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Berwick Says Obama's Plan To Trigger Medicare Cuts Won't Be Necessary

Apr 15, 2011

PHILADELPHIA -- A day after President Barack Obama proposed strengthening an independent commission to control Medicare's costs, the program's administrator said such oversight won't be necessary because new efforts to reduce waste should slow down spending and even improve the quality of care.

"We don't have to get to that point," Medicare chief Donald Berwick told Kaiser Health News Thursday in Philadelphia, where he was addressing a conference of health care journalists. Medicare, the government's health insurance program for 48 million older and disabled Americans, spent about $509 billion last year.

Under the deficit reduction outline Obama unveiled Wednesday, if Medicare spending grows faster than  gross domestic product plus 0.5 percentage point, it would trigger cost reduction recommendations from Medicare's Independent Payment Advisory Board. The board's proposals would then go to Congress. If Congress declined to approve those cuts or make equivalent cuts of its own, the secretary of Health and Human Services would be required to enforce them. The 15-member board was created by the federal health care overhaul law, which set the trigger point slightly higher: a rise in per capita gross domestic product plus 1 percentage point.

Berwick called Obama's proposal "a very wise default system – a Plan B," adding that "he is right to hold our feet to the fire."

But he said that improving the quality of care and reducing waste will avoid the trigger and yield big savings by keeping people healthy and avoiding medical complications.

"There are two ways to save money," Berwick told the journalists meeting. "One is to cut and the other is to improve." He cited hospitals that have dramatically reduced patients' bed sores and another that adopted efficiency steps from Toyota to save millions of dollars while also delivering better care.

"The aim is to make the best the norm," he said.

Berwick said the health law provides other tools to improve health care quality and delivery. These include accountable care organizations, in which doctors and hospitals coordinate patient care, and the newly created Center for Medicare and Medicaid Innovation to "nurture invention" that will lower costs and raise quality.

He also pointed to a patient safety initiative the Obama administration announced this week to reduce preventable hospital-acquired infections and complications. It could save 60,000 lives and cut Medicare costs by an estimated $50 billion over 10 years, officials estimated.

In contrast, Berwick said the Republican proposal to refashion Medicare by giving vouchers to seniors to buy private insurance would reduce health benefits. Such vouchers would eventually cut access to health care, because they would not keep pace with the rate of health care inflation and would not cover seniors' medical bills.

It would abandon people "who need us to be there, the elderly, the disadvantaged, the disabled," he said. "It is a withdrawal of support from people who badly need our help and who will end up worse off."

Contact Susan Jaffe at jaffe.khn@gmail.com.

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