President seeks cap on Medicaid payout White House wants to limit growth of Medicaid payments to states.

January 24, 1992|By New York Times

WASHINGTON -- As part of President Bush's effort to curb spending on health care, administration officials want to limit how much federal Medicaid payments to states can grow each year.

They also are proposing to tax as regular income employer-paid health insurance for families that earn more than $125,000 a year.

Administration officials outlined their ideas at a meeting yesterday with Republican senators and at a meeting with lobbyists for hospitals and health insurance companies earlier in the week. Both proposals are subject to approval by Congress.

Under the Medicaid proposal, the federal government would pay states a flat amount, fixed in advance, for each person enrolled in Medicaid, the health-care program for the poor. The increase in payments for each person would be limited to about 6 percent in 1994 and 5 percent in 1995, the senators and lobbyists were told.

That represents a major change. Currently, only 2.6 million of the 29.8 million Medicaid recipients are covered by such prepaid health plans. For other recipients, there is no limit on Medicaid payments; the government pays more if they use more services.

Federal Medicaid spending shot up 28 percent last year, to $52.5 billion, partly because of surging enrollment as a result of the recession. The Congressional Budget Office predicts that under current law the federal share of Medicaid will rise to $68 billion this year and $80 billion in 1993, almost twice the 1990 total.

The average payment for a beneficiary has been increasing more than 15 percent a year.

The proposed limit on Medicaid spending would allow an increase in federal payments if more people qualify for Medicaid as a result of unemployment or economic hardship.

But it would curb the growth in costs resulting from greater use of costly medical services by Medicaid recipients.

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