[Budget of the United States Government]
[V. Preparing For the 21st Century]
[3. Strengthening Health Care]
[From the U.S. Government Publishing Office, www.gpo.gov]
3. STRENGTHENING HEALTH CARE
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[The Balanced Budget Act] strengthens our families by extending health
insurance coverage to up to five million children . . . [The Act] honors
our commitment to our parents by extending the life of the Medicare Trust
Fund for a decade. It also provides structural reforms that will give
Medicare beneficiaries more informed choices among competing health plans,
authorizes a number of new anti-fraud provisions, and establishes a wide
array of new preventative benefits.
President Clinton
August 1997
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The past year has brought a number of improvements in health care
that will benefit all Americans.
The 1997 Balanced Budget Act (BBA) represents a major step forward in
the President's effort to improve and protect the Nation's health,
especially for the almost 70 million vulnerable Americans who rely on
Medicare and Medicaid. It strengthened the guarantee of quality health
care for nearly 40 million Medicare participants by extending the life
of the Medicare Trust Fund until at least 2010, investing in preventive
benefits, introducing more choice of health plans, and strengthening our
expanding array of activities to combat fraud and abuse. It strengthened
Medicaid managed care quality standards and allowed States greater
flexibility in designing their programs. And it provided an
unprecedented $24 billion, through the State Children's Health Insurance
Program (CHIP) and new Medicaid options, to cover up to five million
children in working families--a population in which many have no
insurance at all.
These wide-ranging efforts came just a year after the President and
Congress enacted the Health Insurance Portability and Accountability Act
(HIPAA), which the Administration is now implementing. HIPAA reformed
the private insurance market to help people keep their health insurance
when they change jobs and limited the ability of insurers to deny
coverage due to pre-existing conditions. It also simplified health care
paperwork, clarified that certain long-term care insurance policies are
tax deductible, and, for the first time, created a new stable source of
funding to control fraud. Also, combined with the 1997 Taxpayer Relief
Act, HIPAA boosted the tax deduction for the self-employed, making it
cheaper for self-employed persons to get health insurance. In addition,
the Administration and Congress enacted legislation that ensured parity
in annual and lifetime limits between mental and physical health
benefits and required health plans to allow new mothers and their babies
to remain in the hospital at least 48 hours following most deliveries.
To ensure that consumers continue to receive high-quality health
care, the President created the Advisory Commission on Consumer
Protection and Quality in the Health Care Industry early last year to
advise him on changes occurring in the health care system and to
recommend steps to ensure quality. In the fall, the Commission approved
and the President endorsed a Health Care Consumer Bill of Rights, which
includes the right to a choice of health care providers; access to
emergency room treatments; participation in treatment decisions;
assurance that patients are respected and not discriminated against;
internal and external grievance and appeals processes; access to
accurate, easily understood information; and confidential medical
records.
These improvements occurred against a backdrop of dramatic change in
the private health care marketplace. After rapid inflation in the 1980s
and early 1990s, national health spending growth dropped to a record low
of 4.4 percent from 1995 to 1996. A strong
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economy, cost consciousness on the part of employers and consumers, and
the shift to managed care contributed to this slowdown. In 1995, nearly
75 percent of workers with employer-based insurance were enrolled in
managed care, a 22-percent increase since 1993. Nevertheless, the number
of uninsured has continued to rise. Thus, the Nation's work is not done;
we must guard against the return of rapidly growing health care costs
and work to reduce the number of uninsured, while maintaining a high
standard of quality.
With this budget, the Administration builds on the recent legislative
achievements by committing to work with Congress on bipartisan tobacco
legislation; proposing to expand health care coverage for some of the
most vulnerable Americans aged 55 to 65; continuing the Administration's
aggressive anti-fraud and abuse enforcement activities in Medicare and
Medicaid; launching an aggressive outreach campaign to enroll eligible
children who are not enrolled in Medicaid; proposing an unprecedented
investment in health research; expanding access to powerful AIDS
therapies; expanding access to cancer clinical trials; increasing funds
for substance abuse treatment and prevention; and helping to reduce
health-related disparities across racial and ethnic groups.
Adopting Bipartisan National Tobacco Legislation
The Administration has focused on improving public health--
particularly children's health--by pursuing efforts to curtail tobacco
use. In 1998, the Administration will work with Congress to enact
comprehensive national tobacco legislation to reduce smoking, especially
by youth. The President has outlined five key principles that must be at
the heart of any national tobacco legislation:
A comprehensive plan to reduce youth smoking, including:
tough penalties on tobacco firms that continue to market to
youths; price increases; public education and counter
advertising; and expanded efforts to restrict access and limit
appeal.
