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Obama jobs plan could bring painful cuts to health care

Medics in a CAT scan room in Miami, Fla.

Steve Chiotakis: This morning, President Obama will outline a new proposal that will up the tax rate for the wealthiest Americans.

On NBC's Meet the Press, Senate Minority Leader
Mitch McConnell called that plan just another tax hike at a time when the country's lackluster economy cannot afford it.

Mitch McConnell: We've borrowed too much. We've spent too much. We're dramatically over-regulating every aspect of the private sector in our country. And now we're threatening to raise taxes on top of it. That's not going to get the economy moving.

Meanwhile, Republicans want cuts to entitlement programs, such as Medicare or Medicaid.

From the Marketplace Health Desk at WHYY, Gregory Warner reports.


Gregory Warner: All the easy cuts to Medicare were made last year, to pay for health care reform.

Bonnie Washington: So there really aren't so many obvious places to cut.

Bonnie Washington, senior V.P. at the consulting firm Avalere Health, says what's left on the table are more painful cuts: cuts to drug payments or to hospital and doctor fees. She says the president may choose to delegate those tough decisions to the non-partisan committee created by the health law to reduce Medicare spending.

Washington: So this new entity will put forth proposals to cut various parts of Medicare spending.

But wherever those cuts fall, be it on the drug companies or doctors or nursing homes, they'll surely argue the cuts will cost jobs.

So, should the president sacrifice health care jobs to pay for his jobs bill? Yes, says David Cutler, health economist at Harvard.

David Cutler: At that point what happens is as health care spends less, there are fewer jobs in health care but there are more jobs in other industries because those industries can now afford to hire more people.

Cutler says what the president really needs to do is change the Medicare discussion from cuts to efficiency. The question isn't just how to spend less, but how to get doctors to do less. He gives me this analogy.

Cutler: It's the difference between Walmart deciding to lower prices by firing workers and thus having the stores be dirtier, versus Walmart figuring out how to make its trucks not have to travel as far and so using less gas and bringing goods to market cheaper.

But no one complains when Walmart uses less oil. When a hospital curbs the number of cat scans? That's a different bag.

In Philadelphia, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.
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