On reimbursement, politics matters.

Without question, the hottest long-term care item on Capitol Hill this summer is revision to the restrictions on Medicare payments to nursing homes. These restrictions, including a $1,500 annual cap on rehabilitation services and a hastily developed prospective payment system (PPS) for nursing homes, were imposed by the Balanced Budget Act of 1997. The effect of these restrictions on both nursing homes and older Americans has been devastating. Lobbyists for the American Hospital Association and former HCFA Administrator Gail Wilensky have joined the nursing home associations in calling for revision of the Act and members of both political parties have united to sponsor legislation. The bipartisan leadership of the Senate and House have written President Clinton asking for a restoration of Medicare funds, and the Administration has indeed responded with a proposed $7.5 billion over 10 years - perceived by some in the provider community as inadequate, but at least a start.

But some congressmen are missing from this love feast of agreement on the need to fix the Balanced Budget Act. It's a case of perceived national interest against the needs of the deserving few that shows how the nearly even balance between Republicans and Democrats affects the ability to pass important legislation.

Those who favor lifting restrictions consist of Republicans and Democrats who come close to a becoming a bipartisan majority of both the House and Senate. For example, on February 25, Senator Charles Grassley (R-Iowa) introduced S.472, a bill to establish routine exceptions to the $1,500 annual cap. Within 30 days, five Democrats and two Republicans signed on as cosponsors. Most of the other bills to relax the long-term care restrictions on Medicare also originated from members of a centrist coalition of both parties.

The opponents of changing the Balanced Budget Act tend to be conservative Republicans from safe congressional districts who believe that the proper role of government is little more than national defense and criminal justice. When House Majority Leader (Dick Armey, R-TX) said in June that all his constituents want is "cut my taxes and let me keep my guns," he gave a rationale for opposition to all measures that would increase social or healthcare spending. Armey and his even more conservative allies describe the Balanced Budget Act as the first installment of a long-term drive to get the federal government out of our personal lives. Any effects of the Balanced Budget Act on such groups as the nursing home industry or the elderly pale in importance compared to the historic effort to reduce the size and scope of federal activities.

This philosophy was central to the restrictions imposed on Medicare reimbursements. The $1,500 annual cap, for example, was established solely for fiscal purposes. There were no hearings or studies on whether the cap reflected typical costs of rehabilitation care or whether the cap would deprive a large number of people of necessary healthcare services. The only consideration that was discussed in developing the cap was the amount of money it would save from the federal budget...if no one found other ways to tap into federal funds to pay for rehabilitation beyond the $1,500 limit.

The reality has been that the Balanced Budget Act's restrictions on long-term care have created more hardship and fewer savings than many congressmen anticipated. Original estimates assumed that the restrictions would reduce nursing home Medicare revenue by approximately $1.2 billion per year; an AHCA-funded study by Muse & Associates found that the reductions have been more than $2 billion per year. At least part of that lost income represents a transfer of Medicare funds to more expensive hospital care because patients recovering from serious illness are unable to find willing providers among the skilled nursing facilities. For these patients, the restrictions on Medicare spending imposed on nursing homes means that Medicare will spend more - not less - on rehabilitation because they receive the services in an inpatient facility.

The informal center-right coalition of Republicans and Democrats forged by Speaker of the House Denny Hastert (R-IL) and the bipartisan group of Senate leaders view these figures as very important. They also are responding to what Senator Harry Reid (D-NV) describes as "horror stories" of elderly patients facing the hard choice of remaining in a hospital or moving to a nursing facility far from their home and family. Many members of the hard core of ideological Republicans in the House do not agree that either the financial realities or the "horror stories" justify a retreat from the goals of the Balanced Budget Act. A spokesperson for the office of Congressman Ernest Istook, the senior Republican from Oklahoma, for example, reported that his office had no position on long-term care concerns resulting from the Balanced Budget Act. Asked for material on the congressman's current issues, the aide sent a constitutional amendment requiring a two-thirds vote in the House for any future tax increases and a proposed resolution "recognizing the public need for reconciliation and healing, urging the United States to unite in seeking God, and recommending that the Nation's leaders call for a day of solemn prayer, fasting, and humiliation before God." The selection suggests that the congressman is more concerned about broad cultural issues than the difficulties of a particular industry.

The budget-purist Republicans are far from a majority of the members in either the House or the Senate, but their influence in their party's caucus greatly outweighs their numbers. Most of them do not face a serious threat from the Democratic party because their districts are safely Republican. In fact, the reason for their hard-core ideological stance might be that their re-election depends more on the results of the Republican primaries than on the general election. The relative safety of their seats ensures seniority. That safety also frustrates the efforts of Speaker Hastert to encourage them to compromise with centrist Democrats on such bills as revision of the Balanced Budget Act. This summer, Hastert has tried to discipline the right wing of his party by threatening the loss of the Republican majority in the 2000 elections, but rebellious members counter that a compromise with the Democrats now would essentially mean that they have already lost control of Congress.

The dilemma facing the nursing homes' effort for relief from the Balanced Budget Act is that the best arguments, support and studies carry little weight among those who place limited government in the national interest above all else. In contrast, Republicans who support modifying the Medicare limitations include those who are most likely to lose the next general election.