Healthy Budget, Healthy Nation

President’s Budget Provides Backdrop to Health Care Reform

The president’s budget builds on current health care investments while underscoring the need for comprehensive health care reform, write Karen Davenport and Ellen-Marie Whelan.

President Barack Obama stands with Health and Human Services Secretary Kathleen Sebelius stand together in the White House Rose Garden in September 2009. (AP/Charles Dharapak)
President Barack Obama stands with Health and Human Services Secretary Kathleen Sebelius stand together in the White House Rose Garden in September 2009. (AP/Charles Dharapak)

The national debate on health care reform is an important backdrop to the president’s fiscal year 2011 budget request, which was submitted to Congress earlier this week. Reforming our nation’s health care system to modernize health care delivery, improve equity and access, and ensure affordable coverage for all Americans has profound implications for our nation’s fiscal future, as well as the Department of Health and Human Services’ short- and long-term responsibilities. Health care reform legislation is currently “on hold” in the wake of the Massachusetts special election, but the president’s budget proposal maintains and builds on his commitment to health care reform.

The budget proposal particularly emphasizes the nation’s long-term fiscal health through critical proposals to reduce the budget deficit, including a spending freeze and a range of tax proposals. Health care reform is a third key component of deficit reduction. The budget does not advance a detailed set of health reform proposals, but the administration does use congressional proposals as the basis for estimating that health reform would yield $150 billion over 10 years in deficit-reducing federal savings.

The president’s budget also acknowledges how important health reform is to transforming health care coverage and delivery. It does not supersede or replace pending reform bills, but it advances the health reform agenda by making investments in our health care system an ongoing priority. In many instances, the budget builds on programs created or strengthened in the American Recovery and Reinvestment Act, or ARRA. A major proposal provides states with enhanced federal Medicaid matching funds, thus ensuring that coverage problems and state budget issues do not intensify as the economy continues to recover. Other budget initiatives focus on critical infrastructure needed for health reform.

For example, the budget continues the ARRA’s substantial investment in health information technology by proposing additional funding for the Office of the National Coordinator for Health Information Technology, which works to standardize and accelerate the adoption of health IT and electronic medical records. Broad implementation of health IT would reduce medical errors and improve the efficiency of health system, while creating more than 200,000 new jobs.

The budget also proposes additional funding for another critical health care improvement tool: comparative effectiveness research. This research, which examines which treatments work and which do not, will help patients and their doctors make treatment decisions based on sound science rather than anecdote or incomplete information. And the president’s budget maintains the nation’s commitment to advancing medical science by increasing the public investment in biomedical research at the National Institutes of Health.

The president’s budget proposal also includes additional funds for improving our delivery system capacity, particularly for underserved and uninsured patients. In particular, he proposes increased funding for community health centers—health centers located in underserved areas—which will allow them to expand the primary care and preventive services that they currently provide to 17 million patients to new clients and new delivery sites. Additional funding in the president’s budget will help develop the nation’s health workforce by enhancing programs to recruit and retain primary care clinicians, including physicians, nurse practitioners, dentists, and behavioral health professionals who agree to work in areas of the nation currently experiencing shortages. These proposals build on ARRA investments and will result in the enhanced capacity we will need to deliver on the coverage expansions so critical to health reform.

One of the most important ways a reformed health care system will ultimately control the growth of health care spending is by changing the way we pay for health care. We will reduce the growth of health care costs over time by moving from a system that pays providers for the number of services they provide to one that rewards providers who deliver high-quality care.

The president’s budget anticipates the delivery system innovations included in health reform legislation by increasing funding for the Center for Medicare and Medicaid Services in a few key ways. First, the budget proposal would provide new funding for demonstration projects that provide higher quality care at lower costs. It also includes investments in new data systems that will enable CMS to build the data infrastructure it needs to conduct broader data analysis and information sharing, which are critical to establishing and reimbursing new models of health care delivery. Lastly, the budget proposes increased funding for Medicare and Medicaid research initiatives, including new demonstration and pilot projects that focus on payment incentives designed to promote better outcomes and quality of care—for lower cost—within CMS payment systems.

In short, the health care proposals outlined in the president’s budget build on current investments and address immediate needs, while underscoring the need for comprehensive health care reform and enhancing the nation’s ability to realize its promise.

Karen Davenport is Director of Health Policy at American Progress and Ellen-Marie Whelan, NP, Ph.D. is a Senior Health Policy Analyst and Associate Director of Health Policy at American Progress.

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