This week, President Barack Obama nominated Kansas Governor Kathleen Sebelius as Secretary of Health and Human Services.  He also appointed Nancy-Ann DeParle “health czar” (a/k/a chief of the White House office on health reform).  Making those selections, however, was the easy part of his overall task: to bring about consensus between Republicans and Democrats on how to tackle much-needed fundamental changes to the U.S. healthcare system.

Members of both parties agree that it is imperative that they figure out ways to reduce healthcare costs and allow the 45 million Americans who don’t currently have health insurance to obtain coverage.  However, most Democrats in Congress would prefer that the government be more actively involved in the effort, while Republicans tend to favor a less direct approach.

During his presidential campaign, Mr. Obama suggested that large businesses be required to offer coverage for their workers, while small businesses would get a tax credit if they offer coverage to theirs.  Left unspoken was the degree to which the government would be involved in establishing requirements for specific types of coverage.

Also during his campaign, Mr. Obama rejected the idea of requiring individuals to obtain their own insurance, similar to Massachusetts’ Mandatory Health Insurance program.  If the government were to do so, it would need to provide subsidies or establish a government-run insurance plan for those who can’t afford to pay the premiums themselves.  The President’s critics who decry the possibility of “socialized medicine” would undoubtedly have a field day with this concept.

The biggest problem will be how to pay for reform, whatever form it takes.  Mr. Obama proposed raising $634 billion over 10 years through tax increases and government spending cuts, but these sources will likely not be sufficient.  The full cost of the President’s health proposals may ultimately exceed $1 trillion over that period.