US healthcare reform

Listen to this article

00:00
00:00

This is an experimental feature. Give us your feedback. Thank you for your feedback.

What do you think?

Perhaps it is little surprise that, after failing to push through healthcare reform 15 years ago as first lady, Hillary Clinton sought less daunting challenges such as world peace. The Obama administration’s ever-shifting plans have something to offend almost every interest group aside from America’s 46m uninsured.

One anticipated proposal Mr Obama failed to make to a doctors’ organisation on Monday was capping malpractice judgments. Fixing the legal environment that compels doctors to order many unnecessary tests would, in theory, put a big dent in costs. In any event, doctors and hospitals fear even more the blunter instrument of pushing patients into a public insurance scheme and then slashing reimbursement levels. Drug companies also fear that tough price negotiations will hit profits and reduce incentives for innovation.

The biggest question mark remains how to pay for universal coverage. The most controversial proposal would tax employer-provided plans, Americans’ main form of private insurance. Their tax-free status costs the Treasury about $250bn a year. Aside from widespread opposition from the middle class and labour unions, this golden goose would soon fly away. The higher cost would lead many companies to drop private coverage and push workers into the newly created government plan.

If that plan resembles Medicare, the programme already covering the elderly and disabled, questions will multiply. It consumes 3.5 per cent of economic output and growing costs will leave its main trust fund unable to pay full benefits within eight years. Many doctors limit or forgo Medicare patients, exacerbating a shortage of general practitioners. Mr Obama is right to call healthcare costs a “ticking time bomb” but he will need to tread carefully. Damage the imperfect system enjoyed by today’s insured majority and the effort will blow up in his face.

To e-mail the Lex team confidentially click here
OR
To post public comments click here

The Lex column is now on Twitter. To receive our daily line-up and links to Lex notes via Twitter, click here

_________________________________________

Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.

Subscribe now

If you have questions or comments, please e-mail help@ft.com or call:

US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe and rest of the world: +44 (0)20 7775 6248

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.