Obama’s health care plan appeals to centrist Democrats

[30 May 2007]

By John McCormick and Mike Dorning

Chicago Tribune (MCT)

IOWA CITY, Iowa - Sen. Barack Obama Tuesday sought to address an issue that polls show greatly concerns voters, as he offered a health care plan that pledged to insure all children and provide better access to health insurance for adults by lowering costs.

The presidential candidate and Illinois Democrat placed himself in the center of his party’s mainstream with a plan that relies heavily on the promise of cost savings through a big investment in technology but also would be funded in part by allowing President Bush’s tax cuts for the wealthiest Americans to expire.

The proposal is not quite as sweeping as that offered by former North Carolina Sen. John Edwards, experts said, while Sen. Hillary Rodham Clinton, D-N.Y., has not yet offered a fully fleshed-out plan of her own.

But ultimately, all three of the top Democratic candidates are likely to offer proposals that will seek to cover the vast majority of the estimated 45 million uninsured, as they seek to tackle an issue that resonates nationwide.

“The senator came across with a large plan, but in Democratic presidential terms it’s a centrist plan,” said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health. “He’s talking about something that takes the existing system and makes it work.”

Like Edwards, Obama would preserve the current employer-based health insurance system and so reduces the risk of stirring opposition from those who are satisfied with their health coverage. By emphasizing steps to reduce the cost, Obama also offered something for voters who are primarily worried about the affordability of maintaining their health care.

Obama portrayed his plan as one that would spread responsibility while using technology to cut costs.

“To help pay for this, we will ask all but the smallest businesses who don’t make a meaningful contribution today to the health coverage of their employees to do so,” he said at the University of Iowa’s medical campus. Companies that do not provide health insurance would be charged a payroll tax to help fund subsidized insurance.

But Obama stopped short of mandating that all Americans be required to have insurance, as many states do with liability insurance for drivers. Massachusetts has adopted such as mandate for health insurance under a statewide universal health plan that takes effect in July. Edwards’ plan has a similar mandate that requires all Americans to obtain health insurance.

Obama would require that families purchase coverage for their children. But adult participation would be voluntary, though all Americans would be eligible for health insurance similar to the options now offered to federal employees, with rates based on their income.

Leaving open the option of forgoing insurance makes his plan fall short of true universal coverage and, some experts said, likely would leave many without insurance.

In response, Edwards spokesman Mark Kornblau said, “Incremental measures are not enough. Any plan that does not cover all Americans is simply inadequate.”

But those who worked with Obama to put the proposal together said that by making the system more affordable, more people would buy into it, moving the country closer to universal coverage.

The financing of Obama’s plan depends heavily on often-elusive cost savings, which he said would result in the average family saving $2,500 a year in insurance premiums.

Citing statistics that premiums have risen 90 percent in the past six years - four times faster than wages - Obama said the upward trend must be broken.

“This cost crisis is trapping us in a vicious cycle,” he said. “As premiums rise, more employers drop coverage, and more Americans become uninsured. Every time those uninsured walk into an emergency room and receive care, that’s more expensive because they have nowhere else to turn.”

Obama’s proposal would leave the private insurance system in place, but create a government-run National Health Insurance Exchange for individuals who wish to purchase private insurance. The entity would also act as a watchdog over insurance companies and their coverage.

Those who could not afford to buy their own insurance would get a subsidy on a sliding scale depending on their income.

Campaign officials said the proposal would require between $50 billion and $65 billion per year of new federal funds when fully phased in. They noted that the revenue could be raised by eliminating the Bush tax cuts for families making more than $200,000 per year, eliminating lower tax rates for dividends and capital gains and maintaining the inheritance tax for estates valued at more than $7 million.

Part of the cost comes from the up-front expense of overhauling medical records technology to cut costs and better manage care.

“There are going to be some initial investments, as more people are using health care services and some front-end investments are required for rural hospitals to buy computers, for example,” Obama said in a brief interview after his speech.

The speech was the latest in a series of policy presentations Obama has given in recent weeks, as he seeks to put to rest suggestions that his candidacy for the Democratic nomination is based more on celebrity than experience and substance.

As part of his plan, Obama would also call for the federal government to pay for the cost of some catastrophic care, which he said would help reduce insurance costs and premiums for Americans. “Two out of every 10 patients account for more than 80 percent of all health-care costs,” he said. Such catastrophic cases also can cause the collapse of health plans for smaller companies when one employee incurs extraordinary medical expenses.

Clinton, meanwhile, delivered her own policy proposals on health care late last week. Like Obama, Clinton focused much of her attention on reining in costs. She is expected to give at least two more speeches on the topic in the coming months that will address quality of care and insurance.

In response to Obama’s proposal, Clinton’s campaign issued a statement that suggested he was late coming to the table on an issue that she has been deeply involved in since presiding over the Clinton administration’s failed attempt to pass a national health insurance plan in the 1990s.

Edwards became the first top-tier Democratic presidential candidate to release a detailed health-care plan in February and has sought to make it a staple of his campaign. He has said he would need to raise taxes to pay for his plan to insure all Americans at a cost of about $100 billion a year.

With other issues such as immigration and terrorism commanding greater attention on the Republican side, GOP candidates have not yet offered detailed health care plans.

Obama’s wife, Michelle, who works in the health care industry, did not help write his plan, a campaign official said, but her professional experience over the years is part of his understanding of the industry’s problems.

As costs have grown, polls show health care is an increasingly important topic for Americans, including the 15 percent of the population without coverage.

A recent Kaiser Family Foundation survey showed it ranks second behind the Iraq war for important problems for the government to address.

“It’s a big, comprehensive plan that puts the financing on the table. That’s always the big litmus test,” Drew Altman, president of the Kaiser Family Foundation, said of Obama’s plan.

“The Democratic plans all build on the employer-based health care system and existing public programs,” he said. “We haven’t seen all the pieces of Sen. Clinton’s health care plan yet. But the similarities are likely to be more important than the differences.”

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(McCormick reported from Iowa City and Dorning from Washington.)

Published at: http://www.popmatters.com/pm/article/obamas-health-care-plan-appeals-to-centrist-democrats/