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Effort being made to incorporate Medicare into new health care blueprint


WASHINGTON -- President Clinton's health policy advisers have been developing plans to incorporate Medicare into a new health care system, even as they have assured elderly people that no major changes in Medicare were imminent.

Although they know they risk creating a political outcry from elderly people who fear major changes in a crucial safety net, administration officials say it will be difficult to control health costs if people 65 and older remain outside the new system. Officials also hope to offer additional benefits, such as lower co-payments, to elderly people in the new system, making the change more attractive.

AARP, which represents the interest of millions of elderly people, reacted cautiously last night.

Martin A. Corry, director of federal affairs at the American Association of Retired Persons, said, "Whenever you talk about changes in Medicare, it makes people nervous."

He said it was fine for the government to give elderly people incentives to enroll voluntarily in health-maintenance organizations. But he warned: "Dropping Medicare into an untested new system, based on an unproved theory about how to deliver health care, would be very controversial. Before we do that, we ought to make sure the new system works."

Medicare finances health care for 32 million elderly and 3.6 million disabled people, at a cost of more than $140 billion this year. It accounts for 15 percent of all health spending in the United States, including 40 percent of the revenue that hospitals get from the care of patients.

Efforts to curb its growth by regulating hospital and doctor fees have largely been confounded by increases in use of medical services, and rising Medicare bills are an important contributor to the federal budget deficit.

In recent weeks, the administration's thinking about how to restructure the health-care system has grown steadily more comprehensive, more sweeping and more ambitious.

White House officials confirm that they intend to propose incorporating workers' compensation, the medical portion of automobile insurance and Medicaid, the health program for the poor.

Medicare is bigger than the other programs, and its beneficiaries are a well organized political force.

Under the administration proposals, which are to be submitted to Congress in June, most people under 65 would get private health insurance coverage through large consumer cooperatives that offer a range of health plans.

The lower-cost plans would resemble health-maintenance organizations, which provide all care for a preset fee and require use of particular doctors and hospitals.

People would retain this coverage when they turned 65. And in the proposals now being discussed, people already on the Medicare rolls would be strongly encouraged, through a variety of incentives and penalties, to join HMOs.

Hillary Rodham Clinton, head of the task force, has told members of Congress that Medicare beneficiaries should be brought into the new networks of doctors and hospitals as quickly as possible.

Confidential work papers from the task force say that Medicare beneficiaries may have to pay more if they insist on getting care through standard fee-for-service arrangements.

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