[Budget Supplement]
[Creating Opportunity and Encouraging Responsibility]
[6. Strengthening Health Care]
[From the U.S. Government Printing Office, www.gpo.gov]
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We still have a lot of work to do. But the answer to the problems of the great American middle class, the
answer to the problem of curing the American deficit, the answer to the problem of dealing with the challenge of
educating a new generation of Americans for a new, highly competitive economy--surely the answer to those
problems is not to break down the one thing we have done right completely, which is to keep faith with our
elderly people.
President Clinton
July 1995
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In a recent report in the New England Journal of Medicine, two
demographers wrote that Americans who reach the age of 80 have a longer
life expectancy than their counterparts in Japan, England, France, and
Sweden. One reason, they wrote, is that older Americans receive better
health care than the elderly in other countries.\1\
\1\Manton, Kenneth G., and Vaupel, James W., ``Survival After the Age
of 80 in the United States, Sweden, France, England, and Japan,'' New
England Journal of Medicine, November 2, 1995, pp. 1232-1235.
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With this in mind, our challenge is to build on the existing health
care system--to protect its strengths and address its weaknesses--as the
President has tried to do for the last three years. It is not to do as
others would--that is, to tear it down.
The President has consistently worked to balance two competing demands
in health care: (1) improving access to coverage, and (2) making the
system more efficient. Thus, he has sought to create an environment in
the public and private health systems where plans compete based on
quality and cost-effectiveness, not on which can choose the healthiest
and cheapest populations to insure. The budget includes health care
provisions that reflect this commitment.
Many innovations in health care have helped to contain costs in the
private sector. The best of them make our delivery system more
efficient, and improve quality by increasing consumer choice, stressing
accountability, and focusing on medical outcomes. The President proposes
to introduce these kinds of improvements into Medicare. For its 37
million beneficiaries, they would create more plans to choose from,
higher quality care, and a more cost-effective program.
For Medicaid, the President's plan proposes to give States
unprecedented flexibility to better manage their programs. They no
longer would have to receive Federal permission to use managed care for
their Medicaid populations, to expand into more desirable home- and
community-based service programs for the chronically ill, or to expand
coverage.
The plan would let States better negotiate contracts with health
providers. And the President's per-person limit on Medicaid spending
would ensure that federal dollars follow the recipients--an approach
that would limit the growth in Medicaid spending while protecting States
that face high population growth or economic downturns. These and other
provisions would maintain and strengthen Medicaid's guarantee of
meaningful coverage for 36 million vulnerable Americans.
In addition, the budget proposes $26.9 billion, a $1.2 billion
increase over 1996, for a wide range of public health services as well
as research and regulatory activities that promote public health.
The services range from community health centers in inner
cities, to clinics on remote Indian reservations, to research
activities at prestigious universities and medical schools.
Public health clinics provide immunizations for uninsured
children, dental care for the underinsured, and prenatal
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care
for millions of low- and moderate-income women. Other public
health services that help those in need include the Ryan White
program, which gives States and cities the resources to
deliver vital services to people with AIDS.
The research and regulatory activities include biomedical and
behavioral research at the National Institutes of Health
(NIH), worker safety and health research at the National
Institute for Occupational Safety and Health, and food and
pharmaceutical safety regulation and enforcement at the Food
and Drug Administration.
STRENGTHENING MEDICARE
The budget strengthens and improves Medicare, extending the solvency
of the Part A Hospital Insurance trust fund through the next decade. It
gives seniors and people with disabilities more choices among private
health plans, makes Medicare more efficient and responsive to
beneficiary needs, attacks fraud and abuse through programs praised by
law enforcement officials, slows the growth rate of provider payments,
and holds the Part B Supplementary Medical Insurance premium at 25
percent of program costs.
The plan saves $124 billion over seven years, as estimated by the
Health Care Financing Administration's Office of the Actuary. The
Administration is proposing policies that save $124 billion in Medicare
using either the Administration's or CBO's ``baseline'' (i.e.,
projection of Medicare spending). The Administration will work with
Congress to ensure that any plan that the President proposes will save
$124 billion as estimated by CBO.\2\
\2\The Administration expects that, for technical reasons--e.g.,
different assumptions about how fast Medicare spending will grow, and
how providers and beneficiaries will behave--the Congressional Budget
Office (CBO) will estimate that the Administration's plan saves slightly
less. In that event, the Administration has identified a way to close
the gap--specifically, by changing the legal formula for paying hospital
outpatient departments to better reflect actual costs.
