The Tension in the Obama Administration's Approach to Health Care Cost Cutting

Credit: National Institutes of Health Library / / CC BY-NC-SACredit: National Institutes of Health Library / / CC BY-NC-SAThe sequestration process is revealing an odd tension in the Obama administration’s approach to paying for health care. 

You can see it in the administration’s conflicted approach to Medicaid: The White House has been increasingly adamant in its refusal to allow any cuts to the joint federal-state program for the poor and disabled. In 2011, Jack Lew, the former White House Chief of Staff and budget head, somewhat famously demanded that the program be exempt from the sequester. And more recently the White House has declared that it will no longer discuss any cuts to Medicaid — even cuts administration officials had previously said indicated they would consider.

Yet at that same time, the administration has been waging a fierce legal battle to preserve the rights of states to cut Medicaid reimbursements as much as state officials want. The administration’s official position is that “there is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs.” The White House is very clear, in other words, that states should be able to cut the program’s payments as they see fit.

You can see a related tension in the administration’s approach to Medicare, the federal health program for seniors. Unlike Medicaid, Medicare is not exempt from sequestration; it’ll face a 2 percent reduction, which will amount to about $11 billion next year. Health and Human Services Secretary Kathleen Sebelius, noting that the cuts will hit health and drug plans as well as other providers, has warned that this will “result in billions of dollars in lost revenues to Medicare doctors, hospitals, and other providers, who will only be reimbursed at 98 cents on the dollar for their services to Medicare beneficiaries.” And the White House doesn’t seem too pleased either: The Office of Management and Budget’s report on sequestration complains that GOP alternatives to the spending reductions are wrong partly because they “fail to address Medicare sequestration.”

Yet the White House’s whole theory of Medicare reform is built around cutting reimbursements to health providers: When President Obama talks about modestly reforming Medicare without cutting benefits, that’s exactly what he means. Obama has repeatedly called for cutting payments to drug manufacturers, and ObamaCare includes more than $700 billion in cuts to Medicare, which are distributed amongst the various big players in the health industry. The Medicare cost-control board that ObamaCare sets up is expected to focus heavily on reimbursement cuts.

The frictions here are revealing: The administration wants to protect Medicaid from any cuts, but it also knows that the combination of squeezed state budgets and the coming Medicaid expansion mean that some cutbacks will inevitably be necessary. It complains about the impact of relatively small cuts to Medicare providers, but also plans for hundreds of billions worth of reimbursement reductions to those same organizations.

In other words, the administration is being evasive and trying to have it both ways: It wants to allow Medicaid to be cut, but doesn't want to do the cutting. It wants to cut Medicare payments, but also gripe about problems that might result from other Medicare reimbursement reductions. It wants to cut federal health spending and reform the entitlement system. But not really. 

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  • R C Dean||

    There really isn't any tension:

    The administration has no objection, and indeed favors, cutting reimbursement to providers. It opposes, however, cutting the budget for the program itself. Money "saved" by cutting what providers are paid is then "repurposed" for bigger bureaucracy, various pilot programs, expanded benefits, etc.

  • John||

    Yup. They have no desire to cut medicare. they just want to cut the parts that don't benefit their supporters and cronies.

  • BakedPenguin||

    He was referring to the sexual tension between the President and Sibelius.

  • Hugh Akston||

    That whole subplot is a total red herring. The real story is the sexual tension between Obama and John Boehner.

  • John||

    Who is the pitcher in that relationship?

  • Hugh Akston||

    Just based on public interactions, I'd say Obama. But I wouldn't be surprised if Boehner was a power-bottom behind closed doors.

  • Hugh Akston||

    If I didn't absolutely know better, I would almost think that Obama and his cabinet had no idea what they were doing.

  • wareagle||

    just the opposite - they know exactly what they are doing, foreseeable consequences and everything

  • CatoTheElder||

    As the Bolsheviks used to say, "The worse, the better."

    PPACA was designed to fail, and to take the entire health care industry down with it. Its proponents knew it was a stepping stone to single payer and then to socialized medicine.

    Only suckers thought otherwise.

  • ||

    In other words, the administration is being evasive and trying to have it both ways

    This should have been the entirety of your article. Because nothing else needs to be said.

  • Hugh Akston||

    This could basically be part of (or the whole of) every story about the Obama Administration.

  • ||

    Yes, if you added something about dishonesty and incompetence, you could just copy and paste every time.

  • LTC(ret) John||

    "being evasive and trying to have it both ways"

    Write it in Latin and put it on the Obama coat of arms.

  • BakedPenguin||

    "Semper dolosa et incerta"

  • LTC(ret) John||

    Excellent - now, what symbols on the coat of arms? Maybe an outstretched hand reaching for a pile of money on the left and a nose lifted in the air on the right...Do we have a bar sinister run through it?

  • BakedPenguin||

    He is both an actual and metaphorical bastard, so I'd put two in.

  • SugarFree||

    How about "Fortune Favors The Liar."

  • Question of Auban||

    But I thought that if Obama signed Romneycare into law that evil doctor’s wouldn’t unnecessarily amputate feet anymore, the whole cost of treatment would go down and quality up? Are you telling me that was all a lie? Are you telling me that Obama and his clone Romney lied?

  • Question of Auban||

    Is reason allowing pop-up ads now? I just saw a Verizon pop up ad.

  • John||

    Janet, good to see you, now have a seat under the bus.

  • LTC(ret) John||

    As if the Administration has any power over parts of the Administration!

  • John||

    They have no idea what is going on. Actually Obama is so stupid and so incompetent, it is somewhat believable. At this point the White House staff and the cabinet officials are running the executive branch. I don't think Obama is involved. Think about it, would you include your boss in things if he were that incompetent and you didn't have to?

  • ||

    There's nothing a bus could do to that face but improve it.

  • Art Vandelay||

    President Not My Fault strikes again.

  • Restoras||

    Fantastic alt+text.

    That picture of him reminds me disturbingly of Big Brother. Not a surprise, mind you, but still...disturbing.

  • CampingInYourPark||


    Remember this piece of shit stock that Shriek was peddling as being up 300% over the last 6 months?

  • LTC(ret) John||

    Perhaps he sunk a large part of his vast fortune into it?

  • BakedPenguin||

    One of the links is to a Motley Fool article titles "Can First Solar survive?"

    Yeah, that's a question I want asked about stocks I'm invested in. The only reason not to short that piece of shit is they might have enough juice in DC to get a bailout.

  • Virginian||

    It's almost like we have an aristocracy of pull.

  • Paul.||

    By my reading (below) had you shorted it, you'd be in catnip.

  • Paul.||

    I've been watching that stock.

    I noticed that when shrike reported it was up over 300%, my question was, "Up 300% from what?"

  • BakedPenguin||

    It's still got $27 to go. $27 to $0 is a long way.

  • buybuydandavis||

    "In other words, the administration is being evasive and trying to have it both ways:"

    Exactly. Lie and lie again. Publicly say you're against cuts, quietly regulate to enforce lower quality of service.

    Whether it's war, immigration, civil liberties, corporate handouts, lobbyist access, or open government, it's say one thing, do another.

    Lie and lie and lie again.


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