Fury over US health cuts heralds bitter poll battle

To a cascade of abuse from Democrats, the Republicans in Congress yesterday presented their plans to overhaul Medicare, the federal health-care programme for the elderly and disabled - igniting a political controversy which will dominate this autumn's battle over the federal budget and loom large over the entire 1996 election campaign.

Under the proposals unveiled by Speaker Newt Gingrich, the Republicans aim to lop $270bn (pounds 175bn) from projected spending on Medicare over the next seven years, the biggest single component of the party's scheme to balance the federal budget by 2002. They intend to do so by a mixture of cost controls, higher premiums and incentives to recipients to switch to lower-cost alternatives.

Insisting that the scheme, which serves 38 million Americans, is facing bankruptcy early next century, Mr Gingrich said his party wanted to "preserve Medicare, to protect Medicare and to strengthen Medicare". For Democrats, however, the Republicans are simply slashing help for the old and infirm to pay for tax cuts for the better-off.

"This is a legislative joke, a disaster," Tom Daschle, the Senate Democrat leader, proclaimed of the 30-page Republican document, which contains no itemised accounting of how the savings will be achieved. Richard Gephardt, his opposite number in the House of Representatives, predicted "one of the biggest fights in congressional history".

More important, it is a fight in which Democrats believe that finally, both right and electoral advantage are on their side. Unlike welfare, where a majority of voters support the harsh reforms endorsed by senators of both parties this week, Medicare is hugely popular. President Bill Clinton has served notice that defence of Medicare will be a key part of his re-election platform, as Democrats seek to depict their opponents as cost-cutters with no heart, inflicting sacrifices on society's weaker elements to finance the $189bn of tax cuts in the "Contract with America".

Even before yesterday, tempers on Capitol Hill were exploding over Medicare reform, as Sam Gibbons of Florida, a senior House Democrat, stormed out of a committee meeting shouting that Republicans were "a bunch of dictators" in refusing him the right to speak. Later Republican and Democratic legislators almost came to blows in the corridor outside.

The Medicare proposals, on which the Republicans plan hearings today, come on top of separate Republican plans to pare back Medicaid, the federal health scheme for the poor, by $180bn. This would be achieved essentially by handing back control of Medicaid to the states, in the shape of block grants comparable to those that will replace existing federal welfare programmes. These lump sums could be spent as the states wished - thus ending the days of Medicaid, like welfare, as an "entitlement" available to anyone who qualifies.

The stage is thus set for an emotional confrontation which could derail a budget compromise this autumn. Mr Clinton concedes some reform of both health schemes is needed, but says he will veto any Medicare cuts remotely resembling the Republican proposals. Hard-line Republicans retort they are ready to block an increase in the federal debt ceiling if they do not get their way, raising the spectre of a US Treasury default some time in November.

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