Proposals for massive new cuts in federal welfare, Medicaid and Medicare benefits--totaling as much as $9.3 billion in fiscal 1983--have been outlined by Secretary of Health and Human Services Richard S. Schweiker in a confidential memo to the Office of Management and Budget.
The memo, in the form of an Oct. 26 letter to OMB Director David A. Stockman, described about $5.9 billion of the cuts and said they already had been approved by the White House Interagency Entitlement Advisory Group. Details of how the department would achieve the additional $3.4 billion in savings to meet the $9.3 billion goal were not given.
These cuts would be in addition to the more than $2 billion in fiscal 1982 Medicaid and Medicare cuts and more than $1 billion in welfare reductions already voted by Congress in last summer's budget bill at the request of President Reagan.
Among the proposals for cutting cash welfare benefits (at an estimated savings of $635 million in fiscal 1983): forcing the states to adopt "workfare" programs for welfare clients and requiring at least one parent to participate if both parents are in the home; requiring all parents in the welfare program for mothers and children to search for a job regardless of the age of the child; reducing benefits if a welfare mother with a child lives in a larger household (with a grandmother, for example) and thus may be deemed to have savings on rent and electricity; paying benefits to aged, blind and disabled welfare clients only from the date of application and not retroactive to the start of the month.
In Medicaid, the medical benefits program for the poor, the cutbacks outlined in Schweiker's letter are estimated to save $604 million in 1983.
They include permitting the states for the first time to make Medicaid clients pay for part of the cost of basic services; converting the portion of Medicaid that now pays for long-term nursing home care for the poor (more than two-fifths of the Medicaid program) into a "block grant" in which federal payments each year would rise at a fixed pace, slower than they have been rising in recent years; and eliminating special extra federal matching funds for some activities.
In Medicare, which goes to all Social Security recipients who are disabled or 65 or older, the savings to the government are estimated at $2.9 billion in fiscal 1983.
Changes would include: limits on federal reimbursements to hospitals for "ancillary care" (laboratory work, pathology and related types of expenses, which account for at least half of a patient's hospital bill) and for basic room-and-board fees; increases in the $11-a-month premium now charged if Medicare recipients choose to buy optional coverage for out-of-hospital doctor visits; and bringing federal employes under the Medicare portion (now 1.3 percent a year) of the Social Security payroll tax (they would get the benefits, too).
Schweiker also listed a $500 million proposed saving from a "health competition" plan for Medicare (possibly a voucher system giving recipients a government payment and allowing them to buy private policies, although he did not specify).
An HHS spokesman declined to discuss the Schweiker letter but said no final decisions have been announced by the White House. Other sources said some of these proposed changes may ultimately be dropped, including the ancillary services proposal.
The Schweiker memo actually was a budget proposal for fiscal 1983, detailing how the secretary proposed to keep under a ceiling of $267.9 billion that Stockman had imposed. It stressed that none of the entitlement changes listed included any further cuts in Social Security benefits, although about $1 billion in Social Security savings that would result from legislation now being considered on Capitol Hill was included in the $5.9 billion total.
The Social Security savings involve taxation of sick pay and a reduction in the family maximum, two measures being considered as part of a bill restoring the Social Security minimum benefit.
Schweiker said in the letter that he expected to reduce department personnel to 144,039, down 5,073 from the level contemplated for fiscal 1982, which in turn was down 3,785 from the 1981 figure.
Schweiker said that in some programs no further cuts would be prudent, and called for some increases. Cuts for the National Institutes of Health and alcohol and drug abuse programs, as well as the Food and Drug Administration, are so severe in fiscal '82, Schweiker said, that more funds are needed lest it be "detrimental to the health and safety of the American public" and "severely restrict ability to insure safety in food and drugs."
Schweiker said he would ask for $900 million for Head Start in fiscal 1983 and take the $68 million increase out of the Community Services block grant figure of $225 million. He said programs like foster care, social services grants and adoption assistance would be funded at the the same levels in 1983 as requested for fiscal 1982 two months ago, a net loss, in view of inflation.
He also said that the department needs more money for the Cuban and Haitian refugee programs, which will run out of money in January.
The proposals for welfare and medical benefit cuts also include:
Welfare: Eliminate separate funds for emergency assistance and pay for it out of the low-income energy block grant; cut off benefits for a parent when the youngest child reaches 16 (it's 18 now); make sure that financial resources of military personnel are counted when their dependents apply for welfare; round down eligibility and benefit standards to the next lowest dollar for aged, blind and disabled; make the states keep 6 percent for themselves when they help non-welfare mothers track down and collect from fathers.
Medicare: Force employers to continue private health insurance for people who keep working after 65 instead of dumping all their bills onto Medicare; index to the cost of living certain deductibles (now $75 a year) that Medicare patients pay for out-of-hospital (Part B) care before the government takes over the bills; start Medicare coverage after the individual has been on the rolls a full month, instead of making it retroactive to the start of the month of application.
Also, in Medicare: postpone annual increases in Medicare doctor fees for three months, from July to October, and reduce payments for doctors in hospital outpatient departments by 40 percent; reimburse radiologists and pathologists at only 80 percent of their normal bills, instead of 100 percent; reduce the allowable rate of return on equity for hospitals under Medicare to the same rate as the government pays on T-Bills or long-term bonds, whichever is lower; change the rules so as to eliminate an alleged subsidy in Medicare reimbursements to hospitals for certain interest on depreciation, and patient use of private rooms (instead of semi-private) and eliminate the 5 percent "nursing differential," a special bonus paid to hospitals.