The Balanced Budget Act of 1997 () was an omnibus legislative package enacted by the United States Congress, using the budget

reconciliation Reconciliation or reconcile may refer to: Accounting * Reconciliation (accounting) Arts, entertainment, and media Books * Reconciliation (Under the North Star), ''Reconciliation'' (''Under the North Star''), the third volume of the ''Under the ...

process, and designed to balance the federal budget by 2002. This act was enacted during Bill Clinton's second term as president. According to the

Congressional Budget Office The Congressional Budget Office (CBO) is a List of United States federal agencies, federal agency within the United States Congress, legislative branch of the United States government that provides budget and economic information to Congress. I ...

, the act was to result in $160 billion in spending reductions between 1998 and 2002. After taking into account an increase in spending on Welfare and Children's Healthcare, the savings totaled $127 billion. Medicare cuts were responsible for $112 billion, and hospital inpatient and outpatient payments covered $44 billion. In order to reduce Medicare spending, the act reduced payments to health service providers. However, some of those changes to payments were reversed by subsequent legislation in 1999 and 2000.

Overview

The Balanced Budget Act was introduced on June 24, 1997, by Republican Ohio Representative John R. Kasich.Kasich, J. R. (1997, August 05). H.R.2015 - 105th Congress (1997–1998): Balanced Budget Act of 1997. Retrieved April 17, 2019, from https://www.congress.gov/bill/105th-congress/house-bill/2015 There were three short titles that the act was also known as in the

House of Representatives House of Representatives is the name of legislative bodies in many countries and sub-national entities. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often ...

. In the House, this act was also called the Child Health Assistance Program of 1997, the Expansion of Portability and Health Insurance Coverage Act of 1997, and the Veterans Reconciliation Act of 1997. The

Senate A senate is a deliberative assembly, often the upper house or chamber of a bicameral legislature. The name comes from the ancient Roman Senate (Latin: ''Senatus''), so-called as an assembly of the senior (Latin: ''senex'' meaning "the el ...

also had three short titles: # the Multifamily Assisted Housing Reform and Affordability Act of 1997 # the Veterans Reconciliation Act of 1997 # the Welfare Reform Act of 1997. The act changed key components of

Medicaid Medicaid is a government program in the United States that provides health insurance for adults and children with limited income and resources. The program is partially funded and primarily managed by U.S. state, state governments, which also h ...

that help to improve and expand Medicaid itself. The bill proposed a plan to get federal Medicaid savings, federally, in three areas. The bill also aimed to expand federal and state authority within the Medicaid system. The bill also established two new

block grants A block grant is a grant-in-aid of a specified amount from a larger government to a smaller regional government body. Block grants have less oversight from the larger government and provide flexibility to each subsidiary government body in terms ...

to child health and to the states. These grants helped to bring in money to Medicaid systems for children and people in the states being funded to use to improve their Medicaid systems. It also created the State Children's Health Insurance Program which gives low income children healthcare coverage. The law introduced what would later be named

Medicare Advantage Medicare Advantage (Medicare Part C) is a type of health plan in the United States offered by private companies which was established by the Balanced Budget Act of 1997. This created a private insurance option that wraps around traditional Me ...

under the name Medicare+Choice.

Savings

The Balanced Budget Act aimed to earn federal savings within the Medicaid system in three areas. The gross federal Medicaid savings comes from three sources: # Repeal of minimum payment standards from hospitals, nursing homes, and community health centers # Limits on federal matching payments to states for payments to

disproportionate share hospital The United States government provides funding to hospitals that treat indigent patients through the Disproportionate Share Hospital (DSH) programs, under which facilities are able to receive at least partial compensation. Although 3,109 hospitals ...

s (DSH) # Authorization for the states to avoid paying deductibles and co-insurance on behalf of many low-income Medicare beneficiaries. The act had a five-year savings goal and a ten-year savings goal following its enactment in 1997. The five-year savings goal was $116.4 billion which would be achieved by limiting growth rates in payments to hospitals and physicians under fee-for-service arrangements. This plan also involved the change of the methods of payment made to rehabilitation hospitals, home health agencies, skilled nursing facilities, and outpatient service agencies as well as the reduction of payments to Medicare managed care plans and the slowing of growth rates of these same care plans. The ten-year savings goal was $393.8 billion using the same savings methods as the five-year goal to achieve the savings in 2007.

Impact on beneficiaries

Beneficiaries of Medicare were also affected by the spending cuts on the health system in order to save money. Medicare premiums increased by nearly $1.3 billion in the first five years and nearly $8.3 billion over 10 years. It was estimated that the increase in premiums for beneficiaries would be around forty-five dollars, raising the average premium to $105. Despite the increase in premium price beneficiaries would also see improvements in their health care coverage following the enactment of the Balanced Budget Act. They would also see a decrease in the amount of outpatient cost-sharing, also known as co-pays. A few examples of new things that would be covered with this new plan are annual mammograms and pap smears with no

deductible In an insurance policy, the deductible (in British English, the excess) is the amount paid Out-of-pocket expenses, out of pocket by the policy holder before an insurance provider will pay any expenses. In general usage, the term ''deductible'' m ...

s, prostate exams, diabetes self-management services, and colorectal cancer screening.

Block grants

Two block grants were established through this bill. One block grant was given to improve children's health insurance and the other block grant was given to the states to improve their Medicaid benefits. The block grant granted to the states was a total of 1.5 billion dollars over the first five years of the act's enactment and was used in order to help low-income beneficiaries with the cost of their new premiums so that they would not lose their health care coverage. The block grant granted for children's health insurance was a total of 20.3 billion dollars over the first five years in an attempt to reduce the number of uninsured low-income children. This block grant was the start of the State Children's Health Insurance Program.

State Children's Health Insurance Program

This program was created with the enactment of the Balanced Budget Act and it is an attempt to reduce the number of low-income children, under the age of nineteen, that are uninsured and not eligible for Medicaid. States had the option to participate in the program which means that the program was not mandated by the United States. The states that chose to participate would be given flexibility with how the grant would be used in the program. The states could choose to expand the states' Medicaid programs, provide coverage that meets the needs of the Act, or a combination of those two options.

References

Congress.gov Congress.gov is the online database of United States Congress legislative information. Congress.gov is a joint project of the Library of Congress, the House, the Senate and the Government Publishing Office. Congress.gov was in beta in 2012, and ...

{{Presidency of Bill Clinton Medicare and Medicaid (United States) United States federal health legislation United States federal reconciliation legislation Acts of the 105th United States Congress Presidency of Bill Clinton