News in brief - Feb. 14, 2000

1997 Medicare cuts deeper than expected - Lawmakers propose health care tax credit

1997 Medicare cuts deeper than expected

Washington -- The same budget projections that detail how the booming economy has raised federal surplus projections over the next decade to between $838 billion and $1.92 trillion, excluding Social Security, also show Medicare spending reductions from the Balanced Budget Act of 1997 are cutting even deeper than anticipated.

A Congressional Budget Office report shows Medicare spending will be $250 billion less than when the BBA was enacted, or $150 billion more than the law was expected to cut.

Congress passed the Balanced Budget Refinement Act (BBRA) last fall that restored $16 billion in Medicare spending, more than half to hospitals. The American Hospital Assn. has said that the BBRA did not go far enough and has launched a campaign to have more money restored.

"More relief is needed to help hospitals keep pace with the costs of caring for patients," AHA President David Davidson said. The AHA wants Congress to adjust the annual Medicare payment rates for two years to reflect the growing costs of care.

Lawmakers propose health care tax credit

Washington -- A bipartisan group of lawmakers from the House and Senate recently proposed a tax credit designed to help more than 21 million of the 44 million Americans now without health insurance to gain coverage.

The proposal targets low- to moderate-income workers who earn too much to qualify for federal programs. It would provide a refundable tax credit of $1,000 for an individual with an adjusted gross income of up to $31,000 a year to purchase health insurance and a $2,000 credit for families earning up to $51,000 a year.

The Health Coverage, Access, Relief and Equity Act, which is to be introduced as legislation this month, is being championed by Sens. John Breaux (D, La.), Jim Jeffords (R, Vt.) and Bill Frist, MD (R, Tenn.), and House Majority Leader Dick Armey (R, Texas) and Rep. Calvin Dooley (D, Calif.). The lawmakers said they were developing a second component to their plan that would focus on improving access to community health centers and rural health clinics.

"In a country as wealthy as ours, enjoying unprecedented economic prosperity, having 44 million uninsured Americans is absolutely unacceptable," Breaux said. Armey cited the need to correct an unfair tax code that provides a generous health insurance benefit to those earning high salaries, while ignoring those who earn very little. "We need to restore tax fairness in health care," he said.

The new plan joins one by President Clinton that includes tax credits to help people 55 to 65 buy into Medicare, help workers retain health insurance when between jobs and help small businesses offer health insurance to their employees. The 10-year cost of Clinton's plan, which contains several additional initiatives, is estimated at $110 billion. The price tag for the new congressional proposal is estimated at $70 billion over 10 years.