New optimism on U.S. healthcare, but obstacles remain

By John Whitesides

WASHINGTON (Reuters) - The U.S. Congress has started work on a broad overhaul of the healthcare system in a rare spirit of optimism, but brewing battles over its cost, scope and structure could still scuttle hopes for a solution.

From President Barack Obama's declaration that "the stars are aligned" on healthcare to a recent cost-cutting pledge by a half-dozen industry groups, momentum has built steadily on an issue that has eluded consensus for decades.

The first test comes in a few weeks when Congress unveils legislation, launching months of expected wrangling over the specifics of tax hikes, spending cuts and the government's role in a revamp that could cost as much as $1.5 trillion.

"It's true that the planets are aligned for healthcare as never before, but there are still big obstacles," said Drew Altman, president of the Kaiser Family Foundation, a nonpartisan health policy group.

"We are about to enter a very different stage of the debate once everyone sees the specifics and how it will be paid for," he said. "Getting a comprehensive agreement is a high hill to climb. We have failed many times."

The push for reform is still haunted by the most spectacular of those failures, the collapse of the Hillary Clinton-led effort in 1994. But analysts say Obama so far has avoided some of the pitfalls that doomed that plan.

Obama has pursued a more open approach than Clinton in developing the legislation, which he hopes will curb costs and expand coverage to many of about 46 million uninsured Americans.

He asked congressional leaders to put together the bill, rather than presenting it to them as a finished package, and brought to the table many of the groups like insurers who helped kill the Clinton plan.

Congressional leaders have backed a quick timetable for approval, limiting time for opposition to mount. The first proposal will be unveiled in the next few weeks and Obama wants to sign a final bill before the end of the year.

'TACTICALLY SUPERIOR'

"The whole approach has been eminently superior, tactically, to 1994," said Ed Howard, executive vice president of the Alliance for Health Reform, a non-partisan health policy education group.

Obama has a strong political hand after a decisive White House win in November over Republican John McCain, and has large majorities of fellow Democrats in both houses of Congress to work with.

Obama and McCain backed dramatically different approaches to healthcare reform. But the issue rarely won the spotlight in a 2008 campaign dominated early by the debate over wars in Iraq and Afghanistan and late by the collapsing economy.

Since then, the economic pain of the recession has strengthened the drive for reform, spotlighting worries about spiraling costs and bolstering Obama's argument that reform is vital to an economic cure.

"The status quo has been shown to be unsustainable right before our eyes," said Len Nichols, director of the Health Policy program at the New America Foundation. "Healthcare is an economic issue again. How do you go out there and tell people we will not do anything about this?"