LOS ANGELES AND WASHINGTON — When Barack Obama steps into the Oval Office in January, healthcare reform will join a list of priorities crowded with two wars, a ballooning budget deficit and an economy mired in one of the worst slowdowns since the Great Depression.
But the bleak environment may paradoxically spur the kind of costly, sweeping overhaul of the nation's healthcare system that has eluded policymakers in Washington for decades, many political strategists, industry leaders and economists say.
Hospitals and physicians are increasingly worried about the escalating burden of newly unemployed workers being thrown onto the rolls of the uninsured.
Liberal advocacy groups see the Treasury Department's $700-billion commitment to banks and other financial institutions bolstering the case for a similar investment to help sick Americans get medical care.
For The Record
Los Angeles Times Wednesday, November 19, 2008 Home Edition Main News Part A Page 2 National Desk 2 inches; 61 words Type of Material: Correction
Healthcare: An article in Tuesday's Section A about the prospects for healthcare reform in Washington said the Pharmaceutical Research and Manufacturers of America had launched an ad campaign opposing Barack Obama's proposal to allow the federal government to negotiate lower Medicare drug prices. The ad campaign urges affordable health insurance but does not oppose government negotiation of lower Medicare drug prices.
And businesses see new urgency in addressing the nation's healthcare crisis as they struggle to pay costs for medical benefits while sales plummet and profit margins shrivel.
When Senate Finance Committee Chairman Max Baucus (D-Mont.) last week announced an outline for universal health coverage, he was applauded by dozens of interest groups across the ideological spectrum.
"Healthcare reform is very much linked to the broader economic issues that the country is facing," said Todd Stottlemyer, president of the National Federation of Independent Business. "Our view is that there is the energy now to make this a top priority."
Fifteen years ago, the federation, which represents about 300,000 small businesses, helped fight the Clinton administration's proposed healthcare overhaul. Today, it is one of the leading champions of broad-based reform.
"I have never seen an effort like this," said Ron Pollack, who heads Families USA, a nonprofit consumer group promoting a healthcare overhaul.
Even the most sanguine observers concede it will be immensely difficult to reshape a healthcare sector that makes up 16% of the nation's economy and move tens of millions of uninsured Americans into the system.
Democrats generally agree on an approach that would allow most Americans to keep their current coverage while creating an exchange so people and businesses without coverage could link up with insurers.
Obama proposed such a plan on the campaign trail, and Baucus offered his own version last week.
Still unresolved are important details about the cost of a new system, provisions for increasing quality and a mechanism for compelling businesses and people to participate.
"People are unhappy with today's healthcare system," said Karen Davenport, director of health policy at the Center for American Progress, a liberal think tank with close ties to Obama. "But they are also nervous about letting go of what they have now."
Most observers expect conflicts between interest groups and policymakers as the debate heats up on Capitol Hill. Last week, the powerful Pharmaceutical Research and Manufacturers of America fired an early warning shot: an ad campaign opposing Obama's proposal to allow the federal government to negotiate lower Medicare drug prices.
Republican lawmakers are already expressing concerns about proposals that would drive the federal budget deeper into the red. By some estimates, extending coverage to the nation's uninsured could cost more than $100 billion a year.
"We have a huge financial problem in this country," said Joe Antos, a healthcare scholar at the conservative American Enterprise Institute, who called the idea that bold action would save money on healthcare "completely ludicrous."
"You have everybody gearing up and trying to make noise and saying, 'Don't forget us.' And health is right there with everybody else," he said. "They are trying to create political space next year for their issue, when there is going to be precious little political space to be had."
Obama has not indicated whether he will champion major healthcare legislation right away or if he will pursue a more incremental approach, as some lawmakers and analysts have counseled.
The president-elect and his Democratic allies on Capitol Hill have said immediate federal action to prop up the sagging economy will be their top priority.
But even before Obama takes office, business leaders are linking their fortunes to the fate of the healthcare debate.
"It's the single biggest cost pressure our members face," said John Castellani, president of the Business Roundtable. "This is coming to a tipping point." Castellani warned that failure to resolve the healthcare crisis would increasingly threaten major employers.
Healthcare providers are struggling to cover increasing costs with government and private insurance reimbursement schemes that are not keeping pace.
The economic slump has also made it more difficult for some hospitals to get lines of credit, even as more patients without insurance or other means of paying turn to emergency rooms for care.