President Proposes $320 Billion in Health Care Cuts

As part of a plan to reduce the federal budget by more than $3 trillion over 10 years, President Obama has proposed $320 billion in cuts to Medicare and Medicaid. Most of the savings ($248 billion) would come by slowing the projected growth of Medicare in the coming decade, according to the White House. The remaining $72 billion would be shaved from Medicaid and other health programs.

Details of the plan include:

  • Pharmaceutical companies would be required to lower their rates to some beneficiaries. The change would allow the federal government to receive the same brand name and generic rebates for low-income Medicare patients as are provided to Medicaid beneficiaries. This proposal accounts for the single biggest savings for Medicare, an estimated $135 billion over 10 years starting in 2013.
  • New beneficiaries would be required to pay higher deductibles. The current, inflation-adjusted deductible ($162/year) would increase by $25 in 2017, 2019, and 2021.
  • Medicare premiums would increase by approximately 30 percent for new beneficiaries who buy private insurance to help fill gaps in Medicare. The protection afforded by Medigap policies “gives individuals less incentive to consider the costs of health care and thus raises Medicare costs,” according to the White House.
  • Starting in 2017, some new beneficiaries would be required to make 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).
  • Higher-income Medicare beneficiaries would pay higher premiums for Medicare Part B and Medicare prescription drug plans.
  • Medicare payments to nursing homes, home health agencies, and rehabilitation hospitals would be reduced. Medicare payments to nursing homes with large numbers of hospitalized patients (because the patients did not receive appropriate care in the nursing home) would be reduced even further.
  • Doctors would have to seek approval from Medicare for the most expensive imaging services.
  • A revised formula for calculating Medicaid payments to states would save a projected $15 billion over 10 years (but would shift those costs to the states).
  • Over the next decade, $3.5 billion would be cut from a prevention and public health fund created by the 2010 health care law.
  • Medicare would cut payments to hospitals and other providers for bad debts that result when beneficiaries fail to pay deductibles and co-payments.

The President’s proposed savings would represent less than 3 percent of what the government expects to spend on Medicare and Medicaid in the next 10 years, but nevertheless generated protest from many quarters. The drug companies, through the industry group Pharmaceutical Research and Manufacturers of America (PhRMA), lashed out against what it called “price controls” for the Medicare prescription drug plan (Medicare Part D).

Senior groups also denounced the plan. “AARP reiterates its strong opposition to any proposals that would raise costs or cut the hard-earned Medicare benefits that millions of seniors depend upon every day for their health and retirement security,” said Nancy LeaMond, executive vice president of AARP.

“The cuts to the Medicaid program in the president’s proposal … shifts the burden to states and ultimately onto the shoulders of seniors, people with disabilities, and low-income families who depend on the program as their lifeline,” said Ron Pollack, executive director of the consumer advocacy group Families USA.

The American Hospital Association (AHA) also criticized the Obama proposal, saying that reduced Medicaid and Medicare provider rates would lead to 200,000 job cuts by 2012 for hospitals and businesses they support. Rich Umbdenstock, AHA president and CEO, called the president’s plan, “The wrong prescription to create a healthier America and sustain job growth in a sector of the economy that is actually adding jobs.”

Medicare and Medicaid insure more than 100 million people, and account for nearly a quarter of federal spending.


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17 Responses to “President Proposes $320 Billion in Health Care Cuts”

  1. Tiffany says:

    What about the many immigrants on the Medicare program that have only lived in the US for a short time? They have never paid into the system. I know they pay higher premiums, but it still drains the system with huge hospital bills. The American people that have paid into the system for many, many years get to pay for this.

  2. Lori says:

    i don’t think it’s a good idea to charge more for Medicare premiums for new beneficiaries who buy Medigap policies. Most people, young or old, don’t want to go to the doctor (except for a cold or sore throat).

    I don’t think older patients should be discouraged from seeking healthcare when needed because they are already worried about their finances. Maybe if they would call their doctor office and speak with the nurse that would cut down on visits. Also somehow more healthcare education for older adults on the aging process would help.

    More trending of physician ordering practices and notifying them of the documentation would be more constructive I think.

