The Obama Administration is unveiling its budget today. His remarks, released this morning, regarding health care included:

Because of crushing health care costs and the fact that they drag down our economy, bankrupt our families, and represent the fastest-growing part of our budget, we must make it a priority to give every single American quality, affordable health care. That’s why this budget builds on what we have already done over the last month to expand coverage for millions more children, to computerize health records to cut waste and reduce medical errors, which save, by the way, not only tax dollars, but lives.

With this budget, we are making a historic commitment to comprehensive health care reform. It’s a step that will not only make families healthier and companies more competitive, but over the long term it will also help us bring down our deficit.

Yesterday news had already broke about a major componant of the Administration’s proposal. The New Republic‘s Jonathan Cohn reported from the Hill:

Officials from the Obama administration on Wednesday briefed both members of Congress and advocates from the health care community about the budget proposal they’ll unveil formally on Thursday… they are proposing to allocate $634 billion over ten years towards health care reform, the bulk of it to expand insurance coverage. And since that won’t fully fund universal coverage, they propose to work with Congress on finding the remaining money.

At the WSJ Health Blog, Sarah Rubenstein detailed some of the policies expected to be included:

Medicare Advantage: Democrats have been vocal critics of these private plans within Medicare, claiming they’re taxpayer-subsidized profit centers for insurers… The administration is expected to proposed cutting federal payments to insurers that run the plans by requiring them to competitively bid to offer plans.
…
Drugs: The generics industry’s trade group tells the WSJ it’s hearing the proposal will set up a regulatory pathway for companies to create generic versions of biotechnology drugs, which currently can’t be made into copycat versions… The administration also wants to curb a practice by makers of traditional branded drugs by which they extend the patent-protected life of existing products by changing them slightly… Finally, Obama wants upper-income seniors to pay more for Medicare drug plans…
…
Hospitals: Obama wants to create one bundled Medicare payment to cover both a hospital stay as well as care for the patient for 30 days after release, a change estimated to save $17 billion over 10 years… The administration is also proposing to cut payments for hospitals that routinely readmit patients after they have been discharged. It’s meant to save $8.4 billion over 10 years…

Ezra Klein presented further details about the plan:

According to documents obtained by The Prospect, the budget also says that “the President looks forward to working with the Congress over the coming year, and as he does, the President will adhere to the following set of eight principles:”

• Guarantee Choice
  …
• Make Health Coverage Affordable
  …
• Protect Families’ Financial Health
  …
• Invest in Prevention and Wellness. The plan must invest in public health measures proven to reduce cost drivers in our system… as well as guarantee access to proven preventive treatments.
• Provide Portability of Coverage. People should not be locked into their job just to secure health coverage, and no American should be denied coverage because of preexisting conditions.
• Aim for Universality
  …
• Improve Patient Safety and Quality Care
  …
• Maintain Long-Term Fiscal Sustainability

…
“Affordability” and “financial health” should be understood as answer a question that has been, I’m told, central to the health teams’ deliberations: What are we doing for the insured? They mean to sell this plan not just as a rescue package for the uninsured but as aid to the 85 percent of Americans who currently have health care coverage.
…
This budget release has broad outlines: The full budget, which comes in April, might provide somewhat more detail. But the administration has now passed the ball to Congress. The question is what Congress does with it.

Paul Krugman found this news “encouraging”:

The supposed commitment of $634 billion to health care reform isn’t quite enough to pay for the subsidies that are an essential part of a universal-care system, but it’s not ridiculously short, either. It’s beginning to look as if Obama’s really going to go through with this — and if he gets us to universality, his legacy will be secure.

Chris Bowers was similarly pleased with the Obama Administration’s health reform reserve idea:

The basic idea appears to be securing much of the funding for health care reform in the budget process, and then working out the details of the reform later on… I like this approach. $634 billion over ten years is not as much as we need to successfully overhaul the health care system, but it is a good first step that will make any further requests for more money in future months and years easier. It appears to be, quite literally, a down payment for health care reform.

On The Treatment blog, Jonathan Cohn discussed the value and significance of $634 billion for reforming our health care system:

How big an investment is that? It’s pretty big—more, I believe, than any president has proposed setting aside for coverage expansions to the non-elderly since Clinton tried for universal health insurance in the 1990s. And it confirms that Obama is serious about pursuing health care reform, beyond small incremental steps. Even so, the amount will not enough to finance full universal coverage, as discussed previously here and elsewhere.
…
[Ceci Connolly] says experts predict the full cost of universal coverage could approach $1 trillion over ten years. I think it could actually cost a good bit more, although—again—it depends on how quick, and how sweeping, the coverage expansions are. But that doesn’t change the fact that Obama is proposing a huge investment.

