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GOP seeks to nudge Medicare beneficiaries into HMOs

THE BALTIMORE SUN

WASHINGTON -- House Republicans are proposing changes in Medicare that would impose annual spending limits and give elderly people a choice of private health insurance plans as alternatives to the standard federal program.

Confidential documents prepared by Republicans on the House Ways and Means Committee describe numerous options that would increase costs for Medicare beneficiaries who stay in the standard program, under which the government pays separately for each doctor's visit and each hospital admission.

More than 90 percent of the 37 million Medicare beneficiaries receive care through such fee-for-service arrangements.

Under the Republican plan, they would be allowed to remain in the standard program, but the proposals would create strong financial incentives for them to switch to health maintenance organizations.

"A greatly expanded choice of plan options will be made available to Medicare beneficiaries at time of initial eligibility and during subsequent annual open-enrollment seasons," say the documents, which put flesh on the bones of the budget cuts already endorsed in principle by both houses of Congress.

The budget plan approved by Congress last month would slow the growth of Medicare by cutting projected spending by $270 billion, or 14 percent, over seven years.

Under the main Republican proposal, the government would make regular payments to private health plans chosen by Medicare beneficiaries. The basic federal contribution would be the same for each person in a given market area, but it would be "adjusted for demographic and risk factors."

An HMO would, for example, get more money from the government for enrolling an 86-year-old woman with cancer than for signing up a healthy, vigorous 65-year-old.

If a Medicare beneficiary chose a private health plan that charged less than the federal payment, he or she would receive a cash rebate equal to the difference.

But if a beneficiary enrolled in a private plan that charged more than the Medicare rate, "the beneficiary must pay the additional premium to the plan."

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