In the final budget plan submitted to Congress, President Bush has outlines a cut to Medicare spending worth approximately $560 billion over a ten year period. Despite the cut to Medicare, the insurance subsidies, worth more than $150 billion would remain intact according to the plan.
The 2% cut in the annual growth rate of Medicare spending is a last resort effort by the Bush administration to maintain Medicare coverage for the future of our nation's children. Without such a budget, Bush believes "huge tax increases, huge deficits, or huge cuts in [Medicare] benefits" will befall the next generation of Medicare recipients.
Despite the fact that this new budget could possibly save Medicare more than $9 trillion over a 75 year period, analysts believe the differences between the Democratically controlled Congress and President Bush may leave the issues unresolved before the end of President Bush's term in office.
While some of the budget propositions remain vague, with no real explanation of due process and how the budget will achieve the goals set forth, clear agendas are heard throughout. Included in the budget are plans to cut Medicare payments to physicians and hospitals based upon funding levels and sources. In years when the funding for Medicare pulled from general revenue exceeds 45%, payments to physicians and hospitals will be cut 0.4%. As of 2006, general revenue funded nearly 41% of total Medicare spending.
Advocate of the Medicare administration are concerned that a decrease in Medicare funding will cause seniors to shy away from a switch from the fee for service Medicare program to private insurance. Looking at long term effects, the cost of private insurance would weigh more heavily on Medicare spending today, but over the long haul would reduce the overall cost of care.
Not all aspects of the new budget focus on program cuts. President Bush outlines a plan to increase the state children's health program (SCHIP) by $20 billion. Democrats, however, are advocating an increase closer to $50 billion in order to ensure health coverage for more of the nation's children.
