To the relief of healthcare providers, President Clinton indicated last week that he opposes slashing Medicare spending to finance a middle-class tax cut.
In a nationally televised address, the president appeared to have ruled out Medicare as a financing option for the $60 billion, five-year package. "I challenge the new Congress to work with me to enact the (tax cut) without adding to the deficit and without any new cuts in...Medicare," Mr. Clinton said.
However, a White House spokeswoman later said the details of the financing would be completed "over the coming weeks." She would not completely rule out Medicare reductions as a way of offsetting the tax cuts.
Adding to the murkiness was the fact that the cuts and streamlining in government programs suggested by Mr. Clinton would not be sufficient to pay for the tax relief in the long run. More reductions in federal appropriations would be needed, but the administration did not specify those cuts.
When word spread through Washington early in the week that the White House planned to propose $60 billion in tax relief for middle-income families, provider groups protested. They worried that Medicare spending would be cut to finance the program.
American Hospital Association President Richard Davidson wrote the White House and insisted that Medicare cuts be used only to finance healthcare reform.
"To use Medicare...as a funding source for tax cuts violates the spirit of this program," Mr. Davidson wrote. "Instead of focusing on cutting Medicare, we should instead focus...on making some long overdue changes."
HCFA Administrator Bruce Vladeck intensified the concern just hours before Mr. Clinton's speech. He said if he had to choose between reducing reimbursements to providers or hurting beneficiaries, he would select the former option.
Separately, the Clinton administration has decided to lower its estimates for future health expenditures in its upcoming 1996 budget, reflecting lower healthcare inflation. The lower estimates would make it easier for the White House to pay for new health reform initiatives, which may be released with its proposed budget.