Syria agreed on a framework
dation for New Era Philanthropy says
Toyota forklift trucks, the first time
for security arrangements on the disputed
it owes between $175 million and $225
the Japanese auto maker has equipped
Golan Heights, Secretary of State Christo-
million, well below the $551 million es-
a vehicle with a Big Three engine.
pher announced. He said he would go to the
timated in its bankruptcy filing.
(Articles on Pages A5 and B9)
Middle East next month to try to close the
(Article on Page A3)
"significant gaps" that remain.
*
*
*
*
*
*
Disney plans to make a motion pic-
California regulators approved a
AIDS researcher Robert Gallo will leave
ture complete with stars and special
tentative plan for deregulating the
the National Institutes of Health to set up a
effects to be distributed directly to
new virus-research center in Baltimore.
state's $20 billion electricity market
video stores, bypassing theaters.
Gallo, one of the world's most famous and
that would establish a wholesale
World-Wide
controversial scientists, said the facility
power pool by January 1997.
initially will focus on AIDS but that it also
(Article on Page A4)
will study leukemia, breast cancer and auto-
SENATE GOP LEADERS DROPPED
*
*
*
immune disorders. (Article on Page B11)
A grand jury is investigating Loui-
efforts to put tax cuts into a budget plan.
*
*
Majority Leader Dole and a group of
siana-Pacific for alleged criminal vio-
fellow Republicans, facing defeat, aban-
The National Football League voted to
lations of environmental laws and
doned their attempt to write specific tax
allow the Los Angeles Raiders to occupy a
fraud at a mill in Colorado. The com-
cuts into a pending balanced-budget pro-
new stadium in Inglewood, Calif., an action
pany said it expects to be indicted.
posal. Dole also had to postpone until today a
which should keep the club from leaving
(Article on Page A4)
final vote on the budget legislation blueprint
Southern California. (Article on Page B8)
*
*
*
*
as Democratic lawmakers forced mostly
futile votes on amendments that were aimed
The American flag deserves special pro-
Summer travel, while expected to
tection, backers of a constitutional amend-
grow from last year's level, won't
at recasting the measure's spending priori-
show the big gains initially projected,
ties. (Articles on Pages A3 and A16)
ment told a House panel. Opponents of the
Provoked by the Senate actions, some
amendment, which makes it illegal to burn
analysts said. High prices may hold
the flag, said the measure would weaken
House GOP conservatives sought signa-
down consumer spending, they said.
tures from fellow Republicans for a
constitutional freedom-of-speech provisions
(Article on Page B1)
letter pledging to oppose any compromise
and might encourage flag-burning.
*
*
*
*
with the Senate that "significantly di-
Sears plans to open more non-mall
minishes" the House tax-cut package.
Stroke victims recover better if they are
outlets such as furniture and hard-
screened for depression and placed in reha-
*
*
ware stores in a bid to increase its
The government filed assault and fire-
bilitation programs that fit their needs,
presence outside malls and clear space
arms charges against a 37-year-old graduate
according to newly issued federal guide-
in its mall stores for more apparel.
student who was shot on the White House
lines. (Article on Page B11)
lawn after scaling a fence with an unloaded
*
*
*
(Article on Page A5)
gun Tuesday night. He was shot by a Secret
Russian forces launched a major artil-
*
Vanguard Group's president, John
Service guard, and the same bullet wounded
lery and air offensive against rebel positions
another guard. Clinton said of the incident:
in southern Chechnya less than a day before
Brennan. will succeed John Bogle as
"Just another day at the White House.
peace talks were scheduled to start in
chief executive of the fund company.
Grozny, the regional capital.
*
(Article on Page C1)
The U.N. issued an ultimatum to the
*
*
*
Bosnian government and Serb forces, say-
A car bomb exploded outside a hotel-ca-
ing the two sides must halt their fierce
sino in a Lima suburb, killing four people
fighting around Sarajevo or face NATO air
and injuring at least 25 others, Peruvian
strikes. The U.N. commander in Bosnia also
authorities said. The predawn blast was
demanded the return of heavy weapons that
blamed on Maoist Shining Path guerrillas.
have been taken from U.N. storage depots.
