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Medicare Budget Cuts May Not be Welcomed in Congress
KaiserNet.org provides more detail on specific
proposals, reactions
Feb. 7, 2006 – Although the President's budget for
2007 that was released yesterday has cuts of $36 billion for Medicare
($105 billion over 10 years), reportedly the biggest in the budget, many
are predicting it will be a hard sell to Congress after they, too, took
big hacks at the program at the first of the month. KaiserNet.org
examines the media and political reactions, and provides details on what
Bush has proposed in a number of health care programs.
 Administration
News | President Bush Releases FY 2007 Budget Proposal; $36B
Medicare Spending Reduction Expected To Have Difficult Approval Process
[Feb 07, 2006]
President Bush on Monday sent a fiscal year 2007
budget proposal to Congress that includes spending cuts for Medicare and
other programs and that is expected to "be a tough sell, especially in
an election year,"
USA Today reports (Wolf/Jackson, USA Today, 2/7).
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Social Security Investment Accounts, Indexing in
Bush Budget
Reform ideas that never caught on in 2006 are back in
the 2007 budget
Feb. 6, 2006 – There were so many things grabbing
the public's and media's attention in the $2.77 trillion federal budget
for FY 2007 presented yesterday, that many senior citizens may have
missed that the President has put private investment accounts and the
indexing of benefits (determining payments by need) for Social Security
back on the table and in the budget.
Read
more...
Bush 2007 Budget Cuts $36 Billion from Medicare,
$12 Billion from Medicaid
Feb. 6, 2006 – President Bush today released
his budget proposal for 2007, which includes proposals to "save an
estimated $36 billion over five years in Medicare." The statement on
Medicare and Medicaid says, "The key to preserving the promise of
Medicare for America's seniors and disabled is to enhance the
long-term fiscal solvency of the program." The cuts proposed for
Medicaid reduce costs by $12 billion. Major new expenditures in
Health Care are aimed at fighting the flu pandemic.
Read more...
Read more on
Medicare
or
Politics |
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The $2.7 trillion budget proposal includes $36
billion in spending reductions for Medicare over five years. The
Medicare spending reductions would total $105 billion over 10 years.
Bush's Medicare proposal would reduce spending on the program -- which
the
Congressional Budget Office estimates at $2.56 trillion over the
next five years -- by about 1.4%.
Many of Bush's proposals follow recommendations
from the
Medicare Payment Advisory Commission, an independent federal panel.
Bush's proposal aims to eliminate or reduce spending in 141 programs for
savings of $14.4 billion in 2007. The budget plan would help Bush reach
a goal of cutting the budget deficit in half by the end of his second
term and make permanent tax cuts he instituted in his first term (Kaiser
Daily Health Policy Report, 2/6).
According to USA Today, the spending cuts for
Medicare are "the budget's biggest single reduction" (Wolf/Jackson, USA
Today, 2/7). The Medicare cuts "will not be enough to please fiscal
conservatives, who complain about runaway federal spending, [but they]
will be considered excessive by fiscal liberals, who want government to
cover more health care costs for older Americans," the
Philadelphia Inquirer reports (Thomma, Philadelphia Inquirer, 2/7).
Proposals to reduce Medicare hospital reimbursement
rates for an estimated savings of more than $8 billion over five years
and to reduce nursing home reimbursements for an estimated savings of
more than $5 billion over five years are likely to face "an uphill
battle in Congress, where local hospitals hold great sway with
lawmakers," the Wall Street Journal reports (Lueck, Wall Street Journal,
2/7). Bush's budget plan also would reduce Medicare home health care
provider reimbursements, for savings of $3.5 billion over five years
(Appleby,
USA Today, 2/7).
