Hard times may be right time for health-care fix

WASHINGTON — When Barack Obama steps into the Oval Office in January, a health-care overhaul will join a list of priorities crowded with two wars, a ballooning budget deficit and an economy mired in one of the worst slowdowns since the Great Depression.

But the bleak environment paradoxically might spur the kind of costly, sweeping overhaul of the nation's health-care system that has eluded policymakers in Washington for decades, many political strategists, industry leaders and economists said.

Hospitals and physicians increasingly are worried about the escalating burden of newly unemployed workers being thrown onto the rolls of the uninsured.

Liberal advocacy groups see the Treasury Department's $700 billion commitment to banks and other financial institutions bolstering the case for a similar investment to help sick Americans obtain medical care.

Businesses see new urgency in addressing the nation's health-care crisis as they struggle to pay for medical benefits while sales plummet and profit margins shrivel.

When Senate Finance Committee Chairman Max Baucus, D-Mont., last week announced an outline for universal-health coverage, he was applauded by dozens of interest groups across the ideological spectrum.

"Health-care reform is very much linked to the broader economic issues that the country is facing," said Todd Stottlemyer, president of the National Federation of Independent Business. "Our view is that there is the energy now to make this a top priority."

The federation, which represents about 300,000 small businesses, helped fight the Clinton administration's proposed health-care overhaul 15 years ago. Today, it is one of the leading champions of broad-based reform.

"I have never seen an effort like this," said Ron Pollack, who heads Families USA, a consumer nonprofit promoting a health-care overhaul.

Cost unresolved

Even the most sanguine observers conceded it will be immensely difficult to reshape a health-care sector that makes up 16 percent of the nation's economy and move tens of millions of uninsured Americans into the system.

Democrats generally agree on an approach that would allow most Americans to keep their current coverage while creating an exchange so people and businesses without coverage could link up with insurers.

Obama proposed such a plan on the campaign trail, and Baucus offered his version last week.

Still unresolved are important details about the cost of a new system, provisions for increasing quality and a mechanism for compelling businesses and people to participate.

"People are unhappy with today's health-care system," said Karen Davenport, director of health policy at the Center for American Progress, a liberal think tank with close ties to Obama. "But they are also nervous about letting go of what they have now."

Debate heats up

Most observers expect conflicts between interest groups and policymakers as the debate heats up on Capitol Hill. The Pharmaceutical Research and Manufacturers of America last week fired an early warning shot: an ad campaign opposing Obama's proposal to allow the federal government to negotiate lower Medicare drug prices.

Republican lawmakers are expressing concerns about proposals that would drive the federal budget deeper into the red. By some estimates, extending coverage to the nation's uninsured could cost more than $100 billion a year.

"We have a huge financial problem in this country," said Joe Antos, a health-care scholar at the conservative American Enterprise Institute, who called the idea that bold action would save money on health care "completely ludicrous."

"You have everybody gearing up and trying to make noise and saying, 'Don't forget us.' And health is right there with everybody else," he said. "They are trying to create political space next year for their issue, when there is going to be precious little political space to be had."

Obama has not indicated whether he would champion major health-care legislation right away or if he would pursue a more incremental approach, as some lawmakers and analysts have counseled.

The president-elect and his Democratic allies on Capitol Hill have said immediate federal action to prop up the sagging economy would be their top priority.

Before Obama takes office Jan. 20, business leaders are linking their fortunes to the fate of the health-care debate.

"It's the single biggest cost pressure our members face," said John Castellani, president of the Business Roundtable. "This is coming to a tipping point." Castellani warned that failure to resolve the health-care crisis increasingly would threaten major employers.

Health-care providers are struggling to cover increasing costs with government and private insurance-reimbursement schemes that are not keeping pace.

The economic slump also has made it more difficult for some hospitals to obtain lines of credit, even as more patients without insurance or other means of paying turn to emergency rooms.

Economic structure

That makes a systemic overhaul vital now, said Thomas Priselac, chief executive of Cedars-Sinai Medical Center in Los Angeles and chairman-elect of the American Hospital Association. "It is more desirable to address this in as comprehensive a way as possible, rather than incrementally," he said.

Len Nichols, an economist who directs the health-policy program at the New America Foundation, said he thinks Obama cannot wait to act on health care.

He said runaway health-care costs would not slow during the recession.

"Health care is part of the economic structure," Nichols said. "The concept that this is some kind of add-on, a luxury, as opposed to an integral part of our economy, is false."

On Monday, the New America Foundation released a report, "The Cost of Doing Nothing," which estimates deaths and illnesses among the uninsured cost the country from $103.9 billion to $207.3 billion last year in lost productivity.

At the high end of that estimate, the cost per uninsured person is $4,541, or about $400 more than the average annual per-person cost of health insurance, Nichols said.

"It's cheaper to cover everyone," he said.

Sen. Ron Wyden, D-Ore., who is sponsoring a comprehensive proposal that would guarantee private universal coverage, is pushing change aggressively.

"If you don't fix health care, health-care expenses are going to make this banking-bailout deal look like a rounding error," Wyden told physicians, business leaders and health-care industry leaders at a recent meeting in Los Angeles.