Full authority of the Food and Drug Administration (FDA) to
regulate tobacco products.
Changes in how the tobacco industry does business, including
an end to marketing and promotion to children and broad
document disclosure.
Progress towards other public goals, including a reduction of
secondhand smoke; promotion of cessation programs; public
health research; the strengthening of international efforts to
control tobacco; and other urgent priorities.
Protection for tobacco farmers and their communities.
In its final form, the legislation will result from extensive
bipartisan negotiations between the Administration and Congress. The
Administration proposes that the legislation provide for annual lump sum
payments by tobacco manufacturers, with the amounts paid by each
determined by formula. The budget assumes net Federal receipts from this
legislation will total at least $10 billion in 1999, rising each
subsequent year for a total of $65 billion between 1999 and 2003. These
amounts are consistent with the President's call for an increase in per-
pack cigarette prices of up to $1.50 (in constant dollars) over 10 years
as necessary to meet the targets set to reduce youth smoking.
The budget applies the receipts from tobacco legislation to finance
research into tobacco-related and other diseases through the National
Institutes of Health; fund a cancer clinical trial demonstration project
for Medicare beneficiaries; support smoking prevention efforts by the
Centers for Disease Control (CDC); strengthen the FDA's enforcement
programs; fund smoking cessation programs; expand outreach efforts to
ensure that children eligible for health care coverage are enrolled;
sponsor counter-advertising; protect tobacco farmers; and support other
initiatives associated with national tobacco legislation. It proposes
that States receive a substantial portion of the net receipts, partly
through block grants that they can use to provide child care and reduce
class size in schools, and partly through unrestricted funds. (For more
information on what the budget proposes to finance through national
tobacco legislation, see Table S-7 in ``Summary Tables.'')
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Improving Access to Health Care Coverage
The budget proposes new initiatives to provide access to health
insurance for the nearly two million people between 62 and 65 who do not
have employer-sponsored insurance; those between 55 and 61 who have been
displaced from their jobs; and retirees who have had their insurance
terminated by a former employer. The budget also proposes to help States
and small employers create voluntary health insurance purchasing
cooperatives that will help individuals buy affordable health insurance.
Expanding Health Insurance Options for People Aged 55 to 65: The
budget proposes three options to increase access to health insurance for
people aged 55 to 65, who face special problems of access and
affordability. They face greater risks of health problems, with twice
the chances of heart disease, strokes, and cancer, as people aged 45 to
54. As people approach 65, many retire or shift to part-time work or
self-employment as a bridge to retirement, sometimes involuntarily.
Displaced workers aged 55 to 65 are much less likely than younger
workers to be re-employed or re-insured through a new employer. As a
result, more of them rely on the individual health insurance market.
Without the benefits of having their costs averaged with other younger
people, as with employer-based insurance, these people often face high
premiums.
Such access problems will increase, due to two trends: declines in
retiree health coverage and the aging of the baby boom generation.
Recently, businesses have cut back on offering health coverage to pre-
65-year-old retirees; only 40 percent of large firms now do so. In
several small but notable cases, businesses have dropped retirees'
health benefits after workers have retired. These ``broken promise''
retirees lack access to employer continuation coverage and could have
problems finding affordable individual insurance. Finally, the number of
people 55 to 65 years old will rise from 22 million to 35 million by
2010--or by 60 percent.
The budget proposes three options that will help an estimated 300,000
members of this vulnerable population:
Allowing Americans between 62 and 65 to buy Medicare
coverage: The budget proposes to allow Americans between 62
and 65 to buy Medicare coverage by paying a premium based on
an actuarially fair rate for that age group. The proposal is
self-financing, because, over time, participants pay the full
cost of their coverage. And it will give millions of older
Americans the security of knowing that they have a health
insurance option.
Expanding health insurance options for displaced workers:
Along with the 62-to-65 age group, the budget offers access to
health insurance to displaced workers between 55 and 61--those
who have lost or left their jobs due to plant or company
closings or moves, slack work, or the abolishment of their
positions or shifts. These workers often become uninsured,
even if they had insurance on their last job. The budget
proposes to allow displaced workers who were insured on their
job but are now uninsured to buy Medicare coverage by paying a
premium.
Protecting retirees whose retiree health benefits have been
dropped: In addition, retirees 55 to 65 whose employers have
dropped their retiree health coverage will be allowed to buy
in to employer continuation coverage (known as COBRA) by
paying a premium.
