Obama’s $3.8T Budget Could Save Medicare $370B

President Barack Obama’s $3.77 trillion budget plan for the 2014 fiscal year, if approved, would raise overall federal spending about 6 percent above the current sequester rates, but it would cut Medicare’s budget by an estimated $370 billion through reduced payments to pharmaceutical companies and requiring wealthier seniors to pay higher premiums for Medicare Parts B and D, according to a report by Politico.

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Payments to hospitals would drop $30 billion for bad debt and other compensation, according to the report. In addition, the chained consumer price index, a metric to estimate inflation in the budget, would be reduced, meaning Medicare payment rates would grow more slowly. The Medicare age would remain at 65, not rising to 67 as earlier Republican proposals attempted.

Pharmaceutical companies would have to pay rebates to low-income seniors, translating to $140 billion in Medicare savings, the largest single change to the program in the president’s budget.

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