Outlook 2005: Budget Deficit Inhibits Possibilities for Health Care Reform 

by Carolynn B. Race

When the 109th Congress convenes in January, Members will face daunting challenges. In the health care arena, they will have to decide how to tackle health issues while working to reduce the federal budget deficit, now at $412 billion. The Census Bureau has reported that nearly 45 million Americans under age 65 lacked health insurance in 2003, totaling 18 percent of the under 65 population (an increase of one million people in a year and over five million people since 2000). 

How can Presbyterian advocates work to lift up the needs of those without health insurance or without adequate access to quality, affordable health care? How can Christians lift up Jesus' call for "life abundant?"   

The Political Environment

With the deficit at $412 billion, many politicians have promised to curtail spending to reduce it. President Bush promised to cut it in half in five years. During the Presidential campaign, Sen. Kerry (D-MA) also noted that he would reduce the deficit, and would roll back the tax cuts for the wealthiest Americans to fund expansions in federal programs, notably health care. The 108th Congress finished its work in December — passing an austere federal spending bill, particularly harsh on domestic agencies. Because of the deficit and because this is not an election year, one can expect even larger cuts in the next spending bill.

In looking for ways to reduce the deficit, some members of Congress are looking at 2005 Medicare and Medicaid spending. According to The Wall Street Journal, "The two programs are juicy targets for fiscal conservatives: At a combined cost of $473 billion a year to the federal government, they account for almost one-quarter of U.S. government spending, and their share is growing."1

Where would Congress cut spending? The Wall Street Journal predicts: "Loath to anger seniors by curbing benefits, the White House and Congress are scrutinizing payments to health care providers — especially those slated to rise sharply under last year's Medicare bill. Tom Scully, former head of the agency that runs Medicare and Medicaid, and now a lobbyist, predicts 'a modest squeeze' on payments."  

Advocates for low-income health care are concerned that the Administration may again propose to cap federal Medicaid expenditures. Medicaid "is the nation's major public health program for low-income Americans, financing health and long-term care services for more than 50 million people — a source of health insurance for 38 million low-income children and parents and a critical source of acute and long-term coverage for 12 million elderly and disabled individuals, including more than 6 million low-income Medicare beneficiaries." 2 Medicaid is funded jointly by states and the federal government.

In its proposed FY 04 budget, the Bush Administration recommended significantly altering the way Medicaid is funded and administered. The proposal called for providing states the option of more funding for Medicaid in the short term, but such funding would come with a catch: states would have to repay those funds in later years and would consent to restructure their Medicaid and SCHIP programs into a capped, consolidated block grant. Advocates are concerned that, if adopted, such a block grant would force states to cut Medicaid and would limit states' ability to respond to health care needs when faced with fiscal crises. 

States have already faced severe fiscal conditions that forced cuts in vital programs. As the Kaiser Family Foundation noted: "As state revenues have plunged, states have been reluctant to cut Medicaid because of the population it serves and because state reductions mean a loss of federal matching funds. For many states, cost containment efforts have been unavoidable. Between FY2002 and FY2004, 50 states reduced provider rates, and 50 took action to limit prescription drug costs; 34 reduced eligibility; 35 reduced benefits and 32 increased co-payments." 3

Governors from both parties are urging the Administration not to limit federal support for Medicaid. The National Governors Association wrote to the White House and congressional leaders and urged them not to reduce Medicaid financing in an effort to cut the deficit. 

Administration Priorities

Throughout the campaign and following the election, President Bush has proposed extending refundable tax credits of up to $1,000 per individual and $3,000 per family for the purchase of health insurance; creating association health plans (AHPs) to allow small businesses to pool together to purchase health insurance; limiting medical malpractice lawsuits and awards, and promoting health savings accounts to allow workers with high-deductible plans to set aside money tax-free to cover health expenses.

In his first news conference following his reelection, Mr. Bush outlined principle domestic policy priorities for the next four years.  Topping the list was his call for an overhaul of Social Security, to allow younger workers to divert a part of their payroll tax into individual investment accounts. He also mentioned that he would renew his effort to enact some old priorities — including legislation to limit damages in medical malpractice lawsuits. 

Democratic Priorities

Protecting Medicaid from a cap on federal Medicaid spending is a priority for Democrats. In December, all Democratic Senators from the 108th Congress (less Senator Zell Miller) and one Independent wrote to President Bush, noting:

We are writing to express our opposition to any Medicaid reform proposal that seeks to impose a cap on federal Medicaid spending in any form or eliminates the fundamental guarantee to Medicaid coverage for our nation's most vulnerable citizens, including low-income children, parents, pregnant women, people with disabilities, and senior citizens.

