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Obama's deficit plan squeezes Medicare

Associated Press | 9/21/2011, 1:03 a.m.

Hospitals and nursing homes, slated for a mix of cuts and efficiency measures, are also complaining. The American Hospital Association says if Obama’s plan becomes law, hospitals and related businesses would lose 200,000 jobs by 2021.

Doctors also have reason to be concerned. Without endorsing any particular fix, Obama’s plan assumes that Congress will address the main issue facing doctors: a scheduled 30 percent cut in Medicare payments next year due to a previous budget law gone awry. A solution being considered by congressional advisers would cut payments to specialists and freeze rates for primary care doctors.

Obama also wants to give additional authority to a new agency called the Independent Payment Advisory Board, which could force further cuts for medical providers.

All told, Obama’s plan would cut Medicare by $248 billion over 10 years and squeeze another $72 billion from Medicaid. Some of Medicaid savings involve shifting costs to the states by rejiggering the federal payment formula and limiting a strategy currently used by states to draw more federal dollars.

Two leading organizations that supported Obama’s health care overhaul law are expressing concerns about his latest plan. AARP says it could result in arbitrary cuts to Medicare. The liberal advocacy group Families USA says the Medicaid cuts could undermine coverage for the uninsured.

Associated Press