Budget talks hit another snag last week when Republican negotiators called off a bargaining session and accused the White House of proposing a plan that would inadequately restructure Medicare and Medicaid.
But even though the two sides did not meet, they moved closer together financially. According to White House documents, Clinton's latest offer would trim projected Medicare spending increases by $124 billion over seven years, up from $102 billion in the previous White House plan.
The latest GOP plan, which was prepared in negotiations with nearly 50 conservative House Democrats, would lower Medicare increases by $168 billion for the six years, from 1997 through 2002.
The latest White House offer also increased the level of Medicaid savings by $7 billion to $59 billion. The GOP plan would slow projected Medicaid spending increases by $85 billion.
But while the two sides continued to inch closer together on the level of reductions, they have not even made an attempt to bridge the policy differences that divide them.
For example, in its latest offer, the White House did not change its position that any Medicaid reform plan must retain the federal entitlement to care. GOP leaders support a block grant plan that would end the federal entitlement and turn control of the plan over to the states.
After the latest breakdown, each side began blaming the other for not coming far enough in the negotiations.
President Clinton said the GOP plan was too harsh on Medicare and Medicaid and that the tax cuts included in the Republican plan were too steep. Meanwhile, Sen. Majority Leader Bob Dole (R-Kan.) attacked the Clinton plan, which Dole said pushed most of the savings to the last two years of the seven-year agreement.
But while the principals in the budget battle seemed ready to call a halt to discussions, a group of 20 moderate senators were not. They sent a letter last week to Clinton and GOP negotiators urging the two sides to "keep trying."
The 20 Senate moderates are developing their own budget. The plan would reduce projected Medicare spending by $154 billion over seven years, while Medicaid would be reduced an additional $62 billion. Leaders of the group said that if negotiations do not show progress they intend to take their plan to the Senate for a vote.
In a related development, Republican leaders have decided not to try to make any spending changes in 1996 as they seek to balance the federal budget by 2002, according to several GOP sources.
The decision means that the Medicare spending updates for hospitals and physicians that went into effect on Oct. 1, 1995, or Jan. 1, 1996, will likely not be superseded by GOP budget-cutting efforts and will remain in effect for the year.
For example, hospital Medicare capital payments, which had been paid at a rate of 95% of cost until Oct. 1, 1995, are now being paid at 100% of cost. The GOP budget would have lowered the payments to 85% of cost in fiscal 1996 through 2002.
Physician payments are similarly affected. Under the GOP plan, the conversion factor, which is the dollar multiplier used to determine how much physicians are paid for Medicare services, would have been $35.42 for all physicians in 1996.
However, because lawmakers will not make changes in 1996, surgeons will receive a conversion factor of $40.95, while primary-care physicians will receive $35.55.
While the 1996 increases are good news for providers, they may still have to pay the piper in future years, hospital advocates warned.
Frederick Graefe, a healthcare lawyer with Baker & Hostetler in Washington, said the lack of spending reductions for provider payments was good news. "The flip side is that if they are going to balance the budget next year, they are going to have to take back those updates and more next year," Graefe said.