Obama Health Budget: It’s A Boat Load Of Money, But 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. The administration plans to set aside $634 billion over 10 years for reforming the health care system, lower costs and expand coverage.

Because this is a budget proposal, we have some details on where the money is coming from, but we don’t really know how that money will be spent. The basic idea is this: cut-back on the waste in our health care system, improve the efficiency of Medicare and Medicaid and then re-invest that money back into the fund (for health care reform).

Where will the $634 billion come from? The administration wants to limit “the tax break on itemized deductions for families with incomes above $250,000” and strip approximately $300 billion from both Medicare and Medicaid, without cutting benefits.

They believe that there is enough waste in the health system to finance at least part of the down payment for reform:

– Eliminate Medicare Advantage overpayments and modernize the competitive bidding process.

– Drug companies would be required to increase the rebate they now provide for medications sold to Medicaid.

– Competition in generic medications (move forward with creating a generic version of biologic drugs)

– Bundle payments for post-hospital providers.

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.

They’ll decide how to spend the fund and divide the pie between preventive care, managed care, reimbursement reform, etc. 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.