In Weekly Address, Obama Lays Out How Administration Will Pay for Healthcare Reform

Can our economy get healthy if we don't reign in skyrocketing healthcare costs? That's a question President Barack Obama talked about in his weekly radio and Internet address ("Health Care Reform as the Key to Our Fiscal Future") and an issue NDN's Dr. Rob Shapiro wrote about in a May 14 essay.

With skeptical Republicans -- and some Democrats in Congress faced with a presidential deadline of October to send a bill to the White House, the healthcare debate -- Obama's top domestic priority -- is front and center.

In his address, Obama detailed savings he would make in Medicare payments, reigning in the costs of prescription drugs, among other changes, and said the current path of massive spending on U.S. health care is untenable:

When it comes to the cost of health care, this much is clear: the status quo is unsustainable for families, businesses, and government. America spends nearly 50 percent more per person on health care than any other country. Health care premiums have doubled over the last decade, deductibles and out-of-pocket costs have skyrocketed, and many with preexisting conditions are denied coverage. More and more, Americans are being priced out of the care they need.

These costs are also hurting business, as some big businesses are at a competitive disadvantage with their foreign counterparts, and some small businesses are forced to cut benefits, drop coverage, or even lay off workers. Meanwhile, Medicare and Medicaid pose one of the greatest threats to our federal deficit, and could leave our children with a mountain of debt that they cannot pay.

We cannot continue down this path. I do not accept a future where Americans forego health care because they can’t pay for it, and more and more families go without coverage at all. And I don’t accept a future where American business is hurt and our government goes broke. We have a responsibility to act, and to act now. That is why I’m working with Congress to pass reform that lowers costs, improves quality and coverage, and protects consumer health care choices.

I know some question whether we can afford to act this year. But the unmistakable truth is that it would be irresponsible to not act. We can’t keep shifting a growing burden to future generations. With each passing year, health care costs consume a larger share of our nation’s spending, and contribute to yawning deficits that we cannot control. So let me be clear: health care reform is not part of the problem when it comes to our fiscal future, it is a fundamental part of the solution.

In his essay, Shapiro had this to say about healthcare costs and our economy:

Most important, any realistic prospect for financing universal coverage depends on getting those costs under control. Otherwise, President Obama will likely find his Administration caught in the same vise that has immobilized health-care reformers for two decades, pressed between the social imperative to cover everyone and understandable resistance to paying for it from the majority of voters who are already covered. On the current path of medical cost increases, the taxpayers’ tab to pay for universal coverage would rise by five to seven percent every year, with damaging effects for other programs that the President would have to pare back to protect the new achievement.

Then comes the sticky matter of actually slowing down those increases. Earlier this week, the White House presented a roster of medical and insurance organizations who pledged together to support $2 trillion in cost reductions over the next decade. The main strategy is to attack “overuse and underuse” of health care. But it doesn’t include many details about how to do it. The administration’s program to computerize health care records over the next five years makes sense here, to help avoid wasteful or needlessly dangerous treatments. The hurdles will be very high, however, to actually putting in place a workable system covering tens of thousands of hospitals, clinics and doctors’ practices across the country.

The stimulus also includes $1 billion for prevention and wellness programs to improve diets, encourage exercise, reduce smoking and drinking, and detect cancers and other conditions early. Various studies have shown that some community-based intervention programs in these areas achieve very high returns, especially those aimed at young people. An analysis of several community-based programs to promote physical exercise, better nutrition and stop smoking, for example, found long-term reductions in diabetes, high blood pressure, heart and kidney disease, with a financial payoff of $5.60 in savings for every $1 invested. Large, long-term savings also were reported in a Michigan program that provides continuing education to prevent, recognize and treat athletic injuries, as well as a number of local programs that counsel low-income, first-time mothers on how best to care for their infants. But there also are many other programs that save little or nothing; and it could prove very difficult for Washington to identify and responsibly scale up those that work best.

The other large, promising approach, touted for several years by this writer and, of late, by OMB Director Peter Orszag, involves developing and applying data about what medical treatments work best, or work as well at less cost. The Dartmouth Atlas study of 2008, for example, found that the costs of treating older people for nine serious conditions, with the same outcomes in each group across five leading medical centers, varied by 30 percent to 45 percent based on where it was done. We could develop much more information in this area, identify those “best practices,” and mandate their use by health care facilities that accept federal money (which is almost all of them).

So the Administration’s health care focus, goals and priorities are right in the ways that matter. Now they need to provide a more detailed blueprint of how they intend to reach those goals and achieve those priorities.

Today, Obama laid out part of the blueprint Shapiro says is necessary. Watch the address below: