President Obama’s Health Care Reserve Fund

Feb 25, 2009 4:55pm

A White House official tells ABC News that in his budget tomorrow President Obama will introduce a $634 billion health care reserve fund dedicated towards health care reform (They acknowledge it will cost more than this, likely one trillion over the next decade, and they will seek additional funds from Congress).

Approximately half of the funding, the official says, will come from improved efficiencies in Medicare and Medicaid: 

  • expanding the Hospital Quality Improvement Program (saving, according to the Obama administration $12 billion over 10 years);
  • improving Medicare and Medicaid payment accuracy;
  • reducing drug prices by allowing more generic drugs on the market;
  • bringing down the drug costs of Medicaid by increasing the drug rebate for brand-name drugs from 15.1 percent to 22.1 percent of the average manufacturers price;
  • reducing Medicare overpayments to private insurers through competitive payments (saving $175 billion over 10 years); and
  • incentivizing better health care that reduces lowering readmission rates (saving $26 billion over 10 years).

The other half of the $634 billion, the official says, would come from reducing the itemized deduction rate for families with incomes over $250,000, limiting it to 28 percent. The administration anticipates raising $318 billion over 10 years from this step.

The administration is setting as its priorities for health care reform guaranteeing choice, making health cover 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.

– jpt

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