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With critics largely in check, House GOP moves on Medicare Use of threats, favors has proved good strategy; foes belatedly speak out


WASHINGTON -- The Republican plan to shrink Medicare is on the verge of approval in the House, with GOP leaders having neutralized much of their opposition with a combination of favors and threats for interest groups that stood to lose billions of dollars.

Doctors, hospitals, insurance companies, medical schools, medical equipment manufacturers and advocates for the elderly all helped craft the bill, took whatever sweeteners they could get and generally withheld criticism, at least until the proposal was unveiled.

Now, with proposals to overhaul Medicare having reached a critical stage in both the House and Senate -- and with polls revealing public alarm -- opposition advertising and grass-roots campaigns are being launched. But the Republicans think -- and hope -- it may be too late.

"We're actually encouraged by the polls," said Tony Blankley, a spokesman for House Speaker Newt Gingrich. "We knew we were going to drop at some point, but it didn't happen until late September. Even though ad campaigns are starting, they were silent all summer, and we're going to be on the floor with our bill next week."

By contrast, the Clinton administration's proposal last year to overhaul the entire health system was crushed by negative advertising campaigns when it was still in the drafting stages.

The difference is that the GOP proposal "is larded with paybacks" to quiet potential opponents, Rep. Pete Stark, a California Democrat, charged this week.

For example, the American Medical Association, which endorsed the House proposal this week, was a big winner. Although doctors will lose $26 billion in fees increases, they won a guarantee that fees will not decrease, a limit on medical malpractice damages, and the right to join with hospitals to form managed-care networks that would compete with insurance companies.

Other sweeteners include:

* For medical schools, $15 billion for a trust fund to finance graduate medical education.

* For insurance companies, managed-care programs were spared an $8 billion loss in reimbursements for payments to academic centers. Health maintenance organizations were also permitted to charge as much in premiums as traditional fee-for-service programs.

* For medical equipment manufacturers, a change in the Senate bill that will allow patients to put Medicare reimbursement toward equipment of their choice rather than the cheapest model.

The one major group to jump ship so far is the American Association of Retired Persons, the biggest lobby for the elderly, which is launching an ad campaign against the Medicare bill this weekend after helping to craft it.

Mr. Gingrich, who regards the Medicare overhaul as the heart of the GOP budget-balancing effort, moved quickly last spring to get everyone with a stake in the bill involved in drafting it. He conducted the negotiations in his office, and there was nothing subtle about the message, participants say. It was play or pay.

During the AARP's time with Mr. Gingrich, the group won a concession that there would be no increase in the co-payments and deductibles Medicare beneficiaries pay. That was not enough to buy support for the whole measure, but it delayed AARP's campaign to alert its 33 million members to provisions the organization opposes.

"We had to take advantage of the opportunity to change the bill so it would do the least damage possible," said John Rother, the group's chief lobbyist.

Frederick C. Graefe, a lobbyist who represents doctors, hospitals, and other health care providers, said: "It was like the old line from Sen. [Russell] Long: 'Come to me early, and you get my undivided attention; come to me late, and you get good government.' "

Almost everyone who came early got something out of it, often a lot.

Lobbyists wrote many sections of the bill, and the Republicans, in turn, gave them "talking points" for news releases and committee testimony to help spur public support for the measure.

"This time, there was an effort to include the industry in the process," said Richard Coorsh, a spokesman for the Health Insurance Association of America, the trade association that ran the "Harry and Louise" ads against the Clinton health care bill last year. "We agreed with most of the Clinton bill, but we felt we were villainized by the administration for political reasons."

Just as important as the favors, though, was that Mr. Gingrich allowed those who took part in shaping the Medicare bill to choose their medicine. Somehow, a total of $270 billion had to be squeezed from the program over seven years. Mr. Gingrich invited proposals from those affected for the best way of getting there.

The doctors, for example, lost $26 billion in expected fee increases.

L "He challenged everyone to come up with a plan to assess con

tributions accordingly," said James Stacey, a spokesman for the AMA, which formally endorsed the House bill this week. "We took that very seriously and produced a 60-page document."

"They didn't take our plan 100 percent," Mr. Stacey said. But the doctors will benefit from many features of the bill.

Hospitals face a loss in Medicare payments of $86 billion over seven years, forcing many out of business. Yet, their representatives are still at the table trying to make the best of what they see as a bad situation.

The new opportunity to join with doctors to provide their own managed-care programs is a strong attraction.

"When they're doing just about everything you ask, it's very hard to go out and blast them," said Thomas A. Scully, a hospital lobbyist. "Newt has played this brilliantly."

White House officials say President Clinton will veto the Medicare bill if it passes in its current form because it cuts too deeply into the program.

Mr. Clinton has offered his more modest proposal for a Medicare overhaul, however, so a compromise is possible.

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