(Story updated at 5:40 p.m. ET.)
President Barack Obama's highly anticipated fiscal 2014 budget (PDF) released Wednesday proposes $5.6 billion in Medicare payment cuts for that year and about $400 billion in total federal healthcare savings over the next decade.
In a news conference at the White House, the president called his budget—which aims to reduce the deficit by nearly $1.8 trillion over 10 years and would eliminate the sequester cuts—“a fiscally responsible blueprint for middle-class jobs and growth.” He also described the budget's Medicare cuts as ways to reduce the cost of healthcare without shifting those costs to beneficiaries. The budget would derive much of the $5.6 billion in fiscal 2014 Medicare savings from $3.1 billion it expects to save by adopting a Medicaid drug-rebate program for the dual-eligible population. The drug rebate program requires refunds from pharmaceutical manufacturers to Medicaid programs.
Following a news conference at HHS headquarters, Jonathan Blum, deputy administrator and director for the Center for Medicare at CMS said the rationale behind that decision is to ensure that the Medicare program gets the same deals as state Medicaid programs.
“I think the question really is: why should one payer get a much better rebate for the same drug, for the same population?” Blum said, adding, that Medicare Part D should benefit from the same lower prices in the Medicaid program. “Same drugs, same people, but they just happen to be eligible for Medicare, not Medicaid, and so it's a really data-driven approach to make sure that Part D is getting the best value for the program.”
Many of the healthcare savings proposed in the budget were derived through various drug cuts, including $740 million in separate drug savings in fiscal 2014 from barring pharmaceutical firm agreements to delay the availability of generic versions of brand name drugs. The drug cuts were hailed as “sensible changes to Medicare” by one advocacy group closely allied with the administration.