In 2002, Medicaid provided coverage to 25 million children (more than one in four in the U.S.), 13 million adults (primarily low-income working parents), 5 million seniors, and 8 million persons with disabilities.

In late November, Sen. Kerry (D-MA) announced that he will introduce a bill to expand health coverage to all U.S. children when the Senate reconvenes in 2005, a "scaled-back version" of his health care proposal during the presidential campaign, according to The Washington Post.  

Bipartisan Agreement?

Given the polarized state of Congress and the nation, are there any possibilities for bipartisan agreement on health care issues in the 109th Congress? One promising sign of bipartisan efforts from the 108th Congress was included in the omnibus spending bill signed by the President. It was a provision funding the "Health Care that Works for All Americans" law, co-sponsored by Sens. Wyden (D-OR) and Hatch (R-UT).  The legislation will fund town hall meetings and online surveys for Americans to share their views on whether and how the nation's health care system should be reformed.  According to Mr. Wyden, "This approach to reform — a national education effort on the realities of the health care system, followed by public input from the folks who use that system-has never been tried before. It's desperately needed, and the law builds in political accountability to make sure the people's voice on health care is finally heard in the halls of Congress."

According to the Senators, "In early 2005, the Government Accountability Office (GAO) will appoint a 'Citizens' Health Care Working Group,' which will publish a guide on how our health care dollars are spent today. During the following months, every American will have the chance to weigh in online and at town hall meetings in every single state about whether they believe the current health care system and health care spending should be reformed and if so, how."

Another sign of possible bipartisan cooperation was seen in August 2004, when Senate Majority Leader Frist (R-TN) and Senator Clinton (D-NY) co-authored an editorial on health care entitled "How to Heal Health Care." 4 They noted:

At a time when much of our public discussion is riddled with disagreement, there is an emerging bipartisan consensus in one vitally important area: that the challenges facing U.S. health care require major, transformative change. Some steps are already underway. Recently the Department of Health and Human Services announced a 10-year plan to build a new health information infrastructure. And while there is no consensus yet on all the changes needed, we both agree that in a new system, innovations stimulated by information technology will improve care, lower costs, improve quality and empower consumers.

Though no action was taken on mental health parity legislation in the 108th Congress, there is strong bipartisan support for it. At the end of the 108th Congress, the legislation (S 486/ HR 953), which would provide for equal coverage of mental health benefits with respect to health insurance coverage unless comparable limitations are imposed on medical and surgical benefits, had 69 co-sponsors in the Senate and 248 co-sponsors in the House. Leadership in both chambers has not yet signed on in support. 

Medicare and Prescription Drugs

During the 109th Congress, expect continued debate about prescription drug access and cost.  Members on both sides of the aisle have supported reimportation of prescription drugs from other countries, including Canada. And, with the Medicare drug benefit set to begin in full in 2006, Members will continue to debate the adequacy of the benefit and the implementation of the program.   

Health Care for All

Due to the budget deficit, the 109th Congress is expected to focus on reining in spending (at least on non-homeland security, non-defense programs). How can Presbyterians lift up the concerns for those without health care - or without adequate access to affordable health care in the coming year?

One can expect that legislation will again be offered to push for health care for all. In the 108th Congress, Rep. Jackson, Jr. (D-IL) offered a resolution, HJ Res 30, proposing an amendment to the Constitution regarding the right of citizens of the United States to health care of equal high quality. In that Congress, Rep. Conyers (D-MI) offered HJ Res 99, which would have had Congress enact legislation by October 2005 that provides access to comprehensive health care for all Americans. 

Throughout the 109th Congress, the National Coalition for Health Care, of which the Presbyterian Church (U.S.A.) is a member, will raise up our common concern that we need-and can achieve-better, more affordable health care for all Americans. The Coalition brings together large and small businesses, the nation's largest labor, consumer, religious and primary care provider groups, and the largest health and pension funds.  The Coalition recently released Specifications for Health Care Reform, the foundation of which is the Coalition's core principles for improving our nation's health care:

• Health care coverage for all.
• Cost management.
• Improvement of health care quality and safety.
• Equitable financing.
• Simplified administration.

View Building a Better Health Care System: Specifications for Reform.

As Presbyterians, review the General Assembly policy that is included in this article. Pray for those with inadequate health insurance — that they may have "life abundant."  Contact your Members of Congress and urge them to support General Assembly policy on health care.