*
*
*
Died: Harold Wilson, 79, former British
*
China took a second retaliatory step after
prime minister who led the Labor Party for
a U.S. decision to let Taiwan's president
13 years, in London, after suffering from
cancer for manv vears.
attend a June reunion at Cornell Uni-
THE WALL STREET JOURNAL THURSDAY, MAY 25, 1995
THE WHITE HOUSE
WASHINGTON
Jen -
/ was out in Utah
this weekend " was
pleased & suprised to
read such an editoral!
-Molly
How alats!
then
Let's do cotteel
ind
soor...
NCAs only vaguely promise. The bot-
release"
- would form the basis
tom line is that Rep. Orton's 1.2 million
responsible bill for Utah wilderness.
pc
life.
You may have not
mentators have beer
Medicare on the Block
posite: That Rabid
gagged or at least mi
have played a role i
bombing, by feeding
The budget battle heated up in
dressed Medicare funding, to embar-
of the bombers. The
Washington this week, as President
rass him. The Clinton approach was to
nel of truth in the
Clinton vowed to defend senior citizens
cut Medicare spending while making
but shutting up th
from Republicans who would slash
the entire health-care system more effi-
solve anything, ex
Medicare to pay for big tax cuts. Repub-
cient. The argument was that unless
out of them and ra
licans fired another round of rhetoric
medical costs were controlled overall,
land's forests prii
accusing the president of dodging his
doctors and hospitals would lose money
military bands tra
budget-planning duty.
on people with limited Medicare cover-
There are man
age. Fewer providers would agree to
Radio rant on U:
Medicare eventually will get hit.
take older and disabled patients, and
shows are a sou
Spending must be controlled. But when
the quality of care would decline.
will not appear
the smoke clears, there must be no
very fact that n
doubt about the purpose, value and ne-
It is the Republicans' turn to take a
it examines the
cessity of senior citizens' sacrifices.
risk with health care. Let them promote
seems surprise
politically unpopular Medicare cuts.
The president took one step toward
Meantime, both Congress and the presi-
spending control Wednesday, when he
dent should forget tax cuts and concen-
told the White House Conference on
trate on stabilizing Medicare and bal-
Popu
Aging that his administration is crack-
ancing the budget.
ing down on Medicare fraud, estimated
to cost the nation billions of dollars a
Medicare cannot operate as usual,
year. Operation Restore Trust will zero
but no one should be left without basic,
R
in on vendors who charge outrageous
affordable health insurance. Steps must
prices for wheelchairs and other medi-
be taken now to cut program costs. Re-
cal equipment, and on doctors who peek
quiring participants to join health-
into a room and then bill for an exami-
maintenance organizations, where their
NEW YOI
nation.
choices of doctors and treatments are
haste, the R
limited, is reasonable. Raising premi-
to keep fro
But fraud is not Medicare's primary
ums for patients who can afford to pay
Medicare.
problem. Medicare's $176 billion bud-
more is inevitable.
Only a fe'.
get is increasing by 11 percent per year,
leaders were
more than twice the rate of health-care
The need for a viable Medicare pro-
finding $300
inflation for the society as a whole.
gram into the future, when more Amer-
tions that co'
icans reach senior status, requires that
care progra
House Republicans propose reduc-
savings be used first to strengthen
which they :
ing Medicare spending by $300 billion
Medicare, not frittered away on unnec-
by the yea
over the next seven years to help bal-
essary tax cuts. Once Medicare spend-
breaks gene
ance the budget and pay for tax cuts.
ing is controlled, it can help reduce the
wealthy. Sp
Others want to use savings to shore up
federal deficit.
