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Healthcare Seen Taking Back Seat to Economy

With popular support and a Democratic majority in both houses of Congress, the stars are aligned for President-elect Barack Obama to rework healthcare.

But, to the relief of some in the industry, experts think Obama has bigger issues to take care of first,namely the economy and two wars.

That’s different from the last time a Democrat held the White House. President Bill Clinton came into office in 1992 with a congressional majority and plans to overhaul healthcare, including subsidization of the uninsured.

That didn’t end up happening. But just the prospect of it sent healthcare stocks tumbling.

With the economy in turmoil, relatively stable healthcare stocks are largely expected to stay that way.

Obama “would like to do a very major reformation of the U.S. healthcare system, but I don’t think he could do it right now,” said Paul Feldstein, a professor of healthcare management at the University of California, Irvine’s Merage of School of Business.

Instead of widespread change, Feldstein expects Obama to take quick action on expanding stem-cell research funding and public health insurance coverage for children whose parents can’t afford private policies.

Obama’s already made some moves in healthcare. Last month, he appointed former Senate majority leader Tom Daschle to be secretary of the Department of Health and Human Services. Daschle, a South Dakota Democrat, recently wrote a book on ways to improve healthcare and has worked with former Senate leaders on the problem.

As for Obama himself, his main thrust is for all children to have health insurance.

Obama has called for businesses to either provide insurance to their workers or to contribute to the cost of individual policies, with the smallest businesses being exempted.

He also has called for creating more competition among insurers and has pushed for “guaranteed issue,” where insurers have to sell plans to people regardless of their health.

While some businesses and insurers balk at increased regulations, many support some of Obama’s other proposals, such as using computerized health records to give doctors easier access to patient information and reduce costly medical errors.

“For us, that’s like Nirvana,” said Steve Plochocki, chief executive of Quality Systems Inc., an Irvine maker of electronic medical record software. “I’m in this software business where the government’s actually giving money to doctors to buy our product.”

Overall, Plochocki said that Medicare must be reformed in some way since healthcare costs for baby boomers could reach $73 trillion before the last of the generation dies.

“We clearly have to go and embark upon a reform,” Plochocki said. “It’s an important issue. It could bankrupt our country.”

But the extent of the reform may not be in the president-elect’s hands as a largely Democratic House of Representatives could start the ball rolling on its own.

“The House is much more liberal than Obama would like,” Feldstein said.

If liberal House Democrats can convince more conservative ones to let the government expand the budget enough to foot the bill, they may try to go much further with reform than Obama’s prepared to do, he said.

Obama is expected to work with congressional leaders on any major healthcare reform proposal.


Possible Reforms

Possible reforms under discussion run the gamut from universal healthcare, which is supported by the California Nurses Association, to reducing money paid to Medicare Advantage HMO plans to more employer mandates.

Feldstein is particularly skeptical about putting more responsibility on businesses in a weak economy.

“He could do an employer mandate, but it’s toothless unless you get the small employers and you give subsidies to them,” Feldstein said. “That’s another burden on employers now going into a recession. I can’t see him doing that.”

Obama has also been skeptical of the individual mandate, or a requirement that all people carry health insurance, which has been proposed for adults by Sen. Max Baucus, D-Mont. Businesses tend to look favorably on individual mandates because they could push insurers to reduce healthcare costs if everyone is required to have it.

Despite pressure from several groups seeking immediate healthcare reform, many see the possibility of more dramatic reform increasing further along in Obama’s presidency.

Barry Arbuckle, chief executive of Memorial Health Services, a hospital operator based in Fountain Valley, expects Obama to only make smaller changes in his first term.

Arbuckle said he would like to see Obama propose legislation that would allow federal officials to negotiate prices with drug companies as a way to cut costs. Drug costs are considered one of the leading drivers in healthcare inflation.

“I don’t believe we will see anything approaching a comprehensive national healthcare reform any time soon,” said Arbuckle, whose system operates three OC hospitals.

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