updated 2/5/2007 3:44:05 PM ET 2007-02-05T20:44:05

Health care providers would get smaller pay increases when caring for the elderly, poor and disabled under President Bush's budget plan submitted to Congress on Monday.

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The recommendations, if adopted, would trim Medicare spending by $66 billion over five years. That means the health care program for seniors would grow at a 6.7 percent clip rather than a 7.6 percent rate, budget officials said.

Bush also calls for reducing Medicaid spending by about $25 billion over five years, which would just slightly dent the more than $1.2 trillion the federal government will spend on health care for the poor over the next five years. Congress would have to sign off on about half of the proposed Medicaid savings, while the remainder are regulatory changes that administration will pursue.

The president, who said he seeks a balanced budget by 2012, took aim at the two programs, which account for $1 out of every $4 spent by the federal government. However, the president called for smaller reductions last year, and those proposals went nowhere.

'Declaring war' on health care
Democratic lawmakers were cool to the recommendations. Rep. Pete Stark, D-Calif., described the Medicare and Medicaid proposals as "declaring war" on the poor and on Democrats. Stark, who oversees the House Ways and Means Committee's health subcommittee, said that savings can be achieved by targeting payments to health care providers, but not in the ways that President Bush sought.

For example, Stark said that he believes Congress can lower payments to insurance companies that provide managed care for seniors, a concept the administration opposes.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, noted that the proposed Medicare reductions are more than the president asked from any previous Congress.

Baucus said payments to insurance companies that provide managed care should be "on the table" of potential spending cuts. He took issue with the changes that Bush seeks for the State Children's Health Insurance Program, which provides health coverage to about 6 million people.

The program cost about $5 billion annually. The president called for an additional $4.2 billion in funding over five years, but Baucus said it may take as much as $15 billion simply to maintain current coverage.

"Simply put, Congress must do more to fund the Children's Health Insurance Program than the president suggests here," Baucus said.

'Devastating news for children, seniors and the disabled'
Hospitals, nursing homes and other providers say that they can't afford lower payments from the government.

"Today's budget is devastating news for children, seniors and the disabled who depend on the Medicare and Medicaid programs," said Rich Umbdenstock, president of the American Hospital Association. "They are being unfairly singled out to carry the burden of achieving a balanced budget."

Even with the attempt to slow entitlement spending, the budget for the Department of Health and Human Services will rise about 8.7 percent next year.

The other parts of the HHS budget didn't fare nearly so well.

The budget recommends a $50 million reduction for the Centers for Disease Control and Prevention, which is the principal agency for protecting the health and safety of all Americans. Funding for the agency would total $5.76 billion. Grants to states for bioterrorism preparation would be reduced, and funding remains at current levels for preventing the nation's leading health problems - heart disease and cancer.

Meanwhile, funding for the National Institutes of Health, which oversees medical research, would rise nearly 2 percent to about $28.7 billion.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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