President Obama's Budget Outline Provides for $634B Over 10 Years for Universal Health Coverage

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 proposal does not outline specific plans for expanding health insurance coverage and other aspects of reform. However, the proposal includes general guidelines for health care reform that would place the U.S. on a path to cover all Americans and allow U.S. residents to have a choice of health plans. The proposal seeks to reduce spending by more than $300 billion over 10 years to help finance the reserve fund. 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. 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.

The budget proposal also includes policy changes that would seek to improve the quality and efficiency of health care and reduce costs. Some of these changes would include Medicare paying 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. In addition, the proposal would facilitate market entry of generic versions of biotechnology medications. The proposal also would end "evergreening," a practice that allows brand-name pharmaceutical companies to reformulate their products to extend patent protection. To view the proposal go to http://www.whitehouse.gov/omb/