was describ
the Medicare trust fund, predicted to go
ized bureau
But Medicare cannot stand alone
bankrupt by 2002, and accuse President
and all the 0
Clinton of failing his duty to lead the
against health-care inflation and deficit
obsolete ap
charge. The president says he'll offer a
spending without harming its clients.
and fraud you
Older and disabled Americans must not
plan once he knows how deeply Repub-
tralized bure
be asked to make health-care sacrifices
licans will cut.
thought he V
just so politicians in Washington can
the welfare
Clinton's reluctance is understand-
avoid even more difficult decisions
Now, sud
able. Republicans last year used his
about health care and the federal
ership is tal
health-care reform proposal, which ad-
budget.
care system
tween it ar
budget. a
The Salt Lake Tribune
saved on
care syste
rich's wo:
UTAH'S INDEPENDENT VOICE SINCE 1871
like they
PAST PUBLISHERS
PUBLISHER
The m'
Dominic Welch
tor of t}
John F. Fitzpatrick (1924-1960)
night b
EDITOR
made f
John W. Gallivan (1960-1983)
James E. Shelledy
Texas
tion (
Jerry O'Brien (1983-1994)
EDITORIAL PAGE EDITOR
Las
Harry E. Fuller, Jr.
minist
KEARNS-TRIBUNE CORPORATION. 143 MAIN ST. SALT LAKE CITY. 84111
comi
care
EXECUTIVE OFFICE OF THE PRESIDENT
11-May-1995 04:56pm
TO:
Gene B. Sperling
TO:
Robert Gordon
TO:
Jennifer L. Klein
TO:
Christopher C. Jennings
FROM:
Theo Lubke
National Economic Council
SUBJECT:
HOUSE GOP CONSIDERING VOUCHER PROGRAM FOR MEDICARE
Date: 05/11/95 Time: 16:35
House GOP Considering Voucher Program for Medicare
WASHINGTON (AP) House Republicans looking for $283 billion in
savings from Medicare are considering converting it into a voucher
program, with seniors getting more than $5,000 a year to buy
private insurance.
A list of options drafted by the House Budget Committee also
suggests doubling the $100 annual Medicare deductible and boosting
monthly premiums for millions of beneficiaries.
The proposals would extend belt-tightening moves that Congress
has taken to hold down payments to hospitals, physicians and other
providers, and add many new economy measures.
One proposal would save $19 billion over seven years by making
hospitals responsible for all skilled nursing care, home health
services and rehabilitation care Medicare patients get within 60
days of a hospital stay. Payment for all those services would be
' bundled' ' into the hospital fees.
Rep. Christopher Shays, R-Conn., who heads a health task force
for the Budget Committee, was preparing to send committees with
jurisdiction over Medicare the list of suggestions, including three
different options to reform the $175 billion insurance program.
Shays did not release details, but a draft Budget Committee
document obtained from Democratic sources outlined three different
strategies to overhaul Medicare:
Giving seniors incentives to enroll in health maintenance
organizations and other less expensive forms of managed care.
The annual $100 deductible for physician and outpatient services
would be doubled over two years and indexed to inflation.
All beneficiaries' Part B premiums now $46.10 a month would
increase by $5 to $6 a year. Beneficiaries would pay up to $164 a
month in premiums if their income exceeded $70,000 for individuals
and $90,000 for couples.
Starting in 1999, new beneficiaries would be charged $20 a month
more in Part B premiums, chiefly for physicians' services, if they
wanted to retain fee-for-service coverage and avoid managed care.
Eventually, Medicare would be converted to voucher system, with
the government making a set contribution to whatever plan the
beneficiary chooses. Those who elected more expensive coverage
would pay more out of pocket.
Going immediately with a universal Medicare voucher for private
coverage. Beneficiaries would pay extra for some coverage and get
''a rebate if the plan is less than the worth of the voucher.
The vouchers would be adjusted based on age, gender, location
and disability status. The average voucher would be $5,105 in 1996
and climb by about 5 percent a year to $6,390 by 2002.
