Bush Budget Chops $101.5 Billion from Medicare, Medicaid

Feb. 5, 2007 - President Bush on Monday released a $2.8 trillion fiscal year 2008 budget proposal that includes $101.5 billion in savings from Medicare and Medicaid over five years, the New York Times reports. The budget includes more than $78.6 billion in Medicare and Medicaid savings, and, according to the New York Times, it also includes revisions to federal regulations for an additional $22.9 billion in savings from the two programs.

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The proposal would "eliminate annual indexing on income thresholds" to require a larger number of higher-income Medicare beneficiaries to pay increased premiums in future years (Pear, New York Times, 2/4).

Currently, individual Medicare beneficiaries with annual incomes that exceed $80,000 and married couples with annual incomes that exceed $160,000 pay increased premiums (Crutsinger, AP/Akron Beacon Journal, 2/5).

In addition, the proposal would implement a premium based on income in the Medicare prescription drug benefit. The two provisions would result in an estimated $10.2 billion in Medicare savings over five years. Bush "contends that he can make the rule changes without any action by Congress," but "Congress could try to block some or all of the changes," the Times reports.

The proposal also would make permanent reductions in Medicare reimbursements to health care providers. The proposal would include $25.7 billion in Medicaid savings over five years, $12.7 billion of which would result from revisions to federal regulations. Bush said, "Our budget reduces Medicare's average annual growth rate over five years to 5.6% from 6.5%" and reduces the average annual Medicaid growth rate to 7.1% from 7.3%.

Other Health Programs
The proposal would provide $5.4 billion to fund SCHIP in FY 2008, a 4% decrease from FY 2007. In addition, the proposal includes an "additional allotment" of $5 billion for SCHIP over five years -- less than half of the amount required to maintain coverage for current beneficiaries.

Bush has said that he seeks to return to the "original objective" of SCHIP: to provide health insurance for children in families with annual incomes less than 200% of the federal poverty level.

Budget documents "note that 16 states cover children above that level, and 'one state, New Jersey, covers children up to 350% of the federal poverty level,'" the Times reports.

The proposal would provide $28.9 billion to fund biomedical research in FY 2008, an increase of less than 1% from FY 2007. Under the proposal, funds for the National Cancer Institute would decrease by $9 million to $4.8 billion in FY 2008. The proposal also would establish a new $17 million program to promote "healthy behavior" among adolescents. However, the proposal "asks Congress to eliminate the preventive health services block grant, which provides $99 million a year to help states prevent obesity and other chronic conditions," the Times reports (New York Times, 2/4).

>> The budget proposal is available online.

Comments
Bush on Saturday said that lawmakers must take action to reduce Medicare and Medicaid growth. "I'm under no illusions of how hard it's going to be," Bush said, adding, "The only thing I want to share with you is ... my desire to see if we can't work together to get it done."

Senate Budget Committee Chair Kent Conrad (D-N.D.) said, "This budget is plunging us toward a cliff that will take us right into a chasm of debt." Conrad added, "In real terms, Bush's plan is going to have very substantial cuts by the fifth year of this budget in all of the domestic priorities from education and health care to law enforcement and veterans.

With Democrats in control, we will have different priorities" (AP/Akron Beacon Journal, 2/5). Sen. Hillary Rodham Clinton (D-N.Y.) said that the "president's answer to our health care crisis is to cut the already strained health care safety net" (Havemann, Los Angeles Times, 2/3)

FY 2007 Omnibus Appropriations Bill – Increases for veterans, health care
In other budget news, Senate Majority Leader Harry Reid (D-Nev.) this week might move the $463.5 billion FY 2007 omnibus appropriations bill that the House approved last week to the Senate floor (CongressDaily, 2/5).

The House on Jan. 31 voted 286-140 to approve the bill, which includes increased funds for NIH, health care for veterans and other health programs.

The 109th Congress last year approved two of 11 FY 2007 appropriations bills and passed a continuing resolution to fund most federal agencies at FY 2006 levels until Feb. 15. The omnibus appropriations bill -- which would fund most federal agencies until Sept. 30, the end of FY 2007 -- would increase funds for NIH by $619 million over FY 2006 levels.

The legislation also would increase funds for health care for veterans by $3.6 billion. In addition, the legislation would increase funds for health education and education programs by $2.3 billion and funds for community health centers by $207 million.

The Senate must pass the legislation by Feb. 15 to avoid a partial shutdown of the federal government, and the White House has indicated that Bush would sign the bill (Kaiser Daily Health Policy Report, 2/1). "If the Senate bogs down, a short-term CR might be required, but Democratic leaders are loathe to drag out the process any longer and might try to limit amendments," CongressDaily reports (CongressDaily, 2/5).

Editorial
The omnibus appropriations bill is "that rare piece of legislative sausage devoid of expensive, toothsome pork" because the House last week "killed thousands of earmarks," a New York Times editorial states. The editorial adds that the House "has made the most of a sorry budgetary business" with legislation that would increase funds for health care for veterans (New York Times, 2/3).

Broadcast Coverage
>> Stephen McMillin, deputy director of the Office of Management and Budget, is scheduled to discuss the Bush budget proposal in an "Ask the White House" online chat on Tuesday at 2 p.m. ET. Questions can be submitted online. A transcript will be available online after the chat.

>>In addition, Cokie Roberts, a political commentator for NPR's "Morning Edition," discussed health care and other provisions in the proposal (Roberts, "Morning Edition," NPR, 2/5). Audio of the segment is available online.

"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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