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House OKs Medicare, Medicaid Cuts

President Bush Says He'll Sign Bill Into Law

WebMD Health News

Feb. 2, 2006 -- The House gave final approval to a $39.5 billion budget-cutting package Wednesday, clearing the way for President Bush to sign into law approximately $15 billion in cuts to Medicare and Medicaid over the next five years.

The bill passed the 435-member House by just two votes after several moderate Republicans gave up previous support for it and voted "nay." But GOP leaders worked hard for the cuts as a first step to reining in entitlement spending that they said threatens to overwhelm the federal budget.

A nearly identical bill passed the House on Dec. 19 by a 212 to 206 vote. But it was returned to the House after changes made in the Senate forced re-approval in the House. Wednesday the bill passed by a narrower 216 to 214 margin.

The bill trims an estimated $6.9 billion for the Medicaid health program for the poor by giving states more flexibility to pare back benefits and charge higher co-payments for services. It also cuts some government payments for prescription drugs.

Supporters said the savings were key to controlling the growth of Medicaid, which is expected to expand at more than 7% per year over the next decade.

"The program has grown so excessively that it is unsustainable in its current form," said Rep. Joe Barton (R-Texas), who leads the House Energy and Commerce committee, with jurisdiction over Medicaid.

The bill also cuts back Medicare by an estimated $6.4 billion over five years, while at the same time stopping a planned cut in the program's payments to doctors. Democrats sharply criticized the cuts, some of which are made up by increases in beneficiaries' outpatient premiums.

Democrats Lash Out

Democrats also attacked Republicans for removing Senate provisions that would have achieved $22 billion in Medicare savings by cutting back on excessive payments to insurance companies and eliminating a monetary fund used to lure the insurance plans toward carrying Medicare benefits.

Rep. John Dingell (D-Mich.) chastised Republicans for moving to raise out-of-pocket health costs for some Medicare and Medicaid patients while declining to cut industry subsidies. "This is a product of special interest lobbying," says Dingell, member of the Energy and Commerce Committee. "They sweated it out of the hides of the poor and the unfortunate."

No Democrats voted for the bill.

A report from the Congressional Budget Office concluded that the bill would achieve savings in part by discouraging Medicaid beneficiaries from using health services.

Doctors' groups praised the bill for stopping a planned 4.4% cut in doctors' payments. Instead, payments were frozen at last year's level.

But the bill was strongly opposed by consumer health groups and the powerful seniors' group AARP.

"Those depending on Medicaid as their health care safety net will see a significant increase in their out-of-pocket expenses and, in exchange, will receive even fewer benefits," says Ron Pollack, executive director of the consumer health group Families USA.

In a statement following the vote, President Bush said he would sign the measure. Bush said the bill will curb spending on entitlement program "for the first time in years."

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