President Donald Trump proposed slashing Medicare funding by $845 billion over the next decade in a budget blueprint by increasing audits of Medicare Advantage payments, changing hospital reimbursement rates and reducing "fraud and abuse" in the system.
The annual White House budget, released Monday, also seeks to move more than $1 trillion in Medicaid spending to a system of block grants allowing states more control in allocating the funds, in addition to cutting another $1.5 trillion over the next 10 years. The 2020 plan also calls for a nationwide Medicaid work requirement for low-income adults to be eligible for coverage.
The budget is sure to go nowhere in Congress, as Democrats control the House and the document includes politically toxic ideas in cutting Medicare, a largely popular program among its users. It will however, give Democrats fodder during the next election cycle, with top 2020 contenders already bashing it.
The plan to winnow funding away from Medicare and Medicaid contradicts campaign promises Trump made in 2016. They could also alienate a big part of his base — the elderly — in a White House budget eerily similar to the failed Republican repeal and replace efforts of 2017.
But some of the Medicare cuts have received bipartisan support in the past, including halting hospitals from bumping up their Medicare payments by acquiring doctors' practices (a method CMS has tried to crack down in the past with its site-neutral payment proposals) and lowering spend on prescription drugs.
The budget would also require everyone with a plan from the Affordable Care Act exchanges pay some amount of premium. Currently, subsidies allow some people to qualify for plans without paying any monthly premium.
A more traditional conservative proposal is block grants for Medicaid, part of an ongoing effort to move healthcare decisions to the states. CMS has already been busy approving Section 1115 demonstration waivers giving states more wiggle room in structuring Medicaid, including highly-controversial work requirements.
The White House's plan stipulates all "able-bodied" and "working-age" Medicaid beneficiaries would have to go to work, train for work or volunteer to quality for Medicaid. The Kaiser Family Foundation estimates that 1.4 million to 4 million impoverished Americans could lose Medicaid coverage if work requirements were scaled nationwide. The Trump administration predicts a savings of $130 billion over the next decade if Congress enacts the proposal.
Currently, seven states have approved waivers from the government for work requirements, and an additional eight have applied, according to KFF. Oral arguments in lawsuits against the programs in Arkansas and Kentucky begin later this week. More than 18,000 Americans lost health insurance in the first four months of Arkansas' program alone.
Under the new budget, $1.5 trillion would be cut from Medicaid over the next decade and $1.2 trillion would be added for a new "Market Based Health Care Grant" to start in 2021. It would also eliminate Medicaid expansion funding.
The proposal comes amid the fierce political debate around expanding public health programs. Multiple Democrats running for president in 2020 espouse some version of an expansion, lumped in popular discourse under the umbrella term of Medicare for all.
Even with little likelihood of coming law, pushback from provider groups was swift.
The Federation of American Hospitals called the proposed cuts "arbitrary and blunt" and the American Hospital Association warned they raise "serious concerns about how hospitals and health systems can ensure they serve as the safety net for their patients."
"Hospitals are less and less able to cover the cost of care for Medicare patients," FAH president and CEO Chip Kahn said in a statement. "It is no time to gut Medicare."
The White House budget also includes provisions meant to lower prescription drug spending and allocates $4.8 billion to stem the tide of the opioid epidemic, along with $291 million next year to fight HIV/AIDS. The National Institutes of Health, which conducts and supports medical research, would lose $4.5 billion in funding, another politically unpopular idea, though the Department of Veteran's Affairs would gain an additional $6.5 billion from the year before.
HHS secretary Alex Azar will appear in front of three separate Congressional committees this week to defend the budget: Tuesday, the House Energy and Commerce subcommittee on Health; Wednesday, the House Appropriations subcommittee; and Thursday the Senate Finance Committee.