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Obama Introduces Fix for Medicare

“However, the specifics of that proposal don’t spring to mind as easily as the reforms being bandied about in Republican circles, such as providing seniors with vouchers to pay for premiums or raising the retirement age.

That’s partly because Obama last laid out his reforms in February 2012 as part of his budget proposal. The president did little more than touch on these plans on the campaign trail last year and again in last month’s State of the Union address.

But as policy makers dig in for an extended battle on deficit reduction, Obama’s Medicare reform plans are likely to get a lot more attention soon. Rep. Paul Ryan is expected to release his budget, which will update the GOP’s proposals to rein in health care spending on the elderly, on Tuesday.

The president’s plan focuses mainly on reducing payments to drug companies and hospitals, though he would also raise revenue by asking wealthy seniors and new beneficiaries to pay more. All told, his reforms would cut health care spending by $400 billion, according to updated estimates by the White House.

Here’s are some of the key things that Obama would do:

Pay less for drugs: Increase the rebates the government receives for Medicare beneficiaries’ medications so they are the same as the rebates given under the Medicaid program. This would save $140 billion.

Reduce payments for post-hospital care: Bring payments for skilled nursing and rehabilitation facilities, long-term care hospitals and home health care more in line with costs. Reduce payments to facilities with high rates of hospital readmission. Reduce payments to rehab centers for certain conditions, such as knee replacements and hip fractures, so they are more comparable with skilled nursing homes. Make sure centers are treating patients with greater need. This would save $50 billion….”

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