Josh Gerstein Josh Gerstein – Sat Jun 13, 7:06 am ET
President Barack Obama says he's now found savings that will pay almost all the costs of a massive overhaul of America's health care system.

Obama on Saturday is announcing an additional $313 billion in new proposed savings that he says would bring the total funding available for his top-priority health insurance reform to nearly $950 billion over 10 years.

White House officials insisted the new savings were rock-solid, but also acknowledged they had yet to settle on a specific mechanism to achieve lower prescription drug costs that make up nearly one-quarter of the new savings.

“Any honest accounting must prepare for the fact that health care reform will require additional costs in the short term in order to reduce spending in the long term,” Obama says in his weekly radio and Internet address. “Today, I am announcing an additional $313 billion in savings that will rein in unnecessary spending, and increase efficiency and the quality of care.”

The new proposals from Obama came as the drive for health care reform reaches a pivotal juncture in Congress. On Monday, the Senate Finance Committee is scheduled to receive Congressional Budget Office estimates on a slew of health-care options. On Wednesday, the committee is expected to unveil proposed legislation.

In advance of those milestones, the White House was moving aggressively to counter public criticism that funding plans for the health reform effort are unrealistic, particularly in the face of an expected 10-year pricetag of $1 trillion or more. Some analysts have faulted the White House for being overly optimistic about savings and tone-deaf to which tax-raising proposals are likely to fly in Congress.

In his address Saturday, Obama refers to a 10-year total of more than $600 billion in “savings” for health care. However, he does not explain in his latest comments that, under his revised budget released last month, $326 billion of that amount would come from tax hikes on Americans making over $250,000 a year, “loophole closers,” and higher fees for some government services.

In a conference call with reporters Friday, Office of Management and Budget Director Peter Orszag said the latest announcement signaled that the White House had met its obligation to identify funding sources for a broad-based effort to make health insurance more affordable and more widely available.

“We are making good on this promise to fully finance health care reform over the next decade,” Orszag declared.

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The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories — though the major cuts don't target doctors, Orszag said.

Over the next decade, $110 billion is slated to come from reducing reimbursements to take account of what Orszag described as the ability of providers to improve their efficiency. “Health care services should be able to achieve and do achieve productivity improvements over time,” he said. According to a fact sheet released by the White House, future increases in such Medicare payments would be reduced based on an assumption that health care providers achieve half the productivity increases seen elsewhere in the economy. The budget official said the reductions would take place even if providers failed to garner the projected efficiencies.

Another $106 billion would come from cuts in so-called disproportionate share payments the federal government makes to hospitals with large numbers of uninsured patients. “As the ranks of uninsured decline under health reform, those payments become less necessary,” Orszag said.



About $75 billion is slated to come from lower payments for prescription drugs. However, Orszag said the White House was “in discussions with stakeholders over the best way of achieving that $75 billion.”

Notwithstanding that ambiguity, Orszag asserted that the White House had put forward $950 billion in budgetary offsets that could be use to fund health reform. He called the proposals "hard" and "scoreable," meaning that they were sufficiently certain and specific to pass muster with CBO officials who formally tally the cost of budget items.

Asked about the discrepancy, Orszag said, “There’s been continuous skepticism that we will come forward with detail….The detail on the $75 billion for prescription drugs will be forthcoming in the very near future and I will rest my reputation as a former CBO director on the fact that there are multiple ways in which those savings can be achieved and we are committed to achieving that level of savings in this package.”

There were signs that the announcement of the additional $313 billion of savings may have been rushed. In addition to the vagueness about the $75 billion in lower drug costs, the White House’s health care reform coordinator, Nancy-Ann DeParle, did not join a conference call with reporters to announce the new proposals. Her presence had been advertised in advance, but a spokesman said she was in another meeting and could not participate.

The cuts and savings are likely to engender warnings from providers that de-facto rationing will occur as patients in some areas find themselves unable to find providers willing to perform lab tests, X-rays and the like, due to the lower reimbursement rates.

Hospitals are also likely to protest that the disproportionate share payments, which are targeted for cuts of 75 percent, are vital to maintaining hospitals in costly urban centers, and to keeping teaching hospitals viable.

“It is unlikely to be an exact match on a hospital-by-hospital basis but what we believe will occur is that the remaining DSH payments that will still exist can be better targeted to the hospitals most in need,” Orszag said.

The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories



Great!!!!! More lay-offs at the targeted companies....

$313 billion.......was this under someone's matress??? Lincoln's treasure????

"pay as you go" for everything other than The presidents pet projects......

Actually this falls within the rules of "pay as you go".

I think Obama should look under that mattress and see if Bush left any "mad money" behind that he stole from the American public. Should be at least half a trillion available in that mattress.

but who paid??? I thought PAYGO was for pet projects for a certain state, etc. this money was "found"

Maybe maybe not. It's one industry that from what I've seen hasn't been hurting too much like the rest of us. But becoming more efficient could require some job cuts so you could be right. My problem with it is I'm a little nervous about mandating efficiency increases in the health industry. I just don't like the idea of cutting corners there. Of course on the other side of that, that kind of thinking has probably led to why the industry is so inefficient (and I have read that it is).

Gosh, there is so much money spent just on advertising and sending out salespeople to doctors offices. I think a lot of the cost of drugs is in there!!
And, it is lame that a box of tissues costs $30 and two Tylenol cost $12 on your bill from the hospital.
And then, after dealing with my Mom's illnesses, it was criminal what I saw got charged to Medicare on a monthly basis or for something that had to be rented which could have been purchased flat out for so much less. Lots of service companies take advantage of that system.

Absolutely true, and that doesn't even begin to address the amount of fraud.

so....do I understand that this healthcare will be for EVERYONE in the US?

I'm wondering if this would even mean that there will be job cuts.
If more people have medical coverage, wouldn't more people be seeking medical care?

My understanding is that it will eventually be available to everyone in the US. I don't know if this just starts the program or if it is the complete program.

as in when Russia was communist?

Good question. If more people do seek medical care, and I suspect you are right, then the saving Obama is counting on may not be there. The cut, as I understand it, is on a per patient basis for some of this.

Only 15% of the population needs health care right now, do we need to add more debt to the already Trillion dollar debts being piled up every time he comes up with a new plan??? He says "invest" he means spending our money, he says "pay as you go" he means raise taxes to pay for it...pretty soon everyone will be unemployed and nobody to pay taxes...tehn what???

Nearly 46 million Americans, or 18 percent of the population under the age of 65, were without health insurance in 2007, the latest government data available.

http://www.nchc.org/facts/coverage.shtml

46 million Americans.

Oh, excuse me for my mistake, 18%...that makes all the spending and taxing worth it huh?? You need to have a plan that provides for the small percentage that needs it, not destroy it for everyone...

this is ONE of the things that bothers me

The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories — though the major cuts don't target doctors, Orszag said.

if this is cut....then even the workers would have to be laid off or salaries cut as well. they are for making money...just like any other business. cutting this would cut a lot of things out

just a thought

The unions have been big supporters of national health care, but what is going to happen when salaries of union nurses and others are capped and wages stagnate??? This will have to happen to prevent growth...People get so blinded by a dream that they don't see the reality of the situation..increasing taxes will cause inflation which will cause unemployement which will overburden our system and collapse it..that is the plan in place...and you voted for it..