Bush to Propose Curbing Growth in Medicare Cost

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The New York Times

 

February 4, 2006

Bush to Propose Curbing Growth in Medicare Cost

By ROBERT PEAR

 

WASHINGTON, Feb. 3 — In his budget next week, President Bush will

propose substantial savings in Medicare, stepping up his efforts to

rein in the growing costs of social insurance programs, administration

officials and health care lobbyists said Friday.

 

For the first time since taking office five years ago, they said, Mr.

Bush will try to reduce projected Medicare payments to hospitals and

other health care providers by billions of dollars over the next five

years. In addition, they said, Mr. Bush intends to seek further

increases in Medicare premiums for high-income people, beyond those

already scheduled to take effect next year.

 

Despite the failure of his plan to overhaul Social Security last year,

Mr. Bush has signaled that he intends to curb rapid increases in

federal spending linked to the aging of the population. " The

retirement of the baby boom generation will put unprecedented strains

on the federal government, " Mr. Bush said in his State of the Union

address on Tuesday.

 

Administration officials, Congressional aides and lobbyists said the

president was contemplating a package of proposals that would cut the

projected growth in Medicare spending by $30 billion to $35 billion in

the next five years. That represents less than 1.5 percent of total

Medicare spending in those years. But whether Congress has the

appetite to trim popular benefit programs in an election year is unclear.

 

The House passed another deficit-reduction bill this week by just two

votes, underscoring the qualms among moderate Republicans about how

far to go in limiting the growth of domestic programs at a time when

the administration continues to push tax cuts.

 

Mr. Bush plans to send his budget for next year to Congress on Monday.

Many of his proposals follow recommendations from the Medicare Payment

Advisory Commission, an independent federal panel.

 

At a meeting last month, the panel said hospitals did not have to be

fully compensated for the increased costs of the goods and services

they used. These costs are expected to rise 3.4 percent in the fiscal

year 2007. But the panel said that hospitals could get along with a

smaller increase, 2.95 percent, if they became more efficient.

 

Jack Ashby, a research director at the commission, said, " We expect

the recommendation to have no effect on hospitals' ability to furnish

care to Medicare beneficiaries. "

 

But Richard J. Pollack, executive vice president of the American

Hospital Association, said the cutback could damage the quality of

hospital care. Already, he said, two-thirds of hospitals lose money

serving Medicare patients.

 

" At the same time cuts are being proposed, " Mr. Pollack said, " demands

on hospitals are increasing. We are taking care of a rising number of

uninsured, we are investing in new technology to increase patient

safety and to move toward electronic medical records, and we are

preparing for emergencies, including the threat of pandemic disease. "

 

The president's 2007 budget also calls for a freeze in Medicare

payments to nursing homes and home health agencies, as recommended by

the commission. In addition, he proposes to reduce payments for oxygen

equipment provided to Medicare beneficiaries.

 

This proposal is likely to touch off protests from a coalition of

patients and oxygen suppliers. The coalition has been running

television commercials against a powerful California congressman who

has supported such changes.

 

In one commercial, an Air Force veteran, with an oxygen tube in his

nose, asks the congressman, Representative Bill Thomas: " I was proud

to fight for my country. Why are you not willing to fight for me? "

 

Mr. Thomas, who is a Republican and the chairman of the Ways and Means

Committee, denounced the commercials. " It's outrageous that some

companies are trying to scare seniors, " he said Friday.

 

Mr. Bush's budget does not seek any change in Medicare payments for

doctors. Their payments were frozen this year. Under current law, they

will be cut more than 4 percent next year.

 

Beneficiaries now pay premiums of $88.50 a month — more than $1,000 a

year — for coverage of doctors' visits and other outpatient care.

 

Under the 2003 Medicare law, any beneficiary with more than $80,000 of

annual income will have to pay higher premiums in 2007 and later

years. For people with incomes of $100,000 to $150,000, premiums would

more than double.

 

Under the law, the income thresholds are increased each year to

reflect inflation. Mr. Bush's proposal would eliminate these

adjustments, so that more people would have to pay the higher premiums

each year.

 

The last three presidents regularly proposed to cut Medicare payments

to hospitals below the levels needed to keep up with inflation. But in

the last five years, Mr. Bush generally avoided making such proposals.

In 2002 and 2003, he was trying to persuade Congress to expand the

program by adding a drug benefit. In later years, he did not want to

reopen the debate over Medicare, for fear that Congress would alter

the drug benefit.

 

Medicare spending totaled $333 billion last year. Under current law,

it will climb by one-third in two years, reaching $445 billion in

2007, as the new prescription drug program gets under way, the

Congressional Budget Office says.

 

William A. Dombi, vice president of the National Association for Home

Care, a trade group, said that a freeze in Medicare payments to home

care agencies in 2007, coming on top of a freeze this year, would

reduce access to such services for patients in some parts of the country.

 

But the Medicare payment commission said that home care agencies could

reduce the number of visits for a patient or reduce the cost of

services to offset the effects of a freeze. Sharon Bee Cheng, an

analyst at the commission, said she expected " no adverse impacts " on

patients or providers of home care.

 

Nursing home operators said it would be absurd to freeze their

Medicare payments at a time when patients, their relatives and the

Bush administration were demanding improvements in the quality of

care. But the staff of the Medicare payment commission said current

rates were " more than adequate. "

 

* Copyright 2006The New York Times Company