Subject: Health-Care Goals Take a Back Seat To Driving Down the Deficit for Now 
Date: Published: 2/18/93 (104 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    Clinton's Economic Package:
    Health-Care Goals Take a Back Seat
    To Driving Down the Deficit for Now
    ----
    By Hilary Stout
    Staff Reporter of The Wall Street Journal

    WASHINGTON -- President Clinton's economic package puts deficit
 reduction ahead of universal health-care coverage for now.
    The plan unveiled by Mr. Clinton yesterday proposes more than $38
 billion of savings from projected federal health expenditures over
 the next four fiscal years, including reductions in annual increases
 in payments to doctors and hospitals under the Medicare program for
 the elderly and disabled.
    But the savings would go toward shrinking the budget deficit, not
 toward helping finance Mr. Clinton's goal of overhauling the
 health-care system to cover the 37 million Americans now uninsured.
    The president has promised to submit to Congress by May 1 a plan
 to provide health insurance to all Americans and curb the sharp rise
 in medical costs.  The Clinton administration has a task force of six
 cabinet secretaries and top domestic policy advisers, along with a
 working group of about 300 government officials and outside health
 experts, working on the package.  But the use of Medicare and
 Medicaid savings, which were painfully eked out from some 31 parts
 of those programs, for deficit reduction will make their job much
 more difficult and make it all the more likely that a new round of
 tax increases will be needed to finance the health system's
 overhaul.
    In her confirmation hearing before the Senate Finance Committee,
 Health and Human Services Secretary Donna Shalala said Mr. Clinton
 had indicated he wanted to use Medicare savings to fund expansion of
 health coverage.  But briefing reporters yesterday on the health
 provisions in the economic plan, Ms. Shalala disputed the notion
 that using Medicare savings for deficit reduction will impede
 efforts to come up with a health-care reform plan.
    "I consider these unfortunate but necessary," Ms. Shalala said.
 "I don't believe they tie our hands" in achieving the goal of
 universal coverage.
    Despite the curbs in Medicare and Medicaid, the federal-state
 health program for poor people, the administration is proposing to
 pump more money into preventive health programs.  The aim is to
 reduce future health costs "by investing in prevention very early,"
 Ms. Shalala said.
    Mr. Clinton unveiled a proposal to spend an additional $26
 billion over the next four years on public health programs,
 including an extra $8.2 billion on AIDS prevention, immunizations,
 women's health research and other initiatives.  He also proposed
 spending an extra $46 million next year and $1.5 billion over four
 years on substance-abuse prevention and treatment efforts.
    The president also plans to request an additional $200 million in
 the current fiscal year for the Ryan White AIDS program to help
 state and local governments care for patients with the disease.  That
 is in addition to the $342 million already appropriated for the
 effort.  Then, over the next four years, he plans to ask for an extra
 $949 million for the program, living up to his pledge to fund the
 program up to the level at which it was authorized.
    Ms. Shalala said repeatedly that Medicare and Medicaid
 beneficiaries won't be hurt by the spending reductions.  "This will
 not change in any significant way the quality of their care or what
 they pay for their care," she said.
    But the biggest savings the administration is proposing is the
 elimination of a federal requirement that state Medicaid programs
 have to pay for home health care.  Ending that mandate is projected
 to save the federal government, which contributes to state Medicaid
 programs, $4.1 billion over four years.  Many patients find home care
 preferable to a hospital stay and consequently are likely to be
 upset by the new measure.
    The administration intends to make doctors and hospitals bear
 most of the savings, with hospitals suffering a far larger blow.  The
 annual increase in Medicare doctors fees would be reduced in 1994.
 Subsidies to teaching hospitals also would be reduced, as would
 reimbursements for hospital outpatient services.  The increase in
 hospital inpatient payments would be curbed.  And payments to medical
 laboratories would be reduced.
    Frederick Graefe, a lobbyist for hospitals, contended that the
 Medicare limits will force institutions to raise their prices for
 everyone outside the Medicare program.  "These Medicare budget cuts
 without comprehensive health-care reform will unfortunately
 exacerbate the existing cost shift and lead inevitably to
 across-the-board price controls for the health-care industry," he
 charged.
    Administration officials disagreed.  They emphasized that the cuts
 will take place as the administration moves to restructure the
 entire health system and eliminate the ability of health providers
 to shift costs.
    "This is the first part of a health-reform effort," Ken Thorpe,
 deputy assistant secretary for health policy, said at the briefing.
 The second part, he said will be "applying equal pressure for
 cost-containment on the public and private sectors."
    ---
    Corrections & Amplifications
    AN ARTICLE yesterday incorrectly said that a federal mandate
 requiring state Medicaid programs to pay for home health care would
 be eliminated under a proposal by President Clinton.
    (WSJ Feb. 19, 1993)

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