Bush to Seek Cuts in Medicaid, Benefits

Bush to Seek Cuts in Medicaid, Benefits

Bush Budget will Target Cuts to Medicaid and Other Benefit Programs

By ALAN FRAM The Associated Press

WASHINGTON (AP) - President Bush is readying a new budget that would carve savings from Medicaid and other benefit programs, congressional aides and lobbyists say, but it is unclear if he will be able to push the plan through the Republican-run Congress.

White House officials are not saying what Bush's $2.5 trillion 2006 budget will propose saving from such programs, which comprise the biggest and fastest growing part.

But lobbyists and lawmakers' aides, speaking on condition of anonymity, say he will focus on Medicaid, the health-care program for low-income and disabled people. Medicaid costs are split between Washington and the states.

Many expect him to propose giving states more flexibility in using the $180 billion in federal Medicaid funds each year, but to limit the program's growth on a per-patient basis - in effect forcing the states to find ways to save money.

Bush may also propose trimming doctors' reimbursements or weeding fraud from Medicare, the health insurance system for the elderly and disabled, the aides and lobbyists said.

He may seek savings from agriculture and other benefit programs as well in the spending blueprint he will send to Capitol Hill on Feb. 7.

There has not been a serious effort to pluck savings from such programs - called entitlements because the benefits go automatically to anyone who qualifies - since 1997.

After two straight record federal deficits that peaked at $412 billion last year, many Republicans are eager to constrain government spending by curbing the growth of benefits. By law such programs, which consume nearly two-thirds of the budget, grow to keep pace with inflation and ever-larger numbers of recipients.

Conservatives - including the chairmen of the House and Senate budget committees, Rep. Jim Nussle, R-Iowa, and Sen. Judd Gregg, R-N.H. - may want to go even further than whatever savings Bush proposes. Many of them consider Bush's goal of halving the budget deficit by 2009 too timid, and see the coming retirement of the 76 million baby boomers as threatening to snowball federal spending.

``There's this demographic tidal wave coming at us,'' Gregg said in a recent interview. ``We've got to adjust our retirement structure to maintain a strong program for retirees'' while making sure younger people won't ``be taxed to the point where their lifestyle is significantly reduced.''

Other Republicans, recalling past Democratic attacks when such programs were targeted, are wary. Veteran Rep. Christopher Shays, R-Conn., said many lawmakers would support such cuts if they would balance the budget in the short term but would be unwilling to ``take a big hit'' for incremental deficit reduction.

By proposing an overhaul this year of Social Security, the biggest benefit program at more than $500 billion annually, Bush has asked GOP lawmakers to risk angering senior citizens worried about the retirement and pension program.

Simultaneously pursuing savings from other programs would only increase many legislators' heartburn.

They would face the wrath of doctors - major GOP contributors - should Bush propose limiting the Medicare payments physicians receive. Governors of both parties are already trying to head off any effort to trim Medicaid, while farmers, veterans and other groups would be sure to combat any efforts to curtail their benefits.

``It's obviously going to be a very difficult lift,'' Nussle said recently.

``Everyone has a program, everyone has a constituency, everyone has a point where they lose their courage to reform a government that is too big,'' he said. ``Republicans need to wake up. You can't have tax cuts without spending restraint and get to a balanced budget.''

Among the fastest growing benefits is Medicare, which increased by an estimated 8.1 percent last year and is projected to pass $320 billion this year. Bush is considered unlikely to seek major savings from a program to which he and lawmakers added expensive prescription drug benefits less than two years ago.

According to Congressional Budget Office estimates last fall, Medicaid spending grew by 9.4 percent while Social Security costs expanded by 4.5 percent.

The budget office projected last September that this year's deficit will hit $348 billion, and stay in the $300 billion range through 2010. The office plans to release its newest estimates on Tuesday.

In 1997 President Clinton and the GOP-run Congress enacted a compromise aimed at balancing the budget in five years. Most of the $130 billion in five-year savings came from reducing health providers' Medicare reimbursements.

That deal capped two years of battling in which Democrats criticized then-House Speaker Newt Gingrich, R-Ga., for proposing Medicare savings. Republicans suffered losses at the polls due to that clash, and Gingrich said in an interview this week that for Bush to prevail this time, he will have to persuade voters to support his proposed savings.

