Despite all the silly talk of socialism in the presidential campaign, President-elect Barack Obama will not move to nationalize the health insurance industry after he is sworn into office. However, the question remains whether he can create another massive federal program during a financial crisis–and if he does, how he'll pay for it.
Obama will at some point–probably sooner rather than later–launch the most serious effort to reform the way health care is insured in this country since First Lady Hillary Clintons ill-fated drive under her husbands administration.
The Clinton initiative was undermined not only by poor management within the White House Task Force created to reshape health care, but by a devastating industry-funded ad blitz featuring the fictional Harry and Louise, expressing alarm over how the government was going to tell them which doctors they could and couldnt see.
The mood towards healthcare reform is quite different these daysnot surprising since 47 million dont have any coverage. Indeed, the Harry and Louise characters were miraculously reborn as reform advocates in an ad campaign launched by a consortium of groups, including the National Federation of Independent Business and the American Hospital Association.
We have a pretty good idea what President-elect Obama wants to do. He promised to establish a National Health Insurance Exchange offering a range of private insurance options, including a new public plan based on benefits available to members of Congress.
If he has his way, he also would prevent insurers from rejecting applicants due to preexisting conditions, provide a tax credit for small businesses that buy coverage for employees, and subsidize individuals who cannot afford the prevailing premiums.
Under his plan, parents would have to provide coverage for their children, but no adult would be mandated to buy insurance.
The big question, however, is how the president-elect will finance his ambitious healthcare initiative. He spoke vaguely during the campaign about doing away with paperwork to save billions, as well as levying a tax surcharge (Sen. John McCain called it a fine) against large employers that dont offer insurance.
Even in a strong economy, the funding challenge would be formidable. But with the country mired in a financial crisis and a deepening recession, the White House will have an even tougher time tackling an expensive issue like healthcare reform.
However, I doubt President-elect Obama will allow himself to be merely a crisis manager, if not reduced to a caretaker role, spending all his time cleaning up the mess left behind by his predecessor. He was elected on a platform of change, and he will be expected to deliver on some bold initiatives. It doesnt get any bolder than healthcare reform.
In addition, rather than be deterred by the ominous fiscal hurdles looming before us, he is likely to argue that if the U.S. government can cough up $700 billion overnight to bail out elite financial institutions, Congress can certainly find enough cash to make sure everyone at least has access to affordable health insurance.
I also have a feeling that a well-disciplined Obama administration will avoid the mistakes made by Hillary Clinton, whose efforts were derailed by micromanagement, policymaking secrecy and a failure to involve key members of Congress. Having come out of the Senate, the president-elect is likely to work hand-in-hand with lawmakers to generate wide support for his bill.
Why should this be of any interest to property-casualty readers? Well, with employee benefits generating a growing percentage of agency revenue, especially in a soft p-c market, our agent audience has a lot riding on the outcome of this debate. It certainly would boost agency bottom lines if small-businesses and individuals could afford to buy health insurance coverage from them.
However, p-c agency lobbyists are nervous that the establishment of another government health insurance option will prompt more employers to drop coverage (depending on how large the “fine” would be versus their premiums), and whether premiums would be actuarially sound, so that private plans could remain competitive.
How do you folks think this will play out?
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