Evaluating the Obama Health Plan: We Need Both Short-Term Affordability and Long-Term Sustainability

Although there is considerable attention paid to addressing cost growth and investing in public health and prevention, the most noteworthy aspect of Presidential candidate Barack Obama’s health care plan is its focus on attempting to make insurance affordable for all Americans. For those unable to afford insurance, Obama proposes a sliding scale of subsidies for the purchase of private health insurance, an approach similar to that being implemented in Massachusetts.

The Obama plan has other details worth noting in its effort to make insurance more affordable. First, while all children would be required to have health care coverage, there is no such mandate for adults. As a result, many adults are projected to remain uninsured, though researchers differ on the exact number. Proponents of Obama’s plan expect near full coverage, while others project 20 million or more may remain uninsured. If the subsidies Obama proposes truly do make insurance affordable for all, we can assume that those who remain uninsured can afford the cost of insurance, but have simply chosen not to purchase it.

Second, the Obama plan proposes a National Health Insurance Exchange (NHIE) where individuals and small businesses can shop for health insurance, much like the current Federal Employee Health Benefit Plan. While the concept of an NHIE generally receives bipartisan support, Obama’s vision for the NHIE includes a provision for a government plan (perhaps along the lines of Medicare) to compete alongside the private plans within the system. This is highly controversial, because many fear that a successful public program within the NHIE could be little more than a foot in the door toward a single-payer health care system.

In addition to making insurance more affordable, the Obama plan contains a number of components aimed at reducing cost growth, such as investing in the accelerated adoption of health information technology, greater transparency in quality and cost, pay for performance, and medical malpractice reform. These are not novel proposals, and indeed, his plan contains elements found in almost all reform proposals. While we favor many of these proposals for their potential to improve the quality of care, no one really knows if and when they will significantly impact the growth in health care costs in the absence of more profound structural changes.

Obama’s plan also emphasizes the importance of prevention and public health. As systems researchers, we are pleased to see the plan’s emphasis on shared responsibility among individuals and families, school systems, employers, the medical and public health workforce, and all levels of government to address better health. His plan contains many good ideas, which again are often found in other health reform proposals. There is, however, still much to be learned about how to successfully encourage healthy environments and behaviors, and the outcome of Obama’s proposals in this respect is far from certain.

Assuming Congress chooses to make the funding available to implement an Obama-style plan, the near term impact will most likely be to make insurance more affordable for all Americans. There will still be those who remain uninsured, but presumably most will be uninsured by choice, not by necessity. This near-term gain in health insurance coverage would be welcome.

In reality, however, increasing the number of Americans with health insurance coverage is only part of the solution to addressing our health system challenges. We cannot fail to address the often unspoken but most critical issue regarding our nation’s health care, which is the matter of the financial sustainability of a system that provides affordable, high quality care for decades to come.

A financially sustainable system is one in which Americans are continually willing and able to pay the taxes needed to maintain the desired level of affordability of health insurance and health care for the broader population. There are two primary elements to achieving sustainability and, unfortunately, both seem beyond the reach of any existing health care reform proposal, including Obama’s.

The first element required for achieving sustainability is to improve the health system in ways that simultaneously reduce cost growth and demonstrably increase the value of the dollars spent. Doing so will lead to slower growth in subsidy requirements and at the same time assure taxpayers that their dollars are well spent.

The second means of achieving sustainability is to address stagnant incomes at the lower end of the income scale. Strong economic growth that lifts lower income families will simultaneously reduce the need for subsidies (since those families will presumably be more able to afford health insurance on their own) and improve overall population health.

Given the current financial crisis and the specter of prolonged recession and growing deficits, the next President will find resistance to expensive new programs like health care reform and insurance subsidies. On the other hand, the problem of unaffordable health insurance will only get worse as time passes, with more and more Americans falling through the cracks, unable to afford insurance. To really address the issue of health reform and make difficult tradeoffs in these difficult times, the next President must begin to come to terms with the importance of a truly sustainable health system.


All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute.

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