But the administration said in a conference call with health-care insiders Thursday that the plan is only a down-payment on the goal of covering every American – saying Obama will “aim for “universality” without offering details of how he’ll accomplish that. He wants Congress to decide how to get there and in what timeframe.
“The goal is still to bring down the cost of care and to get universal coverage,” said an administration source.
The expenditure, to be made over 10 years, will be paid for raising taxes on the wealthy by limiting tax deductions, and by savings and efficiencies in pre-existing government health care programs.
In the conference call, White House health care officials repeatedly stressed how critical the budget was to the larger health care reform effort.
"We can't underestimate the importance of rallying around this budget and making sure that in fact it goes forward and serves as a footprint for something bigger and something larger with regard to our health care plan," said Melody Barnes, Obama's chair of the Domestic Policy Council.
Ahead of the release of his budget Thursday, Obama has endorsed eight guiding principles for health reform, the White House officials said on the conference call. They stressed that they intend to work with lawmakers and other stakeholders on how to accomplish the goals, but the principles will lay down a marker for any congressional plan.
In addition to aiming for universality, the others include maintaining choice of insurance and doctors, ensuring affordable coverage, protecting Americans financial health, investing in prevention and wellness, improving patient safety and quality of care and is fiscally responsible, sustainable and portable.
Early reviews for Obama's effort were favorable.
"We think this is an enormously positive step in the right direction," said Ron Pollack, executive director of Families USA, a consumer health advocacy group. "What is so remarkable is within 24 hours of saying health care reform must be done, the president showed his commitment to putting significant money on the table in a fiscally responsible way."
Obama previewed his broader plans for health care in his address to Congress Tuesday night, saying his budget contained "a commitment to comprehensive health care reform - a down payment on the principle that we must have quality, affordable health care for every American."
But health care advocates are watching closely just how many people Obama thinks he can cover, and how quickly.
Obama has generally shied away from talk of "universal health care" and the $634 billion is not being billed as an achievement of that goal but a big step in that direction. About 47 million Americans don't have health insurance.
OMB chief Peter Orszag is to announce the plan while outlining Obama's budget in a press conference Thursday.
The plan will be paid for by freezing Itemized deductions for the taxpayers earning more than $250,000, covering about half the cost of the plan. The other half will be drawn from an array of changes to Medicare and Medicaid, including expanding competitive bidding and the use of more generic drugs to bring down costs.
The budget fund also fulfills a goal first outlined by Orszag - to use fixes to Medicare reimbursement rates as a way to begin the process of health reform. Because those reimbursement rates are used to set treatment regimens at hospitals nationwide, Orszag reasoned, changing them would be a way to change the very delivery of health care across the nation.
But those reimbursement rates is politically sensitive and cosely watched, particularly in big states like New York, where they are the lifeblood of public hospitals. Hospital advocates, too, are watching to make sure Obama's changes don't drain funding from their facilities.