Subject: Health Costs vs. Poor 
Date: Published: 5/11/92 (98 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    The Outlook:
    Coming Federal Battle:
    Health Costs vs. Poor
    ----
    By David Wessel

    WASHINGTON -- Taking a breather from attacking
 anti-poverty programs of the 1960s, one of those ubiquitous
 "senior administration officials" summoned reporters the
 other day in the wake of the Los Angeles riots.
    It turned out that President Bush was so upset by
 television reports about his track record on assistance to
 the urban poor that he ordered aides to deliver statistics
 showing that spending on some of these much-maligned programs
 has actually risen on Mr. Bush's watch.  These figures don't
 lie.  The Congressional Budget Office confirms that spending
 on benefits to poor people is expected to be about $70
 billion -- or 80% -- higher next year than it was when Mr. 
 Bush took office.  Even allowing for inflation and the sour
 economy, that's a big number.
    Poor folks will be forgiven if they didn't notice the
 extra money in their wallets.  Two-thirds of the additional
 spending went to doctors, hospitals, nursing homes and drug
 companies.  Spending on Medicaid, the government health
 program for the poor and the disabled, now accounts for
 nearly 50 cents of every federal dollar spent on benefits to
 poor people.  In 1981, it was only about 30 cents.
    Health-care costs are becoming the monster that ate the
 federal budget -- and state, corporate and family budgets,
 too.  Spending on Medicaid, the Medicare program for the
 elderly and health insurance for government employees chewed
 up about 10% of the federal budget in 1980, chews up about
 15% today and -- unless something changes -- will chew up
 about 28% by 2002, CBO projects.
    Trying to stun liberal audiences into comprehending the
 severity of this trend, Robert Greenstein of the Center on
 Budget and Policy Priorities says:  "In little more than a
 decade, health care will consume a little more of the federal
 budget than defense did at the height of the Reagan buildup."
 They sit up at that, he reports.
    Medicaid is one big piece.  The federal government spends
 as much on Medicaid as it does on food stamps, cash welfare
 payments, child nutrition, the Supplemental Security Income
 program for the elderly and the earned income -- tax credit
 for the working poor -- combined.  Federal Medicaid spending
 is projected to increase by $20 billion next year to $72.5
 billion, a 38% increase.
    Some of the increase reflects deliberate decisions to
 enroll more pregnant women and children.  Some reflects
 imaginative state budget tricks to shift more costs to the
 federal government.  But an unfortunately large portion
 reflects a basic problem:  Spending on health is rising far
 more rapidly than the health of Americans is improving.
    "What are we getting for the extra $20 billion?  "  asks
 economist John Cogan of Stanford's Hoover Institution, a
 former Reagan budget analyst.  "Is the quality of the health
 care growing that much in any year?  Clearly not.  Strip out
 the population growth and you're left with $15 billion to $18
 billion in increased spending that isn't buying anything."
    For all its shortcomings, Medicaid isn't the root problem.
 As the government program of last resort, Medicaid ends up
 paying bills that other government and private insurers won't
 -- such as bills for nursing homes or AIDS drugs for people
 who are broke.  Despite its growth, Medicaid is dwarfed by
 other health spending; all programs included, Washington
 spends far more on care for people who aren't poor than for
 people who are.
    It's hard to demonstrate that rising health-care spending
 has forced the federal government to cut back spending
 elsewhere -- yet.  "With a $400 billion deficit, it's hard to
 argue that anything has been crowded out," Mr. Cogan says.
    But at the state level, the impact of uncontrolled
 health-care spending is painfully clear.  Constitutionally
 unable to run deficits the way Washington can, state
 governments are slashing spending to make room for Medicaid.
 Poor people are often the hardest hit.  Nine states cut
 welfare benefits last year; 31 froze them at year-earlier
 levels.
    Sooner or later, the same choices will confront federal
 politicians -- sooner if Congress and the president move
 quickly on a constitutional amendment to balance the budget.
 "It's no different than with an employer," Mr. Cogan says.
 "You can tolerate rapid growth if something is a small part
 of your budget.  If it's a big part of your budget, you
 can't."
    Even ardent health-care reformers say the undertaking is
 too risky for an election year.  But if renewed interest in
 aiding the urban poor -- whether by spending more or creating
 new tax incentives -- lasts into next year, it will increase
 the pressure to address the health-care cost crisis.

[This article is made available here by Dow Jones Co. for the
 personal and non-commercial use of callers to this bbs, in the
 hope that it will be of some help to those who are suffering
 from the disease and others who are seeking to help them.]