CHICAGO (Reuters) - U.S. President-elect Barack Obama on Thursday chose former Sen. Tom Daschle to spearhead healthcare reform -- putting a Washington veteran in charge of one of the most ambitious and expensive gambles of his administration.
But even as Obama sought to highlight one of his main policy priorities, he was forced to answer questions about a scandal involving Illinois Gov. Rod Blagojevich, accused of trying to sell Obama's now-vacant U.S. Senate seat.
Obama said he had not discussed the issue with the governor and had asked his staff to gather information about any contacts with Blagojevich. He also said the Democratic Illinois governor had lost his ability to govern and should step down.
On healthcare, Obama said it was urgent to fix the broken U.S. system, where many cannot afford basic care and 15 percent of the country -- about 46 million people -- are uninsured.
"Over the past eight years, premiums have nearly doubled and more families are facing more medical debt than ever before," said Obama.
But he did not say lay out how he intended to pay for the plan, a sharpening question as the global credit crisis pushes the country further into recession.
Daschle, a former Senate majority leader, will lead Obama's new White House office on health reform and serve as secretary of health and human services, making him the top Obama authority on healthcare reform.
Daschle will have to draw upon all of his negotiating experience as he tackles some powerful opponents in his efforts to revamp the system. In addition to Republican and Democratic lawmakers, Daschle will have to face lobbyists from industry groups, insurers, hospitals and advocacy groups.
The industry has proved an intractable political problem. Obama will hope to avoid the mistakes made in President Bill Clinton's first administration, when too many competing efforts and a lack of outreach to various interests doomed then-first lady Hillary Clinton's reform plan.
Daschle's nomination was widely welcomed by the industry and lawmakers who said he was well respected on Capitol Hill.
The American Medical Association praised Daschle as a leader who "has demonstrated a commitment to working with physicians" and said the creation of a White House office on health reform "highlights the importance and priority" that Obama places on the issue.
Obama, who beat Republican John McCain in the November 4 election in part because of his promises to provide affordable healthcare to all Americans, said the country had to move ahead with the plan despite the current financial crisis.
"Some may ask how at this moment of economic challenge we can afford to invest in reforming our healthcare system. I ask a different question. I ask, 'How can we afford not to?'"
Reforming the system could cost up to $75 billion the first year, according to consulting firm PricewaterhouseCoopers.
Obama originally planned to pay for it by rolling back Bush administration tax cuts for Americans earning more than $250,000 a year and keeping the estate tax at its 2009 level.
But with the current economic crisis, analysts think he will no longer be able to carry out that plan.
Obama said on Thursday he had not yet decided if he would get rid of the Bush tax cuts. He said the plan needed to be paid for in part by streamlining and rationalizing the system.
"My charge to my team is figuring out how do we make sure that it pays for itself over, say, a 10-year period so that we're actually saving money over the long term," he said.
This month, Daschle and his team will holding a series of meetings across the country to discuss what ordinary Americans thought were the biggest problems with the healthcare system.
"Our growing costs are unsustainable, and the plight of the uninsured is unconscionable," Daschle said.
U.S. healthcare costs now account for about 16 percent of U.S. gross domestic product -- or $2.3 trillion -- a proportion projected to grow to 20 percent or $4 trillion by 2015.
additional reporting by Steve Holland and David Alexander; editing by David Wiessler