Obama Makes His First Speech on Healthcare: An Annotated Review

Barack Obama has made his first speech on the issue of healthcare, defining the problem as he sees it and deferring specifics until a later date. While keeping to generalities, he made some interesting statements that are likely to raise expectations for his final plan.

Here is most of the speech’s text, with my annotations and commentary:

“On this January morning of two thousand and seven, more than sixty years after President Truman first issued the call for national health insurance, we find ourselves in the midst of an historic moment on health care. From Maine to California, from business to labor, from Democrats to Republicans, the emergence of new and bold proposals from across the spectrum has effectively ended the debate over whether or not we should have universal health care in this country.”

Note: He doesn’t specify which proposals he considers “new and bold,” but presumably he’s referring to various state initiatives, proposals from insurers, and the business/labor coalition proposals – among others.

“Plans that tinker and halfway measures now belong to yesterday. The President’s latest proposal that does little to bring down cost or guarantee coverage falls into this category. There will be many others offered in the coming campaign, and I am working with experts to develop my own plan as we speak, but let’s make one thing clear right here, right now:”

He makes clear that he’s describing the President’s plan in that first sentence. But inquiring minds want to know: is he referring to Hillary Clinton, too?

“In the 2008 campaign, affordable, universal health care for every single American must not be a question of whether, it must be a question of how. We have the ideas, we have the resources, and we must find the will to pass a plan by the end of the next president’s first term.”

That’s a commitment: universal healthcare by 2012. I don’t understand Kevin Drum’s attack from the left. Kevin says “Maybe in a little while he’ll give a major speech in which he really does endorse universal healthcare rather than fiddling around the edges of the debate.” Actually, Obama’s endorsement of universal coverage seems unequivocal to me. The left would be better off focussing their concern on that word “affordable.” The definition of “affordable” is what’s creating division and resistance to the Schwarzenegger plan, and will be critical in the upcoming policy debates on the Federal level.

“For too long, this debate has been stunted by what I call the smallness of our politics – the idea that there isn’t much we can agree on or do about the major challenges facing our country. And when some try to propose something bold, the interests groups and the partisans treat it like a sporting event, with each side keeping score of who’s up and who’s down, using fear and divisiveness and other cheap tricks to win their argument, even if we lose our solution in the process.”

Sen. Obama is raising expectations very high in this paragraph. He’s defining the scope of the problem very broadly, and envisioning a broad initiative in response. The opposite of “small” is “big” – as in Medicare, Great Society, other major social programs.

“Well we can’t afford another disappointing charade in 2008. It’s not only tiresome, it’s wrong. Wrong when businesses have to layoff one employee because they can’t afford the health care of another. Wrong when a parent cannot take a sick child to the doctor because they cannot afford the bill that comes with it. Wrong when 46 million Americans have no health care at all. In a country that spends more on health care than any other nation on Earth, it’s just wrong.”

He begins by defining the problem in social and economic terms.

“And yet, in recent years, what’s caught the attention of those who haven’t always been in favor of reform is the realization that this crisis isn’t just morally offensive, it’s economically untenable. For years, the can’t-do crowd has scared the American people into believing that universal health care would mean socialized medicine and burdensome taxes – that we should just stay out of the way and tinker at the margins.”

This is an important paragraph. Once you define a problem as “morally offensive,” halfway measures aren’t permissible. The presentation of “socialized medicine” (even the use of the term) and the mention of “burdensome taxes” makes it clear he’s not talking about a single-payer system.

“You know the statistics. Family premiums are up by nearly 87% over the last five years, growing five times faster than workers’ wages. Deductibles are up 50%. Co-payments for care and prescriptions are through the roof.

Nearly 11 million Americans who are already insured spent more than a quarter of their salary on health care last year. And over half of all family bankruptcies today are caused by medical bills.”

He’s focussing his definiion of the problem even further here. By including excessive out-of-pocket costs in his litany of concerns, he’s staking a position that will make it difficult for him to endorse something like the Schwarzenegger plan or even the Wyden Healthy Americans Act. Either of those initiatives would continue to allow significant out-of-pocket costs for consumers – costs that could be devastating at lower-income levels – while mandating coverage that could create exactly that type of debt.

“Almost half of all small businesses no longer offer health care to their workers, and so many others have responded to rising costs by laying off workers or shutting their doors for good. Some of the biggest corporations in America, giants of industry like GM and Ford, are watching foreign competitors based in countries with universal health care run circles around them, with a GM car containing twice as much health care cost as a Japanese car.”

Now he’s addressing the total per-employee/per-month cost of healthcare, stating unequivocally that this cost must be brought under control.

“They tell us it’s too expensive to cover the uninsured, but they don’t mention that every time an American without health insurance walks into an emergency room, we pay even more. Our family’s premiums are $922 higher because of the cost of care for the uninsured.

We pay $15 billion more in taxes because of the cost of care for the uninsured. And it’s trapped us in a vicious cycle. As the uninsured cause premiums to rise, more employers drop coverage. As more employers drop coverage, more people become uninsured, and premiums rise even further … caution is what’s costly. Inaction is what’s risky. Doing nothing is what’s impossible when it comes to health care in America.”

In other words, we’re already paying too much to care for the uninsured – and in the wrong ways. This paragraph is another clear endorsement of universal coverage.

This isn’t a problem of money, this is a problem of will. A failure of leadership. We already spend $2.2 trillion a year on health care in this country. My colleague, Senator Ron Wyden, who’s recently developed a bold new health care plan of his own, tells it this way: For the money Americans spent on health care last year, we could have hired a group of skilled physicians, paid each one of them $200,000 to care for just seven families, and guaranteed every single American quality, affordable health care. So where’s all that money going?”

