By Bob Morgan, Jr.

The next stage of President Barack Obama's presidency is the battle over health care reform legislation, a major priority of the new Democratic administration.

The President enters the battle in reasonably good political shape. His approval rating is strong in most polls (66% among adults according to Gallup, 56% among likely voters according to Rasmussen) and he already has a string of legislative victories. He also scored at least a public relations victory by getting key players in the health industry to agree to $2 trillion in purported cost savings over the next 10 years, although many analysts are skeptical about these promises. And, with the defection of Pennsylvania senator Arlen Specter, the Democrats now have a potential filibuster-proof majority in the Senate, or they could adopt the controversial tact of adopting the measure by a bare majority as a part of the budget reconciliation process.

The outline of the Obama health proposal seems fairly clear, although Mr. Obama is giving Congressional Democrats considerable leeway in developing alternatives. As summarized in this week's Weekly Standard , employers are required either to offer health insurance or pay a fine, the proceeds of which would go to developing a new government health care option. Individuals without insurance could enroll in the public program or in a private plan that takes all applicants. Insurance premiums would be subsidized for those below certain income levels, likely about 300% of the poverty line.

The plan raises numerous issues. The first is cost. The existing government health care program, Medicare, is in a precarious financial situation, the country is mired in a recession with lower governmental receipts and the budget deficit, as estimated by the Congressional Budget Office, will already total $9.3 trillion dollars over the next 10 years, without the medical plan. Despite blandishments about cost savings, funding a heavily subsidized new plan would likely require a massive tax increase or a huge rise in indebtedness.

Second, as the Weekly Standard article points out, critics of the proposal fear that the establishment of the governmental insurance option will create inevitable momentum for a government single payer system. The new government option may well have the ability to impose price controls on medical services, something private insurers may not do. This could well have the effect of the government option seeming more desirable than the private coverage, both to beneficiaries and even to employers, who may decide that it is cheaper to drop existing coverage and simply pay the fine. The end result would be a European-style single payer system, with the attendant massive government rationing of health care.

While Republicans and numerous segments of the medical community managed to defeat Bill and Hillary Clinton's health proposals in 1993, it seems very likely that opponents will have to offer serious alternatives this time around.

One key approach is divorcing health care payments from employment by replacing the tax exclusions and deductions with a tax credit and letting employees in effect "shop around" for insurance. State insurance mandates should be eliminated (for example, New York's requirement that policies offer podiatric care) and consumers should be allowed to purchase insurance approved in any state. And consideration should be given to providing uninsured individuals with some form of a subsidized policy covering preventive care and catastrophic events.

Mr. Obama has considerable political momentum, but his health proposals raise considerable issues and problems. The hope is that Congress and the Administration will be able to work together to find more cost-effective, less bureaucratic solutions than those currently on offer from the White House.