Medicare Targeted for Cuts Under HHS Budget

While the bulk of savings proposals come from the healthcare industry, there are also proposals that would affect beneficiaries, says Dan Mendelson, CEO of Avalere Health. In an e-mail statement Mendelson points to the Part B premium surcharge on Medigap policies that offer first dollar coverage and copayments for home health services for new Medicare beneficiaries. Those changes are projected to save $2.5 billion and $350 million, respectively, over 10 years.

The common assessment is that "this budget is really about cuing up election year positioning, as well as a 2013 deficit reduction package," explains Mendelson.

One noteworthy omission in this year's proposed budget, says Cousins, is a fix for the sustainable growth rate. Last year the president proposed a two-year SGR fix; this year's budget is silent on the topic beyond presenting updated numbers that Congress can use as it debates the topic.

He notes that the budget is only a proposal until Congress acts. If early reactions are indications of future actions then the budget faces an uphill battle among Republicans in Congress. Republican reaction to President Obama's $3.8 trillion budget plan was swift with some suggesting that the U.S. could face a debt crisis similar to the one plaguing Greece. Others suggested that the budget is all smoke and mirrors, with many of the deficit reduction methods actually being used to disguise spending increases.