Budget Plan Slashes $90 Billion Over Five Years : U.S. Reportedly Proposes Big Medicare, Medicaid Cuts

WASHINGTON â€”  A new round of Medicare and Medicaid cuts and revisions, designed to reduce projected program outlays by about $90 billion over five years, has been proposed by the Office of Management and Budget for President Reagan’s fiscal 1988 budget, Administration sources said Saturday.

If enacted by Congress, the cuts--$68.8 billion in Medicare and $21.6 billion in Medicaid, which is called Medi-Cal in California--would dwarf any previous retrenchments in the two programs. Some of the changes would eliminate benefits. Others would cut payments to hospitals and doctors, and some would increase taxes or payments by beneficiaries or workers.

“That size cut would be an absurd distortion of national priorities and threaten the quality and access of care for the aged and the poor,� said Michael D. Bromberg, executive director of the Federation of American Health Systems, which represents more than 1,000 for-profit hospitals.

John Rother, legislative director of the American Assn. of Retired Persons, the nation’s largest such group, said: “The Medicaid cuts and some of the Medicare changes would constitute a breach of faith with the old and poor. They hit hardest at people who are most vulnerable.�

The OMB decided on the reductions in the middle of last week after reviewing the tentative budget proposals of the Health and Human Services Department for fiscal 1988. Unless HHS Secretary Otis R. Bowen appeals to Reagan successfully against some of the cuts, the OMB proposals will be included in the President’s budget.

In addition to its proposals for the Medicare and Medicaid programs, which currently spend more than $100 billion a year for benefits to 30 million Medicare and 23 million Medicaid recipients, the OMB also decided on:

--A cut of about $600 million from the fiscal 1987 level in new funds for the National Institutes of Health. For fiscal 1987, Congress appropriated $6.1 billion for NIH. OMB’s funding proposals include $5.5 billion for fiscal 1988, plus a carry-over of $121 million from 1987, for a total of $5.62 billion. Congress in past years has been unreceptive to proposals to cut NIH funding.

--A cut in funds for the Alcohol, Drug Abuse and Mental Health Administration from $1.36 billion in fiscal 1987 to $1.1 billion in 1988.

--An increase in funds for acquired immune deficiency syndrome to $471 million for fiscal 1988 from the $411 million appropriated for fiscal 1987.

--A cut to $1.35 billion in fiscal 1988 from $1.8 billion in fiscal 1987 in the program to help low-income people pay home fuel costs.