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Obama Says Economic Downturn Has Further Strained Health Care System

By Adriel Bettelheim, CQ Staff

DECEMBER 11, 2008 -- President-elect Obama on Thursday linked overhauling the health care system to a broader economic revival but hedged on whether he would roll back some of President Bush's tax cuts to pay for the changes.

Obama introduced the two top members of his health care team at a Chicago news conference that was dominated by questions about the federal corruption case against Illinois Gov. Rod R. Blagojevich.

Obama's point man on health care, former Senate Majority Leader Tom Daschle, will serve in dual roles as secretary of the Department of Health and Human Services and director of a new White House Office of Health Reform. The day-to-day operations of the White House office will be handled by Jeanne Lambrew, a senior fellow at the Center for American Progress.

Obama said rising health costs were contributing to the economic downturn, by hastening personal and business bankruptcies and enlarging the population of uninsured Americans. He blamed "Washington politics and influence-peddling" for thwarting past attempts to fix the system.

"This simply cannot continue," Obama said. "The runaway cost of health care is punishing families and businesses across our country. We are on an unsustainable course, and it has to change. The time has come—this year, in this new administration—to modernize our health care system for the 21st century, to reduce costs for families and businesses and to finally provide affordable, accessible health care for every American."

Obama did not specify how he intends to pay for the changes—a question that has taken on added significance with the cost of the government's response to the financial crisis now exceeding $1 trillion.

Obama's presidential campaign put the cost of his health care plan at between $50 billion and $65 billion a year, though some conservative health policy experts said the figures were overly optimistic.

Obama said his economic team still was evaluating whether to roll back some of Bush's tax cuts on the wealthy. During the presidential campaign, Obama said he would pay for his plan by repealing tax cuts for Americans earning more than $250,000 and maintaining the estate tax at its 2009 level. However, Obama advisers more recently said he is reconsidering that pledge, worried about imposing additional tax burdens during an economic crisis.

On Thursday, Obama said he would try to achieve savings by promoting new health-care technologies and more preventive testing, and by eliminating some wasteful programs. He singled out Medicare Advantage—a privately run, government-funded alternative to Medicare created in the Republican-led overhaul of the entitlement program, in 2003.

"We're spending billions of dollars subsidizing insurance companies for a program that doesn't appreciably improve the health of seniors under Medicare," Obama said.

Beyond those steps, Obama acknowledged, "We are probably going to have to, then, find additional dollars to pay for some investments in the short term."

Obama pledged to convene meetings of health care providers and other interested parties soon after taking office to chart an overhaul plan, and to "have a bunch of this stuff on C-Span" to ensure a transparent process.

Obama would be far from the first president to attempt to remake the U.S. health care system. Former President Bill Clinton and then-First Lady Hillary Rodham Clinton failed in 1993 and 1994 to win support for an ambitious plan to make employers pay for most of their workers' health costs and give the government a hands-on role in the health care system.

President Bush and the GOP-controlled Congress in 2003 pushed through a successful overhaul of Medicare that gave private insurers a greater role administering benefits to seniors and created new outpatient prescription drug coverage—but not without a bitter, year-long fight that fractured Congress.

Obama during the presidential campaign proposed a "play or pay" system that requires employers to either offer health coverage to workers or pay a sum equal to a percentage of their payrolls to fund a new national insurance plan.

The insurance industry opposes the requirement, though its supports other aspects of Obama's plan.

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