President Barack Obama yesterday outlined his plan for reducing the federal deficit and cutting Medicare costs, noting that unlike the GOP plan, his would "use a scalpel, not the machete.”
Obama delivered the speech at George Washington University in Washington, D.C., as Congress prepared to vote today on a FY2011 budget that would cut the federal budget by $40 billion over last year. After settling the debate over this year's budget, leaders of the Democratic and Republican parties alike said they are eager to move on to plans to reduce the deficit beyond 2011. Medicare will play a key role in that discussion.
During his speech, Obama countered the Republican plan for reducing Medicare and Medicaid spending, introduced last week by House Budget Chairman Rep. Paul Ryan (R-Wis.). That plan for Medicare's future would end direct payment to healthcare providers from the federal government, instead providing health insurance vouchers to senior citizens. The vouchers would amount to about $15,000 annually, necessitating that seniors to pay more for health care out of their own pockets. Ryan's Medicaid proposal would replace the current federal matching of state funds with block grants.
Obama told the audience that Ryan's plan would "end Medicare as we know it," and defended Medicare and Medicaid programs as part of "what makes America great." However, he also acknowledged that two-thirds of the federal budget is spent on Medicare, Medicaid, Social Security, and national security, and that careful changes will need to be made to cut costs in these programs.
Obama's plan to reduce Medicare spending incorporates steps intended to slash fraud and abuse, as well as a push for lower prescription drug prices. For Medicaid reductions, he said the federal government should work with governors "to demand more efficiency and accountability" from the program. Obama holds that the Affordable Care Act should cut Medicare spending by $500 billion by 2023 and an additional $1 trillion in the following decade through various health reform provisions.Also covered in the course of the speech were tax increases for America’s most wealthy, which Obama advocates.
Republicans criticized Obama's plan as being too vague and opposed the tax increases. “Outside of Washington, it's obvious that the problem isn't that people are under-taxed, but that Washington overspends," said Sen. Charles Grassley (R-Iowa). "Washington needs to get behind policies that clamp down on spending and grow the economy. The answer is not defending ways to grow the government."