Fiscal Year 2006 Federal Budget Resolution Could Result in Reduction in Funds for Medicare

Following Congress' approval of a federal budget resolution that calls for a $10 billion reduction in Medicaid funding over five years, "heads in Washington" are "turn[ing] in the direction of Medicare" because of the "way the budget document is structured," CongressDaily reports. The budget resolution calls for reductions to Medicaid but states that lawmakers can enact savings in any mandatory programs under their jurisdiction to achieve their designated funding-reduction targets.

A spokesperson for AARP said that $10 billion in Medicaid cuts "will be hard to find, so the tendency is to look at other programs and say, 'Where else can we get the savings from?'"

According to CongressDaily, both the Senate Finance Committee and the House Energy and Commerce Committee -- which oversee Medicare for the Senate and House and must find $10 billion and $15 billion in total savings, respectively -- could look to Medicare physician fees as a source of savings.

Some lawmakers would like to increase physician reimbursement payments, which are slated to decrease by 5% annually through 2012 after the current fee schedule expires in 2006, but some advocates say the new budget agreement could complicate efforts to fund the reimbursement increase. The American Medical Association said it will "continue to work to end proposed cuts to Medicare physician payments" if they become the target of committees' funding-reduction efforts.

In addition, hospitals could be targeted for Medicare cuts, although the House Ways and Means Committee, which oversees Medicare hospital insurance, needs to find only $1 billion in savings.

Regardless, some say that it is "premature" to incite "Medicare-cutting panic." According to Jim Horney, a senior fellow at the Center on Budget and Policy Priorities, lawmakers have indicated repeatedly that the funding reductions will come largely from Medicaid. In addition, CongressDaily reports that reducing Medicare funding would be a politically unpopular move because Medicare beneficiaries are a "major voting bloc" (Heil, CongressDaily, 5/2).