Obama budget will cut Medicare but boost Medicaid and mental health

President Obama’s $3.8 trillion budget for 2014 will reverse some of the cuts activated by sequestration, but will still cut Medicare by $5.6 billion next year. Of the new budget, 54 percent will go to Medicare, while 31 percent will go the Medicaid.

The budget makes several changes to Medicare to make up for the budget redeuction, including charging higher premiums for wealthier seniors and switching dual-eligibles to Medicaid rates for their prescription drugs, notes MedPage Today.

The sustainable growth rate (SGR) also has been nixed—The SGR formula will no longer be used to calculate physician rates each year, a process long-hated by the physician community. For now, the budget will freeze payrates at their current levels, according to Medscape.

Not all health programs are seeing cuts, however. The new budget, released Wednesday, will boost the Department of Health and Human Services budget by $3.9 billion over 2012, including a $130 million allotment for mental health services, according to Reuters.

The American Psychiatric Association and the American Academy of Family Physicians aren’t completely won over, noting that much of the new mental health funding is slated to be spent on awareness training for teachers and school counselors instead of being spent on bolstering the supply of physician practitioners.

“Along with the administration, we recognize the growing need for mental health providers,” the two organizations said in a co-written statement. “However, providing a small amount of training to lesser-qualified health professionals at the expense of utilizing veteran medical psychiatrists will only serve to exacerbate the problem we are trying to solve.”

LeadingAge seemed to express relief that the cuts weren’t worse, saying in a statement: “We applaud the president for including funding for new development of affordable, supportive senior housing. The president’s decision to generally protect Medicaid from cuts in federal funding is greatly appreciated. Medicaid is the most prominent public source of funding for long-term services and supports, and many states have had to make cutbacks in their programs over the last few years.

Overall, many long-term/post-acute care organizations scolded the Medicare cuts as the wrong way to solve the challenges facing the LTC industry. “We are all too aware of the need to fix the long-term financial woes of Medicare and Medicaid,” says American Health Care Association and National Center for Assisted Living (AHCA/NCAL) president and CEO Mark Parkinson in an organization statement. “The long-term and post-acute care profession is ready with solutions that don’t simply rely on further cuts, but instead look at broad, structural changes that benefit both the taxpayer and our nation’s frail elderly.”

Pamela Tabar

Pamela Tabar was editor-in-chief of I Advance Senior Care from 2013-2018. She has worked as a writer and editor for healthcare business media since 1998, including as News Editor of Healthcare Informatics. She has a master’s degree in journalism from Kent State University and a master’s degree in English from the University of York, England.