The toughest issue confronting lawmakers as they consider health care overhaul is how to pay for it. The measure introduced by Sen. Max Baucus, which is at the forefront of public discussion, comes with a 10-year price tag of $856 billion, or about $285 annually for every American. Other plans would cost even more.
Conveniently, like in those Geico ads featuring a stack of bills with eyeballs, there is a pile of money staring lawmakers in the face — some $15.5 trillion to be exact. That’s how much they would be spending on health care if they did nothing. Over the next 10 years, the federal government is on track to fork out about $12 trillion for programs like Medicare, Medicaid and coverage of federal employees. An additional $3.5 trillion will go for tax breaks to people who get insurance through employers.
Baucus’ measure, pending in the Senate Finance Committee, would pay for one-fourth of reform by taxing health insurance packages costing well above the national average of $13,375 a year for family coverage ($13,704 for workers at large companies). Like much about health care, this tax is easy to demonize. No one wants to pay more, but the tax is perhaps the best single way to raise revenue within the system.
A tax on high-end insurance policies would not only generate about $215 billion over 10 years, according to the Congressional Budget Office, it also would wring more efficiency out of health care by discouraging people from overusing the system.
At the very top end of health plans are those offered to corporate executives as part of their compensation. These often include concierge service and benefits like club memberships that are as much about lifestyle as health care. The plan for top Goldman Sachs executives, for example, costs more than $40,000, or about three times the average plan. The last thing taxpayers should be forced to do is subsidize the wealthy.
Further down the ladder are plans that don’t have all the bells and whistles but are extremely generous nevertheless. These have been particularly popular with labor unions. Many General Motors workers, for example, have no premiums, no co-pays, no deductibles and a $500 annual cap on out-of-network costs.
As annoying as deductibles and co-pays might be, they help control costs. For reasons ranging from their natural inclinations to fear of being sued, doctors often err on the side of excess treatment. Out-of-pocket costs serve as something of a check to that.
Critics of taxing such plans point out that some are more expensive because of regional costs, or a workforce that is older than average. This is true. But Baucus provides a considerable cushion. Initially, he set his threshold for the tax (which would be applied to the insurer) at $21,000 a year, about 57% above the average plan. Since then, he has raised the limit to $23,000 — which would hit less than 4% of covered workers. This suggests, if anything, that the cap is too high.
To extend insurance coverage to millions of people, the place to look for money is within the health care system itself — by restraining the growth of medical spending and by cutting health care tax breaks. In medical reform, as in physical therapy, there can’t be gain without some pain.
- insurancenewsnet.com -