$100B Medicare Savings Over 5 Years; Clinton Plan

According to US Administration and Congressional officials, the budgetto be submitted by President Clinton will propose restrictions in Medicare payments to Health Maintenance Organizations to find about $100 billion in savings over five years. The new budget will be unveiled on February 6, two days after Pres Clinton delivers his State of the Union message to Congress.

The reductions would be part of a package that would also call for significant cuts in payments to doctors outside HMO networks and to hospitals. About $20 billion in savings over five years would come from cutbacks in the premium payments being made to HMOs, the officials said. Of the 37 million people now covered by Medicare, four million have already chosen to go into HMOs.

Also included in the budget plan, reported in the Washington Post, is a proposal to extend the life of the Medicare hospital trust fund, now projected to go broke in 2001, by shifting payments for home health care services from the trust fund to a separate Medicare account supported by general revenue. Republicans say this move is an accounting gimmick, which does nothing to produce actual savings.