Health Care Surprises in the Budget Bill

By Jeanne Lambrew | December 20, 2005

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The conference report on the budget reconciliation bill, released at 1 a.m., December 19 and voted on a scant four hours later, includes several surprise provisions – policies that did not appear in either the House or the Senate bills. Many of these affect Medicaid and Medicare, the health coverage programs that provide critical health and long-term care for about 80 million Americans. They underscore the priorities of this Congress and White House: protecting drug companies and health insurers while stripping protections from the poor and sick. Several such provisions are described below:

• Erodes Health Coverage for Every Medicaid Child: A new policy would effectively eliminate the Medicaid policy that ensures that children get all medically necessary health care services.
• Hikes Medicaid Cost Sharing to Unaffordable Levels: A new policy would set arbitrary, excessive standards for cost sharing. These include:
• 10 percent coinsurance for the near poor, which could mean $160 per hospital day
• Unlimited cost sharing for the near poor for certain uses of emergency rooms
• Restricts Eligibility for Nursing Home Care: The conference report includes the worst elements of the House and Senate bills, with the final savings higher than in either original bill. A new “hardship” provision was added that does little to prevent seniors from being denied assistance.
• Block Grants Payments for Katrina Victims: The conference report would replace the House and Senate guarantee of health care financing for low-income people affected by Hurricane Katrina with a block grant. The White House would make all decisions about who gets what funding.
• Raises Medicare Premiums: Increases in Medicare’s Part B costs in the conference report would raise Medicare premiums for all people with Medicare coverage. In addition, a new policy would immediately begin the income-related premium originally scheduled to begin in 2007.

In addition to these surprises, the conference bill drops $42 billion in 10-year HMO and drug company savings and keeps $24 billion in cuts to Medicaid benefits, cost sharing and nursing home eligibility. As a result, an estimated 30 million Medicaid beneficiaries could pay more for fewer benefits by 2015. Moreover, all 29 million children covered by Medicaid may not receive needed treatment as their benefits are scaled back.

Jeanne Lambrew is a Senior Fellow at the Center for American Progress.