Health Care Reform and President Obama’s Budget

February 27, 2009

In this video, Alice Rivlin says that President Obama’s budget calls for taxing the wealthy to help pay for aggressive reform of the nation’s health care system and that the plan also seeks to curtail wasteful Medicare and Medicaid spending while increasing services and efficiency in those programs.


“The president’s budget makes a down payment, and he has used this word, on a long run reform of the whole health system. There basically two problems with our system. It’s inefficient and costly, and the cost is rising very rapidly that’s one problem and the other is there a lot people who don’t have adequate health insurance coverage, and there are more every day because when people loose their jobs they often loose their health coverage, so the president is trying to address both of those problems or least to make a start. The budget takes some quite aggressive stands on efficiency. It says we are going to have electronic records we are going to analyze those records and see what treatments work and what don’t. We are going to make Medicare more effective by doing competitive bidding for Medicare advantage plans. I think that’s a no brainer, but it may be difficult to get through the Congress, the Government is not going to use Medicare money to pay for hospitals that are readmitting the patient right away. That sounds like you didn’t keep them long enough you didn’t do the right thing, so they are going to readjust the reimbursement rates for Medicare so that it covers an episode of illness, and the Hospital is responsible for solving the problem.”

“…I think this is the right approach, but it’s difficult, and it’s going to take time. At the same time, the budget and stimulus package that preceded it take a couple of steps toward broadening coverage, making sure people who loose their jobs have affordable health insurance, but it does not propose a new structure for the health system. That he says we will work with Congress to do that, and I think that is the right thing to do. We in the Clinton Administration made the mistake of writing a very elaborate complicated plan and shipping it up to the Congress, and then it didn’t get a very good reception when it went down, but I think this Administration wants to avoid that mistake. They want to work closely with the Congress. Now that doesn’t mean they are not going to have ideas, but they are tipping their hand right now as to what this negotiation is going to look like from their side.”

“…One has to ask how this big investment in health is going to be paid for, and there basically two answers to that in the budget. One is the increase in taxes on upper income people is going to go into that fund. That will pay for about half of it, and the other the president hopes, the other half will come from the eventual savings from these stronger rules about efficiency and not paying for wasteful care.”