Obama Outlines $313 Billion in Health-Care Savings

President Barack Obama said the government can save $313 billion over the next 10 years by forcing greater efficiency in Medicare, demanding better prices from drugmakers and cutting the number of uninsured Americans.

Obama, in his weekly address on the radio and Internet, outlined the projected savings to help demonstrate that his plan to revamp the U.S. health-care system won’t add to a deficit that’s projected to swell to a record $1.8 trillion this year.

“These savings underscore the fact that securing quality, affordable health care for the American people is tied directly to insisting upon fiscal responsibility,” Obama said.

How to pay for the overhaul has emerged as one of the key points of debate as the administration and Congress work to meet the October deadline Obama set for final passage of legislation. The $313 billion would be in addition to the $635 billion “down payment” the president put into his fiscal 2010 budget for the health-care proposal. The earlier figure includes a combination of tax increases for wealthier Americans and other savings in the federal Medicare and Medicaid programs.

White House Budget Director Peter Orszag said the additional revenue along with cuts and projected savings will cover the estimated $1 trillion cost of a health-care overhaul even if the final, total figures “are still undetermined.”

“We are making good on this promise of fully financing health care reform over the next decade,” Orszag said in a conference call with reporters yesterday.

Higher Estimates

The administration’s cost estimates are lower than those of private analysts. Gail Wilensky, a former administrator at the Centers for Medicare and Medicaid Services, has said the cost may approach $1.5 trillion and other projections are as high as $2 trillion.

In a fact sheet released with the president’s address, the administration projects that “productivity adjustments” to Medicare payments tied to productivity gains in the broader economy would save $110 billion over a decade. It would “encourage greater efficiency” while “more accurately aligning Medicare payments with provider costs,” the fact sheet says.

A further $106 billion would be saved by expanding the number of people with insurance coverage. That would cut payments the government makes to hospitals for treating uninsured patients, according to the administration.

Pledge to Industry

Citing a May pledge by industry groups, including the Pharmaceutical Research and Manufacturers of America, to reign in the growth of medical costs, Obama is projecting $75 billion in savings through “better prices” for drugs paid for in the Medicare prescription program. They way to do that would be part of negotiations with Congress, the fact sheet says.

The administration estimates $22 billion would be saved through such steps as adjusting payment rates for magnetic resonance imaging and similar procedures, as well as for skilled nursing and rehabilitation services and cutting waste and abuse.

“These savings are rooted in the same principle that must guide our broader approach to reform: we will fix what’s broken, while building upon what works,” Obama said.

The president’s address today expands on measures he outlined earlier this week at an event in Green Bay, Wisconsin. As he continues to lobby the public and the health-care industry, he will travel to Chicago June 15 to give a speech to the annual meeting of the American Medical Association, the nation’s largest doctors’ group.

Economic Link

“This is the moment when we must reform health care so that we can build a new foundation for our economy to grow,” Obama said in his radio address today.

In Congress, lawmakers are working on health-care legislation that will include tax increases and spending cuts.

The Senate Finance Committee may unveil a draft bill by the middle of next week. Yesterday, members of the House Ways and Means Committee met to confront what Chairman Charles Rangel, a New York Democrat, called the “heartburn” of trying to find a way to pay for it.

The Republicans in their weekly address turned to another subject, energy.

Representative Mike Pence said Democratic legislation to curb emissions of greenhouse gases through a so-called cap-and- trade system would cost American families $4,300 per year in higher energy costs and lead to the loss of U.S. jobs.

“This national energy tax amounts to an economic declaration of war,” Pence, of Indiana, said in the radio and Internet address. “That’s a heavy price to pay for a plan that will do very little to clean up our environment.”

Domestic Exploration

As an alternative, Pence said Republicans are offering an “all-of-the-above” energy plan. It calls for greater domestic oil and gas exploration, expanded use of nuclear power, investments in alternative and renewable energy sources and incentives for conservation, he said.

Pence said it is “the comprehensive energy solution this country desperately needs to achieve energy independence, create good jobs and help our environment.”

Obama’s address and details of the cost savings were released to reporters last night with the understanding that they wouldn’t be published until 6 a.m. today. The Wall Street Journal published a story on its Web site reporting the speech and the savings early this morning.