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Obama Sizes Up Options For Health Care Cuts

Obama Health Care Cuts

RICARDO ALONSO-ZALDIVAR   04/11/11 05:53 PM ET   AP

WASHINGTON — President Barack Obama's plans to curb health care costs that drive the deficit would mean less taxpayer money for providers and more costs for beneficiaries as he draws from bipartisan ideas already on the table.

But don't look for his speech Wednesday to endorse a Medicare voucher system or turning Medicaid over to the states, as leading Republicans have proposed.

Conceding the GOP's point that government needs to cut and health care is one of the first places to look, Obama will try to change the direction of a deficit debate that threatens to get away from him. The president is using his speech to lay down broad principles and trace a path that could lead to compromise, but he won't unveil a detailed program.

White House spokesman Jay Carney said Monday that health care savings are essential to control the deficit. The spokesman indicated Obama would build on the work of his debt commission, whose recommendations he initially refrained from endorsing. Carney also praised a small group of senators from both parties, known as the Gang of Six, that is trying to set up a framework for a divided Congress to reach compromise on deficits.

"The president understands very well that health care spending is a major driver of our deficit and debt problem," Carney said. "He believes ... we can achieve those savings in ways that protect the people that these programs are supposed to, and were designed to, support and help."

One proposal in the debt commission's report last year would rework Medicare's deductibles and copayments so that most beneficiaries have to pay a share of their everyday bills – cost shifts that in a few years would add up to more than $100 billion in taxpayer savings. In exchange, Medicare recipients would get better protection against catastrophic costs.

Another called for scaling back the tax deduction for workplace benefits, which many economists say would be like putting the entire health care system on a diet. It's strongly opposed by unions, a major Democratic constituency.

And the wild card: curbs on jury awards in malpractice cases. Democrats and Republicans have been rigidly divided on the issue, an arm-wrestling match between GOP-leaning doctors and trial lawyers who tend to back Democratic candidates. A breakthrough could help in other areas.

Former Senate Majority Leader Tom Daschle said "there is virtually no likelihood" Obama will endorse a voucher plan for Medicare or block grants for Medicaid. But medical malpractice is another story. "He has already said he is open to ideas there," said the South Dakota Democrat, an adviser to Democrats on health care.

Obama probably won't drill down to that level of detail on Wednesday. Republicans already laid down their marker.

Later this week, the House will debate a plan by Budget Chairman Paul Ryan, R-Wis., which would fundamentally change government health care programs that touch virtually every family, covering about 100 million Americans.

Instead of Medicare, people now 54 and younger would get a government payment to buy private insurance when they retire. The Medicaid health insurance program for low-income people would be converted into a block grant, allowing each state to design its own program. But the poor would lose the right to coverage under federal law and middle-class retirees might not be able to keep up with future health costs.

Ryan's plan has been praised for its boldness. Even some who vehemently disagree with the specifics have credited the congressman for having the courage to start an adult conversation with the American people about the real costs of their health care programs.

Obama's approach would display another attribute commonly ascribed to adults: caution. A Medicare remake would probably require a mandate from the voters that neither party can claim.

"You don't have to dismantle the program in order to save it," said Rep. Xavier Becerra, D-Calif., a member of the debt commission. But he acknowledged that there would have to be "real cuts that will be painful."

In normal circumstances, the debt commission's ideas would be considered far-reaching. Compared to Ryan's plan, they're incremental. They leave the big health care programs in place, as well as Obama's overhaul, which Republicans would repeal.

Obama is also expected to indicate his support for the efforts of six senators seeking deficit deal. In the group: three conservative Republicans, Saxby Chambliss of Georgia, Tom Coburn of Oklahoma and Mike Crapo of Idaho; two moderate Democrats, Kent Conrad of North Dakota and Mark Warner of Virginia; and a liberal Democrat, Dick Durbin of Illinois.

One of the ideas they are considering would trigger the recommendations of the deficit commission, if Congress doesn't meet certain targets for spending, taxes and deficits.

Until now, the Gang of Six has worked in obscurity on what many consider a thankless task. The presidential seal of approval could improve their chances.

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Filed by Elyse Siegel  |