I’ve been wanting to write (again) about the seemingly forgotten issue of cost as the major barrier to healthcare reform, i.e., how do we pay for it. Cost is the reason Carl McDonald of Oppenheimer—my regular guest on Healthcare Week in Review—thinks healthcare reform is still a long shot (see video). Luckily for me, I don’t have to spend this Friday writing about the cost issue because Jonathan Cohn of The New Republic already covered it pretty well in this post from January. Cohn writes:
“President Obama, in his budget outline, put forward two ideas for raising this money. One was a reduction in the income tax deductions upper-income Americans take for charitable contributions. The other was reforms to the health care system itself, including elimination of the excessive payments government makes to some private insurers participating in Medicare.
“But that only amounted to $634 billion, or around half (maybe less) of what it will take to get to full coverage….[Senate Finance Committee Chairman Max] Baucus has raised some alternatives. And, as I (among others) have written before, the best source of funds may be the existing exclusion of employer health benefits from personal income taxes….But changing the exclusion invites strong political opposition….
“We could, of course, simply increase taxes on personal income–or impose a value-added tax, as many European nations have. We could enact a cap-and-trade scheme, then channel some of the revenue into health care, or we could cut spending elsewhere. But these measures would be no easier to accomplish politically.
“And that’s the rub. At this point, financing health care reform isn’t much of a policy challenge. There are plenty of options, many of them both progressive and economically sound. But it’s a huge political challenge.”
Agreed.
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Is it chicken and egg? Is the industry saying “tell me how you will pay for it and I will work on reforms” or is the government saying “please agree to these reforms and then we will figure out how to pay”?