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Bush Supports Republican Plans To Cut Excess Medicare Spending

By Robert Pear

The New York Times -- WASHINGTON

The Bush administration joined House Republicans on Monday in pushing a proposal that would force Congress to vote on possible cutbacks in Medicare if the costs of the program, including new drug benefits, grow faster than expected.

The plan would also set limits on the use of general tax revenue for Medicare.

Senate negotiators have offered a similar proposal, labeled a “bipartisan Senate staff option.” This suggests that some cost-control mechanism is likely to be in any Medicare bill that emerges from Congress, despite objections from many Democrats and advocates for the elderly.

Both proposals would fundamentally change the financing of Medicare. They would also make it more difficult for Congress to enhance drug benefits, raise payments to doctors or provide coverage for more outpatient services.

The proposals were discussed on Monday by a group of House and Senate negotiators trying to meld Medicare bills passed by the two chambers. The negotiators, most of them Republicans, have agreed on the structure of drug benefits to be offered to 40 million elderly and disabled people. The benefits are significantly less comprehensive than those in many private health plans.

Democrats have said that if Congress enacts a Medicare drug benefit this year, they will immediately campaign to expand it, so that Medicare would pay more of the costs.

In the House, which passed the Medicare bill by one vote in June, Republicans have demanded a mechanism to make sure the new drug benefits do not cost more than the 10-year budget allocation of $400 billion.

President Bush’s budget director, Joshua B. Bolten, and Tommy G. Thompson, the secretary of health and human services, have been trying to devise such a mechanism in talks with the Medicare conferees.

Asked how much cost control the administration wanted, Thompson said, “As much as we can get.”

Rep. Jeb Hensarling, R-Texas, said the proposed controls did not go far enough. “The conferees are working hard and acting in good faith,” he said, “but most of what I have seen, read or heard about their work on cost containment reveals little cause for optimism.”

Democrats outside the conference committee are wary. The proposed cost controls would “undermine Medicare’s protection for the elderly,” said Rep. John M. Spratt Jr. of South Carolina, the senior Democrat on the budget committee.

One of the two Democrats participating in the Medicare negotiations, Sen. John B. Breaux of Louisiana, favors a cost-control mechanism.

The other Democrat, Sen. Max Baucus of Montana, said: “I personally believe that there should be some mechanism, but it should not be discriminatory. It should not single out Medicare.” If the cost of new Medicare benefits must be offset to avoid increasing the deficit, Baucus said, a similar requirement should apply to tax cuts.

Under the latest proposal from House Republican negotiators, Medicare would be declared “programmatically insolvent” if its trustees found that general tax revenue would account for more than 45 percent of Medicare spending at any point in the next seven years. If the trustees made such a prediction for two consecutive years, the president would have to propose ways to reduce the dependence on general revenue.