Seniors who fear change can keep their fee-for-service coverage as it is now. GOP reformers insist, and they won’t be penalized with higher premiums or deductibles. (Wealthier people may be paying more in general under the Gingrich plan, but there will be no additional hike if they want to keep fee-for-service.) It’s the doctors and hospitals who will be taking the biggest hit. Republicans hope to save some 8200 billion over the next seven years by severely limiting the growth in doctor and hospital fees. And GOP reformers plan to prevent providers from padding their bills with extra services: physicians must keep total charges per patient within set guidelines each year, or face further cuts in payments the next year. Not surprisingly, doctors and hospitals hate this idea; they claim Medicare already pays them far less than their actual costs. Some critics worry that if reimbursement rates go much lower, more doctors will simply refuse to treat Medicare patients, and hospitals will try to shift costs or simply close their doors.
Seniors could opt instead to receive vouchers and use them to buy managed-care plans; any savings would be split with the government. Nationwide, 9 percent of Medicare enrollees already belong to an HMO -and many offer extras like free eyeglasses, prescription-drug coverage and zero copayments to lure seniors in. The downside for patients is limited choice of doctors and restricted access to tests, treatments and specialists. That, after all, is how HMOs keep costs down and profits up. But HMOs also benefit from the fact that it is mostly the younger, spryer seniors who join voluntarily, and their care costs far less than the average fees Medicare pays. In areas like California, New York and Florida, where Medicare pays as much as $650 per senior per month, HMOs “are making out like bandits–it’s incredibly profitable,” says Geradline Dallek of the Center for Health Care Rights in Los Angeles. In smaller states, where Medicare pays as little as $200 per month, HMOs aren’t eager to take the elderly on. Unless officials can devise new ways to split the risks and profits, Medicare won’t save much from managed care–and could end up paying even more.
Elderly Americans could also deposit their vouchers into “Medicare savings accounts” and buy private insurance policies covering only major illnesses, with deductibles as high as $5,000. They could pay smaller medical bills from the account on their own–and split the savings with the government. But few seniors would risk having such limited insurance coverage. As it is, 89 percent of them already have some form of supplemental policies to cover what Medicare doesn’t.
Republicans estimate that, eventually, about 40 percent of seniors would opt for managed care–and that competition between the plans could save as much as $80 billion by 2002. But that’s a big, untested assumption. As of now, 10 percent of elderly Americans consume 70 percent of all Medicare dollars. If those sick-est seniors opted to stay in fee-for~service, as many experts predict they will, the government would still be stuck with the bulk of the bills. And none of these reforms addresses the real crisis in Medicare–the fact that it was designed 30 years ago when few Americans lived long after retirement age. Now many more Americans are living far longer, and with chronic, expensive health problems. (And Medicare doesn’t cover afflictions like Alzheimer’s.) “This is mostly about politics,” says John Bother, the AARP’s chief lobbyist. “It would be nice to have a debate on what we want from our health-care system.” But then, the country might conclude that it needs to spend more, not less, on Medicare.
