WASHINGTON – In 2009, we are certain to see an effort to pass comprehensive reform legislation, and all of the players in the health care system (companies, universities, suppliers, economic developers, venture funders and the general public) will be affected.

White House Will Lead the Way

Health care reform is a top priority for Barack Obama. In his campaign for president, Senator Obama has been clear that health care is a top priority, presented the broad outlines of his plan to focus reform efforts where the current system is not working. Obama has promised health reform that will increase coverage, improve quality of care, decrease costs, and promote prevention efforts.

Coverage. Under Obama?s proposal, most individuals would continue to receive coverage through their employer. Individuals who are uninsured would have access to a new public plan?modeled on the current federal plan for federal workers (Federal Employees Health Benefits Plan or FEHBP) or to private coverage through a ?National Health Insurance Exchange.? This Exchange would also reform the private insurance market, incorporating a ban on excluding coverage due to health status. The plan includes a ?pay or play? mandate for employers to provide insurance or contribute a percentage of payroll toward the cost of the national plan. Small businesses would be exempt from this mandate and would receive tax benefits to help purchase coverage. Subsidies would be provided to low income persons. The plan includes a coverage mandate for all children, and Medicaid and SCHIP programs would be expanded.

Quality and Cost. Senator Obama?s proposal includes an array of health system changes to improve quality, reduce waste and drive down health care costs. Proposed system changes include the use of comparative effectiveness research, disease management and care coordination, transparent quality and cost and reform of medical malpractice policies. transparent quality and cost and reform of medical malpractice policies. Another series of proposals are aimed at reducing health care costs: investing in electronic health information technology; preventing Medicare waste and fraud; and increasing competition in the insurance and drug industry. Many elements of these reforms have support from Democrats and some Republicans. While all of these reforms have the potential to impact savings and coverage, some will likely require additional spending by the federal government.

Prevention. Obama?s plan would expand and reward worksite prevention strategies. He has also proposed to increase funding targeted to train the workforce, expand community based prevention initiatives, and increase support for state and local government public health programs.

House and Senate Democrats Will Deliberate the Reform Process

With the House and Senate in stronger Democratic hands in 2009, they will lead the way on health care reform. Democrats in Congress have said they are committed to initiating a comprehensive effort to reform our health care system, and work is underway now to lay the foundation for legislation next year. While Democratic members of Congress have refrained from public activity during the presidential campaign, many are post-election working behind the scenes to craft or re-craft their own proposals, bills and principles.

Reaching Consensus. While Democrats are sure to rally around health care reform, maneuvering through the diverging views within the party will be challenging. For example, some Democrats have argued for an individual mandate, while others believe in capping the tax exclusion for health benefits as a way to finance reform. Neither of these issues has consensus among Democrats. Champions of reform will have to negotiate many complex policy and political issues, such as:

Will states be allowed to continue their own reform efforts in the context of comprehensive reform at the federal level?

Can the interests of small and large businesses be balanced to maintain the support these groups have voiced for reform?

Will the Congressional Budget Office update its scoring model to credit savings found in private sector health plans (such as preventive benefits)?

By all accounts, Mr Obama?s experience in the Senate and ability to create a dialogue with all members of the Democratic caucus bodes well for a strong working relationship between a Democratic Congress and an Obama Administration. Senator Obama?s blueprint for reform threads the needle in a way that avoids certain pitfalls experienced in 1994:

Small businesses are exempt from his ?pay or play? mandate, and large businesses that provide coverage now could continue in much the same manner as today.

Obama?s plan provides a clear view of reform, yet omits much of the second level detail. That will ensure Congress plays a significant role in shaping the plan.

Medicare will be a big part of this debate. Many Democrats believe coverage through a public program is part of the solution for the uninsured. Obama?s plan would create a public program (similar to what members of Congress have through the FEHBP for the uninsured) and many leading Democrats have sponsored legislation that would allow individuals to ?buy-in? to Medicare. Congress could also turn to Medicare savings as a way to finance health reform. Senator Obama and many Democrats have called for reductions in payments for Medicare Advantage and for Medicare prescription drugs, among others. And certainly any of the proposals for Medicare savings debated by

Congress in 2007 and 2008 could be on the table, including proposals supported in the past by President Bush, Senator McCain and other Republicans.

Depending on Congress? appetite for deficit reduction, some members could turn to Medicare savings as a means to reduce the deficit, leaving fewer resources for reform legislation. Regardless, with the expiration of the Medicare ?physician fix? in September, Congress is likely to enact major Medicare policy changes in 2009.

Republicans will play a key role – even with large margins for Democrats, history tells us that most large-scale policy changes need support from both parties.

In general, Republicans share the goal of improving coverage and quality while reducing cost. Fundamental philosophical differences exist, however, between Republicans and Democrats on how best to achieve this. In the past, Republicans have resisted efforts to increase the federal government?s role in setting prices and making clinical decisions.

They have been very cautious about enacting federal mandates that would dictate coverage decisions to states or to plans. Instead, Republicans have focused their attention on ways to enhance individual responsibility and patient-centered decision-making.

Many Republicans are likely to oppose the Obama plan, believing employers would drop coverage, leading to a nationalized health care system. Concepts such as medical savings accounts have been advanced.

The dwindling number of moderate-leaning Republicans in both chambers could have an impact on health reform efforts. While Republicans would be expected to play a less active role in the initial year of an Obama Administration, they could be looked to on important issues such as health care in the out years. Interestingly, many of the more moderate, now-retired Senators expressed support for the broad concept of universal coverage — Senators such as John Chafee (RI), John Danforth (MO), Dave Durenberger (MN), Lincoln Chafee (RI), Bill Cohen (ME), Alan Simpson (WY) and John Warner (VA).

Now, there are significantly fewer moderate Republican Senators such as Senators Olympia Snowe (ME), Susan Collins (ME), and Arlen Specter (PA). As a result, the Senate has become even more polarized; that could