THE WHITE HOUSE

Office of the Press Secretary

     The Republican Budget Resolution Conference Agreement: Impact
                of Medicare and Medicaid Cuts on States

Republicans are proposing to cut more than $450 billion from health care between 1996 and 2002 -- $270 billion from Medicare and $182 billion from Medicaid. Over one-third of these cuts would come from just four states: California ($54 billion), Florida ($38 billion), New York ($37 billion), and Texas ($28 billion). In combination, these cuts are more than four times anything ever enacted. Most of the $270 billion in Medicare cuts would not be necessary without the Republicans' $245 billion tax cut for well-off Americans.

Medicare

Nationally, the $270 billion in Medicare cuts means that the average beneficiary would pay at least $2,825 more in premiums and copayments over seven years; couples would pay at least another $5,650. Under a recent House Republican proposal, in 2002 alone an average beneficiary in a nursing home would face an increase of at least $1,400. Beneficiaries using home health care services would pay on average an additional $1,700 in 2002.

These cuts will affect all states, but some states more so than others. States such as Florida and Texas, where there are high numbers of beneficiaries, will be particularly hard hit. California, Florida, Texas, New York and Pennsylvania, for instance, will bear more than 40% of all the Medicare cuts. On a per beneficiary basis, Massachusetts, Tennessee, Alabama and Rhode Island would also have higher than average increases in the out-of-pocket costs.

Medicaid

The Medicaid cuts proposed by Republicans would force states to slash services, provider payments, and eliminate coverage for 8.8 million children, elderly, and disabled individuals in 2002, according to the Urban Institute. The only way to avoid these reductions in coverage would be for states to increase their spending by 40% -- by raising property or sales taxes, or cutting other critical state spending.

The Medicaid cuts have enormously different impacts on states. While all states will see about a one-third reduction in their Federal Medicaid spending, states with high growth -- for any reason, including recessions or an increase in their elderly population -- will be particularly hard hit. New York and California alone will bear 20% of the total Medicaid cuts, while West Virginia, Florida, and Georgia will see the largest reductions as a proportion of their current Federal grant.

The President's Balanced Budget Proposal

The President shows how it is possible to balance the budget, assure that the Medicare Trust Fund remains solvent for at least another decade, and expand benefits and choice of plans without imposing any new Medicare beneficiary cost-sharing increases. His Medicare savings, which are less than half ($124 billion) of the Republican proposal ($270 billion), come from health care providers and through a major new fraud and abuse initiative.