Bush FY 2007 Budget Proposal Would Raise Federal Deficit by $35B, CBO Estimates

The fiscal year 2007 budget that President Bush has proposed would increase the federal deficit by $35 billion this year, with proposed spending reductions for Medicare, Medicaid and other programs expected to offset about one-third of the cost of his other proposals, according to a Congressional Budget Office report released on Friday, the New York Times reports (Andrews, New York Times, 3/4). According to CBO, the budget proposal over five years would reduce spending for Medicare by $37 billion and for all entitlement programs by $56 billion. Over 10 years, the budget proposal would reduce spending for Medicare by $138 billion and for all entitlement programs by $184 billion, according to CBO (Cohn, CongressDaily, 3/6). The CBO report also estimates that the budget proposal would increase the federal deficit by $1.2 trillion over the next 10 years. The report does not include military costs for Afghanistan and Iraq after 2006 and "assumes that Congress freezes or cuts the vast majority of discretionary government programs outside of military and domestic security ones," the Times reports (New York Times, 3/4).

Congressional Prospects
Senate Budget Committee Chair Judd Gregg (R-N.H.) and House Budget Committee Chair Jim Nussle (R-Iowa) have said that they support additional spending reductions for entitlement programs, and the committees are expected to mark up the budget proposal on Thursday. However, spending reductions for Medicare "are particularly difficult in the Senate" because Sens. Gordon Smith (R-Ore.) and Olympia Snowe (R-Maine), both moderates, "hold sway" on the Senate Finance Committee, CQ Today reports (Dennis, CQ Today, 3/3). Some Senate Republicans also are "balking" at spending reductions for Medicare, in part because of concerns about their "prospects in this fall's midterm elections," the Times reports (New York Times, 3/4). As a result of expected opposition in the Senate, the House might "opt for a slimmed-down version to preserve negotiating room in conference with the Senate" (CongressDaily, 3/6).

Medical Imaging Services Reimbursements
In related news, 31 groups that represent medical imaging service providers, patients and manufacturers maintain provisions of the FY 2006 budget reconciliation law enacted
last month will limit access to care and discourage the development of new technologies, CQ HealthBeat reports. The law caps the technical component reimbursement for medical imaging services provided in physician offices to the lesser of the Hospital Outpatient Prospective Payment System and the Medicare physician fee schedule, according to the American College of Radiology. In a letter to congressional leaders, the groups write, "This provision singles out imaging services to absorb over one-third of all the Medicare reductions" in the law. CBO estimates that the law will reduce Medicare reimbursements for medical imaging services by $2.8 billion over five years, but ACR estimates that the law will reduce reimbursements by $6 billion over the same period. ACR officials said that the law "will stifle research and development of new technologies that are increasingly replacing more invasive, and often more costly, procedures." In addition, ACR officials said that the law might increase out-of-pocket costs for Medicare beneficiaries. Congress should revise the law before the legislation takes effect in January 2007, ACR officials said (Carey, CQ HealthBeat, 3/3).