Clinton HMO Medicare Cuts "Will Hit Elderly"

The Clinton Administration's proposed US Medicare cuts will bewidespread and deep and will affect disproportionately the elderly enrolled in Medicare health maintenance organizations, says a new study conducted for the American Association of Health Plans.

The study, by the Barents Group of KPMG, says that almost 95% of all Medicare beneficiaries, and over 96% of current Medicare HMO members, live in counties where HMO payments would decrease under the Clinton proposal from what they would be under current law.

The Administration's fiscal 1998 budget proposal cuts $34 billion in payments to Medicare HMOs over the next five years. Although only about 12% of Medicare beneficiaries are currently enrolled in HMOs, they account for more than one-third of the Administration's proposed payment cuts. The Barents study shows that under the proposal, per capita payments rates for Medicare HMOs will grow an average 2.4% per year through 2002. Over the same period, it says, fee-for-service payments per capita will grow at 6.1% per year, about two and a half times as fast as HMO payments.