The Obama administration is proposing to cut $320 billion from projected spending on Medicare and Medicaid in the coming decade as part of an overall reduction of the federal deficit.

Medicare, Medicaid, cuts in Medicare, Medicare costs, Medicare beneficiaries, Obama administration, health programs, White House, John Schultz, Jacob Lew, Office of Management and Budget, drug companies, rebates, drug manufacturers, Medicare/Medicaid reductions, federal health care spending, Ronald Pollack, Families USA, John Rother, National Coalition on Health Care

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Obama proposes cuts in Medicare, Medicaid

October 10th, 2011

WASHINGTON – The Obama administration is proposing to cut $320 billion from projected spending on Medicare and Medicaid in the coming decade as part of an overall reduction of the federal deficit.

The president has called for higher premiums and deductibles for many Medicare beneficiaries and lower Medicare payments to teaching hospitals and rural hospitals. In addition, he would begin charging co-payments to homebound older people who receive home health services and would reduce the growth of federal payments to states for treating low-income people under Medicaid.

The White House says 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. Much of the Medicare savings would be used to pay doctors, who would otherwise face deep cuts in the fees they receive for treating Medicare patients.

“If you look at the details of what’s in the plan that the president is sending to the Congress, there is a lot of pain, and it’s spread — it’s spread broadly and, we think, fairly,” explains Jacob Lew, director of the White House Office of Management and Budget.

Medicare and Medicaid insure over 100 million people and account for nearly one-fourth of all federal spending. The proposed savings represent less than 3% of what the government expects to spend on the programs in the next 10 years.

Obama also proposes requiring drug companies to provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries. This plan, which is opposed by drug manufacturers, would save the government $135 billion over 10 years, according to the White House.

But some health care experts warn that some reductions in payments to providers actually hurt beneficiaries because physicians will either refuse to accept Medicaid patients or restrict the number of new Medicare patients that they will take.

The proposed Medicare/Medicaid reductions come at a time in which a special congressional committee has heightened its search for ways to eliminate hundreds of billions of dollars in federal health care spending. That panel is expected to seek similar savings in health programs, or more, as it examines avenues to reduce federal budget deficits by a total of $1.5 trillion over 10 years.

Some of those who are generally viewed as Obama allies have expressed concerns over his Medicaid plan.

Ronald Pollack, executive director of Families USA, expressed his concern: “The Medicaid cuts in the president’s proposal shift the burden to states and ultimately onto the shoulders of seniors, people with disabilities and low-income families who depend on the program as their lifeline.”

And John Rother, president of the National Coalition on Health Care, an organization that represents consumers, employers and providers, warns that although the new health care law “showed that it is possible to slow the growth of Medicare costs without hurting beneficiaries, Medicaid shows that if you starve a program and provide inadequate reimbursement, access to doctors will be at risk.”