Adviser Describes Obama Health Plan

The Campaign for America's Future has invited health care reformers to clarify their proposals for achieving health for all on our blog. We expect that these postings will be widely linked to and discussed in the blogosphere. Comments and discussion are welcomed.

This first entry is presented by David Cutler, economics professor at Harvard University and health care adviser for the presidential campaign of Sen. Barack Obama. - The Editors

On Tuesday, Barack Obama laid out a proposal for universal health care plan that will guarantee every American affordable, comprehensive health insurance. I advised Senator Obama on the proposal, so I will not claim to be an independent voice.

As a health care analyst for nearly 20 years and a veteran of the Clinton Health Plan, however, I believe strongly that the Obama proposal is a bold, comprehensive, realistic approach to national health reform in the United States. It holds the potential for the single most important transformation of health care in a century: one that guarantees Americans health insurance coverage and does so in a way that wrings waste and inefficiency out of the system.

Here's how it works: If you don't have health insurance through your employer, you will be enrolled into a new, comprehensive public health insurance plan that emphasizes prevention, chronic care management and quality care. The benefits will be similar to those available today to every federal employee.

This plan will enjoy the great efficiencies we see in public plans like Medicare but, if you still cannot afford it, you will receive a subsidy to pay for it. Of course, you can choose private insurance if you prefer but the private plans will have to compete on a level playing field with the public plan—without the extra payments that tip the scales in favor of private Medicare Advantage plans today.

Employers who do not offer meaningful coverage or a meaningful contribution to the cost of quality health coverage for their employees will be required to pay a percentage of payroll to the plan and their employees will be enrolled. Any employer can decide it no longer wishes to administer insurance and can offer insurance through the exchange. Self-employed Americans will find it easy to enroll as well at no disadvantage. Children will be covered and no one can be denied health insurance because of a preexisting condition or illness.

All Americans will be covered automatically under this plan. And the resources are set aside in the plan to do whatever is necessary to guarantee affordable coverage for every American.

But, as Senator Obama learned in a series of health care town hall meetings he held recently, in order to create a truly universal health care plan we cannot only focus on coverage. We must also take steps to seriously address the skyrocketing cost of health care as well. He heard story after story from citizens about decisions they faced that no American should ever have to make.

Let's face it, the major reason that 45 million Americans don't have health care and many others are going without needed medical care is not that they don't want it, it's that they can't afford it. And, as a nation, we can't afford to simply add onto a flawed system. We need to address costs or we will make a bad problem even worse and find ourselves right back where we were during the failed health care debates of the past. No matter how much we tell Americans they should, or even have to, buy health insurance, the fact is that people will not get coverage unless it is affordable.

That's why Obama's plan takes unprecedented steps to seriously address the skyrocketing cost of health care as well. And, as a result, it will bring down the cost of every family's premiums by up to $2,500 while covering every uninsured American.

Change won't be easy. There are countless obstacles standing in the way. But it can happen. Here is how.

First, he will have the federal government pick up some of the tab for the most expensive illnesses and conditions, bringing premiums down.

Second, he'll focus our health care system on preventing costly, debilitating conditions in the first place by requiring coverage of evidence-based, preventive care services and expanding our public health infrastructure and efforts.

Third, he'll reduce the cost of our health care by improving the quality of our health care. He'll ask hospitals and providers to collect, track, and publicly report measures of health care quality so that patients can make informed choices about the care that's best for them.

Fourth, he'll reduce waste and inefficiency by moving from a 20th century health care industry based on pen and paper to a 21st century industry that's paperless, which will reduce deadly medical errors and save billions and billions of dollars in the process.

Finally, he'll deal with the immense importance that a few big drug and insurance companies have on the health care market. He'll make generic drugs more available to consumers and tell the drug companies that their days of forcing affordable prescription drugs out of the market are over. And he'll investigate and prosecute the monopolization of the insurance industry.

The twin goals of health care reform are coverage and value. If we do not take steps to seriously address the high cost of health care in America and guarantee health care for every working American, we cannot solve the crisis that is facing millions of families. But if we are willing to take on both these challenges together, we can make universal health care a reality.

David Cutler is currently the Otto Eckstein Professor of Applied Economics in the Harvard Department of Economics and Kennedy School of Government. He is also associate dean of social sciences at Harvard’s Faculty of Arts and Sciences.