Increased Medicare margins are catching Congress's eye.

A s Congress and the Clinton administration move into a new round of balanced-budget wrangling, Medicare .\m\ hospital costs will figure prominently in it. To be sure, the number targets for total Medicare savings are lower this year than they were in 1995, but they would hit hospitals particularly hard. Although many analysts predict another stalemate—or at least no agreement until after the November elections—the new Republican proposal does show where many lawmakers believe they can find the savings necessary for a balanced budget. And Congress's focus on hospitals as a source of Medicare savings may be sharpened by recent evidence that hospitals are enjoying higher profit margins.