The money will be drawn from new revenues and changes in the way federal insurance programs pays drugmakers, medical providers, and insurers offering coverage through Medicare.* It will underwrite the cost of expanding insurance coverage--through public programs like Medicaid and subsidies for the purchase of insurance--at least for the next ten years. (Ideally, efficiency savings will help offset more of that cost in the more distant future.)
How big an investment is that? It's pretty big--more, I believe, than any president has proposed setting aside for coverage expansions to the non-elderly since Clinton tried for universal health insurance in the 1990s. And it confirms that Obama is serious about pursuing health care reform, beyond small incremental steps.
Even so, the amount will not enough to finance full universal coverage, as discussed previously here and elsewhere. The budget will call for finding that money, although that obviously raises another question: Just how much more would it cost to get everybody (or nearly everybody) covered by decent insurance?
The answer depends in part upon how you define "decent" and how quickly you want to get there. Passing a universal coverage plan in 2009 wouldn't necessarily mean covering everybody in 2010. Or 2011. Or, well, you get the idea.
Here's one thing to keep in mind. During the presidential campaign, the Democratic contenders all assumed it would cost around $100 billion a year, or a bit more, to give everybody insurance. Numbers like that have a way of growing once presidents get into office, have to dispense with favorable assumptions that the Congressional Budget Office might now score, and start taking honest account of inflation.
Connolly says experts predict the full cost of universal coverage could approach $1 trillion over ten years. I think it could actually cost a good bit more, although--again--it depends on how quick, and how sweeping, the coverage expansions are. But that doesn't change the fact that Obama is proposing a huge investment.
*Update: Connolly just published her full story, including details about a new tax on the wealthy:
Under the Obama budget blueprint, about half of the new "health care reserve fund" would come by limiting the tax break on itemized deductions for families with incomes above $250,000. The proposal would reduce the value of tax deductions by about 20 percent, a change which would generate about $318 billion over the next 10 years, according to administration documents provided to The Washington Post.
Also, I hurriedly transcribed the wrong figure in my original item. It's $634 billion, not $643 billion--although, let's face it, what's another $900 million a year when the figures are this large? (Ha, just a little wonkish humor there...)