The Obama Health Care Budget Cost Cuts Pretty Small

In conversations with members of the press the last couple of days, it is apparent the scope of President Obama's proposed federal health care cuts is not well understood in context.

Is the President really making hard choices to bring America's health care spending under control?

You decide.

Here are some facts from the Obama budget message spreadsheets (pages 117-127):

• In 2012, three years into the plan, federal health care spending is reduced by $18 billion--to still 97.7% of what it would have been without the cuts.
• In 2019, the Obama budget reduces federal health care spending by $51 billion--to 96.3% of what it would have been.
• Half of the administration's proposed health care spending cuts come from reducing Medicare HMO payments by $177 billion.
• Separating the HMO reductions, looking at just cuts to what we would consider the traditional health care providers--doctors, hospitals, drug companies, home health care--the Obama budget calls for just $6 billion in cuts in 2012 which is less than 1% of what the Medicare and Medicaid budget would have been.
  
• The total spending cuts to these traditional providers (other than Medicare HMOs) totals $19 billion in 2019, about 1.4% of what the budget would have been.
  

The Obama budget did not tackle physician payment reform or call for any physician payment cuts but said, "The Administration believes that the current physician payment system, while it has served to limit spending to a degree, needs to be reformed to give physicians incentives to improve quality and efficiency. Thus, while the baseline reflects our best estimate of what the Congress has done in recent years, we are not suggesting that should be the future policy. As part of health care reform, the Administration would support comprehensive, but fiscally responsible, reforms to the payment formula. "

The Congress has overridden the physician payment cuts called for by the Sustainable Growth Rate Formula eight years in a row--the most recent time this past July when the Congress overrode the pending 10% physician fee cut by eliminating private fee-for-service Medicare in 2011 to pay for it.