Obama’s Deficit Reduction Proposal Would Cut Medicare, Medicaid Spending
President Obama on Wednesday outlined a proposal to cut the federal deficit by $4 trillion over 12 years, in part through significant reductions in Medicare and Medicaid spending over that period.
Specifically, the proposal calls for Medicare and Medicaid reductions of $340 billion by 2021, $480 billion by 2023, and at least an additional $1 trillion over the following decade, according to a White House fact sheet. Obama’s plan would also strengthen the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act by setting a more ambitious target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018. The IPAB would also promote value-based benefit designs and would be given additional enforcement mechanisms.
To achieve $100 billion in Medicaid savings over 10 years, Obama’s framework would replace the current federal matching formulas with a single matching rate that rewards states for efficiency and automatically increases if a recession results in increased Medicaid enrollment. Obama has also asked the National Governors Association to recommend strategies for reforming Medicaid, and his plan supports incentives to deliver more efficient and higher quality care to high-cost beneficiaries.
Limiting “excessive” payments for prescription drugs would save $200 billion over 10 years under Obama’s proposal. The framework advocates leveraging Medicare’s purchasing power, speeding up the availability of generic biologics, prohibiting brand-name companies from entering into “pay for delay” agreements with generic companies, and managing Medicaid’s high prescribers and users of prescription drugs.
The president’s proposal also seeks to reduce Medicaid and Medicare abuse by stopping states’ use of provider taxes to lower their own spending without providing additional Medicaid services, recovering erroneous payments from Medicare Advantage, and establishing upper limits on Medicaid payments for durable medical equipment.
Posted on 4/14/2011 6:00:41 PM