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Provider Payment Reforms and Program Savings
Hospitals.--The budget reduces the annual inflation increase,
or ``update,'' for hospitals; reduces payments for hospital
capital; reforms payments for graduate medical education; and
begins to reform the payment method for outpatient departments
while protecting beneficiaries from increasing charges for
those services.
Managed Care.--The budget reforms payments by using reasonable
rate-of-growth limits on updates for managed care payments and
reducing the current geographic variation in payments.
Physicians.--The budget reforms physician payments by paying a
single update for all physicians\3\ and replaces current
``volume performance standards'' with a sustainable growth
rate.
\3\The hospital update will be based on a single ``conversion
factor,'' or base payment amount, replacing the current three conversion
factors, effective January 1, 1997.
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Home Health Care/Skilled Nursing Facilities.--The budget
implements interim payment reforms, leading to separate
prospective payment systems for home health care and skilled
nursing facilities.
Fraud and Abuse.--The budget introduces aggressive and
comprehensive policies to stamp out Medicare waste, fraud, and
abuse, and extends and enhances Medicare's secondary payor
policy to ensure that Medicare pays only when it should.
Other Providers.--The budget freezes or reduces payments for
durable medical equipment and ambulatory surgical centers.
Beneficiaries.--The budget continues, but does not increase,
the requirement that beneficiaries pay 25 percent of Part B
costs through the monthly Part B premium; it imposes no new
cost increases on beneficiaries.
Provisions to Improve Rural Health Care
The budget enhances access to, and the quality of, health care in
rural areas. It extends the Rural Referral Center program; allows direct
Medicare reimbursement for nurse practitioners, clinical nurse
specialists, and physician assistants; improves the Sole Community
Hospital program; expands the Rural Primary Care Hospital program; and
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provides grants to promote telemedicine and rural health outreach.
Provisions to Expand Choices and Add Preventive Benefits
The budget expands and improves Medicare managed care by:
ensuring beneficiary protections while increasing the types of
plans--including Preferred Provider Organizations and Provider
Sponsored Networks--available to seniors and people with
disabilities; and
instituting a coordinated annual open enrollment process--
similar to that used by the Federal Employees Health Benefits
Plan--during which beneficiaries use comparative information
to choose among managed care and supplemental insurance
options.
In addition, the budget expands coverage of preventive benefits to
include annual mammograms and the elimination of mammography
coinsurance, colorectal cancer screening, flu shots, and diabetes
screening and education. Finally, the budget introduces a respite care
benefit, providing relief to families caring for relatives with
Alzheimer's disease.
STRENGTHENING MEDICAID
The budget reforms Medicaid to give States much more flexibility to
manage their programs, while preserving the guarantee of meaningful
health coverage for the most vulnerable Americans. Millions of children,
people with disabilities, and the elderly would retain the guarantee of
basic health and long-term care services.
The budget saves $59 billion over seven years by imposing a per-person
limit on spending, and cutting Disproportionate Share Hospital payments
and retargeting them to hospitals that serve large numbers of Medicaid
and uninsured patients. As with Medicare, the Administration expects CBO
to make somewhat different estimates about how much the budget would
save in Medicaid. In this case, too, the Administration will work with
Congress to ensure that any plan that the President proposes saves $59
billion under CBO estimates.
The plan provides special payments to States for their transition into
the new system and for meeting their most pressing needs. It gives
States unprecedented flexibility to administer their programs more
efficiently. Finally, it retains current nursing home quality standards
and continues to protect the spouses of nursing home residents from
impoverishment.
Program Savings
Per-person cap.--A per-person cap on Medicaid growth would
limit spending to a reasonable level, while retaining current
eligibility and benefit guidelines. This approach guarantees
that the elderly, people with disabilities, pregnant women,
and children who depend on Medicaid would remain eligible for
health benefits, while it slows increases in spending to
levels that States and the Federal Government can support. In
contrast to a block grant, the Administration's plan protects
States facing population growth or economic downturns.
Disproportionate Share Hospital Payments (DSH).--The budget
gradually reduces DSH payments and retargets them to hospitals
that serve a large proportion of Medicaid and uninsured
patients, including children's and public hospitals. It
provides special payments for Federally Qualified Health
Centers, Rural Health Clinics, States with large numbers of
undocumented immigrants, and States moving into the new
system.
