Medicare will endure a $10 billion cut in 2015 while Medicaid will receive a reduction of nearly $19 billion, based on President Barack Obama’s proposed budget for Health and Human Services in Fiscal 2015.

A federal budget is a slippery thing, however. Those cuts what the federal government will spend based on the law as it stands now. The president’s proposed budget would change those appropriations, but still post sizable increases to Medicaid, while Medicare will receive a small reduction that will be offset by projected higher receipts.

The president has proposed boosting the federal budget for Health and Human Services by more than $50 billion in Fiscal 2015, an increase of around 5 percent over the current budget. Some 85 percent of the HHS budget goes to Medicaid and Medicare, and for 2015 the president has identified some $907 billion for the division, an increase of 6.6 percent over this year.

All of that increase and then some will go to Medicaid, which continues to expand as a result of the Patient Protection and Affordable Care Act. Medicare in the proposed budget will be cut almost $3 billion over last year.

The proposed budget looks ahead 10 years, and the administration has recommended reforms for Medicare and Medicaid that will result in reductions of more than $414 million, most of which will be the responsibility of the next president and his or her successor to implement.

The President’s budget report 

In the report on the budget released by the White House, the administration has identified $402 billion in “additional health savings” over the next decade, $1 billion of will be realized in the current fiscal year. Next year, the last full year of the Obama presidency, that will double to $2 billion; and in Fiscal 2016, for which another president will be primarily responsible, it will increase to $8 billion and then dramatically grow after that. The Obama administration will be responsible for overseeing a little more than $3 billion in health savings; the presidents for the nine years after President Obama leaves office will be responsible for the other $399 billion.

The White House version explains the healthcare budget thus:

For decades, few things exposed hard-working families to economic hardship more than a broken health care system. With the enactment of the Affordable Care Act, we are in the process of fixing that. Already, because of the health reform law, more than 3 million Americans under the age of 26 have gained coverage under their parents’ plans. More than 9 million Americans have signed up for private health insurance or Medicaid coverage. Because of this law, no American can ever again be dropped or denied coverage for a preexisting condition like asthma, back pain, or cancer. No woman can ever be charged more just because she is a woman. And we did all this while adding years to Medicare’s finances, keeping Medicare premiums flat, and lowering prescription costs for millions of seniors. To continue this progress, the Budget fully funds the ongoing implementation of the Affordable Care Act …

Although we have seen a notable and significant decline in health care spending growth over the last few years, in part due to the Affordable Care Act, we know that over the long run, the growth of health care costs continues to be our Nation’s most pressing fiscal challenge. That is why the Budget builds on the savings and reforms in the health reform law with additional measures to strengthen Medicare and Medicaid and encourage high-quality and efficient health care.

We also know that revenue has to be part of the solution to our Nation’s long-term fiscal challenges. Given the aging of our population and the declining ratio of workers to retirees, we will need additional revenue to maintain our commitments to seniors while also making the investments that are needed to grow our economy and expand opportunity.

Healthcare providers bear the brunt

The President’s statement on healthcare concludes by saying, “The Budget secures that revenue through tax reform that reduces inefficient and unfair tax breaks and ensures that everyone, from Main Street to Wall Street, is paying their fair share.” According to organizations representing healthcare providers, that sector of the economy is not only paying its share, it is being unfairly penalized.

“Today’s budget proposal includes some problematic policies that would undermine the ability of hospitals to improve the health care system and, ultimately, puts access to services at risk for the patients and communities we serve,” wrote Rich Umdenstock, president and CEO of the American Hospital Association. “We are unfortunately all too familiar with the consequences of cuts to funding for hospital services. Even before these new reductions, Medicare and Medicaid reimburse hospitals for less than the cost of providing services. Moreover, one in four hospitals operate totally in the red. The administration’s proposal would impact access to the latest treatments and technologies, and may bring about longer waits for care and fewer caregivers to treat our nation’s sickest patients.”

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