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Healthcare reform cannot survive on expanding coverage alone; it requires promoting best practices to fix what is broken, wrote President Barack Obama in a letter sent June 2 to Sens. Edward M. Kennedy, D-Mass., and Max Baucus, D-Mont.,--the two key stakeholders who have been at odds over the payor component of the administration's healthcare reform plan.

Kennedy, chairman of the health committee, and Baucus, chairman of the finance committee, are debating whether the legislation should include a public insurance plan that would compete with private insurers.

"Healthcare reform is not a luxury. It's a necessity we cannot defer," he wrote. "In short, the status quo is broken, and pouring money into a broken system only perpetuates its inefficiencies. Doing nothing would only put our entire health care system at risk."

Obama expressed his willingness to give special consideration to the cost reduction recommendations of the Medicare Payment Advisory Commission (MedPAC), recommendations that would be adopted unless opposed by a joint resolution of the Congress.

"This is similar to a process that has been used effectively by a commission charged with closing military bases, and could be a valuable tool to help achieve healthcare reform in a fiscally responsible way," Obama wrote.

He also applauded current plans being debated that attempt to offer Americans better choices for health insurance, and agreed that a health insurance exchange should be created for those who do not have options, provided that none of the plans deny coverage on the basis of a preexisting condition.

To prevent healthcare reform from adding to current U.S. deficits, Obama wrote that he has set aside $635 billion in a health reserve fund as a down payment on reform. On top of the $309 billion he wants to cut from spending over 10 years, the reserve fund also includes a proposal to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent, which, together with other steps to close loopholes, would raise $326 billion over 10 years.

"I am committed to working with the Congress to fully offset the cost of healthcare reform by reducing Medicare and Medicaid spending by another $200 billion to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues," he wrote. "These savings will come not only by adopting new technologies and addressing the vastly different costs of care, but from going after the key drivers of skyrocketing healthcare costs, including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions."