Hospital reimbursements would be trimmed by nearly $80 billion over a seven-year period under a plan released last week by President Clinton to balance the federal budget in the next decade.
Overall, Medicare spending from fiscal 1996 to 2002 would be reduced by $124 billion under the draft offered by the Clinton administration. That's about half the amount of cuts included in congressional Republican budgets.
The Clinton proposal would not balance the budget until 2005-three years later than the Republican plans.
The Clinton budget also calls for $55 billion in Medicaid spending reductions, less than one-third the $175 billion called for in the Senate GOP plan. It rejected the strict block-grant proposal being considered by GOP governors and House members that would eliminate the Medi-caid entitlement and give states total control over the program. However, White House officials said they were looking to cut the number of federal Medicaid regulations and make it easier for states to implement their own Medicaid reforms.
By Congressional Budget Office estimates, Medicare is expected to grow from about $195 billion this year to more than $300 billion by 2002 if no changes are made in the program. Medicaid would increase from $90 billion this year to about $175 billion in 2002.
Hospital groups have been calling on congressional Republicans to lower the level of Medicare and Medicaid spending reductions in their plans to between $150 billion and $170 billion over seven years.
Those groups said they were generally encouraged that the overall level of Medicare and Medicaid cuts in the White House plan were lower than in GOP budgets. But they also criticized the plan, saying it makes hospitals bear the brunt of the reductions.
"The cuts are all on hospitals and providers, and they don't have any serious restructuring of the Medicare program, so on policy detail it is a joke," said Thomas Scully, president of the Federation of American Health Systems.
The plan also calls for modest insurance reforms that would allow beneficiaries to carry their coverage from job to job and would not allow insurers to deny coverage for pre-existing medical conditions. Medicare beneficiaries would be given a range of managed-care options.
Those programs also have been touted by congressional Republicans, increasing the odds that an agreement between the White House and GOP leaders on a modest healthcare reform plan could be reached this year.
"The president's plan and the plan offered by (Senate Labor and Human Resources chairwoman) Nancy Kassebaum (R-Kan.) are not that far apart," said Frederick Graefe, a healthcare attorney with Baker & Hostetler in Washington. "I can easily see the contours of a deal."
There also were elements of the Clinton administration's comprehensive healthcare reform plan included in its budget proposal. For example, workers who lose their insurance would be eligible for federal subsidies to help them pay for coverage for up to six months. The cost of the subsidies would be $14 billion over seven years.
For long-term-care providers, Clinton's plan had both good news and bad.
While it would expand home- and community-based long-term-care services, it also calls for abolishing the Boren amendment, which requires states to pay providers a reimbursement rate that covers all reasonable costs. Providers have used the amendment, which is named after its sponsor, former Sen. David Boren of Oklahoma, to increase reimbursement rates in recent years.