When President Obama submits his ambitious first budget outline for 2010 Thursday, it will include a 10-year, $634 billion health care reserve fund that will pay for reforms to the health care system.
In the sweeping agenda he laid out Tuesday night in his first presidential address to Congress, Obama outlined four priority areas for significant investments -- health care, education, energy and deficit reduction -- and declared that the "time to take charge of our future is here" after years of passing problems on to future administrations and generations.
He called health care reform an immediate priority for his administration, saying the cost of health care is "crushing" and calling it one of the largest and fastest-growing parts of his budget.
The president spoke of the costs of health care as a significant drain on American consumers in this time of economic uncertainty.
"We can no longer afford to put health care reform on hold. We can't afford to do it," he said. "It's time."
A senior administration official told ABC News the reserve fund will be $633.8 billion over 10 years, and that will be just a "down payment."
The official identified several sources to fund the plan:
$176.6 billion in savings over 10 years will come from adding competitive bidding to Medicare.
Additional billions would come from incentivizing better post-discharge care, quality incentive programs, incentives for physicians and from providers.
$8.1 billion in savings would come from applying the same income standard for premiums for Medicare Part D (prescription drugs) that applies already to Medicare Part B (doctors' visits). That is to say, right now, couples who make more than $170,000 a year already pay higher premiums for Medicare Part B. If the president's proposal goes through, they will also pay higher premiums for prescription drugs. This will affect the top 5 percent of Medicare recipients, the Obama White House anticipates, or about 1.5 million people.
Most of these Medicare/Medicaid changes would start in FY 2011, though a small part -- $1.8 billion -- would start in fiscal year 2010, just from efficiency improvements.
The other half of the funding -- $317.8 billion over 10 years -- would come from a tax increase on those making more than $250,000, or the top 5 percent of the nation. Itemized deductions -- which are generally for mortgage interest payments or donations to charity -- would be reduced from 35 percent to a maximum of 28 percent.
'Aim' of Health Care Plan Is Universality
Key health care reform priorities for the Obama administration are guaranteeing choice, making health coverage affordable, protecting families' financial health, investing in prevention and wellness, providing portability for coverage, improving patient safety and quality care, and maintaining long-term fiscal sustainability. The administration says it will "aim" for universality.
The president will convene a summit on health care reform next week to begin to tackle the issue and is under no illusions that the path for such legislation will be difficult on Capitol Hill, his spokesman said today.
"[The president] understands the only way to do that is bring together the stakeholders on both sides of the aisle, business and labor, doctors, providers," White House spokesman Robert Gibbs said.
Obama will turn over health care reform to Congress -- unlike the Clinton White House's attempt in 1993 when then-first lady Hillary Clinton kept it at 1600 Pennsylvania Ave.
Senate Majority Leader Harry Reid said today on Capitol Hill that he would like to get the ball rolling on health care reform before the August recess.
The White House says some of the work on its ambitious agenda has already begun through the stimulus bill, signed into law last week. Hundreds of billions of dollars from that legislation are going to renewable energy sources, medical technology and refurbishing schools.
"We made important down payments on each of those investments in the recovery and reinvestment plan, whether it was through medical technology that will reduce errors and result in better quality and outcomes in our health care, in investment in doubling our renewable energy output in three years, as well as a commitment to build and refurbish schools that will result in the 21st century classrooms that our children so richly deserve," Gibbs said.
Billions More Spending to Come for Education
Billions more in spending is still to come, especially on education programs, which the president outlined Tuesday night in his address to Congress.
"But we know that our schools don't just need more resources. They need more reform," he said. "That is why this budget creates new teachers -- new incentives for teacher performance; pathways for advancement, and rewards for success. We'll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools."
All of the education funding is pointed at another ambitious goal the president declared last night.
"By 2020, America will once again have the highest proportion of college graduates in the world. That is a goal we can meet," Obama said.
Education Secretary Arne Duncan said today at the White House that more funding does not necessarily mean better educated students, but it is important.
"The money is absolutely important. It's essential, but it's not the whole ballgame. Other things are hugely important. Great talent matters in this work, great teaching matters. Great principals matter," Duncan said after meeting with Vice President Biden and state school superintendents from around the country.
Republicans are skeptical that Obama can tackle this broad agenda while keeping his focus on rebuilding the American economy, which he said in unequivocal terms last night he would make stronger than it was before the current economic crisis.
"The problem is, how many priorities can the American people focus on at one time?" asked former Reagan White House chief of staff Ken Duberstein, who thinks Obama may be overreaching. "You got to focus, as he did so effectively, on rebuilding our economy, on recovery."
Some Republicans on Capitol Hill have noted the irony of the president signing the massive stimulus bill into law last week and touting tax cuts, while this week calling for deficit reduction, spending cuts and rolling back the Bush tax cuts.
Goal to Cut Deficit in Half
Obama said he intends to cut the $1.3 trillion deficit in half by the end of his first term. Whether he reaches that goal and his ability to deliver on this ambitious agenda could determine whether he gets a second term.