White House Details Some Cuts

Barack Obama concentrated on health care during his weekly radio address. The address itself lacked details, but the White House released an accompanying fact sheet suggesting additional savings and revenues to support health care reform.

The new savings (all over 10 years):

$110B – Productivity adjustments; These are provider fee scheduled decreases. We’ll see what kind of reception Obama gets at the AMA next week.

$106B – Hospital subsidies. It makes sense to lower subsidy payments for hospitals which care for “disproportionate share” of the uninsured as the uninsured gain insurance. In Massachusetts, this logic has left both of the largest urban safety net hospitals with huge budget holes.

$75B – Negotiating better prices for drugs under Medicare Part D. For a scary take on how difficult it is to negotiate with a single source charging a fortune for an “orphan drug,” see today's Boston Globe article on Genzyme’s marketing of Cerezyme in Costa Rica.

$22B—Cuts in nursing home payments and imaging fees.

Good article by Reed Abelson in today’s NY Times pointing out that interested parties advocate when they have real dollars on the line. Expect widespread provider opposition to this $238B in cuts, and pharma opposition to this $75B in identified savings. The majority of the Medicare savings in the first box ($177B of $309B) is cuts in payments to private Medicare Advantage health plans. Don’t expect silence on that either.