Wishful-thinking healthcare lobbies continued to push for increased federal funding last week as lawmakers began pointing fingers over who lost the federal budget surplus. That growing battle, some say, could freeze any efforts to boost Medicare and Medicaid payments.
"It wasn't clear to me that (increased healthcare funding) was building up a head of steam, and (the budget fight) sort of seals it," said Nancy-Ann DeParle, the Medicare and Medicaid administrator under former President Clinton who now sits on the boards of several healthcare companies and is an adviser to the Morgan Stanley venture capital group.
Undaunted by the news coming from two congressional committees last week, provider groups launched their fall campaigns for more federal healthcare dollars. Managed-care plans called on Congress to increase Medicare payments to HMOs to keep them from withdrawing from markets across the country. Such withdrawals forced about 1.6 million beneficiaries to change plans or lose coverage in the past three years.
About 6.2 million of the 39 million Medicare beneficiaries receive care through managed-care plans called Medicare+Choice.
Separately, the nursing home industry began an advertising campaign to play up the results of an industry-sponsored study showing that Medicaid underpaid nursing homes by $3.3 billion in 1999 (Sept. 3, p. 14). And the hospital industry is preparing to roll out an advertising campaign that will call on Congress to increase Medicare payments to hospitals by $16.2 billion between now and 2006 to help them hire more nurses and other workers.
But if government budget forecasters are to be believed, some of the groups will be sorely disappointed should Congress decide it has precious little extra money to spend on Medicare providers.
Officials from the White House Office of Management and Budget and from the Congressional Budget Office went before congressional committees last week to explain how a federal budget surplus once projected at $281 billion for fiscal 2001 will shrink to as little as $153 billion before the fiscal year ends on Sept. 30.
All of the remaining surplus results from excess Social Security payroll tax collections. President Bush and congressional leaders have declared that Social Security is off-limits as a source of spending for other government programs. That could limit the federal government's ability to use Social Security revenue to increase Medicare and Medicaid provider spending.
Leaders also had declared off-limits the $32 billion in Medicare Hospital Insurance Trust Fund tax receipts. Democrats charge that Bush violated that pledge to pay for a tax cut enacted earlier this year (See story, p. 24). The surplus hearings prompted angry accusations from congressional Democrats, who returned to Washington from an annual summer recess to charge that President Bush is playing a shell game with federal spending.
Mitchell Daniels, director of the OMB, disputed Democrats' claim. He said the drop in the surplus will have no bearing on the amount of government spending on seniors' healthcare. He said that because general government revenue pays for most of the healthcare services covered under Medicare Part B, Medicare actually runs a deficit and that the notion of a Medicare Part A surplus is fiction.
"All the cash coming in for Medicare, another $50 billion besides, is required to pay the bills of Medicare," Daniels told the House Budget Committee. The Democratic assault may help providers argue against further limits on Medicare spending. Democrats would likely portray proposals to limit spending as a raid on the Part A trust fund to finance other Republican budget priorities.
"You can just imagine if you were cutting Medicare dollars in order to spend them on defense," said David Abernethy, a former congressional Democratic aide who now is senior vice president of public policy and regulatory affairs with HIP Health Plans of New York.
Thomas Scully, administrator of the Centers for Medicare and Medicaid Services, said, "I have no idea if there are going to be provider cuts. We certainly haven't talked about any, but at this point I don't think there's any momentum in Congress for provider cuts. Who knows where things will be in December and January (when the administration's budget usually is drawn up). But hopefully we'll be in a better economy and will be talking about what to do with $300 billion and not $158 billion."