Obama's Health Plan: An Analysis

In a web backgrounder published October 15 on the Heritage Foundation's web site, Dr. Robert Moffit and Nina Owcharenko offered their analysis of Democratic presidential nominee Barack Obama's health plan. It is a lengthy document, so the highlights are presented here. The full document can be found here.

The skepticism of Obama's plan begins right away, with the authors saying, "Senator Barack Obama (D-IL)...has unveiled an ambitious health care plan that is comprehensive in scope, sparse in detail, and limited in its cost estimates. The Senator insists that his proposal would save the typical American family $2,500 in medical costs. These savings are implausible, and the costs are unknown."

The authors recount the three objectives of the Obama plan: offering affordable, comprehensive, and portable coverage; containing spiraling health care costs and improving quality of care; and promoting and strengthening prevention and public health. Sounds good right? Maybe not so much.

"In general," the backgrounder says, "the Obama plan would give the federal government even more control of health care dollars and decisions - a radical departure from the decentralized decision-making system that characterizes employer-based insurance and state-based insurance regulation."

Some of the key initiatives in the Obama expand federal control over health care, which the authors say "...would likely precipitate a rapid evolution toward a federal monopoly over the health care section." Key initiatives include: new federal provision and control of health care; additional federal involvement in employer-based coverage; expansion of existing government health programs, restrictions on state experimentation, and mandated coverage for children; and federal regulation of health care delivery.

Of course, no one really knows how much all this will cost. The authors write, "Independent economists have attempted to offer some cost estimates, but the lack of concrete details makes the exact costs uncertain."

Costs and savings are analyzed as follows: "The Lewin Group estimates that the Obama plan will cost $1.17 trillion over the first 10 years. Other estimates range from $1.6 trillion to $6 trillion over 10 years. On overall savings, the Lewin Group estimates that the Obama plan would reduce family spending by $426 in 2010, an amount far less than the Obama plan's promised $2,500."

And coverage? The authors write, "...the Lewin Group estimates that the plan would reduce the number of uninsured by 26.6 million by 2010 and increase the number of people on public coverage by 48.3 million."

According to the Heritage analysis, Obama's plan limits consumer choice and concentrates more power in the hands of the federal government: "Despite Senator Obama's rhetoric of 'choice and competition,' his plan is a vehicle for new regulations and federal power that would leave ordinary Americans with even less control of their health care dollars than they exercise today."

A more sensible approach would be to allow Americans to keep more of their paychecks and give tax credits for health insurance in order to maximize consumer choice.