Obama administration officials defend health care, other provisions in FY 2010 budget proposal

White House Office of Management and Budget Director Peter Orszag and Department of the Treasury Secretary Timothy Geithner on Tuesday during a House Budget Committee hearing defended health care and other provisions included in the $3.6 trillion fiscal year 2010 budget proposed by President Obama last week, the Washington Post reports (Montgomery, Washington Post, 3/4).

During the hearing, Orszag and Geithner responded to concerns from lawmakers about a provision in the budget proposal that would increase taxes for U.S. residents who have annual incomes of more than $250,000 to help finance a 10-year, $634 billion health care reserve fund. Orszag and Geithner said that the tax increases are needed to reduce federal budget deficits, and Geithner added that the increases would not take effect until the U.S. is "safely in recovery" in 2011.

According to the Washington Times, Orszag also "repeatedly emphasized the importance of reducing escalating health care costs." He said, "Reasonable projections of health care cost growth under current policies show that they are the central cause of the nation's long-term fiscal imbalance," adding, "Health care is the key to our nation's fiscal future, and health care reform is entitlement reform" (Lengell/Dickson, Washington Times, 3/4).

"Democratic budget leaders said they are likely to endorse most of Obama's proposals sometime in April in the form of a nonbinding budget resolution," the Post reports (Montgomery, Washington Post, 3/4).

Medicare Advantage Provision

In related news, a provision in the budget proposal that would establish a "competitive bidding" process for Medicare Advantage to save an estimated $176.6 billion over 10 years has prompted criticism from health insurers, a move that might "be situating the powerful industry for a prime seat at the table when deliberations begin later this week" during a White House health care summit, Roll Call reports.

America's Health Insurance Plans spokesperson Robert Zirkelbach said, "We applaud the president for laying out a broad health care agenda and for laying out the framework needed for health care reform," adding, "Unfortunately, this budget would ask seniors and Medicare Advantage to fund a disproportionate share of the costs to reform the health care system." According to Zirkelbach, AHIP plans to lobby lawmakers to oppose the provision, rather than launch a public relations campaign. He said, "We continue to share with policymakers the value that Medicare Advantage provides, we're sharing with them the additional benefits that the Medicare Advantage program has, such as vision, hearing and dental."

Alissa Fox, a lobbyist with the BlueCross BlueShield Association, said that BCBS also will lobby lawmakers to oppose the provision, adding that the group "will be working with the administration and the Congress to explain what this will mean for the 10 million Medicare beneficiaries that currently enjoy benefits." She said, "It could mean as much as a 5% cut to the payments to Medicare Advantage plans, which translates into premium increases and benefit cutbacks."

In response to the criticism of the provision, a White House spokesperson said that "we need a system where taxpayers aren't having their money wasted."

Jim Dau, a spokesperson for AARP, said that the provision "would require MA plans to compete with each other, which would encourage higher-quality care at lower prices." In an e-mail, Dau wrote, "Private Medicare Advantage plans were created to deliver Medicare benefits for 95% of what it costs under traditional Medicare, yet today they cost around 14% more," adding, "This would not only help level the playing field for MA and traditional Medicare -- a goal which AARP supports -- but also save Medicare billions of dollars that could be used to improve Medicare and our entire health care system."

An unnamed Democratic health care lobbyist said that health insurers "realize that this is an indefensible subsidy." The lobbyist said of the summit, "This is all going to [be]about sharing (the cost) of health care reform and (insurance companies) know they're going to get a piece taken out of them," adding, "That's why they fought this hard over the last few years, because if (Medicare Advantage) were already gone, what else would they have to give up?" (Murray, Roll Call, 3/4).