By a unanimous vote, the 20-member Senate Finance Committee last week enacted the most radical of the Medicare reform plans that have passed Congress so far this year: The plan would raise the eligibility age for Medicare and call on wealthy seniors to pay more for their care.
Like its counterpart bill passed earlier this month by the House Ways and Means Committee, the Senate Finance Committee's balanced-budget bill would reduce projected Medicare spending by about $115 billion from fiscal 1998 through 2002. Both plans call for hospitals to absorb more than $45 billion of those reductions.
But unlike the House plan, the Finance Committee bill does not call for a one-year freeze on Medicare hospital inpatient payment rates. Instead, the legislation would set the 1998 payment rate update at the rate of hospital inflation minus 2.5 percentage points. According to current government figures, the rate of hospital inflation is expected to be about 2.7%, so the 1998 update would be about 0.2%.
The Senate bill also calls for the effective date of the increase to be pushed back three months from Oct. 1 to Jan. 1, 1998.
But the most controversial aspects of the Senate bill involve patients, namely children and Medicare beneficiaries.
For example, a majority of the Finance Committee members rebuffed President Clinton and committee moderates by rejecting a package seeking to expand children's health insurance al-most exclusively through the Medicaid program.
Instead, the committee adopted an initiative drafted by Chairman Sen. William Roth Jr. (R-Del.) that would give states the option of either accepting a block grant to subsidize private-sector health insurance policies or expanding Medicaid.
The committee's initiative fulfills a commitment in May's balanced-budget accord between Clinton and congressional Republicans to spend $16 billion on expanding children's access to healthcare services over the five years of the plan.
Sens. John Chafee (R-R.I.) and John D. Rockefeller (D-W.Va.), both Finance Committee members, were unsuccessful in a bid to insert in place of the Roth proposal an amendment that would seek to expand coverage to pregnant women and children with family incomes of up to 150% of the federal poverty level.
The White House endorsed the Chafee-Rockefeller plan, but it lost by an 11-9 vote.
The Clinton administration was also critical of a provision in the Finance Committee plan that would increase the Medicare Part B deductible for well-off seniors.
Under the amendment, which passed by an 18-2 vote, Medicare beneficiaries with incomes of $50,000 or more ($75,000 for a couple) would pay a Part B deductible of $540 a year. That deductible would rise gradually to $2,160 for seniors with an annual income of $100,000 or couples with an income of $125,000 or more.
Currently, all Medicare beneficiaries pay a $100 annual deductible.
The provision drew criticism from seniors groups. But Senate Majority Leader Trent Lott (R-Miss.) called it "the responsible thing to do" and added that it would be supported by GOP leaders in Congress.
It's unclear whether the higher deductible for affluent seniors or another Finance Committee proposal to gradually increase the eligibility age for Medicare from 65 to 67 will survive the next budget round.
The full House and Senate are scheduled to begin work this week on their respective balanced-budget plans. Then they must meet to hash out the plans' differences. The House plan doesn't include either of the controversial beneficiary provisions.