Clinton to seek new limits, fees under Medicare Proposal would save $35 billion over next 4 years

February 14, 1993|By Robert Pear | Robert Pear,New York Times News Service

WASHINGTON -- President Clinton will seek at least $35 billion in savings from Medicare over the next four years by limiting payments to doctors and hospitals and by trying to increase premiums for elderly people with high incomes, administration officials said yesterday.

The proposed savings, three times what President George Bush sought unsuccessfully last year, are part of what Mr. Clinton describes as a bold program to reduce the deficit and its long-term burden on the U.S. economy. He will announce the outlines of that program in a speech to Congress on Wednesday, but the details may still be modified.

Taken together, the proposed tax increases and budget cuts in various federal programs will save $500 billion to $550 billion over five years, administration officials said. The last such exercise in austerity, the 1990 budget deal, was expected to save $496 billion over five years.

The savings in the Medicare program, which finances health care for 35 million elderly and disabled people, would, at first, be used mainly to help reduce the budget deficit rather than to expand health benefits for those without insurance, administration officials said.

Proposals for expanding coverage will be made as part of the president's national health care plan, which he has promised to send Congress by May 1.

Administration officials say that Medicare and Medicaid, the health program for the poor, must be part of any deficit-reduction plan because they account for nearly half of the projected increase in federal spending over the next five years. The government expects to spend $146 billion on Medicare this year and $80 billion on Medicaid, two of the biggest and fastest growing programs in the budget.

In the 1980s, Congress set standard Medicare rates for hospitals, and it established a national fee schedule for doctors, starting last year. But that did not stem the growth of federal spending on health care.

Without any change in current law or policy, the Congressional Budget Office estimates, spending for Medicare will double, from $129 billion last year to $259 billion in 1998.

One proposal being considered by the administration would prevent doctors and hospitals from increasing charges to private patients to make up for income lost as a result of the new Medicare limits.

If Mr. Clinton seeks Medicare savings of the magnitude now envisioned by the White House, he is likely to face opposition from a small army of lobbyists for doctors, hospitals and the health care industry.

The president seems prepared for such a confrontation and may welcome it for political reasons. In separate appearances last week, he and his wife, Hillary, assailed the drug industry, complaining that companies had made excessive profits from the production of vaccines for children.

The likely Medicare proposals -- in addition to restricting doctors' ability to raise charges to private patients to compensate for lower Medicare payments -- include spending limits on doctors and hospitals and an increase in premiums charged to higher-income elderly people.

In addition, federal health officials said they wanted to prevent doctors and hospitals from raising their charges in anticipation of further cost controls to be imposed as part of Mr. Clinton's national health care plan. It is not clear how the government could control what doctors charge their private patients.

Rep. Pete Stark, D-Calif., chairman of the Ways and Means subcommittee on health, said he saw "no problem" with judiciously limiting Medicare payments to doctors and hospitals.

Doctors have an average income of more than $160,000 a year, he said, and some underused hospitals should be closed. But Mr. Stark said the savings from such cutbacks should be used to expand Medicare benefits, not just to reduce the budget deficit.

In January 1992, Mr. Bush asked for Medicare changes intended to save $10 billion over four years, but Congress rejected most of them. Aides to Mr. Clinton say he has a better chance of winning congressional approval because his party has a majority in Congress and he is offering a balanced package of spending changes and tax increases.

In efforts to slow the growth of Medicare, Congress has already ordered that hospitals be paid a flat amount, set in advance, for each patient, starting in late 1983, and it has established a national fee schedule for doctors, starting last year.

Nevertheless, with rising medical prices, a growing elderly population and the proliferation of potentially useful medical technology, Medicare continues to grow.

When Mr. Clinton discussed his plans to control health costs as a presidential candidate in September, he said, "We will dedicate federal savings from cost controls to expanding coverage to all." But there is no evidence that the initial savings from his proposals next week will be used for any purpose other than to reduce the deficit, which he says is bigger than he realized.

Martin A. Corry, director of federal affairs at the American Association of Retired Persons, expressed concern about the change in emphasis. "The administration will narrow its options for health care reform if it uses all the Medicare savings for deficit reduction," he said.

Federal officials refused to say exactly how Medicare premiums might be raised for affluent elderly people.

Mr. Clinton has conceded that he probably cannot fulfill his campaign promise to cut the deficit in half within four years. But he says he wants to shave $145 billion from the expected 1997 deficit. With no change in current law or policy, the Congressional Budget Office estimates, the 1997 deficit will be $319 billion.

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