The first phase of President Obama’s health services reform is on the table. A combination of $318 Billion in tax increases and $316 Billion in savings from changes to Medicare Advantage programs and other health care services, puts a $634 Billon dollar “down payment” on a health reform movement that President Obama and congressional democrats acknowledge will cost more than $1 Trillion over ten years.
The initial budget contains few details on how the money will be spent, other than it will be a down payment on a plan to put America on a trajectory towards providing health insurance coverage for all Americans. The administration did mention that Americans should have a choice in health plans and that people will be able to keep their employer sponsored health insurance if they wish too.
The budget really focuses on where the money will come from: Half from tax increases on the richest 5% of Americans and half from projected savings by increasing efficiencies in the health services sector. $316 Billion in reduced costs in the health services sector seems achievable in time, but it would be very optimistic to think the health services industry can be retooled quickly.
However, changes made to the Medicare Advantage programs could have a near term impact. We can only hope that quality of services will not be compromised if the government forces private Medicare Advantage insurers to bid of offer coverage by service area, as President Obama has proposed. Hospitals will also absorb some of the cost savings through a restructuring of some Medicare benefits. Also, wealthier seniors may end up paying more for their Medicare Part D prescription drug plan premiums.
The Americans who will be footing the bill for the $318 Billion tax hike are families earning over $250,000 annually. The government would increase taxes by taking away some of their deductions for mortgage interest and charitable donations. However, in 2009 it looks like couples with taxable earnings of $208,500 or more may also be impacted by the tax hike. It is unclear how many people in Colorado will be directly impacted by this tax hike.
Do you think this is a good step forward or how do you feel about these revelations?
Stay tuned for more updates as they become available.