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The Honolulu Advertiser
Posted on: Sunday, June 14, 2009

Obama plan cuts Medicaid, Medicare


By Noam N. Levey
McClatchy-Tribune News Service

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White House: www.whitehouse.gov

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WASHINGTON Under pressure to pay for his ambitious reshaping of the nation's healthcare system, President Obama yesterday outlined $313 billion in Medicare and Medicaid spending cuts over the next decade to help cover the cost of expanding coverage to tens of millions of America's uninsured.

The proposal comes on top of more than $634 billion in new revenue Obama suggested reserving for healthcare in his February budget plan.

The president, who increasingly is focusing on his healthcare agenda as Congress struggles to craft legislation, said his latest plan would help control the country's skyrocketing healthcare tab.

"I know some question whether we can afford to act this year," Obama said in announcing the proposal in his weekly radio address. "But the unmistakable truth is that it would be irresponsible to not act. We can't keep shifting a growing burden to future generations."

Yet the proposal which includes potential cuts to hospitals, pharmaceutical companies and other providers also underscores the political delicacy of the administration's search for money for a massive healthcare overhaul that could cost more than $1.2 trillion over the next decade.

Among the proposed policy changes outlined by the president are:

Reductions in payments to providers to reflect increased efficiencies in the system, which the White House estimates could save $110 billion over 10 years.

Cuts in federal subsidies to hospitals that treat large populations of uninsured patients, estimated to save $106 billion over the next decade.

Cuts in how much the federal government pays pharmaceutical companies to provide prescription drugs to seniors and others, estimated to save $75 billion over the next decade.

The president described the proposals as "commonsense changes" to make the system more efficient.

Peter Orszag Obama's budget director and a leading architect of the president's healthcare policy played down the potential lost revenue for healthcare providers by pointing to the millions of additional people who would get insurance under the plans being advanced by congressional Democrats.

"This money is dedicated to financing, in a fiscally responsible way, expanded coverage," Orszag said. "That expanded coverage will generate benefits for some of those groups, including for hospitals."

Orszag said the spending cuts also could extend the solvency of the primary Medicare trust fund by seven years to 2024.