Obama Offers More Health-Care Savings Through Limits on Payments
By Scott Wilson and Lori A. Montgomery
President Obama proposed today to rein in spending on federal health programs for the elderly and the poor by an additional $313 billion over the next decade, bringing his total proposed savings to nearly $950 billion -- enough to cover the full cost of sweeping health reform, a top adviser said.
In his weekly radio and Internet address, Obama proposed limiting the growth of Medicare fee-for-service payments, taking hospitals and other health providers at their word that they will reduce costs. Obama also proposed slashing subsidies to hospitals that treat uninsured patients, on the theory that very few uninsured patients will remain in the wake of reform.
Obama also suggested reducing payments to drug companies that serve Medicare recipients. Advisers declined to release details, saying the idea was still under discussion.
"These savings will come from common-sense changes," Obama said. "For example - if more Americans are insured, we can cut payments that help hospitals treat patients without health insurance. If the drug makers pay their fair share, we can cut government spending on prescription drugs. And if doctors have incentives to provide the best care instead of more care, we can help Americans avoid the unnecessary hospital stays, treatments, and tests that drive up costs."
By mandating cuts in federal payments to health providers, the measures would go a long way toward ensuring that untested innovations in health delivery actually produce savings for the federal government. But like other parts of Obama's plan to pay for health reform, they are likely to be met with skepticism on Capitol Hill, where lawmakers have so far proven unwilling to cut payments without clear evidence that providers can find efficiencies that don't hurt patients.
The president's offer of new cuts comes against a backdrop of public concern over the nation's fiscal health and long-term spending plans. His 10-year budget would shrink the $1.3 trillion annual deficit left by the Bush administration before allowing it to widen again in its final years, even before taking new spending on health care into account. Obama himself has acknowledged such deficits would be "unsustainable."
Obama and his senior advisers have identified rising health care costs as the biggest long-term drag on the budget, mainly due to the sharply escalating costs of the Medicare and Medicaid programs. He has said reining in health care costs is the key to reducing the deficit, and vowed that his own reform plans will require no additional borrowing.
Cost estimates for extending health insurance to all Americans exceed $1 trillion over the next decade. Obama's budget proposal set aside $635 billion for health care reform. Today's address adds $313 billion more to the pot, offering what White House budget director Peter Orszag called an "unprecedented" effort to "put down in such clarity how reform will be financed."
In addition to saving money in the short term, the newly proposed cuts would "spur productivity in a way that does not exist under current law," Orszag said, helping to prevent an increase in health costs that threatens to bankrupt the federal government. They would also save Medicare patients money - as much as $43 billion in reduced premiums for physician and outpatient services over the next 10 years.
"These savings underscore the fact that securing quality, affordable health care for the American people is tied directly to insisting upon fiscal responsibility," Obama said. "And these savings are rooted in the same principle that must guide our broader approach to reform: We will fix what's broken, while building upon what works."
"I know some question whether we can afford to act this year," Obama said. "But the unmistakable truth is that it would be irresponsible to not act."
The address capped a week when Obama emphasized the importance of health care reform inside and outside of Washington. He held a town hall forum Thursday in Green Bay, Wis., on the subject, and asked congressional leaders to send him legislation that would provide health insurance for the roughly 47 million Americans without it sometime this fall.
On Monday, he is scheduled to speak in Chicago to the American Medical Association, a trade organization wary of the president's reform plans.
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