Obama Proposes Deficit Reduction Measures; Calls for Medicare and Medicaid Changes - April 19, 2011

On April 13, President Barack Obama unveiled the administration’s proposal to reduce the national deficit by $4 trillion over the next 12 years. The plan includes $480 billion in health care cuts from Medicare and Medicaid. Among other measures, Obama would create Medicare spending caps, to be enforced by the Independent Payment Advisory Board, as created under the Affordable Care Act. The plan would also call for $200 billion less in Medicare drug spending than projected, and would seek to fix the Medicare physician payment formula. For Medicaid, Obama proposes to limit state reliance on provider taxes, and would replace the state-specific federal matching rate with a single matching rate.

Following his speech, President Obama tasked Vice President Biden with leading a bi-partisan, bicameral working group to further develop these ideas, with the goal of producing a set of options by the end of June. This timing is intended to coincide with the anticipated Congressional vote to raise the debt ceiling, which could serve as a legislative vehicle for deficit reduction plans.

NAPH has been closely monitoring these events, and recently released a statement and alert on Obama’s deficit proposal.