Press Statement

Threatening the Most Vulnerable Americans

Expected Budget Cuts Will Hurt American Families - Statement by Karen Davenport, Director of Health Policy, Center for American Progress

WASHINGTON, DC – On Monday, President Bush will submit his proposal for the 2008 Federal budget to Congress. According to news reports, the president will propose cutting approximately $70 billion from the Medicare and Medicaid programs over five years, as well as significant changes to the State Children’s Health Insurance Program (SCHIP). With these proposals, the president is playing cynical political games, rather than making the responsible choices needed to maintain affordable health coverage for millions of Americans.

The number of Americans without health insurance has grown to an unfathomable level—nearly 47 million Americans cope without health coverage, knowing that their family is a single serious illness away from financial disaster. As health care costs have skyrocketed, employer-sponsored coverage has eroded, and the cost of private coverage has spiraled out of reach, many families and children who cannot otherwise afford coverage have turned to the Medicaid and SCHIP programs. Since 2000, 6.8 million people have lost health coverage, but SCHIP and Medicaid ensured that the proportion of low-income children without health insurance actually declined during this period, from 20 percent in 2000 to 14 percent in 2005.

Similarly, the Medicare program provides health coverage to some very vulnerable segments of our population, including more than 6 million people with disabilities and 5 million people over the age of 85. Fifty percent of people with Medicare coverage have incomes below $20,000 a year, and nine out of 10 Medicare beneficiaries have at least one chronic health problem. While they also face financial pressure from escalating health care costs as their Medicare premiums and co-payments grow, Medicare has provided a basic level of economic security for people who could not acquire health insurance through the private market.

As he proposes $70 billion in cuts to these programs, President Bush will say that he is trying to address long-term financial problems in these programs. He is trying to treat a symptom, not the disease. The real problem is that health care costs in the United States are out of control—between 2000 and 2005, overall health care spending grew by 40 percent, while inflation grew by only 13.5 percent—and the federal health programs operate within this environment. However, the president hasn’t offered any meaningful solutions for controlling health care costs. Instead, he continues to offer ideas like Health Savings Accounts, which would make families pay more and get less care, and changes to the tax treatment of employer-sponsored health coverage, which would further unravel our existing system of health coverage.

Most importantly, President Bush’s new budget—and these proposed cuts in health care services for vulnerable Americans—is driven by earlier failures. Because the Bush administration failed to husband our national resources and manage the budget surplus that we enjoyed at the turn of the millenium, he is now telling vulnerable families, seniors, and children that they must pay the price for his inability to make hard choices on federal spending. And instead of stepping up to work with Congress to expand children’s coverage during SCHIP reauthorization, he will propose that states scale down their coverage of children in working families and allow the number of children covered by Medicaid and SCHIP to decline—reneging on the bipartisan, federal-state commitment to reduce the number of uninsured children in the United States.

President Bush is proposing deep spending cuts in Medicaid and Medicare—and when Congress refuses to sacrifice health care services for low-income children, and disabled and older Americans, he will claim that they won’t make hard decisions. But the person who is refusing to face reality is the president. If he wants good-faith negotiations with Congress on the budget, he shouldn’t start by threatening health coverage for our most vulnerable families.