While battles over the tax rate "bubble" and other such issues have grabbed headlines during the budget debate, a series of highly technicalchanges in the Medicare program may prove almost as costly to a broad spectrum of Americans.

Budget negotiators are counting on these changes to raise more than $40 billion over the next five years -- nearly 10 percent of the $500 billion in deficit reductions that the White House and Congress hope to achieve. But the budget plan, with this "hidden tax," as one medical group official called it, illuminates more than just the strategies being used to obscure the costs of reducing the deficit. It again demonstrates that the nation's battle against burgeoning health care costs -- which now consume about 12 percent of all the goods and services produced by the United States -- is nowhere near a solution.

Instead, the budget plan continues a decade-long struggle among those who bear these costs -- a struggle in which the burden is constantly being shifted. It is a battle in which "savings" often do not represent real cost reductions, but merely someone's ability to place those costs elsewhere.

In this case, most of the government's savings will come from changing the formulas that are used to calculate how much health care providers are reimbursed for treatment of Medicare patients. By allowing these calculations to lag behind medical inflation and by reducing or eliminating amounts included to cover indirect costs, outlays to providers can be reduced by more than $30 billion over five years.

But health care costs follow "the good old balloon theory -- you squeeze it at one end and it just pops up somewhere else," said Linda Jenckes of the Health Insurance Association of America.

So providers and other experts who follow these issues say that much of the reduction will be passed on to other consumers of health care in the form of higher charges.

"What the government is doing basically is shifting a sizable portion of its health care costs off its books and onto private payers," said Frank McArdle of Hewitt Associates, a private benefits consulting firm.

And while some of this shift will fall on individuals who pay for their own medical care, "primarily it's going to end up in the laps of private employers" who foot the bill for their workers' medical insurance, McArdle said.

Not all of the savings in the budget plan are obtained this way.

Some will come from direct tax increases. The plan would extend the 1.45 percent Medicare payroll tax beyond the $51,300 in income, where it now is capped, up to incomes of $125,000. For the $70,000 wage earner, for example, this means a real tax increase of $226.65 (plus a corresponding amount from their employers).

And some will come from higher payments that will be required from individuals in the program, although exactly how much is not yet clear as congressional conferees were still debating differences late yesterday. For example, the $75 deductible part of the voluntary Part B section of Medicare will rise, perhaps to $125 since the House has agreed to $100 and the Senate to $150.

But the bulk of the savings will come from tightening up on the amounts paid to doctors, hospitals and other providers of health care.

These cuts will not affect the treatment available for Medicare beneficiaries. Instead, when a hospital, for example, is reimbursed for treatment, it will get less. The hospital, in turn, will try to find someone else to pay what it no longer gets from the government, and workers with insurance through their employer are an obvious choice.

Medicare cuts hit employers in two ways. First, those who provide health care coverage for their retirees often "wrap" this coverage around the Medicare program, which is the government's medical insurance program for the elderly: The company's program supplements what is provided by the government program. When Medicare is cut, employers have to make up at least some of those cuts.

McArdle noted that this "comes at a time when employers are particularly sensitive" because of changes in accounting requirements that will force them to recognize their retiree health care obligations, a shift that will hurt balance sheets and profit statements of many companies.

Second, health care providers, where possible, boost their charges to paying patients (and/or their insurers) to make up for revenue cuts in government programs. This "cost-shifting," as it is known, is not confined to Medicare. It takes place when Medicaid -- the program for the poor -- is cut and when hospitals and doctors face increases in the numbers of people who have no coverage and cannot pay.

But, said Paul C. Rettig, director of the Washington office of the American Hospital Association (AHA), "This is not the first time Medicare has been cut. This has been going on year after year, and the cumulative effect makes it more serious."

Rettig said cost-shifting so far has resulted in an "effective tax of 6 to 8 percent on private payers," and while the AHA could not be sure the legislation was completed, "it looks like 6 to 8 percent again" as a result of the new bill.

These shifts will not fall evenly on all payers, several experts said. Michael Bromberg, executive director of the Federation of American Health Systems here, noted that while in some areas "we can raise prices to private payers, in other markets we are not able to do that because employers won't stand for it."

Jeff Klonoff, also of Hewitt Associates, said that "in competitive markets, typically urban markets, if there is a surplus of providers, then {insurance} carriers have the upper hand, and can play one provider off against another" to get a better deal. But other markets have too few providers to allow for that. "In those cases cost increases are passed along to private insurers" and from them to employers who pay the premiums, he said.

Klonoff noted that typically "small businesses are hit the hardest. Large employers have some opportunity for negotiating" better terms because of volume of business they can offer a provider.

Provider representatives said there will be more subtle costs as well. Hospitals may be forced to cut services or do without critical personnel or up-to-date equipment.

"There are going to be hospitals that close," said Bromberg, "but I'm much more worried about those that stay open and run in the red. It's ironic that politicians and the media get so excited about hospitals that close, but not when they are running in red. We have to start worrying about quality of care."