Fiscal Year 2010 Budget in Brief
Health Reform
The Administration is committed to reforming the health care system to assure affordable, quality health coverage for all Americans.
THE NEED FOR HEALTH REFORM
One of the biggest drains on American family budgets and the performance of the economy is the high cost of health care. Health insurance premiums have nearly doubled since 2000, rising four times faster than wage growth. This strains both families and the businesses that struggle to sustain health benefits. At the same time, health care costs are consuming a growing share of Federal and State government budgets.
The United States spends over $2.2 trillion on health care each year, a number that represents about 16 percent of the total economy and is growing rapidly. By 2017, almost 20 percent of the economy—more than $4 trillion—will be spent on health care. While the United States leads the world in health expenditures by a wide margin, our health outcomes often fall short of those achieved by other developed countries.
Across our Nation, health care costs vary substantially, yet the higher-cost areas do not generate better health outcomes than the lower-cost areas. Some researchers believe that health care costs could be reduced by 30 percent—or about $700 billion a year—without harming quality if we moved as a Nation toward the proven and successful practices adopted by the lower-cost areas and hospitals.
At the same time that we strive to control the growth of health care costs, more than 45 million Americans lack health care coverage. An unhealthy workforce leads to an unhealthy economy, and providing all Americans with health insurance is not only a moral imperative, but it is also essential to a more effective and efficient health care system.
DOWN PAYMENT ON HEALTH REFORM
Major strides have already been made in the Recovery Act and the Children’s Health Insurance Program (CHIP) reauthorization:
- CHIP: Covering millions more uninsured children;
- COBRA: Temporarily lowering the cost of COBRA coverage by 65% for workers and their families;
- Health IT: Embarking on an effort to computerize health records in five years;
- Comparative Effectiveness: Devoting $1.1 billion to comparative effectiveness research; and
- Prevention: Investing $1 billion in prevention and wellness.
AN OPEN AND INCLUSIVE PROCESS
The Administration is committed to an open and inclusive process for health reform, giving all Americans and stakeholders a voice in the outcome.
Community Discussions:
In December 2008, the Presidential Transition Team invited Americans to host and participate in Health Care Community Discussions to talk about how to reform health care in America. HHS released a report detailing the concerns and suggestions reported from more than 3,000 meetings with more than 30,000 participants. Participants saw cost as the largest problem with the current system, and identified fairness as a key value that the system should support.
White House Forum: On March 5th, the President hosted the White House Forum on Health Care Reform, bringing together members of Congress and key stakeholders from throughout the health care system to discuss ideas on how to drive down health care costs and improve coverage. That event has been followed by a series of Regional White House Forums on Health Reform bringing the conversation about how to reform our health care system directly to communities across the country.
EIGHT PRINCIPLES FOR HEALTH REFORM
In working with the Congress to pass health reform legislation, the Administration has set out the following principles for the resulting plan:
Reduce Long-term Growth of Health Care Costs for Businesses and Government: The plan must pay for itself by reducing the level of cost growth, improving productivity, and dedicating additional sources of revenue.
Protect Families from Bankruptcy or Debt Because of Health Care Costs: The plan must safeguard American families’ financial health, protecting people from bankruptcy due to catastrophic illness.
Guarantee Choice of Doctors and Health Plans: The plan should provide Americans a choice of health plans and physicians. They should have the option of keeping their employer-based health plan.
Invest in Prevention and Wellness: The plan must invest in public health measures proven to reduce costs in our system, as well as guarantee access to proven preventive services.
Improve Patient Safety and Quality Care: The plan must use proven patient safety measures and provide incentives for quality care delivery. It must support the widespread use of health information technology and the development of data on the effectiveness of medical interventions to improve the quality of care delivered.
Assure Affordable, Quality Health Coverage for All Americans: The plan must put the United States on a clear path to cover all Americans. The plan must reduce high administrative costs, unnecessary tests and services, waste, and other inefficiencies that consume money with no added health benefits.
Maintain Coverage When You Change or Lose Your Job: People should not face the loss of health coverage when they lose or change their job.
End Barriers to Coverage for People with Pre-existing Medical Conditions: No American should be denied coverage because of pre existing conditions.
FINANCING HEALTH REFORM
The Budget establishes a Health Reform Reserve Fund of about $600 billion over 10 years to finance fundamental reform of our health system to bring down costs and expand coverage. The Administration recognizes that while the reserve fund is a significant commitment, it is not sufficient to fully fund comprehensive reform, and we look forward to working with Congress to identify additional resources. The reserve is funded by new revenue and by savings from
Medicare and Medicaid. The goals behind these savings proposals are described below, with additional details described in the Medicare and Medicaid sections of this book.
Aligning Incentives Toward Quality: Proposals in the Budget that improve incentives to provide high quality care in Medicare include quality incentive payments to hospitals and voluntary physician groups, and reduced payments to hospitals with high readmission rates.
Promoting Efficiency and Accountability: The Budget includes savings from increasing the efficiency and accountability of Medicare and Medicaid. Proposals include reducing Medicare payments to private insurers through competition, implementing policies to decrease Medicaid costs for prescription drugs, improving Medicare and Medicaid payment accuracy, and bundling Medicare payments for inpatient hospital and post-acute care.
Encouraging Shared Responsibility: Moving toward a reformed health system will require all stakeholders to contribute a fair share. The Budget includes a proposal to require certain higher-income Medicare beneficiaries enrolled in Part D to pay higher premiums, as is currently required for physician and outpatient services.
New Revenues: Comprehensive health reform will require new revenues. Among other changes, the Budget includes a proposal to limit the rate at which high-income taxpayers can take itemized deductions, with the revenues dedicated to health reform.