President Bush's budget proposal for fiscal year 2008 released yesterday calls for $70 billion in cuts to Medicare and Medicaid over five years.
The $2.9 trillion proposal, which must be approved by Congress to take effect, aims to balance the budget by 2012 through reform to many entitlement programs, while increasing spending for the Iraq War and limiting tax cuts to the wealthy.
According to Department of Health and Human Services Secretary Michael Leavitt, the president's budget includes $700 billion for HHS spending and "reflects fiscally responsible steps to reform and modernize the Medicare program."
Leavitt said the budget includes legislative and administrative proposals to increase government efficiency in paying for services while fostering competition and promoting beneficiary involvement in healthcare decisions.
Rich Umbdenstock, president of the American Hospital Association, said AHA "strongly opposes" the president's provisions.
"[The] budget is devastating news for children, seniors and the disabled who depend on the Medicare and Medicaid programs. The proposed budget includes a tidal wave of cuts that will inflict real damage on hospitals' ability to care for these patients," Umbdenstock said. "America needs policies that shore up these programs, not damage them further."
Umbdenstock said Medicare and Medicaid payments to hospitals are currently "well below" the cost of providing care to patients. "Today's budget does nothing to address these underlying challenges," Umbdenstock said.
Cecil B. Wilson, MD, board chair for the American Medical Association, said physicians face a 20 percent increase in practice costs over the next eight years and the president's proposed 40 percent cuts to physician reimbursement could force some doctors to opt out of Medicare.
Wilson also said that the proposed cuts to the State Children's Health Insurance Program would "tie states' hands by narrowly focusing the program as they work on innovative ways to provide health care coverage for more of the uninsured."
According to Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee, slashing Medicaid and Medicare is not the answer. At a Jan. 25 Senate Budget Committee hearing, Conrad said approximately 5 percent of Medicare beneficiaries are chronically ill or have multiple conditions, yet they account for half of Medicare spending. "If we focused on that category we could both improve healthcare outcomes and save money," Conrad said.
Sen. Judd Gregg (R-NH), ranking member of the Senate Budget Committee, said "The only way that you're going to address this problem is if you look at the programs which are in place, and try to make them affordable for our children at the same time as we allow them to continue to be strong programs for those who are retired."