Feb. 25 (Bloomberg) -- President Barack Obama called surging health costs a drag on the economy, and said Congress needed to overhaul health care this year.

“The cost of our health care has weighed down our economy and the conscience of our nation long enough,” Obama told a joint session of the House and Senate in a speech yesterday.

Obama blamed medical expenses for causing bankruptcies, costing U.S. jobs and swelling the budget deficit. He didn’t specify the steps he’ll take to expand care or curb expenses, saying they’ll be included in the budget he releases tomorrow. The president also said he would hold a White House forum next week that would include medical providers, health-care businesses, workers and lawmakers from both parties.

“This was a solid commitment to changing health care, but the part on how you solve the health-care cost puzzle while covering everyone is still missing,” said Paul Keckley, director of the Deloitte Center for Health Solutions in Washington, D.C., in a telephone interview after the speech. “He’s got to start giving specifics.”

The president’s focus will help Congress pass legislation this year to get everyone covered by medical insurance, said Senator Max Baucus, chairman of the Finance Committee, which has jurisdiction over government health-care programs.

“Working together, we can remake America’s health system,” said Baucus in an e-mailed statement. In November, Baucus issued his own health proposal, including requiring that everyone have coverage and temporarily opening up Medicare to people as young as 55.

Not so Fast

Democrats won’t be able to deliver a health-care plan as fast as they say, said Thomas Miller, a health-policy adviser to Senator John McCain during the presidential campaign, in a telephone interview yesterday.

“It’s much easier to sketch out grand ambitions than give details,” said Miller, a health policy economist at the free- market American Enterprise Institute in Washington.

Obama said that to ensure long-term fiscal stability, Congress needed to figure out how to slow the growing costs of Medicare and Social Security, two programs for the elderly.

“Comprehensive health reform is the best way to strengthen Medicare for years to come,” he said.

Obama said previously that the U.S. faces continuing strain on the budget because the costs for programs such as Social Security, Medicare and Medicaid will keep rising as the U.S. population ages. Those three programs now consume about 40 percent of federal spending.

Growing Public Health Expenses

U.S. government spending on Medicare and Medicaid will reach $721 billion this year, or about 28 percent of all public and private health-care spending, according to a report yesterday by the Centers for Medicare and Medicaid Services, the agency in charge of the two programs.

Medicare, the program for the elderly and disabled, and Medicaid, the joint U.S.-state program for the poor, cover almost 100 million people, or about one in three Americans.

Obama said during the campaign that he can reduce the U.S. health-care bill while making sure everyone has affordable coverage. Some 46 million people, amounting to one American in seven, lack medical insurance, according to the Census Bureau. For those with coverage, the price rose an average of 5 percent last year, the Henry J. Kaiser Family Foundation in Menlo Park, California, reported in September.

‘Root Out Waste’

“We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier,” Obama said in his speech.

Obama has called for subsidies to help people afford coverage, and seeks to expand government health programs. Obama also has proposed creating a public plan to compete with private insurers in addition to steps, such as putting more health records in digital form, to help reduce costs.

Some campaign promises got a boost in the stimulus package, which Obama signed Feb. 17. The measure allocates $20 billion to encourage adoption of computerized records and gives $1 billion to research the comparative effectiveness of medical treatments. Both may save money later on, according to the Congressional Budget Office, an arm of Congress.

Obama has suggested that Medicare can reduce costs by doing more to promote better care, which can cut hospital bills by treating diseases early before they require costly operations and reducing the need for repeat procedures.

To contact the reporter on this story: Aliza Marcus in Washington at amarcus8@bloomberg.net

Last Updated: February 25, 2009 00:04 EST