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The WSJ Examines Increased Cost of Entitlement Programs

The Wall Street Journal on Friday examined how the “significance” the fiscal year 2007 budget proposal that Bush plans to announce on Monday is “dwarfed by one daunting fact”: 84% of the federal budget is “essentially committed” to interest on the federal deficit, defense and homeland security and entitlement programs such as Medicare, Medicaid and Social Security.

Spending on entitlement programs has increased by about 8% annually in recent years, “far faster than either inflation or the economy,” and spending on Medicare — about $391 billion in the current fiscal year — “is close to equaling the entire domestic discretionary slice of the budget,” the Journal reports.

Bush on Tuesday in his State of the Union address proposed to eliminate or reduce spending for 140 federal programs to save $14 billion in FY 2007, but those proposed spending reductions would account for only 0.005% of the federal budget, the Journal reports.

According to the Journal, “By all accounts, a solution to the entitlements spending problem must be bipartisan so that the parties jointly convey the need for sacrifice and share political fallout.” However, “the political calendar works against … Bush achieving” major reforms to entitlement programs, and, in his state of the Union address, he proposed only to establish a bipartisan commission to address the issue, the Journal reports.

Rep. Jim Kolbe (R-Ariz.) said, “This will not get done in this president’s term,” adding, “Congress is never going to be willing to deal with this, because the members are always up for re-election, every two years.”

Meanwhile, Bush has shifted his focus to health care for individuals younger than age 65. In addition, Bush has sought to encourage Medicare beneficiaries to select private health plans for physician, hospital and prescription drug coverage; establish pay-for-performance standards for health care providers who participate in Medicare; and allow states to have more flexibility to administer their Medicaid programs (Calmes, Wall Street Journal, 2/3).

Reprinted from California Healthline

Delay In The Implementation Of The Deficit Reduction Act of 2005

According to a December 30, 2005 CMS press release, The delay in the implementation of the Deficit Reduction Act of 2005 will delay the following changes among many others:

• As required under current law, claims for physicians’ services on or after January 1 will be paid with the -4.4 percent reduction from 2005 levels. The bill would have kept physician payment rates from being reduced, and would have provided significant offsetting savings to limit any impact on beneficiary costs
• The base composite rate paid to end-stage renal disease facilities will not increase from 2005. The bill would have implemented a 1.6 percent increase.
• Home health agencies will receive payments reflecting a 2.8 percent increase on January 1, rather than the zero percent increase as recommended by MedPAC and specified in the bill.

However , CMS expects congress to take up the bill again after congress reconvenes and is ready to “make all appropriate payment changes in the least burdensome manner possible.”