Medicare Policy And Politics: The Obama Debt Reduction Plan

Austin Frakt

First posted 9/19/11 on The Health Affairs Blog

Copyright ©2011 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc. 

Today, President Obama offered his plan to reduce the national debt by $3 trillion over 10 years, relative to current law. Most media attention will focus on his “Buffett rule,” the principle that millionaires should not pay average tax rates below those of the middle class, and on his ultimatum to “veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share.” However, the plan also includes some proposed changes to health programs.

In broad terms, two important changes for Medicare policy and politics are included in the plan. They are (1) targeted cuts in provider payments (saving $224 billion over 10 years) and (2) 15 percent increases in income-related Parts B and D premiums and the fixing of thresholds so that, in time, one-quarter of beneficiaries are subject to a premium surcharge (generating about $20 billion in revenue over 10 years). The former is consistent with the spirit of the Affordable Care Act (ACA), which also cuts provider payments. The latter is consistent with the Buffett rule, which aims to make wealthy Americans pay a greater share of the cost of social programs.

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