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.
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(Link last retrieved September 23, 2011)
