President Barack Obama asked Congress for $76.8 billion for the Department of Health and Human Services Thursday in a fiscal year 2010 federal budget outline.
Some of the funding would come from changes to the way healthcare is provided, with a new emphasis on pay for performance for Medicare providers.
Under the president's budget request, Medicare Advantage would be revamped, physicians and hospitals could expect to be paid for performance under Medicare, pharmaceutical companies would face steeper competition from generic drug companies and the government would clamp down on inadvertent and fraudulent overpayments under Medicare. The budget also calls for "comprehensive, but fiscally responsible" reforms to the physician payment formula, moving toward rewarding doctors for efficient quality care.
The president's request kicks off the annual budget process and lists his priorities for the upcoming fiscal year, which begins Oct. 1. Obama has asked Congress to invest in healthcare IT, expand research on comparative effectiveness, double current cancer research funding and increase the numbers of healthcare providers in rural areas. He also requests assistance for the Indian health system.
The president's proposed budget would finance healthcare reform by eliminating certain tax breaks for what he calls the wealthiest Americans and promoting efficiency and accountability in Medicare and Medicaid. Together, these will make an estimated $316 billion available over 10 years, according to the administration.
Obama's proposal would crack down on Medicare Advantage plans and pharmaceutical companies. Medicare Advantage, paid 14 percent more than fee-for-service Medicare, would be replaced with a competitive system based on the average of plans' bids submitted to Medicare. According to the administration, this would allow the market, not Medicare, to set the reimbursement limits and save taxpayers more than $175 billion over 10 years, as well as reduce Part B premiums.
The proposal would also reduce drug prices by preventing drug companies from blocking generic drugs from consumers.
The president's plan would also make hospitals responsible for readmissions of Medicare patients by bundling payments for an entire stay, including post-acute care for 30 days. Hospitals with high rates of readmission would be paid less if patients are re-admitted to the hospital within the same 30-day period. This combination of incentives and penalties should lead to better care and save roughly $26 billion of wasted money over 10 years, according to the proposal.
Obama said he considers measures in the newly passed American Recovery and Reinvestment Act of 2009 as a down payment on healthcare reform. These include $19 billion for health information technology and $1 billion for comparative effectiveness research, and subsidies for the newly unemployed to maintain health insurance.
In his budget, the president proposes that Congress accomplish eight principal healthcare goals for America: reduce growing premiums and other healthcare costs for individuals and businesses; make healthcare more affordable by eliminating waste and inefficiencies; aim for universal coverage; provide portability of coverage; guarantee choice in selecting a provider or health plan; invest in prevention and wellness; improve patient safety and quality of care through incentives and widespread adoption of healthcare IT; and maintain long-term fiscal sustainability.
Though the president enjoys majority Congressional support for his proposal, he has pushed for a bipartisan consensus, calling for Congress to begin with serving the common good.
Both sides of the aisle might agree to that much, but there are stark differences and bruised egos. Republican leaders, calling themselves "the endangered species" in this Democratic Congress, are asking for a fair chance to participate, time to deliberate and Congressional Budget Office analysis of proposed bills. They feel the economic stimulus package lacked all of these preparations in advance.
At the Executive Office Building Thursday morning, the president said his budget is making a historic commitment to comprehensive healthcare reform. '"It's a step that will not only make families healthier and companies more competitive, but over the long term it will also help us bring down our deficit," he said.
Obama said he expects a rocky road ahead as he goes line-by-line to eliminate waste in current federal programs.
"This is a process that will take some time, but in the last 30 days alone, we have already identified $2 trillion in deficit reductions that will help us cut our deficit in half by the end of my first term," he said.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the president's budget takes steps to respond to the nation's challenges, but "much more will be needed to put our budget back on a sound long-term fiscal course. "
Now that they have Obama's proposal, Congress will have to write and pass a budget resolution, accepting or rejecting elements of the president's recommendation. Congress is supposed to pass a budget by April 15, but often this process takes much longer.
