McCain Plans Federal Health Cuts

Medicare, Medicaid Spending Would Be Reduced to Offset Proposed Tax Credit
By LAURA MECKLER
Wall Street Journal

John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs.

The Republican presidential nominee has said little about the proposed cuts, but they are needed to keep his health-care plan "budget neutral," as he has promised. The McCain campaign hasn't given a specific figure for the cuts, but didn't dispute the analysts' estimate.

In the months since Sen. McCain introduced his health plan, statements made by his campaign have implied that the new tax credits he is proposing to help Americans buy health insurance would be paid for with other tax increases.

But Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said Sunday that the campaign has always planned to fund the tax credits, in part, with savings from Medicare and Medicaid. Those government health-care programs serve seniors, poor families and the disabled. Medicare spending for the fiscal year ended Sept. 30 is estimated at $457.5 billion.

Mr. Holtz-Eakin said the Medicare and Medicaid changes would improve the programs and eliminate fraud, but he didn't detail where the cuts would come from. "It's about giving them the benefit package that has been promised to them by law at lower cost," he said.

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