WASHINGTON, Feb. 6 (UPI) -- The Bush administration's 2008 budget for the Department of Health and Human Services features belt-tightening -- especially for the Medicare and Medicaid programs.
Administration officials said the budget reflects priorities and will help eliminate the federal budget deficit by President Bush's 2012 deadline. But critics say seniors and low-income Americans are being asked to bear the brunt of balancing the budget.
The president's proposal is an "aggressive, yet responsible budget that funds our priorities and helps sustain our long-term commitment to seniors and low-income Americans," Health and Human Services Secretary Michael Leavitt said at a news conference Monday.
Medicare, which covers nearly 45 million seniors, would have a total budget of $454 billion, $28 billion more than last year. But a series of proposed cutbacks would trim the growth rate from 6.5 percent to 5.6 percent over the next five years, a $76 billion reduction.
The program's expenditures are capped at 45 percent of general revenues.
Medicaid, which covers low-income and disabled Americans, is slated for a $25.7 billion decrease over five years.
The State Children's Health Insurance Program -- the federally funded but state-administered program that offers healthcare coverage to low-income children who do not qualify for Medicaid -- will be subject to new restrictions.
Eighteen states extended eligibility to children in families with incomes over 200 percent of the federal poverty line, about $40,000 for a family of four. Under Bush's proposal, those states will face reduced federal matching if they choose to offer coverage to those children or extend coverage to their parents.
To pay for the cuts, Bush's plan limits the growth of provider reimbursement rates and mandates cost-reducing administrative reforms.
It will also require wealthy seniors in Medicare to pay more for coverage than their lower-income counterparts.
Currently, wealthier seniors pay somewhat higher premiums for outpatient services. This would be expanded so that beneficiaries with individual annual incomes over $200,000 pay 75 percent of their premium, compared with just 25 percent for beneficiaries with incomes below $80,000 per year.
A similar system requiring wealthier seniors to pay more would be adopted for Part D, the prescription-drug benefit.
To meet the needs of the uninsured -- including those who would lose government coverage under the proposed cuts -- the administration is focusing on strengthening the individual market, Leslie Norwalk, acting administrator of the Centers for Medicare & Medicaid Services, told United Press International.
States will be allowed to apply for "affordable choices" grants for programs that will help the uninsured buy individual healthcare coverage, she said. Combined with the tax deduction for insurance premiums Bush proposed in his State of the Union address, many uninsured individuals -- regardless of income level -- will be able to afford private health insurance.
"If you can help reduce the price of care overall and make the individual market more robust, individuals can ... get the insurance they need," Norwalk said.
Bush's proposals -- which touch many of the programs important to Democrats and Republicans alike -- may have a rough time getting through Congress. Last year the Republican Congress rejected milder versions of many of the provisions in the budget.
"Rather than acknowledge the will of the American people and incorporate Democratic ideas into his budget in the hope of reaching legislative consensus, Bush reintroduced many of his same old, partisan healthcare schemes," said Rep. Pete Stark, D-Calif., chairman of the House Ways and Means Health Subcommittee.
The cuts will also meet with stiff opposition from healthcare stakeholders.
Doctors and hospitals protested the reduction in what they are paid for providing services.
"Over the next eight years, Medicare payments to physicians will be slashed nearly 40 percent, while practice costs increase about 20 percent," said Cecil Wilson, board chair of the American Medical Association. "Without adequate funding, physicians cannot make needed investments in health information technology and quality improvement, and seniors' access to healthcare is placed at risk."
Medicare beneficiary groups said it is unfair and unwise to make wealthy seniors pay higher premiums.
"Fundamentally, everyone on Medicare has already contributed a means-tested lifetime of payroll taxes," Robert Hayes, president of the Medicare Rights Center, told United Press International.
"The reason Medicare works for older Americans who are poor is because wealthier people with more political influence are also in the system," he said. "This points toward a bifurcated system where healthier, younger and wealthier people will go elsewhere for coverage."
Eliminating insurance middlemen from Medicare would be a better way to save money, he added. "The administration is looking to save money in all the wrong places."
Advocates for the uninsured also criticized Bush's budget.
The administration should be expanding SCHIP, not limiting it, said Ron Pollack, executive director of Families USA, a healthcare consumer advocacy group. The budget's proposed $5 billion increase over the next five years will not be enough to cover existing beneficiaries, let alone add more. And the eligibility limits would bar individuals who need help from receiving it -- individuals who are currently covered in 18 states.
"The administration is trying to pull a fast one," Pollack told UPI. "These are cutbacks."
The individual market is not a good substitute, he added. "Moving people into the individual market is almost always a problem -- it's more expensive than group coverage."
Others, pointing to the high price tag of entitlement programs, applauded Bush's proposals.
"Medicare faces such big, long-run problems (that) the sooner we start doing something the better," Robert Helms, a health economist at the conservative American Enterprise Institute, told UPI. "In the current, fee-for-service system, the only way to achieve savings is to cut down on (provider reimbursement) rates."
The SCHIP eligibility limits, he said, would cause the program to "refocus on the original purpose of SCHIP."
Given Medicare and Medicaid's shaky financial situation, means testing may be the best of a list of bad options available to cut costs, Helms said. "They're going to have to do a lot of things to Medicare. There is no change to the program that doesn't step on someone's toes."
