Budget includes familiar cuts to Medicare, Medicaid

By Sam Baker - 02/13/12 12:06 PM ET

The White House budget proposal includes a modest, familiar set of cuts in Medicare benefits, as well as Medicaid cuts that even some Democrats oppose.

The budget proposal would not make major changes to Medicare benefits, unlike Republican proposals to privatize the program. Democrats have found a potent campaign issue in Medicare, and they say smaller-scale adjustments to the program can avert the more dramatic overhaul championed by Rep. Paul Ryan (R-Wis.).

President Obama’s budget proposal would require wealthy seniors to pay for a higher share of certain Medicare benefits. It would charge a copay for home healthcare services and put new limits on supplemental policies known as Medigap.

All of those proposals were floated during various deficit-reduction negotiations last year.

The budget also includes cuts in Medicare’s payments to healthcare providers that would total about $267 million over the next decade. By far the largest share of that total would come from the pharmaceutical industry. Those cuts, too, were floated during earlier budget talks, but congressional Republicans largely dismissed the call to take more money out of drug companies.

On Medicaid, the White House again proposed a streamlined funding system that states do not support. The plan would combine various rates of federal funding into a single percentage. States and budget analysts say that approach would simply shift costs to the states, rather than actually controlling the cost of Medicaid.

Washington Gov. Christine Gregoire, a Democrat, said last year that the consolidated payment rates could be a “huge problem” for states.