MEDICARE: 1998 Saw Smallest Spending Increase Since 1965
Decreased reimbursements and crackdowns on fraud slowed Medicare spending growth to a 33-year low of 1.5% last year, brightening the program's short-term prospects but doing little to address its looming long-term structural difficulties. The New York Times reports that "[f]or the first time, Medicare spending ... grew more slowly than the federal budget as a whole, which increased by 3%." The slowed growth comes after a decade of runaway costs in which spending rose an average of 10%, or $12.8 billion per year. Perhaps more significantly, the modest cost increase came as Medicare's rolls swelled slightly more than 1%, meaning "the average increase in Medicare spending for each beneficiary was close to zero." The less-than-expected increase in costs may "relax the pressure on Congress to redesign the program," as the Medicare "trust fund "had been expected to lose $4 billion in 1998, but instead it posted a surplus of nearly $1 billion," thanks in part to higher payroll taxes from the booming economy. However, while experts are not completely sure why the program's balance sheet for 1998 ended in the black, they warned against any complacency. Former Congressional Budget Office Director Robert Reischauer said, "Nobody is really sure why Medicare spending has slowed down quite as much as it has. The only thing we can be sure of is that it won't last."
The federal crackdown on fraud, most visibly the federal "investigation of the Columbia/HCA Healthcare Corp., has sent a chill through the hospital industry and encouraged greater compliance by health care providers of all types." Federation of American Health Systems President Thomas Scully said, "People in hospitals, the billing clerks and their supervisors, are generally scared to death of being investigated for billing errors, accidental or intentional." Additionally, Medicare trustee Marilyn Moon said, "The 1997 Balanced Budget Act will do more than people thought to hold down Medicare costs." She added that home health care spending also declined last year. The slowing spending growth can also be attributed to delays in claim payments due to tighter scrutiny in search of fraud, and "exacerbated by changes in Medicare computer systems, needed to get ready for the year 2000." Thus, "[s]mall amounts of Medicare spending may ... have been shifted from 1998 to 1999" (Pear, 1/12).
In other Medicare news, the Washington Post reports that the National Bipartisan Commission on the Future of Medicare has agreed to "make all of its sessions and documents accessible to the public," after the Post charged that private dinner and breakfast meetings of the panel were in violation of federal open-meetings law. Commission co-chairs Sen. John Breaux (D-LA) and Rep. Bill Thomas (R-CA) "have acknowledged that members convened informally in private virtually all of the eight times they have gathered for a public meeting of the full body." And although the co-chairs said the meetings were purely "social," one commission member said, "We did discuss part of the time sort of substantive issues ... to explore ideas, look at various ways of solving a problem" (Goldstein, 1/12).
Health Insurance Association of America President Chip Kahn released a statement criticizing President Clinton's "trial balloon calling for" allowing a Medicare buy-in for people ages 55 to 64. He writes, "The President's call for Medicare expansion was a bad idea then and is a bad idea now. Currently, Medicare's budget woes are leading to a rumored $20 billion cut in payments to hospitals, and have resulted in unrealistic caps in payments to private Medicare HMOs." He concludes, "The President's proposed Medicare expansion would add additional strain on an already overburdened program ... By contrast, allowing individuals to completely deduct the cost of their health insurance and providing a $500 per person refundable tax credit ... would help more than 2 million of these deserving people get or maintain private health coverage" (HIAA release, 1/11).