Obama's health care cuts spread the pain

Health care savings in President Barack Obama's deficit-reduction plan would squeeze future Medicare recipients, cut payments to drug companies and hospitals, and shift costs to states.

Still, some advocates say the president's approach is less painful than other major ideas being debated this year, from privatizing Medicare to letting the states run Medicaid without a federal guarantee that the poor would get needed care.

"This is a question of 'compared to what?'" said John Rother, president of the National Coalition on Health Care, a research and advocacy group. "I would describe this as an attempt to spread the pain pretty broadly. While it does hit Medicare beneficiaries, it's better than most of the alternatives we've seen thus far, which would involve bigger hits."

Obama did promise Medicare beneficiaries that he'd veto any legislation asking them to sacrifice without also raising taxes on upper-income earners. But he didn't issue them a complete pass.

Instead, his administration is borrowing from corporate America's playbook by proposing to raise a range of costs for future retirees, while mostly shielding Medicare's 48 million current beneficiaries. Under the president's plan, starting in 2017:

—Upper-income beneficiaries would pay higher monthly premiums for outpatient and prescription coverage. Eventually about a quarter of all Medicare beneficiaries would be hit with the higher income-related premiums that only a small share of seniors now pay.

—Newly signed-up beneficiaries would pay a penalty if they also purchase private insurance that covers all or most of Medicare's copayments and deductibles. Administration officials say such insurance encourages over-treatment.

—New beneficiaries would pay a $100 copayment for home health services, unless they have just been discharged from a hospital or nursing home.

—New beneficiaries would pay a higher annual deductible for outpatient services. The so-called Part B deductible, currently $162, is indexed for inflation. It would go up by $25 for new enrollees in 2017, 2019 and 2021.

"You can't reduce the deficit without making some people pay more or get less," said Paul Van de Water, a senior analyst with the Center on Budget and Policy Priorities, which advocates for the poor. "If you think there should be no cuts in Medicare, anywhere, then this obviously goes too far. If, at the end of the day, you recognize that they have to make some further reductions, then these are about the best you can do."

Try telling that to the pharmaceutical industry. Obama's plan would cut their payments by $135 billion over 10 years, accounting for more than one-third of his total health care savings. The president wants drug makers to pay rebates to Medicare, along the lines of what they now pay Medicaid. The Pharmaceutical Research and Manufacturers of America says it would lead to the loss of thousands of jobs in the industry.

Hospitals and nursing homes, slated for a mix of cuts and efficiency measures, are also complaining. The American Hospital Association says if Obama's plan becomes law, hospitals and related businesses would lose 200,000 jobs by 2021.

Doctors also have reason to be concerned. Without endorsing any particular fix, Obama's plan assumes that Congress will...More.