USA Today Examines President Bush's Proposed Budget, What Challenges, Including Health Care, Next President Will Face

Main Category: Public Health
Also Included In: Health Insurance / Medical Insurance;  Medicare / Medicaid / SCHIP;  Regulatory Affairs / Drug Approvals
Article Date: 06 Feb 2008 - 7:00 PDT

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President Bush on Monday released a $3.1 trillion fiscal year 2009 budget request that would reduce Medicare spending by $178 billion over five years, the Baltimore Sun reports (Hay Brown, Baltimore Sun, 2/5). Over 10 years, the budget request would reduce Medicare spending by about $560 billion.

The budget request would reduce annual Medicare spending growth from 7% to 5% and save the program $10 trillion over the next 75 years, according to the White House (Godfrey, Wall Street Journal, 2/4). In an effort to reduce Medicare spending growth, the budget request "asks doctors and hospitals to hold the line on what they charge the elderly for medical care" and maintains that "cuts in Medicare can be painless -- even lowering premiums that seniors pay by capping what doctors and hospitals can charge," the Chicago Tribune reports (Silva, Chicago Tribune, 2/5).

According to the Los Angeles Times, a senior Democratic congressional aide estimated that at least $115 billion of the reduction in Medicare spending would result from decreased reimbursement to hospitals, nursing homes and home health agencies, although "hospitals and other providers in traditional Medicare would face the sharpest cuts" (Gosselin, Los Angeles Times, 2/5). The budget request includes few details about some parts of the reduction in Medicare spending, according to the Wall Street Journal. However, the budget request specifies that Medicare reimbursements to physicians and hospitals would decrease by 0.4% each year that general revenue financed 45% or more of the program (Godfrey, Wall Street Journal, 2/4).

Medicare reimbursements to private health insurers that participate in the program would receive "only a light trim" under the budget request, the Los Angeles Times reports (Los Angeles Times, 2/5). The budget request would not reduce subsidies valued at about $150 billion over 10 years for health insurers that participate in Medicare (Godfrey, Wall Street Journal, 2/4).

Medicaid, SCHIP
The budget request would provide $224 billion for Medicaid and SCHIP, with $450 million in outreach grants to help enroll uninsured low-income children in the programs (Wetzstein, Washington Times, 2/5). The budget request would reduce Medicaid spending by $17 billion over five years (Gay Stolberg, New York Times, 2/5). In addition, the budget request would reduce Medicaid spending by almost $47 billion over 10 years (Los Angeles Times, 2/5).

The budget request also would increase SCHIP spending by about $20 billion over five years (Godfrey, Wall Street Journal, 2/1).

Other Health Care Programs
The budget request would increase domestic discretionary spending for health care and other programs by less than 1% (Taylor, AP/Detroit Free Press, 2/4). Under the budget request, HHS discretionary spending would decrease by 2.1% (Chicago Tribune, 2/5).

The budget request would provide $737 billion for HHS that includes $4.4 billion to efforts to protect against bioterrorism and other public health emergencies, $5.7 billion for the Health Resources and Services Administration, $3.3 billion for the Indian Health Service and $3 billion for the Substance Abuse and Mental Health Services Administration. In addition, the budget request would provide $29.3 billion for NIH (Washington Times, 2/5). The budget request would reduce CDC spending by 7% (Los Angeles Times, 2/5). CDC would receive $5.6 billion under the budget request (Washington Times, 2/5). The budget request also would eliminate spending for some health care programs, such as an initiative that trains physicians at children's hospitals (Abramowitz/Weisman, Washington Post, 2/5).

The budget request also would reduce funds for health care programs for veterans, although their "costs have nearly doubled during Bush's tenure," the AP/Free Press reports (AP/Detroit Free Press, 2/4). The budget request would increase health care fees for non-disabled veterans to raise an additional $2.1 billion in revenue over five years (Washington Post, 2/5).

FDA
The budget proposal would provide a "larger-than-average" increase in FDA spending, in part to increase the number of agency inspectors abroad, the AP/Free Press reports (AP/Detroit Free Press, 2/4). Under the budget request, FDA spending would increase by 5.7%, and spending for food safety efforts would increase by 6.8% (Schmit, USA Today, 2/5).

The budget request would provide $2.4 billion in FDA spending that includes $662 million for food safety efforts (Washington Times, 2/5). The budget request estimates that user fees from pharmaceutical and medical device companies would account for $628 million in FDA spending (Corbett Dooren, Wall Street Journal, 2/4).

Bush Administration Comments
HHS Secretary Mike Leavitt said the budget request "reflects our commitment to improving health care for all Americans" and "maintaining sensible stewardship of their tax dollars" (Wayne, CQ Today, 2/4). Leavitt said, "American sensitivity to entitlement warnings has become numbed by a repeated cycle of alarms and inaction," adding, "We're approaching an emergency here. Real change is necessary in the Medicare system, and it's required soon." Leavitt said that the budget request would not reduce Medicare reimbursements for MA plans because "we think Medicare Advantage is a part of the future that will bring Medicare into a place where it can be sustainable" (Reichard, CQ HealthBeat, 2/4).

