There’s something for just about everyone to dislike in the $320 billion of healthcare savings President Obama proposed Monday.
Obama’s plan would cut programs that many Democrats prize and bolster initiatives that Republicans have attacked. It would require seniors to pay more for their Medicare benefits while cutting payments to doctors. It would shift Medicaid costs to the states. And it’s anathema to powerful healthcare industries including hospitals and pharmaceutical companies.
Even some groups that strongly supported Obama’s healthcare reform effort were sharply critical of the proposals he unveiled Monday.
AARP blasted sections of the plan that would require seniors to pay more for certain Medicare benefits. The proposals would raise deductibles and require co-pays for some services.
Senior administration officials emphasized that those policies wouldn’t take effect until 2017 and therefore wouldn’t affect current beneficiaries. But AARP said shifting costs to seniors is fundamentally the wrong approach to curbing healthcare costs.
“These people are not going to be any richer three years from now,” AARP Director of Legislative Policy David Certner said. “It’s really about trying to protect their economic security and retirement.”
The seniors’ lobby wasn’t any happier with a proposal to increase Medicare means testing — requiring wealthier seniors to pay higher premiums for parts of Medicare, including its prescription drug benefit. According to the White House, means testing would save the government about $20 billion over the next 10 years. Other cost-sharing would save a combined $4 billion.
State Medicaid programs also could face a major hit from Obama’s proposal. The advocacy group Families USA said Obama’s Medicaid proposals would simply shift costs to the states and then on to low-income families.
Obama’s proposal includes the two policies state Medicaid directors feared most: a “blended” rate of federal payments and limits on states’ ability to use taxes to increase federal payments. The blended rate would streamline various percentages of federal funding into a single rate of federal healthcare support for each state.
The White House has backed the plan before, but senior administration officials noted that they’ve now added a provision to increase federal support during recessions, when Medicaid rolls grow.
Matt Salo, executive director of the National Association of Medicaid Directors, said that change isn’t enough. If a blended rate is established, he said, the supercommittee and future deficit-cutting groups can use it to make much deeper cuts.
“Once people focused solely on reducing federal spending accept that this is a good policy, or an acceptable policy, at that point it really doesn’t matter what the dollar amount is,” Salo said.
Salo said he sees potential in proposals to cut payments for healthcare providers, including some cuts that would allow states and the federal government to share in the savings. But many of those proposals offer limited savings, and the big-ticket items drew immediate criticism from health industries.
The Pharmaceutical Research and Manufacturers of America (PhRMA) made a deal to support healthcare reform in part to ensure that the bill wouldn’t extend Medicaid drug rebates to Medicare. Democrats have long championed the rebate expansion, and Obama included an even more aggressive version in Monday’s package.
“PhRMA opposes implementing Medicaid’s failed price controls in Medicare Part D.,” the group said in a statement. “Such policies would fundamentally alter the competitive nature of the program, undermine its success and potentially cost hundreds of thousands of American jobs.”
With 10-year savings of $135 billion, the extended rebates are the single biggest source of savings in Obama’s proposal.
PhRMA also opposes Obama’s call to strengthen the Independent Payment Advisory Board (IPAB) — an expert cost-cutting panel created by healthcare reform. Republicans have charged that the IPAB will lead to “rationing,” and its support even among Democrats is weak. Obama’s deficit proposal would lower the threshold for the IPAB to begin recommending Medicare cuts.
The plan also would cut $3.5 billion from the healthcare law’s trust fund for prevention and public health programs. The American Public Health Association said the cuts “could effectively put the nation’s health at risk.” And the American Cancer Society Cancer Action Network said it was “troubled” by the proposal.
A senior administration official told reporters Monday that the administration would have preferred not to cut the prevention fund, but said sacrifices have to be made and that the remaining funds would still be targeted to the most valuable prevention efforts.