Republican leaders changed their tactics last week by all but abandoning a seven-year balanced-budget plan in favor of a smaller package of reforms that include some structural changes in the Medicare program.
Those revisions would be attached to legislation needed to keep the federal government from defaulting on its debt.
The GOP decision came a day after President Clinton used his fourth State of the Union address to reiterate his opposition to the level of Medicare and Medicaid spending growth constraints included in the GOP budget plan.
The last plan the GOP proposed would reduce projected Medicare spending by $168 billion from 1997 through 2002, cutting the annual growth rate from about 10% to 7.4%. The Clinton budget would reduce Medicare by $124 billion between 1996 and 2002, keeping the yearly growth rate to about 7.8%.
"I do not believe, with this president in the White House, that you can get entitlement reform," said House Speaker Newt Gingrich (R-Ga.).
Meanwhile, Republican leaders worked to move their agenda forward on another front last week. In an effort of avoid another government shutdown, GOP leaders and the White House agreed to yet another temporary spending measure to fund most of the federal government through March 15. The previous funding measure was set to expire last week. The new funding bill killed about 10 minor programs, none affecting health services.
The Republican strategy now is to attach a portion of the Medicare policy changes that were included in their balanced-budget plan to legislation to increase the federal debt limit. Another possibility is to create a separate, less comprehensive Medicare bill.
Among the changes being considered are opening the Medicare program to new delivery choices, including provider-sponsored networks, and rolling back some fraud-and-abuse regulations and rules governing clinical laboratories, a GOP aide said. The package would be paid for through provider spending constraints. However, the level of those reductions hasn't been determined.
The package may also include a $29 billion tax cut for 1996 that would be paid for through reductions in entitlement spending. It wasn't known how Medicare and Medicaid would be affected.
A measure raising the debt-ceiling must be approved by early March to keep the federal government from defaulting on its debt. Republicans hope that by attaching the Medicare reforms to such a critical piece of legislation, Clinton will sign the measure.
Republican leaders stressed last week that only provisions agreed to by both GOP leaders and the White House will be included in the pared-down plan. However, many observers said the two sides have less in common than it appears at first glance.
"I think they are going to find that when they really start digging into the details they really don't agree on much," said one health industry analyst who asked not to be identified.
Clinton's State of the Union address became another opening for partisan finger-pointing over Medicare and its part in the stalled budget negotiations.
"We have all agreed to stabilize the Medicare Trust Fund, but we must not abandon our fundamental obligations to the people who need Medicare and Medicaid," Clinton said.
Responding to Clinton's speech, Senate Majority Leader Bob Dole (R-Kan.) said the president "has chosen to defend the status quo in Medicare" and guaranteed that the hospital insurance trust fund will go bankrupt.
Overnight polls conducted by two television networks indicated that a majority of those who watched the speech approved of Clinton's positions and believed the country should follow his lead, although they said the speech contained few new ideas.
In his address, Clinton also urged Congress to pass a health insurance bill sponsored by Sens. Nancy Kassebaum (R-Kan.) and Edward Kennedy (D-Mass.) that would make it easier for employees to retain health insurance when they switch jobs and for small employers to pool their money to buy health insurance. The bill would make it harder for health insurance companies to exclude workers with pre-existing conditions.
That legislation, which the Senate Labor and Human Resources Committee passed unanimously last year, has been the subject of delaying tactics by several senators described only as "conservative Republicans" by a Kassebaum spokesman.