
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 13, 1994                   TAG: 9401130186
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A8   EDITION: STATE 
SOURCE: The Washington Post
DATELINE: WASHINGTON                                LENGTH: Medium

MEDICARE, MEDICAID SPENDING DROP

The federal government expects to spend $120 billion less on its budget-busting Medicaid and Medicare health programs between now and 1998 than it estimated would be needed just a year ago, according to recent projections circulating in Congress and the administration.

The slackening growth of the two huge entitlement programs has resulted in "the most optimistic deficit scenario we've seen in a long time," one budget officer said. Rapid growth in government health spending, especially in the Medicaid program for the poor, has been a major contributor to federal deficits over the past few years.

But while the slowing of the double-digit inflation in the government programs is good news, it could take some of the urgency out of the movement for comprehensive health care reform and present some technical problems for reformers.

President Clinton has proposed using $189.6 billion from Medicaid and Medicare savings between 1995 and 2000 to help finance health insurance policies for the uninsured. As the growth of these programs shrinks, some economists suggest, achieving these savings could become more difficult.

An administration official who asked not to be quoted said, however, that the money for the savings will be there "when this all shakes out," and noted that recent declines in general medical inflation would make it cheaper to extend coverage to the uninsured.

"If health care costs aren't going up as fast, that's something to be happy about," said Office of Management and Budget spokesman Barry Toiv.

The lower spending projections for the big health entitlement programs is a significant reversal of the pattern of recent years, when federal health care spending often outstripped estimates by tens of billions of dollars. In 1992, for example, federal spending on Medicaid grew by 29 percent - a jump that had not been anticipated.

Budget officials are now predicting that Medicaid could grow by as little as 7 percent between 1994 and 1995.

More than half the estimated $120 billion decrease in projected Medicaid and Medicare spending between now and 1998 results from the five-year deficit reduction measure enacted last year. It contained dozens of provisions to curb the growth of the programs, including smaller increases in physicians' fees for treating patients covered by the programs, and a crackdown on middle-income individuals using Medicaid - a program for the poor - to pay their nursing home bills.

But about $57 billion is due to factors unrelated to the 1993 deficit-cutting measure, budget officials said.

One factor, which could save the government at least $1 billion a year, is an unexpected falling off in states' use of a gimmick that enabled them to recover billions of dollars of federal matching funds for hospitals handling large number of uninsured or Medicaid patients.

Memo: shorter version ran in the Metro edition.

by CNB