The prospect of a federal budget surplus at the end of this fiscal year has healthcare industry lobbyists on Capitol Hill working in unfamiliar territory.
A move to reduce Medicare payments to providers is drawing a big yawn, while getting a cut of the budget surplus is attracting attention.
The situation also creates a dilemma for hospital groups specifically, which on one hand may need the senior citizens' lobby to fight the budget cuts but may face off against the wealthy elderly over the budget surplus.
On the budget reduction side, a proposal from the House Budget Committee to cut $12.5 billion from projected Medicare payments over the next five years isn't inspiring the usual cries from the provider community that such reductions will put many of them out of business.
While they said they can't dismiss any proposal to slice Medicare, provider groups said the political environment is working against the committee's plan.
The Budget Committee voted the plan to the full House on a 22-16 vote May 20, after stopping Democratic efforts to eliminate the Medicare cuts. Then last week the White House trumpeted the latest projections of a $39 billion federal budget surplus in fiscal 1998, which ends Sept. 30.
With the White House Office of Management and Budget projecting surpluses that escalate to $148 billion by 2002, Congress may find it difficult to justify more cuts and the Budget Committee may face an uphill battle (See chart).
"I don't see how you take money out (of Medicare) when you see the size of these surpluses," added a Senate GOP aide who asked not to be identified.
In touting the surplus last week, President Clinton urged that it be used to preserve Social Security. But many providers want to use it as an argument to nullify cuts included in last year's balanced-budget law, and conservative members of Congress are eyeing it for tax cuts.
The budget law froze Medicare hospital payment rates for one year, costing hospitals $1.4 billion in federal fiscal 1998.
Despite the long shot, providers may turn to grass-roots lobbying mechanisms to urge Congress not to follow through on the Budget Committee proposal.
"Anytime the specter of Medicare cuts comes up, we have to fight against it," said Thomas Nickels, the American Hospital Association's vice president of government affairs and associate general counsel.
In fact, Richard Wade, the AHA's senior vice president for communications, said the AHA has discussed with the American Association of Retired Persons the possibility of campaigning against the House budget proposal, but no decision has been made on whether to pursue that campaign.
Tighter payments to hospitals and other providers could reduce senior citizens' access to healthcare, providing the impetus for a joint campaign by the AARP and the AHA.
But observers note that the committee's Medicare cut proposal is not so much an outline of House spending priorities as it is a Republican political document.
Sensing their House majority potentially in danger in this November's midterm elections, the GOP might present a tax cut to energize its most reliable voters, the anti-tax fiscal conservatives.
To deliver a tax cut, however, Republicans must find savings elsewhere in the budget, which makes the $1.3 trillion in projected Medicare expenditures between 1999 and 2003 a big target.
Furthermore, Budget Committee Chairman John Kasich (R-Ohio) may want to energize that same group of voters for a potential White House run in 2000.
That strategy could backfire if Medicare cuts are used to pay for the tax cuts because it would be handing the Democrats a campaign issue, said one healthcare lobbyist.
"To me, that makes no sense," said the lobbyist, who asked not to be identified.
Republican leaders, meanwhile, may seek to remove the cuts from the budget resolution if they sense they will backfire.
"These (cuts) are still flying underneath the radar," said Stephen Ubl, vice president for legislation at the Federation of American Health Systems.
If provider groups do step up grass-roots efforts to fight the cuts, it could be one of their easiest healthcare lobbying victories in recent memory, giving them something to brag about to their members.
The Budget Committee's vote last month to send its version of the fiscal 1999 budget to the full House may have come too late to have any effect on congressional action this year.
But lobbyists and Capitol Hill aides said many members of Congress are not enthusiastic about pushing a big budget package through Congress less than a year after enactment of the Balanced Budget Act, which already secures $115 billion in savings from the Medicare program over five years.
That indifference toward a new budget package is particularly acute since other large bills-including a possible patient-protection bill and a national settlement of lawsuits against cigarette manufacturers to recover smoking-related Medicaid costs-could occupy much of Congress' remaining legislative session.
"I don't think they've figured a way out of the wilderness on this one," said Marty Corry, AARP director of federal affairs.
Despite the possibility that the AARP and the AHA could work together to stop the House budget resolution, the projections of a growing surplus could pit providers and seniors in lobbying battles over the use of the surplus money.
The AHA, for one, would like a piece of the surplus to restore $1.3 billion in fee reductions resulting from declaring as "transfers" discharges of certain patients to skilled-nursing care. And senior citizens groups are in agreement with Clinton's call for using the surplus to save Social Security.
"AARP is looking at Social Security, and we're looking at transfers," Wade said. "Our agendas meet on some issues and conflict on others."