Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, August 6, 1993 TAG: 9308060153
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Clinton administration officials and lawmakers point out that the government still will spend almost $1 trillion on Medicare over the next five years. The cutbacks will just slow the rapid annual increase in spending on care for 31 million elderly and four million disabled workers.
But Congress and the Reagan and Bush administrations have nibbled repeatedly at Medicare reimbursement rates, and most hospitals already lose money treating Medicare patients.
Medicare covered 88 percent of hospital costs in 1991, and hospitals made it up by charging private insurers 130 percent of their costs, said Dr. Donald A. Young, executive director of the Prospective Payment Assessment Commission, a congressional advisory board.
"The hospitals don't swallow it. They shift their costs back onto the private employers," said Mark J. Ugoretz, president of the ERISA Industry Committee, which lobbies for corporations on pension and health issues. "We're moving the deck chairs on the Titanic."
"Premiums for individuals and businesses will go up," predicted Chip Kahn, executive vice president of the Health Insurance Association of America.
And Dr. Mary Jane England, president of the Washington Business Group on Health, said, "If you squeeze one part of the balloon, it's going to blow up in another section."
Because many big businesses are moving aggressively to curb health costs by steering workers into managed care, "more and more is going to be borne by small business and the individually insured," she predicted.
The bulk of the Medicare savings in the House-Senate conference committee's deficit-reduction bill would come by reducing annual cost-of-living increases for physicians and hospitals.
The hospital rate increases would be trimmed by 2.5 percent in both 1994 and 1995, 2 percent in 1996 and 0.5 percent in 1997 to save almost $21 billion.
Some $4.4 billion would be shaved from increases in physicians' fees. Surgeons would have gotten a 12.2 percent increase from Medicare next year and other physicians 6.6 percent. The conference bill would limit the raises to 8.6 percent for surgeons, 6.6 percent for primary care doctors and 4 percent for the rest.
Dr. James S. Todd, executive vice president of the American Medical Association, said some physicians with large numbers of Medicare patients may have to "stop taking new ones. They won't be able to make ends meet."
"How much of a Medicare discount can a physician absorb? Their costs are not being controlled," said Todd. "Salaries are going up and they have to pay for new equipment and supplies."
Medicare beneficiaries themselves would contribute $7.8 billion toward the $56 billion by continuing to pay monthly premiums amounting to 25 percent of the cost of their so-called Part B benefits, which cover physicians' services and other out-of-hospital expenses. The rest comes out of general revenues.
Affluent retirees also would pay more income tax on Social Security benefits, while upper-income workers would be hit with the 1.45 percent Medicare tax on all wages. The tax now cuts off at the $135,000 income level.
The bill also would save $1 billion by making it harder for families to shed assets to get Medicaid to pay their nursing home bills.
A House Ways and Means Committee aide said, "The problem with these reductions is not that they inevitably lead to cost-shifting, but that a single payer cannot control the behavior of providers. That's an argument for national health care reform."
by CNB