Patients will lose out again as frontline services are targeted in a bid to save €721m.
Under the new plans by the HSE, 40,000 people will no longer be entitled to the medical card following a change to income eligibility.
The plans were announced in the HSE's national service plan.
In a bid to make its budget viable, the HSE is to take 20,000 medical cards from people over 70 under the new income eligibility rules.
Another 20,000 card-holders in younger age groups will also lose full benefit from the end of this month.
This will happen when the HSE eliminates a range of expenses that people could previously include, such as home-improvement loans.
The cuts will also mean that certain drugs will no longer be free to medical card-holders.
However, falling incomes and unemployment will mean the HSE will issue another 60,000 new full medical cards and 13,000 GP visit cards this year.
Despite the cuts, growing demand for medical cards and drugs will push existing costs up by €748m.
Details of the cuts to medical cards and other measures will be announced at the end of this month.
A further €60m is to be cut from primary care as the Government looks to implement December's austerity budge.
Funding for hospitals is being increased by 3.5pc in attempts to ease their financial pressures.
However, the brunt of cuts are being directed at medical card schemes and services for the disabled and older people.
The HSE plans to cut costs by axeing up to 4,000 jobs, reducing access to GP services and putting elderly people on nursing home waiting lists until beds are vacated.
The cuts include a controversial plan to cut agency and overtime costs for nurses by hiring 1,000 nursing graduates on two-year contracts on salaries of €22,000.
The Irish Nurses and Midwives Organisation last night expressed concerns about safe staffing levels with the departure of so many staff from the health service.
Health Minister James Reilly has defended the latest cuts.
"The lesson of the past two years in health services is clear," he argued.
"We have the capacity to maintain safe services and improve services, even though funding levels have to fall."
The Health Service Executive overspent by almost €400m last year, but director-designate Tony O'Brien said yesterday that he expects the service to keep within its spending targets in 2013.