Federal budget talks stalled last week, with White House and Republican congressional negotiators $65 billion apart on the issue of Medicare spending.
The talks were broken off after no agreement could be reached on Medicare and Medicaid, among other programs, during more than a week of marathon negotiating sessions.
But even though the next round of talks was tentatively scheduled for this week, the parties involved seemed pessimistic that an agreement could be reached.
"I think the odds are better than even....that there will be no agreement," said House Speaker Newt Gingrich (R-Ga.)
"I'm tired of putting a happy face on everything," said Rep. John Kasich (R-Ohio), House Budget Committee chairman. "There has been almost no progress made."
According to several Republican sources, the talks never made it past trying to reach agreement on how much projected Medicare and Medi-caid spending would be reduced under the plan, a sentiment echoed by President Clinton.
"Unfortunately the talks have not been successful because we disagree on the level of cuts in the programs of Medicare, Medicaid and aid to the poor," Clinton said. "Republicans still want cuts in Medicare and Medicaid that are far beyond what is needed to balance the budget."
Republican negotiators said that they had made their final offer, but the two sides remained more than $65 billion apart on the level of Medicare reductions over seven years (See chart). On Medicaid, they are only $30 billion apart, but they haven't resolved whether the federal entitlement will continue.
"This is as far as we can go," said House Majority Leader Richard Armey (R-Texas). "If we move one more inch we will lose....the majority."
Armey added that he would call for a House vote on the latest GOP plan, which would reduce projected Medicare spending by $168 billion over the period from 1996 to 2002. He didn't say when that vote would occur.
The Congressional Budget Office projects that, under current law, Medicare spending will increase by about 10% a year, from $196 billion in 1996 to $332 billion by 2002.
A coalition of 47 mostly conservative House Democrats said in a letter to Clinton that they supported the $168 billion of Medicare reductions "in the interest of moving forward toward enactment of a balanced-budget plan."
A number of provider groups-including the American Hospital Association, the Catholic Health Association, AmHS/Premier/SunHealth and InterHealth-endorsed a plan issued by a coalition of conservative Democrats, nearly all of whom signed the letter to Clinton. That plan would reduce Medicare spending by $170 billion over seven years.
One reason for the endorsement was that the plan would allow provider sponsored networks to contract directly with Medicare under federal regulations. The Republican plan would put most of the regulatory authority in the hands of the states, which providers say are biased toward insurance companies and hostile toward PSNs.
The groups said they were guardedly optimistic that any compromise between the conservative Democrats and GOP leaders would look more like the conservative Democrats' plan.
Sherry Hayes, vice president of InterHealth, said that if Republicans are serious about giving Medicare benificiaries more choice, "I don't think they can stand on a choice between insurance companies."
But others say the more the plan looks like the conservative Democrats' proposal, the less chance it has of passage by the Senate, which has taken a more conservative stance on provider-sponsored networks.
"Overall, I think it's one dead duck," said Federation of America Health Systems President Thomas Scully. "The odds of something passing that (the conservative Democrats) proposed is zero."