Obama budget raises health spending to $1.1 trillionNews added by Benefits Pro on February 12, 2016

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By Jack Craver

President Obama’s eighth and final budget proposal for the 2017 fiscal year would raise health spending to $1.1 trillion, according to an analysis by the Washington Post.

Much of that increase comes from non-discretionary programs, particularly Medicare, whose budget increases with just about every baby boomer who retires.

However, the president is also using the budget, which is unlikely to pass the Republican-controlled Congress, as a way to highlight ambitious health initiatives. Some of them are costly, but others are aimed at saving the government money.

One of the central health policies is a proposal to authorize more spending that would go to the 19 states that have not yet expanded Medicaid as part of the Patient Protection and Affordable Care Act.

Under current law, states that decide to accept the expansion now would not have the first three years of the expansion completely funded by the federal government--something that the states that did expand at the beginning enjoyed.

Under Obama’s proposal, those states would get three years of 100 percent federal funding, after which the federal government would gradually reduce its share, eventually funding only 90 percent of the program.

In addition, the president is proposing over $1 billion in funding to combat opioid addiction and over half a billion dollars to treat mental illness. Both initiatives are drops in the bucket in terms of overall spending, but they serve a strong symbolic purpose in support of a national push to emphasize treatment to prevent crime.

But in attempts to reduce health costs in the long term, Obama is also pushing for a new version of the Cadillac Tax, a controversial excise tax on expensive health plans that was supposed to go into effect in 2018 before Congress voted to suspend its implementation in December.

The new version of the tax that the president has proposed would take into account regional variations in the cost of health insurance when determining the threshold at which a plan would be subject to the 40 percent tax.

In a similar attempt to reduce health costs, the budget also seeks to enshrine new ways of paying Medicare providers that shifts the focus from services to outcomes and to set up a bidding system for insurers seeking to set up plans through Medicare Advantage.

Finally, in response to outcry over the rising cost of prescription drugs, the budget includes a provision that would force pharmaceutical companies to disclose their spending on research and development.

Ideally, that would allow regulators and consumers to get a sense of how much the price of medicine is based on recouping the investment, as opposed to profit.

Originally posted on BenefitsPro.com
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