Healthcare Business News

Obama budget would mean sacrifice for many healthcare sectors

By Rich Daly
Posted: February 14, 2011 - 5:30 pm ET

Physicians, hospitals, drugmakers and states would all have to undertake various sorts of belt-tightening under President Barack Obama's proposed fiscal 2012 budget, administration officials acknowledged. Such sacrifices are required to address the new fiscal realities presented by a looming national debt.

“We can't build a future without living in our means,” said HHS Secretary Kathleen Sebelius, at a Monday budget proposal news conference. “In some cases, we cut programs we would not have cut in better fiscal times.”

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Those federal reductions include extending savings from the Medicaid Disproportionate Share Hospital program through 2021, slashing biologic drugs’ market exclusivity to seven years from 12 years and eliminating the children’s hospital graduate medical education program.

The proposed medical education cuts to help pay for a two-year delay of cuts in Medicare physician payments drew specific concern. “While we fully support eliminating future reductions to physicians, the answer to the physician payment issue is not cutting one provider to reimburse another,” Richard Umbdenstock, president and CEO of the American Hospital Association, said in a written statement.

States also would face a reduction in their federal Medicaid funding through a 10-year $18.4 billion phase-in of a federal limitation on a Medicaid physician tax. States use such taxes to boost their share of Medicaid funding, which in turn draws additional federal dollars due to a requirement that the federal government maintain a set ratio to state Medicaid spending.

The proposed budget also would reduce federal spending by $6.5 billion over 10 years by prohibiting so-called pay-for-delay agreements between brand name and generic drug makers that delay the release of generic versions of popular pharmaceuticals.

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