March 2, 2001
Bush Budget Proposes Reforming Medicare and Medicaid, Expanding Coverage to Uninsured
The Bush FY 2002 budget released Feb. 28 marks the president's intent to reform the Medicare and Medicaid programs as well as expand coverage to the insured. While details on a Medicare reform plan have not been specified, the outline speaks to the importance of adding a prescription drug benefit. The plan also seeks to improve Medicaid integrity and provide a refundable tax credit to the uninsured.
Under the chapter entitled "Modernize and Reform Medicare," the document cites a number of reasons for reforming the program: the lack of a prescription drug benefit and other preventive and routine services; the "complexity and inflexibility of the Medicare bureaucracy;" and the long-term financial challenges relating to demographic trends. The budget proposes to increase Medicare spending by $11 billion in FY 2002 for a total of $229 billion and to "devote $156 billion this year and over 10 years for urgently needed Medicare modernization…." No reductions to provider payments are mentioned.
Remarks from the president's state of the union speech and references within the chapter unveil the framework the president will use for reform. In his speech before Congress Feb. 27, President Bush said "the framework for reform has been developed by Senators Frist and Breaux and Congressman Thomas, and now is the time to act." The chapter references the need to unify the Medicare Part A and B trust funds, as the "separation of trust funds may lead to misleading assessments of Medicare financing and reflects a different era of medicine." President Bush proposes enacting an interim drug plan for low-income seniors, called "Immediate Helping Hand" until Medicare reform is enacted and implemented. "Immediate Helping Hand" will provide funds to states to offer relief to cover all or part of the cost of prescription drugs.
Congress has already expressed interest in reforming the Medicare program this year. The Chairman of the Senate Finance Committee have publicly expressed his intent to hold hearings on Medicare reform, and members of the House Ways and Means Committee and House Commerce Committees has announced interest in reforming the Health Care Financing Administration. The Ways and Means Health Subcommittee held its first hearing on Medicare reform Feb. 28 where Sen. John Breaux (D-La.) testified on his plan to make Medicare look more like Federal Employee Benefits program.
The budget outline says that the "Administration will also focus over the next few months on Medicaid and S-CHIP and recommend reforms that will improve the way these programs provide health care coverage to the poor and near-poor." Not only is the administration interested in giving states more flexibility to use the private health care market under Medicaid, but it is interested in improving Medicaid integrity. Referring to regulations limiting how states draw down Medicaid payments from the federal government, the plan proposes to "prohibit new hospital loophole plans approved after December 31, 2000 from receiving the higher upper payment limit proposed in the final rule."
As for proposals related to the uninsured, the administration intends to "encourage the purchase of private health insurance through health care tax credits and other proposals." Further details were not released. The plan also proposes to eliminate funding for the Community Access Program (CAP), which seeks to strengthen the effectiveness, efficiency and coordination of services for the uninsured and underinsured. Supported by the AAMC, the program was funded at $125 million in FY 2001.
Information: Lynne L. Davis, AAMC Office of Governmental Relations, 202-828-0526.
