Senator Barack Obama (D-IL) has unveiled an ambitious health
care plan that is comprehensive in scope, sparse in detail, and
therefore uncertain in its cost and savings estimates. His
proposals focus on three stated objectives: offering affordable,
comprehensive, and portable coverage; containing spiraling
health care costs and improving quality of care; and promoting and
strengthening prevention and public health. These key goals
would appeal to most Americans, but the coercive means to
accomplish them will be far less attractive.
Very little in the Obama health plan is new or original. Many of
its policy initiatives are recycled from the ill-fated Clinton
health plan of 1993 and the Kerry health plan of 2004 and strongly
resemble a detailed proposal by the Commonwealth Fund, a
prominent liberal think tank. In general, the Obama plan would give
the federal government even more control of health care dollars and
decisions-accelerating the federal domination of the U.S.
health care system.
Instead of using the federal government to change the health
care system from the top down, policymakers should transfer direct
control of health care dollars back to individuals and
families. Such a system of personal ownership would allow
Americans to exercise real personal choice of health plans and
benefits by choosing those plans that best meet their needs. This
would also make health plans and providers compete directly for
their dollars. Personal ownership of health care would help to
control costs and guarantee better quality.
The Obama Plan. The Obama plan proposes a comprehensive,
standardized federal health benefits structure; a massive expansion
of federal regulatory authority over health insurance; and an
enlargement of federal regulatory power over health care
delivery, including the defining of what constitutes "quality"
care. Moreover, the plan would prop up the existing employer-based
health insurance system and government health programs, such as
Medicaid and the State Children's Health Insurance Program (SCHIP),
to expand health insurance coverage.
Centralizing Control. The most significant change in the
Obama plan is a proposal to consolidate even more control of
health care dollars and decisions in Washington, D.C. This is a
radical departure from the decentralized decision-making
system that sets the United States apart from other developed
countries. His plan includes several initiatives that would
give the federal government extensive control of the
financing, delivery, and management of health care. These
government initiatives would likely precipitate a rapid
evolution toward a federal monopoly over the health care sector.
These initiatives include:
- New federal provision and control of health care.
Obama's new government-run national health plan would compete
directly with private health plans in a National Health Insurance
Exchange. Federal officials would not only run the new
government plan but also use the exchange as a "watchdog" over
participating private health plans. The federal government would
decide the level of health benefits that Americans would
receive through the exchange. These rules would apply to the
new national health plan and all participating private health
- Additional federal involvement in employer-based
coverage. The Obama plan would mandate that employers
provide a federally approved level of health benefits to their
workers or pay a tax to help finance the government's new health
plan. The plan does not specify the level of the employer
contribution, value of the required health benefits package, or
size of the payroll tax. The federal government would also assume
the high-end costs of employer-based coverage and provide a new
taxpayer subsidy to small businesses to encourage them to
offer coverage. In any case, the Obama prescription would end
employer-based health insurance as millions of Americans know
- Expansion of existing government health programs,
restrictions on state experimentation, and mandated coverage
for children. The plan calls for unspecified expansions of
Medicaid and SCHIP and would severely limited states' ability to
develop health care reform proposals on their own.
Additionally, it would require parents to ensure that their
children have health care coverage.
- Federal regulation of health care delivery. The federal
government would regulate the delivery of medical care through
specific initiatives, such as those that would govern medical
reimbursement and determine the "comparative
effectiveness" of medical treatments and procedures. It would
also increase the federal regulation of medical liability reform,
prescription drugs, and health insurance.
Cost Implications. How much the Obama health plan would
cost American taxpayers is unclear. Independent economists have
attempted to offer some estimates, but the lack of concrete details
makes the true costs uncertain.
A Better Way. Despite the Senator's rhetoric of
"choice and competition," his plan is laden with new regulations
and government authority that would leave ordinary Americans with
even less control of their health care dollars than they
Instead of using the massive power of the federal government to
impose a top-down change on the health care system, Senator Obama
and other policymakers would be wise to transfer direct
control of health care dollars to individuals and families. This
would enable Americans to exercise real personal choice of
health plans and benefits while making health plans and providers
compete directly for consumers' dollars by providing value to
The next President and Congress should start to level the
playing field through tax and regulatory changes designed to
harness the power of freemarket competition to improve
access, promote portability, and restrain health care
spending. Specifically, they should reform the tax treatment of
health insurance, expand options for employers and individuals to
purchase health insurance, and restructure poorly performing public
programs to help those in need buy superior coverage through
private health insurance.
Such policies would constitute real change. They would empower
individuals to make informed choices and enable the marketplace to
respond rapidly to their needs and wants rather than placing
them at the mercy of government bureaucrats and politicians in
Robert E. Moffit, Ph.D.,
is Director of and Nina
Owcharenko is a Senior Policy Analyst in the Center for Health
Policy Studies at The Heritage Foundation.