Creating Voluntary Purchasing Cooperatives: The small group health
insurance market does not function as efficiently as the large group
market. As a result, small business employees and their families will
more likely be uninsured and have more expensive premiums. Small
businesses also have higher administrative costs and pay more for the
same benefits as larger firms.
To help small businesses overcome these disadvantages, the budget
includes $100 million in seed money over five years for selected States
to establish voluntary purchasing cooperatives that will allow small
employers
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to pool their purchasing power and negotiate better rates for their
employees.
Providing Cancer Clinical Trials for Medicare Beneficiaries
Less than three percent of cancer patients participate in clinical
trials of new therapies. Many scientists believe that higher
participation could lead to the faster development of therapies for more
of those in need.
Moreover, the elderly, who are most likely to get cancer, often
cannot participate in such trials because Medicare does not pay for such
treatments until they are established as standard therapies. Americans
over 65 make up half of all cancer patients, and are 10 times more
likely to get cancer than younger Americans.
The budget would give more Americans access to these cutting-edge
treatments and encourage higher participation in clinical trials by
establishing a three-year, $750 million demonstration program,
specifically for Medicare beneficiaries, to cover the patient care costs
for those who participate in certain federally-sponsored cancer clinical
trials. Although the Health Care Financing Administration (which
administers Medicare) would run the demonstration, it would be funded by
specified receipts from national tobacco legislation and, thus, would
not draw upon Medicare's Hospital Insurance (HI) or Supplementary
Medical Insurance (SMI) trust funds. The proposal includes an evaluation
after three years to consider whether to expand the demonstration.
Promoting Program Integrity in Medicare and Medicaid
The Administration has worked hard to promote competition, reduce
errors, and eliminate fraud in Medicare and Medicaid. The budget
proposes efforts to strengthen our commitment to eliminate fraud and
abuse and promote competitive pricing, including:
Initiatives to combat Medicare fraud and abuse and, in turn,
extend the life of Medicare's trust funds by enabling Medicare
to pay market-oriented prices for prescription drugs;
eliminating overpayments that facilities receive for drugs
used to treat anemia; reforming outpatient mental health
benefits; and requiring insurance companies to provide
information to enable Medicare to make payments only when it
is the primary payer.
An initiative to expand Medicare's ability to use its market
power to competitively negotiate rates with providers for
selected Medicare procedures. By creating ``Centers of
Excellence,'' Medicare will be able to reduce its average cost
while improving quality.
The Administration is also considering Medicaid incentive projects
that measure errors and fraud in State Medicaid programs and develop
performance measures related to such errors and fraud. These projects
would help States identify problem areas in their Medicaid programs,
target program integrity resources more effectively, and measure the
success of their efforts to reduce errors and combat fraud.
Expanding Access to Children's Health Insurance
The new Children's Health Insurance Program enables States to extend
health insurance coverage to as many as five million uninsured children.
It builds on an already strong Medicaid program that the Administration
has worked hard to protect. But with over three million uninsured
children eligible for Medicaid, but not enrolled, important work
remains.
To achieve the President's goal of working with the States to enroll
as many children as possible, the budget contains several outreach
proposals, costing $900 million over five years and financed by receipts
from tobacco legislation, including:
Outreach in schools and child care sites: The budget would
allow school and child care center staff to enroll children
into Medicaid temporarily on the presumption that they are
eligible. This proposal would increase enrollment by expanding
the network of individuals who can identify and enroll
children, and inform families about the potential eligibility
of their children. It also would enable Medicaid to cover the
costs related to providing this temporary
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coverage, rather than requiring States to cover the costs from
their CHIP allotment.
Matching funds for outreach: The budget proposes to expand
the use of a special $500 million Medicaid fund--now aimed at
outreach for children losing welfare--to fund outreach to all
children.
Simpler enrollment: The budget proposes to streamline the
Medicaid application process by simplifying eligibility and
encouraging the use of mail-in applications.
The budget contains other proposals to further promote the
President's goal of reducing the number of uninsured children,
including:
Aid for the territories: The budget proposes $153 million in
increased funding under CHIP for Puerto Rico and the other
four territories, fulfilling the President's promise to
provide more equitable funding for children's health care in
the insular areas.
Health insurance for legal immigrant children: The budget
would give States the option to provide health coverage to
legal immigrant children under Medicaid and CHIP. Currently,
States can provide health coverage to legal immigrant children
who entered the country before the 1996 welfare reform law was
enacted. But immigrant children who entered after the law was
enacted cannot get benefits for five years. Under this
proposal, States could provide coverage to immigrant children
through Medicaid or through their current CHIP allotment.
