System Overhaul


The global economy is on life support, unemployment is marching upward, wars rage on in Iraq and Afghanistan, and the federal deficit is approaching $1 trillion. By necessity, President Obama will push campaign promises to lower healthcare costs and provide affordable, accessible health insurance to all Americans to the end of his “to do” list, right?

Not necessarily.

“If we want to overcome our economic challenges, we must also finally address our healthcare challenge,” Obama said in a Dec. 11, 2008, speech in which he nominated former Sen. Tom Daschle (D-S.D.) to be his secretary of Health and Human Services and appointed him director of a new White House Office on Health Reform.

What this aggressive pursuit of healthcare change means for hospital medicine is still unclear, say health policy experts and hospitalists, because the Obama administration’s plan isn’t concrete and will change as it moves through Congress and the forums of public debate. Even so, some experts think an Obama healthcare overhaul would mean more revenue and information technology advancements for hospitals as well as significantly more patients as millions of newly insured Americans flood a system beset by a dwindling number of primary-care physicians.

For hospitalists and other physicians, the Obama plan could mean:

  • Access to more information on what therapies work best for patients.
  • A focus on preventative care.
  • Greater emphasis on care-management programs and medical homes, especially for people with chronic conditions.

“He will lay out a bold vision on what he wants to do over time, and then he will enact it in several steps,” says Karen Davis, PhD, president of the Commonwealth Fund, a private healthcare research organization. “He’s certainly said it won’t be business as usual.”

Key Healthcare Officials in President Obama’s Administration


The secretary of Health and Human Services and director of a new White House Office on Health Reform is a former Democratic congressman and senator from South Dakota. He co-authored a book with Jeanne Lambrew this year, “Critical: What We Can Do About the Health-Care Crisis.” Obama has called the book “groundbreaking.” Prior to joining the Obama team, Daschle, 61, was a public policy adviser at Alston & Bird, a legal and lobbying firm. He remains a distinguished senior fellow at the Center for American Progress, where he’s pursued his interest in healthcare policy.


The deputy director of a new White House Office on Health Reform is an associate professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas in Austin, and a senior fellow at the Center for American Progress. A co-author of the book Critical: What We Can Do About the Health-Care Crisis, Lambrew was a health policy advisor to President Clinton during his second term and helped establish the State Children’s Health Insurance Program.


The director of the Office of Management and Budget is a Princeton University graduate who has a Ph.D. from the London School of Economics. Prior to joining the Obama administration, Orszag, 39, directed the Con-gressional Budget Office and shifted a large part of its focus to healthcare issues. Orszag says the top fiscal threat facing the nation is escalating healthcare spending.

Sources: Obama-Biden transition Web site,; Center for American Progress; Congressional Quarterly

Right to Work

Obama says he will work immediately to expand eligibility for the State Children’s Health Insurance Program (SCHIP) and, in light of the recession, direct more federal money to states’ Medicaid programs, says Joseph Newhouse, PhD, a professor of health policy at Harvard University. Indeed, in the months before she was named deputy director of the White House’s new office on health reform, Jeanne Lambrew urged Congress to pass legislation that would boost federal funding for Medicaid and SCHIP.

Within the first few months of his administration, Obama also plans to push for investment in health information technology as a way to modernize the healthcare system and spur the economy, says Judy Feder, PhD, a professor and former dean of Georgetown University’s Public Policy Institute and a two-time Democratic congressional candidate who campaigned on a healthcare platform almost identical to the president’s.

Obama says he would like to direct $10 billion a year over the next five years to help the nation’s hospitals and healthcare providers install electronic billing and medical record systems.

“Somebody’s got to help set those up. We’ve got to buy computer systems and so forth. That’s an immediate boost to the economy…but it’s also laying the groundwork for reducing our healthcare costs over the long term,” Obama said in November upon naming Peter Orszag, an economist who regards rising healthcare spending as the nation’s top fiscal threat, director of the Office of Management and Budget.

