American Society of Hematology

Obama Deficit Reduction Plan Would Make $320 Billion in Health Cuts, Including Medicare, Medicaid; Assumes Repeal of SGR

Published on: September 21, 2011

The deficit reduction plan President Obama shared with the Congress September 19 includes $320 billion in health cuts over a decade; $248 billion of the reductions would come from Medicare and $73 billion from Medicaid.

What President Obama did not recommend was an increase in the Medicare eligibility age, something that up until this past weekend White House aides said was still being considered. In addition, while the President's proposal does not make specific recommendations concerning Medicare physician payment, it does note that the President assumes congressional action to permanently fix the troublesome physician payment formula.

The biggest reductions from the $248 billion in Medicare savings in the administration plan would come from requiring drug makers to give the price breaks they now give Medicaid beneficiaries to low-income Medicare enrollees who receive comprehensive drug benefits through what officials call the LIS, or low-income subsidy. This would save $135 billion over 10 years.

Post-acute care providers — skilled nursing facilities, long-term care hospitals, inpatient rehabilitation facilities, and home health agencies — would face reductions totaling $42 billion over that period.

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