Nurse Lucy Stufflebeam records a patient's heartbeat using a "home telecare" device. Video monitoring is just one form of information technology that can help promote wellness and reduce health care costs. (AP/Jim McKnight)
Nurse Lucy Stufflebeam records a patient's heartbeat using a "home telecare" device. Video monitoring is just one form of information technology that can help promote wellness and reduce health care costs. (AP/Jim McKnight)

A centerpiece of the Obama administration’s fiscal year 2010 budget, which was released this morning, is $634 billion over 10 years dedicated to health reform in the form of a reserve fund, giving health care advocates much to celebrate. During the presidential campaign, President Obama promised to seriously tackle health reform. This budget demonstrates his determination to deliver on this promise. The health reform reserve fund is a pool of funds explicitly dedicated to the investments in expanded coverage and health system infrastructure we need to improve the American health care system. The administration has identified significant savings in the Medicare and Medicaid programs and specific new sources of revenue for this purpose.

No less important than the reserve fund itself is the savings that flow into it. The administration has identified inefficiencies and overpayments in the Medicare program, and additional savings in the Medicaid program, to cover $317 billion of this fund. These reforms include important changes in Medicare’s payments to private health insurance plans, new incentives to improve quality of care, and more efficient payment systems for patients who need hospital care and post-hospitalization services. They will improve state Medicaid programs’ purchasing power on prescription drugs and provide greater access to generic medications. These changes will result in meaningful savings. More importantly, these changes will strengthen the Medicare program’s long-term financial position, and, through Medicare’s leadership, pave the way for improved efficiency and quality in the entire health care system.

The administration is also making important investments in proven strategies for improving health and wellness. For instance, the budget contains a proposal for a new Nurse Home Visitation program for new parents, which builds on a multiyear demonstration project that has shown its ability to improve health outcomes and reduce child abuse and neglect. Similarly, the administration has committed to using evidence-based approaches to reducing teen pregnancy, including the provision of medically accurate and age-appropriate information to sexually-active youth.

The budget proposal, however, is just a beginning. This budget must be followed by health reform legislation that makes affordable, comprehensive coverage available to everyone. CAP has long advocated for reforms that build on the vital foundation of the Medicaid and SCHIP programs, use the market leverage of group purchasing to achieve reasonable insurance rates for individuals and small businesses, and provide financial help for individuals and families who cannot afford coverage on their own.

Expanded coverage is a worthy goal on its own merits. The financial insecurity, delayed care, and poorer outcomes experienced by people without health insurance create a moral imperative for change. But covering more Americans is also a key component of cost containment. As long as our health care system excludes 16 percent of the population, promising approaches to cost control—such as improved information, enhanced use of technology, and greater utilization of preventive services—will fail to reduce costs.

Health reform must also build on the budget’s first steps at improving quality and efficiency, and reorient health care spending toward prevention, improved access to primary care, and better care coordination for people with chronic diseases. By reforming provider payments, making targeted investments in the health care workforce, rewarding high quality care and improved provider performance, and investing in health care infrastructure—in concert with expanded coverage—we can achieve our ultimate goals of improved health and financial security for all Americans.

Karen Davenport is Director of Health Policy at the Center for American Progress. For more on health policy from CAP, see our Health page.

Overview: A New, Ambitious Course of Action, by Michael Ettlinger

Defense: Obama’s Defense Budget Is on Target, by Lawrence J. Korb

Energy: Energy Budget Is Sunlight After Eight Years of Darkness, by Daniel J. Weiss

Education: Investing Wisely in Our Children, Cynthia G. Brown and Melissa Lazarín

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