President Clinton yesterday abandoned plans to call for a fundamental change to Medicare that would have for the first time charged 39 million elderly and disabled Americans different amounts for their health care depending on their income, according to White House sources.
Sources said the president had been prepared to include the controversial change as part of a long-promised proposal aimed at improving the vast public health insurance system and keeping it from going broke.
But just 72 hours before the plan is scheduled to be unveiled, Clinton dropped the idea in the face of a wall of resistance his aides encountered in recent days as they shopped the idea on Capitol Hill to Democrats and Republicans alike.
Many congressional Republicans contend that charging higher fees to wealthier Medicare patients, an idea known by the jargon of "means testing," is tantamount to a tax increase. Many Democrats, on the other hand, argue that such an approach would erode broad support for a program that has been enormously popular since it began more than three decades ago.
As a result, Clinton, who has long favored a Medicare means test as a way to boost the program's fragile financial health, reluctantly concluded that the idea would doom from the outset what may prove one of the last major domestic initiatives of his presidency, according to sources familiar with the president's thinking.
"It's pretty clear that there's no traction for this in either caucus," one senior White House official said last night.
The possibility of different insurance premiums for different Medicare patients was one of the most sensitive ideas under consideration, as the White House put together a plan for redesigning Medicare. Created as a Great Society reform of the 1960s, the insurance system is widely considered to offer an outmoded package of benefits. It will also soon face enormous financial pressures as the large baby boom generation begins to retire.
Clinton will propose that Medicare begin to offer all beneficiaries help in paying for prescription drugs -- a step that is wildly popular in principle but almost certain to elicit criticism in its details. The plan also will attempt to foster greater competition among private HMOs, which enroll a small but growing share of Medicare patients, and within the traditional "fee-for-service" version of the program in which patients choose their own doctors and visit them when they want.
His proposal will not, however, contain a proposal to begin charging Medicare patients some of the cost of home health services. White House officials had initially favored the idea, but it was opposed by Vice President Gore, a source said.
Means testing would have saved $3 billion to $10 billion over five years. But with that idea off the table, the White House has not figured out how to save as much money as the program will need, particularly in light of the expensive new drug benefit. White House sources said that Clinton would remain open to adding back the idea during negotiations with Congress.
Yesterday, as the president sought through a speech to teenagers and a White House news conference to refocus attention on his domestic priorities, key members of Congress signaled that they are receptive to at least discussing changes to Medicare.
But the reaction on and off Capitol Hill also suggested that finding a specific agreement on how to design the program this year is likely to prove difficult, at best. In particular, GOP leaders suggested that any prospect for Medicare reform might require the White House to swallow the party's desire for some kind of tax cut.
"I ask the president: Please include tax relief in your agenda," House Speaker J. Dennis Hastert (R-Ill.) said at a GOP rally at the Capitol.
But Rep. Robert T. Matsui, a senior Democrat on the House Ways and Means Committee, expressed doubt about including more money for both Medicare and a major tax cut. "There won't be enough money to go around," he said.
On a more conciliatory note, Sen. William V. Roth Jr. (R-Del.), chairman of the Senate Finance Committee, announced yesterday that the bipartisan bill his committee is working to draft will contain a prescription drug benefit. "It is critically important that we not squander this opportunity to work together in favor of pursuing self-serving, partisan and short-term advantages," Roth said.
And Sen. John Breaux (D-La.), who accused Clinton of obstructionism three months ago when a high-level Medicare reform commission the senator chaired collapsed in dissent, sounded far more congenial yesterday after a brief meeting with White House officials.
"I'm hopeful, and I'm optimistic," Breaux said. Noting that both Clinton and GOP leaders all were professing to want Medicare reform, he said, "Now, there's a big leap from saying, `Let's do something,' to getting something done, but . . . I think we're closer to getting something done than we've been in quite a while."
Clinton's eagerness to charge more affluent patients more money is not the first time the issue of means-testing has arisen -- or the first time it sparked controversy.
It was an element of his ill-fated health reform proposal during the first term of his presidency, and it resurfaced two years ago as Congress searched for ways to control Medicare costs in drafting a balanced-budget agreement. The Senate supported the idea in 1997, but it was defeated in the House.
To try to dampen the political opposition, the White House had been thinking of setting the incomes at which patients would be charged significantly higher premiums than under past proposals -- perhaps starting at $80,000 to $100,000 -- but had not settled on an amount before Clinton backed away from the idea.
Even so, the reaction on Capitol Hill was swift and negative. As emissaries from the White House conferred with members of Congress, many Democrats warned that such an approach inevitably would antagonize older Americans with higher incomes. It also presented a potential problem for Gore's presidential hopes.
"Whenever you've tried to means test taxes or benefits for seniors," Rep. Martin Frost (D-Tex.), chairman of the Democratic caucus, said yesterday, "you've run into great difficulty."
Staff writer John F. Harris contributed to this report.