Obama discovers pitfalls of healthcare reform

WASHINGTON (Reuters) - President Barack Obama knew it was not going to be easy to overhaul U.S. healthcare.

"There's a reason why it hasn't happened for 50 years," he told supporters on Thursday. "Harry Truman wanted to do it; couldn't get it done. Every president since that time has talked about it; hasn't gotten it done,"

And now he is finding out just how hard it is.

Just this week, legislation to revamp how Americans receive their healthcare advanced in key committees in the U.S. Congress, thanks to Obama's Democrats, who control both chambers on Capitol Hill.

But it has come with a price, and it is a long way from final passage.

Douglas Elmendorf, director of the non-partisan Congressional Budget Office, dealt a sharp blow to the Democrats' healthcare proposals when he said the plans do not contain the spiraling costs of government health programs as Obama has said he wants.

"We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount," he said on Thursday.

Fiscally conservative Democrats, already worried about how to pay for the program's estimated $1 trillion cost over 10 years, raised doubts and Republicans were galvanized in their opposition.

"The CBO testimony yesterday should be setting off alarm bells. Instead of rushing through one expensive proposal after another, we should take the time we need to get things right," said Senate Republican leader Mitch McConnell.

Doug Holtz-Eakin, who was chief economic adviser to Republican presidential candidate John McCain last year, said the CBO report put the costs of the program in dramatic relief.

"As it turns out, reform that was intended to control costs turned into legislation that didn't do that and indeed is built in a way that makes the problem substantially worse," he said.

NO TIME TO SLOW DOWN

Obama and his advisers found flaws in the CBO testimony, saying Elmendorf did not take into account the cost savings that will be carried out in separate legislation.

Obama rejected calls to give the legislation more time.

"Now's not a time to slow down," he said at a hastily arranged White House event on Friday, which was followed by an announcement via Twitter that he will hold a Wednesday night news conference.

Obama vowed healthcare legislation "will happen this year," and in spite of the obstacles, nobody was betting against him.

Democratic strategist Bud Jackson said Obama has two things going for him: the Democratic base still supports his goal of more affordable healthcare, and Democrats control Congress.

He has already signaled he is willing to get legislation passed using only Democrats, as he did in gaining approval of a $787 billion economic stimulus package last February.

The CBO report will likely cause Democrats to go back to the drawing board to find more cuts, Jackson said. "It's still a work in progress," he said.

Linda Fowler, a government professor at Dartmouth College in New Hampshire, said one complication for Obama is that there are several healthcare plans circulating on Capitol Hill.

"So it's easy for the Republican critics to just capitalize on the uncertainty that all these multiple plans have created to raise people's fears that reform might make things worse. And the fact that there is no one plan but several different ones is just making their job easier I think," she said.

Obama can be thankful for one thing: he does not have insurance companies lined up against him as President Bill Clinton did in 1993 when his healthcare plan went down in flames.