by Lynn Shapiro
, Writer | March 03, 2009
The Senate is pitched for battle, having heard the details of President Obama's plans for health care reform, laid out in the speech he delivered to Americans last week.
It is a certainty that every vested interest will lobby against it, especially pharmaceutical companies, which stand to lose huge sums of money now that the Obama administration plans to spend $1.1 billion for new reviews of generic drugs. The move is based on several recent studies showing that generics sometimes work as well or better than newer, more expensive medicines. The budget also calls for negotiations with drug makers to lower their prices, as Canada and Western European countries now do.
This initiative is a radical departure from President George W. Bush's Prescription Drug Plan of 2003 for Medicare beneficiaries (Medicare Part D), which refused to require drug makers to negotiate their prices downward.
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Unlike Bush, Obama appears unafraid of impinging on the fortunes of industry. Neither is he averse to taxing Americans in the highest income bracket. The President said that most workers are unduly constrained by health care costs and that to ease this burden, he would derive $318 billion by raising the taxes on the top 20 percent of tax filers who earn more than $250,000 a year. These individuals would pay 90 percent of all taxes.
Obama's proposal would also eliminate subsidies now given to the private plans that provide care to more than 10 million of the 44 million Medicare beneficiaries. By forcing these plans, known as Medicare Advantage, into a competitive bidding process, the administration says it can save $175 billion over the next 10 years
The President is counting on the economy to be thriving by 2011. Then, his plan for hiking taxes on high-income payers would make it possible for him to keep his promise to halve the deficit by 2013.
Deficits of almost $1.8 trillion in 2009 and $1.2 trillion in 2010 are frightening. But while Obama wants to extend tax cuts for the middle class, much of the health care package is intended to save the economy and create jobs. So, the massive amount of red ink Americans face should be temporary, the budget assumes.
Deciding when to go from stimulus spending to deficit reduction is the trickiest part of the equation, but doing it is essential, analysts say.
Another avenue for health care savings would come from slashing Medicare's home health care programs, said to be excessive. What's more, ending rebates from drug companies for medicines sold to Medicaid patients would save the U.S. healthcare system almost $20 billion.