HHS budget up $4 billion, Medicare cut

The President's Fiscal Year 2014 Budget proposal is delivered to the Senate Budget Committee and distributed to staff, in Washington DC on April 10, 2013. UPI/Molly Riley
The President's Fiscal Year 2014 Budget proposal is delivered to the Senate Budget Committee and distributed to staff, in Washington DC on April 10, 2013. UPI/Molly Riley | License Photo

WASHINGTON, April 10 (UPI) -- U.S. President Obama added nearly $4 billion in his proposed 2014 budget Wednesday to fund healthcare exchanges, food safety and expanded preschool.

The proposed 2014 budget provides $80 billion in discretionary funding for the U.S. Department of Health and Human Services -- $3.9 billion above the 2012 enacted level. No budget was approved for 2013, so 2012 levels were maintained.


The new budget calls for $370 billion in Medicare spending cuts -- over 10 years -- by negotiating better prescription drug prices, reducing management costs and costs to hospitals, increasing enforcement to reduce fraud and having higher-income beneficiaries pay more.

The budget calls for increases in premiums for those with high incomes for Medicare Part B -- outpatient medical service -- and Part D -- outpatient prescription drugs. For example, billionaire Warren Buffett and a retired autoworker pay the same for Medicare Parts B and D now, but the budget raises the cost of Medicare for high earners an estimated $580 billion over 10 years.

However, by combining Medicare deductibles for hospital and doctor's visits, all beneficiaries might pay more by having to pay a single $500 deductible, instead of a Part A hospital deductible of $1,184 and Part B outpatient deductible of $147 each year.


The budget provides funding for the implementation of the Affordable Care Act's exchanges and the delivery of premium tax credits, the cost sharing assistance to make coverage affordable and increased support for states for expanded Medicaid coverage for the working poor.

The Affordable Care Act, goes into effect Jan. 1, 2014, but the exchanges should be in place by Oct. 1, 2013.

Healthcare reform was designed to be revenue neutral, meaning the additional costs are paid for via program savings and increases in fees such as those for medical devices or indoor suntanning.

For example, the budget cuts direct healthcare programs such as immunizations and cancer screenings because these services for the uninsured and under-insured will be financed via new insurance coverage and increased reimbursements for safety net providers in 2014.

Hospital reimbursements are lowered because they will have fewer uninsured patients to care for in emergency rooms because more patients will have health insurance.

In addition, cuts to public health departments and community based organizations will be offset by being able to bill third-party payers for HIV testing, immunizations and substance abuse treatment.

The budget authorizes the Federal Trade Commission to block "pay for delay" deals -- brand-name drug manufacturers pay generic suppliers to put off releasing generic versions of medications -- for an estimated savings of $11 billion over 10 years.


The budget invests $1.4 billion in new Early Head Start-Child Care Partnerships. This increase in spending is supposed to be offset by an increase in the tobacco tax.

The funding for the U.S. Food and Drug Administration was increased by $820 million to improve food and drug import safety.

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