THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, September 27, 1995 TAG: 9509270007
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 63 lines
The outlines of Medicare reform, as proposed by the GOP, are becoming clearer. But details remain sketchy. In broad strokes, here's how the program that covers 36 million seniors would be changed to save $270 billion over 7 years.
Save $120 billion by paying health-care providers less. And if saving targets aren't met by the rest of the program, providers could be hit even harder.
Save $70 billion by charging Medicare recipients more for participating. All recipients will see their monthly fees double by 2002, from $46.10 today to more than $90. Affluent participants would pay several times as much.
Save $50 billion by persuading participants to choose more cost-effective managed-care plans over the present fee-for-service arrangement.
The House would limit malpractice awards; the Senate would raise deductibles slightly and the eligibility age to 67.
Several elements of the plan are essential reforms that the Republicans deserve credit for proposing. Premiums have got to rise and means-testing them is reasonable. The most important innovation is to offer seniors a range of plans.
Market forces should be brought to bear on rising health-care costs. Unfortunately, competition is short-circuited by giving participants little economic incentive to choose a more frugal plan.
Seniors will get rebates for choosing managed care over the present fee-for-service plan. Providers are likely to make less money from fee-for-service patients and so may shun them. Thus, seniors may be forced into managed-care plans.
Rather than debate these issues, Democrats have demagogued them. Some provisions they now denounce are similar to reforms they proposed a year ago. This year, they offer no competing plan. In fact, managed care is the way to go.
However, many find the plan's cost-containment squeeze excessive. Between $90 billion and $150 billion would be sufficient to keep the system solvent. The additional billions are meant to reduce the deficit and, Democrats say, finance a tax cut for the prosperous.
Henry Aaron, health-care expert with the moderate Brookings Institution, calls the cuts Draconian. Even the editorial page of The Wall Street Journal, a conservative bastion, worries about ``squeezing doctors and hospitals once again with price controls to meet that arbitrary $270 billion target.''
Savings so huge can't materialize out of thin air; health-care consumers are likely to pay. And the squeeze could get even worse. The Congressional Budget Office has been unable to make the numbers add up to the $270 billion in savings that the GOP seeks.
Thus, Medicare reform is a work in progress. The GOP learned from Clinton's experience not to lay out a complex plan and let interest groups take potshots for months. They appear intent on keeping the details vague and pushing the reform through fast.
Tens of millions are dependent on Medicare or have parents covered by the program. All must follow reform efforts carefully and insist on clarity. Medicare is too important to allow it to be fundamentally changed by legislative sleight of hand. by CNB