Liberal group outlines substantial Medicare cuts

Associated Press Modified: November 14, 2012 at 10:32 am •  Published: November 14, 2012
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WASHINGTON (AP) — Trying to prevent a raid on health care programs in upcoming budget talks, a think tank close to the White House on Wednesday released a plan for significant savings, mostly from Medicare.

Medicaid and the new health care law are largely spared from cuts in the blueprint from the liberal-leaning Center for American Progress. Instead, it targets Medicare service providers, from the pharmaceutical industry to hospitals and nursing homes. Higher-income Medicare recipients also would face increased monthly premiums for outpatient and prescription coverage.

After taxes, health care costs are probably the thorniest issue facing policymakers looking for a way to avoid the so-called fiscal cliff, an economically toxic combination of tax increases and spending cuts looming Jan. 1 if compromise fails.

Rising health care costs are the most stubborn element of the nation's long-term budget woes. At the same time, a recent report for the government estimated that the U.S. health care system squanders $750 billion a year, about 30 cents of every medical dollar.

The center's proposal is notable because the organization serves as a kind of idea factory for President Barack Obama's administration, akin to the conservative Heritage Foundation during Ronald Reagan's presidency. The plan calls on Obama to draw the line against broader cuts and premium increases in budget talks with Republicans.

"This isn't a floor. This is a ceiling," said Neera Tanden, president of the center and formerly a senior White House official who worked on Obama's health care overhaul. "The idea was to provide ideas in the debate that would not punish the middle class and low-income seniors."

Congressional Republicans call the approach wishful thinking. They argue that all health care programs, including Medicaid for the poor and Obama's law covering the uninsured, must be on the table. They say any plan that walls off big portions of government health care spending is simply not credible.

Tanden suggests Republicans recheck the election results. Voters, she said, knew that Republican Mitt Romney wanted to repeal the health care law, privatize Medicare and give Medicaid over to the states — and they chose Obama. "This election was not a coin toss," she said. "We did not come out equal."

The center's plan rejects raising the Medicare eligibility age to 67, a concession that Obama quietly offered during failed budget negotiations last year. Instead it focuses on squeezing Medicare service providers, a strategy the plan's authors say will make the entire health care system more efficient without risking quality.



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