President Bush is right to try to control the federal deficit, and the reason is right there in his 2007 budget proposal: the $27 billion interest payment on the national debt is more than will be spent on Medicaid.

The president hopes to find his biggest cost savings with rollbacks in entitlement spending, most notably Medicare and Medicaid. Just this week he signed a budget bill that shaves costs to those programs by $40 billion over five years. And now he is seeking another $35 billion in savings, some of which will come in the form of reduced payments to hospitals, nursing homes and other health-care providers.

That proposal faces an uphill battle and for good reasons.

First, budget hawks don’t take it seriously, because even with the cuts the deficit is expected to rise this year.

Second, the Medicare and Medicaid rollbacks will exacerbate trends that threaten the viability of the nation’s health care system. To see why, consider what’s happening in the Inland Northwest. Hospitals have endured painful cutbacks that caused them to lay off hundreds of workers. One of the reasons is that Medicare and Medicaid reimbursements do not realistically reflect the cost of care. That’s also why fewer doctors in private practices are accepting Medicare patients. With so many jobs tied to health care, our region’s economy can ill afford to absorb a body blow to reimbursements.

At the same time, the new prescription drug program is expected to add as much as $1 trillion to the nation’s Medicare bill in the next 10 years. Strangely, this program is immunized from the president’s call to rein in health care spending. It isn’t allowed to use its purchasing power to negotiate for lower drug prices.

As baby boomers approach retirement age, something must be done to reform entitlement spending. But blanket cuts miss opportunities to reward the best health care practices. The formula for Medicare reimbursements is a prime example.

Last year, a Washington Post report showed how bad practices net higher reimbursement rates. Health care providers qualify for Medicare payments each time a patient returns. The number of visits is a factor in calculating reimbursement rates. So a hospital in Florida was rewarded when 106 patients developed post-surgery infections and many of them had to be readmitted.

Washington state ranks near the bottom in reimbursement rates because of historic good practices. If Medicare were to reward positive outcomes, its costs would decline.

Medicare also spends freely on, say, amputations that result from diabetes, but it is stingy with care that could prevent such surgeries. A 30-year Dartmouth University study shows that Medicare wastes $1 for every $3 it spends because of its upside-down priorities.

There’s nothing wrong with reforms to the major entitlement programs that constitute such a huge part of the federal budget. But performing meatball surgery on budgets won’t cure deficits or improve health care.