© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: February 25, 2009 11:57 pm
President Barack Obama will on Thursday announce the creation of a $634bn healthcare reserve fund that would help pay for his plans to provide universal insurance partly by raising taxes on the wealthiest Americans.
The move follows Mr Obama’s announcement in his speech to Congress on Tuesday night that he would make a “substantial down payment” on the future expansion of healthcare. Mr Obama also strongly hinted he would unveil plans to set up a cap and trade system for carbon emissions in Thursday’s budget.
The health fund will be part of a 10-year “headline” budget that the White House will publish this morning as part of a well-flagged effort to adopt more transparent budget accounting.
“A really important message behind this budget is honestly accounting for future costs,” a senior administration official told the Financial Times. “This [reserve fund] will be a marker in terms of tax reform and creating economically offsetting ways to pay for our priorities.”
The proposal is also intended to avoid the pitfalls of President Bill Clinton’s failed healthcare reform efforts in 1993. The Clinton administration alienated many potential allies in Congress by failing to consult widely enough.
Under Mr Obama’s plan, the healthcare reserve fund would receive $30bn in annual receipts by limiting the amount that households earning over $250,000 can claim in deductions on items such as mortgage payments. In addition, $30bn in annual savings would be created by introducing competitive bidding by private insurers offering Medicare to seniors.
Thursday’s budget will also set out how Mr Obama plans to reduce the deficit to below $650bn by the end of his first term – half of what he inherited from George W. Bush.
It is also likely to include some upfront accounting for future financial bailout funds.
“The president is underscoring that a budget … should be honest about the full range of possibilities that might or could be necessary down the line to stabilise our financial system,” Robert Gibbs, the White House spokesman, said on Wednesday.
The pool fund would only cover about half the expected $120bn costs of providing universal health insurance. Officials said that other ways would be found to fully fund the reforms once they are in the negotiating process with Congress.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in