President Obama’s Budget: Progress on Health Care

February 27, 2009

Editorial

Mr. Obama’s budget plan makes a bold and long overdue commitment to overhaul the dysfunctional and far-too-costly American health care system. The plan will not guarantee affordable health coverage for all Americans, the ultimate goal, and it contains no blueprint for comprehensive reform of the system. Those issues will have to be thrashed out with Congress.

But the substantial sums proposed by Mr. Obama are an impressive down payment on his pledge to make health care reform a priority right from the start of his administration. Those critics who will inevitably say that he is overreaching in the midst of an economic crisis should listen to the millions of Americans — employers, employees and the unemployed — struggling with the crushing costs of health care.

The plan calls for creating a $634 billion reserve fund for health care reforms over the next decade. And unlike the ill-fated Clinton health reform plan of the early 1990s — whose many complexities were worked out behind closed doors only to crash in Congress — Mr. Obama has mainly issued guiding principles.

Coverage should be universal, affordable, portable and there should be investments in prevention and improved quality of care. He is leaving most of the details to Congress in hopes of winning political support for an arduous reform task.

To the administration’s credit, the budget plan does not pretend that this can be paid for through swiftly delivered efficiencies. Fully half of the money, $318 billion, would come from new taxes on the wealthy. The other major source of money would come from eliminating unjustified subsidies granted to the private plans that provide comprehensive care to more than 10 million of the 44 million older Americans covered by Medicare. By forcing these plans — known as Medicare Advantage — into a new competitive bidding system, the administration believes it can save $175 billion over 10 years.

The rest of the needed revenues, officials say, would come from various proposed savings and payment changes in the huge Medicare and Medicaid programs. Some $37 billion would be saved over 10 years by reducing Medicare’s home health care payments, currently considered excessive. Almost $20 billion would be saved by extracting higher rebates from drug companies for medicines sold to Medicaid patients. And so it would go until the full $634 billion is reached.

Mr. Obama deserves high marks for putting out his own ideas on how to raise or save money while leaving plenty of room for Congress to substitute other ideas.

Even then, the prospects for full-scale reform remain highly uncertain. Congress is deeply polarized, and it will be lobbied heavily by every group whose financial interests might be threatened. Mr. Obama’s budget won’t come close to financing universal coverage. But the president has now made health care reform a top priority, and this plan is a sound start.