Bush Budget: Cut Medicare and Medicaid Growth Rate

MONDAY, Feb. 5 (HealthDay News) -- President Bush's proposed $2.9 trillion federal budget, unveiled Monday, calls for health care spending cuts, including a major five-year reduction in Medicare expenditures to slow the program's annual growth rate from 6.5 percent to 5.6 percent.

The proposed total cuts of $78 billion for Medicare and Medicaid -- the federal health insurance programs for the elderly and lower-income Americans, respectively -- are part of Bush's plan to eliminate the federal deficit by 2012. However, Medicare spending would increase nearly $454 billion in 2008, an increase of $28 billion over this year, before the proposed reductions take effect.

The total 2008 budget for federal health care, administered by the U.S. Department of Health and Human Services, would be nearly $700 billion for the fiscal year that begins Oct. 1, an increase of more than $28 billion over 2007. Medicare makes up 55.4 percent of the HHS budget, while Medicaid accounts for 29 percent.

"The budget we are releasing today builds on our past successes and continues to invest in the future," HHS Secretary Mike Leavitt said in a prepared statement. "It sets out an aggressive, yet responsible, budget that funds our priorities and helps sustain our long-term commitment to seniors and low-income Americans. We are serving our citizens with compassion while maintaining sensible stewardship of their tax dollars."

Under the proposed budget, however, more Medicare beneficiaries would have to pay higher premiums for coverage of prescription drugs and doctor services,The New York Timesreported Monday.

Currently, married couples who earn more than $160,000 and single people who earn more than $80,000 have to pay higher Medicare premiums for doctors' services. In his budget proposal, Bush wants a similar surcharge for the new prescription drug benefit, which took effect last year.

Bush is also proposing to "eliminate annual indexing of income thresholds," a move that would result in more Medicare beneficiaries eventually having to pay higher premiums, theTimesreported.

It's expected the changes would bring in $10 billion more to the federal government over the next five years.

But now that Democrats control both houses of Congress, one health-care expert said it was unlikely there would be much, if any, change to the existing Medicare program.

"Increases in Medicare that would increase payments for poor people would be humanely and financially counterproductive," said Robert Hayes, president of the advocacy group Medicare Rights Center. "But we would expect Congress to reject that," he added.

Hayes said he thought any cuts in Medicare reimbursements would come at the expense of the insurance industry and pharmaceutical companies, as Congress mandates lower drug costs for Medicare recipients.

Planned Parenthood Federation of America (PPFA) criticized Bush's budget for proposing cuts to Medicaid. The budget proposal also doesn't increase funding for Title X, which provides access to contraception for low-income women and couples, the group said.