Medicare Proposals
Bush's proposals that would affect Medicare include:
● The elimination of an adjustment for
beneficiaries with incomes greater than $80,000 that automatically
raises income thresholds to reflect inflation. Because of this change,
3.8 million beneficiaries would pay an additional $48 to $262 per month
by 2016 in premiums for Medicare Part B, which covers physician and
outpatient costs. Savings are estimated at $40 million over the first
five years of the change;
● An automatic reduction of federal spending on
Medicare when federal expenses surpass 45% of the program's total cost
for two consecutive years. According to Bush administration projections,
this would first occur in 2017, provided that Congress passes Bush's
budget proposal (Wall Street Journal, 2/7); and
● A requirement that oxygen equipment be
purchased after 13 months rather than leased, for estimated savings of
$6.6 billion over five years (Schuler, CQ Today, 2/6);
Medicaid Proposals
Bush's proposals that would affect Medicaid include:
● A cap on payments to local government health
care providers at "no more than the cost of furnishing services," for
estimated savings of $3.8 billion;
● Restrictions on the ability of states to
assess taxes on providers as a way of increasing federal matching
payments, for estimated savings of $2.1 billion;
● The end of payments for certain administrative
services that the White House says already are funded through the
Temporary Assistance to Needy Families program, for estimated
savings of $1.8 billion;
● Efforts "to further reduce Medicaid
overpayments for prescription drugs," for estimated savings of $1.3
billion;
● A reduction in federal reimbursement for
services provided by certain Medicaid case managers, for estimated
savings $1.2 billion; and
● Allowing states to "avoid costs for prenatal
and preventive pediatric care claims where a third party is responsible
through a noncustodial parent's obligation to provide coverage for a
limited time," for estimated savings of $500 million (Carey,
CQ HealthBeat, 2/6).
Other Health Proposals
Other budget proposals related to health care include:
● A number of provisions related to encouraging
the use of health savings accounts, for a combined cost of $60 billion
over five years (Wall Street Journal, 2/7). The cost of the proposals,
including tax incentives, is estimated at $156 billion over 10 years
(Appleby, USA Today, 2/7);
● A modification to HSAs that would allow
employers to contribute more money to the accounts of workers with
greater health care expenses;
● A proposal to give tax credits to low-income
uninsured people who have high-deductible health plans;
● An allocation of $2.65 billion in funds to
protect the nation against a pandemic flu, which would be added to $3.3
billion already approved by Congress. The funding would be used to
purchase flu vaccines for every U.S. resident and to provide antiviral
drugs to 25% of the population in an emergency (Kaiser Daily Health
Policy Report, 2/6).
● The elimination of a $10 million program that
helps states provide hearing tests to newborn children from low-income
families;
● The elimination of a program that provides
defibrillators to communities; and
● The elimination of the National Children's
Study, which was expected to track 100,000 children for 21 years
(Neergaard, AP/Miami Herald, 2/7).
Agency Budgets
Bush's proposal includes the following budgets for health agencies:
● A proposed budget of $28.6 billion for
NIH, the same as the FY 2006 NIH budget, including small cuts to 18
of 19 NIH institutes. The
National Institute of Allergy and Infectious Diseases -- leading the
research on pandemic flu and bioterrorist attacks -- would receive an
increase. The
National Cancer Institute would receive $4.75 billion, $40 million
less than its FY 2006 budget. The
National Heart, Lung and Blood Institute would receive $2.9 billion,
$21 million less than its current budget;
● An increase in health care costs for
middle-income veterans with no service-connected disability, including
higher copayments for prescription drugs and a new fee for the use of
government health care (Kaiser Daily Health Policy Report, 2/6);
● A proposed budget of $1.5 billion for
FDA, a $50 million increase from the FY 2006 FDA budget. FDA also
would receive an additional $21 million in user fees assessed on
industries it regulates;
● A proposed budget decrease of $179 million for
CDC, with $128 million coming from construction projects. CDC
Director Julie Gerberding said additional savings would come from a
number of agency programs, which she did not specify;
● A proposed budget of $3.2 billion for the
Indian Health Service, a $125 million increase from the FY 2006 IHS
budget. The IHS
Urban Indian Health Program would be eliminated, for savings of $33
million.
HHS said beneficiaries under that program are covered through other
HHS services;
● A proposed budget of $3.3 billion for the
Substance Abuse and Mental Health Services Administration, a $71
billion reduction from the FY 2006 SAMHSA budget;
● A proposed budget of $88 million for the
Office of the National Coordinator for Health Information Technology,
up from $42 million allocated in the FY 2006 budget; and
● A $25 million reduction in funding for the
Health Resources and Services Administration, representing 4% of the
FY 2006 HRSA budget. HRSA would receive a $181 million funding increase
to fund 300 new or expanded community health centers, as well as $188
million to fund a new HIV/AIDS initiative, including funds to test three
million additional Americans for HIV and provide HIV/AIDS drugs to
low-income individuals currently on state waiting lists. HRSA would
experience a $198 million drop in funding for graduate education
programs in children's hospitals. Spending for health programs in rural
areas would drop from $160 million to $27 million (Reichard, CQ
HealthBeat, 2/6).
