Congressional Republicans last week set up a possible showdown over the fate of Medicare when they rejected President Clinton's plan to earmark $700 billion of the federal budget surplus for the Medicare trust fund.
While acquiescing to Clinton's proposal to use 62% of the surplus to keep Social Security solvent, GOP leaders said they want to use the remainder for a tax cut. In January, Clinton called for earmarking an additional 15% of the surplus over the next 15 years to extend through 2020 the life of the Medicare Hospital Insurance Trust Fund, now expected to expire in about 10 years.
Without disclosing details, the GOP said its plan would set aside more money for Medicare than Clinton's plan would.
By rejecting Clinton's Medicare proposal, the Republican leadership could bring about a replay of the budget battle of 1995-1996. Then, Congress and the White House went to war over budget-balancing plans that would have cut taxes while squeezing $270 billion from Medicare provider payments over seven years. The fight resulted in repeated shutdowns of the federal government.
"Clearly, the Clinton administration has sprung a trap on the GOP by forcing them to choose between tax cuts and Medicare," said a healthcare lobbyist, who asked not to be identified He added that the GOP could inoculate itself by devoting at least part of the surplus to Medicare.
Hospital groups have argued in favor of using the surplus to keep the hospital trust fund healthy.
Signifying that using the surplus for Medicare may be the key political battle of 1999, Republicans announced their budget plans a day after a Democratic rally on Capitol Hill to tout the Clinton plan.
"We can't secure Medicare with any set of reforms unless we also invest some more money in the program," Clinton said at the Democratic rally. "Ask any hospital . . . . We can't deal with Medicare's problems without a greater investment of money."
House Speaker J. Dennis Hastert (R-Ill.) responded: "The American people will be pleased to know that our budget will . . . set aside more money to strengthen Social Security and Medicare."
The GOP's announcement focused on the congressional budget resolution for federal fiscal 2000. The Senate and House budget committees are scheduled to start work on those blueprints later this month.
The Congressional Budget Office, meanwhile, gave the budget committees some good news about Medicare when it said it has trimmed $6 billion from its estimate of Medicare spending for federal fiscal 1999 and $15 billion from its projections over the next five years.
The CBO's latest revision of government spending estimates puts 1999 Medicare spending at about $214 billion, just $3 billion more than the $211 billion spent in 1998. The CBO called the slow growth in spending "unprecedented."
The decreased spending eases the pressure to follow President Clinton's proposal to trim $9 billion in Medicare spending over the next five years, although provider groups said Congress may pursue other ways of reducing Medicare spending.
-With Kristen Hallam