WASHINGTON -- After he promised to make major strides in cutting the deficit through health care reform, President Clinton's final plan proved to be a disappointment.
Throughout this year's budget debate, the administration repeatedly fended off attempts to make big reductions in the government's two large health care programs, Medicare and Medicaid.
The Clinton forces argued that the double-digit growth in the two programs, which has been fueling triple-digit deficits, should be dealt with through health reform.
In August, in a last-ditch effort to secure votes for his embattled $500 billion deficit reduction plan, the President personally assured several conservative Democrats that deficit reduction would be a major focus of the health reform legislation. At one point, he even suggested that the plan might go so far in cutting health spending as to eliminate entirely the federal budget deficit.
"We need to bring the deficit down to zero," Clinton said in a last-minute lobbying blitz on Aug. 2, "and to do that, we have to reform the health care system."
But Clinton delivered far less than he promised in the final plan. He does make good on his pledge to propose major reductions of $123 billion in Medicare and $65 billion in Medicaid by the year 2000. But the cuts are more than overwhelmed by major new entitlement programs Clinton proposes to create in the health care reform legislation -- as many as six by some counts.
The new entitlements include coverage of prescription drugs for Medicare beneficiaries, at a cost of $66 billion; a long-term care program costing $65 billion; a $31 billion expansion of public health services; a $12 billion early retiree benefits program; and a $10 billion insurance premium tax deduction for the self-employed.
Last but far from least, the plan's universal health system would, in its first six years, guarantee up to $349 billion of premium subsidies, mostly to small businesses and low-income individuals.
With very little in new taxes proposed -- primarily $65 billion from an increase in the federal tobacco tax -- the net effect of the changes in the Clinton plan is to reduce the federal deficit by only $58 billion between fiscal 1995 and 2000. That's down sharply from the $90 billion the administration sought to chisel off the deficit in its September draft plan.
The plan leaves the deficit, according to the administration's own estimates, little below $200 billion for the foreseeable future. The fact is, it does not, as promised, resolve the federal budgetary problem created by the rampant growth in health care programs. It merely replaces some old health care entitlements with big new ones.
Granted, the proposal promises to reap more budget savings beyond the year 2000 by keeping health care inflation at little more than the 4% average inflation rate through an elaborate system of controls and caps and federal subsidies and premiums. But those savings depend entirely on Congress approving such tight cost controls, and many experts doubt Congress will.
Almost as discouraging as the small savings envisioned in the President's plan is the reaction in Congress. Those who denounce the plan as too much new spending and too much government have so far failed to come up with health care reform proposals that are as comprehensive as Clinton's and that reduce the deficit much more than his would.
As for members of Congress who espouse the same universal health care goal as Clinton, they appear content to buy his argument that his proposed major new entitlements, with their unprecedented costs, can be paid for from the outset with little more than a cigarette tax increase.
The proposition has prompted a "good news, bad news" joke in health care circles. The good news: All we need is a cigarette tax to finance the universal health care plan. The bad news: Every man, woman and child in America will have to start smoking 12 packs a day.
Perhaps the most cogent criticism came last week from Rep. John Kasich, R-Ohio, ranking minority member of the House Budget Committee. From a budget standpoint, Kasich said at a hearing, "we'd be better off if we did nothing."
A more typical response came from Sen. John C. Danforth, R-Mo., also an advocate of entitlement cuts as well as universal health care, at a Senate Finance Committee hearing.
Danforth lamented that so little of the Medicare and Medicaid savings that Clinton proposes to achieve would go toward reducing the federal deficit, and instead would be eaten up by the new entitlements.
"My own preference iS to use the savings for deficit reduction," Danforth said, "but I guess you have to have a little sugar to go along with the medicine."
