Projected Medicare spending would be trimmed $124 billion between now and 2002 and Medicaid by an additional $59 billion under the fiscal 1997 budget proposal released last w eek by the Clinton administration.
The budget also calls for a nearly 3% increase in health spending for the Department of Veterans Affairs.The new budget includes few substantive changes from the final fiscal 1996 White House budget offer that was on the table last December when negotiations with GOP leaders over a balanced budget broke off.
HCFA Administrator Bruce Vladeck would not detail how the $124 billion in spending constraints would be achieved. Howev er, the fiscal 1996 White House budget contained the following provisions:
Hospital Medicare updates would have been reduced by one percentage point through 2000 and 1.5 percentage points thereafter for savings of $17.5 billion ov er seven years.
Indirect medical education would have been 7.2% through 2000 and reduced to 6% thereafter, saving $6.9 billion.
Medicare disproportionate-share payments for treating large numbers of poor people would have been re duced by 10%, saving $2.4 billion.
The conversion factor used to determine physician payments would have been set at $35.42 for all nonsurgical services. The conversion factor for surgeons would have been $38.10 in 1996 and therea fter equal to the other services. Savings: $12.9 billion.
The most significant difference between the two budgets is that the document released last week would achieve balance in only six years, from fiscal 1997 through 2002. Vladec k said he didn't anticipate that any of the spending reductions would be made retroactive to cover 1996 if a budget accord is reached with GOP leaders.
By releasing a budget that is essentially the same as the plan rejected last Dec ember by GOP leaders, the Clinton administration is ensuring that no agreement will be reached before the start of fiscal 1997 on Oct. 1, Washington observers said.
"It's unfortunate, but while this budget is good for providers and beneficiaries, because of legislative gridlock it is not going to go anywhere," said Frederick Graefe, a lawyer and healthcare lobbyist with Baker & Hostetler in Washington.
The Department of Veterans Affairs, meanwhile, is seekin g a 2.7% increase in its healthcare budget, to slightly more than $17 billion. That request for fiscal 1997 is just $47 million more than the administration requested for fiscal 1996.
Congress has funded VA healthcare at about $16.6 billion for fiscal 1996.The department's 1997 request falls $55.6 million short of the House Veterans Affairs Committee's recommendation for the VA healthcare system for fiscal 1997.
The administration's request also estimates a 14 .7% increase, to $643.7 million, in the amount it collects from third-party payers. The department expects that increase to be driven by proposed changes in legislation that will allow it to keep part of the money it collects above a current-law baseline.
Under the administration's projections, the department would divert $45.2 million to its own coffers in fiscal 1997 if it is allowed to keep some third-party payments.
The veterans department doesn't seek any money for health professional scholarships in fiscal 1997, acquiescing to congressional action in fiscal 1996 that eliminated $10.4 million in scholarship funding. The House VA committee recommended reinstitution of those scholars hip dollars.
A veterans group representative said the administration's budget will be inadequate at a time when the VA is attempting to follow the private sector by transforming its 702 largely independent healthcare facilities into 22 integrated networks that operate under capitated budgets.
"There's a modicum of an increase, but for all intents and purposes (the budget) is straight-lined," said Richard Fuller, health policy program development director for Paralyzed Veterans of America. "People don't stop getting sick and needing healthcare just because of budget deficits. We're treading water here."