Obama takes bold approach to healthcare system reform

Barack Obama has pledged a major overhaul of America’s healthcare system by the end of his first term as president. As campaign promises go, this one’s a doozy.

Presidents since Harry S. Truman have tried and failed to enact universal health coverage.

President Clinton’s first term and the Democrats’ 40-year reign in Congress were brought low in 1994 thanks in large part to the White House’s failure to close the deal on health reform.

Times have changed a lot since the Truman era and even since the mid-1990s, though. At least, that’s what Sen. Obama (D-Ill.) is counting on during his campaign for the presidency.

The rate of people without health insurance has risen steadily over the past two decades, reaching 15.3 percent of the population in 2007, according to a Census Bureau report issued Tuesday. Last year, 45.7 million lacked health coverage, an increase of 7.2 million people since the 2000 presidential election.

“On Bush’s watch, an additional 7.2 million Americans have fallen into the ranks of the uninsured.  This is the failed record of George Bush’s economic policies that Senator McCain has called ‘great progress,’” Obama said in a statement.

The cost of medical care — to patients, to the employers that bear the largest share of the burden and to government programs like Medicare and Medicaid — continues to grow at a staggering rate, spreading pain throughout the economy. Healthcare spending has risen an average of 2.5 percentage points higher than the rate of inflation every year and constituted 16 percent of the U.S. economy in 2005, federal authorities estimate.

Worse still, even as healthcare gets more expensive, the quality of the care is worsening, as shown in studies by the Institute of Medicine and others.

These ill winds, swirling together, might create a perfect storm that could carry with it the political will for big change.

Obama’s plan, by and large, represents orthodox Democratic principles.

Many liberals would prefer a single-payer, government-run system that covers everyone. Though Obama has said that’s what he would create if he were starting from scratch, he instead put forth a plan that he says would preserve the best parts of the current system.

To be sure, Obama would significantly increase the role of the federal government in the healthcare system. Obama would create a government-sponsored health plan people could choose instead of private coverage, and he would expand Medicaid and the State Children’s Health Insurance Program (SCHIP), federal-state programs that serve low-income people.

Obama’s plan also would create the National Health Insurance Exchange, a kind of federally organized clearinghouse people would use to choose among plans, including the government-run option.

Obama would increase federal regulation of whom health plans must insure and what benefits they must offer. Subsidies would be given to people who earn too much to qualify for Medicaid or SCHIP but not enough to afford insurance premiums. Those subsidies would be partially financed by employers that don’t offer coverage.

Obama says he would strive to strengthen the employer-sponsored model rather than replace it, a promise designed to reassure people who have insurance they like that they won’t have to give it up. Opponents of the Clinton administration’s plan stoked anxiety about this among middle-class voters.

“The Obama plan was clearly written with the lessons of 1994 in mind,” said James Kvall, a senior fellow at the liberal Center for American Progress Action Fund. Kvall was policy director of former Sen. John Edwards’s (D-N.C.) 2008 presidential campaign and served in the Clinton White House as a senior policy adviser at the National Economic Council.

Like almost no other nation, most Americans who have health insurance, 61 percent, get coverage for themselves and their families through their employers. Overall, 158 million people have health insurance connected to employment. By contrast, 5 percent of people buy individual health plans and 16 percent are enrolled in Medicaid. Larger employers generally pay most of the premium and neither the company nor worker pays tax on the cost of insurance.

“[Obama’s plan is] a very well-put-together plan and has the potential to get to universal or near-universal coverage and make the healthcare system overall more cost-effective,” Kvall said.

By promising people health plan options better than what they have now and at a lower cost, however, Obama risks alienating voters if they don’t get just that, warned Joseph Antos, a healthcare scholar at the conservative American Enterprise Institute. “If Obama is president, there are going to be lots of people who support him who are going to feel betrayed” because he has promised too much, Antos said.

Antos, however, praised the health insurance exchange, which would provide a place for “one-stop shopping” to compare health plans.

During Obama’s primary contest with Sen. Hillary Rodham Clinton (D-N.Y.), she strongly criticized him because his plan would not mandate that all people get coverage. Without a mandate, Clinton argued, truly universal coverage is impossible. Obama maintains people should not be forced to buy health insurance and that that lower-cost benefits would encourage nearly all of the uninsured to get covered voluntarily.

This dispute could haunt Obama, according to some experts. Kvall said Obama needs to better explain exactly how he would achieve universal coverage without a mandate. “If we want a universal healthcare system, we need some sort of mechanism to ensure everyone participates,” he said.

In reality, there were more similarities than differences when it came to Obama’s and Clinton’s health reform plans, particularly compared to the proposals put forth by Republican presidential candidate Sen. John McCain (Ariz.). During the general election, however, a sharp ideological divide is evident in the ways the two candidates seek to reshape the U.S. healthcare system.

Obama will have to convince voters that the best way to ease the burden of healthcare costs, reduce the uncertainty of coverage and encourage higher quality and more efficient medical care is to give the federal government a bigger role in promoting those things.

McCain will counter that many of the inefficiencies in the healthcare system can be traced to government interference with the market.

Both men will strenuously argue that the other’s plan will only make things worse. The consequences of this debate are grave: either of their plans, if implemented, would represent a social policy experiment of grand proportions.