Congressional Budget Cutters Take Aim at Two Sacred Cows GOP Raises Curtain on Ambitious Medicare Plan

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CANCEL your dinner plans. Unplug the phone. Heat up a bag of popcorn. Even in a year when Congress is considering dozens of ambitious reforms, nothing will match the upcoming Medicare debate for raw political theater. Armed with flow charts, opinion polls, and podium-thumping speeches, Republicans will portray themselves as the party of good sense, bent on saving Medicare from insolvency. Democrats will accuse the GOP of gutting the $180-billion program to finance a tax break for the wealthy. The show could start tomorrow, when Republicans plan to unveil blueprints for slowing Medicare's growth by $270 billion, over the next seven years. Many observers say this goal cannot be met without significant cost increases or reductions in coverage. At stake is the support of the 37 million older and disabled Americans enrolled in Medicare, and the Republican promise to balance the federal budget. But also in question is government itself. Some wonder if Congress can, or should, be pushed to revolutionize, in a matter of weeks, a program that consumes 11 cents of every tax dollar. "This debate will say a lot about the ability of our institutions to deal with huge programs where there are billions at stake, millions of people affected, and issues that are exceedingly complex," says Mark Peterson, a professor of political science at the University of Pittsburgh. "These are the hardest things for government to do." House Republicans recognize the gravity of the task. Win, and they could become the party of reform for the next generation. Lose, and they could be drummed out of office faster than their Democratic predecessors. Today, House and Senate Republicans are expected to meet privately to hash out their differences and, as Senate majority leader Bob Dole put it, begin "singing out of the same hymnal." By all accounts, Medicare costs are exploding. Since 1970, the rolls have swelled by 18 million, and Medicare's share of federal expenditures has nearly quadrupled. Part A of Medicare, which covers government payments to health-care providers, is funded by a 1.45 percent payroll tax, and is expected to run a deficit by 2002. Part B, which covers costs like doctor visits and laboratory tests, is funded by premiums paid by beneficiaries and general tax revenues. Its costs are also rising. While the GOP plan is still a work in progress, some details are emerging. Republicans have avoided raising copayments or deductibles for beneficiaries - with the possible exception of those earning more than $75,000 a year. Neither do they plan to force recipients into managed care networks, or HMOs, that would limit their choices of health-care outlets. The GOP plan would achieve $100 billion in savings by reducing the amount it pays to providers, like doctors and hospitals, to cover the costs of everything from inflation to new technology and the treatment of indigent patients. …