President Obama released a proposal last week to jump start the economy and reduce the deficit. The proposal includes many cuts to Medicare and increased cost sharing. Senators Coburn and Lieberman are supporting these cuts.
Increased cost sharing is a common theme in Medicare, Medicaid, but also for other programs as well. For instance, the proposal includes increases to TRICARE pharmacy benefit co-payments to be fall more in line with the most popular Federal employee health plan
The proposal, however, also has some interesting provisions. For instance, it would require providers to secure prior authorization to perform advanced imaging. This is one of the first moves away from the fee-for-service free-for-all towards managed care (read: rationing).
A pro-competition rule would prohibit ‘pay-for-delay’ where brand drug companies pay off other drug makers to delay their introduction of a generic into the market. The FTC is charged with enforcing this requirement. The proposal also would reduce the exclusive period of generic biologics. Weakening patent protection, for this authors perspective, is likely a good idea.
Specific changes under consideration which are related to medicare are highlighted below (with potential savings per year in parentheses):
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