House rejects Medicare, Medicaid spending caps

A White House-supported bill with potential caps on Medicare and Medicaid spending was defeated in the House by a 268-146 vote, a relief for the hospital industry and what is viewed as a blow to the Bush administration. The basic bill, introduced by Rep. Jim Nussle (R-Iowa), would have required Medicare and Medicaid improvements to be offset by spending cuts elsewhere, within the programs themselves or within other federal programs. An amendment would have established a hard cap on aggregate spending in the two programs. A study by the Center on Budget and Policy Priorities, a Washington-based think tank, said the cap would have reduced Medicare and Medicaid spending from 2006 to 2014 by $800 billion and $400 billion, respectively. An alternative bill that included a similar cap also was rejected by the House. -- by Tony Fong