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Stumping for Changes in Health Care

Stumping for Changes in Health Care
Dean Gerald C. Davison, left, and Henry Aaron, of the Brookings Institute, with USC Davis School faculty members Susan Enguidanos and Phoebe Liebig

The USC Davis School of Gerontology hosted Brookings Institute senior fellow Henry Aaron to discuss health care reform in the United States.

On hand for the fifth installment of the 2008-09 Andrus Gerontology Center/AARP Distinguished Lectures Series on March 11, Aaron predicted that if President Barack Obama’s economic stimulus plan leads to a quick recovery, then the president will have leverage to make much needed health care reform.

“The success of health reform is going to hinge on the ability of the president to maintain and enhance his credibility and political standing with the American people and with Congress,” said Aaron, the Bruce & Virginia MacLaury Senior Fellow in Economic Studies.

“If the economy does not turn around, the president will run into some very serious opposition in addressing health care.”

Obama’s budget set aside a $643 billion “reserve fund” over 10 years to pay for a health care overhaul. A sum, Aaron said, “Large enough to begin upgrades.”

But, he added, it is not nearly enough to tackle the most critical problems of the American health care system, which include lack of insurance that leaves 17 percent of the non-elderly population without coverage, mediocre quality of care – the U.S. health care system is currently ranked 38th by the World Health Organization – and excessively high costs.

“We cannot remake an industry worth $2.5 trillion, as large as the entire Gross Domestic Product of France, during one presidency,” he said.

Aaron outlined what he called an “evolutionary program” of health system reform that embraced both conservative and liberal principles.

Key components included comparative analysis to address best practices in the delivery and organization of care and links between in-patient and out-patient treatments.

A government-run clearinghouse, he said, would regulate the sale of health insurance to individuals and small groups. Through “increasingly intrusive regulation,” he said, this federal apparatus would serve to decrease overhead costs, manage plan types and prices, narrow the variety of premiums and make insurance more affordable.

A reinsurance program, he said, might also allow small or medium-sized business owners to provide health insurance for millions of workers by enabling them to spread their losses, lessening the impact of claims for high-cost illnesses.

He also called for a reduction of the tax incentives that encourage employers to pay health insurance for high earners. The savings, he advised, could instead be used to increase incentives for employers to provide insurance to lower-wage earners.

Finally, he advocated the creation of a separate trust fund that would enable the health care system to stay solvent and also finance subsidies to the elderly, disabled and low-income households.

“President Obama has the chance to be an agent for health reforms as far-reaching as any in American history,” Aaron said.

After the presentation, Caleb Finch, the ARCO/Keischnick Professor of Gerontology and Biological Science and University Professor, called the lecture “a masterful synthesis of the contradiction in economics and politics of health care, showing us that, pragmatically speaking, we need to develop a uniquely American solution to a uniquely American problem.”

Dean Gerald C. Davison added that although health care reform will take years to implement, “it is essential to both the health of the citizenry and the revival of the economy.”

Stumping for Changes in Health Care

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