White House budget eyes reserve to pay for health system overhaul

2/26/2009

WASHINGTON Submitting a $3.55 trillion budget plan to Congress today, President Barack Obama proposed the creation of a $634 billion “reserve fund” to help pay for a massive overhaul of the nation’s stressed healthcare system.

Among other uses, the fund would help defray the costs of insuring more of the estimated 46 million Americans without healthcare coverage, the President said. It would also help spur the adoption of health information technology, a new agency to oversee the effectiveness of health spending and treatments, cost-lowering health prevention and wellness initiatives, and other programs.

The White House’s massive spending plan for 2010 is short on details about specific elements of the health reform plan, and instead proposes that those details will be worked out through negotiations in Congress. Already clear, however, is that the President intends to expand coverage for drugs and medical care to more Americans, particularly children, and to boost the use of generic drugs, including follow-on biologics, as cost-saving tools.

To pay for the reserve fund, the White House is proposing an end to tax breaks for the wealthiest 2% of Americans already set to expire in 2010, as well as the closing of corporate-tax loopholes and a cutback in payments to insurance plans, doctors and hospitals serving Medicare patients and others. Those proposals have angered Republican lawmakers, insurance companies and other constituencies.

Reacting quickly to the Obama budget plan, House Republican Whip Eric Cantor, R-Va., today decried the President’s health reform proposals as “old-style spending increases and government-knows-best approaches which have historically failed to achieve better outcomes at lower costs.

“For too long, waste, inefficiency and bureaucracy have been the hallmarks of our system instead of access, choice, quality and affordability,” Cantor charged. “Republicans believe we should focus on preserving patient’s options for their care while ensuring that doctors are free to make critical decisions without interference from restrictive government policies.”

Under the Administration’s fiscal proposals, wealthier seniors would also pay more for their Medicare premiums. Also proposed, although details have yet to be worked out, are additional payments for drugs dispensed under Medicaid.

Pharmacy and health groups have registered support for some aspects of the President’s budget plan, including the steps it takes to at least build a framework for universal health coverage of Americans, and to cut down on waste and fraud in the Medicare system.

“Today’s budget submission sends a signal to the American people that this Administration is serious about prioritizing health care. We applaud the President for laying out a bold framework and setting aside significant resources to put our nation on a path towards comprehensive healthcare reform, which is a goal that has eluded our country for more than a century,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans. “We have strongly supported recent efforts by the Administration and Congress to strengthen the health care safety net, expand coverage for kids, conduct comparative effectiveness research, and invest in health information technology.”

Also weighing in today was the managed care industry. In particular, the Pharmaceutical Care Management Association praised the President’s call in the fiscal 2010 budget for a regulatory pathway at the Food and Drug Administration for the approval of generic versions of biologic drugs.

“The key to health reform is to improve access to quality care while reducing waste and unnecessary spending,” said Mark Merritt, the PCMA’s president and CEO. “For over a quarter century, generic medicines have increased access and affordability for consumers, employers, labor unions, government agencies, and others. However, expensive biologics have not faced generic competition, straining payers’ ability to provide affordable drug benefits for these necessary and often life-changing products.

“PCMA strongly supports the provision in the President’s budget that would create a regulatory pathway to approve generic biologics,” added Merritt. “This will save billions of dollars for both the public and private sector by introducing competition and will help finance broader health reforms.  It also protects incentives to produce new biologics.”

As of press time, other groups, including the National Association of Chain Drug Stores and the National Community Pharmacists Association, had yet to issue new statements on the President’s budget proposals.

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