Federal Health Programs Face Cuts, Experts Warn : Conference: Industry representatives meeting in Irvine said that Medicare and Medicaid are likely to be targeted by politicians pledging deficit reduction.

With the demise of global health-care reform and sweeping efforts at controlling costs, experts said, the new Congress is eyeing Medicare and Medicaid hungrily, bent on slicing what they see as the fat from these fast-growing programs.

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Federal officials and industry representatives said at a conference Thursday that these two programs are seen as major forces driving up federal spending, and they are likely to be targeted by politicians pledging deficit reduction.

“In some sense, the easiest cuts were used up,” said Nancy Gordon, assistant director for health and human resources at the Congressional Budget Office, which prepares budget-cutting options for Congress. “That gets us to entitlements--that’s where people are really looking.”

What reductions might mean to about 38 million Americans on Medicare and the 37 million Medicaid recipients is uncertain, Gordon and others said. But a range of options are being explored, including increasing the premiums Medicare recipients pay and reducing federal contributions to state Medicaid programs.

Medicare, the government health insurance program that serves the elderly, and Medicaid, the program for the poor, now account for 17% of the $1.5-trillion federal budget and are expected to account for 27% of the projected $2.6-trillion budget by the year 2005. Federal analysts project that the Medicare program will be bankrupt by 2001.

The annual Health Care Forecast Conference, organized by the UC Irvine Graduate School of Management and attended mostly by more than 200 health-care industry representatives, was convened this year to consider the “quantum shift” in the debate over health-care reform. Speakers from both the public and private sectors addressed everything from how to form integrated health-care networks to the likely behavior of political heavyweights in Washington.

The conference, held at the Beckman Center, ends today. Some speakers confessed that they felt sheepish about making predictions, having been convinced only a year ago that widespread, government-led change aimed at expanding and improving health-care coverage was on the way. In the aftermath of those unsuccessful initiatives, industry observers said, uncertainty reigns.

“Everyone’s leaving themselves a lot of wiggle room this time, and it’s not hard to see why,” said keynote speaker Julie Kosterlitz, a contributing editor of the National Journal and frequent radio and television commentator. “The last time a politician (Clinton) drew a line in the sand on health care, both it and he got obliterated in a tidal wave of public reaction. Not surprisingly, after last year, members of both parties are gun-shy on the issue.”

Kosterlitz said that certain incremental reforms aimed at the middle class--such as making health insurance “portable” from one job to another without penalizing workers for pre-existing conditions--are likely to be popular, but even these carry some political risks.

Other piecemeal reforms, because of their complexity, are likely to confuse people, she said. Polls have shown that the public is, in any case, largely ambivalent about health reform, endorsing massive overhaul and universal coverage but balking at the costs and sacrifices involved.

Whatever the actions of government, private industry is already altering the health-care landscape. Representatives of the managed-care industry said that it is not politicians who are behind the streamlining and consolidation that has occurred in the past several years; market forces are.

“Health-care reform has had nothing to do with what’s going on in our market today,” said Jack Massimino, executive vice president and chief operating officer of FHP Inc. “Reform is an after-the-fact. It came in well after (change) was underway in California.”

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Enrollment Rush Medicare and Medicaid enrollees have increased substantially since 1975 and are expected to continue to do so into the next century. Program participants, in millions: *

1975 Medicare: 25 Medicaid: 22*

1985 Medicare: 31 Medicaid: 22 *

1995* Medicare: 38 Medicaid: 37 *

2005* Medicare: 43 Medicaid: 48 * Estimated *

Spending Spurt Medicare and Medicaid spending will advance relentlessly, each increasing about 65% over the next five years. Projected spending by fiscal year, in billions of dollars: 1995 Medicare: $176 Medicaid: $90 *

1996 Medicare: 196 Medicaid: 100 *

1997 Medicare: 217 Medicaid: 111 *

1998 Medicare: 238 Medicaid: 123 *

1999 Medicare: 262 Medicaid: 136 *

2000 Medicare: 286 Medicaid: 149 Source: Congressional Budget Office; Researched by JULIE MARQUIS / Los Angeles Times