Obama’s Budget Health Care Savings In One Chart

This morning, President Obama unveiled a $3.8 trillion budget plan that eschews any dramatic reforms to entitlement programs but would still produce $360 billion in savings from Medicare, Medicaid, and other health care programs over 10 years. Obama avoids Rep. Paul Ryan’s approach “to turn Medicare into a voucher or Medicaid into a block grant,” but does adopt several Republican-backed ideas that would increase means testing for higher-income seniors and discourage overuse of care by penalizing beneficiaries.

Under Obama’s approach, for instance, higher-income seniors would pay more for doctors visits and prescription coverage beginning in 2017 and all new enrollees will pay a $25 deductible as part of their Part B premiums. But for the most part, the budget is similar to the administration’s September 2011 deficit reduction plan and recoups the greatest savings from drug rebates and modernizing provider payments to achieve greater efficiency. Here is a chart showing where all the savings come from:

Given that Ryan’s Medicare savings don’t kick in until 2022, it’s hard to make a direct comparison with Obama’s proposal. But suffice it to say, Ryan would cut about 1.4 trillion from Medicaid alone and another $30 billion in net Medicare savings using last year’s 10-year budget window.