In what promises to be a highly charged process to determine next year’s federal budget, the President released hisproposed 2021 Budget on February 10th. Over the coming months, Congress will review the President’s Budget, eventually coming up with its own budget resolution, a process that typically goes through numerous iterations as it bounces between the House and Senate. So while this first volley from the President isn’t necessarily what the final budget will actually contain, it’s an important indication of the President’s priorities and perspectives. The department-by-department budgets shape the President’s vision of how to use government resources to provide a path to the three unalienable rights set forth in the U.S. Declaration of Independence: life, liberty and the pursuit of happiness.
How do healthcare programs fare in the President’s Budget?
The President’s Budget reduces overall investment in three of the government’s biggest healthcare programs.
- Medicare, the federal health insurance program primarily for those age 65+ is slated to decrease by seven percent over ten years.
- Medicaid, the program that provides health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities, is being reduced by 16 percent over ten years.
- Reduced premium subsidies for people getting health insurance through the Affordable Care Act (ACA, also known as Obamacare) together with specific Medicaid cuts will strip $1 trillion from the program responsible for 20 million people getting health coverage since being enacted in 2010. The Congressional Budget Office (CBO) estimates these ACA cuts represent around 85 percent of what would have been spent on Obamacare coverage in the year 2029.
Will Medicare cuts affect access to care?
While cuts to Medicare total about $756 billion, the changes don’t reduce benefits or limit program eligibility. Many of the Medicare-related proposals cut payments to hospitals and doctors, a controversial strategy on both sides of the political aisle. The lower reimbursement rates paid to medical personnel and institutions do save taxpayer dollars. But serious downsides, such as practitioners opting out of the system altogether, and medical institutions becoming financially insolvent, can limit access to care. Other initiatives seek to reduce cost and fraud, such as requiring pre-authorizations from Medicare for certain procedures. Many of these same proposals were included in budgets submitted by President Obama.
Though it involves subjective judgment, eliminating waste and creating operational efficiencies are generally viewed as a positive. The real challenge that isn’t addressed in the President’s Budget is how the savings accrued through the Medicare cuts ought to be used. Healthcare consumer advocate Eliot Fishman at the nonpartisan Families USA organization stresses that making healthcare less expensive for seniors should be the ultimate priority.
Major cuts to Medicaid
Deep cuts in Medicaid – $920 billion over 10 years– have raised concerns that millions of people could lose health coverage. The President’s “Health Reform Vision” includes federal work requirements for Medicaid and Temporary Assistance for Needy Families (TANF), and calls for states to frequently verify recipients’ eligibility.
Deep cuts in Medicaid – $920 billion over 10 years – have raised concerns that millions of people could lose health coverage.
So far, 20 states have attempted imposing Medicaid work requirements, though at least four court challenges have kept a number of states from implementing them as they wait for the litigation to play out. The latest court action on this issue was on February 14th in Arkansas, when a U.S. Court of Appeals three-judge panel ruled the work requirement was “arbitrary and capricious” because it failed to consider the loss of coverage to people in need.
States that have expanded Medicaid eligibility with funding from the ACA will gradually be made to pay more of the costs of that care. This aligns with a January 30thannouncement from the Trump administration to shift responsibility for Medicaid to the states. The voluntary program would provide federal block grant funding that states could use to create their own Medicaid programs without federal oversight. But with less funding overall, states may be put in a position of making cuts of their own, deciding whether to raise copays, reduce eligibility, or cut services.
Calls for lowering prescription drug costs
The President’s Budget calls upon Congress to enact reforms aimed at lowering prescription drug prices, but it doesn’t endorse any legislation currently in the House or Senate. In his State of the Union address, President Trump expressed interest in working with Senator Chuck Grassley (R-IA), the sponsor of the Prescription Drug Pricing Reduction Act (PDPRA). That bill is projected to save about $100 billion in costs paid for drugs by Medicare. The House Bill, H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, contains provisions allowing Medicare to directly negotiate with drug companies for lower prices. According to preliminary Congressional Budget Office (CBO) analysis, H.R. 3 would achieve a $345 billion savings in drug costs to Medicare alone, with additional savings to individuals purchasing prescription drugs.