  3. Debbie Rakowski says:

    If I am to understand this correctly…bullet #10 would further penalize the provider/hospital because the patient does not take responsibility for thier own debt, which private physicians can write off but not use as deductions on tax return, by further reducing payment to the provider? Why would the care provider by punished? Should not the patient risk losing thier entitlement coverage? Providers cannot incur these types of financial loses and maintain a business, keep employees, or provide care on the private sector. Outpatient care is already at risk secondary to the ongoing assult to physician payments. This makes no sense at all!

  4. Karen says:

    It could be a simple fix if the providers banded together and refused to participate with ANY
    insurance companies.

  5. Diane says:

    I agree with bullet #3. New knees and new hips are provided easily to those who have Medicare and an expensive supplemental insurance which covers these procedures. The entire healthcare system has been overused by people who have said “my insurance will cover it.” Those days are gone and rightfully so they should be gone. Patients should share the expense for certain procedures leaving the money for the critically ill and injured patients who don’t have choices.

  6. Jerri says:

    Yes, Diane, but what of those seniors who don’t have the finances to sustain additional costs for “certain procedures” in addition to an already expensive supplement policy that they can’t afford to NOT have? Why is it that the first place they look at is the senior programs? How about trimming some of the fat from Washington? How about making our representatives pay for Medicare? How about cutting off their payroll once they’ve served their terms? How about stop supporting every other country in the world except our own? How about telling Fannie Mae & Freddie Mac to take a flying leap & stop pouring money into them? How about telling Nancy Pelosi to stop charging us for her plane trips back & forth to & from home? How about a lot of alternatives BEFORE they AGAIN pick on a senior program? There are many options available before they force-feed something like this to us.

  7. Cheryl Muckenfuss says:

    I have worked in the healthcare industry for over 20 years. I worked at my last job for 14 years and was laid off this past summer. My husband is 72 and now has to go on Medicare as I am unemployed. He is diabetic and has had a triple bypass within the past 7 years. I live in a small house in the midwest; our two cars are each over 7 years old. At the rate things are going with healthcare coverage cuts and increases in costs to patients, I would expect we will eventually lose our home. I am one of millions and it is not getting better. I agree with Jerri.

  8. Kathy says:

    Not one person has mentioned the fact that most often you end up having to go to 3 different Doctors to get the correct diagnosis. I wonder, are these doctors in such a hurry to see the next patient in order to make up the money they should be charging. Or did most of them not pay attention in school. It seems to me if a Doctor got it wrong instead everyone suing you and the insurance company should be able to get your money back, so you can apply it to the Doctor that gets it correct. Sometimes it’s amazing what these Doctors tell you. Either the need more time, more money, or more school, not sure which. Signed tired of Doctors and the rising cost of having to see more the one to get something corrected anymore.

  9. Jean says:

    I agree with Jerri. I have paid into the Social Security and Medicare system since I was 17 years old. For anyone other than our leaders to be penalized for mis-managing our investment greatly damages whatever trust I might have had in those who are supposed to be leading us and protecting the systems that were designed to provide for senior healthcare and income. The question might be “How can we replace the money we ‘borrowed’ from those who have invested in these systems for the agreed upon time and at the agreed-upon rate?”

  10. Barb says:

    I agree with Jerri and Jean. I think Jerri has made some good points and Jean is right about the mis-management that has been going on. If our President and Congress people recieved the same health care options as the working people get they might be more in touch with the real world. As it is they are not affected by whatever decisions they make. Instead the burden is passed on to the people who have already paid into the system and were told it would be there for them when they needed it. Adding to the retirees medical costs is not the answer to our budget crisis. When our President’s and congress’ term expires then so should their benefits, after all when I leave my job I will not retain my insurance unless I pay for it so why should they and my employer will definitely not continue paying me a salary. My income and benefits will come from the my next job and what I have put into my retirement fund.

  11. Kristi May says:

    The entire basis of this Presidency is to make healthcare affordable and available for all. Now that people are doing that let’s penalize them?? I don’t believe people who have medi-gap policies obtain them to have unnecessary procedures, they obtain them to protect themselves against catastrophic events. Also working in a billing office I see more medi-gap plans that pay only 20% of the balance left by MCR then ones that pay 100%. Those policies are few and far between.

    According to the 2010 RAC report “In the past fiscal year, the Recovery Auditors identified and corrected $92.3 million in combined overpayments and underpayments. Eighty-two percent of all Recovery Audit program corrections were collected overpayments, and 18 percent were identified underpayments that were refunded to providers.” What happens with the overpayments? Are they not put back into the MCR fund?

