Balanced Budget Act of 1997
The Balanced Budget Act of 1997 was a significant piece of legislation aimed at addressing the budget deficits faced by the United States during the 1990s. Enacted under the Clinton administration, this omnibus bill encompassed various provisions concerning programs such as food stamps, housing, and children's health, but it primarily focused on the Medicare program. The act introduced approximately 240 changes to Medicare, which were projected to save around $115 billion, mainly through adjustments in reimbursement rates for service providers and increased out-of-pocket costs for beneficiaries. Additionally, it established Medicare + Choice, allowing more private insurance options for seniors, which aimed to enhance coverage but also complicated the Medicare system. While the act succeeded in reducing federal expenditures on Medicare, it also raised concerns about accessibility to care, as many physicians opted out of accepting Medicare patients due to lower payments. Advocates for the elderly have expressed worries about the complexity of the system, particularly as it now includes additional layers like Medicare Part D, making it challenging for many senior citizens to navigate their options effectively. Overall, the Balanced Budget Act of 1997 represents a pivotal shift in healthcare policy with lasting implications for Medicare beneficiaries and the healthcare landscape.
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Balanced Budget Act of 1997
Identification Legislation aimed at reducing the federal deficit and increasing the solvency of many social programs
Date Signed into law on August 5, 1997
This act made several changes, particularly to the Medicare program.
During the 1990’s, the Clinton administration and the U.S. Congress made great strides toward eliminating the record budget deficits that they inherited. This was accomplished through a number of shifts in policy and the enactment of new laws aimed at reducing the deficit and moving the nation toward a budget surplus. Among these pieces of legislation was the Balanced Budget Act of 1997 (P.L. 105-33).
This was an omnibus bill, meaning that it contained several (sometimes diverse) subjects or provisions in a single bill. The act included provisions dealing with food stamps, housing, children’s health, Medicaid, and even the auctioning of recaptured space in the television broadcast spectrum. However, the primary focus of the act was the Medicare program. In fact, the Balanced Budget Act made roughly 240 changes to the Medicare program alone, and these changes were expected to result in cost savings of approximately $115 billion. The bulk of the savings were to come from two primary areas: a change in the growth rate of reimbursements for fees for service providers and an increase in the out-of-pocket expenses paid by program beneficiaries in the form of higher premiums and copayments for services. In addition, the act added something called Medicare + Choice (now Medicare Part C) as an alternative to the traditional Medicare Parts A and B, which recipients had enjoyed since the inception of the Medicare program. The “choice” was that the act increased the number of private insurance carriers that could contract with the government to give options for senior citizens receiving Medicare. While the option to add a supplemental, private plan allowed for the possibility of getting wider coverage with lower out-of-pocket expenses, it also made the system more complex for beneficiaries.
Impact
If the sole goal of the Balanced Budget Act of 1997 was fiscally related, it would appear that the act has been a success, as federal expenditures to Medicare were reduced. However, the act had an impact on people as well as dollars. Many physicians were adversely affected by the change in payments to providers, and there is a feeling that many people, especially those with longer-term acute conditions, might be left without the same access to care that they may have once enjoyed, because the lower payments led to fewer physicians accepting Medicare patients. Moreover, the addition of Medicare + Choice made the system more complex, and many advocates for the elderly feel that the system has become too cumbersome for a great number of senior citizens (beneficiaries of the program) to understand—especially when coupled with Medicare Part D, added in 2003.
Bibliography
Rivers, Patrick A., et al. “The Impact of the Balanced Budget Act of 1997 Act on Medicare in the U.S.A: The Fallout Continues.” International Journal of Health Care Quality Assurance 15, no. 6 (2002): 249-254.
Tannenwald, Robert.“Implications of the Balanced Budget Act of 1997 for the ’Devolution Revolution.’” Publius 28, no. 1 (Winter, 1998): 23-48.
U.S. Congressional Budget Office. Budgetary Implications of the Balanced Budget Act of 1997. Washington, D.C.: U.S. Government Printing Office, 1997.