Obama Proposes 320 Billion in Medicare and Medicaid Cuts Over 10 Years
Tuesday, September 20, 2011
Obama Proposes 320 Billion in Medicare and Medicaid Cuts
Over 10 Years
By: Robert Pear, New York Times
WASHINGTON - President Obama's budget director said Monday that
the president's new deficit-reduction plan would impose "a lot of
pain," and that is clearly true of White House proposals to cut
$320 billion from projected spending on Medicare and Medicaid in
the coming decade.
Mr. Obama proposed higher premiums and deductibles for many
Medicare beneficiaries and lower Medicare payments to teaching
hospitals and rural hospitals. He would start charging co-payments
to frail homebound older people who receive home health services.
And he would reduce the growth of federal payments to states for
treating low-income people under Medicaid.
The White House said Mr. Obama's proposals would cut $248
billion from the projected growth of Medicare in the next 10 years,
while shaving $72 billion from Medicaid and other health programs.
A large share of the Medicare savings would, in effect, be used to
pay doctors, who would otherwise face deep cuts in the fees they
receive for treating Medicare patients.
The proposals are part of a package to reduce deficits by more
than $3 trillion over 10 years, beyond the $1 trillion in savings
already assumed under the debt limit law that Mr. Obama signed in
early August. The package includes tax changes intended to raise
$1.5 trillion in revenue over 10 years.
Mr. Obama would also allow the Postal Service to cut its losses
by ending Saturday mail delivery. He would reduce farm subsidies by
$31 billion over 10 years, require federal employees to contribute
more to their pension plans, force military retirees to pay more
for prescription drugs and charge higher fees to air travelers for
"aviation security."
Jacob J. Lew, director of the White House Office of Management
and Budget, rejected suggestions that the White House was going
after rich people.
"If you look at the details of what's in the plan that the
president is sending to the Congress," Mr. Lew said, "there is a
lot of pain, and it's spread - it's spread broadly and we think
fairly."
Medicare and Medicaid insure more than 100 million people and
account for nearly one-fourth of all federal spending. The proposed
savings, which provoked predictable protests from health care
providers, represent less than 3 percent of what the government
expects to spend on the programs in the next 10 years.
Speaking in the Rose Garden on Monday, Mr. Obama said his plan -
in the form of recommendations to a bipartisan Congressional
committee on deficit reduction - "includes structural reforms to
reduce the cost of health care in programs like Medicare and
Medicaid."
The proposal would require new beneficiaries to pay higher
deductibles before Medicare coverage of doctors' services and other
outpatient care kicks in. The deductible, now $162 a year, is
already adjusted for inflation. Mr. Obama would increase it further
by $25 in 2017, 2019 and 2021.
In addition, the White House would increase Medicare premiums by
about 30 percent for new beneficiaries who buy generous private
insurance to help fill gaps in Medicare.
Many beneficiaries choose these private Medigap policies because
they want the financial security they get from the extra insurance.
But the White House said this protection "gives individuals less
incentive to consider the costs of health care and thus raises
Medicare costs."
Mr. Obama would raise $20 billion over 10 years by charging
higher premiums to higher-income beneficiaries and by freezing the
income thresholds so more people would have to pay the
surcharges.
About 5 percent of the 48 million Medicare beneficiaries now pay
the higher premiums. The proportion would eventually rise to 25
percent under the proposal.
Starting in 2017, Mr. Obama would require certain new
beneficiaries to pay co-payments for home health care, which is now
exempt from such charges. The co-payment would be $100 per episode,
defined as a series of five or more home health visits not preceded
by a stay in a hospital or a skilled nursing home.
Howard J. Bedlin, vice president of the National Council on
Aging, a service and advocacy group, said such co-payments would
"significantly increase out-of-pocket costs for many low-income
widows with multiple chronic conditions." Likewise, Mr. Bedlin
said, "The Medigap proposal would shift costs onto Medicare
beneficiaries."
Mr. Obama also proposed these changes:
¶ Require drug companies to provide additional discounts, or
rebates, to Medicare for prescription drugs bought by low-income
beneficiaries. This proposal, opposed by drug makers, would save
the government $135 billion over 10 years.
¶ Squeeze $42 billion over 10 years from Medicare payments to
nursing homes, home health agencies and rehabilitation hospitals.
Cut Medicare payments to nursing homes with large numbers of
patients hospitalized because they did not receive appropriate care
in the nursing home.
¶ Require doctors to get approval from Medicare for the most
expensive imaging services.
¶ Revise the formula for calculating Medicaid payments to
states, saving $15 billion over 10 years. Restrict states' ability
to finance their share of costs by imposing taxes on care
providers.
¶ Cut $3.5 billion over 10 years from a prevention and public
health fund created by the new health care law.
Another White House proposal would save $20 billion over 10
years by reducing Medicare payments to hospitals and other
providers for bad debts that result when beneficiaries fail to pay
deductibles and co-payments.