President's New Deficit Reduction Plan Includes Cuts to Health Programs

On Monday, President Obama released a proposal to reduce the federal deficit by $3 trillion over the next 10 years, in part by making cuts to Medicare and Medicaid, The Hill's "Healthwatch" (Baker, "Healthwatch," The Hill, 9/19).

The plan was developed to provide guidance to the newly created debt panel, which is charged with finding $1.5 trillion in savings by the end of November.

Details of Obama's Plan

Obama's plan would cut $248 billion from Medicare, of which 90% would come from "reducing overpayments" within the program, according to administration officials.

However, they said that some of the cuts would affect beneficiaries. Meanwhile, the proposal would cut $72 billion from Medicaid, but officials would not provide specifics on those reductions.

The plan does not include a gradual increase in the Medicare eligibility age -- from 65 to 67 -- as some analysts had expected (Baker, "Healthwatch," The Hill, 9/18).

In addition, Obama's plan would strengthen the Independent Payment Advisory Board, a cost-cutting panel that has been criticized by Republicans. 

The plan also would:

  • Apply a single "blended" rate to Medicaid and Children's Health Insurance Program payments;
  • Restrict how states tax Medicaid providers; and
  • Move up from 2017 to 2014 the implementation of waivers from provisions of the reform law ("Healthwatch," The Hill, 9/19).

Congressional Democrats Largely Oppose Cuts to Entitlement Spending

Administration officials said that the health care cuts would be balanced with new tax revenues.

According to an unnamed official, the president will veto any plan that "takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share" (Budoff Brown/Epstein, Politico, 9/18).

To do that, the proposal calls for overhauling the tax code and raising $1.5 trillion primarily from taxing wealthy residents (Cooper, New York Times, 9/18).


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