President Obama’s plan for deficit reduction and what it means for Medicaid

On September 19th, President Obama outlined a set of proposals to reduce the nation’s debt by more than $4 trillion and fund the American Jobs Act. The plan cuts $2 in spending for every dollar in new revenues.  These cuts are in addition to the $1 trillion in spending that has already been cut from the budget under the Budget Control Act. As stated by the President, his proposals include “structural reforms to reduce the cost of health care in programs like Medicare and Medicaid,” as well as cuts to many other parts of the Federal budget. The plan has been sent to the Congressional Joint Select Committee on Deficit Reduction for their consideration as they seek to develop a proposal to reduce the nation’s deficit by at least $1.5 trillion over the next 10 years.
To help pay for the plan, the President proposed $320 billion in health savings over the next decade with approximately $248 billion in cuts to Medicare and $73 billion in Medicaid cuts. The proposed Medicaid changes include phasing down but not eliminating the use of Medicaid provider taxes, limiting federal reimbursement for certain durable medical equipment, simplifying the federal Medicaid payment formulas for states and other changes. The Arc will be analyzing the proposals to assess the impact on people with intellectual and or developmental disabilities and their families. The Arc remains concerned that Medicaid program cannot bear deep cuts that will likely result in cost shifting to low income Americans and to the states.