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Obama Wants to Spend $630 Billion on Health Care Reform

President's plan calls for replacement of Medicare reimbursement system, increase in FDA budget

THURSDAY, Mar. 5 (HealthDay News) -- Achieving health care reform is one of President Barack Obama's major challenges, and his newly released spending plan calls on Congress to commit $630 billion over the next decade to finance that reform, according to an article published online Mar. 4 in the New England Journal of Medicine.

John K. Iglehart, a correspondent for the New England Journal of Medicine, writes that the president's budget proposal suggests paying for health care reform by reducing Medicare and Medicaid payments to health plans, hospitals, pharmaceutical companies and home health care providers by $318 billion over 10 years and by increasing the taxes of high-income Americans. Iglehart notes that the administration says Medicare currently pays health plans it contracts through its managed care arm an average of 14 percent more than it does traditional fee-for-service providers.

He writes that the Obama administration is proposing, among other things, replacing the current Medicare payment system with a competitive system that allows the market to set reimbursement limits, increasing the U.S. Food and Drug Administration's budget by $1 billion to strengthen its regulatory and approval powers, and making generic drugs more affordable and available. Obama emphasizes that slowing the growth of health care expenditures is one of his highest priorities.

"This is only one of countless challenges faced by the new administration," Iglehart writes. "On the other hand, Obama pulled off a historic victory last November; perhaps he will prove capable of bending the cost curve and achieving health care reform as well."

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