One of the many major challenges confronting President Barack Obama is reform of the US health care system.

Among industrialised nations, the US spends well over twice the per capita average on health care and soaring health costs are expected to reach 20 percent of Gross Domestic Product by 2015. High spending, however, has not translated into better health: Americans do not live as long as citizens of a number of other comparable countries, including Australia, and disparities are pervasive, with widespread differences in access to care based on insurance status, income, race, and ethnicity.

Most people currently get their health insurance through their employers, but government programs for the elderly, disabled, children, veterans and the poor account for over 45 percent of health care expenditures. The US government is the largest insurer in the nation — an ironic fact given the substantial public opposition to national health insurance.

Over a third of the population is uninsured, unstably insured, or underinsured, and at any time some 16 percent of the population, or 47 million people, are without health insurance. Health insurance costs are rising faster than wages or inflation, and “medical causes” are cited by about half of those filing for bankruptcy.

As the economic crisis bites deeply, and more people lose their jobs and their health cover, health care issues will become even more crucial for American families. Health insurance expenses are the fastest growing cost component for employers who spend 11.3 percent of payroll on employees’ health care.

The three major motor car manufacturers, GM, Ford and Chrysler, have medical obligations of $US114 billion and in 2005 GM estimated that it spent more than $1,500 in employee medical expenses for each new car sold. If these companies go under, there will be major ramifications for health care with the health insurance for 2 million people tied to auto workers’ jobs.

The divergent opinions of the US public on health care priorities and reforms, how these should be achieved and who should pay for them, offer ample ammunition for both reformers and their opponents. While presidential campaigns are ill-suited to the task of designing policy reforms, they represent critical periods for setting an incoming administration’s agenda.

President-elect Obama has moved quickly to out his Administration in place, and has nominated former Senator Tom Daschle as both the Secretary of Health and Human Services and head of health policy in the White House. At the same time, the Democrats in the Congress are undertaking preliminary work to assist the passage of legislation, hopefully learning from the problems encountered by the Clinton proposal in 1993-94.

The passage of President Obama’s health reform proposals will be facilitated by the surge of public support for reforms, and by the strong Democrat majorities in both houses of the Congress.

With at least four committees in the Congress having a role in the passage of this legislation, strong leadership from the White House and the ability to develop broad agreement by those in power on the critical details of reform will be essential.

Economic issues will be the primary focus of the new president’s first 100 days in office, but we can expect that Obama will begin the process of outlining his health care reform plans soon after he is inaugurated. While he is not required to give a State of the Union speech, we should expect such an address before the end of January, and his first budget is due in the middle of February.

In order to see timely progress on health care reforms, it will be essential for Obama to not hold the attainable goals of universal coverage and quality improvement hostage to the more unattainable goal of health cost control.

My full paper, Health Care Reform in the 2008 U.S. Presidential Campaign, is available here.

Lesley Russell is Menzies Foundation Fellow at the Menzies Centre for Health Policy University of Sydney/Australian National University and Research Associate, US Studies Centre, University of Sydney

Peter Fray

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