President’s Budget Plan Seeks Savings in Medicare, Medicaid

President Bush on Monday released a $2.8 trillion fiscal year 2008 budget proposal that includes $101.5 billion in savings from Medicare and Medicaid over five years, the New York Times reports. The budget includes about $78.6 billion in Medicare and Medicaid savings and revisions to federal regulations for an additional $22.9 billion in savings from the programs.

The proposal would "eliminate annual indexing on income thresholds" to require a larger number of higher-income Medicare beneficiaries to pay increased premiums in future years (Pear, New York Times, 2/4). Currently, individual Medicare beneficiaries with annual incomes that exceed $80,000 and married couples with annual incomes that exceed $160,000 pay increased premiums (Crutsinger, AP/Akron Beacon Journal, 2/5).

In addition, the proposal would implement a premium based on income in the Medicare prescription drug benefit. The two provisions would result in an estimated $10.2 billion in Medicare savings over five years.

Bush "contends that he can make the rule changes without any action by Congress," but "Congress could try to block some or all of the changes," the Times reports. The proposal also would make permanent reductions in Medicare reimbursements to health care providers. The proposal would include $25.7 billion in Medicaid savings over five years, $12.7 billion of which would result from revisions to federal regulations.

Bush said, "Our budget reduces Medicare's average annual growth rate over five years to 5.6% from 6.5%" and reduces the average annual Medicaid growth rate to 7.1% from 7.3%.

The proposal would provide $5.4 billion to fund SCHIP in FY 2008, a 4% decrease from FY 2007. In addition, the proposal includes an "additional allotment" of $5 billion for SCHIP over five years -- less than half of the amount required to maintain coverage for current beneficiaries.

Bush has said that he seeks to return to the "original objective" of SCHIP: to provide health insurance for children in families with annual incomes less than 200% of the federal poverty level. Budget documents "note that 16 states cover children above that level, and 'one state, New Jersey, covers children up to 350% of the federal poverty level,'" the Times reports.

The proposal would provide $28.9 billion to fund biomedical research in FY 2008, an increase of less than 1% from FY 2007. Under the proposal, funds for the National Cancer Institute would decrease by $9 million to $4.8 billion in FY 2008.

The proposal also would establish a new $17 million program to promote "healthy behavior" among adolescents. However, the proposal "asks Congress to eliminate the preventive health services block grant, which provides $99 million a year to help states prevent obesity and other chronic conditions," the Times reports (New York Times, 2/4).

Bush on Saturday said that lawmakers must take action to reduce Medicare and Medicaid growth. "I'm under no illusions of how hard it's going to be," Bush said, adding, "The only thing I want to share with you is ... my desire to see if we can't work together to get it done."

Senate Budget Committee Chair Kent Conrad (D-N.D.) said, "This budget is plunging us toward a cliff that will take us right into a chasm of debt." Conrad added, "In real terms, Bush's plan is going to have very substantial cuts by the fifth year of this budget in all of the domestic priorities from education and health care to law enforcement and veterans. With Democrats in control, we will have different priorities" (AP/Akron Beacon Journal, 2/5).

Sen. Hillary Rodham Clinton (D-N.Y.) said that the "president's answer to our health care crisis is to cut the already strained health care safety net" (Havemann, Los Angeles Times, 2/3).

Stephen McMillin, deputy director of the Office of Management and Budget, is scheduled to discuss the Bush budget proposal in an "Ask the White House" online chat on Tuesday at 2 p.m. ET. Questions can be submitted online.

A transcript will be available online after the chat.

In addition, Cokie Roberts, a political commentator for NPR's "Morning Edition," discussed health care and other provisions in the proposal (Roberts, "Morning Edition," NPR, 2/5). Audio of the segment is available online.