A Road Map to Changes in Medicare Landscape of U.S. Health Policy Changing

By Robert Pear 1995, New York Times News Service | St Louis Post-Dispatch (MO), October 21, 1995 | Go to article overview

A Road Map to Changes in Medicare Landscape of U.S. Health Policy Changing


Robert Pear 1995, New York Times News Service, St Louis Post-Dispatch (MO)


THE MEDICARE bill passed Thursday by the House would propel elderly people into a new world, where competitive forces are buffeting doctors, hospitals and the rest of the health care industry.

For better or worse, Medicare is catching up with the private health care market. Even if President Bill Clinton vetoes it, the bill signals the direction in which health policy and the nation's health care system are already evolving.

Under the bill, elderly people will, in theory, have a range of health insurance options like those available to people under 65. But many people under 65 now find their choice of doctors and hospitals restricted. They accept limited choices in return for lower costs or additional benefits.

The Senate Finance Committee has approved legislation like the Medicare bill passed Thursday by the House. What follows is a summary of the bills' likely effects on Medicare patients and various segments of the health care industry:

Beneficiaries

Under the Republican proposal, Medicare beneficiaries could enter a fiercely competitive medical marketplace. Those who join health maintenance organizations would probably have less choice of doctors and hospitals, but they could perhaps obtain coverage for prescription drugs, preventive services, eyeglasses and other items not covered by the standard Medicare program.

Healthy Medicare beneficiaries are presumably more likely to enroll in HMOs. But sick people may also find them attractive because the HMOs put a firm limit on the costs for which patients are responsible.

The Congressional Budget Office estimates that the monthly Medicare premium, which helps pay for doctors' services, would rise under the Republican plan to $87.60 in 2002, from $46.10 this year. Under current law, the premium would drop to $42.50 next year, and would rise to $60.80 in 2002.

Under the Republican proposal, Medicare costs would be predictable for the next seven years - much more predictable than health costs are for private employers.

The risk, repeatedly emphasized by Democrats, is that Medicare payments will not keep up with actual health costs, so the purchasing power of Medicare benefits will be eroded. In theory, private health plans would have to provide Medicare beneficiaries with the same services now available under the government program.

The average federal payment for each beneficiary would grow 5 percent a year, but there is no limit on the growth of private health costs or premiums. Low-income people may have to choose low-cost plans, while high-income people could presumably buy better coverage.

*****

Doctors

In the past, when Medicare cut payments to doctors, there was concern that doctors would shun Medicare patients in favor of those with private insurance, which paid higher fees for the same services. But the private market has become less lucrative and satisfying for doctors, whose clinical decisions and fees are continually scrutinized by insurance companies and private health plans.

So doctors squeezed by Medicare have fewer alternatives. The House and Senate Medicare bills would cut payments for surgery by 10 percent next year as part of an effort to save more than $22 billion in Medicare spending on doctors' services over seven years.

Doctors want to create their own health plans, to compete with HMOs and insurance companies, and the Republican bills in Congress make it easier for them to do so, in part by exempting doctors from certain antitrust laws.

Urologists derive 60 percent of their income from Medicare, and most practice in groups of two or three. But officials say urologists are forming links with HMOs, which will have greater need for their services if millions of elderly people enroll.

The House bill would relax federal regulation of laboratories in doctors' offices and allow doctors to refer Medicare patients to medical companies in which the doctors have financial interests.

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