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Health care update: Budget kicks the Medicare can

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President Obama’s proposed budget has delayed some tough choices on entitlement programs, including Medicare, which will eventually bankrupt the country unless lawmakers can agree on some drastic changes. The budget forestalls the cut in Medicare payments to doctors, which was first proposed in a 1990s effort at debt reduction, for another two years.

Currently, 100 million Americans depend on programs such as Medicare, Medicaid and children’s health insurance, and beginning in 2014, the health care law will add another 30 million. Some budget experts argue that the proposed budget is merely a jumping off point for much more serious bipartisan budget-cutting to come.

“I don’t think this represents his bottom line at all,” said Alice Rivlin, an economist who served on Obama’s debt commission. “I believe that the president, probably as a tactical move, did not propose changes in the big entitlement programs. He wants to work that out on a bipartisan basis with the Congress. With respect to entitlements and taxes, nothing is going to happen unless both sides are in sync.”

The “doc fix,” which prevents cuts to Medicare physicians, will add up to more than $54 billion over 10 years. Until now, lawmakers have simply thrown the cost of such relief onto the mounting heap of national debt. However, Obama has attempted to account for the expense by proposing $62 billion in health care cuts to be made elsewhere.

States will be forced to make up some of the shortfall, while drug companies will likely lose more than $11 billion after the budget places the introduction of generic prescriptions on the fast track.

In an attempt to control inflation of health care costs, one of the biggest drivers of the deficit, the budget proposes an increase of $270 million to combat fraud. This effort is forecast to net as much as $1.50 for every $1 invested. Furthermore, improvements in healthcare delivery, which are slated to begin next year, may help avoid costly hospitalizations for those suffering chronic disease.