Reforming America's Health Care System: Barack Obama's Health Care Plan
Background
According to a recent health tracking poll conducted by the Kaiser Family Foundation,[1] voters in the 2008 presidential election ranked reforming America’s health care system as the one of the most critical issues that influenced their voting decisions, falling second only to the economy and virtually tied with the Iraq war. Registered voters indicated that the incoming administration should make repairing the health care system a priority even in light of current economic woes stemming from the subprime mortgage crisis and the meltdown of the financial sector and that “it is more important than ever to take on health care reform.” Most voters identified affordability as the most important reform area, as approximately 33% have difficulty paying medical bills, up from a 25% two years ago and further exacerbated by the 2008 recession.
An article published by Time Magazine reported that America is the leading spender on health care per capita – health care represents 16% of America’s gross domestic product – but that Americans live shorter lives than others in more developed nations.[2] Moreover, while smoking – a leading cause of disease and premature death – is on the decline, Americans still are not healthy, especially because of America’s obesity crisis. Four out of ten Americans do not exercise, and many Americans are overweight. To America’s credit, treatment innovations have curbed deaths from heart disease, cancer and stroke, but many Americans do not have access to these treatments because they lack health insurance or access to doctors. According to the Kaiser Family Foundation, about 45 million Americans lack health insurance, largely because these individuals do not have access to employer-sponsored health plans and yet are also ineligible for Medicaid, resulting in both negative health consequences and high debt levels from medical bills.[3]
Barack Obama will be sworn in as the 44th president of the United States of America on January 20, 2009. The health care reform agenda announced on Obama’s campaign to take the White House will most likely set the tone for the health care plan that Obama’s administration will submit to the United States Congress next year.[4] Tom Daschle, recently appointed by Obama to head the Department of Health and Human Services and replace current Secretary Michael Leavitt, will likely also have an influence on the plan submitted. Daschle is a former United States Senator and the author of Critical: What We Can Do About the Health-Care Crisis. Though Obama’s administration will not be the first to attempt to tackle the state of America’s health care system, many hope that he will depart from his predecessors and will be able to cure the system’s ills.
Obama’s announced plan includes a three-pronged approach that focuses on (1) lowering costs, (2) offering affordable, accessible, universal health insurance coverage and (3) promoting prevention and strengthening public health. A recent article published by The Wall Street Journal summarized the planas reforming health care through learning (making information available), rewarding (tying reimbursement to patient outcomes), pooling (allowing individuals and small firms to join large insurance pools), preventing (ensuring Americans have access to regular screenings and health information) and covering (lowering premiums so that uninsured have access).[5] A report issued by the Lewin Group – a group that purports to have a 38 year record of providing objective analysis and consulting services in the health care space – estimates that Obama’s plan would provide health insurance to an additional 26.6 million people and result in a net federal cost of $1.17 trillion between 2010 and 2019.[6] Highlights of the plan are set forth below.
Barack Obama’s Health Care Plan
- Lowering Costs
The first prong of Obama’s health care plan centers around lowering health care costs by promoting the use of electronic health information technology programs, improving access to prevention and disease management programs and ensuring the delivery of high quality care.
Despite technological advances, most health care providers continue to use paper medical records. According the Obama plan, electronic health information technology allows providers to more easily coordinate care, measure quality and reduce medical errors. Thus, Obama’s plan calls for the investment of $10 billion dollars a year over the next five years to move toward the broad adoption of a standards-based electronic health information system.
Moreover, Obama has advocated for improving access to prevention and proven disease management programs. First, providers who accept federal health care funds would be required to offer patients participation in disease management programs because health care costs decline when patients are able to manage their conditions. Second, the Obama plan calls for measures that increase coordination among providers. Third, Obama advocates for transparency. The Obama administration will seek to require health care providers to report cost and quality data such as data on preventable medical errors, nurse staffing ratios, hospital-acquired infections and disparities in care and costs. Insurance companies must also disclose the percentage of premiums that pays for patient care and administrative costs.
The Obama plan further seeks to improve quality of care. If presented and passed in its current form, reimbursement will be aligned with quality of care measures. Providers that achieve performance thresholds on outcome measures will be rewarded for their performance. The plan further targets tackling health care disparities – health care providers will be required to have a diverse workforce and support and expand safety-net institutions that provide a disproportionate amount of care for underserved populations but are underfunded and lack the necessary resources.
In addition, the Obama plan seeks to drive down costs by increasing competition in the insurance and drug industries. For example, in areas where the insurance industry is not competitive, insurers will be forced to pay a reasonable share of premiums for patient care instead of keeping these amounts for profits and administration. As for the drug industry, the plan would allow consumers to import safe drugs from other developed countries if prices are lower, prohibit brand name prescription drug companies from paying generic companies to refrain from entering the market and allow Medicare Part D to directly negotiate with drug companies to reduce the prices for prescription drugs.
Finally, the plan recognizes that employers are currently burdened by costs tied to catastrophic illnesses. The plan seeks to reduce catastrophic expenditures by reimbursing employer plans for a percentage of catastrophic costs incurred over a threshold amount if the savings realized by the employer are used to reduce premiums paid by workers.
- Universal Coverage
Citing the statistics that over 45 million Americans lack health insurance, rising costs burden employers and that two million fewer Americans receive health insurance coverage through their employers than they did eight years ago, the second prong of the plan aims to provide universal health care coverage. The Obama plan would require insurance companies to cover pre-existing conditions and would offer Americans the opportunity to enroll in a new public plan – the National Health Insurance Exchange – or an approved private plan and would make available income-based sliding scale tax credits. The plan further calls for increased transparency – plans would be required to provide information concerning the plans as well as the costs of the services. Small business owners would receive a tax credit of up to 50% on premiums paid on behalf of employees, and large employers that do not offer meaningful coverage would be required to contribute a percentage of payroll costs toward the costs of the national plan. All children would have health care coverage and eligibility for Medicaid, and SCHIP would be expanded.
- Promoting Prevention and Strengthening Public Health
The third prong of the plan targets the avoidance of the pain and suffering caused by chronic diseases including obesity, diabetes, heart disease, asthma and HIV/AIDS. The Obama plan acknowledges that worksite and school site health promotion programs and onsite clinical preventive services such as vaccinations and exercise facilities improve employees’ health. Accordingly, the plan rewards efforts to offer such worksite and school site interventions. The plan further calls for financial rewards for community based prevention efforts such as sidewalks, biking paths and walking trails and wellness and educational campaigns. Collaboration between federal, state and local governments is also strongly encouraged.
[1] The Henry J. Kaiser Family Foundation, Kaiser Health Tracking Poll: Election 2008, available at http://www.kff.org/insurance/upload/7828.pdf.
[2] Alice Park, America’s Health Checkup: The Sorry State of American Health, Time Magazine December 1, 2008 at 41.
[3] The Henry J. Kaiser Family Foundation, Five Basic Facts on the Uninsured, available at http://www.kff.org/uninsured/7806.cfm.
[4] Barack Obama’s health care platform is available online at http://www.barackobama.com/pdf/issues/HealthCareFullPlan.pdf.
[5] David M. Cutler and J. Bradford Delong et. al, Why Obama’s Health Plan is Better, The Wall Street Journal, Sept. 16, 2008, available online at http://online.wsj.com/article/SB12215229221369569.
[6] The Lewin Group, McCain and Obama Health Care Policies: Cost and Coverage Compared (October 15, 2008).
