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Dwindling subsidies, smaller inflation raises


WASHINGTON -- Imagine a day when the elderly get medical services from cost-cutting managed health-care plans -- as most younger people do already.

When scores of altruistic poverty programs from the 1960s are scaled back, phased out, or simply shut down.

When you use a new dollar coin instead of the greenback to save Uncle Sam some printing and paper costs.

Republican budget-cutting plans being put forward in the House and Senate offer a glimpse of what it would be like to live under a leaner government.

Because Washington's reach now extends into every corner of American life, cutting back will mean thousands of changes, large and small.

It won't be easy. People who lose out on benefits aren't going to like it. There could be hassles for some, painful consequences for others. But the cost of continuing to pile on debt is high.

"If the federal government continues on its present path . . . we will put this nation into the position we now see confronting Mexico," warns Sen. Judd Gregg, R-N.H., who led a task force on cutting benefit programs.

Here are just a few examples, little and big, of the stuff Republicans are putting on the table.

Little stuff:

If you go to the symphony, you might have to pay more for your tickets. Or the local theater company might stop sending actors to teach a drama workshop in your children's public school.

That's because House Republicans are recommending an end to subsidies for the arts and humanities.

People living in isolated cities might lose air service. The House GOP is calling for an end to a small program that subsidizes air service to 82 communities, with some 700,000 passengers carried each year.

Say you're poor, and your landlord decides to keep a security deposit that you were supposed to get back. You want to take the landlord to court.

Under the House GOP recommendations, you would no longer be able to get a free, federally subsidized lawyer through the Legal Services Corp.

Or say you're an engineer working on the "smart" cars of the future. You'd lose the benefit of a federal research program into new automotive technologies. Businesses that export abroad could lose a government agency that helps them advertise and promote their goods.

Big stuff:

Here's where things get really tricky. Smaller programs have limited constituencies, but big programs touch nearly every family. Politicians of both parties have promised to not to tamper with the biggest of the big -- Social Security.

But what if there was a back-door way to cut Social Security spending -- and raise income tax revenues at the same time? Such a tantalizing possibility is being considered in the Senate.

How they'd do it: Adjust the way inflation is measured.

A lower inflation number would reduce automatic cost-of-living increases for retirees. It would also increase income tax collections, because tax brackets are moved up a little bit every year to compensate for inflation. A lower inflation number would put more people in higher tax brackets.

Medicare may also be affected.

Suppose you're an elderly person covered by Medicare and you've just been discharged from the hospital after a stroke. A physical therapist is assigned to come to your home regularly to guide your rehabilitation. Under a proposal by Senate Republicans, Medicare beneficiaries would have to start paying 20 percent of home health-care costs. In some areas, each home visit by a nurse or therapist costs $100.

If you're a Medicare beneficiary, you would also be encouraged to join health maintenance organizations or other cost-conscious managed care plans. These plans agree to cover all your health needs, but limit access to specialists and costly tests. You would get additional services like prescription drug coverage, maybe even a cash bonus from the government, but you might have to give up your current doctor.

A poor person getting health coverage through Medicaid probably won't get a choice about joining a managed care plan. Washington wants to turn Medicaid over to the states, with limits on federal funding. States are already experimenting with managed care for Medicaid beneficiaries.

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