[Editor's note: This weekend, we're thrilled to tell you that Rich Rodgers has joined our regular cast of contributors. He's a former aide to Portland City Commissioner Erik Sten and previously worked in the Oregon State Senate and at Metro.]
Before the Supremes take over the news, here's my attempt at a health care roundup.
Senator Max Baucus (D-MT) chairs the Senate Finance Committee, and so he is pretty darn powerful on the subject of health care reform. He released this in November 2008, essentially a set of principles to guide health care reform. Among other things, Baucus would require everyone to have health insurance, including the 50 million uninsured currently, and would provide some mechanisms to help people who cannot afford it.
A summary of President Obama's plan is here, which includes some specifics, as well as a set of principles. Key features include a stronger hand in bulk purchasing of prescription drugs, a requirement of insurance companies to cover pre-existing conditions, and a new public insurance plan to introduce competition in the marketplace.
Ron Wyden (D-OR) has the Healthy Americans Act, which includes a very specific approach for how to pay for universal health care coverage, and it gets rid of the employer-provided health care system that currently serves around 170 million people.
All of these plans would pay 100% of the premiums for people under the poverty line, with declining support up to 400% of the poverty line. Each of the plans contains measures to control costs and emphasize high quality, proactive care. There's a whole bunch of other important stuff in there, computers and things.
You might know that Senator Wyden is under fire for two reasons. First, his plan would remove the tax exemption for employer provided benefits, replacing it with a standard deduction at a fixed amount. This has the effect of making people pay taxes on their health care plans if they cost more than the deduction allows.
Secondly, Wyden is being pushed to agree to include a public plan among the new menu of offerings. President Obama and many others view a public plan as an essential way to keep insurance companies honest. As reported here at BlueOregon by Carla Axtman, Wyden's office has said that the Senator is open to a public option, provided the bill meets the Senator's test for real reform.
A lot of heated rhetoric is being thrown around, but perhaps we can read between the lines?
It's not absurd to postulate that what Wyden's office is saying is that the core funding mechanism of the Wyden plan has to be in the bill to get his support. This funding mechanism is a major accomplishment on its own. It gets us out of an incredibly messy and expensive employer-provided health care system while providing a bridge for funding from those employers in the form of 'the single largest pay raise that America has ever seen'. According to this report, employer contributions to health care coverage totaled $440 billion in 2005. Under Wyden's plan, those employer contributions would be converted into a raise for employees, who would then purchase insurance on their own.
It may be that Wyden's Republican co-sponsors don't like the public option. If, for example, a public option was created that had lower administrative costs and limited reimbursement rates and ended up costing 20-30% less, insurance companies could lose lots of business. Some doctors and hospitals will worry that a public plan will not pay them enough, just as Medicare and Medicaid reimbursements run at 60-80% of the private plans today. But surely nearly everyone agrees that we need some effective backstop to control health care costs from a system-wide perspective?
It would seem that there would be broad support for a synthesis of the Obama, Wyden & Baucus proposals. There doesn't appear to be anything mutually exclusive about the plans. It should be possible to devise a plan for universal coverage using a menu of plans that provide benefits as good or better than what Congress gets, with the Wyden financing mechanism that moves us away from the mess of employer-provided health care.
Last night, House leaders announced a proposal to pay for half of the costs of health reform over the next decade with a tax surcharge on the wealthiest Americans--1% for couples at $350K, 2% at $500K, and 3% for a $1 million or more. This would bring in around $550 billion over ten years. It's unclear how much support this proposal will have, but the idea of using the income tax to fund health care is the right one.
If revenue neutrality was the goal, a reduction or elimination of the 2.9% Medicare taxes paid by employers and employees would, in combination with the Wyden plan, help US businesses with international competition. Medicare revenues are currently around $300 billion a year, more than the proposed surcharge would generate, but there is a lot to be said for removing the costs of health care from the cost of doing business. This is especially true for manufacturing, which is very badly hurt right now. All together, for example, Ford estimates that health care costs add $1500 to a price of a car. The income tax is a better vehicle than payroll for raising health care revenues.
The components are there for a real revolution in health care: The Wyden funding mechanism, a public option with strong cost controls, and a shift in the costs of financing health care from payroll to the income tax. Universal health care with cost containment, plus a dramatically more competitive American economy. It's within reach.