It's back to the future for healthcare lobbyists. In the past two years, hospital advocates have been able to argue that the federal budget was balanced on the backs of healthcare providers, and as a result their clients reaped some $50 billion in new Medicare and Medicaid spending over six years. The era of deficit spending, when providers were battling for the scraps of federal dollars to justify reimbursement increases or to limit payment cutbacks, had been replaced by one of overflowing surpluses that were projected to continue for a decade or more.
One of the most incredible vanishing acts of fiscal history has provider group lobbyists recalling the days before the passage of the Balanced Budget Act of 1997. The evaporating surplus has sent advocates back to their toolbags for the crowbars they used to use to pry loose spare change from the federal purse.
"Let's get in the Wayback Machine," says Herb Kuhn, vice president of the Premier hospital network. "The important thing is we've done all this before and we know how to do it."
Midyear budget updates released separately last month by the White House Office of Management and Budget and the Congressional Budget Office project that the federal budget surplus in 2001 has fallen by at least one-third from 2000. That shrinkage of the surplus has resulted from the combination of a loss of tax revenue from tax-cut legislation enacted this year and lower corporate profits, as well as increased government spending.
What will make lobbyists' maneuvering harder this year is that nearly all of the remaining surplus-$158 billion by the OMB's measurement and $153 billion by the CBO's-results from the Social Security payroll tax deduction. That's the money President Bush and many lawmakers have tagged as off-limits for purposes of further tax cuts or new spending.
In fact, the CBO says the federal government has already spent $9 billion in Social Security money. In addition, the office says the federal government also has spent all of the $29 billion in surplus revenue collected from payroll taxes for the Medicare Hospital Insurance Trust Fund.
To argue that the remaining surplus, all of it earmarked for Social Security, should be diverted to Medicare may be a tough sell, says Robert Reischauer, president of the Urban Institute in Washington and a former CBO chief. "Clearly the cupboard is bare and the advocates of providing more resources to providers are going to have a much tougher time," he says. "The danger is that we would be robbing Peter to pay Paul-robbing Social Security to provide resources for Medicare, even though Medicare is in and of itself running substantial surpluses."
If the government wants to avoid spending more of the Social Security surplus, then new spending needs to be offset by cuts elsewhere in government spending, according to an OMB news release that accompanied the agency's midyear review.
That could put hospitals and other providers in the awkward position of advocating for cuts in other programs-or hospitals endorsing cuts for other providers-to persuade the government to increase their Medicare payments.
"That's always an unpleasant thing to have to do, and right now I'm not sure where those (cuts) are," says Richard Knapp, executive vice president of the Association of American Medical Colleges.
But after the CBO released its projections last week, the White House appeared to be backing off its position that the Social Security surplus is untouchable.
"The surplus is a means, not an end," OMB Director Mitchell Daniels said on NBC's "Today" show. "The end of government policy here ought to be to create the conditions for a strong economy, for more jobs, higher incomes for people. It's not about how much extra money the government keeps its clutches on."
In fact, the American Hospital Association has been using job creation as one of its pitches for freeing $16.2 billion in new Medicare spending for hospitals from now through 2006. It says the new spending is necessary to help hospitals hire nurses and other workers who are in increasingly short supply.
There's still another potential roadblock to new dollars for providers: a continuing push to add prescription drugs to Medicare benefits. In releasing the OMB numbers, Bush said he wanted to add $37 billion to his 10-year budget proposal for a prescription-drug benefit and comprehensive Medicare reform, boosting the cost of the plan to $190 billion.
On the side of hospital lobbyists, however, is a continuing grass-roots campaign that has contributed to the Medicare payment increases of the past two years. During the annual August congressional recess, the AHA, the AAMC and other hospital groups initiated a postcard campaign to Congress for increased payments and for hospital trustees to endorse a resolution, to be delivered to their members of Congress, for greater Medicare reimbursement. After Labor Day, the groups, with the help of state associations and large healthcare systems, will initiate an advertising campaign to highlight workforce supply issues.
"Hopefully, (members of Congress) are saying to each other, `I've talked to my hospitals, and we've got to do something about this workforce issue,' " Premier's Kuhn says.