Undaunted by the economy, Obama presses ahead on healthcare reform

President Barack Obama is pressing forward this week with plans to recast American healthcare despite the nation’s worsening economic condition, ignoring criticism that he is taking on too much.

On Monday, President Obama introduced his new nominee for secretary of health and human services, Kansas Gov. Kathleen Sebelius (D), who will play a central role in the reform effort. On Thursday, the White House will hold a major policy summit about runaway healthcare costs.

Since unveiling his proposed budget last week, which includes $634 billion toward universal health coverage, critics have said reform should wait until the economy improves. But Obama insists he was elected to provide “sweeping change,” and budget analysts say healthcare spending is a key factor in the nation’s chronic deficits.

“The high rate of growth of healthcare costs is at the root of the nation’s long-term fiscal problem,” writes Robert Greenstein, executive director of the Center on Budget and Policy Priorities in Washington, in a statement on the center’s website.

The costs of public healthcare programs are increasing at a rate well above overall inflation, consuming more of the federal budget.

Thursday’s healthcare summit will bring together members of Congress from both parties as well as stakeholders and advocacy groups in the healthcare industry.

“They’ll be testing the waters” at Thursday’s healthcare summit, says Maggie Mahar, a healthcare fellow at the Century Foundation in New York. “Obama will take whatever he can get from it.”

“He knows that if a Republican stands up and says something reasonable, [budget director Peter] Orszag will say, ‘I’m glad to hear someone say this, it’s a brilliant idea,” she adds.

The beginnings of Obama’s effort at healthcare reform come in marked contrast to the failed effort by the Clinton administration 16 years ago, when then-first lady Hillary Clinton led a task force that conducted its business behind closed doors and issued a 1,000-plus page plan that sank under its own weight. In his budget outline, Obama signaled his intentions by setting up a reserve fund of $634 billion – more than half the $1 trillion needed over the next decade to put reforms into practice. Half the $634 billion would come from tax increases. The other half from program changes, including efficiencies to Medicare and Medicaid, the government’s health programs for the elderly and the poor, and higher discounts from pharmaceutical companies for Medicare drugs.

The nomination Monday of Governor Sebelius for the Health and Human Services job helps Obama move beyond the withdrawal of his first choice, former Sen. Tom Daschle of South Dakota. Mr. Daschle, one of Obama’s closest confidants during the campaign, dropped out a month ago when it came out that he owed $128,000 in back taxes. The withdrawal deprived Obama of a key player in his health reform effort, especially given Daschle’s background as onetime Senate majority leader.

As a two-term Democratic governor in a Republican state, Sebelius brings her ability to work across the aisle. In addition, Sebelius was Kansas’s insurance commissioner for eight years. Her knowledge of how the healthcare system works at the state level, which is critical to any federal reform, would also help her in Washington. Some conservatives pledged to drum up opposition over her support of abortion rights despite her Catholic faith, but she is expected to be confirmed.

Sebelius is not expected, however, to be appointed White House “health czar,” a second hat Daschle was to wear. Instead, Obama has named Nancy-Ann DeParle to serve as counselor to the president and director of the White House Office for Health Reform. The White House describes her as “one of the nation’s leading experts on healthcare and regulatory issues.” But she will not play the high-profile role that Daschle would have, or that Mr. Orszag, the budget director, already is playing on healthcare.

“Healthcare is the key to our fiscal future,” Orszag said Sunday on ABC’s “This Week.” “We are going to make sure that it is ... self-financing over the next 5 to 10 years, which means if that revenue stream isn’t available, something else will have to be. And in addition, those reforms to healthcare, making the system more efficient, will help ... vastly improve our long-term fiscal future.”

Not all budget watchdogs believe it is possible to reform the healthcare system and bring down its runaway costs at the same time. David Walker, the former comptroller general of the United States, believes Obama should focus on cost-cutting first, then reform.

“Before we expand coverage, which we know is going to cost a lot of money, we need to be able to demonstrate – not based on theory, but based upon actual practice – that we can reduce the rate of increase of healthcare costs,” says Mr. Walker, now president and CEO of the Peter G. Peterson Foundation. “And we need to make a significant down payment on our tens of trillions of dollars of unfunded healthcare obligations right now.”

He adds: “It’s all too easy to expand coverage and say we’re paying for it based on some theoretical savings that we hope we will end up achieving through various reforms.”