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BellaOnline's Geriatrics Editor

President Bush's 2008 Budget Calls for Medicare Cuts But What Will it Cost Seniors?

President Bush’s proposal for a $2.9 trillion federal budget was recently unveiled. It calls for dramatic cuts in Medicare and Medicaid growth rates. For instance, over a five-year period the proposal calls for reduction in Medicare expenditures in order to slow the program’s yearly growth from 6.5 percent down to 5.6 percent. However, over the same period of time many more Americans will enroll in Medicare and health care costs are expected to increase significantly.

A total decrease of $78 billion in spending is on the line for both Medicare and Medicaid.
Prior to the proposed cut, Medicare spending should increase by $28 billion in 2008, however. Nevertheless, overall the outlook is very concerning for patients and physicians alike.

According to The New York Times, the proposed budget calls for more Medicare beneficiaries to pay higher premiums for their doctor services and prescription medications. In addition, the proposal calls for eliminating annual indexing of income thresholds, which will would ultimately result in higher premiums.

“Increases in Medicare that would increase payments for poor people would be humanely and financially counterproductive,” said Robert Hayes, president of the advocacy group Medicare Rights Center.

In addition to imposing a financial hardship on Medicare beneficiaries, the administration may be jeopardizing their basic access to medical care. According to the American Medical Association (AMA) the 2008 budget ignores the potentially catastrophic issue of physician payments. In 2006 physicians across the country came together in Washington, D.C. to meet with Congress to demand that proposed Medicare cuts to physicians be stopped. Fortunately, their concerns were heard, thus averting a major crisis.

Nevertheless, according to AMA Board Chair, Cecil B. Wilson, M.D., “The AMA is deeply disappointed that President Bush has once again ignored an opportunity to right the wrongs in the current Medicare physician payment system by failing to call on Congress to stop the cuts and provide payments in line with practice costs. Current average Medicare payments to physicians are about the same as in 2001, and next year’s reimbursement will be cut 10 percent-unless Congress intervenes.

“Over the next eight years, Medicare payments to physicians will be slashed nearly 40 percent, while practice costs increase about 20 percent…and seniors’ access to health care is placed at risk.”

While many people think that all doctors make an extraordinary amount of money, in reality, the average hourly pay for a primary care physician is less than the hourly rate of a good plumber. Doctors just work very long hours (often to the detriment of their health and their family life). In addition, many physicians incur medical school debt in excess of $100,000. Add malpractice premiums of tens, sometimes hundreds of thousands of dollars each year and it is easy to see why many physicians fear having to make a gut-wrenching, but financially necessary decision to limit their number of Medicare patients or close their practices altogether due to escalating practice costs in the face of dwindling insurance reimbursements.

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Content copyright © 2013 by A. Maria Hester, M.D.. All rights reserved.
This content was written by A. Maria Hester, M.D.. If you wish to use this content in any manner, you need written permission. Contact Patricia Villani, MPA, PhD for details.

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