The Ins and Outs of Obama's Health Plan

If Iraq had the starring role in Sunday night's Democratic debate, health care was the key supporting actor. Sen. Hillary Clinton, Sen. Barack Obama, former Sen. John Edwards, Gov. Bill Richardson, and Rep. Dennis Kucinich all spoke with passion about the need to reform a health insurance framework that, in Edwards's well-chosen words, "is completely dysfunctional."

Unfortunately, while we have growing clarity of purpose in Democratic discussions, we have not always had clarity of vision. Few candidates have specified how they would achieve affordable quality health care for all. (Sen. Clinton is among those whose health plan remains TBA.) And last week, when Obama released his long-awaited health plan, most of the health care commentariat appeared not relieved, but completely flummoxed about what he was up to.

Obama's speech presenting the plan didn't resolve the confusion either: Even more general than the policy blueprint released by the campaign, it simply magnified the uncertainty, fueling initial reports that were either misleading or just plain wrong.

However, after Sunday's debate and new statements from the campaign (including a posting from Harvard economist David Cutler, a key Obama adviser, at the Campaign for America's Future blog), the outlines of Obama's plan are clearer.

And it's much more sophisticated, bold, and far-reaching than initial reactions suggest.

Granted, I am not a detached observer. I have talked with Obama and his team, and I'm gratified that the proposal they adopted contains core elements of the proposal I've been advocating, "." Still, I have no affiliation with the Obama campaign, and I have talked with other candidates and officeholders, including, most notably, Edwards.

I also have differences with the Obama approach, and I'll present some in a moment. But first we should understand what his approach is, and how it would dramatically transform American health insurance for the better.

Obama's proposal is best understood as a new framework to provide automatic coverage for everyone who works (or lives in the family of a worker). In the Obama plan, if you work (or someone in your family works), you are entitled to good insurance, either from your employer or through a new public plan.

Notice what I said: a new public plan. Obama believes that a new Medicare-style public plan for those younger than 65 will deliver big savings and better coverage, and that this plan should be the default source of coverage for anyone whose employer doesn't provide good insurance. Indeed, he takes a major step beyond Edwards by envisioning a national Medicare-like plan (Edwards would make a plan similar to Medicare available on a regional basis) and by clearly stating that this plan will have generous, guaranteed benefits.

No less important, Obama, like Edwards, is insisting on shared responsibility. Employers have to either provide benefits at least as good as the new public plan or make a payroll-based contribution to the public plan, in which their workers will be automatically enrolled. This is a massive change. Today, employers have no obligation to sponsor or help fund their employees' health coverage. If Obama's plan is implemented, paying at least a minimal amount for coverage will become a basic requirement of operating a business in the United States.

The Obama plan also calls for a "National Insurance Exchange" that allows those automatically enrolled in the public plan to obtain private insurance instead. Some progressive activists have called this a sell-out to the private insurance industry, but they should take note of two features of Obama's plan.

First, the Obama camp is committed to making the public plan a highly affordable option and ensuring it has generous benefits. They will do this by leveraging the huge economies of scale and bargaining power of a national plan, as well as capitalizing on its capacity for quality improvement and for the provision of preventive and primary care that will keep people healthier.