While acknowledging that the rising cost of health care is currently the biggest driver of the nation’s long-term debt, Obama asserted that we can’t ask our senior citizens to shoulder the burden alone. He stressed that affordable, quality health insurance is a key component to middle-class security and that growth of the middle class can not be achieved by shifting the burden of health care onto those who are already struggling.
“We can’t just cut our way to prosperity," he said.
Obama declared that he was prepared to enact reforms that will achieve the same amount of savings by the next decade as those proposed by the bipartisan Simpson-Bowles commission in 2011. The commission’s final report, “The Moment of Truth,” proposed measures that would achieve health care savings amounting to $400 billion over a 10-year period.
Obama asserted that already his Affordable Care Act (ACA), was helping to slow the rising costs of health care.
Specifically Obama plans to:
Reduce taxpayer subsidies to prescription drug companies while asking wealthier senior citizens to pay more. That means higher Medicare premiums for some.
In a 2009 agreement with drug companies, Obama announced plans for drug manufacturers to contribute $80 million over the next decade to narrow the gap in prescription drug coverage senior citizens receive under Medicare. The controversial deal involved a big trade-off for which Obama was widely criticized. To strike the deal, the administration ended up backing off its support for the re-importation of prescription drugs at lower prices.
Challenge the way government pays for Medicare by bringing down costs. “Because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital- they should be based on the quality of care that our seniors receive,” he said.
The president advocated doing away with a fee-for-service Medicare reimbursement system and replacing it with one that rewards quality. A fundamental problem with fee-for-service payment methods is it sometimes encourages doctors and hospitals to provide a higher quantity of care, but not necessarily a more quality one.
This issue has been addressed in the administration’s Value-Based Payment Provision, a Medicare reform enacted in January that ties hospitals’ Medicare funding to quality vs. quantity care. Hospitals with high re-admittance rates or poor treatment lose a percentage of their funding while others can gain funding by lowering their rates.
Obama also stressed that he remained open to additional reforms to health care from both parties “as long as they don’t violate the guarantee of a secure retirement.” He urged lawmakers to pass legislation to avoid the $85 million in mandated spending cuts under sequestration noting that “Now is not the time to gut these job-creating investments in science and innovation.”
A State of the Union worth noting.