Tom Smith's Health Policy Today examines what the newly-inaugurated 44th president of the USA's health plans will mean in practice
On Barack Obama's first day in office, both expectations and his in-tray are high.
'As people in the USA lose their jobs, most also lose their healthcare coverage. Rising unemployment is compounding America's healthcare challenge'
The economic crisis means jobs are being shed. As people in the USA lose their jobs, most also lose their healthcare coverage. Rising unemployment is compounding America's healthcare challenge, and act one of Obama's healthcare reform programme is contained in the $800bn fiscal stimulus package being prepared.
$40bn is earmarked to ensure healthcare coverage to those who lose their jobs. Although only 5 per cent of the total spend, it is a move that is will significantly change the US health system.
HOW THE AILING US ECONOMY AFFECTS INDIVIDUAL HEALTH
The Washington Post on Saturday 17 January 2009 explained the reason for the inclusion of healthcare in the stimulus plan.
"The ideas' boldness reflects a precipitous rise in the uninsured. Recent estimates suggest that worsening unemployment, which reached 7.2 percent last month, translates into a loss of health coverage for an additional 2.6 million people. That increase, on top of the estimated 45 million uninsured, is exacerbating a persistent problem in the U.S. health-care system: too many people who lack access to proper care."
THE PROPOSALS TO EXTEND HEALTHCARE TO THE NEWLY-UNEMPLOYED
The proposals will extend healthcare coverage to the unemployed for up to two years, in a two-pronged approach. One part of it would expand Medicaid by allowing states to temporarily sign up jobless residents to the scheme, with the federal government paying the entire cost. The other part would provide large subsidies to an existing law that allows the newly laid-off to extend the benefits they used to receive through their jobs if they can pay the cost.
In short, the proposals will allow states to provide coverage to the existing unemployed and it will allow the newly-unemployed to continue coverage for much less than half the previous cost.
The proposals have been influenced and supported by the Obama team, who “supports the protection of health insurance through COBRA and Medicaid in a time-limited way", according to a Transition Team aide.
The plan is to devote $30bn over two years (hence the time limit) and $8.6bn to expand Medicaid. The Post piece report 'legislative sources' that say these figures are preliminary, because analysis is ongoing to detail the cost of the proposals and how many unemployed people would want the help.
AN INCREASE IN FEDERAL RESPONSIBILITY FOR HEALTH
In various places, the Post piece describes the proposals as 'unprecedented', 'profound' and a 'sharp departure' from current government support. These words refer not only to the scale of the expansion, but to a massive rebalancing of how US is paid for, between federal governments and states.
The big difference in the plans to expand Medicaid is that the scheme was set up (in the 60s) as a shared financial responsibility, between the US government and the states. Under the new proposal, the US government would pay all the costs of the new claimants.
The shift in Medicaid coverage will mainly affect two groups:
(i) people who are receiving or have used up unemployment benefits, and
(ii) 'laid-off people with incomes as much as twice the poverty level'.
This last group will allow coverage for adults without children, whom most states disallow from coverage.
In the recent past, there have been mini-expansions of coverage - for NY residents after 9/11 and for those who fled Hurricane Katrina - but as the Post says, 'not on the scale envision now'.
The Post reports recent researchh showing that only 'a small fraction of people eligible for COBRA buy it'. A consumer body described the previous form of CORA as 'an economic impossibility for most people because its typical costs would use up nearly 84 percent of the average unemployment benefits.
Changes to the COBRA scheme will mean the government pay 65% of the premium.
There are some who think that even with a large subsidy, the scheme will still be unaffordable for many people. Based on a study of an agricultural equivalent, one study found only between 12 and 15% took up the offer. The author says there is a “big chance” the scheme could end in failure.
THE BATTLE FOR REFORM IS AHEAD
Republicans will be sceptical of the plan. In particular they are concerned about whether the proposals can really be time-limited. They question how easy it will be to withdraw federal support for the scheme in 2011. They worry the current plan is a way to introduce permanent arrangements by the back door.
Even some Democrats are sceptical. They question how much help the massive cost will provide. There is also a risk that large federal investment will drive up the market cost of premiums, keeping coverage beyond the reach of those required to make contributions from benefits cheques.
The gamble for the White House is that within two years, they will have reformed health insurance and have a system in which the emergency coverage will not be necessary.
There is a loose consensus that the US Government should be acting to provide help. This political shift is a foundation on which Obama will wish to build, as he seeks to reform the US system and how people are able to access health insurance.
Illustrating the political appetite for change, in the last days of George W. Bush's administration, both houses bypassed opposition from the White House and voted for an immediate expansion of health insurance for 'poor and working-class children'. It was adopted by Congress on Wednesday (Jan 12) and approved by a Senate panel the following day.
The Washington Post says, 'Taken together, the insurance for children and laid-off workers signifies an effort by Democrats to create momentum for the more difficult work of broad health reforms that they and the Obama administration plan to undertake soon.'
POLITICAL APPETITE FOR CHANGE
As the Post puts it, debate 'will not solidify until lawmakers learn more precisely how much the proposals would cost and how many people they might help'.
I have written before on this site about the political nature of US health reform and this was the main theme of Monday's Panorama on the BBC. It is important to bear in mind, however, that some of the political analysis is a little dated and things have changed over recent years.
The problems that were described in the BBC show were the problems that Hilary Clinton faced. And the appointment of former Senate leader Tom Daschle as health secretary is acknowledgement that any reform bill will require careful drafting and ferrying through complex legislative debates.
But the opposition this time will be more technical, questioning whether interventions will fulfil their aims - rather than whether the federal government should play a greater role.
As Obama said in his inaugural address, 'the question we ask today is not whether our Government is too big or too small, but whether it works'. Questions about whether his plans will work are the first obstacle the new President faces.