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White House Deficit Reduction Proposal Targets Medicare

Margaret Dick Tocknell, for HealthLeaders Media, April 14, 2011

President Obama on Wednesday presented a plan aimed at reducing the federal deficit by $4 trillion over the next 12 years. Healthcare will be expected to contribute its share with changes in the Medicare and Medicaid programs accounting for$480 billion in savings by 2023 and another $1 trillion in savings by 2033.

In a speech delivered at George Washington University, the President outlined in broad strokes the steps his administration will take to reduce healthcare costs. He said passage of the Accountable Care Act will reduce the deficit by $1 trillion and that his deficit reduction proposal will build on that success. He said that savings in the Medicare program will involve reducing wasteful subsidies and erroneous payments, and cutting spending on prescription drugs.

President Obama also proposed capping the growth of Medicare spending per beneficiary and strengthening the Independent Payment Advisory Board, a 15-member commission of doctors, nurses, medical experts, and consumers who recommend ways to reduce spending.

In a nod to the Partnership for Patients program announced by the Department of Human Services on Tuesday, the president said "we will change the way we pay for health care, not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.

The President made it clear that he will oppose efforts by Rep. Paul Ryan(R-WI) to reduce the deficit by recreating Medicare or Medicaid. "Their plan lowers the government's healthcare bills by asking seniors and poor families to pay them instead. Our approach lowers the government's healthcare bills by reducing the cost of healthcare itself."

Obama's defense of the Medicare and Medicaid programs was more emphatic later in the speech: "I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations."

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