The need to reform the U.S. healthcare system was a key theme of President Obama's address to Congress last night, and there's early word that the budget proposal he's set to release tomorrow will create a 10-year, $634 billion "reserve fund" to pay for it.

The Washington Post, citing administration documents and an unidentified White House official, is reporting that the money would come from reducing tax breaks for the wealthy (which Obama said last night includes those who make more than $250,000 a year) and lowering payments to insurers, hospitals and physicians.

The plan, according to the Post, would force private insurers who sell Medicare managed-care plans to undergo a competitive bidding process, which would save an estimated $175 billion over the next decade. Drug makers would have to increase their medication rebates to Medicaid patients from 15 percent to 21 percent. And hospitals that have high readmission rates would be paid less by Medicare, using a system of flat fees for the first hospitalization and 30-day follow-up.

Obama described health reform last night as "a down-payment on the principle that we must have quality, affordable health care for every American. It's a commitment that’s paid for in part by efficiencies in our system that are long overdue."

He noted that there's money in the $787 billion economic stimulus package earmarked to develop electronic medical records and "new technology that will reduce errors, bring down costs, ensure privacy, and save lives."

"Let there be no doubt," he told lawmakers in the televised address, " health care reform cannot wait, it must not wait, and it will not wait another year."

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