    What I see is a gross mismanagement of our funds. We need a complete overhaul of our whitehouse.

  12. Mary says:

    The problem with the drain on spending is in the Medicaid program, not so much Medicare. Public assistance programs, including Medicaid have become a lifestyle for many. When originally designed, public assistance and Medicaid were stop gap for those who truly needed help; people were embarrassed to accept the help. We need to totally revamp public assistrance and Medicaid programs so that it is a temprary step while re-training, re-educating or providing jobs assistance is provided. There needs to be a limit on the length of time healthy individuals, can be on the program. When we accomplish this, we will cut tremendous cost from this program and decrease the need to mess with Medicare.

  13. Amy says:

    After reading all of the comments, many valid points have been made by American workers that know the system, obviously alot better than the government does. It has always been said that changes should begin at the top. The governement needs to take a good look in the mirror and quit being so greedy. We the American people are the ones that keep this country going by our hard work and we the American people are the ones that are getting screwed. I am 33 years old and believe none of these programs will even exist when I am eligible for retirement (never) Why should I continue to pay into social security/Medicare when nothing will be there for me? Why is it the American people are afraid to stand up for themselves and fight back?

  14. Paige says:

    Jerri and Amy read my mind! I hope that in the election of 2012, whoever is elected, they will repeal Obamacare. In my eyes, it is the worst one of the many ill-gotten plans hatched by Obama and his democrat cohorts! The seniors deserve better!
    Hopefully, this nightmare will end with the election of a much needed leader of this great country.

  15. Sarah says:

    I most certainly agree with Jerri and Amy. I am only 24 and just starting to carve a name for myself in this world. I am scared for my future, my family, and myself. What is this World coming to?

  16. Karen S. says:

    I agree with Jerri. The politicians in Congress are keeping themselves insulated from this Medicare/Social Security nightmare at the expense of the American people. Simply put, they must live within OUR means and we can no longer afford THEM at their present level of royalty status. I’m all for rescinding their health coverage, their special clinics, and their many other, numerous perks. If any Americans must go without, so must they.

  17. Nicole D says:

    While I have many years before I am on Medicare, my mother and uncle are both on Medicare (my mom is on medicaid also) I help them do pretty much everything.I go to the doctors, make sure they get what they need, fill their prescriptions. What I notice is that if people want medications for pain among others they must go in every month. But they aren’t allowed to pick up the prescription until they have been seen. That’s a waste. It may seem insignificant but consider all of the miscellaneous materials used (thermometer sheaths, gloves, etc) for every single patient. Then there is all the blood-work and misc tests that some Doctors “want to do first just to make sure” or when the elderly see multiple doctors they each want their own tests. There needs to be a central place for items of this nature that all doctors involved to tap into, I’m sure this alone would cut costs. Medicaid could also have a premium type payment involved, like no premium for the children and elderly if they are extremely low income or have serious medical problems. I mean Medicaid could be the entire US”s insurance just charge a premium, considered by income.

    The elderly should not be cut in anyway. They have been on this earth working and paying and they deserve something back. Others states (like FL where I lived) If you are not disabled, 65 or older or have children you can not apply for food stamps or medical. I have to say where I live now in AZ is the most generous with their Welfare. I do believe I can say these things because I have been on welfare through the years. I didn’t even reapply for benefits and I can’t afford things, I go to school through the VA and I go to them for services. When I did have medicaid the past 3 years I only used it 2 times and those were both emergencies. We need to limit the visits that are allowed so the the Doctors and patients do not take advantage. If someone goes to the emergency room and it’s not an emergency make them go to urgent care or their Doctor. I even tell my kids no we are not going to the ER because for some reason that’s where everyone wants to run.

    Cuts need to go in the right places, and besides all of that I thought that OBAMHA was not going to touch the medicare system????? way to go pres….. I don’t vote because I feel that it is a waste of time. The People do not really get a choice or we would have thrown half of Washington’s ignorant and selfish politicians out on the you know what. I really hope that someone realizes that the US seems to care for everyone but their own. It is sad to know that we have caused a lot of our own downfall. The people should be able to ban together and FIRE the ones in Washington that just screwing it all up.
    Besides Washington I want to tell everyone that my intention was not to offend anyone (besides where it was pointed) and If I somehow did I apologize.
    May GOD truly bless America.

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