Stakeholders Criticize Portions of President’s Deficit Reduction Plan

Nearly all stakeholders expressed opposition to at least a portion of the $3 trillion deficit-reduction proposal President Obama released on Monday, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 9/19).

Details on President's Plan

Obama's plan would cut $248 billion from Medicare, 90% of which would come from reducing overpayments within the program, according to administration officials. However, they said that some of the cuts would affect beneficiaries. Meanwhile, the proposal would cut $72 billion from Medicaid.

Administration officials said that the health care cuts would be balanced with new tax revenues. To do that, the proposal calls for overhauling the tax code and raising $1.5 trillion primarily from taxing high-income U.S. residents.
In addition, Obama's plan would strengthen the Independent Payment Advisory Board, a cost-cutting panel that has been criticized by Republicans.

The plan also would:

• Apply a single "blended" rate to Medicaid and Children's Health Insurance Program payments;
• Restrict how states tax Medicaid providers; and
• Move up from 2017 to 2014 the implementation of waivers from provisions of the reform law (California Healthline, 9/19).

GOP Reactions

House Speaker John Boehner (R-Ohio) dismissed the proposal. He said, "Unfortunately, the president has not made a serious contribution" to the work of the debt panel, which is charged with finding $1.5 trillion in savings by the end of November (Condon, National Journal, 9/19).

Senate Minority Leader Mitch McConnell (R-Ky.) also criticized the plan. "Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth -- or even meaningful deficit reduction," McConnell said.

Sen. Pat Toomey (R-Pa.), who is a member of the debt panel, said the panel would consider the president's proposals, but he said much of the plan amounted to "political posturing" (Min Kim, Politico, 9/19).

Democrats' Reactions

House Minority Leader Nancy Pelosi (D-Calif.) praised the plan. "By calling for reforms that will ensure that all Americans contribute their fair share, and by strengthening Medicare, the president is ensuing that we aren't balancing our budget on the backs of the middle class and seniors," she said (House/Friedman, National Journal, 9/19).

Other Democrats disparaged the suggested cuts to entitlement spending. "While we support cutting waste, fraud and abuse, we reject any proposal that cuts benefits in Medicare or Medicaid," Reps. Raul Grijalva (D-Ariz.) and Keith Ellison (D-Minn.) said.

Advocacy Groups React

Families USA Executive Director Ron Pollack warned that proposed changes to Medicaid -- such as reducing federal matching rates to states -- "shifts the burden to states and ultimately onto the shoulders of seniors, people with disabilities, and low-income families who depend on the program as their lifeline" (Lillis, The Hill, 9/19). Nancy LeaMond, executive vice president of AARP, praised Obama for not including an often discussed increase in Medicare eligibility age from 65 to 67, but said the plan would cause beneficiaries to pay more.

Provider groups praised the president's plan for assuming enactment of legislation that would stop Medicare provider payment cuts, which are scheduled to take effect at the end of the year. However, American Medical Association President Peter Carmel criticized the plan for not proposing how to offset the estimated $300 billion cost of blocking the cuts.

Consumer groups criticized proposed changes to Medicaid, which would rely on a single blended rate for federal Medicaid payments. Pollack said Families USA would oppose the changes because they would result in reduced coverage and benefits (Ethridge, CQ Today, 9/19).

Military Groups React

Military groups -- including American Legion, Veterans of Foreign Wars and the Military Officers Association -- all opposed elements in the proposal to raise pharmacy copayments for military families and increase fees for medical coverage for military retirees. "In our book, (these are) a formula for retention and readiness disaster," Steve Strobridge of MOA said (Zoroya, USA Today, 9/20).