Obama puts healthcare reform at heart of budget
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Obama puts healthcare reform at heart of budget

President Barack Obama unveiled an unprecedented bid to reform the country's ailing healthcare system to much-needed insurance to millions of Americans and give a shot in the arm to the ailing economy.

world Updated: Feb 27, 2009 08:24 IST

President Barack Obama unveiled on Thursday an unprecedented bid to reform the country's ailing healthcare system to much-needed insurance to millions of Americans and give a shot in the arm to the ailing economy.

Calling it a "down payment" on healthcare reform, the Obama administration proposed to set aside a whopping 634 billion dollars over 10 years to finance reforms to make health coverage affordable and move the country toward universal coverage.

The proposed healthcare fund is at the heart of the six-week-old administration's budget plans for the next decade, which begin with a bold 3.55-trillion-dollar budget for 2010.

"Because of crushing healthcare costs, and the fact that they drag down our economy, bankrupt our families and represent the fastest-growing part of our budget, we must make it a priority to give every single American quality, affordable healthcare," Obama said at the White House as he officially unveiled an overview of the budget plan.

The Democratic president made healthcare reform a major campaign plank and one of his first acts in office was to sign into law expanded healthcare coverage for low-income children.

The lack of universal healthcare coverage in the United States has left 46 million Americans uninsured.

And with the world's largest economy struggling with recession, soaring unemployment threatens to tip millions more into the ranks, since most workers rely on employers or themselves to pay for coverage.

Obama's budget plan -- to be finalized and submitted to Congress in April -- envisions a dramatic shift in government spending that pours more money into healthcare, education and green energy, on top of other initiatives designed to promote long-term economic growth.

To pay for the massive spending, his administration wants to allow tax breaks for the rich to expire in 2011 to level the playing field for other Americans.

The new healthcare fund would also be financed by a reduction in the itemized deduction rate for families with incomes over 250,000 dollars that would raise an estimated 318 billion dollars over 10 years.

"The single most important thing we can do is bend the curve on healthcare costs," Obama's budget chief Peter Orszag told reporters.

Obama has pledged to immediately make investments to computerize all US medical records within five years while protecting individuals' privacy.

Reform of Medicare, the federal healthcare insurance program targeting seniors aged 65 and older that covers nearly 40 million Americans, would be a key area of reform.

The Obama administration wants to reduce Medicare overpayments to insurance companies and weed out duplications and error. One approach would be to force insurers into competitive bidding.

Orszag, the director of the US Office of Management and Budget, said that previous federal budgets had assumed Medicare payments would be reduced to insurance companies, when in fact each year Congress would "fill in the hole" by not approving cuts.

Senator Ted Kennedy, chairman of the Senate Health, Education, Labor and Pensions Committee and a champion of healthcare reform, hailed his fellow Democrat's budget plan.

"With this budget, the president also makes an historic commitment to the goal of quality, affordable healthcare for all Americans," he said.

"I'm optimistic that Congress is now ready to answer the challenge of enacting legislation to reach that goal, and the funds proposed in the budget are an essential starting point for our effort."

But Republican lawmakers charged that it was unwise to pay for healthcare reform through a tax hike during a recession.

"Everyone agrees that all Americans should to have access to affordable health insurance. But an increase in taxes in the middle of an economic recession, especially on small businesses, is not the way to accomplish that goal," said Republican House Leader John Boehner.

Orszag dismissed such arguments, saying taxes would not rise for the rich or businesses until 2011, when the economy is projected to have rebounded to a robust 4.0 percent growth rate.

First Published: Feb 27, 2009 08:22 IST