Bush proposes Medicaid cuts; national health care spending went up in 2000
Bush proposes Medicaid cuts; national health care spending went up in 2000
President Bush’s proposed FY 2003 budget would save $9 billion over five years by "reducing Medicaid payments to public hospitals and by cracking down on state efforts to obtain extra federal money to finance health care for the poor."
Federal officials say the president will not seek any significant cuts in Medicare payments to hospitals, but said the Medicaid cutbacks affecting public hospitals in 31 states were necessary to prevent abuse by some states.
Under Medicaid rules, states can use creative financing arrangements to pay public hospitals up to 150% of the Medicare rate for certain services. The administration charges that public hospitals often "kick back" the extra federal money to the states, which can use it for services not related to health care. In an attempt to reduce Medicaid spending, the administration wants to reduce the Medicaid upper payment limit to 100% of the Medicare rate.
The proposal has met with resistance from some state officials who say it will limit their ability to care for Medicaid beneficiaries at a time when most states are facing budget deficits.
Meanwhile, the Centers for Medicare & Medicaid Services (CMS) says that health care spending in the United States rose to $1.3 trillion in 2000, a 6.9% increase over the previous year. That’s the highest annual increase recorded since 1993, when spending rose by 7.4%. CMS economists say the increase primarily reflects a rise in economywide inflation. Health care spending averaged $4,637 per person in 2000, compared to $4,377 in 1999. Spending for prescription drugs led the upward trend, although at a slower rate than in previous years. Drug spending increased by 17.3% to a total of $121.8 billion in 2000, compared to a 19.2% increase to $103.9 billion in 1999.
Hospital spending rose to $412 billion in 2000, which was an increase of 5.1% over 1999. Nursing home expenditures, which had been trending downward since 1995, rose by 3.3% in 2000. Spending for freestanding nursing home services increased by 0.3% in 2000 after five years of declining growth and actual declines in 1998 and 1999.
Federal and state spending for Medicaid totaled nearly $202 billion in 2000, an increase of 8.3% from 1999. Federal and state spending for the Children’s Health Insurance Program was $2.8 billion in 2000, a 55% increase from the 1999 level. Spending for Medicare was $224 billion in 2000, an increase of 5.6% for the year. Medicare accounted for 38% of public spending on health care and 17% of overall health spending. Increases in Medicare spending were attributed largely to changes in provider payments, including those enacted in the Balanced Budget Refinement Act of 1999.
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