Although it cut the overall federal deficit, the budget bill recently passed by Congress mandated a huge expansion of Medicaid to cover all poor children through age 18 and also created federal income subsidies and insurance assistance worth billions of dollars to "working poor" and near-poor families with children.
The bill created programs to conduct mammography screening for 18.7 million women on Medicare and to protect the low-income elderly from out-of-pocket charges for Medicare. It also provided for home-care services for frail low-income elderly persons, and mandated strong federal regulation of commercial "Medigap" policies and of prices Medicaid pays for prescription drugs.
These new programs will cost the federal government a net of about $22 billion over the next five years but will touch tens of millions of lives.
Rep. Henry A. Waxman (D-Calif.), a key sponsor of many of the health changes, said that, taken as a whole, the provisions are some of "the most significant improvements in domestic benefits since the start of the Reagan presidency."
Sen. Lloyd Bentsen (D-Texas), also a sponsor of major health changes, said, "The attitude of the U.S. government toward the health of American children has undergone a remarkable change, and nowhere is that change more in evidence than in the budget bill."
Robert Greenstein of the nonprofit Center on Budget and Policy Priorities said this year isn't the first time expanded help for low-income people has been put into a budget-cutting bill.
"Since about 1983, there's been a growing recognition that deep cuts in social programs made in 1981 did cause hardship and went too far," and Congress since then has gradually been improving some of the programs, Greenstein said. But he said the current measure "probably covers more areas of improvement for the working poor than any single piece of legislation in recent years."
The two broadest provisions are the expansion of Medicaid for children, pushed by Waxman and Bentsen, and a big increase in income subsidies for the working poor and near-poor.
Medicaid, the federal-state welfare health program for the poor, does not cover millions below the poverty line (which today, for a family of three, is income of $9,885 a year). Virtually all states set the income cutoff well below the poverty-line income.
Last year, Congress required states to provide Medicaid coverage to children up to age 6 who reside in families with incomes less than 133 percent of the poverty line (or about $13,147 a year).
In last week's bill, Congress mandated that by the year 2002, the states extend coverage to include children ages 6 through 18 residing in families whose income is at or below the poverty line. By 1995, an additional 700,000 children will be brought into the program. Over the next five years, the expanded program, along with some related provisions, will cost the federal government $1.1 billion and states will match most of that. Several million more children will become eligible by 2002.
The budget bill also sharply expanded the Earned Income Tax Credit, a subsidy for poor and near-poor working parents. In 1990, the tax credit will pay about $6 billion to more than 10 million low-income families, as a reward to parents who work but still have meager incomes. The maximum 1990 payment is $953.
The budget bill increased the payment to a maximum of $1,186 in 1991 for families with one child and $1,228 for those with two or more and adds $355 if one or more of the children is under 1 year old.
The basic payment will rise to about $1,850 for one child, $2,000 for two or more by 1994, when the special allowance for the child under 1 will be $400.
The five-year cost to the Treasury is about $13.1 billion but is projected to grow quickly after 1994.
Low-income working families with children will also be eligible for a tax credit equal to 6 percent of eligible earnings -- a maximum of $426 in 1991 -- to purchase health insurance covering their children, which is expected to cost $5.2 billion over five years.
Another provision authorizes Medicare, the health insurance program for Social Security recipients, to pay for routine mammography breast cancer screenings for women in the program at a five-year cost of $1.25 billion.
The bill requires state Medicaid programs to pay all Medicare premiums, copayments and deductibles for Medicare beneficiaries below the poverty line in 1991. By 1995, states will have to pay the premiums, but not the other costs, for persons earning between 100 percent and 120 percent of the poverty line. The federal cost is expected to be $387 million over five years.
Pharmaceutical manufacturers will be required by the bill to give substantial discounts to state Medicaid programs on the cost of prescription drugs -- saving the federal government about $1.9 billion over the next five years.
The bill also sets tough new federal standards for private insurance policies sold to the aged to supplement Medicare coverage -- called Medigap policies -- with federal penalties of up to $25,000.
It also establishes a new Medicaid program that can spend up to $580 million over the next five years for state home-care services for frail low-income elderly people who need help with at least two needs of daily living -- such as eating or using the bathroom -- and who otherwise might have to go to a nursing home.
Waxman said these costly programs ended up in a bill aimed at cutting spending because of "pent-up frustration to try to get on with the domestic agenda. We've short-changed some of the domestic programs for the low-income for more than a decade."
Rep. Willis D. Gradison Jr. (R-0hio) said because the Democratic leadership knew the bill would not get support from most House Republicans, they didn't hesitate to include liberal provisions to attract more Democratic votes, although provisions to help the working poor had support from both sides of the aisle.