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FOR MONTHS, REPUBLICANS on Capitol Hill complained that “their” Congressional Budget Office wasn’t behaving. The CBO had long been a COP bete noire, subject to constant accusations from the right that its supposedly independent studies were cooked for the benefit of the Democrats in charge of the House and Senate. The new Republican Congress was supposed to effect major ideological changes in the CBO, now under the management of June O’Neill. But O’Neill’s CBO has been a disappointment for many; it has refused, for example, to support claims that a cut in the capital-gains tax will actually increase the amount of tax money in government coffers.

So a sigh of relief flooded Capitol Hill last week when the CBO decided to ” score” the GOP’s Medicare reform proposals the way the House leadership wanted them scored (and needed the CBO to score them). The COP needs $ 270 billion in savings over the next seven years to balance the budget, and party leaders believe their Medicare plan does just that.


Through their fretting, Republicans have found themselves with an unlikely ally in their Medicare struggles — none other than Robert Reischauer, who headed the CBO for six years under Democratic Congresses. Reischauer, now at the Brookings Institution, is also happy to declare $ 270 billion in savings. In fact, he’s puzzled by those who think otherwise: “They’ve missed the plan completely.”

Before Republicans start crowing over this, however, they had better hear Reischauer out — if only to understand why he sounds so amused when he talks about this. Because it’s not the menu of new choices in the Republican plan — private HMOs, medical savings accounts, doctor and hospital networks — that has Reischauer’s blessing. No, it’s the so-called “global budgeting.” And ” global budgeting” is something Republicans hated as little as a year ago. Ah, the irony.

The GOP plan sets a fixed amount of money that the government will spend on health care for seniors in each of the next seven years. Then, the GOP offers its choices — the new, private options that make up the so-called “Medicare Plus.” You add up the total cost of the Medicare Plus component, subtract it from the big fixed number, and that is how much you have to pay doctors, hospitals, and other providers. In the event that spending in a given year outpaces the funds available, the secretary of Health and Human Services must hack away to get the numbers to match up. Lab fees might be frozen, reimbursement percentages for doctors might be reduced, and so on.

Reischauer calls the system a set of “prospective and retrospective fail- safe provisions” and “a very important step in the right direction.”

He also calls it “price controls” — and he’s right. Which is why he’s so amused. There was a time not so long ago — as the Clinton health care plan was dying aborning, to be precise — when Republicans railed to the heavens against any sort of “global budgeting” and the price controls and rationing of care that would surely ensue from it. The horrors that would be visited upon the sick who did not meet the protocols for timely care! The long, long queues of people ahead of Granny in line for that hip replacement! The pain, the suffering! The demise of the finest health care system in the world! But that was then.

Ouch. Reischauer has a point. But Republicans have a couple of things they can say in their defense. First of all, they really do believe that adding competition to the system in the form of those Medicare Plus options will realize so much in savings that the current fee system will be safe. If that happens, then the HHS secretary will never have to impose additional cuts to keep under the global-budget limit.

Second, when the Clintonires were talking about the global budgeting for their health-care plan, they were talking about the sum total of all health- care spending in the United States. Now that’s a global budget — S800 billion-plus a year. In the Republican case, the global budget consists of the government’s share of old-folks” care. At $ 157 billion a year, it sure isn’t just chopped liver, but it’s far from everything. And the fact is that from the COP point of view, Medicare is precisely the sort of socialized medicine Republicans feared we’d all be subjected to by the Clintonites. Republicans didn’t create Medicare, nor would they. They’re just trying to cope with it.

The unfortunate bottom line in this is that the GOP Medicare plan had better work. Nobody’s got any other bright conservative ideas for dealing with this Great Society legacy of big-government intrusion. Odds are pretty good that seniors would object to a proposal to just up and get rid of the whole thing, for example.

Because if these ideas don’t work, the solution is rationing. You needn’t take Bob Reischauer’s word for that — or Hillary Rodham Clinton’s, or Ira Magaziner’s, or that of any other proponent of the view that government is the way to resolve this little matter of life and death. It’s right in the Republican plan. The secretary of Health and Human Services, Democrat or Republican or Powellista, will be meting out health care dram by dram. Great.