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White House Deficit Reduction Proposal Targets Medicare

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

President Obama's willingness to reduce Medicare drew the ire of the American Medical Association. In a statement issued by her office, Ardis D. Hoven, MD and AMA chair released a statement expressing "strong concerns about the potential for automatic, across-the-board Medicare spending cuts because they are not consistent with meeting the medical needs of patients, which is our primary focus. The AMA urges President Obama and Congress to work with the medical profession on patient-centered reforms."

A White House fact sheet available here provides additional details of how costs will be reduced and savings achieved. Among the highlights:

  • Set a new target of Medicare growth per beneficiary as the gross domestic product plus 0.5%. According to the fact sheet this is consistent with the reductions in Medicare spending since ACA passed and the new Medicare proposals included in the president's speech.
  • Address the drivers of Medicare cost growth by providing the Independent Payment Advisory Board with additional enforcement measures. The IPAB, which was created by the Affordable Care Act, analyzes the drivers of excessive and unnecessary Medicare cost growth and recommends to Congress policies to reduce the rate of growth.
  • Replace the patchwork of federal matching formulas with a single matching rate that rewards efficiency for the Medicaid and the Children's Health Insurance e Plan program.
  • Work with the National Governors Association to develop recommendations to reform and strengthen Medicaid.
  • Incentivize more efficient, higher quality care for high-cost Medicaid beneficiaries, including those who are eligible for both Medicaid and Medicare.
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