Jill Wechsler
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President-elect Barack Obama stated loudly and clearly during the election campaign that all Americans have a right to affordable
healthcare. Now he faces significant challenges in boosting coverage for the uninsured. His basic strategy is to expand federal
and local government programs and to require employers to "play or pay" to support insurance for workers. Obama stopped short
of backing a mandate for universal coverage as advocated by many Democrats, but his proposals raise the prospect of increased
government involvement in the nation's healthcare system.
That said, the need to address rising unemployment and slow economic growth may force Obama to seek more limited health policy
changes in the short term. The soaring federal budget deficit also will intensify the hunt for ways to cut healthcare spending,
an exercise likely to squeeze insurance operations.
CHILDREN FIRST
An early initiative will be to expand the State Children's Health Insurance Program (SCHIP) along with federal support for
state Medicaid programs. President Bush twice vetoed legislative proposals to make SCHIP more generous, prompting Congressional
leaders to hold off on further action. Now SCHIP has to be reauthorized by April, putting it at the top of the political agenda.
Expanding SCHIP and Medicaid would be a first step in fulfilling Obama's promise to provide healthcare for every child. Moving
some 25 million people off the uninsured rolls will be more difficult. Obama has proposed to mandate that large and medium
employers support "meaningful" insurance for workers or pay into a fund. Those without work-based coverage and small employers
would gain subsidies and access to private insurance options or a government-sponsored National Health Plan through a National
Insurance Exchange.
To offer plans through the Exchange, insurers will have to provide comprehensive benefits and meet standards for quality and
efficiency. Plans also will have to issue coverage to all applicants and to set premiums without regard to health status,
a policy predicted to raise the cost of insurance for young and healthy individuals.
CUTTING COSTS
Achieving these changes will be challenging—and expensive. The Obama reform proposal was pegged to cost between $1.2 trillion
and $1.6 trillion over 10 years (2010 to 2019). Paying the bill without adding to a soaring federal budget deficit will require
serious cost-cutting.
Like his opponents, Obama has a list of savings options. Expanding health information technology would net $60 billion over
10 years. There are potential savings from expanded DM programs, coordinated care models and P4P initiatives. And the president-elect
has jumped on the comparative effectiveness bandwagon, predicting that research on the relative effectiveness of alternate
treatments would cut costs by reducing unnecessary care.
Because these strategies yield little in the way of near-term savings, a more popular tactic will be to cut government outlays
to insurers and drug makers. Democrats want to eliminate "excess" payments to Medicare Advantage plans, a change Obama says
would save $135 billion. And the reformers propose to revoke the Medicare "non-interference clause." Direct negotiation of
payments for drugs covered by Medicare plans is predicted to save about $20 billion, but it also could raise plan costs and
limit insurer flexibility in offering drug plans with differences in formulary coverage, copayments and premiums.
