During his weekly address to the nation on Saturday, President Obama announced that he will seek more than $300 billion in additional cuts from Medicare and Medicaid payments to help finance health care reform.

Two-thirds of the new proposed spending cuts come from hospital payments.  The President proposed $106 billion in ‘savings’ by cutting the Medicare and Medicaid DSH programs by 75 percent.  In addition, the President proposed $110 billion in ‘savings’ by reducing inflationary updates with an annual ‘productivity adjustment,’ the greatest impact on hospitals.

These ‘savings’ are in addition to the President’s FY2010 budget proposal to cut Medicare and Medicaid spending by $309 billion. They are also in addition to the $38 billion in previously announced reform-related cuts, and $41 billion in cuts in the proposed FY 2010 inpatient PPS rule.

IHA will be analyzing the proposal’s specifics and determining as best possible the Iowa impact. IHA will also be coordinating our messages and advocacy strategy with AHA.  Please stay tuned for next action steps on this important issue.

The American Hospital Association, along with other health care industry leaders, presented President Obama with a voluntary cost-curbing plan this morning. In a letter, the groups committed to work together as stakeholders to help achieve the administration’s goal of reducing health care costs by 1.5 percentage points over 10 years – saving $2 trillion or more.

The groups will focus on curbing cost increases through consensus proposals that:

• Make administrative simplifications across all sectors of the health care system.
• Reduce excessive utilization and under-use of health care by aligning quality and efficiency incentives.
• Encourage coordinated care and evidence-based practices.
• Reduce of the cost of doing business through delivery model improvements and information technology.

Many news reports today incorrectly reported that the plan promised to curb the growth rate of health care spending by 1.5 percentage points each year for 10 years. But the letter clearly stated:

“As restructuring takes hold and the population’s health improves over the coming decade, we (hospitals, physicians, other health care workers, payers, suppliers, manufacturers and organized labor) will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate — saving $2 trillion or more.”

IHA has long supported health care reform efforts that incent value by aligning quality and efficiency measures. Confirmed by the 2008 Dartmouth Atlas Project, IHA maintains that Iowa’s care delivery system should be a model for the nation of how to provide high quality care at a low cost.

A complete overview of IHA’s position on value-based purchasing is available for download.