Bush Plan May Reduce Disability Benefits

Millions Wonder About Potential Impact of Bush Privatization Plan

By LEIGH STROPE, Associated Press January 17, 2005

Social Security disability benefits may not be safe from the across-the-board cuts that are likely in President Bush's proposal to allow personal investment accounts.

Retirement and disability benefits are calculated using the same formula, so if future promised retirement benefits are cut, then disability benefits also would be reduced - unless the program is somehow separated.

That also raises big questions about how investment accounts would be structured for disabled people, especially if they get injured at a young age or are dependent on a parent. Disabled beneficiaries typically work less and need benefits sooner, so the accounts would not provide enough income to these people.

"The Social Security programs are insurance programs, not investment programs, designed to reduce risk from certain life events," said Marty Ford of the Consortium for Citizens With Disabilities.

Currently, disabled workers move seamlessly through the Social Security system, often unaware they draw their benefits from the disability program until they reach retirement age and shift to the retirement program. That would change with investment accounts, advocates claim, with people falling through holes in a new system.

About 16 percent of the 47 million people receiving Social Security benefits are disabled workers and their dependents. The impact of accounts on beneficiaries who aren't retirees hasn't been publicly discussed yet by the Bush administration.

Supporters of Bush's overhaul say that disability should be treated as a separate program.

"The proper way to deal with this is to essentially make it clear that these are two different programs and to separate the benefit formulas," said David John, Social Security senior analyst at the conservative Heritage Foundation.

"One is an insurance program and one is essentially a retirement program," John said. "They have vastly different characteristics, they have vastly different administrative structures."

But disability advocates argue that the two programs can't be easily separated. Bush wants to let younger workers invest much of their 6.2 percent in payroll taxes into personal investment accounts, similar to a 401(k). Of the tax, 0.9 percentage point funds disability benefits, while the remainder is for retirement benefits.

Almost three in 10 of today's 20-year-olds will become disabled before reaching age 67, according to the Social Security Administration. About 72 percent of the private sector work force has no long-term disability insurance.

Advocates worry that some of the nation's most vulnerable and needy people will be hurt by Bush's plan to remake Social Security.

"Anything they do to the retiree formula will affect people with disabilities," Ford said.

That's what occurs in the main plan offered by Bush's 2001 Social Security Commission charged with crafting a proposal for investment accounts. Promised disability benefits get reduced along with retiree benefits, in some cases up to 46 percent. The cuts were used to make the plan's finances add up in the report.

The commission plan is serving as a blueprint for legislation the Bush administration would like Congress to consider. Bush's commission did not recommend changes for the disability program and cautioned that the benefit reductions shouldn't be viewed as a suggestion.

But, "in the absence of fully developed proposals, the calculations carried out for the commission and included in this report assume that defined benefits will be changed in similar ways for the two programs," the commission said.

The commission noted that disabled beneficiaries may not have their full adult lives to accumulate enough funds in their accounts, a rationale for maintaining their traditional benefits.

But if future retirement benefits are cut and disability benefits were maintained at levels being promised under current law, that would encourage an increase in disability applicants, and potentially, fraud, the commission said.

John said separating the programs, but continuing to coordinate benefits as disabled beneficiaries move into retirement is not an "insurmountable objective." Investment accounts also could be used to supplement benefits for some of the more difficult cases, he said. If a 32-year-old worker becomes disabled, the account could continue to earn interest until he reached retirement age at 67, and help supplement retirement benefits.

Some proposals bar workers from withdrawing money if they become disabled, when money probably is needed most, said Peter Orszag, an economist at the liberal Brookings Institution and former Clinton White House adviser.

"There is just an underlying tension between the kind of social insurance features of Social Security and individual accounts," Orszag said. "There are all sorts of beneficiaries where the account model just doesn't really work that well."

This 'Mental Health E-News' posting is a service of the New York Ass'n of Psychiatric Rehabilitation Services, a statewide coalition of people who use and/or provide community mental health services dedicated to improving services and social conditions for people with psychiatric disabilities by promoting their recovery, rehabilitation and rights.

Last Updated on 01/26/05 webmaster@namiscc.org

Opinions expressed in this web site do not necessarily reflect the views of NAMI Santa Cruz County, NAMI California or any affiliated organizations. We attempt to present a balanced perspective on issues by presenting multiple viewpoints.

FAIR USE NOTICE: This may contain copyrighted (©) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available to advance understanding of ecological, political, human rights, economic, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml If you wish to use copyrighted material for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.