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OBAMA'S BUDGET: HEALTHCARE

A blueprint for health spending

Obama's budget includes the principles that will guide his healthcare reform, including universal coverage and reduced premiums.

February 27, 2009|Noam N. Levey

President Obama says he will adhere to eight "principles" in trying to overhaul the healthcare system.

One is to "aim for" providing every American with insurance, also known as universal coverage -- though Obama does not lay out a course for accomplishing that.

Other principles include reducing premiums, guaranteeing that Americans have a choice of health plans, and ending the insurance company practice of denying coverage to people with preexisting conditions.

His budget also outlines how he and his congressional allies might pay for those goals.

The president has proposed a 10-year, $634-billion reserve fund as a "down payment" on healthcare reform:

He wants to raise nearly $318 billion over the next decade by limiting itemized deductions on income taxes for families making more than $250,000.

Under the president's proposal, these taxpayers would recoup 28% of the value of qualified deductions, such as charitable donations, rather than higher percentages laid out under current law.

That could mean a couple in the 35% tax bracket who once could have recouped $3,500 of a $10,000 donation to a charity would now recoup only $2,800.

The budget envisions more than $316 billion in additional revenue from changing the way the federal government pays for healthcare through Medicare and Medicaid, its two primary public insurance programs.

The biggest chunk of that revenue -- more than $175 billion -- would come from cutting payments to insurance companies that currently contract with the federal government to provide care to senior citizens on Medicare through the Medicare Advantage program.

-- Noam N. Levey

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