Obama takes on healthcare

Times Staff Writers

Sen. Barack Obama on Tuesday offered an ambitious plan to curb healthcare costs and expand insurance coverage, in the latest example of Democratic presidential candidates honing strategies to achieve coverage for all.

Among the top three Democratic contenders, the Illinois senator joins former North Carolina Sen. John Edwards in outlining a comprehensive health plan. New York Sen. Hillary Rodham Clinton, who has the most experience with the issue, has offered some ideas to rein in costs and is working on a plan.

Republicans have thus far largely shied away from healthcare but are expected to weigh in with ideas that stress individual responsibility and market reforms instead of reliance on government. “It’s a Goldilocks story, where the Democrats have gone way too far, and I don’t think Republicans are doing enough,” said GOP pollster Bill McInturff.


Obama’s plan would expand the federal role in regulating insurers and paying for healthcare, particularly for the costliest cases. But it would stop short of creating a Canadian-style system in which the government paid all the bills. The proposal would require most employers to contribute toward workers’ coverage and require parents to obtain insurance for their children through an employer, a government program, or on their own.

The plan’s most far-reaching aspect is a set of cost-containment changes that Obama said could save a typical insured family up to $2,500 a year by wringing out much of the inefficiency and waste that make the U.S. healthcare system the world’s costliest.

“We have reached a point in this country where the rising cost of healthcare has put too many families and businesses on a collision course with financial ruin,” Obama said in a speech at the University of Iowa. “Democrats and Republicans, small-business owners and CEOs have all come to agree [it] is not sustainable or acceptable any longer.”

Obama’s plan is more a vision than a blueprint, but it could buttress his standing with Democratic primary voters who may be skeptical of his level of experience.

“He’s finally responding to the criticism that he’s a theme in search of a program,” said Democratic political analyst William A. Galston. “The fact that he’s getting specific is more important than the precise substance of the specifics.”

But some experts said the plan was short on specifics, particularly regarding the hoped-for savings and the costs of providing coverage to the estimated 45 million uninsured.

“The numbers don’t seem to work very well,” said health policy analyst John Sheils, senior vice president of the Lewin Group, a top healthcare consulting firm. “I think [the savings] are just dramatically overstated.”

Consultants to Obama said in a memo released by the campaign that $200 billion or more in annual savings were possible through a combination of changes to increase efficiency, including converting to electronic medical records, better coordination of care for patients with chronic illnesses such as diabetes, and a dramatic reduction in duplicative tests and medical procedures of dubious benefit.

But Sheils said most major employers and government healthcare programs were already pursuing such reforms, and the jury was still out on how much money could be saved. Moreover, some of Obama’s proposals would require doctors to change the way they treat certain medical conditions, a reeducation process that could take years.

“They don’t explain how they are going to get at the inefficiency,” Sheils said. “I don’t see anything [in Obama’s plan] that changes the fundamental incentives of the system.”

The Edwards campaign also criticized the plan, saying the lack of a requirement that individuals buy health insurance means it will not achieve universal coverage.

Edwards’ proposal includes a so-called individual mandate requiring individuals to buy insurance, and employers would have to help pay for coverage for their workers.

But Obama campaign officials said the senator thought it would be unfair to impose an individual mandate unless healthcare costs could be reined in. The Obama plan should cover at least 98% of U.S. residents, the officials said, and Obama would fine-tune it to get the remainder. Obama has pledged that, if elected, he would sign legislation guaranteeing coverage for all by the end of his first term.

Under his plan, the government would create a public insurance program for workers and their families who do not have access to group coverage through their employers and do not qualify for other programs such as Medicaid. Small businesses could get coverage from the program for their employees, which would offer benefits patterned on those available to government employees.

The proposal calls for the creation of a National Health Insurance Exchange, which would act as a clearinghouse for people wishing to purchase private coverage, but also set and enforce standards for the industry. Obama would prohibit insurance companies from refusing coverage because of pre-existing conditions.

To help lower the cost of private coverage, the government would pick up the cost of insuring against catastrophic illnesses -- a proposal that Sen. John F. Kerry (D-Mass.) made in his 2004 presidential campaign.

With savings from healthcare efficiency, Obama’s campaign estimated it would cost $50 billion to $65 billion a year to cover the uninsured. That sum could be raised by allowing President Bush’s tax cuts for upper-income taxpayers to expire, the campaign said.

That cost estimate is too optimistic, Sheils said. “If you want to have universal coverage, it’s $100 billion to $115 billion,” he said.*