President Clinton Warns Governors that Congress Risks Nation's Fiscal Discipline (7/10/00)
                               July 10, 2000

Today, at the National Governors? Association summer conference, the
President will challenge the Congress to reject fiscally irresponsible tax
cuts that would threaten investments in urgent health care priorities such
as a voluntary and affordable Medicare prescription drug benefit.  He will
make the case that the Republican leadership?s tax strategy threatens
Medicare reforms, insurance coverage expansions, and long-term care
initiatives that represent sound economic and social policy.  He will point
out that, because of the reforms brought to the Medicaid and Medicare
programs, and the surpluses they helped create, the nation can add a
voluntary prescription drug benefit to Medicare and still spend
substantially less on health care over the next decade than was projected
when he first came into office.

The President will also highlight the progress states have made in
extending affordable insurance for more than 2 million children.  However,
he will encourage the nation?s Governors to move aggressively take
advantage of existing options to streamline eligibility and enrollment
processes to enroll all those eligible for Medicaid and CHIP.  To that end,
the President will reiterate his opposition to Congressional proposals to
reduce state funding for CHIP and state welfare programs, release a report
promoting school-based outreach and announce that this month, the
Department of Health and Human Services will issue guidance on approving
CHIP 1115 demonstration waivers that expand coverage to uninsured children
and their parents.

CRITICAL INVESTMENTS IN HEALTH CARE.  The Congress has adopted a strategy
of passing tax cuts piece by piece.   The tax cuts already passed by the
House would spend over $550 billion of the surplus.  If the Republican
Congress continues on this path, they could pass tax cuts that would spend
the entire on-budget surplus and more leaving no money for America?s
priorities, including crucial investments in health care.

?    The estate tax bill the Senate will vote on this week is backloaded
and fiscally irresponsible.  According to estimates by the Joint Committee
on Taxation and the Department of the Treasury, the cost would explode from
about $100 billion from 2001-10 to about $750 billion from 2011-20.  In
2010, the entire benefit of estate tax repeal would go to only 54,000 of
the wealthiest estates two percent of all decedents providing them with an
average tax cut of $800,000.  This would cost $50 billion  substantially
more than the cost of the President?s prescription drug proposal, which
would potentially benefit more than 40 million people.  Only a tiny
fraction of the total benefits small businesses and family farms.
Furthermore, studies by economists have found that repealing the estate tax
would reduce charitable donations by $5 billion to $6 billion per year.

TO TODAY?S SURPLUS.  The Clinton-Gore Administration has overseen the
biggest economic turnaround in the nation?s history.  The success in
slowing health inflation has strengthened the economy, helped balance the
budget and pay down the national debt, and extended the life of the
Medicare Trust Fund, while saving hundreds of billions of dollars that
should be used to help meet the nation?s health care challenges.

When the President took office, spending in Federal health programs was
growing at over 12 percent per year.  Because of strong program management,
improved efficiency, reductions in fraud, and low health care inflation,
federal health spending for 1993 through 2000 has been a total of a half a
trillion dollars lower than projected.  Similarly, reduced Medicare and
Medicaid spending projections account for nearly one-third of the
improvement in the projected federal budget outlook since 1993.  Not only
has this has helped to eliminate the deficit and buy down the national
debt, it has extended the life of the Trust Fund by 25 years. He will
stress that Medicare and Medicaid should continue to be prudently managed
through competitive reforms.

AND SOCIAL POLICY.  Now that the Federal government is on a fiscally sound
path, Medicaid and Medicare programs have become more efficient, and the
life of the Medicare Trust Fund has been secured for a quarter century, the
President will issue a prescription for maintaining fiscal discipline while
investing in health care. He will:

?    Advocate that the best policy for the economy and the Medicare program
is to follow the Vice President's lead and take Medicare off budget.
Taking the Trust Fund off-budget will ensure that payroll taxes
contributing to today?s Medicare surplus will not be diverted to pay for
tax cuts or spending increases.  Instead they will be used to pay down the
debt in order to help strengthen Medicare.  This will contribute to the
President?s commitment to retire the nation?s debt by 2012.  In addition,
the interest savings achieved by protecting the Medicare surplus will help
extend the life of the Trust Fund to at least 2030.