Currently Medicare spends $4,763 per beneficiary and has been
growing at 10 percent a year.
A plan combining $178 billion in savings from providers and
beneficiaries with an automatic mechanism to trigger $101 billion
in additional savings if the shift to privatize Medicare failed to
save that much.
Rep. John Kasich, R-Ohio, the Budget Committee chairman, said
spending on Medicare would still grow from $178 billion in 1995 to
$258 billion by 2002.
But the Congressional Budget Office has projected that under
current law, Medicare would spend $319 billion in 2002 the same
year its hospital trust fund is scheduled to run short of money.
CBO Director June O'Neill told the Senate Finance Committee the
fund would need an additional $165 billion to remain solvent
through then.
The American Hospital Association warned the Medicare savings
could drive rural hospitals out of business. Hospitals that now
turn a slight profit on elderly patients could lose 21 percent, or
$1,300, on each Medicare patient they admit in 2000, hospital
executives said.
'`The financial picture here could be devastating,' said Dick
Davidson, president of the hospital association.
APNP-05-11-95 1636EDT
EXECUTIVE OFFICE OF THE PRESIDENT
15- May- 1995 10:04am
TO:
(See Below)
FROM:
Barry J. Toiv
Office of the Chief of Staff
SUBJECT:
Kasich on Medicare
For those who haven't seen it, here are comments by Kasich on the
subject of Medicare on 60 Minutes last night:
"Now, will it mean that our senior citizens will be uncomfortable
with the fact that they've got some higher deductibles and they
find themselves in somewhat of a foreign setting from what they' ve
been used to? Yeah, that'll be a problem. But if they cannot
adapt to that, and if we cannot design a comfortable way for them
to get into that kind of a setting, they won't have any Medicare
in seven years. I mean, it's not like we've got a choice here.
And our biggest challenge will not be medical care at the end of
the day. Our biggest challenge is going to be the fear of
change.'
Distribution:
TO:
George Stephanopoulos
TO:
Gene B. Sperling
TO:
John C. Angell
TO:
Martha Foley
TO:
Patrick J. Griffin
TO:
Douglas B. Sosnik
TO:
Karen L. Hancox
TO:
LAWRENCE J. HAAS
TO:
Nancy-Ann E. Min
TO:
Virginia M. Terzano
TO:
Carol H. Rasco
TO:
Kathryn Higgins
TO:
Mark Gearan
CC:
Laura Capps
CC:
Elena R. Mccoy
CC:
Erin A. O' Connor
CC:
Steven A. Cohen
THE NEW YORK TIMES, THURSDAY, MAY 11, 1995
G.O.P. Suggests Smaller Benefit Adjustments
By ROBERT PEAR
Index, was already planning a revi-
Republican recommendations says.
WASHINGTON, May 10 - As part
sion for 1998. But the Congressional
The premium is now $46 a month.
of their plan to eliminate the Federal
Budget Office said this revision was
The House Republicans would also
budget deficit, House Republicans
likely to slow the growth of the index
reduce payments to doctors and hos-
today recommended a reduction in
by just two-tenths of 1 percentage
pitals, especially teaching hospitals
the annual cost-of-living adjustment
point.
and those that serve large numbers
for Social Security and other Gov-
The Medicare proposals unveiled
of low-income patients.
ernment benefits, starting in 1999.
today by Representative John R. Ka-
sich, chairman of the House Budget
The Budget Committee recom-
At the same time, Republicans on
Committee, are far more detailed
mendations are not binding on other
the House Budget Committee sug-
gested vast changes in Medicare,
and specific than those suggested by
committees. The Ways and Means
which would increase costs for many
Senate Republicans, who called for a
Committee, for example, could
elderly beneficiaries.
bipartisan commission to deal with
choose other policies to achieve the
More than 43 million people re-
the politically explosive issue.
savings required in the annual budg-
ceive Social Security, and 37 million
Republicans on the House Budget
et resolution.
