President Obama has released an outline of a more than $3.1 trillion fiscal year 2010 budget proposal that will include a 10-year, $634 billion reserve fund to help finance universal health coverage, the New York Daily News reports (Bazinet/McAuliff, New York Daily News, 2/26). According to the proposal, Obama would remain "committed to working with the Congress to find additional resources" to finance the remainder of the cost of health care reform (Wolf, USA Today, 2/26).
The proposal does not outline specific plans for expanding health insurance coverage and other aspects of reform (Levey, Los Angeles Times, 2/26). However, the proposal includes general guidelines for health care reform that would place the country on a "clear path to cover all Americans" and allow US residents to have a choice of health plans (Meckler, Wall Street Journal, 2/26).
White House domestic policy adviser Melody Barnes said of the proposal, "This is the first step toward getting health care reform done this year." Neera Tanden, a top Obama health care adviser, said, "We know that this is not enough to achieve our overall goal of getting health care for every American, but it is a significant down payment." Administration budget aide Keith Fontenot said, "We aim to get to universal coverage" and remain "open to any ideas people want to put forward," adding, "He wants to work openly with the Congress in a very inclusive process" (Connolly, Washington Post, 2/26).
Obama next week will host a White House summit that will focus on health care reform (Thomma, McClatchy/Miami Herald, 2/25). White House Press Secretary Robert Gibbs said, "The (health care) process starts formally next week here" (Koffler, Roll Call, 2/25).
Reserve Fund Details
The health care reserve fund financing, "half of which would come from health-related expenses and half by scaling back the value of itemized deductions for wealthier taxpayers," is considered a "down payment toward health care reform" (Rogers, The Politico, 2/25). The change in itemized deductions would apply to residents in the 33% to 35% tax bracket range, or those who have annual incomes of more than $250,000 (Calmes/Pear, New York Times, 2/26). The proposal would cap itemized tax deductions for those residents by about 20% (Connolly, Washington Post, 2/26). The tax increase would raise revenue by $300 billion over 10 years (Clarke/Schatz, CQ Today, 2/25).
The proposal also would seek to reduce spending by more than $300 billion over 10 years to help finance the reserve fund (McClatchy/Miami Herald, 2/25). The spending reduction would include the elimination of $177 billion over 10 years in subsidies paid to health insurers that operate Medicare Advantage plans and the implementation of a competitive bidding process for such plans (Fuhrmans, Wall Street Journal, 2/26). In addition, the proposal would increase the rate of the rebate that pharmaceutical companies pay for medications sold to Medicaid from 15% to 21% to reduce spending by $19.5 billion. The proposal also would increase premiums for Medicare prescription drug coverage for higher-income beneficiaries.
According to the Washington Post, the reserve fund "is Obama’s attempt to demonstrate how the country could extend health insurance to millions more Americans and at the same time begin to control escalating medical bills that threaten the solvency of families, businesses and the government." In addition, by "first identifying a large pot of money to underwrite health care reform—before laying out a proposal on who would be covered or how—Obama hopes to draw Congress to the bargaining table to tackle the details of a comprehensive plan," the Post reports (Connolly, Washington Post, 2/26). The reserve fund also signals that Obama "is serious about fulfilling his pledge to enact comprehensive health care legislation this year," according to the Wall Street Journal (Meckler, Wall Street Journal, 2/26).
The budget proposal also includes policy changes that would seek to improve the quality and efficiency of health care and reduce costs. Under the proposal, Medicare would pay hospitals a flat fee for the first hospitalization and 30 days of follow-up care, rather than reimburse them on a fee-for-service basis, to help improve the quality of care and reduce readmission rates (Connolly, Washington Post, 2/26). In addition, the proposal would facilitate market entry of generic versions of biotechnology medications (Wangsness/Wallack, Boston Globe, 2/26). The proposal also would end "evergreening," a practice that allows brand-name pharmaceutical companies to reformulate their products to extend patent protection (Mundy, Wall Street Journal, 2/25).
The proposal is available online.
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[Source: Medical News Today]