The Senate late last week approved a fiscal 1996 Republican budget that would reduce Medicare spending by $256 billion and Medicaid spending by $175 billion over seven years.
Before voting on the Republican plan, the Senate killed several attempts by Democrats to reduce the size of the Medicare and Medicaid spending reductions. Most of the Democratic plans sought to use some of the $170 billion economic dividend the Congressional Budget Office says would result from a balanced budget to offset the Medicare and Medicaid reductions. Senate Budget Committee Chairman Pete Domenici (R-N.M.), author of the GOP budget, has earmarked the $170 billion windfall for a tax cut.
The Senate also killed a Democratic alternative budget that would have reduced Medicare and Medicaid spending by $150 billion less than the Republican plan.
Hospital groups spent the week seeking Republican sponsors for an amendment to pare Medicare and Medicaid reductions but were unsuccessful.
The CBO pro jects Medicare will grow from $176 billion this year to $286 billion by 2000. Medicaid is expected to grow from about $90 billion this year to nearly $150 billion by 2000.
While the defeat of the Democratic amendments was expected, there was some drama surrounding a plan offered by Sen. Phil Gramm (R-Texas) that included more than $300 billion in tax cuts over seven years. The Senate defeated the Gramm plan by a vote of 69-31. Hospital officials had opposed the tax cuts, arguing they would be paid for with additional Medicare and Medicaid spending reductions.
The Senate bill now must be reconciled with the House version of the budget that was passed earlier this month. The House plan included $467 billion in Medicare and Medicaid spending reductions over seven years.
Meanwhile, the Senate last week passed a measure that would cut fiscal 1995 spending for the Department of Veterans Affairs by $50 million and reduce spending on several rural healthcare projects by about $11 million.
The House already has passed the same package. However, President Clinton has threatened to veto the measure. Should that veto occur, the measure would return to Congress to be revamped.
Under the plan the Senate passed last week, the VA would be required to cut $50 million from either personnel services or equipment purchases this year. The measure also would stop the VA from spending $31 million of its $354 million major construction budget for 1995.