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Jewish World Review Oct. 12, 1999 /2 Mar-Cheshvan, 5760

Morton Kondracke

Kondracke
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Econophone

Congress can save health care from ruin


http://www.jewishworldreview.com -- CONGRESS WON'T REFORM MEDICARE this year. It probably won't pass a patients' rights bill. But it can save hospitals, nursing homes and other health-care providers from ruin.

After months of lobbying, advertising and expert analysis, the providers seemed to have convinced key members and the Clinton administration that they are being driven into the red by major miscalculations in the 1997 balanced-budget agreement.

The Congressional Budget Office reported that instead of cutting $115 billion from Medicare outlays over five years, provisions of the law and its administration will actually cut double that -- creating havoc for providers.

Last month, the health-care information firm HCIA and the accounting firm Ernst & Young reported that the balanced-budget-agreement cuts "could leave a majority of the nation's hospitals in the red by 2002 if Congress and the administration don't take action."

The study found that hospitals' profit margins nationwide would fall from 4 percent this year to below zero percent by 2002, forcing reductions in staff and services and hurting patient care.

Similarly, a study in June by a Washington consulting firm, Muse & Associates, showed that Medicare payments to skilled nursing facilities would drop $2 billion a year instead of the originally projected $1.3 billion, causing the facilities to refuse patients who would otherwise be released from hospitals.

And 200 managed-care plans have dropped 700,000 Medicare patients from coverage in the past year, with the HMO industry charging that the federal government is paying HMOs less than it pays fee-for-service doctors to care for Medicare patients.

The providers have mounted major advertising campaigns. One of the cleverest, sponsored by the nursing-home industry, addresses Vice President Al Gore.

The daughter of a senior citizen writes that her father "can't get the care he needs" because of Medicare cuts, but "you have the power to restore vital Medicare funding for nursing-home patients like my dad."

As The Washington Post reported Tuesday, the message -- conveyed in newspaper ads in Iowa and New Hampshire -- has gotten through to Gore, who announced that he favors rewriting balanced-budget-agreement provisions to help nursing homes, teaching hospitals and rural hospitals.

The most aggressive ad campaign has just been mounted by the managed-care-industry lobby, the American Association of Health Plans, showing an older man saying that "politicians down in Washington decided to cut too much from Medicare HMOs, and seniors like me end up paying more and getting less, even losing our drug coverage."

Congress, which won't be able to pass much else on the health-care front this year, probably will do something on Medicare "givebacks" -- also known as "BBA fixes." How much -- and what kind -- are still up for grabs.

No plan, however, comes near to correcting the $100 billion-plus error made in 1997. The most generous proposed fix was unveiled last week by Senate Minority Leader Tom Daschle, D-S.D., calling for $22 billion over 10 years in givebacks to various categories of providers.

For hospitals, Daschle provides a mechanism to stop huge losses incurred because of a new system to advance-pay an estimated cost for outpatient services, instead of paying actual costs -- a $13 million reduction that hits cancer hospitals especially hard.

Another bill, sponsored by Reps. Mike Bilirakis, R-Fla., and Peter Deutsch, D-Fla., would correct what HMOs regard as an unfair $11-billion cut imposed by the government's Health Care Financing Administration only on them, not on fee-for-service providers.

A key player in the effort is Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means subcommittee on health, who has proposed $7.5 billion in "givebacks" and is insisting that the Clinton administration make administrative decisions worth a similar amount. The administration, which until recently was dubious about the providers' claims of damage, has come around to the view that there are systematic differences. The administration has put out a "fix" figure of $7.5 billion over five years, but officials say it is "neither a floor or a ceiling."

One key factor involved in what's done is politics. Both parties are pursuing the votes of seniors, who have trended Republican in recent years. The administration had been hoping to win them back for Democrats by proposing a prescription drug benefit for all seniors as part of Medicare reform. It also wanted to expand Medicare to workers who lose their private insurance after age 55.

However, the ad blitz by hospitals, nursing homes and HMOs has created the impression that instead of helping seniors, administration policy is hurting them. So the Clinton administration is scrambling to change its tune.

First lady Hillary Rodham Clinton (D), once a critic of providers, suddenly is an advocate for hard-pressed teaching hospitals now that she is running for the Senate in New York, which has several such institutions. Her involvement may have a backlash effect, though, because Republicans are reluctant to help teaching hospitals if she gets the political benefit.

Complicating the picture is money. Some Republicans view any spending -- even on Medicare -- as money that could otherwise go for tax cuts.

Others think that money spent on Medicare will force Congress to break open the "lockbox" it is trying to use to protect Social Security surpluses. The message that the providers are trying to send is: Medicare and Social Security benefit the same people. If you hurt their health care, you're doing as much damage as if you cut their income.



JWR contributor Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill. Send your comments to him by clicking here.

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