Medicare care reform panel splits on federal funding limits; Coverage of drugs, scope of benefits are key issues


WASHINGTON -- The highly charged politics of the government's influential Medicare reform commission were laid bare yesterday when commissioners grappled with a controversial proposal to limit the federal role in financing and running the health care system for the elderly and the disabled.

While agreeing with the need to cap government's contribution to the $214 billion-a-year program, the 17-member commission found itself at odds on two contentious questions: the scope of the benefits that the elderly would be entitled to under a new system and whether coverage of prescription drugs would be offered by all health plans -- including the traditional Medicare program.

"This could end in an impasse," said Laura D'Andrea Tyson, a commission member and dean of the Haas School of Business at the University of California, Berkeley. "It could deadlock because of the drug coverage questions. That is the pivotal issue."

With just five weeks left before the commission's report is due to Congress, Rep. Bill Thomas, a California Republican, had the same assessment. "Today was a basic advance from where we were before, but if we have to have drugs in the traditional Medicare program, then it's going to be difficult to come to an agreement," Thomas said.

If the commission endorses the new framework it would be a sweeping change in the 34-year-old Medicare program, which is the nation's largest health insurance program, serving 38 million elderly and disabled.

Depending on the direction the commission takes over the next four weeks, the proposal could fundamentally alter the nature of the entitlement that the elderly would be guaranteed. And, over time, it could result in a growing number of elderly receiving their health care through health maintenance organizations and other managed-care plans.

Under the proposal laid out by Sen. John B. Breaux, the Louisiana Democrat who chairs the commission, the government would pay 88 percent of the national average cost of a health care plan and recipients would pick up the remaining 12 percent, as well as co-payments and deductibles.

One commission member, Rep. Jim McDermott, a Democrat from Washington state, estimated that the proposal would result in a 30 percent increase in the premium cost to beneficiaries without any guarantee of new benefits. However, he said, if drugs were covered -- as has been proposed -- then the increase in costs might be justified.

Breaux also proposed that more affluent retirees pay more than others. Under his plan, elderly couples with an income of $50,000 a year and individuals with incomes of $40,000 a year would pay 25 percent of the premium -- more than twice as much as less affluent beneficiaries. In contrast, the poor would pay nothing for their premium.

The elderly and disabled covered by Medicare would choose between the traditional fee-for-service program, which allows them to choose any doctor or hospital, and a selection of HMOs and other managed care plans. Because a recipient's costs would be higher in more expensive plans, it is expected that a number of people would migrate to cheaper ones.

Pub Date: 1/27/99

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