During a speech today at George Washington University, President Obama set a goal of reducing the U.S. deficit by $4 trillion within 12 years and highlighted reforms to Medicare and Medicaid.
According to a fact sheet released to coincide with the President’s speech, his plan aims to build on the Affordable Care Act and reduce the growth of healthcare spending. “The President opposes any plan that would simply shift costs to seniors and the vulnerable by undermining Medicare and Medicaid,” the fact sheet read. The proposed reforms to Medicare and Medicaid would save $340 billion by 2021, $480 billion by 2023, and at least an additional $1 trillion in the subsequent decade. The reforms include initiatives to:
· Bend the long-term cost curve by setting a more ambitious target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018. This would involve strengthening the Independent Payment Advisory Board (IPAB).
· Make Medicaid more flexible and efficient without resorting to block granting the program, ending federal partnerships with States, or reducing healthcare coverage for seniors in nursing homes. This would result in a combined Medicaid savings of at least $100 billion over 10 years, according to the fact sheet.
· Reduce Medicare’s excessive spending on prescription drugs as well as lower drug premiums for beneficiaries without shifting costs to seniors or privatizing Medicare. A combined Medicare savings of at least $200 billion over 10 years is forecasted.
The White House plan overall looks to implement $2 trillion in spending cuts, $1 trillion in tax increases, and $1 trillion in lower debt payments.