The Senate has just approved $10 billion in cuts to Medicare and Medicaid that are set to occur over the next five years. While it is expected that the beneficiaries of the programs will not see any changes in their current plans, there will be effects experienced by insurance companies and drug manufacturers.
Almost $5 billion worth of savings are set to be accrued by Medicaid through cuts to prescription-drug payments. In addition, savings of over $330 million could be seen through new legislation that is aimed at sealing off various loopholes in the system. In fact, more than $500 million could be saved as a result of the cuts by reducing fraud and abuse such as false claims.
Medicare payment policies will also be changed, which will result in $4.5 billion in savings over five years. Purchasing programs aimed at getting the best value will be implemented in various areas of health care.
The regional Medicare Advantage PPO Stabilization Fund will be cancelled, which will save over $5 billion, while changes to the Medicare Advantage plans will save over $6 billion. It is expected that the country’s health-care system will be improved with these changes. In fact, some Medicaid money will be allotted for emergency benefits to the victims of Hurricane Katrina.
When the budget bill went to the House, House Representatives made changes to issues that had been discussed in the Senate, including nearly $12 billion in savings from Medicaid alone. For example, rules surrounding the shedding of assets in order to qualify for nursing-home care would be tightened and pharmacy profits would be capped. Also, patients would be required to pay more for Medicaid according to the House bill.
Since the House and the Senate could not agree upon the bill, the differences must now be reconciled.