Tuesday, October 21, 2008

The Obama Healthcare Plan

As I noted in a previous post on the future of healthcare in America, both candidates have dynamic proposals for reforming our healthcare system. Today, I look at Senator Barack Obama's proposal for reform. The entire proposal can be found here: Barack Obama's Healthcare Plan (pdf).

If you click, you'll find a broad-ranging plan that is nearly 9 pages long. Here are the key points that I liked:
  • Barack Obama and Joe Biden will invest $10 billion a year over the next five years to move the U.S. health care system to broad adoption of standards-based electronic health information systems, including electronic health records. They will also phase in requirements for full implementation of health IT and commit the necessary federal resources to make it happen.

    I have written previously that electronic medical records need greater support in order to reap potential benefits, and this sounds like the type of commitment the healthcare community has been waiting for. A standards based approach is especially prescient.


  • Barack Obama and Joe Biden will require hospitals and providers to collect and publicly report measures of health care costs and quality, including data on preventable medical errors, nurse staffing ratios, hospital-acquired infections, and disparities in care and costs. Health plans will be required to disclose the percentage of premiums that actually goes to paying for patient care as opposed to administrative costs.

    Such transparency is key to forcing hospitals to improve. If the public is more aware of which hospitals are truly good and which are not, they will vote with their feet and their healthcare dollars, forcing underperforming hospitals to shape up.


  • Barack Obama and Joe Biden believe we need to eliminate the excessive subsidies to Medicare Advantage plans and pay them the same amount it would cost to treat the same patients under regular Medicare.

    Makes sense, doesn't it? Why should the government pay more for what is essentially the same care provision? This is just common sense.


  • Barack Obama and Joe Biden will allow Americans to buy their medicines from other developed countries if the drugs are safe and prices are lower outside the U.S.

    A good idea in theory (and a free market one, to boot). However, the plan does not provide specifics as far as which countries will be acceptalbe, and how one is going to judge which imported drugs are "safe." The FDA can barely handle monitoring domestic drugs as it is.


  • The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers.32 Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion,33 to further invest in improving health care coverage and quality.

    Thank you. Finally.


  • Catastrophic health expenditures account for a high percentage of medical expenses for private insurers. In fact, the most recent data available reveals that the top five percent of people with the greatest health care expenses in the U.S. account for 49 percent of the overall health care dollar. For small businesses, having a single employee with catastrophic expenditures can make insurance unaffordable to all of the workers in the firm. The Obama-Biden plan would reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee such savings are used to reduce the cost of workers' premiums. Offsetting some of the catastrophic costs would make health care more affordable for employers, workers and their families.

    Again, makes sense. This is how insurance is truly supposed to function. Instead of working to deny claims in a patient's time of need, this plan would simply cover catastrophic care. Of course, the obvious question is how much of a liability does this pose to the federal government. Furthermore, isn't this effectively nationalizing coverage anyway since the government would be the 'single payer' behind this scheme for the truly high cost cases? Hmm


  • Obama and Biden will require insurance companies to cover pre-existing conditions so all Americans, regardless of their health status or history, can get comprehensive benefits at fair and stable premiums.

    A nice sentiment, and definitely something that is necessary, but without details on how this will be enforced or what the limits of "coverage" will be, it's not clear what the true impact of this is.


  • They will also create a new Small Business Health Tax Credit to provide small businesses with a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums.

    Sounds good, but how much will this cost? What are the cut-offs for 'small business'? Who will enforce that the businesses are actually providing good plans? Again, hmm

Overall, I think the Obama plan is sound and has many innovative ideas along with many items that were due for a change. However, without more details on inclusion and exclusion criteria, it is difficult to gauge how much this all will cost. Furthermore, without an enforcement scheme, it is not clear how Obama plans to ensure that all these ideas become reality in a way that protects taxpayers from fradulent claims or plain ol' waste. However, given how competently Obama has run his campaign, I can only hope that his administration would similarly find ways to effectively manage the new healthcare bureaucracies he would be creating. Your thoughts?

I'll have a post soon about the McCain plan too.

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