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President Obama, in response to the House Republican budget plan, released his administration’s proposal that seeks to reduce the deficit by $4 trillion over the next decade.

Though the proposal is merely a framework, early analysis shows that of the $4 trillion in sought reductions, at least one quarter of the savings the president is requesting comes from reductions in government health care spending, in particular the Medicare and Medicaid programs.  These programs have come to the forefront of discussions when dealing with the national debt, which is currently more than $14 trillion.

The president’s plan seeks to achieve Medicare and Medicaid savings of $480 billion by 2023 and an additional $1 trillion over the following decade (2023-2033).

The plan would:

  • Strengthen the power of the controversial Independent Payment Advisory Board
  • Reform the Medicaid program’s Federal-State Partnership
  • Make changes to Medicare’s prescription drug program
  • Reduce costs by improving patient safety
  • Reduce abuse in the Medicare and Medicaid programs

The White House has released more detail here.

The proposal comes in response to the House Republican proposal that would make more fundamental changes to the Medicare program — while the president’s proposal aims to make changes to the program as it exists today.  House Budget Committee Chair Paul Ryan (R-WI) stands by his committee’s proposal and came out yesterday critical of the Obama plan.

On the Ryan plan, the president said, “I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry with a shrinking benefit to pay for rising costs.”

It is unclear at this time which, if any, of the presidents’ or the House Republican proposal will gain enough traction to move forward, but even on first look of the side-by-side comparision of the proposals one can easily see stark differences that will add to the overall difficulty of compromise on these tough issues.

IHA will continue to evaluate the proposals and monitor their progress.

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.