President Clinton's $1.5 trillion fiscal 1995 budget contains few policy initiatives for HHS but calls for more than 5,300 personnel cuts in the Department of Veterans Affairs.
Because no new programs or policies were included in the budget, which was submitted to Congress for its approval, much of the usual hullabaloo over the Medicare and Medicaid budgets was muted. However, the proposed personnel VA cuts drew strong criticism from veterans groups and on Capitol Hill.
American Hospital Association President Richard Davidson reiterated his objections to the Medicare and Medicaid reductions and called for alternate financing of healthcare reform. The AMA didn't even release a written statement commenting on the budget.
The 1995 budget included the effects of the Medicare and Medicaid reductions included in the Clinton administration's healthcare reform bill and featured new funding and spending projections for the plan (see chart).
Overall, the Medicare budget is slated for an 8.8% jump to more than $156 billion. That includes more than $2.1 billion in Medicare reductions in 1995 related to the financing of the Clinton administration's healthcare reform bill. Medicaid would grow 10.64% to more than $96 billion under the Clinton budget.
Under the revised projections, Medicare increases will be reduced by $118 billion during the next six years-a reduction from earlier forecasted cuts of $124 billion. Medicaid increases will be reduced by $61 billion, down from $65 billion. HHS Secretary Donna Shalala attributed those differences primarily to changes in the medical inflation rate.
The $37.8 billion VA budget drew far more criticism than the HHS budget. The VA medical budget is slated to increase by $500 million to $16.1 billion under the Clinton plan.
While the VA was one of only a handful of departments to receive a budget increase, it also was scheduled for a reduction in personnel of more than 5,300, including nearly 3,700 medical staff. The department is budgeted for 205,000 medical personnel in fiscal 1994.
According to Mark Catlett, VA assistant secretary for financial and information resources management, nearly 2,000 of those reductions will come from taking physician residents off VA hospital rosters. The residents will continue to see patients in VA facilities, but won't be considered VA personnel.
Under the proposed budget, medical and prosthetic research funding was reduced by $41 million to $211 million, while the construction budget saw a 45% reduction to $314 million.
On Capitol Hill and among veterans groups, the response was outrage.
The Clinton administration needs "to add medical personnel rather than dealing it a blow that could damn well be fatal," said Larry Rivers, executive director of the Veterans of Foreign Wars.
House VA Committee Chairman G.V. "Sonny" Montgomery (D-Miss.) introduced legislation that would exempt VA medical facilities from staff cuts.
Veterans advocates argue that the cuts in research will cause the VA to lose physicians and will make the VA less attractive to veterans who would be asked to choose between the VA and private healthcare plans under the Clinton reform bill.