Paying for Universal Health Coverage

For Congress and the administration to keep the promise of comprehensive health care reform, they will have to find the political will to pay for universal coverage and other investments that are needed right away but will not produce quick savings. The cost could reach $1.5 trillion over the next decade.

resident Obama, who had already proposed some $634 billion in new taxes and spending cuts, endorsed additional ideas last week. But Congressional Democrats will almost certainly need to come up with a lot more money — and that is likely to mean new taxes.

There are at least two easy ways to duck the problem should Congress choose to be imprudent. One way out would be to abandon the goal of universal coverage until after costs have been controlled. That would be unfair to the 46 million uninsured Americans, who often suffer health damage because they are reluctant to seek treatment until their plight becomes desperate.

Another way out would be to finance universal coverage by adding to the deficit, the path that George W. Bush took to pay for his tax cuts for the wealthy. With deficits already at high levels, Mr. Obama has reasonably insisted that health care reforms have to be “deficit neutral” over a 10-year period, meaning that any upfront costs must be fully paid for through cost reductions or new revenues by the end of a decade.

Mr. Obama’s budget experts have proposed short-term savings of more than $300 billion in the Medicare and Medicaid programs. They would eliminate unjustified subsidies given to private plans that participate in Medicare and reduce payments to home health care providers, drug companies and many hospitals.

Last week, Mr. Obama said he would work with the Senate to find $200 billion to $300 billion more in Medicare and Medicaid savings. He endorsed one way to ensure that cuts would actually be made — saying he was open to giving an obscure panel, the Medicare Payment Advisory Commission, enormous power to set Medicare payment rates. That would insulate Congress from lobbying by every group whose income might be reduced.

Mr. Obama said he was receptive to proposals that would require most Americans to take out health insurance and most employers, except for small businesses, to share the cost. Both would pump money into the system and help defray the costs of reform.

Virtually all experts agree that more revenues will be needed. Mr. Obama’s proposal to limit itemized deductions by wealthy Americans met with a cool reception but ought to remain on the table. Significant money could be raised by increasing taxes on sugared drinks, alcohol, tobacco and other products that are bad for one’s health. But more taxes will probably be needed.

Even the liberal-leaning Center on Budget and Policy Priorities suggested last week that Congress is unlikely to be able to pay for universal coverage unless it takes the unpopular step of limiting the tax exclusion for the value of the health insurance provided by an employer. It is the nation’s costliest tax subsidy, and some experts believe it encourages overuse of medical services.

Congress has heavy lifting ahead. It must foster reforms that are apt to reduce costs in the long-run (past the 10-year mark) and find a mix of short-term savings and tax increases to put us on course without driving up the deficit.

Source: http://www.nytimes.com/2009/06/07/opinion/07sun1.html