“I will preserve these health care programs as a promise we make to each other in this society. I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.”

                                                              — President Obama (4/13/11)

President Obama unveiled a deficit reduction plan this week that provided a stark alternative to the House Republican’s budget plan.  His plan would reduce the deficit by $4 trillion over the next twelve years by cutting $1 trillion in spending from the tax code, reducing interest payments on the debt by $1 trillion and by cutting $2 trillion from a wider range of government budget items including defense. On the Medicaid and CHIP issues that we follow closely, it is a plan that contrasts sharply in key ways with the proposal put out by House Budget Committee Chairman Paul Ryan. The President stood firm in his opposition to House Republican’s plans to block grant and cap Medicaid and ending Medicare as we know it.  These proposals were included in the Ryan’s resolution adopted by the House today on a vote of 253-193, split mostly along party lines.

While firmly opposing radical proposals to pass the buck on health care spending and cause more Americans to become uninsured, President Obama said he would find more cost savings in health care spending.  His plan would build upon the reforms enacted in the health care reform law that are already on track for reducing the deficit by $1 trillion.  With respect to Medicaid and CHIP,  he specifically called for:

• Creating a simplified Medicaid and CHIP financing structure that would, among other things, respond automatically in recessions to help states with rising enrollment and costs. 
• Working with governors of both parties to demand more efficiency and accountability from Medicaid.
• Creating incentives for more efficient, higher quality, care for high-cost beneficiaries, including those who are eligible for both Medicaid and Medicare.
• Changing the way we pay for health care — not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.
• Cutting spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and getting generic drugs on the market faster.
• Reducing wasteful subsidies and erroneous payments.

We still need more details on these proposals.  The President has suggested that they will generate savings of $100 billion over 10 years.  It will be important to assess whether they truly can do so without harming those who rely on Medicaid.  Medicaid not only enable children to see a doctor when they are sick or injured, it helps seniors in nursing homes and assists those with disabilities so they can continue to live independently. Most fundamentally, though, it is important to highlight that President Obama made a firm commitment to protecting those that Medicaid and CHIP serve.  He focused on health care costs rather than simply passing the buck (with a cap or block grant) to states, health care providers, local communities and those who can least afford increased costs.