In The Wonk Room, Igor Volsky concluded that even though $634 billion is “A Boat Load Of Money,” “Good Health Reform Demands Even More”:

Details are slowly leaking about the health care provisions in Obama’s budget and so far, the news sounds promising.
…
They believe that there is enough waste in the health system to finance at least part of the down payment for reform… Overall, the fund is a good start, but it’s certainly not enough to reach universal coverage. Still, the Obama administration has learned from the mistakes of past reform efforts. Unlike the Clinton strategy, which didn’t include any money for health reform in the budget, and left Congress to digest a 700+ page health plan, Obama and Congress will fill in the details of reform… This leaves a lot of room for compromise, but in working out the details of reform, progressive principles of true universality and affordability must remain intact.

On his medinnovationblog, Dr. Richard Reece commented:

What does this mean for doctors? I do not know. Some of it, of course, will come form higher taxes on doctors making over $250,000. Some may come from forcing doctors to “bundle bills” with hospitals. Some may come from only paying those doctors who use EMRs. Some of it may be indirect, as HMOs tighten financial screws on doctors to compensate for Medicare HMO losses. Little mention yet of how much is to be saved from prevention, EMR use, and lower Medicare fees for high ticket items that “don’t work” according to comparative effectiveness. Curiously, no mention of single-payers or universal coverage which will impractical unless costs are lowered.

Politico’s David Rogers analyzed the general plans for coming up with the $634 billion for health care:

Hard on the heels of Obama’s speech to Congress, administration officials began briefing lawmakers Wednesday on their proposals including the healthcare reserve fund: half of which would come from health-related expenses and half by scaling back the value of itemized deductions for wealthier taxpayers. By itself, the $634 billion won’t be enough to finance the president’s ambitious health plans. But it represents a major commitment upfront, with the administration promised to work with lawmakers to find additional savings as legislation is developed this year.

Obama’s focus on high-end households is consistent with his larger philosophy — both in taxes and spending. Within the $2 trillion in savings, for example, the budget is expected to limit agriculture subsidies to farms earning more than $500,000, resulting in an estimated saving near $16 billion. Large charitable deductions—used to shelter income—would face new limits, and Bush-era tax cuts for the wealthy would expire after 2010.

On The Daily Finance, Douglas McIntyre pointed out:

The new Obama health care reform package is based on two key programs. One is the taxation of the rich over the next ten years. The other is more competitive bidding among health-care providers that want to get big blocks of business.
…
Forcing health-care companies to drop rates if they want to keep large customers may be easier than taxing the rich. That is based on the fact that there may be fewer rich to tax… The government may be assuming that in a recovery the number of people with annual incomes over $250,000 dollars will grow again. If the industries where most made their money never return to tremendous profitability, the headcount of people who are truly rich could stay depressed for more than a couple of years. You can’t tax what isn’t there.

Finally for this week, at The Health Care Blog, Robert Laszweski pointed out:

Interestingly, the Obama budget reportedly calls for creating a system where the private Medicare plans will bid market to market to compete with the traditional Medicare plan rather than continuing the current system where the government tries to set the rates for them. Ironically, that was the original Republican idea for using the competitive value of managed care to reduce long-term Medicare costs and is what should have happened in the first place rather than this temporary system of overpayments the HMO industry has been fighting to keep permanent.

With $318 billion in tax increases and another $175 billion in Medicare HMO cuts, the $634 billion “down payment” only contemplates a total of another $141 billion in federal health care cuts over ten years… That is hardly a rounding error… If the Obama administration is serious about not “kicking the can further down the road” then any overhaul of our health care system has to do more than fritter around the edges with spending reductions.
…
As the budget details come out over the next few days the question we all need to be asking is, Just what is this administration willing to do to make health care affordable over the next ten years? Affordability will have a lot more to do with the how this administration deals with the $2.5 trillion we already spend every year not whose taxes we can raise.

This entry was posted on Thursday, February 26th, 2009 at 4:00 pm and is filed under Cost, Policy, Politics, Roundup. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.