Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary premiums

Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary prem

The co-chairs of President Barack Obama's deficit reduction commission are promoting a way to achieve $600 billion in healthcare “savings” in a new version of their deficit reduction plan. Medicare and Medicaid cuts would be targeted over the next 10 years.

On Tuesday, Alan Simpson and Erskine Bowles proposed more spending cuts than they had in their original, 2010 plan. The updated plan would reduce the total deficit by $2.4 trillion overall within 10 years, they say.

Simpson, a former Republican Senator from Wyoming, and Bowles, who served as chief of staff for President Bill Clinton, identified a number of steps to bring down Medicare and Medicaid spending. They say these steps — including “reducing provider payments” and “adjusting benefits to account for population aging” — should be enacted between now and December.

This latest proposal comes little more than a week before $85 billion in across-the-board sequestration spending cuts are scheduled to take effect (March 1). Last week, Republicans rejected Senate Democrats' plan to replace the sequester with a package of spending cuts and tax hikes, saying no additional tax revenue should be on the table. With Congress on recess until next Monday, some political observers say the sequestration cuts are likely to occur.

Long-term care providers are among those facing a possible 2% reduction in Medicare payments if sequestration cuts take effect. They have protested this reduction, which would come on the heels of an 11.1% reduction in Medicare payments that took effect in late 2011.