Reaction
White House Budget Director Joshua Bolten said the budget proposal
indicates Bush's goal "to focus on national priorities and tighten our
belt elsewhere" (Jackson/Wolf,
USA Today, 2/7).
Senate Budget Committee Chair Judd Gregg (R-N.H.) said, "We must
address the retirement needs of the massive baby boom generation,
grapple with the skyrocketing costs of health care and find some balance
that will not leave future generations with a bill they cannot pay"
(Wolf/Jackson, USA Today, 2/7).
Senate Labor-HHS Appropriations Subcommittee Chair Arlen Specter
(R-Pa.) said, "The president's FY 07 budget proposal is going to require
substantial modifications by Congress" (Cohn, CongressDaily, 2/7).
Senate Finance Committee Chair Chuck Grassley (R-Iowa) said that it
"wasn't an easy legislative accomplishment" to get the FY 2006 budget
reconciliation bill (S
1932) passed, which included Medicare and Medicaid cuts. Grassley
added, "Any more reductions of a significant scope could be difficult
this year" (Wall Street Journal, 2/7).
Rep. John Spratt (D-S.C.) said Bush's budget comes
"down on those who need health care the most and have it the least --
the elderly and the poor," adding, "I don't think it's going to happen
in the next year, and that's one more reason that the president's budget
is not a realistic statement of the choices that lie before us"
(CongressDaily, 2/7).
More Comments
Barbara Kennelly, president of the
National Committee to Preserve Social Security and Medicare, said
the president's budget proposal is "an effort to fundamentally change
the way we look at Medicare" (Wolf/Jackson, USA Today, 2/7).
Dick Davidson, president of the
American Hospital Association, said Bush's budget is "a step
backwards in protecting access to care for all Americans" (Wall Street
Journal, 2/7).
Bill Novelli, president of
AARP, said, "Arbitrary caps on Medicare will mean that providers or
beneficiaries will have to make up the difference through lower payment
rates or higher cost sharing" (Schuler, CQ Today, 2/6).
Paul Ginsburg, an economist with the
Center for Studying Health System Change, said the Medicare payment
reductions "see[m] to be a very modest reduction."
Chip Kahn of the
Federation of American Hospitals said, "This is no time to cut
Medicare payments for services," adding that many hospitals are facing
financial pressure.
Joseph Antos of the
American Enterprise Institute said that while he supports HSAs,
Bush's proposal is "a considerable amount of money" and "a more
expansive proposal in terms of committing federal resources to health
care than one could have anticipated from the State of the Union
address" (Appleby, USA Today, 2/7).
 Additional
information about the budget is available
online from the Office of Management and Budget.
Broadcast Coverage
Two broadcast programs reported Medicare spending in Bush's budget
proposal:
 APM's
"Marketplace
Morning Report": The segment includes comments from Maya MacGuineas,
president of the
Committee for a Responsible Federal Budget (Wicai, "Marketplace
Morning Report," APM, 2/6). The complete segment is available
online in RealPlayer.
NPR's
"Morning
Edition": The segment includes comments from Leavitt; Kahn; John
Rother, policy director at AARP; and Alec Vachon, a now a political
consultant and former health aide to Senate Republicans (Rovner,
"Morning Edition," NPR, 2/7). The complete segment is available
online in RealPlayer. Expanded NPR coverage of Bush's fiscal year
2007 budget proposal is available
online.
"Reprinted with
permission from kaisernetwork.org (insert hyperlink to http://www.kaisernetwork.org).
You can view the entire
Kaiser Daily Health Policy Report, search the archives, and sign
up for email delivery at
www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser
Daily Health Policy Report is published for
kaisernetwork.org, a
free service of The Henry J. Kaiser Family Foundation. © 2006
Advisory Board Company and Kaiser Family Foundation. All rights
reserved.”
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