Presidential candidate Barack Obama announced his plans on Tuesday for sweeping reforms to the US health care system which he said overcharges patients, tolerates poor quality health care, rewards waste and inefficiency, favors disease treatment over disease prevention and leaves 45 million Americans uninsured.

Speaking at the University of Iowa on Tuesday, Senator Obama (D-Ill.) said health insurance premiums have skyrocketed at a rate of nearly 90% over the past six years, four times that of wage rises. He said the bulk of health care cost increases have been due to administrative charges, insurance company profits, excessive salaries and bonuses for industry CEOs, and the growing cost of prescription drugs.

“Every year, candidates offer up detailed health care plans only to see them crushed under the weight of Washington politics and drug and insurance industry lobbying,” said Senator Obama. “Well, this cannot be one of those years.”

Citing a raft of statistics, he said health care costs impose an onerous burden on US businesses and health consumers: over half of small businesses cannot afford to insure their workers; 11 million insured Americans spend more than a quarter of their income on health care; and over half of all personal bankruptcies are now caused by medical bills.

Senator Obama also said that the US spends “almost twice as much for health care per person than other industrialized nations, and too much of it has nothing to do with patient care”.

He vowed that if elected President he would enact a universal health care plan by the end of his first term in office. He believes there is now strong support for universal health care in the US, unlike when it was first proposed by the Clinton administration in the early 1990s, because the rising costs of health care have convinced many more businesses and individual states to back reform.

Under his strategy, he said the average family’s health insurance premiums would be reduced by as much as $2,500 per year. The plan would cover all essential medical services including preventive, maternity, disease management and mental health care, and no one would be excluded because of a preexisting condition or illness.

This would cost between $50-$65 billion per year. It would be funded by providing incentives for all but the smallest businesses to participate, and by allowing the Bush administration’s temporary tax cut for the wealthiest Americans to expire.

The Obama health care proposal is based on five principles:

1.         Reduce insurance premiums for businesses and workers by subsidizing “catastrophic cases” such as cancer and heart disease

2.         Focus the health care system on preventing costly, debilitating diseases

3.         Reduce the cost of health care by improving the quality of health care – (includes providing the public with information about preventable medical errors, nurse-to-patient ratios, and hospital-acquired infections)

4.         Save billions in waste and inefficiency by moving away from a paper-based medical records system to one based on the latest information technology – (to enable ready access to patient information such as prescriptions and allergies, prevent errors and substantially reduce time spent on paperwork)

5.         “Break the stranglehold” that a small group of drug and insurance companies have on the health care market – (includes making generic drugs more easily accessible and prosecuting monopolies in the insurance industry)

Senator Obama acknowledged that there would be initial resistance to any proposal for a universal health care system in US, especially from some pharmaceutical and insurance companies, yet he said such reform is critical and long overdue.

“We have reached a point in this country where the rising cost of health care has put too many families and businesses on a collision course with financial ruin and left too many without coverage at all – a course that Democrats and Republicans, small business owners and CEOs, have come to agree is not sustainable or acceptable any longer.”

By announcing the details of his strategy, Senator Obama has weighed in more forcefully into the debate over universal health care, which has been a cornerstone of the campaigns waged by his fellow Democratic presidential hopefuls, Senator Hillary Clinton (D-N.Y.) and former Senator John Edwards of North Carolina.