President Bush in FY 2008 Budget Will Seek $70B in Savings From Medicare, Medicaid, According to Administration Officials, Lobbyists

President Bush next week is expected to propose more than $70 billion in savings from Medicare and Medicaid over five years, according to administration officials and health care lobbyists, the New York Times reports. The proposed cuts are part of Bush's plan to balance the budget by 2012, beginning with his fiscal year 2008 budget scheduled for release next week. Under Bush's proposal, a greater percentage of Medicare beneficiaries with relatively high incomes would be required to pay more than the standard monthly premium, which currently is $93.50. Administration officials did not provide details about proposed Medicare premium increases. Bush also is "expected to propose freezing Medicare payments to home health agencies and reducing inflation allowance paid to hospitals, nursing homes and other providers," the Times reports. The FY 2008 budget proposal assumes that an 8% Medicare reimbursement cut for doctors scheduled to go into effect next year will not be reversed. Bush also is expected to propose changes to SCHIP to "sharpen its focus on low-income families," possibly by reducing federal payments to states that cover children whose families have incomes that exceed 200% of the federal poverty level, the Times reports. Administration officials said Bush will not propose lowering reimbursements to private Medicare plans.

Analysis, Reaction
"Even some administration officials say they cannot imagine approval of such large cutbacks in a Congress now controlled by Democrats," according to the Times. Anticipated proposals from Sen. Hillary Rodham Clinton (D-N.Y.) and other Democratic lawmakers to expand SCHIP likely would clash with Bush's proposal. House Ways and Means Committee Chair Charles Rangel (D-N.Y.) said, "There is a large area for potential compromise and agreement, but with these latest Medicare proposals, the president is just asking for controversy. He still acts as if Republicans were in complete control and Democrats had lost the election." House Ways and Means Committee ranking member Jim McCrery (R-La.) said, "The current rate of growth in Medicare, fueled by rising health costs and an aging population, is unsustainable. If Congress does not undertake sensible reforms soon, the system will be swamped as the baby boom generation begins to retire. Taxes will rise, benefits will be cut and the entire economy will suffer." American Enterprise Institute economist Joseph Antos said, "The president's budget is an opening bid, the start of negotiations with Democrats over health care and other programs." Hospital lobbyists are planning to fight Bush's proposal. American Hospital Association Executive Vice President Richard Pollack said, "Two-thirds of hospitals already lose money treating Medicare beneficiaries" (Pear, New York Times, 2/2).

Biodefense
In other budget news, a budget omnibus bill that would fund most government agencies for the remainder of FY 2007 that won House approval this week does not include funding for the Biomedical Advanced Research and Development Authority, a new program intended to coordinate vaccines and countermeasures for biological threats (Berger, CQ HealthBeat, 2/1). BARDA, signed into law in December 2006 by Bush, was created to distribute $1.07 billion over two years to biotechnology companies for the development of vaccines and treatments (Kaiser Daily Health Policy Report, 12/20/06). CQ HealthBeat reports that the "absence of funding for BARDA ... is surprising, considering passing BARDA legislation was supposed to be a top priority for Democrats after their electoral victories in November." Laura Caudell, a spokesperson for Sen. Richard Burr (R-N.C.), the bill's primary sponsor, said that Burr was "disappointed." Caudell added, "He believes support for the development of drug and vaccine countermeasures to protect the nation against future threats should be a top priority for Congress." An HHS spokesperson was unavailable for comment. The Senate could add funding for BARDA when it considers the budget resolution next week, or funding could be added in an emergency supplemental spending bill (CQ HealthBeat, 2/1).