President Barack Obama yesterday proposed an additional $313 billion (Dh1.15 trillion) in cuts to Medicare, Medicaid and other programmes to pay for healthcare reforms expected to cost about $1trn over the next decade.
"I know some question whether we can afford to act this year. But the truth is that it would be irresponsible not to act," Obama said in an advance text of his weekly radio address.
Obama wants a healthcare reform bill on his desk by October, but faces opposition from Republicans who oppose creation of a government-run insurance plan to compete with private insurers.
Many of his fellow Democrats are wary of making deep cuts to Medicare and Medicaid, the US healthcare programmes for seniors and poor people, to pay for reforms. With the cost of US healthcare continuing to rise rapidly, Obama argued the country could not afford to wait another year for sweeping changes. But he acknowledged the ambitious plan would increase government costs in the short run.
To address those concerns, Obama has pledged to come up with enough spending cuts and new revenue to pay for reforms.
"So today, I am announcing an additional $313bn in savings that will rein in unnecessary spending, and increase efficiency and the quality of care – savings that will ensure that we have nearly $950bn set aside to offset the cost of healthcare reform over the next 10 years," Obama said.
About $110bn of the new cuts would come from reducing scheduled increases in Medicare payments. That would encourage healthcare providers to increase productivity, White House budget director Peter Orszag told reporters.
Obama also proposed cutting payments to hospitals to treat uninsured patients by $106bn on the assumption those ranks would decline as healthcare reforms phase in. An additional $75bn would come from "better pricing of Medicare drugs", Orszag said, adding the White House was in talks with stakeholders over the best way to do that. The remaining $22bn in proposed cuts would come from smaller reforms.
The new cuts are in addition to a $635bn "down payment" on healthcare reform that Obama outlined in his budget to Congress earlier this year.
About half of that came from cuts in Medicare and Medicaid and the rest from revenue proposals such as cutting tax deductions for families that make more than $250,000 a year.
Altogether, the Obama administration is now asking Congress to trim spending on Medicare and Medicaid by more than $600bn over the next decade.
House Ways and Means Committee Chairman Charles Rangel said the committee would include about $400bn in Medicare and Medicaid savings in the healthcare overhaul legislation being drafted.
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