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In Weak Economy, Obama May Face Obstacles to Health Care Reform

November 20, 2008 at 6:40 PM EDT
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During his campaign for the White House, President-elect Barack Obama proposed lowering health care costs and helping the uninsured. Now he faces the tough task of implementing such reforms. Analysts examine the road ahead for health care initatives.
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JUDY WOODRUFF: Finally, the health care agenda for a new president and Congress.

Throughout the campaign, Barack Obama laid out proposals for covering many of the 45 million people who are uninsured and for reducing costs.

Published reports say he has now selected a Capitol Hill veteran to lead that mission: former Senate Majority Leader Tom Daschle is expected to be named secretary of health and human services.

Here is some of what the president-elect spelled out about his health care priorities during the final presidential debate in October.

BARACK OBAMA, President-elect of the United States: As I travel around the country, this is the issue that will break your heart over and over again.

Just yesterday, I was in Toledo shaking some hands in the line. Two women, both of them probably in their mid- to late-50s, had just been laid off at their plant. Neither of them have health insurance.

And they were desperate for some way of getting coverage because, understandably, they’re worried that, if they get sick, they could go bankrupt.

So here’s what my plan does: If you have health insurance, then you don’t have to do anything. If you’ve got health insurance through your employer, you can keep your health insurance, keep your choice of doctor, keep your plan.

The only thing we’re going to try to do is lower costs so that those cost savings are passed on to you. And we estimate we can cut average families’ premium by about $2,500 per year.

If you don’t have health insurance, then what we’re going to do is to provide you the option of buying into the same kind of federal pool that both Senator McCain and I enjoy as federal employees, which will give you high-quality care, choice of doctors at lower costs, because so many people are part of this insured group.

JUDY WOODRUFF: The question now is, how ambitious a plan should President-elect Obama propose, given the financial crisis, a likely recession, and other priorities, like the Iraq and Afghanistan wars?

We get four views now. Karen Ignagni is the president and CEO of America’s Health Insurance Plans, a national trade association representing health insurance providers.

Stuart Butler, vice president for domestic and economic policy at the Heritage Foundation.

Chris Jennings, former senior health policy adviser to President Clinton, he’s now president of Jennings Policy Strategies, a health policy consulting firm.

And Uwe Reinhardt, professor of economics and public affairs at the Woodrow Wilson School at Princeton University.

Thank you all four for being here.

The scope of Obama's health plan

Karen Ignani
America's Health Insurance Plans
I think the president-elect is right to say this should be an important priority. I think naming Tom Daschle signals that this is, in fact, an important priority and he intends to get it done. And that's a good thing.

JUDY WOODRUFF: And, Uwe Reinhardt, I'm going to start with you. Given the economy, given the competing claims, how ambitious should the next president be?

UWE REINHARDT, Princeton University: I think it should be very ambitious. There is a demand for this. We don't know how deep this recession is going to go, and people who thought they had made provisions for life will find themselves without health insurance. So there's a great popular demand for that.

Financing it, of course, is a problem. President Obama will not have to raise taxes on people over $250,000, because President Bush has already done that for him by passing the law that he did. So all he needs to do is let that law expire and there's a source.

And I do believe the employer-provided insurance -- which now enjoys a tax privilege that's worth about $300 billion -- could be asked to the cashier's window. One could maybe get $100 billion out of that.

JUDY WOODRUFF: Well, let's come -- I want to come back to that in a minute, but just in terms of the overall scope of this, Stuart Butler, ambitious? Do you think he should be?

STUART BUTLER, The Heritage Foundation: Well, it's -- I think he should try to be ambitious, but I think he should be realistic, as well. The fact is, if you look at the budget deficit that we're likely to see, which will be astronomical, and if you think about that, it's very important that he seeks to try to use the money that we're currently spending much more sensibly.

And I think that alludes to the point that Uwe made, about the tax treatment, for example, where we're giving huge tax breaks to some people who really don't need them and nothing to others.

So I think one of the things he should do is walk over to the aisle before he leaves the Senate and say hello to Mr. McCain and actually have a real conversation about changing the tax treatment.

