President Barack Obama is outlining a deficit reduction plan Wednesday that calls for deep Medicare and Medicaid spending cuts, but through a stronger independent Medicare board and a new Medicaid funding formula rather than the structural changes Republicans want.
The rest of his plan relies on a number of cost-cutting devices — some new, some old — that avoid asking for sacrifices from nearly all of the seniors and low-income people who rely on the health care entitlement programs.
Obama is setting a new goal of saving $340 billion in Medicare and Medicaid costs over 10 years, and $480 billion by 2023, with another $1 trillion in savings in the decade after that, according to a fact sheet released by the White House.
But he would do it in part by beefing up the Independent Payment Advisory Board, one of the least popular parts of the health care law among most Republicans and some Democrats — as well as provider groups that fear the cuts it would recommend. The idea of expanding the board is unlikely to gain traction in Congress any time soon, especially since it assumes that Republicans would end their efforts to repeal or defund the law.
He’d also move to a single federal Medicaid matching rate for the states, a change with uncertain implications for states, which now receive a variety of different levels of federal help.
Overall, Obama’s plan calls for reducing the deficit by $4 trillion in 12 years, backed up by a “debt failsafe” provision that would make across-the-board spending cuts if the debt hasn’t stabilized by 2014 — but not to Medicare, Social Security or low-income programs.
Obama hopes to use the new Medicare and Medicaid plans to draw a contrast with the Republican budget plan outlined by Rep. Paul Ryan, arguing that there are ways to cut spending without forcing seniors and poor people to pick up the costs.
But in doing so, he also rejected some of the biggest money-savers proposed by his own bipartisan fiscal commission, led by Alan Simpson and Erskine Bowles, that would force Medicare beneficiaries to share any of the sacrifices.
