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President Bush's $3 trillion FY 2009 Budget would freeze domestic spending, seek nearly $200 billion in savings from Federal Health Programs

[Feb 01, 2008]  President Bush on Monday will release a fiscal year 2009 budget request that will total more than $3 trillion and include a large reduction in Medicare spending, the Wall Street Journal reports (McKinnon, Wall Street Journal, 2/1). The budget request would decrease Medicare spending by $178 billion over five years as part of a $200 billion reduction in entitlement program spending (Freking, AP/Houston Chronicle, 1/31).

Under the budget request, most of the reduction in Medicare spending would result from decreases in reimbursements to physicians, hospitals and other health care providers, as well as efforts to reduce payments for services to a level closer to the actual cost, according to an unnamed White House official (Weisman, Washington Post, 2/1). The budget request also would increase monthly premiums for Medicare beneficiaries enrolled in the prescription drug benefit (Koffler/Cohn, CongressDaily, 2/1).

The budget request would reduce Medicare spending growth to 5% from 7.2% currently and would reduce by one-third the estimated unfunded obligation for the program over 75 years, according to the Journal (Wall Street Journal, 2/1). The budget request also would reduce Medicaid spending by $17 billion over five years (Pelofsky, Reuters, 1/31).

Other Health Care Programs
The budget request would place a "virtual freeze" on domestic discretionary spending, the Post reports (Washington Post, 2/1). An unnamed White House official said that the budget request would increase domestic discretionary spending by less than 1% (AP/Houston Chronicle, 1/31). Under the budget request, HHS discretionary spending would decrease by $2.2 billion to $68.5 billion.

The budget request would reduce Health Resources and Services Administration spending by $1 billion, with a $240 million reduction in funds for a program that trains nurses and other health care professionals and a $112 million reduction in funds for rural health care programs. In addition, the budget request would eliminate funds for a program that trains physicians at children's hospitals and funds for public health buildings and other projects.

The budget request also would reduce CDC spending by $433 million, with a $111 million reduction in funds for worker safety programs at the Occupational Safety and Health Administration and a $83 million reduction in funds for helping Ground Zero workers. In addition, the budget request would reduce funds for mental health and substance drug abuse programs by $198 million to $3.2 billion (Wayne, CQ Today, 1/31). The budget request includes $29.3 billion in funds for NIH, which would "basically flat-fund medical research at current-year spending, not enough to keep pace with inflation," according to CongressDaily (CongressDaily, 2/1). The budget request would increase FDA spending by $130 million (CQ Today, 1/31).

Comments
According to CQ HealthBeat, lawmakers and "lobbyists are dismissing the possibility that Congress will go along with massive cuts the Bush administration is planning to propose in the Medicare and Medicaid programs" (Reichard, CQ HealthBeat, 1/31). Congress last year rejected a request from Bush for a $65 billion reduction in Medicare spending (Washington Post, 2/1). In addition, the proposed reduction in Medicare spending "will face heavy opposition from powerful health care provider groups that could be affected by the Medicare cuts," CongressDaily reports (CongressDaily, 2/1).

House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said that the proposed reductions in Medicare and Medicaid spending would "endanger the health care of America's seniors, people with disabilities and low-income children" (Wall Street Journal, 2/1). He added, "This budget will be dead on arrival" (CQ HealthBeat, 1/31).

House Speaker Nancy Pelosi (D-Calif.) in a statement said, "The president is proposing to once again slash health care coverage for seniors and low-income working Americans. The president's cuts are exactly the wrong medicine when the cost of health care and the number of uninsured continue to rise and families are feeling economically insecure" (Washington Post, 2/1).

Senate Finance Committee Chair Max Baucus (D-Mont.) said that Democrats "will oppose those cuts." He added, "You have to be frugal, clearly, but those are draconian" (CQ HealthBeat, 1/31).

Allen Segal, associate director of federal relations for the American Cancer Society Cancer Action Network, said, "For more than a decade we've seen historic declines in cancer death rates," adding, "The president's budget threatens to stall that progress by proposing the fifth straight year of flat funding. We are counting on our champions on Capitol Hill to repudiate this request by passing a substantial increase in cancer research" for FY 2009 (CQ Today, 1/31).

Steve Speil, vice president for policy at the Federation of American Hospitals, said, "From what we hear, the Medicare budget would subsidize health plan profits and slash hospital payments," adding, "Someone should ask seniors what they think about this."

Alicia Mitchell, a spokesperson for the American Hospital Association, said, "The magnitude of the cuts reported are of great concern, especially for the patients who rely on hospitals every day" (CQ HealthBeat, 1/21).

Budget Legacy
The Journal on Friday examined how, although Bush entered office with "budget surpluses projected to stretch years into the future," when he leaves office next year, he "will leave behind a trail of deficits and debt that will sharply constrain his successor."

According to the Journal, because Bush has "failed to work out a deal with Congress to tackle the spiraling cost of government health and retirement programs," the "ambitions of Mr. Bush's successor to ... institute universal health care" and other programs "might have to give way to the reality of soaring costs for Social Security, the Medicare program for the elderly and the Medicaid program for the poor" (Phillips/McKinnon, Wall Street Journal, 2/1).