I think that would get a lot of mileage. And I think he's got to be very sensitive, however, that you have to probably move in stages to reach the ambitious goal that he wants and that a lot of us want.

And I think he's got to be sensible about that and look for stages to go forward. And I think the tax treatment is one. He wants to make changes in the tax system. This is a perfect opportunity to start doing that.

He needs to look at Medicare and whether we need to pay as much as we do for doctors in different parts of the country that cost a lot of money.

JUDY WOODRUFF: Karen Ignagni, when we say "ambitious," how ambitious? We're hearing stages; we're hearing different focuses. What should the focus be? How big should this effort be?

KAREN IGNAGNI, America's Health Insurance Plans: I think it should be comprehensive. And I think this is an opportunity that comes around every 15 years or so. It's a unique opportunity to tee up the issues of cost containment, quality improvement, and getting everybody in.

And, arguably, if we don't tee up all three issues in tandem, we can't get everyone in as effectively as we could otherwise. So it's a unique opportunity.

I think the president-elect is right to say this should be an important priority. I think naming Tom Daschle signals that this is, in fact, an important priority and he intends to get it done. And that's a good thing.

JUDY WOODRUFF: Chris Jennings, you worked with the Clintons. You've been around the Democrats and their thinking on this issue. If we're thinking incrementally, if we're thinking stages, as Stuart Butler just said, what does that mean he shouldn't try to do to start with?

CHRIS JENNINGS, former White House health care adviser: Well, I mean, obviously, at the beginning of this year, he's going to have to deal with the Children's Health Insurance Program that will be up for reauthorization, and he's going to start with that.

And, clearly, at the beginning of this process, we're seeing state budgets being almost bankrupted by both reduced revenues and increased costs. So we're going to have to, through a stimulus, deal with some additional dollars for the states.

But I want to say something about this issue. You really do -- I would agree with Karen -- you cannot really effectively address cost over the long haul without also addressing coverage. They really go hand in hand.

So, for example, you can't do prevention well unless everyone is covered. You can't deal with this issue of the chronically ill population that cost so much to this country without, you know, managing it.

And, lastly, you really can't get insurance reforms done the way you need to get them done if people can wait until they're sick to purchase health care.

So, in the end of the day, in order to have an efficient, workable system, you have to get everyone in the health care system to start this process. And I think -- and I would argue, and I think he and his people will, too -- that you need to do this comprehensively.

JUDY WOODRUFF: So "comprehensively," meaning try all of these things or else you can't get any one of them?

CHRIS JENNINGS: Yes, I want to be clear. One last thing is the cost issue is clear. You cannot deal with coverage unless you deal with cost, so we have to talk about delivery reforms, as well, but, yes.

Clarifying health care goals

Uwe Reinhardt
Princeton University
There's probably perhaps more imaging done than should be done. So these things can be done, but they take longer to bear fruit.

JUDY WOODRUFF: Uwe Reinhardt, how do you reconcile all this with what we just heard candidate Barack Obama say? I mean, he said basically -- he made it sound very simple.

He said, if you're already covered by an employer, you're fine. If you don't have coverage, I'd like to give you a plan similar to the one that I have that as a senator.

But what you all are talking about here is more complicated than that.

UWE REINHARDT: No, it can be done. There is no reason to undo what works, but you do have to address the issue of costs.

We know, for example, that health care in different parts of the country cost vastly different amounts for no particular reason. No one can explain that. Medicare data show that. But private insurance shows that, as well. We can address that.

There's probably perhaps more imaging done than should be done. So these things can be done, but they take longer to bear fruit.

I think the idea that we used to have -- you do cost containment first, then expand coverage -- I think that is the wrong one. You have to do both simultaneously, but coverage has to be done quickly and now.

JUDY WOODRUFF: How does that square with what you were saying, Stuart?

STUART BUTLER: I think it's very difficult for Mr. Obama to reconcile these promises that he made. I mean, for example, as Uwe said and as you heard, Mr. Obama says, if you've got coverage today through your place of work, nothing will change, you'll just pay less.

