AEA Healthcare Update

July/August 2008 Update

Obama Sees Expanded Role for Government in Helping Individual Americans Pay for The Cost of Their Health Insurance.

Can America join the list of nations with affordable and effective insurance coverage for all its citizens? Senator Barack Obama has announced the centerpiece of his strategy to achieve universal coverage will be to offer the Federal Employees Health Benefits Program, the same plan that currently insures U.S. Senators, Representatives their families, to any American who wants to purchase it. Under the Obama plan, health care professionals, hospitals and other medical facilities would remain largely private as they now are, but open enrollment in the Congressional insurance plan would hang a National health insurance safety net in place of the gap in coverage that has left 50 million Americans without health insurance.

In addition, the Obama plan would employ many of the elements of the health insurance reform model largely pioneered by various States:

• Employer mandates: requiring employers to provide health insurance or contribute to a government subsidy fund.
• Financial assistance to those who cannot afford market rate insurance.
• A central information clearinghouse, the National Health Insurance Exchange, to set national minimum standards and share information on all available plans.
• Expanded eligibility of Federal programs such as Medicaid and State Children's Health Insurance Plan (SCHIP) to insure more low income adults and children.

The Obama plan however departs from most state reform plans in its omission of an Individual Mandate. This is a legal requirement that everyone must carry some form of insurance or pay a fine. Sen. Obama's position is that effective cost saving measures will make insurance premiums affordable enough that most people will voluntarily opt for coverage over the risk of going without insurance. In the absence of lower prices, individual mandates are likely to be ignored or unfairly punish low and moderate income Americans.

The Senator recommends improved prevention to contain costs- a healthier populace reduces demands on the health care system- and more technology advanced information exchange and record keeping. The application of internet storage and communication of health records and treatment protocols has an avid following and is popular with policy makers.

While the use of new media is attractive, the real cost of transferring the nation to a single billing and health data management system is unclear as are or the cost savings once such a system were in operation. The staging of so vast a database might prevent a full and accurate accounting of the benefits for many years to come.

The Obama plan does, however, offer more immediate financial relief. In addition to subsidizing those who cannot afford the going rate for insurance premiums, Obama proposes to create a Government assistance program to help employer-based plans offset the high costs of treating catastrophic illnesses such as cancer and heart disease.

The cost to the tax payer of the Obama reform package would be considerable, but many experts believe that only an infusion of Public money will be able to slow, then reverse the negative trends of spiraling costs and growing population of the uninsured. The source of those extra revenues is still under consideration. To date, the Obama campaign has rejected the idea of taxing employee benefits as one method of raising new funds.

Senator Obama has made it clear that he does not endorse a Single Payer Insurance reform solution. His philosophical approach, however, does envision the Federal Government as a major player in setting the proper conditions for success and that Public policy makers, insurance operators and the general public will have to work together to achieve affordable, universal coverage.

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