Promoting Public Health
The budget continues the Administration's commitment to invest in key
public health areas. In particular, the budget proposes to expand health
research; increase access to powerful AIDS therapies; discourage tobacco
use among young people; enhance food safety; help reduce disparities in
disease rates across racial and ethnic groups; improve substance abuse
treatment and prevention; promote childhood immunizations; provide
voluntary family planning to low-income women; reduce infant mortality;
and improve health care quality.
Increasing Biomedical Research: Progress in biomedical research has
ensured that many diseases that Americans faced a generation ago can now
be prevented or treated. Smallpox has been eradicated from the world and
polio is gone from the Western Hemisphere. Surgical procedures, such as
organ transplants or cardiac pacemakers, can restore normal lives for
those who once had few treatment options.
The scientific community is now poised to make even more advances
that, with sufficient investment, could dramatically alter and improve
the way we treat diseases. Several new technologies in medical research
show great promise. Specifically, important strides in imaging
technologies make it possible to visualize living cells and entire
organs, providing new insights into the structure of disease; computer-
based systems give scientists new tools to rapidly analyze vast amounts
of new data; and the scientific community stands on the cusp of a host
of breakthroughs in genetics that will enable scientists to map the
entire human genome and revolutionize how we understand, treat, and
prevent some of our most devastating diseases.
The budget proposes an unprecedented commitment in biomedical
research that will lay the foundation for new innovations to improve
health and prevent disease. It invests $1.15 billion in the National
Institutes of Health (NIH)--the largest increase in history. Moreover,
to ensure that the Nation continues to make important investments in
biomedical research, the budget proposes--for the first time ever--
sustained increases in the NIH over five years. By the year 2003,
funding for biomedical research will increase to over $20 billion, or by
nearly half.
Within the NIH increase, the budget provides for increased funding on
cancer-related research. In 1999, NIH's cancer-related research will
grow by 10 percent and, over the next five years, by almost two thirds.
Though the Nation's death rate from cancer fell between 1991 and 1995--
the first sustained decline since record-keeping began in the 1930s--
nearly one in five people in the United States dies from cancer. The
proposed investment in cancer-related research over
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the next five years will enable NIH to make further advances in cancer
prevention, detection, and treatment.
Making Quality Direct Services and Preventive Care Accessible to
Special Populations: Direct health services and prevention activities
translate the ground-breaking medical advances often produced by
biomedical research into benefits such as disease prevention, medical
cost reductions, and public health education. The budget proposes
funding increases for the following health service and prevention
activities, many of which help serve low-income and other vulnerable
populations:
Ensuring access to powerful AIDS therapies through Ryan White
HIV/AIDS Treatment Grants in partnership with the States: The
budget proposes a $100 million increase in Ryan White
treatment grants to help States provide AIDS treatment,
especially the powerful ``combination therapy'' AIDS drugs.
While combination therapy offers tremendous hope to people
with HIV, it also presents a tremendous challenge to AIDS
services programs to make this hope available to all Americans
living with HIV/AIDS. Many States spend a considerable amount
of money on the AIDS Drug Assistance Program; others
contribute little or nothing. The Federal Government, States,
and the private sector all must rise to the challenge of
meeting the future needs of people with AIDS. The
Administration will work with Congress to develop revised
matching requirements or other means of encouraging more State
participation on behalf of people living with HIV/AIDS. The
budget also includes a $65 million increase for grants to
cities, States, and clinics for medical care, critical support
services, and new ways to help people who are HIV-positive. In
total, the budget proposes $1.3 billion in Federal spending
for activities authorized by the Ryan White CARE Act, a 14-
percent increase over 1998 levels and a 241-percent increase
over comparable 1993 levels.
Reducing tobacco use among young people: Tobacco is linked to
over 400,000 deaths a year from cancer, respiratory illness,
heart disease, and other health problems. Each year, a million
young people become regular smokers, 300,000 of whom will die
earlier as a result. In August 1996, the Administration
approved an FDA regulation to cut tobacco use among young
people in half over seven years. The budget includes $146
million of additional funds for tobacco-related activities in
the CDC and the FDA--$46 million of which will pay for
expanding CDC's existing State-based tobacco prevention
activities, and $100 million of which will support FDA's
outreach and enforcement activities.
