On Tuesday, President Obama delivered his State of the Union address, and as expected, the main themes of the speech revolved around the topics of the economy, jobs, and the federal budget. There was, however, a brief mention of healthcare policy in the beginning of the speech.
President Obama identified healthcare for our aging population as the biggest driver of our long term debt. The President also conceded that programs like Medicare will need to be reformed in order to be sustainable for future generations.
Specifically, the President announced that he is willing to enact reforms to Medicare that will achieve the same amount of healthcare savings by the beginning of the next decade as the reforms proposed by the Simpson-Bowles commission. That bi-partisan commission came out with a number of suggestions in 2010 aimed at reducing the national debt.
Further, the President made some additional proposals aimed at reforming health care costs. President Obama suggested a reduction in taxpayer subsidies to prescription drug companies, and proposed that cost savings could be accomplished by “changing the way our government pays for Medicare.” The latter proposal was another way of highlighting a shift from the pay-per-procedure model to the pay-for-performance model – initiated through the Value Based Purchasing program in the Affordable Care Act. Obama also spoke about the need to avoid the automatic spending cuts known as sequestration, with would automatically cut Medicare reimbursements to doctors by two percent.
Finally, the President signaled that he was open to additional reforms from both parties, so long as they “don’t violate the guarantee of a secure retirement”. The big healthcare line in the address was “our government shouldn’t make promises we cannot keep – but we must keep the promises we’ve already made.”
After the State of the Union, Senator Marco Rubio (R-FL) gave the Republican response. In his speech, he spoke about how the Affordable Care Act had backfired by forcing companies to lay off employees or stop hiring altogether. Senator Rubio, and Senator Rand Paul (R-KY) who gave the Tea Party Response, warned against big government entanglement in health care.