FDA Chief Operating Officer John Dyer said of the budget request, "It gives us a real good start and lays the groundwork for where we need to go" (Wayne, CQ Today, 2/4).

Acting CMS Administrator Kerry Weems said that the budget request "does not cut spending, it decreases the rate of growth." He added that much of the reduction in Medicare spending under the budget request would target hospitals because "Part A is the trust fund going broke" (CQ HealthBeat, 2/4).

Prospects
The budget request received "condemnation from House Democratic leaders for continuing 'failed' policies and praise from Republican leaders for starting the annual conversation in a fiscally sound manner," CongressDaily reports (Bourge, CongressDaily, 2/4).

According to CQ Today, the budget request "leaves little room for funding boosts for domestic programs favored by Democrats, such as those dealing with ... health care access" (Clarke, CQ Today, 2/4). As a result, congressional "Democrats vowed to ignore most of the threatened cuts to Medicare and other domestic programs," which likely have "little chance of passage" in an election year, USA Today reports (Wolf, USA Today, 2/5).

However, Congress "will probably take action in pressing areas such as Medicare spending," as both "parties agree that rising Medicare costs will put heavy pressure on the nation in coming decades," according to the Journal. "To avoid a drop in Medicare payments to physicians ... Democrats want to decrease payments to other health care providers, including private health insurers that operate in Medicare Advantage," the Journal reports (Lueck et al., Wall Street Journal, 2/5).

Editorials
Several newspapers on Monday published editorials that address health care provisions in the budget request. Summaries appear below.

• Baltimore Sun: The budget request "shows how the continuing war in Iraq and mounting Social Security and Medicare costs are going to make new promises difficult to keep" for presidential candidates, a Sun editorial states. The editorial adds, "Presidential candidates should do the math and explain to voters just how they intend to deal with the soaring" costs "if they are proposing ambitious new federal programs." Presidential candidates "like to talk about change, but they also need to explain how they intend to put the government's financial house in order," the editorial concludes (Baltimore Sun, 2/5).
  
  
• Boston Globe: Bush in "long-range forecasts that are part of the budget ... proposes to extend tax cuts beyond 2011, when they are due to expire, even though the beginnings of the baby boomers' retirement will put unprecedented stress on Medicare," a Globe editorial states. The editorial adds, "Bush estimates that the budget will be balanced by 2012, with the tax cuts in effect." However, to "eliminate the deficits, he had to ... arbitrarily restrain the growth of Medicaid and Medicare," among other proposed spending reductions. The editorial concludes, "The president is setting up his successor for a major fight over restoring tax rates to their 1990s levels to sustain vital federal programs" (Boston Globe, 2/5).
  
  
• New York Times: "Predictably, the big losers in Mr. Bush's budget are domestic-spending programs," which would "either be held flat or cut," and, "more predictably, most of Mr. Bush's touted savings would come from programs intended to protect the country's most vulnerable citizens," a New York Times editorial states. The budget request "would sharply restrain the growth of spending on the huge Medicare health insurance program, in an effort to save some $178 billion over the next five years," in large part by "cutting the annual increases in payments to hospitals, nursing homes and other health care providers that are designed to keep up with the rising costs of caring for Medicare beneficiaries," according to the editorial. The editorial adds, "There is clearly room to restrain the rate of growth in some of these payments," but the "size and duration of the cuts are irresponsible." However, the budget request did not include a reduction in reimbursements for Medicare Advantage plans that "could save Medicare more than $50 billion over five years and $150 billion over 10 years." The editorial concludes, "All of this means that Mr. Bush will leave his successor a daunting list of problems: the ever-rising cost of health care" and the "tens of millions of uninsured," and, because of "Mr. Bush's profligate ways, it also means that the next president will have even less money for solving them" (New York Times, 2/5).
  
  
• USA Today: "In the federal budget, the real money is in the big entitlement programs, such as Social Security and Medicare," and health care, "in particular, is the monster that's eating the federal government, in ever bigger bites," a USA Today editorial states. The editorial adds, "Next year, the government is projected to spend $408 billion on Medicare -- up 90% since 2001," and, as "baby boomers retire, the situation will only worsen." However, "cuts in these areas would involve painful and unpopular decisions," according to the editorial. The editorial states, "The presidential candidates prefer to discuss how they'd expand health insurance coverage, not how they'd control costs" or make the "tough choices that would make a real difference in the bottom line" (USA Today, 2/5).
  
  
• Washington Post: Bush in his first budget request "vowed to 'confront great challenges from which government has too long flinched,' putting Social Security and Medicare on solid financial footing," but the "contrast between then and now could hardly be more sobering," a Post editorial states. The editorial adds, "The explosion in entitlement costs has been left unaddressed and is therefore even more daunting," and "Mr. Bush's legacy will be to have added to the long-term tab with the addition of an expensive Medicare prescription drug benefit." The editorial concludes, "Mr. Bush inherited a potential windfall -- and squandered it," and the "next president will inherit his mess" (Washington Post, 2/5).

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