Obama on Healthcare


by varjavand

In less than months, American voters go to the pole to elect a new president. What really matters to them when deciding on how to cast their vote is the candidates’ stance on the core issues. While the pre-election polls cannot predict the outcome of the November election conclusively, they provide revealing information about voters’ priorities and the key issues. Most of the polls show that healthcare is ranked either # 2 or 3 after economy/jobs/cost of living, and Iraq war. Dealing with such crucial issues entails some tough, and often controversial, choices especially when it comes to the proper role and the responsibility of government. Clearly, people are fed up with the business as usual and are demanding change. I believe neither the government nor the private sector per se can reform the inefficient U.S. healthcare system. Collaboration and sometimes competition between the two are indispensable and that is the essence of the health plan for America proposed by Senator Barack Obama. It seems that the majority of Americans as well as he members of congress feel that the government should do more regarding this issue.

We must mention a priori that any plan aimed at revamping the healthcare system should address four interrelated issues; accessibility, cost and quality, wasteful spending, and preventive measures.

I. Accessibility Obviously, healthcare is very costly, therefore, hardly accessible for tens of million of Americans not only due to high cost of insurance but also an inefficient delivery system. There are currently 45.6 millions without health insurance, nearly 15.3% of US population according the U. S. Census Bureau. Many more lose their coverage temporarily sometime during a year because of voluntary or involuntary change of job. Often, people work for low, or no, monetary compensation just to obtain insurance coverage through their employers. In year 2001, fifty percent of uninsured could not pay their medical bills, 36% of them were contacted by the collection agencies, and 27% of them were forced to change the way of life including filing for bankruptcy (Wall Street Journal, Oct. 30, 2003). “An estimated 18,000 individuals die annually because they cannot afford to buy insurance or adequate coverage” and “nearly 11 million insured spend more than a quarter of their salary on health care last year” Because of inadequate access, many chronic diseases that can be cured, or be alleviated, if discovered at early stage remain undetected until they become acute and very costly to treat. Obama’s plan is designed to provide comprehensive portable coverage to all at affordable cost by:

• Setting up a government national program that would sell low price insurance to low income people and to those with no group coverage through subsidies. Financial assistance will be made available to those who do not qualify for Medicaid or State Children’s Health Insurance Program (SCHIP).

• Providing additional quality choices, Obama’s plan will create a National Health Insurance Exchange, a watchdog organization that sets the rules and the standards for participating insurance plans to ensure, affordability and accessibility and to promote competition among private plans and the government plans that benefits consumers.

• Offering tax credits to employers who provide healthcare coverage for their employees so that they can continue to provide the coverage without a heavy burden on their costs hence the loss of competitiveness.

• Establishing “regional Pools” that allows individuals as well as business firms to buy healthcare coverage at low rates. In other words, lowering the average costs through volume and the economies of scale.

II. Cost Healthcare, which is considered one of the largest industries in the United States, if not the largest, is also one of the most expensive both at the individual and at the aggregate level. The United States spends more money on healthcare than any other industrialized country in both relative and absolute terms. In 1993, the total national health expenditure as percentage of Gross Domestic Product (GDP) was 13.4%. No other developed nation spends more than 10% of its GDP on healthcare. Since then, this number has been rising steadily. With total spending of $2.3 trillion in 2007, almost 16% of the GDP, the U.S. spent almost $7700 per every person. There is no relief in sight. The total healthcare spending is projected to climb to $4.3 trillion by the year 2017, according to the Medicare and Medicaid Services, CMS, to about 20 percent of the GDP. The cost of healthcare usually increases at least twice the rate of inflation. In 2007, for example, this rate was nearly 6.7% percent according to the CMS Senator Obama believes that cost containment policies cannot succeed without improving the quality of healthcare and its delivery system. The highlights of his plan are:

• Improving the affordability of healthcare to business firms, thus lowering the costs by reimbursing their health plans for a portion of catastrophic costs they have incurred.

