Obama Identifies $313 Billion for Health Care Through Medicaid and Medicare Savings

By MichaelJames

Jun 13, 2009 6:01am

From Sunlen Miller and Sarah Tobianski:

Calling Medicare and Medicaid “one of the greatest threats to our federal deficit,” President Obama used his weekly address to announce savings in Medicare and Medicaid that the administration said will generate more than $313 billion over 10 years for funding health care reform.

The savings, coupled with a $635 billion “down payment” already outlined in the fiscal year 2010 budget would add up to roughly $950 billion toward paying for health care reform.

“I know some question whether we can afford to act this year,” President Obama said in the address, “But the unmistakable truth is that it would be irresponsible to not act. We can’t keep shifting a growing burden to future generations. With each passing year, health care costs consume a larger share of our nation’s spending and contribute to yawning deficits that we cannot control. So let me be clear: Health care reform is not part of the problem when it comes to our fiscal future, it is a fundamental part of the solution.”

The $313 billion savings is in large part made up of savings from three big areas:  $110 billion from incorporating productivity adjustments and Medicare payments, $106 billion from reducing disproportionate hospital payments and $75 billion from better pricing of Medicare drugs.

“These savings will come from common sense changes,” Obama said in the address, “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.”

As Congress gears up next week to write legislation, Office of Management and Budget director Peter Orszag told reporters on a conference call Friday night that the $950 billion price tag is “in the ballpark” of many of the proposals floating around Capitol Hill.

“[$950 billion] is roughly in the range of many of the proposals being discussed, so that we are making good on this promise to fully finance health care reform over the next decade,” Orszag said.

But he didn’t rule out that some additional costs might be necessary in the future.

“There may very well be some additional resources that are necessary, and we would work with the Congress to come up with them if they are, but we haven’t seen [them]. The committees are still writing the legislation. And the precise cost involved has yet to be determined. What we wanted to do was put enough specificity on the table to get in the range.”

The president, in his address, says that the identified savings underscores that securing quality, affordable health care for Americans is tied to fiscal responsibility.

“The 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,” he said.

– Sunlen Miller and Sarah Tobianski

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