Another Million People Lacking Medical Plans Medicaid Cuts Would Worsen Crisis

Since President Clinton’s plans for universal health care coverage collapsed a year ago, another million Americans have lost their health insurance, a trend the Clinton administration and some private analysts say would be almost doubled by Republican proposals to rein in Medicaid spending.

Estimates of the number of uninsured Americans now run as high as 43.4 million, more and more of whom are from the working poor. The rate at which the ranks of the uninsured have been growing has increased slightly but steadily in recent years, to a current annual rate of 1.2 million, by the latest estimates.

But administration officials say that Republican plans to cut projected Medicaid spending by $182 billion during the next seven years could deprive as many as 9 million additional Americans of Medicaid coverage by 2002.

While that projection could be labeled as partisan because it is part of the administration’s preparation for the budget battle that will open when Congress returns after Labor Day, a number of outside groups and analysts agree that Medicaid’s soaring growth in recent years has acted as a brake on the rising number of the uninsured. Cuts in the program, which provides health coverage for low-income Americans, could lead to an increase in the number of people without health coverage, they say.

Congressional Republicans contend that by transferring federal money directly to the states with reduced regulation, they can expand the number of people served while limiting the growth in spending. “We’re going to change Medicaid,” said Rep. Dennis Hastert, R-Ill., who is the vice chairman of the Commerce subcommittee on health, which oversees Medicaid. “We think by changing it, knocking out some of the dual federal-state bureaucracy, we can expand it.”

Republicans also fiercely contest Democratic descriptions of their Medicaid plans as cuts. Under the budget resolution passed by the House and Senate this summer, Medicaid spending would increase to $124.3 billion in the fiscal year 2002. That would be up from $89.2 billion in the current fiscal year, which ends on Sept. 30, but well below the $177.8 billion that the Congressional Budget Office projects would be needed in 2002 to maintain existing levels of service for everyone who meets the eligibility standards in current law.

This new debate is a stark contrast to the arguments heard here last August. Back then, Democrats wondered whether settling for covering 95 percent of Americans was too great a compromise, while many Republicans argued that the Clinton health-care plan was moving in the right direction but too far, too fast.

A number of senior Republicans joined moderate Democrats last year in supporting limited changes in health-care legislation. When President Clinton’s plan failed last year, Sen. Bob Dole of Kansas said that legislation addressing the cost and quality of health care would be “at the top of the Senate’s agenda” this year. But as majority leader this year, Dole has put his emphasis instead on cutting the federal budget deficit and other issues.

Hearing little public clamor for change, Republicans put health care low on their agenda, except for proposing reductions in Medicare and Medicaid in their drive to balance the federal budget by 2002. Democrats have reacted with dire predictions of the effects of Republican cuts in government insurance programs.

The only significant exception is a bipartisan Senate Labor Committee bill that would help some people who lose their insurance when they change jobs. But its immediate prospects appear dim, particularly in the House, where it ranks far down the Republican list of priorities.

Democratic warnings on Medicaid cuts are echoed by many private health-care experts, who are skeptical that the Republican initiatives would reduce the number of uninsured and who argue that the number may begin rising even faster.

“You’re talking about a situation that is likely to deteriorate even if the Medicaid program is not cut,” said Robert D. Reischauer, a senior fellow at the Brookings Institution and former director of the Congressional Budget Office. “With cuts, the ranks of the uninsured will swell much faster.”

The most widely used estimates of the number of uninsured Americans come from the Employee Benefit Research Institute in Washington, a non-profit, non-partisan group supported by a range of large corporations, law firms, trade associations and labor unions.

Paul Fronstin, a researcher at the institute, said calculations from Census data show that 40.9 million Americans under the age of 65 lacked health insurance in 1993, along with several hundred thousand older Americans who did not qualify for Medicare for various reasons.

The number of uninsured Americans has been steadily rising as employers have stopped offering coverage or have begun charging fees that some people felt they could not afford. These trends appear to have continued over the last two years, so that the number of uninsured probably rose to slightly more than 42 million last year and to as much as 43.4 million this year, or 18.7 percent of those under 65, Fronstin said.

Medicaid covered nearly 32 million people in 1993, up from 21 million in 1989, according to the institute.

Social researchers have long approached figures on the uninsured with caution because they are based on large, annual surveys by the Census Bureau.

Some analysts have argued that many respondents misunderstand the questions and indicate that they have been without health insurance for the entire preceding year when they have actually lacked coverage only part of the time.

Studies by the Employee Benefit Research Institute and a new study this summer by the Urban Institute, a liberal Washington research group, have concluded that the rise in the number of people without health insurance has come mainly among the working poor.

A series of legislative changes in recent years have meant that Medicaid covers a steadily rising percentage of poor Americans. At the same time, the number of poor Americans is increasing as the gap between rich and poor widens. But Medicaid is not available to many families whose earnings are slightly greater than the official definition of poverty - $14,764 for a family of four in 1993.

Clinton administration officials relied heavily on the Urban Institute’s analytical techniques in forecasting that 9 million Americans would be denied Medicaid in 2002 if the current Republican budget were approved. They assumed that the Republican plans would cut the annual rate of increase in Medicaid’s cost per beneficiary to 1.9 percent above consumer inflation, from the current 3.8 percent.