In his new budget, President Barack Obama proposed Monday to squeeze $399 billion over the next 10 years out of Medicare, Medicaid and other programs run by the Department of Health and Human Services.
Under the proposals, many Medicare beneficiaries would have to pay more for their care and coverage. The president would, for example, introduce a co-payment for new Medicare beneficiaries who receive home health care services, and he would collect $4 billion over 10 years by imposing a surcharge on premiums for new beneficiaries who buy generous private insurance to supplement Medicare.
In addition, Obama’s budget would reduce scheduled Medicare payments to teaching hospitals, nursing homes and health maintenance organizations that care for older Americans and people with disabilities.
The budget would reduce the projected growth of Medicare payments for graduate medical education by $16 billion over 10 years while saving $116 billion in Medicare payments to drug companies for medicines prescribed for low-income patients.
Obama would save more than $100 billion over 10 years by reducing inflation updates for health care providers that care for Medicare beneficiaries after they are discharged from hospitals.
And he would cut $43 billion over 10 years from the projected growth of federal payments to Medicare managed-care plans, known as Medicare Advantage plans. The goal of this proposal, the White House said, is to “improve payment accuracy for Medicare Advantage.”
The president’s budget would collect $66 billion over 10 years by charging higher premiums to higher-income Medicare beneficiaries, for coverage of doctors’ services and prescription drugs.
Obama again proposes to ban deals between brand-name and prescription drug manufacturers that he says delay the marketing of lower-cost generic medicines. This change, he said, would save Medicare and Medicaid more than $11 billion over 10 years.
The budget proposes to continue the Children’s Health Insurance Program through 2019. Under current law, the White House said, financing for the program will end in 2015.
Obama would pay for the extension of the program by increasing tobacco taxes, a step that the White House said “will help reduce youth smoking and save lives.”
The president would reduce Medicare payments to hospitals for “bad debt” - the share of bills they cannot collect from beneficiaries - and he would cut Medicare payments to hospitals for the training of doctors.
Obama said he wanted new beneficiaries to have “a modest co-payment” for certain home health care services, but in the past, beneficiaries and members of Congress from both parties have successfully resisted such co-payments.
In defending its proposal for a new surcharge linked to generous insurance policies’ supplementing Medicare, the White House said that such Medigap insurance reduces the incentive for people to consider the costs of health care, and this, it said, raises Medicare costs and premiums for all beneficiaries.
The president said his budget would encourage nursing homes and home health agencies to deliver care more efficiently by making a single bundled payment for many of their services.
Obama also proposed steps to address severe financial problems in Social Security’s disability insurance program. He said he wanted to reallocate payroll tax revenue from Social Security’s old-age and survivors trust fund to its disability trust fund, while he works with Congress to devise “a longer-term solution” to the solvency of the overall program.