Health industry cool to Bush budget cuts

[Ron Burgundy]

AP - Health care providers would see their reimbursement rates from the federal government go up less in coming years when they care for the elderly, poor and disabled under President Bush's budget.

The recommendations, if adopted by Congress, would trim Medicare spending by $66 billion over five years. Also, the administration will move to trim another $10 billion in Medicare spending through regulations.

Together, the changes sought for Medicare means the program would grow at a 5.6 percent clip rather than 6.5 percent, Health and Human Services Secretary Mike Leavitt said Monday.

"The program will continue to grow. It will have robust growth," Leavitt said.

Bush also calls for reducing Medicaid spending by about $25 billion over five years. That change would just slightly dent the more than $1.2 trillion the federal government will spend on the program during that span. Congress would have to sign off on about half of the proposed Medicaid savings. The remainder are regulatory changes the administration will pursue.

The two programs account for about $1 out of every $5 spent by the federal government. The president called for smaller reductions last year, and those proposals went nowhere.

Democratic lawmakers were cool to the recommendations. Rep. Pete Stark, D-Calif., said that trimming Medicaid will make it harder for states to fund health care for the poor and the uninsured.

Stark, who oversees the House Ways and Means Committee's health subcommittee, said savings can be achieved by targeting payments to health care providers, but not in the ways that Bush sought.

For example, Stark said that he believes Congress can lower payments to insurance companies that provide managed care for seniors, a concept the administration opposes.

Sen. Max Baucus (news, bio, voting record), D-Mont., chairman of the Senate Finance Committee, noted that the proposed Medicare reductions are more than the president asked from any previous Congress.

Baucus said payments to insurance companies that provide managed care should be on the table when talking about potential spending cuts. He took issue with the changes that Bush seeks for the State Children's Health Insurance Program, which provides health coverage to about 6 million people.

The program cost about $5 billion annually. The president called for an additional $4.2 billion in funding over five years, but Baucus said it may take as much as $15 billion over the same period to maintain current coverage.

"Simply put, Congress must do more to fund the Children's Health Insurance Program than the president suggests here," Baucus said.

Hospitals, nursing homes and other providers say that they can't afford lower payments from the government. They said that the payments won't keep up with the cost of providing health care.

The effect of the budget on providers would differ depending upon the specialty, but almost all would be affected one way or the other. The reimbursement rates for providers increase each year to account for inflation and other factors.

The administration will also be asking wealthier beneficiaries to pay higher premiums. Individuals who make more than $80,000 a year and couples who make more than $160,000 would pay a higher premium for their prescription drug coverage under Medicare Part D.

They already pay higher Medicare premiums for doctor visits. Under the president's proposal, the income threshold would not be indexed to increase at the rate of inflation. As a result, more and more people would fall into that category as inflation pushes incomes upward.

Many of the agencies within Health and Human Services will have to make do with about the same amount of money as they got this year.

"We are serving our citizens with compassion while maintaining sensible stewardship of their tax dollars," Leavitt said.

The budget recommends an estimated $50 million reduction for the Centers for Disease Control and Prevention, which is the principal agency for protecting the health and safety of all Americans. Funding for the agency would total $5.76 billion. Grants to states for bioterrorism preparation would be reduced, and funding remains at current levels for preventing the nation's leading health problems — heart disease and cancer.

Meanwhile, funding for the National Institutes of Health, which oversees medical research, would rise nearly 2 percent to about $28.7 billion.

The president upped his recommendation for the Food and Drug Administration to about $2.1 billion. That's a $106 million increase compared to what he requested last year. The increases focused on strengthening food safety and getting more generic drugs to the market.

Numerous advocacy groups took issue with the president's budget.

"This is not a budget that the nationwide cancer community was hoping for after the president's visit to NIH last month to tout an historic decline in cancer deaths," said Daniel E. Smith of the American Cancer Society.

The AARP's Bill Novelli said the Medicare and Medicaid savings reflect an annual rite in Washington — "piecemeal cuts that threaten to damage critical programs without addressing the fundamental problems that exist in our entire health care system."

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On the Net:

Health and Human Services Department: http://www.hhs.gov

source: http://news.yahoo.com/s/ap/20070205/ap_on_go_pr_wh/budget_health [link]