| WASHINGTON – President Barack Obama's
first budget will seek $634 billion over 10 years as a down payment on
health care reform, a senior administration official said Wednesday. The
official said Obama's proposal is meant to start a dialogue with Congress
over how to provide coverage for an estimated 48 million uninsured while
also slowing health care costs, which amount to $2.4 trillion a year and
keep rising even as the economy is shrinking.
The senior official spoke on condition of anonymity because the budget
won't be released until Thursday.
Obama's request comes on top of recent health care expansions approved by
Congress and also described by his administration as down payments toward
overhauling the health care system. Those include $32 billion to expand
coverage for the children of low-income workers and $19 billion to speed the
adoption of computerized health records.
Aside from health care, the budget will extend Obama's signature $400 tax
cut for workers, originally enacted as part of the economic stimulus plan.
The budget also calls for an increase in the top income tax rate, from 35
percent to 39.6 percent for couples with incomes above $250,000 a year, said
another administration official.
The biggest tax adjustment, however, would come from updating the
alternative minimum tax for inflation. That would add $150 billion to the
deficit by 2013. The AMT was originally designed to make sure the wealthy
paid at least some taxes, but it threatens to ensnare some 24 million
middle- to upper-income taxpayers next year.
Obama has called on Congress to send him a health care reform bill this
year, but even before the budget arrives on Capitol Hill, senior members of
both parties say they are concerned about the cost.
Almost no one believes that Americans are getting good value for their
health care dollars. Some experts say 30 percent or more of what the nation
spends may be going for tests and treatments of little or no lasting
benefit.
But bringing the uninsured into such a costly system won't be easy.
Experts say the cost could easily exceed $1 trillion over 10 years, a figure
that the Obama administration does not dispute.
Against that backdrop, "it's very hard for me to understand why the
answer is to put more money into the system," Senate Budget Chairman Kent
Conrad, D-N.D., said at a hearing Wednesday.
Sen. Charles Grassley of Iowa, the senior Republican on the Finance
Committee, warned that Obama is walking "a razor's edge between a broken
health care system and fiscal catastrophe."
But administration officials say overhauling the health care system to
slow increases in costs and get everybody covered is essential to solving
the nation's long-term budget problems. They argue that it may take a big
investment up front to reap significant dividends over the long term.
The $634 billion Obama wants to set aside for health care would be almost
evenly divided between spending reductions and tax increases.
Obama's plan would trim $316 billion over 10 years from Medicare. Some of
the savings would come from scaling back payments to private insurance plans
that serve older Americans, which many analysts believe to be inflated.
Other proposals include charging upper-income beneficiaries a higher premium
for Medicare's prescription drug coverage.
The health care proposal would also limit tax deductions for upper-income
individuals and families, raising about $318 billion over 10 years.
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