| The "lion's share" of the Medicare and Medicaid savings over
five years proposed in President Bush's fiscal year 2008 budget proposal
comes from limits on annual inflation adjustments for reimbursements to
hospitals, nursing homes and other health care providers for Medicare,
amounting to $39.5 billion. The total five-year savings for the two programs
under Bush's budget is about $101.5 billion. The budget proposal would
reduce Medicare reimbursements to providers by 0.65% in FY 2008. In
addition, the budget proposal would end a practice under which Medicare
reimburses providers when beneficiaries fail to pay their bills. The budget
proposal also would automatically reduce reimbursements by 0.4% when
Medicare general revenue exceeds 45% of the total cost of the program and
would reduce reimbursements to providers that fail to submit price and
quality data after 2008. Under the budget proposal, Medicare reimbursements
to hospitals would decrease by about $30 billion over five years. In
addition to the $76 billion in Medicare savings over five years from
legislative changes, the budget proposal includes $10.2 billion in savings
from administrative changes to improve "efficiency, productivity and program
integrity." The budget proposal would "eliminate annual indexing on income
thresholds" to require a larger number of higher-income Medicare
beneficiaries to pay increased premiums in future years. Currently,
individual Medicare beneficiaries with annual incomes that exceed $80,000
and married couples with annual incomes that exceed $160,000 pay increased
premiums. In addition, the proposal would implement a premium based on
income in the Medicare prescription drug benefit. |