Hospitals and hospitalists can benefit from IT advancements, but the technology should be slowly phased in to give users time to adjust, which may run counter to the quick economic stimulus Obama is trying to achieve, says David Meltzer, M.D., Ph.D., a professor in the department of medicine at the University of Chicago who has conducted considerable research in hospital medicine.

“The point is, health IT takes years to implement,” Dr. Meltzer says. “Just giving grants to buy and set up the equipment isn’t enough. You also want to give grants to prepare people on how to use it effectively.”

Key Points Of Obama’s HealthCare Plan

President Obama and Secretary of Health and Human Services Tom Daschle want to lower healthcare costs and provide all Americans with affordable, accessible health coverage. Here’s how they plan to do it:


  • Require insurance companies to sell to everyone, regardless of health problems.
  • Create a national health insurance exchange, which would set a minimum level of benefits for health plans, give tax credits to any person or business that can’t afford premiums, and allow people to keep their plan when they change jobs.
  • Offer a new public health plan similar to federal employee benefit plans.
  • Expand eligibility for Medicaid, Medicare, and the State Children’s Health Insurance Program.
  • Require all children—and possibly all adults—to have health coverage.
  • Eliminate subsidies to Medicare Advantage plans and pay providers what it would cost to treat patients under regular Medicare.


  • Invest $10 billion annually over the next five years in health information technology.
  • Pay providers based on quality of care, not quantity of services.
  • Promote disease management programs and medical-home-type models for people with chronic conditions.
  • Create an independent board to compare the effectiveness of drugs, medical devices, and procedures so that doctors and their patients have accurate, objective information. The board could decide the therapies that public and private insurance plans cover.
  • Promote preventive-care initiatives, such as vaccinations, health screenings, exercise programs, and healthful foods in schools and workplaces.


  • Allow people to get their medications from other countries, provided the drugs are safe and cheaper than those in the U.S.
  • Allow Medicare to negotiate with pharmaceutical companies for cheaper drug prices.
  • Prevent pharmaceutical companies from keeping generic drugs off the market.

Sources: Obama-Biden Healthcare Plan; Critical: What We Can Do About the Health-Care Crisis, by Tom Daschle, Jeanne M. Lambrew and Scott S. Greenberger.

Dr. Meltzer is encouraged by Obama’s plan to create an independent, government-funded board charged with scientifically comparing the effectiveness of pharmaceutical drugs, medical devices, and procedures, and presenting the results to the medical community. He foresees hospitalists gaining opportunities to participate in clinical research as well as enroll patients in clinical trials.

“Over the long run, we’ll probably end up with therapies that will be better for patients and will control costs,” Dr. Meltzer says. “We spend a lot of money on things that don’t work or don’t work very well.”

The Obama Plan and Hospital Medicine

President Obama’s health plan proposal is widely regarded as ambitious and, if enacted, would mean substantial change for hospitals and hospitalists.

In the short term, hospitalists should be on the lookout for:

  • Grants and other assistance to implement health information technology systems, such as electronic medical records.
  • Financial incentives aimed at improving the coordination and quality of care, including the use of drugs, medical devices, and procedures deemed by independent researchers to be the most effective.
  • Requirements to collect data on measures of healthcare costs and quality for public reporting purposes and penalties, if the numbers dip below acceptable levels.
  • In the long term, hospitals and hospitalists should see:
  • Rising revenues as more patients are insured by private insurers, a new national health plan, and government programs, which Obama intends to expand.
  • Increased workloads as patients turn to hospitals for care they can’t get at overwhelmed primary-care doctors’ offices.
  • More hospitalists entering the field, as general and internal medicine becomes more lucrative and Obama backs efforts to offer medical school graduates incentives to go into general medicine.
  • Changes in reimbursements as the nation’s healthcare system begins to adopt best practice, medical home, and bundling models.

