Teaching hospitals and wealthy Medicare beneficiaries could be among the first healthcare casualties of the incoming House Republican majority's proposed legislative program.
The Republicans swept into their first House majority in 40 years touting their "Contract with America," a package of 10 laws the GOP intends to pass in the first 100 days after taking control.
To offset the $148 billion tab for their program, the soon-to-be House leadership is considering a list of potential spending reductions, which would trim about $176.1 billion in federal spending. The cuts include a decrease in the Medicare indirect medical education adjustment for teaching hospitals and greater deductibles for wealthy Medicare beneficiaries.
House Republican leaders don't appear to be shrinking from their promises, and they may have the numbers to get the job done. Of the 367 Republican candidates and incumbents who signed the contract Sept. 27, 224 will be members when Congress convenes Jan. 4, six more than needed for the House to pass legislation.
"We will get the contract done in 100 days," Rep. Richard Armey (R-Texas), the likely majority leader, said at a press conference last week. "We will be prepared to work seven days a week."
Herb Kuhn, vice president of congressional and executive branch relations for the American Hospital Association, acknowledged that healthcare spending is clearly on the table and said the industry should prepare for a lobbying battle next year.
"You have to expect that the Republicans have an aggressive agenda and have to be looking at all financing options," Mr. Kuhn said. "The challenge for us is to educate them on what the effects of these financing options will have on institutions."
Teaching hospitals targeted. Reducing government reimbursements to teaching hospitals is the second-largest of the 71 possible specific spending reductions suggested by the House Budget Committee's Republican staff members.
Decreasing the Medicare indirect medical education payment adjustment to 3% from 7.7% would save an estimated $13.5 billion over five years.
The IME adjustment-which pays for the additional demands that teaching activities place on hospitals-is projected to cost $22.6 billion from fiscal years 1995 through 1999.
"We're very worried about that," said Dick Knapp, executive vice president of the Association of American Medical Colleges. "We've got a fair amount of education and advocacy to do."
New allies needed.Teaching hospitals frequently have been protected from cuts by Sen. Daniel Patrick Moynihan (D-N.Y.), outgoing chairman of the Finance Committee; Sen. Edward Kennedy (D-Mass.), outgoing chairman of the Labor and Human Resources Committee; and Rep. Dan Rostenkowski (D-Ill.), the former chairman of the House Ways and Means Committee, who was defeated in his re-election bid.
All three former chairmen come from states with high concentrations of teaching hospitals and medical schools.
But with the change in power, Mr. Knapp acknowledged that his group may need to look for new allies. He listed likely Senate Finance Committee Chairman Bob Packwood (R-Ore.) and probable House Ways and Means Committee Chairman Bill Archer (R-Texas) as possibilities.
"Texas has a large number of teaching hospitals. Chairman Archer is going to have to worry about that," Mr. Knapp said. "Sen. Packwood has a fair bit of understanding in this area."
Seniors groups, meanwhile, are rallying against proposals to make wealthy Medicare beneficiaries pay greater deductibles for hospital coverage and greater premiums for physician coverage. The House Budget Committee's Republican staff estimates those two proposals would save $9 billion over five years.
From fiscal years 1995 through 1999, federal spending on Medicare hospital and physician coverage is projected to be $1.1 trillion.
John Rother, director of legislation and public policy for the American Association of Retired Persons, said his group has supported increasing the physician coverage premiums if benefits also were increased.
"If they're going to propose that just as deficit reduction, then we'd have to fight it," Mr. Rother said.
He said greater deductibles for hospital coverage would require a "huge new bureaucracy" and provoke a negative reaction from beneficiaries.
Jack McDavitt, publications director for the National Committee to Preserve Social Security and Medicare, added: "When you take a program and means-test it, it turns from a social insurance system to a welfare system. By doing so, you decrease public support for it."