Bush Seeks Big Medicare and Medicaid Saving - New York Times
The New York Times

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February 2, 2007
Bush Seeks Big Medicare and Medicaid Saving
By
ROBERT PEAR

WASHINGTON, Feb. 1 - President Bush will ask Congress in his budget next
week to squeeze more than $70 billion of savings from Medicare and Medicaid
over
the next five years, administration officials and health care lobbyists said
Thursday.

The proposals, part of a White House plan to balance the budget by 2012, set
the stage for a battle with Congress over entitlement spending. Even some
administration
officials say they cannot imagine approval of such large cutbacks in a
Congress now controlled by Democrats.

Mr. Bush is also expected to propose changes in the Children's Health
Insurance Program to sharpen its focus on low-income families. The changes
could reduce
federal payments to states that cover children with family incomes exceeding
twice the poverty level. Under federal guidelines, a family of four is
considered
poor if its annual income is less than $20,650.

The child health proposal, like those for Medicare and Medicaid, is likely
to touch off a fight on Capitol Hill. Senator
Hillary Rodham Clinton
of New York and other Democrats are seeking major expansions of the
children's health program, though they have not said how they would pay for
the changes.

One measure of the political difficulty facing the president's plan for
Medicare and Medicaid is that he sought $20 billion less in savings from the
two
programs last year, when
Republicans
controlled Congress, and few of those proposals were adopted.

Representative
Charles B. Rangel
, the New York Democrat who heads the House Ways and Means Committee, said
Thursday: "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."

Mr. Bush has repeatedly said that Medicare has serious long-term financial
problems, and many experts share his concern.

"If you want to balance the budget eventually and you do not want tax
increases," said Joseph R. Antos, an economist at the American Enterprise
Institute,
"you have no choice but to propose substantial reductions in Medicare. The
president's budget is an opening bid, the start of negotiations with
Democrats
over health care and other programs."

Taken together, Medicare and Medicaid cover more than one in four Americans.
Federal spending for the two programs totaled $554 billion last year, or
about
21 percent of all federal spending - a little more than Social Security.
With no change in existing law, spending on the two health programs is
expected
to rise at a brisk pace, averaging more than 7 percent a year in the next
decade.

Representative Jim McCrery of Louisiana, the senior Republican on the Ways
and Means Committee, 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."

Under the president's plan, some Medicare beneficiaries would shoulder added
costs. At present, about 4 percent of the 43 million beneficiaries must pay
more than the standard monthly premium - it is $93.50 this year - because
they have high incomes: more than $80,000 for individuals and $160,000 for
married
couples. The president's budget would require more people to pay the higher
premiums, but administration officials would not immediately provide
details.

Most of the proposed savings, however, would come from health care
providers. Mr. Bush is expected to propose freezing Medicare payments to
home health
agencies and reducing the inflation allowance paid to hospitals, nursing
homes and other providers.

Hospitals plan to fight the president with lobbying and advertising.
"Two-thirds of hospitals already lose money treating Medicare
beneficiaries," said
Richard J. Pollack, executive vice president of the American Hospital
Association.

The president's budget also assumes that Medicare payments to doctors will
be cut at least 8 percent next year, as provided under a formula in existing
law.

Administration officials said Mr. Bush would not try to curb payments to
private managed care plans, which currently enroll more than eight million
Medicare
beneficiaries. But many Democrats in Congress want to do so, because, they
maintain, Medicare overpays the plans, which they see as a step toward
privatizing
the program.

Insurance companies are mobilizing beneficiaries to lobby against any cuts
in Medicare payments to private plans. Mohit M. Ghose, a spokesman for
America's
Health Insurance Plans, a trade group, said, "Any cuts would take away
benefits from millions of low-income people and members of minority groups,
who
enroll in private plans because they cannot afford the high out-of-pocket
costs in the traditional Medicare program."

Budget Asks Rise in Pell Grants

The president's budget will propose raising the maximum Pell grant - the
federal grant for low- and middle-income students to attend college - to
$4,600,
Education Secretary Margaret Spellings announced Thursday.

The announcement followed by only a day the Democratic-controlled House's
passage of a $260 increase in the current maximum grant, to $4,310, under a
catchall
spending bill needed to address budget matters remaining from last year.

Ms. Spellings's announcement suggests that the administration will try to
emphasize access to education, an issue that Democrats have seized upon as
the
cost and debt burden of higher education continue to rise. Democrats have
already proposed legislation in the Senate that, exceeding the
administration's
plan, calls for an increase to $5,100.

The last substantial increase was in 2001.

Copyright 2007
The New York Times Company

Posted by Miriam V.