White House to Ease Up on Health Savings : Budget: Plan would waive mammogram co-payments and offer Alzheimer’s patients a week of paid care annually to give their families a respite.

WASHINGTON — The Clinton Administration on Wednesday tried to assuage the political pain of its new plan to trim the growth in Medicare by promising some expanded benefits.

Under the new Clinton budget, the 20% co-payment for mammograms would be waived and Alzheimer’s patients would receive a week every year of government-paid care so their care-giver families can get a respite.

For an estimated 4 million people who lose their jobs each year, the government would provide subsidies to help them pay for health insurance while they are out of work. States would determine eligibility for the newly jobless, who would receive insurance subsidies for six months.

The spending for these benefits, plus new state grants for home care for the elderly and disabled, total an additional $25 billion. But they are dwarfed by more than $100 billion in reduced Medicare payments to doctors and hospitals. In effect, the Clinton Administration rolled out a familiar program to reach its goal of a balanced budget: health care reform, albeit a slimmed-down version, that promises a modest expansion of insurance coverage.

Overall, the new Clinton budget calls for saving $177 billion over the next 10 years from the growth of Medicare and Medicaid, the giant federal health programs. Congressional Republicans have proposed saving $450 billion over seven years.

“I was assured that if the President would put his proposals on the table that we would be able to have a healthy discussion with the Republicans,” Health and Human Services Secretary Donna Shalala told reporters at the White House on Wednesday, offering a rationale for the Administration’s turnabout from earlier in the week when officials said they could not even talk to the GOP about Medicare changes.

On Monday, Bruce C. Vladeck, the head of the Health Care Financing Administration, which runs Medicare and Medicaid, had declared it would be impossible to have an “intelligent” conversation with congressional Republicans on controlling health care costs because they had staked out such an “extreme” position.

On Wednesday, Vladeck lined up with his boss, Shalala, and other Administration officials in the White House briefing room to declare their eagerness to talk with the GOP. Their message: Our cuts are reasonable, theirs are too deep.

Controlling the growth of health care costs is the key to balancing the federal budget. Medicare, for those over 65 and the disabled, and Medicaid, for the poor, are expanding their outlays at an unsustainable rate of 10% a year. They already consume about 16% of the federal budget. If the growth rates remain unchecked, government entitlement programs--Medicare, Medicaid, Social Security and federal pensions--combined with interest on the debt, would consume virtually all tax revenues by the year 2012, leaving no money for defense or any other discretionary programs.

The President’s plan “proposes to get savings the old-fashioned way, by whacking at providers [doctors and hospitals],” said Ed Howard, executive vice president of the Alliance for Health Reform, a bipartisan group calling for expanded health coverage. “By staking out a tangible position that he, too, is interested in deficit reduction, he has the moral and political leeway to veto something later that he doesn’t like,” Howard said.

But the medical providers, who were hoping the White House, in alliance with senior citizen groups, would help protect them from reductions, were surprised and angry at the change of strategy.

“We’re deeply disappointed,” said Rick Pollack, executive vice president of the American Hospital Assn. A proper solution would call for the 36 million Medicare beneficiaries to bear a “share of the burden,” Pollack said.

Reductions in the growth of payments to hospitals will accelerate the economic pressures already leading to layoffs, mergers and shutdowns, he said.

However, the Clinton Administration wanted to avoid raising the ire of the beneficiaries, who would have to pay more for their care.

The White House said its plan would postpone until the year 2005 the bankruptcy of the Medicare hospital trust fund, which would run out of money in the year 2002 at current rates of spending.

Shalala said the government will try to encourage senior citizens to join managed-care programs such as health maintenance organizations. Currently, fewer than 10% are enrolled in HMOs.

For Medicaid, the White House wants to put a cap on the growth in spending, but officials declined to provide details.