are enrolled in Medicare. The annual
Committee recommended three doz-
But the options recommended to-
cost-of-living adjustment in Social
en ways to slow the growth of Fed-
day by Mr. Kasich were developed
Security is based on changes in the
eral Medicare costs. They include
with House Republican leaders and
Consumer Price Index. Republicans
higher premiums, deductibles and
are widely seen as a road map for
said their proposal was justified be-
co-payments for beneficiaries and
the type of changes that will be en-
cause the price index, in its current
dorsed by the full House and Senate
form, overstated inflation by as
as they try to shore up the finances
much as 1.5 percentage points. Many
Taking a slice out of
of Medicare and revamp the pro-
economists agree that there is some
gram for millions of baby boomers
overstatement, but the amount is in
the cost-of-living
who will retire in the next century.
dispute.
Confidential documents from the
Lobbyists for the elderly said the
increase.
House Budget Committee show that
proposals violated the Republicans'
the Republicans are also recom-
campaign pledge to make no
mending these changes:
changes in Social Security, Martin A.
Corry, director of Federal affairs at
strong new incentives for them to
9Double the amount that benefi
the American Association of Retired
join health maintenance organiza-
ciaries must pay for doctors serv-
Persons, said: "Prior to and after
tions, which provide comprehensive
ices before Medicare covera be
care in return for a fixed monthly
gins. The annual deductible, now
the elections, Republicans made un-
fee.
$100, would be raised to: $200 and
equivocal statements that Social Se-
Mr. Kasich said the Republican
then increased automatically to keep
curity was off the table. Today's
proposals would "expand health
pace with the growth of the program
proposal is a repudiation of that
care choices for the elderly." But
The deductible has been raised only
campaign promise." He predicted
"a firestorm" of opposition to any
Mr. Corry said the Republicans were
three times in the year history of
reduction in the inflation adjust-
"creating a coercive environment in
Medicare.
which Medicare beneficiaries will be
9Increase the monthly $46. pre
ment.
herded into managed care and out of
mium by $5 in each of themex four
The average Social Security bene-
traditional fee-for-service arrange-
years, then by $6 in 2000 and in each
fit for retired workers is $698 a
ments."
of the following two years
month. In recent years, the annual
cost-of-living adjustment, or has
Under one of the leading options,
9Charge higher premiums for
Medicare beneficiaries would re-
beneficiaries with incomes exceed
been around 3 percent, and in the
ceive Federal vouchers worth a
ing $70,000 a year. The premium
next decade it is expected to be 3 to 4
fixed amount, around $5,100 a year,
would more than triple, toy$164 a
percent. The House Republicans
to enroll in an H.M.O. or other pri-
month, for individuals with incomes
would make a one-time permanent
reduction of six-tenths of 1 percent-
vate health plan. They would have to
of more than $95,000 a year and
age point in the Consumer Price
use their own money to make up the
couples with more than $115,000.
difference if the cost exceeded the
9Charge patients for a portion of
Index, with a corresponding reduc-
amount of the vouchers, but they
the cost of home health care pro-
tion in the inflation adjustment for
1999. This would reduce the basic
could keep most of the savings if
vided to elderly people residing in
amount on which future adjustments
they chose less expensive plans.
their own homes. Republicans said
are calculated, and the cumulative
The Republicans also recommend
such a charge would discourage
a stiff (inancial penalty for new
overuse of home health services, but
effect could be substantial, totaling
Medicare beneficiaries who refuse
lobbyists for the elderly said it would
several hundred dollars a year for
the average beneficiary over five
to join H.M.O.'s. "Beginning in 1999,
be a tax on frail elderly people.
all new enrollees choosing Medicare
The House Republicans are pro-
years.
The Bureau of Labor Statistics,
fee-for-service would pay a pre-
posing similar charges for the use of
which computes the Consumer Price
mium $20 higher than that of current
medical laboratories and skilled
Medicare beneficiaries," one of the
nursing homes.
Hew muny pay more?