President Clinton's fiscal 1998 budget plan will fall at least $50 billion shy of balance in 2002, according to congressional budget analysts, a shortage that could result in higher Medicare and Medicaid spending reductions.
According to June O'Neill, director of the Congressional Budget Office, which is the final arbiter of the cost or savings of federal legislation, the estimates included in the White House budget are overly rosy.
O'Neill said preliminary CBO analysis shows that in 2002, the president's plan will still have a $50 billion shortfall rather than the $17 billion surplus predicted by the White House Office of Management and Budget.
O'Neill said the estimates for Medicare and Medicaid spending would not be out until later this month. However, she added that the CBO analysis would likely find that the White House plans do not save as much as advertised. As a result, the deficit in 2002 "would most likely be higher" than $50 billion, O'Neill told the House Budget Committee.
House Ways and Means health subcommittee Chairman William Thomas (R-Calif.) said the shortfall in Medicare could be as much as $15 billion over the five-year period of fiscal 1998-2002.
According to White House estimates, Clinton's budget will reduce projected Medicare spending by about $100 billion while Medicaid spending would be $22 billion less.
Hospital payments would absorb about $33 billion of the $100 billion in Medicare savings while managed-care payments would be reduced by about $34 billion.
If the CBO estimates for savings in the healthcare programs do come in at less than the White House figures, Congress could move to increase the reductions to providers.
White House officials defended their estimates, which they said in the past have been closer to actual figures than the CBO projections. They also argue that the White House budget includes a "fail safe" mechanism that would automatically reduce spending across the board, including Medicare and Medicaid, by 2.25% if the White House budget doesn't balance.