Senators told to tread carefully on health care

WASHINGTON (Reuters) - With the presidential candidates fighting over how best to rein in soaring health care costs and cover the uninsured, a veteran of the last major U.S. health care reform battle urged lawmakers on Tuesday to build broad public support before embarking on any reform.

Donna Shalala, who served as Secretary of Health and Human Services under President Bill Clinton, told the Senate Finance Committee that public support for Clinton's health reform effort in the early 1990s diminished as people with health insurance began to worry about what it would mean for their coverage.

The 1990s proposal also faced staunch opposition from the health care industry, which launched a series of television ads that helped doom the plan.

"We shouldn't be mislead because there is widespread agreement in this country that we have a broken system," Shalala told the Finance Committee.

"Both agreement on the definition of the problem and solution must be present if we are to succeed," she said in testimony.

Health care costs and insurance premiums have been rising rapidly and an estimated 47 million Americans are without coverage, making health care a major issue in this year's congressional and presidential elections.

"This happens to be an issue out there that both political parties for the first time are saying something has to be done," Tommy Thompson, former Secretary of Health and Human Services under President George W. Bush told panel. "We never really had a presidential campaign in which we really fought the issue of health care."

Thompson suggested lawmakers first tackle Medicare, which he said will start going broke in 2012. He suggested an independent commission look at changes that will help shore up this government health care program for the elderly.

"You are not going to be able to transform health care without first addressing Medicare," Thompson said. "That is the big 800 pound gorilla."

Americans spend about $2 trillion a year on health care, accounting for about 16 percent of the U.S. economy, said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. Baucus said his committee plans a series of hearings to lay the groundwork for reform under the next president.

The candidates have been battling over the best way to overhaul the system. Republican John McCain wants to make insurance more affordable and provide more choices to people by ending tax breaks for employer-sponsored insurance and instead provide a tax credit to help individuals buy policies.

Democrats Hillary Clinton and Barack Obama want to provide universal coverage through a mix of private and public insurance.

Clinton would require everyone to have coverage and use tax subsidies to help make it more affordable. Obama would require coverage for all children and create a program to help businesses and individuals without employer-based coverage buy insurance.

(Editing by Philip Barbara)