Obama's budget sets $634B aside for healthcare

WASHINGTON -- The budget President Obama unveils Thursday sets aside $634 billion over 10 years, a big step toward extending health coverage to 46 million uninsured and subsidizing premiums for others who have insurance.

The money would come equally from tax increases on people making more than $250,000 a year and cuts in government payments to health providers, insurers, drug companies and others.

Details would have to be worked out with Congress, but the administration said in a budget document provided to USA TODAY on Wednesday that the new fund is "a first crucial step" toward a comprehensive overhaul of the nation's health care system. Obama wants to preserve a choice of health plans and doctors and move toward coverage for all.

Obama's budget will not propose a specific overhaul plan, which was a strategy of President Clinton in 1993-94. That effort failed, as have others during the past century, because of the competing interests of patients, doctors, hospitals and insurers.

A senior administration official told the Associated Press that the budget projects the government's deficit for this year will soar to $1.75 trillion, reflecting efforts to pull the nation out of a deep recession and a severe financial crisis.

A official also said Obama's $3 trillion-plus spending blueprint also asks Congress to raise taxes on the wealthy in 2011 and cut Medicare costs to provide health care for the uninsured.

During last year's presidential campaign, Obama focused heavily on overhauling the health care system. Unlike some of his Democratic primary rivals, including Hillary Rodham Clinton, he did not call for universal coverage — a requirement that everyone have insurance. Obama's plan was estimated to cost about $1 trillion over 10 years by PricewaterhouseCoopers.

The budget plan acknowledges that $634 billion "is not sufficient to fully fund comprehensive reform." It says Obama "is committed to working with the Congress to find additional resources."

Republicans warned against high costs of an overhaul. "Too often with the federal government, the upfront spending happens, but the long-term savings don't," said Sen. Chuck Grassley, R-Iowa.