As the debt reduction “super committee” – tasked with finding at least $1.2 trillion in deficit reduction by late November – continues to meet, various proposals to reduce the deficit are being unveiled and discussed. Notably, President Obama released his own plan last week.

Over the next decade, the President’s proposal would cut the deficit by more than $3 trillion via a combination of spending cuts and tax increases. The plan will trim more than $320 billion from Medicare and Medicaid over the next 10 years – $248 billion from Medicare and $72 billion from Medicaid. Some specific provisions include:

  • $135 billion in savings by allowing for Medicare to receive drug rebates for generic and brand-name drugs dispensed to low-income beneficiaries (those receiving the Medicare Low-Income Subsidy under Medicare Part D) beginning in 2013;
  • $42 billion in savings by adjusting reimbursements to post-acute care providers, including skilled nursing facilities (SNFs), long term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs);
  • $20 billion in savings by reducing provider reimbursements for bad debts (those that occur from the non-payment of deductibles and co-pays by beneficiaries);
  • $9 billion in savings by reducing indirect medical education (IME) payments;
  • $26.3 billion in savings by reducing the Medicaid provider tax threshold, beginning in 2015; and
  • $4.2 billion in savings by limiting federal Medicaid reimbursement for states’ Medicaid spending on certain durable medical equipment (DME) services.

The President’s proposal can be found here in full, the Health Savings portion of which begins on page 35 of the document.