On February 8, 2006 the President signed the Deficit Reduction Act of 2005 (DRA). The Act is expected to generate $39 billion in federal entitlement reductions over the 2006 to 2010 period and $99 billion over the 2006 to 2015 period. The DRA includes net reductions of $4.8 billion over the next five years and $26.1 billion over the next ten years from Medicaid, the program that partners with states to provide health coverage and long-term care assistance to over 39 million people in low-income families and 12 million elderly and disabled people, to fill in gaps in Medicare coverage, and to support safety-net providers. Many of the policy changes in the DRA would shift costs to beneficiaries and have the effect of limiting health care coverage and access to services for low income beneficiaries. The Congressional Budget Office (CBO) estimates that the DRA will reduce federal Medicaid spending by $11.5 billion over the five year period and by $43.2 billion over the next ten years. Provisions related to premiums and cost sharing, benefits, and asset transfers make up about half of the savings in the DRA and have the most significant implications for beneficiaries. Over the ten year period, the changes to benefits and cost sharing make up a larger share of the savings (27 percent over five years increasing to 37 percent of the savings over the ten year period). These reductions are offset by several provisions to increase spending, including health care relief related to Hurricane Katrina, for a net Medicaid reduction of $4.8 billion over the next five years and $26.1 billion over the next ten years. Several provisions including the Family Opportunity Act and other long-term care changes are expected to have positive impact for beneficiaries.
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