In his 2013 budget released today, President Obama has proposed cutting $250 billion out of Medicare and $65 billion out of Medicaid over the next 10 years. Nursing homes,hospitals, and other providers would be paid less, while some Medicare beneficiares would have to pay more out of pocket. At the same time, federal spending for other critical senior services programs would be frozen–in many cases for the third year in a row.
Here is a quick summary of some of Obama’s major budget initiatives and how they’d effect seniors. He has proposed some of these changes in the past but there is little doubt that they are a major priority for a White House looking to reduce the budget deficit.
Medicare: One-quarter of Medicare beneficiaries would pay higher, income-related premiums for Medicare Part B and D (the drug benefit). Starting in 2017, new beneficiaries would pay a surcharge for Medigap policies that pick up Medicare copays and other “first dollar” costs. In that same year, they’d also be charged a $100-per-episode fee for home health care and a $25 increase in the Part B deductible. Many of these changes are aimed at encouraging more seniors to enroll in Medicare Advantage managed care plans
At the same time, Medicare would reduce payments to nursing homes for post-acute care. It would also cut Medicare payments that pick up some of the cost of patients’ bad debts.
For years, skilled nursing facilities have been paid generously by Medicare for post-acute and rehabilitation services but lost money on Medicaid payments for their long-stay residents. Now, the Adminstrationwould cut those Medicare reimbursements–a step likely to force some facilities to abandon their money-losing Medicaid beds. That may not be a problem in areas where there is overcapacity of long-stay nursing home beds. But where there is a shortage, it may create some real challenges for those who are unable to continue to live at home.
Finally, Obama has again proposed to penalize nursing facilities whose post-acute Medicare patients are readmitted to the hospital for conditions that could have been avoided, such as falls or infections.
Medicaid: Obama would make it tougher for states to game the Medicaid system by taxing providers such as nursing homes and using the money to increase payments to those facilities. This practice effectively shifts Medicaid costs to the federal government and the change would reduce the amount of money available to state Medicaid programs. The White House would also reduce payments to vendors of durable medical equipment such as wheelchairs.
Other spending. Funding for the National Institute for Aging would be effectively frozen. Most other spending on long-term care services is funded by the Department of Health and Human Services. The Obama budget would freeze funding for the Administration on Aging. Thus, the budgets for nutrition services such as Meals on Wheels, caregiver supports, respite care, and aging network services would all be held at 2012 levels. Funding for aging and disability resource centers would be cut by more than one-third. Alzheimer’s Disease demonstrations would get $6 million more and adult protective services would get $8 million.
The Department of Housing and Urban Development would receive $475 million for Section 202 housing programs for the elderly.
Keep in mind, the Obama’s budget proposal is very likely the high water mark for spending on these programs. If Congress passes a budget this year–which is unlikely at best–many of these programs would be cut even more deeply. And long-term spending for many of these programs would be in even more serious jeopardy, especially given major spending reductions being proposed by all of the Republican presidential candidates.