If the Clinton administration's Medicare expansion proposal works as advertised, it's unlikely to significantly shrink either the ranks of the uninsured or providers' uncompensated-care costs.
But if the critics of the plan are correct, it could have lasting effects on the health of the Medicare trust fund.
Last week the Clinton administration unveiled its major Medicare initiative for this year's budget: A proposal to give early retirees and workers over age 55 who lose their jobs a chance to buy into Medicare.
Early retirees would pay a monthly premium, about $300 if they leave work at 62. For those over age 55 who lose their jobs, the monthly fee would be about $400, said HHS Secretary Donna Shalala.
Anyone taking advantage of the new early Medicare benefit would pay more for Medicare once they reach age 65. The surcharge, estimated by Shalala to be about $15 a month, would make up for the cost of their taking Medicare early.
The administration said the program will be self-financing and will not affect the Medicare Part A trust fund. However, officials acknowledged the premiums would not cover the entire cost. The difference, between $2 billion and $3 billion a year, would be made up through fines and repayments from new anti-fraud measures.
Administration officials concede that at best, the program would put only a small dent in the number of uninsured, now more than 40 million. According to Shalala, when fully implemented, the program could help about 300,000 of the nearly 2 million eligible individuals.
"I don't think it will help (hospitals) much, but it will make a good election-year issue," said one hospital lobbyist, who asked not to be identified.
Seniors and consumer groups hailed the proposal, while Republicans were less enthusiastic. Critics said the new program will attract only the sickest patients and therefore further strain the Medicare system.
"When your grandmother is on the Titanic and it is sinking, your first thought ought not to be to get more people on the Titanic," said Sen. Phil Gramm (R-Texas), chairman of the Senate Finance health subcommittee.
Providers said they supported increasing access to insurance but criticized subsidizing the program through increased anti-fraud activity, which provider groups are trying to rein in (See related story, p. 21).
"We welcome the discussion of ways to plug gaps in the insurance system . . . but it is outrageous to suggest that the new initiative be funded through a new fraud initiative," said Richard Pollack, executive vice president for federal relations for the American Hospital Association.
Jim Scott, president of the Premier Institute in Washington, said he is concerned that over time, lawmakers would increase subsidies and the number of eligible individuals, further straining Medicare.