As Barack Obama prepares to become our nation’s 44th Chief Executive, he has reiterated time and again that one of his top priorities when he takes office will be to reform the nation’s existing health care system, and make health insurance affordable and accessible for everyone. Although President-Elect Obama initially may focus on incremental changes early in his first term, to fulfill his promise of expanded and improved health care coverage for all Americans, there appears to be significant momentum for bold and sweeping federal regulation – perhaps implemented before the end of his first term.

A National Health Care Crisis

The rising cost of health care and health insurance is of great concern to many across the country – from consumers to policymakers, to health care providers and payors and to lawmakers. Currently, over 46 million Americans lack health care coverage and another 25 million Americans are considered underinsured. In addition, of those Americans who have access to health care coverage, many experience problems in obtaining quality care and appropriate coordination of care, and struggle paying higher out-of-pocket costs. These challenges are more pronounced in minority communities and for lower income Americans. If left unabated, the weaknesses which challenged our health care system in a thriving economy may strain beyond the breaking point segments of our health care delivery and health care financing systems in this weakened economy.

In an effort to expand and make affordable health care coverage, President-Elect Obama has expressed his intent to use the federal government to overhaul the health care system from the top down, proposing a comprehensive, standardized federal health benefits structure, expanding federal regulatory authority over health insurance, and increasing federal regulatory power over health care delivery.

What We Get with the Obama Plan

According to the Obama plan, those Americans who are satisfied with their current coverage will see no changes – except for the fact that their health care costs could go down by as much as $2,500 per year through investments made in health information technology, prevention and care coordination. Those without health insurance would have the choice of new, affordable health insurance options.

With the Obama plan also including a proposal to create even greater control of health care dollars and decisions in the nation’s capital, and giving the federal government widespread control over how health care is financed, delivered and managed, massive new federal regulation may be required to implement the new Administration’s goals – regulation which may be at least of the scope and magnitude of the recent Medicare Prescription Drug Benefit Program. This is evidenced by the fact that President-Elect Obama’s plan includes: 

  • Requiring all health insurance plans to cover pre-existing conditions. 
  • Creating a National Health Insurance Exchange to help Americans who are uninsured, or want new health insurance, purchase new affordable health care options.
  • Requiring all large businesses which currently do not offer meaningful coverage to pay a percentage of their payroll to the government as a contribution to the national plan.
  • Mandating healthcare coverage for all children.
  • Expanding eligibility for the Medicaid and State Children’s Health Insurance Programs.
  • Regulating the delivery of medical care through specific initiatives.
  • Increasing the federal regulation of medical liability reform, prescription drugs and health insurance.

Small businesses which offer health insurance to their employees would be entitled to a Small Business Health Tax Credit of up to 50 percent on premiums paid on behalf of their employees. Also, under the Obama plan, states are allowed to enact their own health reform plans, so long as they meet the minimum standards of the national plan.

From Vision to Reality: Implementing the Obama Plan

Demonstrating his commitment to reforming health care, President-Elect Obama recently tapped Tom Daschle, a former U.S. Senator and Senate Majority Leader, to be his Secretary of Health and Human Services, calling Daschle “one of America’s foremost health care experts.” Throughout his tenure in the Senate, Daschle took the lead in proposing policies on health care reform. After leaving the Senate, Daschle continued his focus on health care reform as a Distinguished Senior Fellow at theCenter for American Progress. Daschle’s nomination has been widely intrepreted as a sign that Obama intends to focus his attention early on health care reform.

President-Elect Obama also nominated Dr. Jeanne Lambrew, Associate Professor of Public Policy at the LBJ School of Public Policy and a Senior Fellow at the Center for American Progress (who co-authored a book about health care reform with Daschle), to serve as Deputy Director of the newly-created White House Office of Health Reform. This new White House office will coordinate efforts within the Administration, the Congress and across the country to pass health care reform.

Daschle is expected to immediately begin work with Congress on a universal health care plan. Unlike the icy and often contemptuous reception met by the Clinton Administration’s health care reform efforts 15 years ago, there now appears to be a growing consensus among lawmakers and health care industry participants that broad government action is required to reform our health care system. Of course we cannot predict how the Republican minority in Congress will respond to specific health care reform regulation proposed by Secretary-designate Daschle on behalf of the Administration. However, the country’s general ambivalence towards health care reform has dissipated during the last 15 years, even though differences in thinking remain as to how to achieve effective reform.

Consider that, in early 2007, long before ballots were cast in the November 4 election, Democratic U.S. Senator Ron Wyden and Republican U.S. Senator Bob Bennett sponsored the Healthy Americans Act, a bi-partisan universal health care plan supported by six Democratic Senators and six Republican Senators. More recently, U.S. Senator Max Baucus (D-Mont), Chairman of the Senate Finance Committee, issued the Call to Action, Health Reform 2009 (November 12, 2008). In the Baucus white paper, the Senator challenges the next Congress to reform America’s health care system to achieve affordable coverage for all Americans and to improve quality of care while providing appropriate value-based incentives to lower health care costs. After praising the Baucus white paper, and within a week of its release, U.S. Senator Edward M. Kennedy, Chairman of the Senate Committee on Health, Education, Labor and Pensions, established three working groups of his committee to deal with critical issues of health reform. Under Senator Kennedy’s direction, the working groups will concentrate on three areas essential to comprehensive reform: (1) prevention and public health, (2) improvements in the quality of care and (3) insurance coverage.

With the team that President-Elect Obama is assembling, his ideological allies in the Congress and the support of both consumers and many health care industry participants, the opportunity for meaningful federal health care reform has never been so great.

Is Commitment and Consensus Enough?

Will broad-based support for curing what ails the health care system result in actual bi-partisan legislation which resonates with consumers as well as those which deliver health care and those which pay for it? It would be misleading and a miscalculation to assume that everyone in favor of health care reform is in agreement as to how that reform should occur and, when achieved, what the health care system should look like.

Still, consistent with the Obama plan and the Baucus white paper, consensus from the political and private sectors seems to be building around the preservation of the employer-based health care systems through which most Americans currently get their coverage. A federal, single payor system is no longer viewed as a politically viable construct around which to fashion health care reform although there are still some vocal proponents of the single payor model. The marketbased solution of providing financial incentives to consumers in hopes that more Americans will purchase health insurance appears to have been rejected by most as well. Despite the variations on the common theme of health care reform, perhaps the mood of lawmakers, health care providers, employer and union purchasers of health coverage, consumer groups and health care payors can be summed up by the recent quote of Karen Ignagni, the President of America’s Health Insurance Plans (AHIP):

“The nation is on the eve of a national discussion about healthcare. This comes around once every generation. . . We believe reform needs to be comprehensive, and it needs to happen now."

Given the ambitious goals of the new Administration’s health care reform policies, and high hopes of those who believe they will benefit from such reform, there undoubtedly will be irreconcilable differences which arise as more concrete proposals are put forward. It will be interesting for us to see if the consensus around the need for health care reform will outweigh any such discord and push the country toward compromise or whether those vested in competing solutions can still create a stalemate. Of most interest, of course, is whether the new Administration will be successful in increasing health care quality, accessibility and affordability through government regulation. If all of these goals are achieved, will we be able to credit greater competition that was spurred in the private sector or simply the government mandating of the proverbial “carrots and sticks.” In any case, we should all prepare for sweeping health care regulation which, not only will impact the way in which health care is delivered and paid for in this country, but will likely result in new compliance and enforcement challenges for many health care industry participants.