Experts: Obama’s Budget Likely To Forgo Major Changes to Medicare
Although President Obama has signaled a willingness to make some significant changes to Medicare as part of a deficit-reduction deal, few observers expect his fiscal year 2014 budget proposal to include major structural changes to the program, Modern Healthcare reports.
Obama is expected to release the budget plan on Wednesday.
Some experts say the roughly $400 billion in Medicare reductions over 10 years expected in Obama's FY 2014 budget proposal will focus on providers and likely will not include major structural changes sought by GOP leaders, such as expanding means testing for higher-income beneficiaries, combining hospital and physician services under one Medicare payment structure and adding a surcharge to Medigap plans. Experts also note that large-scale structural reforms are contingent upon Republicans agreeing to tax increases.
Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, said he expects that Obama's cost-sharing proposals will be similar to those included in last year's budget, such as:
- Adding a $100 home health care copayment per episode for some beneficiaries;
- Creating a surcharge for new Medigap plans;
- Increasing Medicare Part B deductibles for new beneficiaries in 2017, 2019 and 2021; and
- Requiring Medicaid-style rebates for Medicare Part D.
Park and advocacy groups from both sides say Obama likely will not include in his budget plan a proposal to combine Medicare parts A and B and use some of the savings to create a limit in catastrophic costs for Medicare beneficiaries.
Meanwhile, experts say Obama's proposal could include proposals for Medicaid that would bolster programs aimed at fighting fraud and abuse, apply competitive bidding to durable medical equipment or slowly lower Medicaid provider taxes that states use to operate their Medicaid programs. However, some sources say the program is not likely to face any cuts (Zigmond, Modern Healthcare, 4/8).
Democrats, Advocacy Groups Place Hopes in GOP
Despite the effort to protect vulnerable U.S. residents, some Democrats and liberal advocacy groups continue to oppose Obama's expected plan to cut entitlement programs and are placing their hopes in the GOP's stance against higher taxes, The Hill reports.
According to The Hill, Republicans are the main driving force behind Obama putting entitlement cuts on the table, but the chances of those reductions going into effect are tied to an unlikely scenario in which Republicans accept calls to raise taxes.
Rep. RaÃºl Grijalva (D-Ariz.) said that Republicans "won't give [on new revenues], and that just creates the situation where nothing moves." He added, "And if nothing moves, then you can't put Medicare or Social Security on the table. ... It's an interesting way to look at it, but there might be more than a kernel of truth in that."
However, some Democrats are concerned Republicans will "call [Obama's] bluff" and agree to some tax increases to put entitlement benefit cuts into effect.
Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said, "Itâs a pretty sad commentary," adding, "[I]f we're now counting on Republican intransigence to protect us from cuts in Medicare and Social Security" (Lillis, The Hill, 4/9).
Obama's FY 2014 Budget Proposal Would Boost Mental Health Programs
In related news, Obama's FY 2014 budget proposal is expected to include $235 million in funding for new mental health programs and other initiatives aimed at early detection of mental health issues in children, according to an anonymous administration official, the Washington Post's "Wonkblog" reports.
According to the official, Obama's spending blueprint will propose $130 million for programs that train teachers and other adults to detect early warning signs of mental illness, including $55 million for a new program called Protect AWARE that will help states and local school districts fund such initiatives and collect data on the programs. Meanwhile, $50 million would be used to train mental health specialists who work in schools.
The budget proposal also is expected to include an additional $25 million to help schools with high rates of violence to test prevention strategies and support children who have experienced trauma (Kliff, "Wonkblog," Washington Post, 4/9).
Obama's Plan Expected To Propose Slowing Growth of Social Security, Other Benefits
President Obama's fiscal year 2014 spending blueprint -- which will be released Wednesday -- is expected to propose slowing the growth of Social Security and other federal benefits, but will include protections for a broad range of U.S. residents, including low-income elderly residents and veterans, the Wall Street Journal reports (McKinnon, Wall Street Journal, 4/8).
The provision -- known as chained CPI -- would create a new way of calculating inflation increases that would result in slower cost of living benefit increases for elderly U.S. residents who receive federal benefits.
White House officials have said the proposal would include "protections for vulnerable" U.S. residents, but few details have been released on the provision. An individual familiar with the plan on Monday told the Post that the protections would include low-income elderly U.S. residents and veterans. Meanwhile, Obama senior adviser Dan Pfeiffer on Sunday said the protections would cover "the oldest seniors."
Some Democrats who oppose the change have said they would consider the option as a way to curb the growth of spending on federal benefits if it was carefully written to protect certain groups and linked to an increase in taxes on higher-income individuals.However, other critics note that even with added protections the plan does not take into account that elderly U.S. residents' spend more on fast-growing health care costs. Further, critics say that the reduction in benefits would increase over time. For example, AARP estimates that an individual who is age 65 in 2013 who receives $15,190 annually in Social Security benefits would receive $2,135 less in 2038 -- at age 90 -- under the chained CPI approach than under the current formula (Wall Street Journal, 4/8). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.