Fact Check: The Truth Behind Obama's Health Care Plan

Fact or fiction? Decoding the president's prescription for American health care.

June 24, 2009, 6:45 PM

June 24, 2009— -- A fact check on President Obama's main messages of Wednesday night's health care forum at the White House reveal a president eager to make his case to the public -- but sometimes glossing over the thorny details of how to achieve reform.

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Read the full transcript here.

President Obama told the audience that

health care costs are increasing at a rate three times faster than wages in America. It's a line he has used regularly as he campaigns for the health care plan.

Families USA, a group that advocates for health care reform, found that health care is rising at a rate five times faster than wages in America in a report issued in October 2008.

Also in 2008, the Department of Labor found that benefits such as health care represent more than 30 percent of an employer's compensation costs.

And the Kaiser Family Foundation found that family health care costs increased by 78 percent between 2001 and 2008.

Georgetown University medical student Mary Vigil told President Obama she would have about $300,000 in debt when she graduated from medical school -- a staggering figure and part of the reason that physicians are forced to eye the bottom line as they treat their patients.

But Vigil, the first person in her family to attend college, has a much higher debt than the average graduating medical student, according to the American Medical Association.

The AMA reported that in 2007 the average debt carried by graduating medical school students was $139,000, less than half the debt Vigil will have.

While Vigil's debt may be larger than average, three quarters of graduating medical students have debt of more than $100,000, according to the AMA.

President Obama Talks Health Care

Obama used different language Wednesday night to argue that his health care plan won't force people off of their current health plans.

"If you are happy with your plan, and if you are happy with your doctor, we don't want you to have to change," the president said.

Then, he made a slightly different claim: "If you're happy with your plan and your doctor, you stick with it."

Last week, the president gave a speech in which he made a more sweeping guarantee: "If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period."

But -- as the president acknowledged at his news conference Tuesday -- that's not really a pledge he can promise to deliver on. Private companies are always free to choose different health plans for their employees, and that's not something Obama's plan would change.

"When I say if you have your plan and you like it, ... or you have a doctor and you like your doctor, that you don't have to change plans, what I'm saying is the government is not going to make you change plans under health reform," the president said Tuesday.

When Obama talked to Jane Sturm, whose mother received a pace maker six years ago at the age of 99, he said it's important for the government to work with doctors and hospitals to determine the best care possible, as a rule, for specific ailments.

Sturm said the doctor originally balked at giving her 99-year-old mother a pacemaker because it would cost Medicare $30,000. But Sturm argued the pacemaker saved the taxpayers money by keeping her mother out of the hospital for lengthy alternative therapy.

The president said it's this kind of cost weighing that health care reform should focus on.

"If we've got experts who are looking at this and they are advising doctors across the board that the pacemakers are saving money," he said.

Such studies, known as "comparative effectiveness" touch on an important issue, according to many Republicans, particularly Sen. Tom Coburn of Oklahoma, a practicing doctor. He sees a government hand in determining the best practices for health care leading to the rationing of care to what the government thinks is best and not what doctors want for their patients.

Coburn has tried to change a reform proposal being considered in the Senate Health Education Labor and Pensions Committee to ban such comparative effectiveness research. The issue snarled that bill in committee earlier this week.

Obama said that a public option for health care won't drive private insurers out of business -- that it will "keep private insurers honest."

Private insurers, he said, should be able to compete with "just one other option," as long as the public alternative is subjected to the same fees and regulations as private insurers.

"We're not talking about an unlevel playing field; we're talking about a level playing field," the president said.

But many of the president's Republican critics argue that a public plan by definition would present an unlevel playing field. The public entity wouldn't have to make a profit, and would be run by the same government bodies that regulate the industry.

"It's like putting an elephant in the room with some mice and saying, 'OK fellas, compete,'" Sen. Lamar Alexander, R-Tenn., said last month.

Health Care Challenges

Americans support health care reform, but they don't generally support higher taxes. So it was important when Obama said he could offer health care reform without adding to the deficit.

It will be a hard promise to deliver on. The price tag for health care reform, pegged at between $1.3 trillion and $1.6 trillion for several proposals on Capitol Hill, will need revenue to pay for it without adding to the deficit.

There is no consensus on how to pay for health care reform. Obama has said he wants to pay for reform by lowering the percentage of their tax returns the wealthy can deduct. Essentially, this would raise taxes on the rich.

But even many Democrats on Capitol Hill don't want to change those rules. It could have unintended consequences on donations to charities, the subject of many deductions for the wealthy.

Moderates and some conservatives want to pay for health care reform by taxing health care benefits. Look at it this way: An worker is paid two ways -- One, they get a salary, which is taxed. Two, they get benefits, which currently are not.

One way to pay for health care reform would be to tax those benefits. This would raise taxes on everybody who pays taxes and could raise more than enough money to pay for health care. Candidate Obama promised throughout 2008 not to raise taxes on anyone making less than $250,000 per year.

The sticky question comes when determining who should pay taxes on their health care benefits. Not everyone. One idea on Capitol Hill is to tax benefits for people whose benefits are worth 10 percent more than what federal workers get.

Another way to raise revenue would be to penalize companies that do not currently offer benefits. One riff on this idea would be to levy a sort of tax on companies whose employees qualify for Medicaid.

These issues have stalled members of the Senate Finance Committee, who have been wrangling for weeks in closed-door negotiations as they strive for a bipartisan formula to pay for reform.

When Charlie Gibson challenged Obama to reconcile his harsh criticism of taxing health care benefits during last year's presidential campaign with the current reality that he may have to sign a bill that does exactly that, Obama maintained that he did not like the idea, but would not rule it out.

During the campaign, part of Republican nominee John McCain's health care reform plan including taxing the value of the health care benefits employees receive from their employers. Candidate Obama issued one of his harshest criticisms of McCain for that plan.

"For the first time in American history, he wants to tax your health benefits," Obama said on the campaign trail last fall. "Apparently, Sen. McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too."

But the reality of reforming health care from the White House has changed that. Despite his campaign rhetoric, as president, Obama has refused to rule out a tax on money paid into a health plan, creating the appearance of a flip-flop on the issue.

Wednesday night, Obama argued that taxing benefits is still not his first choice as a way to pay for health care, but that some compromise might have to be reached in Congress.

"You went after him for suggesting that we tax that money," Gibson said to Obama.

"I continue to believe that it would be the wrong way to go for us to eliminate the deduction, or the exclusion, on healthcare benefits," Obama replied. "That essentially taxes current benefits."

But, he said, among the options being discussed in Congress to cap the exclusion of healthcare benefits so that so-called gold-plated plans might pay more in taxes, might have to be part of the conversation.

"There's going to have to be some compromise at the end of the day," Obama said.

ABC News' Kate Barrett contributed to this report.

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