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Friday 25th May 2018

Obama's healthcare options

10th November 2008

Healthcare sector analysts are busy trying to gauge how and when the new administration of US president-elect Barack Obama will set about reforms of the country's healthcare system.


Obama was elected 44th US president after pledging sweeping changes in the healthcare system which he hopes will provide coverage to millions of uninsured Americans.

The issues were a key plank in the Obama campaign platform, as he spoke widely about the need for affordable and accessible healthcare for all.

On a more personal note, his mother's death from ovarian cancer and her struggle to pay her medical bills, was also widely discussed and publicised.

However, sweeping changes to the system look unlikely amid the current financial crisis, with any changes likely to be phased in over time, according to Karen Davis, president of the health policy and research group Commonwealth Fund.

Others agreed that the economic climate would probably put the brakes on reform for now. University of Michigan health economist Thomas Buckmueller said the Obama presidency looked like the best chance for reform in a long time.

On the campaign trail, Obama proposed using federal subsidies and mandates to extend health coverage by expanding existing private and public programmes, estimating that such reforms could lower the average family's health insurance premiums by about US$2,500 a year.

Among the options open to an Obama administration would be requiring employers, except small businesses, to provide health insurance to their employees or contribute to the cost.

There could be a mandatory requirement that all children have health insurance, achieved by expanding Medicaid and the State Children's Health Insurance Program (SCHIP).

Other possible changes include giving people the choice of competing private or public health plans, and creating a National Health Insurance Exchange to pool risk.

If fully implemented, Obama's proposals could reduce the number of uninsured Americans from a projected 67 million to 33 million over the next decade at a cost of US$1.6 trillion, according to the Tax Policy Center, a nonpartisan tax analysis group.

People making more than US$250,000 a year would lose tax cuts granted by President George W Bush in order to pay for the plans. Estate tax would also remain at 2009 levels.

Beyond that, specific details of how he would implement the proposed changes has not been forthcoming.

Expansion of the children's insurance program SCHIP is widely regarded by industry experts as a top priority, however.

An attempt by Democrats in Congress to boost federal funding to expand the programme last year was twice vetoed by Bush. In March, the programme will be up for congressional review, and that is when the Obama administration's may make its first move.

Buckmueller called SCHIP one of the big success stories in health policy over the last 20 years, because it had been successful in getting kids the preventive care they need to keep them out of hospital emergency departments.

Even a large and friendly Congress may not give support to his other plans, however, including the expansion of Medicare, and the National Health Insurance Exchange.

Analysts say any major reforms will need to gain bipartisan support to be successful.

Similar attempts by President Clinton's administration to reform the healthcare system in 1993 founded on a lack of such support.

Obama was more likely to work out the details of his plan in conjunction with advisers and representatives of both parties, Buckmueller said.

However, there is a broad consensus that the inequalities in the US health care system must be addressed and that this must happen sooner rather than later.

Currently, 45 million Americans have no health insurance. A further 25 million have only minimal coverage, while 42% of US adults under age 65 are uninsured or underinsured, up from 33% in 2003.

The problem looks set to worsen in the current economic climate as people lose jobs and related healthcare plans as companies fail or downsize to ride out the downturn.

Total spending on healthcare is projected to rise to a quarter of gross domestic product by 2025, from around 16% of GDP in 2007, according to the Congressional Budget Office.

Former Congressional Budget Office Director Alice Rivlin, now a scholar with the Brookings Institution, said the number one priority of any healthcare reform should be to reduce the rate of health care spending growth.

Experts said some changes had to be made, as the cost of doing nothing would be too great, and that the current system was unsustainable.


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