Now he’s addressing administrative costs.

We know that a quarter of it – one out of every four health care dollars – is spent on non-medical costs; mostly bills and paperwork. And we also know that this is completely unnecessary. Almost every other industry in the world has saved billions on these administrative costs by doing it all online. Every transaction you make at a bank now costs them less than a penny. Even at the Veterans Administration, where it used to cost nine dollars to pull up your medical record, new technology means you can call up the same record on the internet for next to nothing.

But because we haven’t updated technology in the rest of the health care industry, a single transaction still costs up to twenty-five dollars – not one dime of which goes toward improving the quality of our health care.”

Here he joins Hillary Clinton and Newt Gingrich in promoting health IT, which is a smart move politically and technically.

“The federal government should be leading the way here. If you do business with the federal employee health benefits program, you should move to an electronic claims system. If you are a provider who works with Medicare, you should have to report your patient’s health outcomes, so that we can figure out, on a national level, how to improve health care quality. These are all things experts tell us must be done but aren’t being done. And the federal government should lead.”

Ditto …

“Another, more controversial area we need to look at is how much of our health care spending is going toward the record-breaking profits earned by the drug and health care industry. It’s perfectly understandable for a corporation to try and make a profit, but when those profits are soaring higher and higher each year while millions lose their coverage and premiums skyrocket, we have a responsibility to ask why.”

Taking on the drug companies directly could take many forms. There’s the low-impact and already-inevitable act of negotiating prices on behalf of the Government one one hand, and direct price controls on the other. He gives no hint which way he’s leaning here.

At a time when businesses are facing increased competition and workers rarely stay with one company throughout their lives, we also have to ask if the employer-based system of health care itself is still the best for providing insurance to all Americans.

Neither employers nor workers are happy with the current system. How would he replace it? Certainly not with the Bush-endorsed free-market purchase of individual health coverage. What’s he thinking? Presumably, more will be revealed.

We have to ask what we can do to provide more Americans with preventative care, which would mean fewer doctor’s visits and less cost down the road. We should make sure that every single child who’s eligible is signed up for the children’s health insurance program, and the federal government should make sure that our states have the money to make that happen. And we have to start looking at some of the interesting ideas on comprehensive reform that are coming out of states like Maine and Illinois and California, to see what we can replicate on a national scale and what will move us toward that goal of universal coverage for all.

Prevention is critical, because its not in any single health insurers’ financial interest to promote it too aggressively. Children’s Health Insurance was the one health specific proposal Sen. Clinton made in announcing her candidacy. Calling the states’ ideas “interesting” isn’t exactly a way to lay his cards on the table …

“But regardless of what combination of policies and proposals get us to this goal, we must reach it. We must act. And we must act boldly. As one health care advocate recently said, “The most expensive course is to do nothing.” But it wasn’t a liberal Democrat or union leader who said this.

It was the president of the very health industry association that funded the “Harry and Louise” ads designed to kill the Clinton health care plan in the early nineties.”

So he’ll even listen to insurance companies!

“The debate in this country over health care has shifted. The support for comprehensive reform that organizations like Families USA have worked so hard to build is now widespread, and the diverse group of business and health industry interests that are part of your Health Care Coverage Coalition is a testament to that success.”

… followed by a nod to the Left …

“And so Washington no longer has an excuse for caution. Leaders no longer have a reason to be timid. And America can no longer afford inaction. That’s not who we are – and that’s not the story of our nation’s improbable progress.”

The remainder of the speech pays tribute to America’s initiative in creating Medicare. This is the strongest populist rhetoric he uses in the entire speech, and again raises his own bar by suggesting a comprehensive large-scale initiative is needed.

Half a century ago, America found itself in the midst of another health care crisis. For millions of elderly Americans, the single greatest cause of poverty and hardship was the crippling cost of health care and the lack of affordable insurance. Two out of every three elderly Americans had annual incomes of less than $1,000, and only one in eight had health insurance.

As health care and hospital costs continued to rise, more and more private insurers simply refused to insure our elderly, believing they were too great of a risk to care for.

The resistance to action was fierce. Proponents of health care reform were opposed by well-financed, well-connected interest groups who spared no expense in telling the American people that these efforts were “dangerous” and “un-American,” “revolutionary” and even “deadly.”

And yet the reformers marched on. They testified before Congress and they took their case to the country and they introduced dozens of different proposals but always, always they stood firm on their goal to provide health care for every American senior. And finally, after years of advocacy and negotiation and plenty of setbacks, President Lyndon Johnson signed the Medicare bill into law on July 30th of 1965.

The signing ceremony was held in Missouri, in a town called Independence, with the first man who was bold enough to issue the call for universal health care – President Harry Truman.

And as he stood with Truman by his side and signed what would become the most successful government program in history – a program that had seemed impossible for so long – President Johnson looked out at the crowd and said, “History shapes men, but it is a necessary faith of leadership that men can help shape history.”

Never forget that we have it within our power to shape history in this country. It is not in our character to sit idly by as victims of fate or circumstance, for we are a people of action and innovation, forever pushing the boundaries of what’s possible.

Now is the time to push those boundaries once more. We have come so far in the debate on health care in this country, but now we must finally answer the call first issued by Truman, advanced by Johnson, and fought for by so many leaders and Americans throughout the last century. The time has come for universal health care in America. And I look forward to working with all of you to meet this challenge in the weeks and months to come. Thank you.