Calling a comparative-effectiveness board “absolutely essential,” the Common-wealth Fund’s Davis says the U.S. has fallen far behind other countries in reviewing and rating therapies. Part of the reason is a fear that comparative effectiveness would stymie innovation and prevent doctors and patients from pursuing their choice of treatments, Dr. Meltzer says.

Opponents point to the book “Critical: What We Can Do About the Healthcare Crisis,” which Daschle and Lambrew co-wrote last year. In the book, Daschle advocates creating a federal health board outside the influence of Congress that would decide which procedures and therapies should be covered under public and private insurance plans. Obama has yet to support such a concept.

“There is that danger, but we live in an even more dangerous health system now,” says Dr. Meltzer, who predicts comparative-effectiveness legislation will advance this year. “I will be shocked and profoundly disappointed if we don’t see the legislation.”

Dr. Meltzer and other experts are less certain as to when Obama will move on other parts of his proposal, although Feder believes the president will try to create a national health-plan option and establish a national health insurance exchange, a kind of one-stop shop offering consumers health plans that would meet a minimum level of benefits, sometime in the next four years.

The national health-plan benefits could be similar to what federal employees receive, namely guaranteed health coverage and long-term care benefits, a wide variety of health plans to choose from, and insurability for pre-existing conditions. Private insurers would have to sell policies to everyone, regardless of pre-existing health conditions, and consumers who are unable to afford the premiums would be eligible for tax credits. The president’s plan stops short of requiring all Americans to have health insurance.

System Overload?

With more Americans insured, hospitals’ revenues will increase, according to Davis. Hospital patient loads—and hospitalists’ workloads—would increase, says Iris Mangulabnan, MD, a hospitalist at Covenant HealthCare in Saginaw, Mich.

“In the global scheme of things, if (Obama) is going to have insurance for about 45 million more patients, you’re going to see hospitals crammed with more people,” Dr. Mangulabnan says.

Adam Singer, MD, CEO of IPC: The Hospitalist Company, a national physician group practice based in California, says Obama’s plan has the potential to “overwhelm” the U.S. healthcare system. “Who’s going to take care of all these people?” he says.

Obama’s healthcare plan highlights preventive-care and disease management programs as ways to keep people out of hospitals and save money, but Dr. Mangulabnan says research has shown such initiatives aren’t always effective. “They hold a lot of conceptual promise, but I’m reminded of that fast-food commercial—you know, ‘Where’s the beef?’ ” Dr. Singer says.

Both doctors question how Obama’s healthcare plan, which would cost an estimated $75 billion a year when fully implemented, would be paid for. During his campaign, Obama talked about letting tax cuts expire for people making more than $250,000 a year and using that money for healthcare. But the economic crisis has forced the president to reconsider ending the tax cuts.

Cost is just one obstacle to Obama’s plan. Experts say the list also includes health insurers, pharmaceutical and medical product companies, doctors, congressional Republicans, an agenda full of other pressing problems, and change.

“It’s very difficult for a multitrillion-dollar industry to see the ground shift beneath it. It’s the known versus the unknown,” Davis says. “But I don’t see the economy as an obstacle. If anything, it increases the chance that healthcare will be addressed, because more people are being affected by problems in the system. The main thing that’s driving all of this is a feeling that it’s time.” TH

Lisa M. Ryan is a freelance writer based in New Jersey.

Additional Reading

To stay up to date on potential healthcare system changes, hospitalists should consider reading:

  • SHM’s Legislative Action Center:
  • The Obama-Biden healthcare plan, which can be found at
  • Critical: What We Can Do About the Health-Care Crisis, by Tom Daschle and Jeanne Lambrew (St. Martin’s Press, 2008).
  • CQ HealthBeat News, a healthcare policy Web site and e-newsletter, products_cqhealth beatnews.html.
  •, a one-stop shop for information about money and medical policies.
  • The Wall Street Journal’s Health and Washington Wire blogs, http://

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