Obama's Health Care Budget Faces Medicare Headache

Ricardo Alonso-Zaldivar, Associated Press

WASHINGTON (AP) — President Barack Obama's budget fixes a looming cut to doctors that could devastate Medicare, but it offers no cure for the underlying problem of rising health care costs that threatens to break the bank.

The budget would stave off for two more years a threatened 28 percent cut in Medicare payments to doctors, a relic of a 1990s budget law that failed to restrain costs. That would avoid severe disruptions for seniors, since doctors might start bailing out of Medicare if lawmakers let the cuts go through next year.

But with more than 100 million Americans already covered by programs such as Medicare, Medicaid and children's health insurance, Obama's budget is largely silent on costs that keep growing faster than the economy, tax revenues and workers' wages. And starting in 2014, the health care overhaul will add another 30 million people who depend on the government for coverage.

Some budget experts said Obama's proposal is only an opening bid. Much bigger health care changes would be in store if lawmakers of both parties agree to work together on a broad plan later this year to reduce government red ink.

"I don't think this represents his bottom line at all," said economist Alice Rivlin, a former Federal Reserve vice chair 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."

One thing is for sure: Obama is forging ahead with his health care overhaul despite a repeal push by Republicans in Congress and challenges in federal court. Medicare Administration Don Berwick said the budget includes $465 million to implement the law. Most of that would go to his agency, now taking the lead in carrying out Obama's landmark coverage expansion.

The budget did not provide a new cost estimate for the overhaul, but it's certain to be higher than last year's figure of less than $1 trillion over a decade. That's because an additional year of full operation will have to be taken into account.

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