Clinton's Medicare Cuts

Clinton's Medicare Cuts

Clinton's Medicare Cuts

The conventional wisdom debunked.
Oct. 25 1996 3:30 AM

Clinton's Medicare Cuts

Bill in '93 = Bob in '96.

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A draft summary of the Health Security Act, released in September of 1993, contained a chart showing projected growth for Medicare slowing to less than 6 percent by 1997, and less than 5 percent by 1999. And in its independent review of the Clinton plan, health-care consulting firm Lewin-VHI noted that the act "attempts to slow the growth in public and private health spending to the rate of growth in the CPI plus an allowance for population growth." That puts Medicare growth at just over 4 percent a year.


Far from devastating, this slowdown was, the White House said at the time, good for seniors. Ira Magaziner told a press briefing that "slowing the rate of growth actually benefits beneficiaries considerably because it slows the rate of growth of the premiums they have to pay."

But looked at in the terms the White House uses today, Clinton was proposing cuts in Medicare spending beyond the $270 billion Republicans dared propose.

Like the GOP plan, Clinton wanted to take a big chunk of savings from Medicare providers--doctors and hospitals--by cutting back payments to them.


M ore Cuts Than Needed. At one point, Clinton warned that the GOP cuts were "more than was necessary to repair the Medicare trust fund." The implied political point was that Medicare cuts were going to pay for tax cuts for the rich.

Clinton's Health Security Act, however, also cut Medicare more than was needed to repair the trust fund. Most of the savings from Medicare were to be plowed back into new federal health programs. As the Congressional Budget Office put it: "Reductions in Medicare spending would provide a major part of the funding for the Administration's proposal." More than a quarter of it, by White House calculations.

Raise Costs to Seniors. Several times during the debates, Clinton and Gore said that the Republicans' Medicare-reform plan would have boosted costs to seniors. "It would have charged seniors more for out-of-pocket costs as well as more in premiums," Clinton said at one point.

Under Clinton's Health Security Act, more than a quarter of the savings came out of the hides of seniors. They were to be charged higher premiums for Medicare Part B, the program that covers physician services. New copayments were to be added for some Medicare services that are now 100 percent covered. Over six years, those costs to seniors would have totaled $33 billion.

To be sure, Clinton concentrated the premium hikes for Part B on the well-to-do--those seniors earning $90,000 a year or more. The rest would pay only a quarter of the premium cost, with taxpayers picking up the rest. The GOP set the contribution rate at just under one-third of the full cost, but they also "means tested" the premiums so that seniors with incomes over $75,000 would pay a bigger chunk.

Push Seniors Into Managed Care. "Sen. Dole's Medicare plan ... would have forced a lot of seniors into managed care," Clinton said. That's something of a misrepresentation. The GOP plan would have expanded the managed-care options open to seniors, and encouraged them to take it. Today, seniors can stick with Medicare, or opt for Health Maintenance Organization (HMO) coverage, with the government ponying up the premiums. The GOP plan would have opened that door to the rest of the alphabet soup of private managed-care plans, such as preferred-provider organizations, point-of-service plans and physician hospital organizations.

So would Clinton's 1993 reforms, and even his more recent Medicare proposals. One section in his Health Security Act was titled "Encouraging Managed Care Under Medicare Program." Clinton's current reform proposal suggests expanding managed-care options for seniors. The only difference between the Republicans and Clinton on this score is that the GOP wanted to give seniors one extra option--to enroll in a "medical savings account" plan.