The Health Care Reserve Fund: A Historic Commitment to Reform
We began that process in February in the budget overview, which included a $634 billion health care reserve fund -- a substantial down payment toward health care reform. On Monday, when we release the Summary Tables and Analytical Perspectives of the Budget, you will see that the full Budget does exactly the same thing and includes $635 billion in a health care reserve fund.
As in the February overview, about half of the health care reserve fund in the full Budget comes from savings in Medicare and Medicaid that would improve the health care system’s efficiency and quality. There is a change (the "$635 billion" in the above paragraph is not a typo). In the time since we released the February overview, the health care reforms in the reserve fund have been re-estimated to save about $7 billion less over the next 10 years, while the limitation on itemized deductions has been re-estimated to save about $51 billion less over this period. We closed this gap by dedicating some other tax enforcement measures and loophole closers totaling $60 billion. This then brings the reserve fund in the full Budget to almost exactly the same total as before.
How do we do it?
First, we improve tax compliance and eliminate unjustified tax breaks for narrow interest groups. For instance, the Budget proposes to:
- Expand information reporting that will help the IRS catch tax cheats. The expanded information reporting is expected to raise more than $10 billion over the next 10 years, by allowing the IRS to better enforce existing tax law.
- Target valuation games played by those facing estate and gift taxes that allow them to undervalue transferred property, raising another $24 billion over the next 10 years.
- Immediately clamp down on a tax loophole that is giving an unintended, multibillion dollar windfall to paper companies, saving more than $1 billion this year and next.
It is true—more savings than this will be needed to pay for comprehensive health care reform in its entirety. But I believe that the reserve fund, in itself, represents a historic commitment, and I look forward to working with Congress to bring about—and pay for—fundamental health care reform this year
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