Healthcare Financial News

President Obama stated that health reform is “a necessity we cannot postpone any longer” rather than a “luxury” in his weekly address to the nation on Saturday. And reform will succeed, said Obama, because “everyone is at the table--patient’s advocates and health insurers; business and labor; Democrats and Republicans alike.” He pointed out that the “improbable allies” of hospitals, physicians, insurers, pharma, and unions have pledged to cut $2 trillion in health costs over the next decade, a milestone that “wouldn’t have happened just a few short years ago.”

Obama also stressed that reform must not increase the budget deficit but will be paid for through “rigorous spending reductions and appropriate additional revenues. We’ll eliminate waste, fraud, and abuse in our health care system, but we’ll also take on key causes of rising costs,” he said. Obama concluded by saying, “All across America, our families are making hard choices when it comes to health care. Now, it’s time for Washington to make the right ones. It’s time to deliver.”

To assuage the insurance industry’s fears that a public health plan will drive them out of business, President Obama has been highlighting that three dozen states offer a government health plan to their employees without ill effects on the private insurance market. But while the public plans cover 3 million workers, they haven’t been successful at holding down health costs, which is a cornerstone of healthcare reform, reports The New York Times. “Even the best of them are pretty far short of what most of us who advocate public plan choice want,” Jacob S. Hacker, a political scientist at the University of California, Berkeley, told the Times.

Most of the state plans don’t make reimbursement conditional on medical performance and quality, and they are usually administered by commercial insurers that aren’t constrained in negotiating payment rates with providers. And although Obama and the Democrats say that a public plan will maintain reserves and not be subsidized by the government, skeptics say that the government wouldn’t let its health plan fail--undermining the promised fair competition with private insurers. The Lewin Group forecasts that a public plan paying rates similar to Medicare will succeed in providing coverage to 28 million uninsured and will cause 119 million people to opt out of employer-sponsored insurance for the public plan.