President Clinton raised the specter of new Medicare provider payment reductions last week in renewing a call to add prescription drug coverage to Medicare benefits.
While his final State of the Union address did not reveal it, administration officials hinted that Clinton plans to extend Medicare provider payment restraints to finance the prescription benefit. Administration officials did not provide a cost estimate for the drug benefit.
Clinton pledged to use $400 billion of the federal budget surplus over 10 years to strengthen the Medicare Hospital Insurance Trust Fund, which pays for seniors' care in hospitals and other institutions, and to help pay for the prescription benefit.
But administration officials said the vast majority of the surplus diversion would be used to extend the trust fund's solvency past 2025.
Although he did not specify details of Clinton's budget plan, expected to be released next week, White House healthcare adviser Christopher Jennings told reporters that program savings will pay for a large share of the prescription benefit.
He cited fraud-and-abuse initiatives but also raised concerns about resuming higher rates of Medicare spending growth once restraints from the Balanced Budget Act of 1997 expire in 2002.
"We probably will need to address that," Jennings said.
Hospital groups, which last year helped win a $15 billion package of rollbacks to the Medicare cuts in the balanced-budget law, objected to the proposal, saying the federal surplus should be used to finance the prescription benefit.
"We're supportive of a prescription drug benefit but not out of providers' hides," said Thomas Scully, president and chief executive officer of the Federation of American Health Systems.
Clinton's speech came on the heels of a Congressional Budget Office report that estimated a $176 billion federal surplus for fiscal 2000, $15 billion more than it projected last July. The CBO report decreased its estimate of Medicare spending between 2000 and 2004 by $47 billion, down from nearly $1.3 trillion for the five years.
The American Hospital Association will release new data this week about how the budget law has affected hospitals. That will come at a Capitol Hill rally during the AHA's annual meeting in Washington.
In a speech recapping his largely unfinished healthcare agenda, Clinton also called for expanded healthcare insurance coverage and new federal protections for managed-care enrollees.
Mary Grealy, president of the Healthcare Leadership Council, said those two priorities conflict.
"By pushing for passage of (managed-care reform), the president continues to advocate legislation that will force thousands of employers to drop health insurance coverage for hundreds of thousands of American workers," Grealy said. "On this issue, the nation needs a consistent approach that was lacking in the president's speech."
Meanwhile, Clinton avoided mentioning an Institute of Medicine report that called for comprehensive measures to reduce medical errors, an issue he highlighted in December.
"I can't imagine having information that almost 100,000 people die every year from medical errors and not having that issue be a prominent part of the healthcare agenda," said Karen Ignagni, president of the American Association of Health Plans. "It's a fundamental patient-protection issue, and it shows that the discussion on patient protection thus far has been very narrow in scope."