But, in fact, of course, he's setting up a system outside, a public plan, that we know from analysis that the Lewin Group and others have done that millions of people will discover that their employers stop the current coverage, because it would be less expensive for them to pay a tax and have people in the public.

That's a huge change. And I don't know that Americans are ready for that. So I think reconciling all these objectives is extremely difficult, and this is why it should be done carefully, and slowly, and methodically.

JUDY WOODRUFF: Well, the other question, Karen Ignagni, people have is -- Barack Obama as a candidate talked about universal health care, but he said we shouldn't mandate it, people shouldn't be forced to buy it. Is that really universal?

KAREN IGNAGNI: Well, I think it depends on what the objectives will be. We strongly believe and made an announcement yesterday on part of our community that nobody should fall through the cracks.

If we're going to embrace that goal as a nation, then we need to say that we have to get everybody to participate in the system and we have to provide some tax subsidies to help purchase, so all of these things go hand in hand.

If we don't want to take on that goal, then you could have a different alternative. But we need that goal, Judy. We need to make sure...

JUDY WOODRUFF: To meet the goal of a mandate?

KAREN IGNAGNI: No, first, before we get to a mandate, the goal that nobody falls out, that everybody with a pre-existing condition can get coverage.

If we agree with that as a population -- and I believe we do -- then there are several things you need to do to accomplish that.

We need to get everybody in to accomplish that. It's the cleanest, most effective way to do it. And we have to provide some tax subsidies to allow people a helping hand with purchase.

JUDY WOODRUFF: What about this question, Chris Jennings, of universal or not universal, if it's not a mandate?

CHRIS JENNINGS: Well, I think his commitment is to covering every American, and I think he's been quite clear that he'll do what it takes to get there.

And, as you know, he does have an individual requirement for parents to cover their children. And he's opened the door to thinking about other options.

But what he has also said is that you first need to -- or not first, as you do this, you need to ensure that health care costs are affordable. You can't require something unless you, both through cost-containment mechanisms, value, quality changes, as well as subsidies, both through the tax code and elsewhere, make sure it is affordable.

But the fundamental question is, yes, I think, in the end of the day, you have to have everyone in, in order to make the system work efficiently.

JUDY WOODRUFF: And does that square with what you're saying, Uwe Reinhardt?

UWE REINHARDT: Yes, except that harvesting these cost savings will take a little longer. You can't do that overnight. But insurance happens overnight, if you cover someone.

By the way, I'm not so sure that adding a public plan for people under age 65 -- which Obama proposes -- is such a revolutionary thing. If people don't want it, they don't have to choose it, right? So why is that so -- it's just more choice. Why shouldn't Americans have more choice?

STUART BUTLER: Well, I'm for choice. The problem is, if you have current employer-based coverage, and the employer says, "Well, given the choice between adding to my coverage, which is what I'm going to be required to do, or paying a tax, it's much easier for me just to simply shut down my plan and have people go into the public plan."

That's going to be a big surprise to millions of Americans, and that's a big problem, I think, politically.

Changes to the political climate

Chris Jennings
Jennings Policy Strategies
If nothing's done, that in itself is a policy choice, to do nothing. And what's really exciting about the stakeholders is no longer are they saying that the second-best choice is to do nothing.

JUDY WOODRUFF: Let's talk about getting this done. What most people remember about health care reform is what happened under the Clintons back in the early '90s. How is the political climate different now or is it different, Karen Ignagni?

KAREN IGNAGNI: Well, I think the first thing is that a range of stakeholder groups that were focused on opposition before are now spending a great deal of time talking about getting to yes and contributing to a process. That's a palpable change.

JUDY WOODRUFF: So stakeholder groups?

KAREN IGNAGNI: Stakeholder groups.

JUDY WOODRUFF: Who?  Insurance companies?

KAREN IGNAGNI: I'll only speak for our members, but a range of different hospitals, physician groups, consumer groups, et cetera, coming together to talk about how to do this.

I think the second thing, Judy, is a sense, in this economy, we have talked a great deal about health care in our country. For over 100 years, it's been an elusive goal to get health care reform. We have talked about the idea of moving forward on health care from a social perspective.

