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Medicare
Congress Should Pass Bush Medicare Cuts, Says
Administrator
Joins Medicare trustees in discussing cost
dilemma
May 3, 2006 The budget cuts to Medicare - $36
billion proposed in the 2007 budget by President Bush have received a
cool welcome by the Congress but, yesterday, the administrator for the
Centers of Medicare and Medicaid services said the proposals should be
approved to lower cost. His speech followed the news from the trustees
on Monday showing Medicare Part A will be exhausted in 2018, two years
earlier than projected last year. Medicare costs, they say, will exceed those of
Social Security in 2028.
 Bush Administration Proposals
Would Help Address Future Medicare Insolvency, CMS Administrator Says
CMS
Administrator Mark McClellan on Tuesday said Congress should pass
President Bush's proposals that would eliminate increases in Medicare
provider payments and require higher-income beneficiaries to pay higher
Medicare premiums, CongressDaily reports.
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Related Stories |
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Medicare Trustees Annual Report
Medicare Cost to Pass Social Security in 2028, Part
A Trust Fund Broke in 2018
Higher cost in 2005
cuts fund's life by two years
May 1, 2006 - Medicare expenditures were $336
billion in 2005 and are expected to increase in future years at a faster
pace than either workers earnings or the economy overall and exceed the
cost of Social Security in 2028. By 2080 Medicare costs will be almost
twice that of Social Security. The data is in the annual Medicare
Trustees Report issued today, which also says the trust fund for
Medicare Part A will be exhausted in 2018, two years earlier that
projected last year, due to higher cost than estimated and
upward revisions of assumptions of utilization.
Read more...
Bush Medicare Cuts Getting Cold Shoulder in Senate
and House
Conservative House Study Committee, however,
recommends even more cuts
March 9, 2006 Republican enthusiasm for cutting
Medicare is waning rapidly. The Senate Budget Committee is holding a
mark-up session today on their 2007 budget resolution, which ignores
President Bush's proposed cuts in Medicare and other entitlement
programs. It is just as hot in the House, where 60 moderate Republican
members sent a letter to House Budget Committee Chair Jim Nussle saying
they oppose the Bush cuts to Medicare. There is another side, however,
with the conservative House Republican Study Committee proposing
even more cuts that Bush recommended, according to KaiserNet.org.
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 |
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Speaking at an event at the
American Enterprise
Institute, McClellan said the two proposals, which are
included in Bush's fiscal year 2007 budget, would help lower Medicare
costs and might avoid the need to make more drastic cuts in the future.
He said the financial problems predicted in the annual report from
Medicare trustees justify the need for Congress to pass Bush's proposals
(Heil, CongressDaily, 5/2).
According to the report, released Monday, the
Medicare hospital trust fund will become insolvent in 2018, two years
earlier than was predicted in the trustees' 2005 report.
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Original White
House Statement on Medicare and President's 2007 Budget |
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The FY 2007 Budget includes
proposals to save an estimated $36 billion over five years in
Medicare. 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 FY 2007 Budget includes
proposals that would strengthen Medicare's financial viability,
encouraging prudent choice of health care needs by
beneficiaries. The proposals would reduce excessive government
spending and save money for most beneficiaries, while also
encouraging providers to increase productivity and efficiency.
The Administration wants to ensure that Medicare continues to
provide quality care to current and future beneficiaries. These
proposals would:
● increase competition in
the payment and acquisition of medical items and services
● encourage providers to
become more efficient and productive in the delivery of care
● support beneficiaries
who are most able to pay to contribute more for their health
care costs
● promote beneficiary
receipt of care in the most appropriate medical settings, and
● reduce improper
payments. |
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In addition, the report predicts that a spending
threshold that requires the president to submit legislative proposals to
cut Medicare costs soon will be met. Under the 2003 Medicare law, the
president is required to submit to Congress legislative proposals to
reduce Medicare spending if trustees project that general revenue
contributions will exceed 45% of total Medicare spending for two
consecutive years within the first seven years of the program.
The trustees' 2006 report makes that projection for
the first time, saying that the 45% threshold will be met in 2012. That
means President Bush would have to propose legislative changes to the
program in 2007 if the trustees' projections are similar next year (Kaiser
Daily Health Policy Report, 5/2).
McClellan said the president's current proposals,
along with other cost-saving steps underway at CMS, would help reduce
reliance on general revenues. "We are not waiting for that second year,"
McClellan said, adding, "We are proposing action now." He continued,
"The more [lawmakers] do now, the less pressure there will be to take
drastic steps down the road, like reductions in payments or reductions
in benefits.
" When asked if the report would encourage
lawmakers to pass the administration's proposals, McClellan said, "It's
only been one day. Let's give it a little time" (CongressDaily, 5/2).
Other Comments
Medicare chief actuary Richard Foster, trustees Thomas Saving and John
Palmer and former
Congressional
Budget Office Director Douglas Holtz-Eakin also spoke at the
AEI event.
Foster said eliminating scheduled cuts to provider
payments, combined with other factors, would lead to double-digit
increases in premiums for Medicare Part B, which covers outpatient care.
The trustees' report projects an 11% Part B premium increase in 2007.
Foster said rapid increases in Part B costs might mean significant
increases in premiums for several more years.
Saving predicted that by 2040, 45% of the money in
Social Security checks will go toward premiums for Medicare parts B and
D, the prescription drug benefit. He said increasing Medicare costs will
also impact taxpayers and the federal budget, with half of all federal
income tax revenues going toward Medicare or Medicaid in 25 years (Reichard,
CQ HealthBeat,
5/2).
Drug Benefit
Foster said legislative proposals that would allow Medicare to negotiate
drug prices with pharmaceutical companies would not result in savings
because the private insurers sponsoring Medicare drug plans are more
effective negotiators than the federal government.
Foster also dismissed legislative proposals that
would extend the May 15 deadline for enrolling in the drug benefit. He
said some beneficiaries are delaying enrollment to the last minute
because they want to avoid paying premiums, not because they are
confused about the drug benefit, as some lawmakers maintain (CongressDaily,
5/2).
He said the good news about the drug benefit is
that the trustees' report projects the program's cost to be about 20%
lower than was previously estimated. About four percentage points of
that decrease are the result of greater-than-expected discounts that the
drug plans have negotiated, and another four percentage points are the
result of lower-than-expected enrollment, Foster said.
Excess Cost Growth
Palmer said projections in the trustees' report assume that the
percentage by which increases in health care costs will exceed increases
in the gross domestic product -- a figure known as "excess cost growth"
-- will be 1.4% annually 25 years from now and zero percent 75 years
from now. He said that assumption might be optimistic because economists
can't know for sure if those projections will hold. Holtz-Eakin said
economists are unsure if, or how, some parts of the excess cost growth
could be beneficial increases in health care spending. That question
needs to be addressed in order to better understand what to do about
Medicare, Holtz-Eakin said (CQ HealthBeat, 5/2).
Editorial
"No one thinks Congress will keep retirees from getting hospital care as
a result" of the projection that Medicare's hospital trust fund will
become insolvent in 2018, "but policy makers need to start thinking
about solutions" for the program, a
Boston Globe
editorial states.
The solution should "involve new revenue with
perhaps a few benefit cuts," the editorial says. However, "revenue ...
would be lost if the tax cuts proposed by the administration and passed
by Congress are made permanent," it states. The editorial concludes,
"Next year's trustees' report ought to be accompanied by a commitment
from the president to abandon the tax cuts for the sake of Social
Security and Medicare" (Boston Globe, 5/3).
"Reprinted with
permission from 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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