Obama Deficit Plan Would Strengthen IPAB


WASHINGTON – President Obama unveiled a plan on April 13 to cut the deficit by $4 trillion over 12 years by, in part, strengthening the Independent Payment Advisory Board (IPAB) to help hold Medicare costs down.

In a mid-afternoon speech delivered at George Washington University, Washington, the president said the IPAB, which many physician groups have objected to, would be empowered to hold Medicare cost growth per beneficiary to the gross domestic product plus 0.5%, starting in 2018.

The IPAB, which was created under the Affordable Care Act, has been viewed by health care providers as a way to slash their Medicare reimbursement.

President Obama said Medicare and Medicaid savings would also be achieved by building on to the Affordable Care Act’s provisions. The health-related nondiscretionary side of the deficit-reduction plan he plans to implement would save $340 billion by 2021—in addition to the $1 trillion in savings the White House has projected for health reform—said the president. An additional investment in patient safety could reduce Medicare costs by $50 billion over the next 10 years, he said.

"We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market," said President Obama.

He also said that he would work with the nation’s governors "to demand more efficiency and accountability from Medicaid." But the White House made it clear in a fact sheet about the deficit cutting plan that the president would not support the block grant concept that has been advanced by several Republican governors.

In addition, said the president, "We will change the way we pay for health care—not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results."

The president also made it clear that he did not approve of the budget plan that was introduced on April 11 by Rep. Paul Ryan (R-Wisc.) and scheduled to be voted on Wednesday afternoon in the House. That budget would essentially privatize the Medicare program for anyone who is 54 years or younger.

"I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs," said President Obama. "We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations."

The president said that Vice President Joe Biden will begin meeting with congressional leadership in a few weeks to start discussing his deficit-reduction plan. The aim would be to have an agreement in place by the end of June, said President Obama.

The deficit plan includes a "fail-safe" mechanism: Across-the-board spending reductions would be required if, by 2014, "the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade." The spending cuts would not apply to Social Security, low-income programs, or Medicare benefits, according to the White House.

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