KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Obama Debt Plan Includes Cuts To Medicare, Medicaid

News reports offer details of the plan, which President Barack Obama outlined today in a Rose Garden speech. It is designed to reduce the federal deficit by more than $3 trillion over the next 10 years and includes a $3.5 billion reduction in funds for the health law's prevention and public health trust fund as well as a new Medicaid "blended rate."

Kaiser Health News: "In his plan to trim the federal deficit, President Barack Obama Monday proposed $320 billion in cuts to Medicare and Medicaid, largely by changing how the federal government pays health providers, slashing payments to drug companies, and dramatically changing the way it splits the costs of Medicaid with the states, according to a fact sheet the White House released today" (Galewitz, 9/19).

Bloomberg: "President Barack Obama's deficit- trimming proposal would cut $320 billion from U.S. health programs in prescription drug and nursing home spending and by increasing individuals’ payments for Medicare coverage. The biggest cut is a $135 billion reduction in drug prices the government pays companies led by New York-based Pfizer Inc. (PFE) and Merck & Co. of Whitehouse Station, New Jersey, for enrollees in both Medicare, the federal health program for the elderly and disabled, and Medicaid, the U.S.-state plan for the poor. The White House released the proposals today" (Armstrong, 9/19).

Politico Pro: "Aspects of the plan are likely to frustrate Democrats on Capitol Hill, whether it's the $3.5 billion in cuts to the health reform law's Prevention and Public Health fund, the introduction of a new form of blended rates for Medicaid, or additional costs for seniors who enroll in Medicare after 2017, according to White House fact sheets. The fact that Obama backed off the idea of raising the eligibility age for Medicare, explicitly tied entitlement and tax reform, and didn’t cut as much from Medicaid blended rates as some advocates had feared, however, may placate some of the base" (Haberkorn, 9/19).

The Hill: "The plan calls for strengthening a controversial piece of the healthcare reform law, and it includes proposals state governments have strongly opposed. It also would require seniors to pay more for certain Medicare benefits, according to a summary of the proposal, which would cut $248 billion in Medicare funding and $73 billion to Medicaid and other health programs. The plan proposes strengthening the Independent Payment Advisory Board (IPAB) — a cost-cutting panel created by the healthcare reform law that Republicans have said will 'ration' care. Obama’s proposal would allow the IPAB to start its work earlier" (Baker, 9/19).

The Boston Globe: "President Obama’s plan to cut $320 billion in health care costs over the next decade includes reducing federal Medicare subsidies for high-income beneficiaries, cutting the amount Medicare reimburses hospitals for “bad debt” when patients who don’t pay their bills, and shortening market exclusivity for biotech drugs to seven years to accelerate access to lower-cost generics, among dozens of other cuts that will impact providers, industry and patients

CNN: "In terms of spending, Obama's plan incorporates $580 billion in mandatory cuts, including $248 billion from the politically popular Medicare program. Roughly 90% of those savings will come from reducing overpayments in the system, according to a senior administration official. Any changes to Medicare benefits won't kick in before 2017, the official said. An additional $72 billion will come from Medicaid and other health programs" (9/19).

Roll Call: "Of the $580 billion in proposed cuts to entitlement programs, $248 billion would come from Medicare and $72 billion will come from Medicaid or non-Medicare health-related savings, with no changes in retirement age planned and no beneficiary changes until 2017. In a carrot to Congressional Democrats who likely will feel uneasy about entitlement reform, Obama emphasized his desire to protect health benefits for seniors and Social Security" (Shiner, 9/19).

Reuters: "Vowing to veto any plan that relies solely on spending cuts to reduce deficits, the Democratic president's recommendations set the stage for an ideological fight with Republicans opposed to tax increases that will stretch through Election Day 2012. ... Obama's suggestions do not raise the eligibility age for Medicare recipients, something he proposed during debt ceiling negotiations with Boehner over the summer. Instead, he is proposing something more palatable to the left wing of his party -- $248 billion in savings from Medicare, the government health program for the elderly. The bulk of that would come from reducing overpayments to health care providers" (Bull and Bohan, 9/19). 

Kaiser Health News also tracked advance coverage of the release of the president's plan.

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