The Taxpayer Relief Act of 1997 should rightfully be referred to as the Soak the Healthcare Provider Law. Make no mistake about it, the balanced-budget baloney and tax-cut goodies are financed chiefly by lower payments to hospitals, physicians and other providers.
But the bill's fatal flaw is that it fails to significantly address the fundamental changes necessary to ensure the long-term survival of the Medicare program. Instead, it nips and tucks at a bloated program in dire need of massive reform.
Moreover, the bill never would have passed had government economists not "found" $200 billion attributable to the robust economy. Without optimistically calculating that bonus into projected revenues, the nation likely would have been treated to more bipartisan bickering, government shutdowns and other political shenanigans.
The Taxpayer Relief Act does call for $135 billion in gross tax cuts and $50 billion in new revenues for a net $85 billion in tax relief over five years. But before getting too carried away with jubilation, there are some things to remember:
In fiscal 1997, the federal government will spend $60 billion more than it collects. In the next three fiscal years, the deficit will swell another $250 billion (See chart).
Under the agreement, the first budget surplus won't occur until 2002.
Nothing about this balanced-budget accord is set in stone. Remember Gramm-Rudman, the 1985 legislation that vowed to balance the budget within five years? It was violated more than the 55-mile-per-hour speed limit on a wide-open Wyoming highway. Nobody can be sure if politicians will stick to the latest balanced-budget law or if it's just more Washington flimflam.
Healthcare is Uncle Sam's First National Bank. The Medicare program will achieve $116.4 billion in savings over five years mainly by lower-than-anticipated payments to providers.
In addition, the healthcare industry faces a slew of new rules and regulations. Changes include a prospective payment system for home care, skilled nursing and rehabilitation, as well as demonstration projects and solvency standards for provider-sponsored networks.
Many of these fast-track bureaucratic treats must be crafted by HCFA. HHS Secretary Donna Shalala says she needs at least $150 million in new funding over five years to meet the ambitious schedule, but she probably won't get a dime. Providers can look forward to delays, confusion and related snafus. Such is life in a town without pity.