There's an economic reason to move forward on health care reform, which is why I think it makes sense right now to talk about it. It's the most expensive thing to do nothing at all, because people don't have prevention, they don't have early intervention, and they're entering the system through the doors of the emergency room.

JUDY WOODRUFF: I think that's what a lot of people don't understand, because people attach a price tag to fixing health care. And in this situation that we are in now, Chris Jennings, people are saying, "We're not going to have the money to do what we need do."

CHRIS JENNINGS: I think this is a really important point. The truth is, failing to act has huge consequences. So all we'll see is a doubling of our $2 trillion that we spend on health care today to $4 trillion, with more uninsured, more cost...

JUDY WOODRUFF: You mean if nothing's done?

CHRIS JENNINGS: If nothing's done, that in itself is a policy choice, to do nothing. And what's really exciting about the stakeholders is no longer are they saying that the second-best choice is to do nothing.

And if I may, just two other quick points, is that the business community, both large and small, manufacturing and retail, have engaged. They frequently are the tiebreaker in Washington, as you know.

And the last point is, this is not just a health care team proposal. The economists, like Uwe and others, they get that you cannot deal with our competitiveness nature, we cannot deal with long-term fiscal problems that this nation face, or, in fact, to strengthen our economy without meaningful health reform.

Obstacles to making changes

Stuart Butler
The Heritage Foundation
When you say, "We've got to make the system efficient by reducing unnecessary costs," as Uwe said, that means people's jobs and that means that doctors are going to rebel against that, and we've got to deal with those things steadily and carefully.

JUDY WOODRUFF: Uwe Reinhardt, if the political climate is more favorable, then what are the main obstacles going to be?

UWE REINHARDT: Well, the main obstacles is that, when you write down the details, the interest groups will pore over it and see -- for example, cost containment.

Yesterday on the Hill, I reminded people of Alfred E. Newman's famous equation, "Every dollar health spending is someone's health care income, including fraud, waste, and abuse."

And so everyone says, "Let's get rid of fraud, waste, and abuse," but when you do that, you cut people's income, some people's income. They might then start resisting where they wouldn't resist the idea, but once they see what it means to them, you might get some obstacles.

But I agree with Karen -- you're not going to hire Harry and Louise this time around, you won't -- that I think the climate is such that a lot of stakeholders will, in fact, be willing to give up something at the table, as they did in Massachusetts, for example, where the reform did come through, with the help of Heritage, by the way.

JUDY WOODRUFF: And, Stuart Butler, how do you see the climate and the obstacles?

STUART BUTLER: I think climate, the willingness is much better now than we've seen before. There's a genuine conversation that's been going on for some time.

And the very fact that people like Senator Baucus from the Finance Committee issued a white paper, a very lengthy document to get a conversation, that's very different from what we saw in the early 1990s.

But I think the real obstacle -- and it's not a question of, I think, doing nothing or everything. I think trying to do everything will be very difficult.

And, therefore, I think it's very important to take some steps and to recognize that Americans are not necessarily comfortable with some of the steps that have to be taken to get there yet. And I think that's going to be a difficult...

JUDY WOODRUFF: And how is that different from where the country was in the early '90s?

STUART BUTLER: Oh, I think it's similar. And I think we have to learn from that, too, that it's all well and good to talk about broad goals and getting there, but when you make big changes in what people currently have, they tend to push back.

When you say, "We've got to make the system efficient by reducing unnecessary costs," as Uwe said, that means people's jobs and that means that doctors are going to rebel against that, and we've got to deal with those things steadily and carefully.

JUDY WOODRUFF: Less than 30 seconds. Your forecast, what's going to happen?

KAREN IGNAGNI: I'm optimistic. I think we have a chance this year. I think it may happen.

CHRIS JENNINGS: I am, too. And I think this president is committed to it. And I'm really pleased to say that I think members of both sides of the aisle in both houses of Congress are, as well.

JUDY WOODRUFF: We appreciate all of you being with us, Chris Jennings, Uwe Reinhardt, Stuart Butler, Karen Ignagni, thank you all very much.