Provisions to Increase State Flexibility
The budget includes a number of policies to give States more
flexibility in managing their Medicaid programs, such as:
Boren amendment.--The plan repeals the ``Boren amendment'' for
hospitals and nursing homes, allowing States more flexibility
to negotiate provider payment rates.
Managed care.--The plan allows States to adopt managed care
without Federal waivers.
Home- and community-based care.--The plan allows States to
move populations who need long-term care from nursing
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homes to
home- and community-based settings without Federal waivers.
Coverage expansions without waivers.--The plan enables States,
without waivers, to expand coverage to any person whose income
is under 150 percent of the poverty line. States would pursue
these expansions within their per-person limits, thereby
limiting Federal costs.
Protections for the Most Vulnerable
The budget retains the policy of helping low-income seniors and people
with disabilities by preserving the shared Federal-State responsibility
for their Medicare premiums, copayments, and deductibles. It also
retains payment protections for Medicaid-eligible Native Americans
treated in Indian Health Service and other facilities. These protections
are not subject to the per-person cap.
MAINTAINING AND EXPANDING COVERAGE FOR WORKING AMERICANS
Reforms to Make Health Coverage More Accessible and Affordable
In his State of the Union address, the President challenged Congress
to enact insurance reforms to enable more Americans to maintain health
insurance coverage when they change jobs, and stop insurance companies
from denying coverage for pre-existing conditions. The budget proposes
that plans make coverage available to all groups of businesses,
regardless of the health status of any group members. Insurers would
have to provide an open enrollment period of at least 30 days for all
new employees (whether or not they were previously insured), and
insurers could not individually underwrite new enrollees--i.e., their
premiums would have to match other enrollees' with similar demographic
characteristics.
To increase affordability, the President's insurance reforms phase out
the use of claims experience, duration of coverage, and health status in
determining rates for small businesses. To put the self-employed on a
more equal footing with other businesses, the reforms gradually raise
the self-employed tax deduction for health insurance premiums from 30 to
50 percent. And to help give small businesses the purchasing clout that
larger businesses have, the budget proposes $25 million a year in grants
that States can use for technical assistance and for setting up
voluntary purchasing cooperatives.
Health Insurance for the Temporarily Unemployed
The budget gives premium subsidies to individuals who lose their
health insurance when they lose their jobs, to pay for private insurance
coverage for up to six months. States would receive funding to design
and administer the program, which would provide coverage for about 3.8
million Americans a year. During the four-year period for which this
program is authorized, a Commission would study and provide
recommendations to the Administration and Congress as to making it
permanent.
PROMOTING PUBLIC HEALTH
The budget continues our Nation's critical investment in basic
biomedical research, an investment that plants the seeds for lifesaving
advances in medicine. The budget proposes $12.4 billion for NIH, a $467
million increase over 1996 and a 20 percent increase since 1993.
Further, the budget advances our efforts to eradicate, once and for all,
the dreaded disease of polio. And it supports childhood immunizations,
which have proven their cost-effectiveness time and again.
The budget continues the President's strong commitment to HIV/AIDS
prevention and treatment. It increases funds to prevent HIV transmission
by $34 million over 1996 levels. It increases Ryan White funding by $32
million over 1996 to ensure that our most hard-hit cities, States, and
local clinics can assist those with AIDS. It increases funding for
potentially life-prolonging therapies, including some of the newly-
discovered drugs that show so much promise in treating AIDS. It
increases support for drug treatment--one of the most effective forms of
HIV prevention. And it increases AIDS research funding at NIH in the
continuing search for effective treatments, vaccines, and a cure.
The budget also gives substance abuse treatment and prevention a 17
percent increase, helping expand efforts against drugs.
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And it increases
support for the Indian Health Service (IHS) by eight percent--keeping
our Nation's commitment to Native Americans and continuing efforts to
promote Tribal administration of IHS programs.
Biomedical and Behavioral Research: The budget continues the
Administration's long-standing commitment to biomedical and behavioral
research, which advances the health and well-being of all Americans. The
$12.4 billion proposal for the NIH invests in research directed to areas
of high need and promise, as well as in basic biomedical research that
would lay the foundation for future innovations that improve health and
prevent disease. The budget includes increases for HIV/AIDS-related
research, breast cancer research, high performance computing, prevention
research, gene therapy, and developmental and reproductive biology. The
Office of AIDS Research will continue to coordinate all of NIH's AIDS
research. The budget also includes funding for a new NIH Clinical
Research Center, which would give NIH a state-of-the-art research
facility in which researchers would bring the latest discoveries
directly to patients' bedsides. NIH's highest priority continues to be
financing investigator-initiated research project grants.
