Obama's Budget Includes Large Health Care Fund

by: Chris Bowers

Wed Feb 25, 2009 at 18:30


The big news in President Obama's budget appears to be that it will include a large fund for health care. 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:

President Obama intends to release a budget tomorrow that creates a 10-year, $634 billion "reserve fund" to partially pay for a vast expansion of the U.S. health care system, an overhaul that many experts project will cost as much as $1 trillion over the next decade.

Obama would pay for the expansion by trimming tax breaks for the wealthy and tightening payments to insurers, hospitals and physicians, according to a senior administration official.

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 signal his willingness to negotiate with Congress over the details of an eventual plan.

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.

Now, even though this is the budget process, it still might take 60 votes in the Senate because it increases the deficit. If anyone can verify in the comments whether this year's budget will need 50 or 60 votes to pass the Senate, it would be a great help.

However many votes are needed, talk of major health care reform after a grueling first victory for a new Democratic trifecta certainly reminds of a lot of 1993-1994. This time, let's not slide backward because of this fight.

Chris Bowers :: Obama's Budget Includes Large Health Care Fund

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60 votes (0.00 / 0)
I think it depends on if there's a pay-for in the budget doesn't it? So if this is attached as an amendment to the budget but they include the (new and actually exciting) tax provisions that will offset the costs over ten years, then I think it maintains the 50 vote margin. But it's not clear to me that their pay-fors will indeed cover the entire cost and that's not mentioned in the article or in the NY Times article (which just came online as well).

I'm really excited about the pay-fors though. Reducing further tax breaks for the wealthy on top of getting rid of their lower marginal tax rates. So in actuality this new proposal would be like getting a new 40-something percent marginal tax rate under the old tax exemption rules. Pretty damn cool.


PAYGO (4.00 / 2)
Now, even though this is the budget process, it still might take 60 votes in the Senate because it increases the deficit. If anyone can verify in the comments whether this year's budget will need 50 or 60 votes to pass the Senate, it would be a great help.

I've been looking for authoritative rules on PAYGO, but still don't completely get it.  Wikipedia has an entry that helps.

But I don't think it matters because Obama's plan doesn't add to the deficit; it is payed for.  The article only mentions half:

Under the Obama budget blueprint, about half of the new "health care reserve fund" would come by limiting the tax break on itemized deductions for families with incomes above $250,000. The proposal would reduce the value of tax deductions by about 20 percent, a change which would generate about $318 billion over the next 10 years, according to administration documents provided to The Washington Post.

As long as the other half is offset in the budget somewhere, PAYGO doesn't apply, as I understand it.


WSJ (4.00 / 2)
The WSJ claims it is payed for:

President Barack Obama will propose a combined $634 billion in upper-income tax increases and cuts to government health spending over 10 years to fund a new program aimed at getting health coverage to all Americans, a senior administration official said Wednesday.


[ Parent ]
Yep, all signs show paid for (4.00 / 1)
But Congressional Dems can still give us problems, as this Reuters UK article suggests: link



Krugman is pretty happy with the shift toward Universal coverage. (4.00 / 5)
let me say that the initial leaks on health care are 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.

http://krugman.blogs.nytimes.c...

There is a house bill for single payer that has tons of co-sponsors, I say its time to agitate. Lets give Obama the pressure he needs, give congress the heat they need, lets presure the hell out of moderate Snowish Republicans.  

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


Its obvious Obama isn't planning for (4.00 / 2)
a half-measure for healthcare reform, seeing the money already being allocated in the budget. So now we know this will be a fight over legislation design(arent they all) as opposed to spending, the budget, big government etc...

Knowing this, we CANNOT have another stimulus where the final draft looks like its not quite good enouigh, or didn't go all the way. This isn't a 2 year program, this is for all the marbles ala SS, for our kids, for Obama's legacy, for the case for government and, in the words of Karl Rove, a true permanent majority. We need to provide the necessary pressure on the left that allows Obama to be firmer and draw a harder line with the 3 moderate repubs in the Senate.

Obama's with us on this, we just need to turn his eventual "compromise" into what his original design is for universal healthcare.  


[ Parent ]
Pretty sure (0.00 / 0)
that the budget will still only need 50 votes, I don't see why they'd do it if it didn't need only 50.  

John McCain: Beacuse lobbyists should have more power

The details are even more impressive (4.00 / 6)
The Obama plan would have private plans bid to offer coverage in a given geographic area; insurers would then be paid based on an average of the bids. The administration estimates that the result would be that private plans would be paid about the same as the government normally spends per participant.

The administration will also propose a new measure to make generic drugs available more quickly. It would also change the formula for how brand-name drugs are paid for through the Medicaid program.

Mr. Obama will also propose new ways to tie payments to performance in Medicare for both hospitals and doctors, an initiative aimed at improving quality as well as reducing cost.

http://online.wsj.com/article/...

And in the Washington Post:

Nearly one-third of the reserve fund would be generated by forcing private insurers who sell Medicare managed care plans to undergo a competitive bidding process. Currently, the government pays the plans, known as Medicare Advantage, about 14 percent more than traditional fee-for-service Medicare coverage, according to estimates by the Congressional Budget Office.

Obama is DEFINETELY not trying to pass some half-measure and label it Universal Healthcare. Its crazy how he's taken the exact opposite approach of the one he took in the stimulus, he's actually matching his rhetoric and being bold. Don't know why, maybe he thinks because he campaigned on healthcare he has political capital, whereas the stimulus debate largely took form way after he won the election.

Either way, I would rather he be bold with healthcare. Now its up to us to provide the necessary pressure on the left so there isn't a watering down of the final legislation.  


If he added a public option to the regional plans (4.00 / 4)
it would be perfect. But this is definitely an encouraging development.

[ Parent ]
Rachel's interview with Speaker Pelosi provides one answer (4.00 / 2)
In one of the later segments that aired tonight, the Speaker's firmness on healthcare passing is because they are making it's passage a precondition to eventually taking up consideration of the entitlement programs. In other words, the Repubs will never be able to vote to change Medicare unless healthcare reform is done first.  

[ Parent ]
There is an interesting fight brewing here. (0.00 / 0)
Does anyone have links to progressive discussions of the problems Medicare has pouring money into profits and fraud, and progressive ways of restructuring it?

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
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