A bipartisan group of senators wants to make the Medicare program work more like the health insurance program available to federal employees, and they want to do it as part of this year's balanced-budget bill.
The plan is meeting stiff opposition, however. Seniors groups and liberal lawmakers fear it will evolve into a voucher program and HCFA will reduce the amount of Medicare's contributions over time to save money.
It could also put the GOP budget on a collision course with the Clinton administration, which said last week it would oppose any Medicare overhaul that doesn't guarantee every Medicare beneficiary a full range of benefits.
Under the plan gaining momentum in Congress, Medicare beneficiaries would be able to choose from a menu of managed-care options as well as traditional fee-for-service Medicare. Nearly 10 million federal employees and their dependents are part of the Federal Employees Health Benefits Program, which has a similar structure.
Sen. John Breaux (D-La.) introduced the Medicare restructuring legislation. Sen. Connie Mack (R-Fla.) also has worked with Breaux on the proposal, which appears to have bipartisan backing. At a recent hearing of the Senate Finance Committee, which has jurisdiction over Medicare, all the senators in attendance expressed support for the measure.
Health plans, including provider-sponsored organizations, would bid on a defined set of Medicare benefits. HCFA would set Medicare's per-beneficiary contribution at an amount equal to the average of the bids. The Medicare contribution would vary by beneficiary to account for variations of age, health status and other risk factors. HCFA would disseminate standardized quality and benefit information and monitor the marketing sales practices of the plans. There would be an annual open enrollment period, but seniors could still change plans at regular intervals.
The plan also has some support in the House. Ways and Means health subcommittee Chairman William Thomas (R-Calif.) said in a recent speech that he would like to infuse the balanced-budget plan with a Medicare overhaul, and he singled out the Federal Employees Health Benefits Program as a suitable model.
While the idea of creating a menu of managed-care and indemnity plan options has little opposition, the idea of capping per-beneficiary contributions does.
Marty Corry, director of federal relations for the American Association of Retired Persons, said Congress should not rush to make changes to the Medicare program.
"It is premature to be trying these big structural changes in this year's debate; this is not a quick and easy thing to do," Corry said.
This would not be the first time the Republicans have looked to the federal employees health plan as an outline for Medicare. It was included in the Republican 1995 balanced-budget plan vetoed by President Clinton.
"This has already been accepted by (Congress) once; the basic concept is something we are familiar with," Mack said.
But a Democratic aide said the chances of passing a major Medicare overhaul in this year's budget "aren't great."
Current Medicare HMOs say a program based on the federal employees plan would, if structured right, be a positive change. However, they would not support moving Medicare into the current plan as some lawmakers have suggested.
HHS Secretary Donna Shalala said the White House would oppose turning Medicare from a defined benefit program, in which every beneficiary is entitled to every Medicare benefit, to a defined contribution program in which Medicare contributes a set amount on behalf of each beneficiary toward the purchase of insurance.
"We believe we ought to guarantee the benefit rather than just making a contribution" toward the purchase of coverage, Shalala said.