Into the Fray

President Barack Obama is rightly famous for his set-piece speeches—he knows how to set the tone appropriately and communicate complex ideas clearly and persuasively. These skills helped him overcome the political juggernaut behind his Democratic rival Hillary Clinton ahead of last year's elections, and have been employed to good effect to justify the succession of bold policy initiatives launched during his presidency. Expectations were consequently riding high ahead of yesterday's address to a rare joint session of Congress on healthcare reform. Obama has consistently cited these reforms as a central priority of his presidency, but to date he has remained relatively aloof from the legislative preparations. It has been left to Democrats in Congress to draw up and defend detailed proposals; the administration has been closely involved, but behind the scenes. The Republicans have meanwhile launched blistering counter-attacks, egged on by influential right-wing media commentators. Wild accusations have been aired, and despite their falsehood they continue to circulate. Town hall meetings held by Democratic members of Congress have descended into chaos as right-wing protestors determinedly disrupt them. Opinion polls have shown Obama's approval ratings slip somewhat, and there has been much discussion of whether his presidency is already in trouble.

So did yesterday's speech turn the tide? It was unrealistic to expect that one speech could, but it has been well received in most quarters. He reiterated the powerful economic and social justice arguments for reform, and also spoke emotionally of the legacy of recently deceased Senator Edward Kennedy (a long-time reform advocate). Although efforts at bipartisanship have proved largely futile, some gestures were offered across the aisle. These included embrace of an idea voiced by Republican Senator John McCain that would see the poor insured against catastrophic medical expenses, as well as moves to combat medical malpractice lawsuits. At the same time, Obama had no truck for those he sees as wilfully destructive: "Know this. I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it". He labelled the assertions levelled by former Alaska Governor Sarah Palin and others that the reforms would see "death panels" introduced "a lie, plain and simple". Much of the media debate after the speech focused on an intemperate outburst from Republican Representative Joe Wilson, who yelled "you lie" when Obama stated that there was nothing in the proposals that would see illegal immigrants covered. This was a breach of protocol and the heckler subsequently issued an apology, but he succeeded in getting noticed.

Obama's preferred reform blueprint is now becoming clearer, as laid out on http://www.whitehouse.gov/.

• Pre-existing disease conditions: Denial of coverage due to pre-existing conditions will be made illegal. There will be no arbitrary limit over benefit payments annually or in a lifetime. Routine medical check-ups and preventive care will be part of coverage without extra charge, and there would be a cap on "out-of-pocket'' medical expenses. A national high-risk pool will be created to help with coverage for those who have been denied coverage by insurance firms due to pre-existing conditions.
• Medicare: There will be protection for Medicare beneficiaries to improve care and reduce programme costs. The Medicare Trust Fund will be amended to extend coverage to care for future generations.
• "Doughnut Hole": The president aims to close the "doughnut hole"—which is hit by Medicare beneficiaries when they reach the threshold of US$4,080 in healthcare costs and hence have to incur out-of-pocket expenses—completely in 10 years' time.
• Insurance Exchange and Public Health Insurance: The establishment of an insurance exchange where the uninsured and small businesses can buy health insurance at "competitive prices" starting in 2013. Controversially, the president reiterated his belief in the public health insurance option, limiting it to the uninsured population and those who cannot afford insurance in the current insurance marketplace.
• Tax Credits: Individuals, families, and small businesses will be provided with tax credits in a bid to help citizens buy health insurance. The plan also promises greater cost-sharing benefits for out of pocket expenses.
• Healthcare Savings and Cuts: The president has assured that the plan will not add to the deficit in the federal budget in the short or long term. In a bid to pay for some of the expenses, the U.S. administration (the White House) is proposing to include a fee for insurance firms who sell high-end expensive plans. in addition, the federal government has put itself also under pressure by adding a requirement to provide savings to ensure the plan does not end up in deficit.
• Treatment Delivery Reform: A reform of the delivery system will also be initiated, with proposals to focus on improving quality and standard of care. Hospitals will be offered incentives to prevent avoidable re-admissions and new bundled payments will be introduced in Medicare. The emphasis here is clearly on providing a co-ordinated approach to healthcare. An independent commission will also be set up to annually recommend ways to promote efficiency and quality in Medicare. This commission is to be made up of physicians and other medical experts.

While the details above are clearer than what has been provided before by the White House, there are still areas where the policies are not well defined. For instance, the president intends to completely close the "doughnut hole" by 2019, but there is no comprehensive policy measure on how it will be achieved. At this stage one can refer to the deal between pharmaceutical firms and the White House to cut innovative drug prices by half for beneficiaries hitting the doughnut hole. However, there is still some ambiguity over the achievement of this policy measure. The public health insurance option was once again touched upon by Obama. However, little clarity was provided given the immense response to the option from both consumers and the industry. In his proposal, the president has said that such a firm will "operate like any private insurance firm" relying on premiums. In the same breath, it was reiterated that the option will "hold insurance firms accountable and assure affordable choices''. It is clear now that this public health insurance firm will not be a for-profit unit, potentially triggering concern from the insurance industry of destroying business viability in the market for private-sector firms. In this plan though, Obama has not mentioned the recently circulating concessions being considered by the administration, such as a five-year trigger for the setting-up of such an option if the private insurance industry is not successful in improving quality and standards.

Outlook and Implications

The reform plan has tried to pick up on policies that have emerged from the five different Congress committees mandated with coming up with a healthcare reform proposal. This is in line with the stated presidential objective to incorporate favourable policy measures from all quarters. The speech once again stressed the importance of getting a plan in place before the October deadline that the president set when announcing the reform earlier this year, but this is ambitious. The debate will is set to intensify further as the last committee—the Senate Finance Committee—announces its draft bill this week.

Politically, Obama sought yesterday to show leadership and bolster resolve among Democrats in Congress. Given their majorities in both chambers, it is their unity that is ultimately pivotal to the success of the healthcare reform process. They will also dictate how far the reforms are ultimately watered down. The speech certainly helped on this front, but there are huge challenges ahead that Obama is all too aware of. The bitter experience of another gifted orator, former Democratic president Bill Clinton (1993–2001), always looms large. The latter also gave a well-received speech to Congress when pushing his reform plan, but similar opposition to that seen today finally put paid to the effort. If the reforms ultimately founder, the momentum of Obama's presidency will be badly sapped, and the task of seeing through the rest of his ambitious agenda will be that much more difficult. Having said this, the media has generally exaggerated his current problems. Obama's popularity remains high by historic standards, and it still looks likely that the reforms will prevail in some form. Even watered down, this still promises to be the most wide-ranging overhaul of the healthcare system in decades.

Global Insight (Reino Unido)