Obama's health fund proposal would raise taxes on the wealthy

McClatchy NewspapersFebruary 25, 2009 

WASHINGTON — President Barack Obama plans to propose on Thursday the creation of a $634 billion fund over several years to finance major changes in health care, White House officials said Wednesday.

He'll propose creating the pool of money with a combination of new tax increases on those making more than roughly $250,000 a year and cuts in government spending on other health care.

Obama won't use his broad budget outline on Thursday to spell out the details of his plans to expand health care, a dream of Democrats for more than 60 years and a centerpiece of Obama's presidential campaign.

His administration instead will spell out the broad principles that he wants in health care.

Rather than dictate how it wants the legislation written, the administration wants to write the details in concert with members of Congress, along with outside interest groups. A White House summit next week will be a first step in that process, aides said.

"We've seen what happens when people march up the hill (Capitol Hill) and drop a stack of paper on them," said one administration official in a thinly veiled reference to the way the Clinton administration sent a detailed proposal to Congress only to see it fail under a barrage of criticism. He spoke on condition of anonymity because he wasn't authorized to discuss the plan publicly.

Obama, however, wants to start finding sources for the extraordinary amount of money that will be needed. That could reach $1 trillion over 10 years by some estimates.

To do it, he'll propose raising taxes by about $300 billion over 10 years on those in the 33 percent and 35 percent tax brackets, roughly defined as those making more than $250,000 a year.

He'd do it by further limiting their deductions, aides said, apparently beginning at the start of the next fiscal year on Oct. 1.

The proposal is apart from the administration's plan to let the Bush tax cuts for those earners expire as scheduled at the end of 2010.

The spending cuts would total more than $300 billion over 10 years.

The biggest single cut would total $170 billion over that period _ money to be saved by using competitive bidding in Medicare Advantage programs, private plans that administer Medicare. They now are paid $1.14 for services that cost the government-run Medicare program $1.

Another block of money would come from removing roadblocks to generic drugs in government-financed health care programs, the aides said.

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