?    Make the case that targeted and significant investments in health care
are good economic and social policy.  Children without health insurance
often don?t get glasses or treatments for ear infections, limiting their
ability to see the blackboard or hear their teachers.  Adults without
health insurance are 50 to 70 percent more likely to be hospitalized for
treatable conditions like pneumonia.  Allowing people with disabilities to
keep their Federal health insurance when they return to work brings
untapped talent to our workforce.  And, older Americans who can?t afford
prescription drugs are more likely to end up in nursing homes.  Recognizing
the need to invest in health care, the President will highlight his budget
investments in:

?    A long-overdue, voluntary, affordable prescription drug benefit in
Medicare.  The President has proposed to invest $250 billion over 10 years
to create a voluntary Medicare prescription drug benefit.  This benefit
would begin in 2002 and, in return for a $25 premium, provide prescription
drug coverage that would have a zero deductible and cover half of all
prescription drug costs up to $5,000 when fully phased in as well as
limiting all out-of-pocket medication costs to $4,000.  This optional
benefit would also provide negotiated discounts to ensure that Medicare
beneficiaries no longer pay the highest prices in the marketplace.  The
Administration?s proposal is part of a broader set of reforms that would
make the program more efficient and competitive, and dedicate $40 billion
over 10 years to improve health care provider payment rates.  The President
will highlight the fact that these major investments in Medicare can be
made while program spending would still be substantially less on health
care over the next decade than was projected when he took office.

?    Health insurance coverage for millions of uninsured Americans.  The
President has proposed a major, $110 billion initiative to address the
nation?s multi-faceted problem of the uninsured.  It builds on and
complements current private and public programs.  The initiative would:
provide a new, affordable health insurance option for parents; accelerate
enrollment of uninsured children eligible for Medicaid and CHIP; and expand
health insurance options for Americans facing unique barriers to coverage,
including children aged 19 and 20, Americans aged 55 to 65, workers in
small businesses and in-between jobs, and people leaving welfare for work
as well as legal immigrants.  Building on CHIP and dedicating more
resources for parents is a policy that has been endorsed by both the NGA
and Vice President Gore.

?    New assistance for individuals with long-term care needs and their
caregivers. The President?s 2001 budget included a $3,000 tax credit for
people with long-term care needs or their caregivers ? tripling the credit
over last year?s proposal and increasing the total investment in long-term
care to $28 billion over 10 years.  In addition, the initiative would
establish: a new Older Americans Act family caregivers support program;
enhanced flexibility for home and community-based alternatives in Medicaid;
and new private long-term care insurance options for Federal employees.

President will praise states for their progress in implementing the CHIP
program, and note that the strong enrollment trends reported over the past
year appear to be continuing into 2000 (although data from all states is
not yet in).   From the first quarter of FY 1999 to the first quarter of
2000, enrollment increased by more than 80 percent in 43 states.  During
that time period, 19 states reported that their enrollment had more than
doubled, and 9 of those states reported that their program enrollment had
tripled.  The President will commend states who have eliminated burdensome
eligibility requirements, shortened application forms, and streamlined the
enrollment process.

In addition, the President will release a new report by the Departments of
Health and Human Services, Education, and Agriculture that details
recommendations and best practices for school-based outreach activities.
This new report details strategies for motivating schools to adopt outreach
as part of their mission and highlights promising state practices for
identifying and enrolling eligible children through school systems.

IMPLEMENTATION OF WELFARE REFORM.  While committing to protect CHIP and
TANF funding, the President will reiterate his concerns about families
inappropriately losing their Medicaid when they leave welfare and enter the
workforce. He will also call on the states to use TANF dollars responsibly
and not as a means to reduce their own investment in welfare reform.
Although states have cut the welfare rolls in half and millions of families
have moved from welfare to work, more needs to be done to help those
families remaining on welfare to move into the workforce and to help
low-income working families succeed on the job.  The President will also
praise states who have responded to these challenges by identifying
existing problems and redesigning their eligibility systems to correct

ANNOUNCE NEW CHIP WAIVER POLICY.  The President will also announce that,
later this month, the Department of Health and Human Services will release
guidance on its new 1115 waiver policy for the State Children?s Health
Insurance Program (CHIP).  The Administration will approve waivers that
demonstrate innovative approaches to covering uninsured children and, to
the extent that states have succeeded in covering uninsured children,
uninsured parents.  States can access unused state allotments for this
purpose.  This flexibility will help meet the mutual goal of using
state-based approaches to reducing the number of uninsured.


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