A YEAR'S worth of lofty talk by the president and both parties in Congress about the importance of strengthening Medicare's finances while improving its benefit structure has come down to a bill that would do neither. Congress instead is preparing with general administration support to back away from some of the reimbursement cuts that it imposed on Medicare providers as part of the vaunted 1997 balanced budget act.
Hospitals, nursing homes, the managed care and home health industries and others have besieged the politicians all year with complaints about the impact of the cuts, which they say were deeper than intended and already have begun to cost some patients care. On Friday, a heavily lobbied House passed, 388 to 25, a bill to give back more than $11 billion over five years, and a similar bill is pending in the Senate. This is one they're almost sure to send to a willing president before they go home.
Some of the give-backs seem justified, but seem is the operative word. The providers almost always squeal when cut, the data needed to reach a rounded judgment about the effect of the 1997 bill are not yet available and the mechanisms are enormously complicated. The nursing home fight, for example, has to do in part with what are known as RUGs or resource utilization groups. Patients are divided into these categories to help determine how much it likely will cost, and therefore how much the government should pay per day, to care for them. The industry says the RUGs for very sick patients have been set too low. Most experts seem to agree, but aren't sure about other aspects of the industry's case. Some hospital outpatient rates likewise seem to have been set too low, and teaching hospitals claim to have been particularly affected by the 1997 cuts, coming as they did atop other revenue reductions in recent years.
That's part of the problem for analysts -- deciding to what extent the providers are really being squeezed by the 1997 act as distinct from being squeezed generally and looking to the government via Medicare to bail them out. The administration is particularly skeptical of the managed care industry's claim that it is being inadequately compensated under Medicare, and Congress's own General Accounting Office has testified that, to date and on average, the 1997 legislation has likely only "removed . . . a portion of excess payments."
The good news in the face of this costly uncertainty is that the current bill is only a retreat, not a rout. The 1997 bill put in place a number of needed new mechanisms to keep Medicare from being ripped off, and while some are being eased, they're not being abandoned. What's being abandoned, at least for this year, is thought of broader reform. In the long run, it is going to take a significant revenue increase to make Medicare whole. Spending cuts alone won't do the job. The revenue increase will have to be the greater if Medicare is expanded, as it ought to be, to include a prescription drug benefit such as the president has proposed, to say nothing of what will be needed to drive down the number of uninsured in the country, as the Democratic presidential candidates are urging. It, too, is a worthy cause. But they will have to pay for it, and it's not enough to say, as the proponents have, that they're going to do so with a nonexistent budget surplus.