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Obama's Harvard Health Plan

July 25, 2008

That an Obama presidency would save the average American family $2,500 on health-insurance premiums is one of the campaign’s chief talking points—but where did that number come from?

From three Harvard professors, as the New York Times explains. The number evidently comes from a policy memo written in May 2007 by Eckstein professor of economics David Cutler; Thier professor of medicine and professor of healthcare policy David Blumenthal; and Wiener professor of public policy Jeffrey Liebman.

Cutler, Blumenthal, and Liebman wrote that more than $200 billion a year in wasteful spending could be eliminated from the U.S. healthcare system through instituting a few big changes. According to the Times, the memo forecast savings of $77 billion through conversion to computerized medical records; $46 billion by “reducing administrative costs in the insurance industry”; and $81 billion by “improving prevention programs and chronic disease management.”

The Times author takes a skeptical tone, writing that the estimate is “based on numbers that are largely unknowable” and that “it is not completely clear what [Obama] is promising.” But the campaign’s economic-policy director is quoted as saying the campaign can achieve the savings by the end of Obama’s first term if he is elected.