FACT SHEET | February 20, 2008

President Bush's Budget Proposal Shortchanges Health Programs

President Bush’s final budget proposal continues down the same irresponsible path he started on seven years ago and demonstrates his misplaced priorities. While health care costs are rising and health coverage is increasingly difficult to obtain, the President’s budget demonstrates his continued unwillingness to address the problem. The President has again failed to invest enough in the successful Children’s Health Insurance Program (CHIP) to cover any of the millions of children who are eligible for the program but unenrolled. At the same time, his budget proposes another round of deep cuts to Medicare and Medicaid totaling close to $200 billion over five years. His budget also cuts discretionary health programs at the Department of Health and Human Services, including the National Institutes of Health, the Centers for Disease Control and Prevention, and rural programs. Unfortunately, the President’s budget proposal will cause even more distress for millions of Americans who are already anxious about the quality and affordability of health care.

 

Medicare cuts.Approximately 44 million senior citizens and people with disabilities depend upon Medicare for their health care, and the great majority of them participate in the traditional Medicare fee-for-service program. Instead of setting forth a plan to address the underlying reasons for rising costs in the Medicare program, the President’s budget proposes $186 billion in legislative and regulatory Medicare cuts over the next five years – slashing payments to hospitals, nursing homes, hospices and other health care providers participating in the traditional Medicare program. These drastic, across-the-board cuts could prompt some health care providers to limit the number of Medicare patients they see, or to drop out of the program altogether. As a result, significant numbers of elderly and disabled could lose access to their health care providers.

 

Moreover, the President’s budget proposal blatantly favors private managed care plans over traditional Medicare providers. The President has ignored the recommendation of MedPAC, an independent panel that advises Congress regarding Medicare payments, to eliminate tens of billions of dollars in overpayments to private insurance companies that treat some Medicare beneficiaries through the private Medicare Advantage program. While slashing reimbursement to fee-for-service providers, the President’s budget continues to pay private insurance companies 13 percent more, on average, than it costs to treat the same beneficiaries under traditional Medicare -- overpayments that will cost taxpayers more than $150 billion over ten years according to the Congressional Budget Office. These overpayments also accelerate by two years the point at which the Medicare Trust Fund will become insolvent and increase the monthly premiums that beneficiaries in traditional Medicare must pay.

 

President Bush also proposes to increase the number of Medicare beneficiaries who are subject to higher premiums. Specifically, the President’s budget would prevent the current income threshold for higher premiums in Part B ($82,000 for singles and $164,000 for couples) from increasing to reflect inflation, and establish in Part D the same income-related premiums he proposes for Part B. Accordingly, under the Bush budget, more middle-class beneficiaries will pay higher premiums, and one of the greatest strengths of the Medicare program – its universality – will erode.

 

Medicaid cuts.More than 50 million low-income people – about one out of six Americans – depend on Medicaid for their health care. Since President Bush’s last budget, the Administration has proposed regulatory changes to Medicaid that, in effect, cut $13.9 billion in federal Medicaid funding over the next five years. Now, on top of these cuts, the President’s budget, through legislative proposals and regulatory changes, calls for an additional $18.5 billion in net cuts over five years. These cuts, touted by the Administration as “savings,” would be primarily achieved not by lowering health care costs, but by shifting costs to states. This means that states – already facing tough economic times, strained budgets and increased demand for services like Medicaid – will have to make up for lost federal dollars, or be forced to cut services to our nation’s most vulnerable.

 

Children’s Health Insurance Program.The President’s budget includes what is described as a $19.3 billion increase in funding for CHIP. This amount is not, however, sufficient to allow states to cover any of the millions of uninsured children who are currently eligible for CHIP and Medicaid, but unenrolled. It is unclear whether this amount would even suffice to allow states to maintain their current coverage. Moreover, despite the Administration’s constant rhetoric during the CHIP reauthorization debate demanding coverage for “poor children first,” while the President’s budget increases funding for CHIP, it significantly cuts Medicaid – jeopardizing access to health care for our nation’s very poorest children.

