Medicare Preserved in President’s Budget, but Congress May Target the Program

This week, President Obama’s administration released its proposed federal budget for 2012. Funding for Medicare programs remains mostly stable, and includes a few improvements. The budget increases funding for fighting Medicare fraud, which has been shown to eliminate waste and improve the financial outlook of the program. Also, the budget proposes reducing the time before generic versions of certain medications are allowed into the market, from 12 to 7 years. Generic drugs are more affordable than their brand-name counterparts.

In addition, the budget proposes freezing Medicare physician payments for two years and using this time to produce a long-term solution to reforming Medicare physician payment rates.  Without such reform, physician rates would be cut under the Sustainable Growth Rate (SGR) formula, which was put in place by the Balanced Budget Act of 1997. The temporary month-to-month patches to Medicare payment rates that have been put in place over the past year have led some providers to question their participation in the Medicare program. Although the president’s proposed two-year freeze would create greater stability in the program, a permanent solution is necessary.

Congress is the final arbiter of the budget. The chairman of the House Budget Committee, Representative Paul Ryan, has said that he will specifically target Medicare in budget proposals. While not offering specific proposals for the 2012 budget, a bipartisan group of senators, including Senator Richard Durbin and Senator Tom Coburn, have also indicated that they may include Medicare in upcoming deficit-reduction legislation.
Read the president’s budget and accompanying fact sheets.