Billions in Tax Cuts for The Elite; Cuts in Medical Care for Elderly and Poor

Bush’s proposed health-care cuts spark debate

Some see salvation, others see doom for Medicare and Medicaid

By Christopher Lee and Lori Montgomery

Updated: 10:43 p.m. CT Feb 10, 2007

Depending on whom you ask, the budget that President Bush proposed last week will save or sink Medicare and Medicaid, two popular programs that, along with Social Security, threaten to swamp the federal budget as the baby-boom generation retires.

Bush, citing the need for fiscal responsibility, proposed reducing by $101 billion over five years the spending growth of the two health programs, which serve 93 million people and will cost the government $564 billion this year. One of his most controversial ideas is to charge wealthier seniors higher Medicare premiums for the second time in the program's 41-year history.

Budget experts call the plan one of the most significant efforts in years to rein in federal spending on entitlement programs. But health-care providers and advocates for beneficiaries call the proposed cuts arbitrary and say they would exact an unaffordable toll on a big part of the nation's health-care system.

"It is very, very significant that they're willing to put on the table some specific proposals," said Comptroller General David M. Walker, who frequently warns of the government's troubled long-term fiscal outlook.

Stuart M. Butler, a budget expert at the conservative Heritage Foundation, said, "It's the only way forward in dealing with a huge unfunded obligation that right now is being left in the lap of our children and grandchildren."

Sacrificing Medicare for the war?
Others see the proposals as likely to do more harm than good, and many congressional Democrats have accused Bush of trying to pay for the Iraq war and his signature tax cuts by reducing health care for elderly and poor Americans.

"There are problems in terms of future financing of Medicare, and those need to be dealt with in a comprehensive way," said Charles N. Kahn III, president of the Federation of American Hospitals. "To think we're going to solve all those problems by simply saying, 'We're not going to pay those who provide service what we need to pay them' is more than problematic. . . . This has more to do with the balanced budget and other things than it does with the preservation of Medicare."

Senate Finance Committee Chairman Max Baucus (D-Mont.) said the Bush plan does nothing to address the underlying causes of the financial woes of Medicare and Medicaid -- rising health-care costs.

"I know it's difficult, but the administration would be doing this country a much greater service by finding ways to lower the underlying costs of Medicare and Medicaid, rather than just lopping off the top," Baucus said. "These costs will just get transferred somewhere else -- emergency rooms or uncompensated care."

Hospitals, care facilities concerned
Some of the institutions affected most would be hospitals, nursing homes, home health agencies and other providers, whose Medicare payments would be more than $61 billion lower than anticipated over five years (although still higher overall). Bush also proposes automatic across-the-board cuts in provider payments if Medicare spending reaches certain levels for two consecutive years. His budget would not forestall a planned 10 percent cut in Medicare payments to doctors next year.

Bruce Yarwood, president of the American Health Care Association, said the 9,000 nursing homes he represents would receive about $10 billion less than anticipated over five years.

"We'll squeeze, cut and trim administrative costs," he said. "You take a look at your staffing patterns, and rather than four people on the night shift you have three. And rather than seven or eight on the day shift you have six. You take a look at your maintenance crew; you say, 'Rather than mow the lawn every week, I'll mow it every two weeks,' so you lay off a maintenance guy." [WA: nursing homes are already notoriously understaffed; cuts in staffing further lessen the quality of care. ]

CONTINUED: Fears that docs will flee

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