Improving substance abuse prevention and treatment: The
budget continues to expand substance abuse prevention and
treatment activities, enabling hundreds of thousands of
pregnant women, high-risk youth, and other under-served
Americans to get drug treatment and prevention services. The
Substance Abuse and Mental Health Services Administration's
Substance Abuse Block Grant (SABG) funds 40 percent of all the
Nation's publicly-provided substance abuse treatment. To
narrow the gap between those who are seeking treatment and
those who can be accommodated by the public treatment system,
the budget proposes a $200 million increase for the SABG.
Along with continued support from the States, this increase
would allow another 50,000 individuals a year to receive
substance abuse treatment. This proposal also would help
reduce the spread of AIDS by giving intravenous drug users
increased access to substance abuse treatment programs.
Enhancing food safety: American consumers enjoy the world's
safest food supply, but too many Americans get sick from
preventable food-borne diseases. The budget increases funding
by $101 million, or 12 percent, over the 1998 level for the
Administration's inter-agency food safety initiative, which
created a national early warning system for food-borne
illnesses and improved Federal-State coordination when food-
borne disease outbreaks occur. The budget increase also
expands food safety research, risk assessment capabilities,
education, and surveillance activities, as well as food import
inspections. Furthermore, the budget proposes to expand FDA's
international inspection force to en
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sure that imported fruits and vegetables are as safe as those
produced in the United States.
Helping to reduce racial disparities in health status:
Despite improvements in the Nation's overall health,
continuing disparities remain in the burden of death and
illness that certain minority groups experience. For example,
the infant mortality rate for African-Americans is twice that
of Caucasians. American Indian and Alaska Natives are about
three times as likely to die from diabetes as other Americans.
To address these and other disparities, the budget includes
$80 million for health education, prevention, and treatment
services for minority populations. Working with minority
public health providers, advocates, and other consumer
representatives, CDC will begin a new $30 million
demonstration program to enable selected communities to
develop innovative and effective approaches to address these
disparities. Each community, chosen through a competitive
grant process, would begin an intensive program to address one
or more health areas with major disparities, such as infant
mortality. The remaining $50 million will go to various public
health programs that serve mostly minority and low-income
populations.
Enhancing family planning: The budget provides a $15 million
increase, to $218 million, to support over 4,000 family
planning clinics, a primary source of voluntary family
planning services for low-income women Nation-wide. The
increase would expand services to adolescents and enable
grantees to better meet the rising demand for comprehensive
services, such as screening, prevention, and education and
counseling. Publicly subsidized family planning services help
American women prevent over a million unintended pregnancies
each year. The budget also includes $50 million in mandatory
funding for States to conduct abstinence education projects to
help reduce out-of-wedlock pregnancies.
Promoting full participation in the Women, Infants, and
Children (WIC) program: WIC reaches nearly 7.5 million women,
infants, and children a year, providing nutrition assistance,
nutrition education and counseling, and health and
immunization referrals. WIC provides for prenatal care to
those who would not otherwise get it, reducing the incidence
of premature birth and infant death. As a result, Medicaid
saves significant sums that it would otherwise spend in the
first 60 days after childbirth. Largely because of funding
increases in the last five years, WIC participation has grown
by 30 percent, and the program now helps half of America's
infants. The budget proposes $4.1 billion to serve 7.5 million
people through 1999, fulfilling the President's goal of full
participation in WIC.
Promoting childhood immunizations: The budget proposes $973
million for the Childhood Immunizations Initiative, including
the Vaccines for Children program and CDC's discretionary
immunization program. As a result of the Administration's
Childhood Immunization Initiative, the Nation exceeded its
childhood vaccination goals for 1996, with 90 percent or more
of America's toddlers receiving each basic childhood vaccine.
The incidence of vaccine-preventable diseases among children,
such as diphtheria, tetanus, measles, and polio, are at all-
time lows. The budget also includes $47 million to eradicate
polio--preventable through immunization throughout the world.
Improving health care quality: The budget would double, to
$30 million, the Department of Health and Human Services'
health care quality activities to expand research on quality
and put into practice the recommendations of the President's
Advisory Commission on Consumer Protection and Quality in the
Health Care Industry. The research will increase knowledge
about how best to measure and improve the outcomes and quality
of medical services, and reveal ways to encourage health care
providers to use this information in their work.
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Caring for veterans health needs through veterans medical
care: Continuing its commitment to veterans programs, the
Administration proposes $17.7 billion for the Department of
Veterans Affairs' (VA) health system. The funds will enable
the VA to continue to restructure its health care system by
increasing access and delivering quality care to our Nation's
veterans.