Affordable And Accessible For All‏

December 12, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Igor Volsky

HEALTH CARE

Affordable And Accessible For All

Yesterday, President-elect Obama nominated former South Dakota senator Tom Daschle to head the Department of Health and Human Services and the White House Office of Health Reform. Obama also appointed Center for American Progress Senior Fellow Jeanne Lambrew as deputy director of the new White House health office. As the Politico's Mike Allen reported, the new White House health office "will be like a special-projects arm of the White House" designed to achieve "significant changes" in health care reform. "The time has come -- this year, in this new Administration -- to modernize our health care system for the twenty-first century; to reduce costs for families and businesses; and to finally provide affordable, accessible health care for every American," Obama said at the press conference announcing the appointments. Linking the health care crisis to the current economic downturn, Obama suggested that without addressing the skyrocketing costs of health care and reforming the fragmented system, America cannot solve its economic problems. "This has to be intimately woven into our overall economic recovery plan. It's not something that can be put off because we are in an emergency. This is part of the emergency," Obama explained. To address this challenge, Obama proposes a new system in which every player in the health-care arena -- the government, employers, doctors and hospitals, insurers, and individuals --helps support a rational and sustainable structure. He has promised to expand access to care, lower health care costs, and improve care quality.

EXPAND AFFORDABLE COVERAGE: By extending coverage to all, Obama can achieve efficiencies, end cost shifting, and rationalize financing mechanisms. To insure the 45.7 million Americans living without health insurance and the more than 25 million Americans who are underinsured, Obama will build on the major existing sources of health coverage such as the employer based system and public insurance programs like Medicaid and State's Children's Health Insurance Program (SCHIP). Obama's plan offers Americans the choice of staying with their employer-based coverage and enrolling in Medicaid or SCHIP -- if eligible -- or buying affordable insurance through a new national insurance pool. Insurance companies will be required to cover all Americans "regardless of their health status or history" and charge "fair and stable premiums." Private insurance companies participating in the pool will have to compete on quality and efficiency with a new public plan and offer comprehensive benefits "including preventive, maternity and mental health care." Americans who can't afford coverage will receive new tax credits to help make coverage more affordable and ensure that families don't spend more than a certain percentage of income on health insurance premiums. Small businesses will be eligible for a new Small Business Health Tax Credit that will "provide small businesses with a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees." Obama will also expand eligibility for Medicaid and SCHIP to ensure that "these programs continue to serve their critical safety net function" of providing affordable coverage to working Americans.

LOWER COSTS: At yesterday's press conference, Obama argued that the costs of America's health care system are unsustainable. Without lowering costs, "we can't insure everyone under the current system without bankrupting the government or bankrupting businesses or states," he said. Indeed, as Center for American Progress Senior Fellow James Kvaal pointed out, while "high health care costs put many American businesses at a disadvantage to their foreign competitors and lead to lower wages and fewer jobs," "ever-rising health care costs are threatening to drive an unsustainable explosion in the national debt." To lower America's health care costs and build an economically sustainable health care system, Obama proposes developing better information about which treatments and procedures work best. Currently, "most health research focuses on determining whether a particular medicine or treatment is safe and works." A federal investment in clinical effectiveness and cost effectiveness that compares different treatments and medical technologies would "enable patients, providers, and payers to make sensible health care choices." Obama's plan calls for establishing an "independent institute to guide reviews and research on comparative effectiveness" to provide unbiased information to doctors and patients." Refocusing America's health care system on prevention rather than treatment will also contain costs. More than 75 percent of America's health care dollars are spent on managing chronic diseases, and Obama will require federally funded health plans to cover preventive services such as cancer screenings and smoking cessation classes. Obama also calls for empowering employers and local communities in their efforts to implement workplace wellness programs and community-based preventive interventions. While it is difficult to quantify the possible savings from expanded prevention efforts, experts estimate that just ensuring that every child receives every routine vaccination could reduce direct and indirect health care costs by up to $40 billion.

IMPROVE QUALITY: While investments in disease prevention, health promotion, and comparative effectiveness research will improve health outcomes and secure better value for the health care dollar, investing in health information technology (HIT) will improve health quality. Obama has promised to invest $50 billion over the next five years "to move the U.S. health care system to broad adoption of standards-based" HIT, "including electronic health records." While estimates vary and real-life experience is limited, one group of researchers found that implementing HIT would result in mean annual savings of $40 billion over a 15-year period. Moreover, Obama seeks to improve quality by investing in coordinated care. Health providers will be encouraged to put in place care management programs and implement the medical home model to improve coordination and integration. The payment system will also be reformed. Currently, public and private insurers are paid based "on the volume of services provided, rather than the quality or effectiveness of care." Consequently, while some patients receive excellent care, America wastes as much as $700 billion a year on tests and treatments that cannot be shown to improve health. Obama's plan aligns reimbursement with "provision of high quality health care," rewards providers who achieve certain performance thresholds, and incentivizes prescription of only the most effective treatments and medicines.