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Medicare Faces Cuts in Bush Budget

$36 Billion Cut Could Face Tough Sell in Congress

Medicare Cuts continued...

"There's billions of dollars of potential savings there," he said. "There's no question there's got to be savings but the question is where they should come from."

Medicare is financed by a combination of taxpayer money and money paid by beneficiaries in the form of deductibles, premiums, and a variety of other cost-sharing arrangements.

The White House plan proposes to reduce all Medicare provider payments by 0.4% if the government's share reaches 45% of Medicare's total cost. Current government projections put the date of the threshold at 2017.

The administration also wants to accelerate outpatient premium increases paid by higher-income Medicare beneficiaries making more than $80,000 per person annually.

Medicare director Mark B. McClellan said the cuts were "incremental" and would help protect Medicare's long-term solvency. "What we'd like to do is take those steps now," he said.

Capitol Hill Reaction

Both Republicans and Democrats predicted that President Bush would have a tough time convincing Congress to support more Medicare and Medicaid cuts in an election year.

Sen. Charles E. Grassley (R-Iowa), chair of the Finance Committee, pointed out that Congress just got through a big political fight over Medicare and Medicaid cuts passed last week.

"Any more reductions of a significant scope could be difficult this year," he said.

"I don't think it's going to happen in the coming year," said Rep. John Spratt (D-S.C.), the senior Democrat on the House Budget Committee.

Some lobbying groups sharply criticized the plans.

Kirsten Sloan, chief health care lobbyist for AARP, says the budget would achieve Medicare savings by moving costs from the federal government to individual beneficiaries. "It isn't a way to control health care costs, it's a way to shift costs onto someone else," she tells WebMD.

Sloan says the moves were akin to a cap on federal support for the program. She says AARP would now lean on lawmakers to oppose the 45% spending threshold as well as the premium boost.

Other Cuts

The White House budget also made requests for several other popular health programs, including:

  • A $179 million cut to in the budget for the CDC. Most of the cuts would curb new building construction at the agency, officials say.
  • A flat funding request for the National Institutes of Health. The Bush administration proposes to again spend $28.6 billion on research at the agency, including a $40 million spending cut at the National Cancer Institute.
  • $2.3 billion to fund the federal preparedness against pandemic influenza, including bird flu.
  • A $188 million program to increase HIV/AIDS testing among minorities and boost funding for anti-AIDS medications.

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