• Lowering cost by improving outcomes mainly by supporting and encouraging the utilization of “disease management programs”

• Providing proper and prompt care for chronic diseases through implementation of “medical home type models”.

• Mandating transparency by requiring disclosure of vital information from hospitals and healthcare providers.

• Creating a large pool of individuals and small business firms to lower the average administrative cost through economies of scale.

• Promoting access to good quality preventive care by better management of the healthcare system, trimming the fats, getting rid of wasteful spending by eliminating paper-based patient record keeping and more efficient coordination and circulation of medical data.

• Encouraging healthy and innovative competition among providers and the drug markets

• And finally, preventing waste and abuse in Medicare program

III. Wasteful Spending: Wasteful spending and needless bureaucracy is peculiar aspect of the current healthcare system, “One quarter of all medical spending goes to administrative and overhead costs and reliance on antiquated paper-based record and information system needlessly increases these costs” The material incentives that guide an ordinary market toward economic efficiency are simply misguided or skewed in healthcare market. The multilayer payment system has led to the conflict of interests or has created an adversarial relationship among payers, doctors, and patients. And, desire to protect self-interests has resulted in the shifting of financial responsibilities to one another. Complicated method of reimbursement by Insurance companies has generated costly layers of bureaucracies; paper billings and people who work at the doctors’ office or in hospitals whose sole job is to battle the insurance companies for reimbursement. Obama’s plan will spend $50 billion over the course of five years to construct a national electronic health information network that facilitates not only information sharing, it also eliminates duplicate and redundant medical tests, and reduces the length of hospital stay. A hefty sum of $77 billion will be saved each year as a result of better utilization of resources and the ensuing efficiencies.

• Under Obama’s plan, the use of generics and drug importation are encouraged. American can buy their medicines from other countries under his plan given that the safety of the imported drugs is assured.

• Repealing the ban on direct negotiation by government with drug companies to lower price of prescription drugs under Medicare.

• Preventing waste and abuse in Medicare by eliminating the excessive government subsidies

IV. Preventive care and promoting public wellness High spending, using state-of–the-art technology, and having a well established network of hospitals, doctors, and other resources do not necessarily guarantee high quality outcome. Our cost cutting efforts will not likely succeed without paying thorough attention to a host of other issues such as life style, prevention, and public health. One of the key objectives of Obama’s health plan is to create an environment that is conducive to healthier lifestyles. Undoubtedly, individuals will differ when it comes to their attitudes toward health risks. While most people may not be willing to take any risk and manage a healthy life style, others would engage in health-risk activities such as smoking, use of narcotics, and consumption of unhealthy food regardless of the consequences. The differences in choice of a life style do not mean that some people are reckless or wish to harm themselves. They may be simply unaware of the destructive effects of the risky behaviors especially in the long run. Giving them proper education, they may be willing to give up the pleasures and the conveniences of a certain life style and to make some sacrifices in exchange for a better long-term health and a longer life span. The choice of lifestyle can be regarded as one of the most critical factors that influence the extent of demand for, hence the cost of, healthcare in long term. Any plan designed to improve the national health should adequately address the lifestyle related issue and strive to create circumstances that are conducive to healthy life style.

Mr. Obama has taken an all-inclusive approach on preventive care and on wellness by emphasizing the mutual responsibilities. He believes that government alone cannot promote public health and prevention fruitfully without cooperation of the individuals, households, school systems, employers, and other elements of the society. His plan will increase funding to expand community-based preventive initiatives, to encourage Americans to make better choices in order to improve their health, and requires government “to invest in workforce recruitment as well as modernizing our physical structures, particularly our public health laboratories”. Although there is no way to formulate a perfect healthcare plan, I believe Obama’s plan adequately addresses the issues that have made our healthcare system costly and inaccessible and I think he is sincere in his effort to make the system works better for all of us.


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