Ryan White HIV/AIDS Treatment Grants: The budget proposes $807
million for activities authorized under the Ryan White CARE Act, an
increase of $32 million over 1996. This level would fund grants to
cities disproportionately affected by the HIV epidemic; to States to
provide medical and support services; to community-based organizations
to provide HIV early intervention services; and to support pediatric
AIDS demonstration activities. In addition, the Administration has
sought more funds for State AIDS drug assistance programs funded under
Title II of the Ryan White program--to finance newly-discovered life-
prolonging AIDS therapies, some of which are beginning to receive Food
and Drug Administration approval. Under this Administration, funding for
Ryan White grants has risen by 89 percent. The budget for 1997 would
increase Ryan White funding by 132 percent since 1993.
HIV Prevention: The budget proposes $618 million for Centers for
Disease Control and Prevention (CDC) HIV prevention activities, a $34
million increase over 1996. At the historic White House Conference on
HIV and AIDS, the President made his commitment to HIV prevention clear:
``We have to reduce the number of new infections each and every year
until there are no more new infections.'' A portion of these funds would
address the linkages between substance abuse and HIV infection.
Indian Health Service: The budget proposes $2.4 billion for the IHS, a
$186 million increase. IHS clinical services--often the only source of
medical care on isolated reservation lands--grow by $138 million,
maintaining our commitment to Native Americans. The budget allows the
Tribes to continue taking greater responsibility for managing their own
hospitals and clinics; it increases the ``contract support costs'' that
help underwrite Tribal activities by 31 percent, to $201 million. In
addition, the budget proposes a major new initiative to bring water and
sewer lines to those Native Americans still without adequate access to
these basic necessities. This initiative would ensure that about 4,000
more Native American homes receive water and sewer lines--a step which
has been critical to improving public health.
Substance Abuse Treatment and Prevention: The budget increases
support for State substance abuse treatment and prevention activities by
$67 million, to $1.3 billion. The budget reiterates support for
Performance Partnerships, which would give States more flexibility to
better design and coordinate their substance abuse prevention and
treatment programs, and better target resources to local priority areas.
In addition, it increases funds for substance abuse demonstration and
training activities by $140 million, to $352 million. The budget
establishes a $20 million Substance Abuse Managed Care Initiative that,
with the rapid growth of managed care, would help to establish service
guidelines and design quality assurance, monitoring, and evaluation
systems. This strong support for substance abuse activities would enable
hundreds of thousands of pregnant women, high risk youth, and other
under-served Americans to receive drug treatment and prevention
services.
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Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC): WIC reaches over seven million women, infants, and
children a year, providing nutrition assistance, nutrition education and
counseling, and health and immunization referrals. As a result of
funding increases under President Clinton, WIC participation has grown
by nearly 25 percent in the past three years. The budget proposes $3.9
billion, to serve 7.5 million individuals by the end of 1997, fulfilling
the President's goal of fully funding WIC in four years.
Immunizations: The budget proposes $957 million in spending on
immunizations, including the Vaccines for Children program. For many
diseases, the Administration is ahead of schedule to meet the goal of
immunizing 90 percent of two-year-old children by 1996. The most recent
figures show that, from April 1994 to December 1995, 90 percent or more
of all two-year-old children were immunized against diphtheria, tetanus,
pertussis, and hemophilus influenza type B. Further, rates for
immunization against measles, mumps, rubella and polio are approaching
the 1996 goals. Nevertheless, the Nation must maintain its efforts in
order to lock in these gains and meet the goals for the remaining
immunizations.
The budget also includes a major $47 million initiative in the
Department of Health and Human Services (HHS) to eradicate polio--
preventable through immunizations--throughout the world. (This HHS
funding comes in addition to polio-eradication efforts that the Agency
for International Development supports.) Polio is already gone from the
Western Hemisphere. This shows that, like smallpox, polio can be wiped
from the face of the earth, sparing all children from this crippling
disease and saving the United States the hundreds of millions of dollars
we now spend to immunize against it.
Infectious Disease: The budget proposes $88 million for CDC's
cooperative efforts with States to address infectious disease, an
increase of $25 million. It would support training and applied research,
and States' disease surveillance capability. All Americans face threats
from the onset of infectious disease problems, such as drug resistant
bacteria, and emerging viruses, such as the hantavirus. CDC works with
State health departments to monitor and prevent such problems and to
contain outbreaks.