Medicaid, Medicare Growth to Slow

By Peter Baker
Washington Post Staff Writer
Thursday, February 9, 2006

MANCHESTER, N.H., Feb. 8 -- President Bush signed legislation Wednesday to roll back entitlement spending for the first time since he took office, vowing to restrain the explosive growth of benefits programs and firing back at Democrats who labeled his plans "immoral."

Promising to "bring fiscal sanity" to Washington, Bush argued that the nation must curtail programs such as Medicare and Medicaid to control a budget deficit that has soared to records on his watch. But he maintained that his "rational reforms" targeted fraud and abuse while sparing recipients much pain.

The legislation, which Republicans called the "Deficit Reduction Act of 2005," pares spending for Medicaid, the health program for the indigent, and Medicare, the health program for the elderly.

Without naming him, Bush rebutted criticism by Senate Minority Leader Harry M. Reid (D-Nev.). "People talked about how the decision to reform Medicaid was immoral," Bush said. "Well, it's not immoral to make sure that prescription drug pharmacists don't overcharge the system." Nor is it immoral, he said, to stop recipients from transferring assets to children to make themselves eligible for more benefits: "We're able to keep the commitment to the poor."

Bush rejected the notion that he was cutting Medicare, saying his proposals would allow it to grow, just not as fast. "People call it a cut in Medicare," he told a business group here. "That's not a cut. It's slowing down the rate of growth. It's the difference between slowing your car down to go the speed limit or putting your car in reverse."

Bush's trip to New Hampshire, one of the nation's most fiscally conservative states and the home of Senate Budget Committee Chairman Judd Gregg (R), launched a difficult bid to persuade Congress to curb entitlement spending further in an election year.

Just how difficult was made clear by the tortured path of the bill he signed later at the White House. The legislation, aimed at paring Medicaid and other programs by $40 billion over five years and the first such move since 1997, would have failed had a single vote changed in either the House or the Senate. Vice President Cheney had to cut short a trip December to provide the tie-breaking vote in the Senate, and it squeaked through the House last week, 216 to 214.

The legislation requires wealthier Medicare recipients to pay higher premiums for coverage while reducing payments for Medicaid prescription drug benefits to combat inflated markups and tightening rules that allowed assets to be transferred to children to qualify for benefits.

The budget Bush unveiled Monday attempts to build on that, slicing an additional $65 billion from formula-driven entitlement spending over five years, with $36 billion coming from Medicare. Bush said it would still allow the program to grow 7.7 percent a year, compared with 8.1 percent without his changes. Even with the scaled-back spending, the administration projected the budget deficit to rise to an all-time high of $423 billion this year and estimated it at $354 billion next year not counting more anticipated costs of the Iraq war.

Bush found himself under attack for his fiscal policies. He was greeted by an editorial in the conservative Manchester Union Leader asserting he had "squandered the opportunity" to make more meaningful changes to entitlements.

"Mr. President, you are not fooling anyone," the editorial said. "Stop these short-term political games and give us a budget that brings federal spending down to a sustainable level. Don't let the American people down by passing this problem on to our children."

Democrats attacked from the other side, with Reid issuing a fresh denunciation of what he called "immoral and irresponsible budget policies." Sen. Edward M. Kennedy (D-Mass.) said: "If you're already wealthy, then this budget will make you wealthier. But if you're a widow, orphan, or are disabled, you'll see a cut in benefits."

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