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Upfront costs complicate Obama's health care plan

Associated Press | 5/13/2009, 5:52 a.m.

WASHINGTON — Costs are emerging as the biggest obstacle to President Barack Obama’s ambitious plan to provide health insurance for everybody.

The upfront tab could reach $1.2 trillion to $1.5 trillion over 10 years, while expected savings from wringing waste and inefficiency from the health care system may take longer to show.

Details of the health legislation have not been written, but the broad outlines of the overhaul are known. Economists and other experts say the $634 billion that Obama’s budget sets aside for health care will pay perhaps half the cost.

Obama is hoping the Senate comes up with a bipartisan compromise that would give him political cover for disagreeable decisions to raise more money, such as taxing some health insurance benefits. In the 2008 campaign, Obama went after his Republican presidential rival, Arizona Sen. John McCain, for proposing a large-scale version of that idea.

Concerns about costs could spill over in the coming week when the Senate Finance Committee holds a hearing on how to pay for coverage. Committee leaders hoping to have a bill before the full Senate this summer must first convince their own members that it won’t break the bank.

“You go to a town meeting and people are talking about bailout fatigue,” said Sen. Ron Wyden, D-Ore. “They like the president. They think he’s a straight shooter. But they are concerned about the amount of money that is heading out the door, and the debts their kids are going to have to absorb.”

Sen. Mike Enzi, R-Wyo., said cost control has to come ahead of getting more people covered.

“Unless we halt skyrocketing health care costs, any attempt to expand coverage will be financially unsustainable,” he said.

Obama wants to build on the current system, in which employers, government and individuals share responsibility for health care. He says his plan would make health insurance more affordable, particularly for small businesses and individuals. The government would subsidize coverage for low-income people and some in the middle class.

The U.S. spends about $2.5 trillion a year on health care, more than any other advanced country. Experts estimate that at least one-third of that spending goes for services that provide little or no benefit to patients. So theoretically, there’s enough money in the system to cover everybody, including an estimated 50 million uninsured.

But one person’s wasteful spending is someone else’s bread and butter.

The office visits, tests, procedures and medications that the experts question represent a lot of money for doctors, hospitals, drug companies and other service providers. Dialing them back won’t be easy. Providers will resist. Patients might complain their care is getting rationed.

The chairman of the Senate Finance Committee, Sen. Max Baucus, said “it’s clear that the financing of this is not going to be easy.” Baucus, D-Mont., says the basic approach to health care must become more economically efficient.

Instead of paying doctors and hospitals for the number of services they provide, as happens now, Baucus wants to tie reimbursement to the quality of care. Quality would be measured by standards that doctors and hospitals have a hand in shaping.