Obama's Health Care Budget: ER Visit But No Cure

WASHINGTON (AP) - President Barack Obama's budget fixes a looming cut to doctors that could devastate Medicare, but it offers no cure for the underlying problem of rising health care costs that threatens to break the bank.

It's like stabilizing a patient in the emergency room and sending him home until the next crisis.

The budget would stave off for two more years a threatened 28 percent cut in Medicare payments to doctors, a relic of a 1990s budget law that failed to restrain costs. That would avoid severe disruptions for seniors, since doctors might start bailing out of Medicare if lawmakers let the cuts go through next year.

But with more than 100 million Americans already covered by programs such as Medicare, Medicaid and children's health insurance, Obama's budget is largely silent on costs that keep growing faster than the economy, tax revenues and workers' wages. And starting in 2014, the health care overhaul will add another 30 million people who depend on the government for coverage.

Some budget experts said Obama's proposal is only an opening bid. Much bigger health care changes would be in store if lawmakers of both parties agree to work together on a broad plan later this year to reduce government red ink.

"I don't think this represents his bottom line at all," said economist Alice Rivlin, a former Federal Reserve vice chair who served on Obama's debt commission. "I believe that the president, probably as a tactical move, did not propose changes in the big entitlement programs. He wants to work that out on a bipartisan basis with the Congress. With respect to entitlements and taxes, nothing is going to happen unless both sides are in sync."

One thing is for sure: Obama is forging ahead with his health care overhaul despite a repeal push by Republicans in Congress and challenges in federal court. Medicare Administration Don Berwick said the budget includes $465 million to implement the law. Most of that would go to his agency, now taking the lead in carrying out Obama's landmark coverage expansion.

The budget did not provide a new cost estimate for the overhaul, but it's certain to be higher than last year's figure of less than $1 trillion over a decade. That's because an additional year of full operation will have to be taken into account.

Heading off Medicare cuts to doctors won't come cheap. The two-year reprieve Obama proposes will add up to more than $54 billion over 10 years. Until last year, lawmakers merely tacked the cost of such relief onto the deficit. Recognizing that's no longer politically feasible, Obama is proposing $62 billion of health care cuts elsewhere to pay for it.

States would take the biggest hit, more than $18 billion, under a proposal to limit a financing strategy that draws more federal Medicaid money. Many states finance a portion of their Medicaid spending by imposing taxes on health care providers who are paid by Medicaid, thereby increasing payments to those providers by the same amount. States then use that higher number to increase their federal match.

Drug companies also get squeezed for more than $11 billion as the budget looks to speed up introductions of generic prescriptions.

For their part, Republicans are in a bind on health care. Their unrelenting criticism of the health care law's Medicare cuts helped them win back the House. Many would like to see more sweeping changes, like converting Medicare to a voucher plan where seniors would get a fixed payment for health care. But Democrats are ready to pounce at the first sign Republicans are moving to a voucher.

The Obama administration says the budget takes steps to control costs. An increase of $270 million to help spot fraud and improper payments is expected to return as much as $1.50 for every $1 invested. And components of the health care law that start to go into place next year offer hope for reorganizing the way health care is delivered, so that patients with chronic illnesses can lead healthier lives and avoid costly hospitalizations.