"Make or break" time for U.S. health reform: Obama

WASHINGTON Tue Jun 2, 2009 5:02pm EDT

Jim Hann tends to his wife Hannah at Georgetown University Hospital in Washington May 18, 2009. When Hann learned he would be laid off, he scheduled surgery to donate a kidney to his wife. Hann was one of those trying to compensate for losing health insurance in a country where unemployment often means going without coverage. REUTERS/Hyungwon Kang

Jim Hann tends to his wife Hannah at Georgetown University Hospital in Washington May 18, 2009. When Hann learned he would be laid off, he scheduled surgery to donate a kidney to his wife. Hann was one of those trying to compensate for losing health insurance in a country where unemployment often means going without coverage.

Credit: Reuters/Hyungwon Kang

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WASHINGTON (Reuters) - President Barack Obama stepped up efforts to build public support for a broad revamp of U.S. healthcare on Tuesday, saying the country could no longer afford the soaring costs of the current system that leaves millions without medical coverage.

"We cannot avoid bringing about change in our health care system," Obama told a group of Senate Democrats. "Soaring health care costs are unsustainable for families, they are unsustainable for businesses, and they are unsustainable for governments, both at the federal, state and local levels."

Obama's push on healthcare comes as lawmakers seek to craft a bill and pass it through the Senate before lawmakers take a summer break. Democratic leaders in the House of Representatives also hope to move health legislation through that chamber before August.

"This window between now and the August recess, I think, is going to be the make-or-break period," Obama said. "This is the time where we've got to get this done."

The White House Council of Economic Advisers issued a report on Tuesday saying that the overall U.S. economy would benefit significantly from an overhaul that reins in soaring costs and expands medical coverage to an estimated 46 million uninsured.

UNSUSTAINABLE COST INCREASES

The White House report said healthcare spending, which currently accounts for about 18 percent of the country's economic output, could reach 34 percent by 2040 if the current rate of cost growth continues. The report called that outlook "unsustainable."

Most working Americans with health insurance get it through their employers and the study said rising costs have increased insurance premiums and cut into workers' wages. A reform that reins in costs would improve economic efficiency and boost economic output by more than 2 percent in 2020 and by 8 percent in 2030, the report concluded.

That would translate into $2,600 in higher income for a family of four in 2020, rising to $10,000 by 2030, the report said. Since about half of healthcare costs are paid by federal, state and local governments, their budgets also would benefit greatly by reform, it said.

Providing medical coverage to the uninsured will also help the economy by improving the overall well-being of the work force -- providing a net benefit to the economy of about $100 billion a year, the report said.

Without the overhaul, the number of uninsured Americans would rise to about 72 million in 2040, it said.

Republicans were skeptical.

"This report is nothing more than smoke and mirrors. Everyone agrees that reducing the cost of health care would benefit our economy, but the administration hasn't offered a credible plan to do so without raising taxes or rationing care," House Republican Leader John Boehner said.

Covering the uninsured will be costly, just as U.S. government fiscal deficits are hitting record levels because of a huge economic stimulus package, financial and auto industry bailouts, and reduced revenue from taxes due to recession.

Lawmakers are trying to find cost savings through Medicare and Medicaid, the government health programs for the elderly and poor. The White House has proposed about $300 billion in savings from those two programs.

Baucus also made clear he is considering limiting the tax benefits of employer-provided insurance.

Workers now pay no taxes on that benefit but Baucus said a cap on the tax exclusion would likely be a part of legislation his committee is writing, even though Obama opposes taxing employer-provided health benefits.

(Reporting by Donna Smith; Editing by Eric Walsh)

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