Scarce Funds Imperil Bush Health Goals

Health and Human Services Secretary Tommy G. Thompson signaled Thursday that the Bush administration is backing away from its commitment to extend health insurance coverage to some of the nation’s 39 million uninsured.

The slowing economy is making it likely that the money won’t be available for that effort and for a major expansion of Medicare, Thompson said.

Earlier this year, the administration agreed with a congressional budget resolution to set aside $28 billion to help the uninsured by expanding a program for children in low-income families. The program is a personal favorite of Thompson, and he used a similar one as governor of Wisconsin to manage dramatic increases in coverage.

But in an interview with The Times, he warned that budget pressures may make any expansion impossible this year for the Children’s Health Insurance Program, known as CHIP.

“The reality is the economy is starting to contract, and when it does you don’t have as much money,” Thompson said. The “$28 billion would be a nice fix toward helping the uninsured, but . . . I don’t know if it’s going to be there.”

He also warned that it may be virtually impossible for Congress to make good on another part of the budget resolution, a plan to spend $300 billion over 10 years to reform Medicare and add a new prescription drug benefit.

The chances of achieving this seem dubious, according to Thompson, who used the word “if” repeatedly. Approval would be possible only “if Congress can find that amount of money, which I think is going to be very difficult.”

The coming pullback in the health area from earlier expectations illustrates the tough choices that will face members of Congress and the Bush administration as they deal with a shrinking budget surplus. The Democrats, with different priorities and control of the Senate, will be battling with the President and a Republican-led House over allocations of scarce funds.

On defense, for example, the administration faces a struggle to get an $18.4-billion increase in the budget for the next fiscal year. Defense Secretary Donald H. Rumsfeld indicated Thursday the administration is ready for a hard legislative fight but expects to prevail.

“The need is so serious and so real, and the president’s commitment is clear, and I’ve generally found that there are always some people who are against defense spending at any level,” Rumsfeld told reporters at a Pentagon briefing.

“And yet when the votes tend to be done, they seem to find a majority to support a strong national defense. And I suspect that that will be the case this time.”

However, Rumsfeld admitted uncertainty about the final tally when Congress votes on the money, saying, “I don’t have any nose count.”

Bush administration officials strongly believe the nation’s military forces have been underfunded for years and that increased spending for defense should be at the top of the list, even in a time of reduced expectations. Discussing the request for an added $18.4 billion, which represents an increase of nearly 6%, Rumsfeld said that “we need every nickel of that and intend to be working with the Congress, as well as the president and the White House, to see that that happens.”

In the health area, Thompson said that, despite the budget stringency, the administration hopes to win passage of two other programs: the expansion of community health centers, which are clinics that serve the poor and the uninsured, and the adoption of new tax credits to encourage people to buy health insurance.

The number of community clinics would increase from 1,200 now to 2,000 by 2006, but the costs would be modest. The low-budget program has won support from both parties.

But the tax credits--$1,000 for a single person and $2,000 for a couple--are unacceptable to the Democrats who control the Senate. People who buy a health insurance policy could claim the credit. A family policy might cost $5,000 to $7,000 a year, and Thompson believes the subsidy would be enough to convince millions of uninsured families to spend the money.

The subsidy--the credit reduces a family tax bill on a dollar-for-dollar basis--is “enough to put them over the top” in deciding to buy health insurance, Thompson said.

But Democrats regard the credits as an inefficient way to deal with the problem of the uninsured, and the proposal has a bleak future in the Senate Finance Committee.

President Bush proclaimed that adoption of Medicare reform and creation of a drug benefit were important legislative goals. The current Bush budget plan sets aside $190 billion for those goals, but Democrats say at least $300 billion must be spent to provide a comprehensive drug benefit. Senate Finance Committee Chairman Max Baucus (D-Mont.) has vowed that the president’s plan won’t get through his committee.

All this leaves Thompson little room to maneuver toward his goal of reducing the ranks of the uninsured. Based on his experience as a governor, he is looking for ways to change the regulatory structure to help states when additional money isn’t available.

He has worked through a backlog of 900 waiver requests by state governors to get more flexibility in the rules for Medicaid, the state-federal program for the poor. Using the waivers, states have been able to expand Medicaid coverage to small groups this year, providing new coverage for 1 million people, Thompson said.

California has an application at the federal health agency to expand its coverage of low-income people by adding 300,000 adults and children to the CHIP program, which offers heavily subsidized coverage. The state has been disappointed at not getting approval for the plan submitted last year.

The state’s application is “strong, [and] I’ve been looking favorably on it,” Thompson said.