 

Twice last year, Congress passed bipartisan CHIP reauthorization legislation that would invest $35 billion in new funding for CHIP, extending coverage to almost 4 million uninsured children at no cost to taxpayers. And twice, the President vetoed the legislation. Now, the President has proposed funding far below the level for which Congress has demonstrated its bipartisan support. There are 9.4 million uninsured children in our country, and the President continues to deny them access to doctors, life-saving prescription drugs, immunizations, preventive screenings and the basic medical care necessary to start life healthy.

 

Health coverage proposals that increase costs and premiums.More than 46 million Americans – one in every six Americans under the age of 65– are uninsured, and an additional 16 million have health coverage that does not adequately protect them from catastrophic health care expenses. But instead of offering a real solution, the President’s budget proposal would jeopardize existing employer-based coverage and push people into the individual insurance market where insurers can discriminate based on pre-existing conditions and drop coverage when people get sick. By capping the tax deduction for health insurance, and driving healthier individuals out of comprehensive health insurance plans into health savings accounts (HSAs), the President’s plan will raise costs for millions of Americans while failing to address the problems of the uninsured.

 

A paltry increase for community health enters. The Community Health Centers program includes community health centers, migrant health centers, and health care centers for the homeless. These organizations provide primary health care and social services for those Americans who do not have other access to care. Last year, more than 15 million people received care through these health centers, 90 percent of whom have incomes below 200 percent of the federal poverty level. While President Bush has touted community health centers as an integral part of his “plan” to make health care more accessible and affordable, his budget request includes a paltry one percent increase in funding for the program, funding that is targeted for new centers in high-risk areas. The budget includes nothing for base adjustments to cover inflationary costs to existing health centers.

 

No funding increase for the National Institutes of Health.The National Institutes of Health (NIH) are the leading source of basic biomedical research funding and have played an essential role in improving health and extending lives. Composed of 27 Institutes and Centers, the NIH provides leadership and financial support to researchers in every state and throughout the world. Yet despite the prominence and importance of the NIH, it is currently faced with a funding squeeze. A lack of sufficient funding threatens the pace of biomedical research and, if not remedied, could even delay cures and treatments that are within reach.

 

President Bush’s budget freezes funding for the NIH at $29.3 billion, which would make Fiscal Year 2009 the sixth year in a row that our nation’s investment in life-saving research failed to keep pace with biomedical inflation. Inadequate levels of funding for the NIH will result in reductions in the number and/or size of grants supporting research about the causes of and cures for diseases like cancer, diabetes, AIDS and Parkinson’s disease. Insufficient funding will also affect the ability of researchers to pursue new and promising but unproven lines of research and to develop a new generation of researchers to carry out important research in the coming decades.

 

Cuts to health professional training.The Title VII health professions training programs train health professionals to respond to the needs of special and underserved populations as well as to increase the racial and ethnic diversity of the health care workforce. But the President’s budget proposes to cut funding for health professions training. The President’s budget proposes a 29 percent reduction in funding to train nurses, despite the fact that the Bureau of Labor Statistics reports that registered nursing will have the second greatest job growth of all U.S. professions from 2004–2014. A proposed $13 million increase in loan repayment for undergraduate nurses is more than offset by the elimination of the $62 million Advanced Education Nursing program.

 

Cuts to rural health programs.The President’s budget proposal also targets programs designed to help rural communities address their unique health care challenges. He proposes only $25 million in funding for rural health programs, a $150 million (86 percent) cut from last year’s funding level. The President proposes terminating outreach grants, the rural and community access to emergency devices program, and rural hospital flexibility grants.

 

Cuts to health promotion programs.The President proposes to cut overall funding for the Centers for Disease Control and Prevention (CDC) and again proposes eliminating the Preventive Health Bock Grants. The President’s budget also harms the fight against chronic disease and obesity in this country by cutting the CDC’s chronic disease programs by $29 million, including elimination of the Pioneering Healthier Communities program.

 

Cuts to substance abuse and mental health programs.The President proposes cutting the Substance Abuse and Mental Health Services Administration (SAMHSA), which supports mental health programs and alcohol and other drug abuse prevention and treatment services throughout the country, by $209 million.

 

Program terminations.The President also proposes to eliminate several important health programs, including the Preventive Health and Health Services Block Grant, Emergency Medical Services for Children, Universal Newborn Hearing Screening, Trauma Care, Traumatic Brain Injury, Children’s Hospitals Graduate Medical Education, and Alzheimer’s Disease Demonstrations.

DPC