U.S. President Barack Obama addresses a town-hall meeting on health care at Shaker Heights High School in Shaker Heights, Ohio, outside Cleveland
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2. Raising Revenue
All this makes the $1 trillion, 10-year price tag of health reform very tricky. A good two-thirds of the bill is already paid for: $237 billion would come from fines on employers and individuals who don't comply with new rules to provide or buy health insurance; $525 billion would come from reductions in Medicare payments to private insurers and money ponied up by drug companies (as touted by Obama in a high-profile White House event); and corporate- and foreign-tax changes totaling $37.2 billion.
Still, Democrats have said they won't pass anything that isn't fully paid for, and finding the money to plug an estimated $200 billion–to–$320 billion shortfall has been particularly tough. Obama's original proposal to raise the tax deduction for charitable giving by the nation's highest earners seemed dead on arrival, while the House idea of taxing the rich directly has run into resistance from conservative Democrats known as Blue Dogs. One proposal that has gained traction in the past week is to tax pricey, so-called Cadillac health-insurance plans, either directly or by taxing the insurer who provides them. The plans given to many Wall Street and Fortune 500 executives, for example, are worth about $40,000 a year. But even if the threshold could be set at such a level that it doesn't apply to many union insurance plans, which in some states are worth upwards of $20,000 a year, that approach is expected to raise no more than one-third of what is needed.
Other revenue-raising proposals include prohibiting the use of Flexible Spending Account money — tax-free funds withheld by individuals to pay for certain medical expenses — for over-the-counter drugs; imposing taxes on alcohol, sodas and other unhealthy beverages; rescinding the nonprofit status of hospitals that act like for-profit companies and no longer offer charity care; and deriving $100 billion from a windfall tax on insurers based on their U.S. market share. But many of these ideas are controversial and face significant opposition from members and Senators representing areas where local companies or hospitals might be adversely impacted.
3. Coverage Questions
Hard to believe, but money is actually only half the problem. The flip side of cutting costs is adding coverage for the nearly 50 million uninsured Americans. To that end, both the House and Senate HELP bills include a public plan that would compete with existing private plans — a highly controversial idea that Republicans say is tantamount to the socialization of health care, but which many Democrats (including Obama) say is essential for any overhaul of the system. The Senate Finance Committee's bill takes a middle-of-the-road approach, including a co-op plan, essentially a nonprofit version of a government plan that some critics say couldn't possibly compete effectively the way a public option could. The legislation includes provisions for a public plan, but such an approach would be triggered only if the co-op plan doesn't prove to work in certain states or locales — a backup model based on President George W. Bush's Medicare Prescription Drug Plan. Many wonder if that will garner enough votes in the Senate, since it will most likely lose votes from both ends of the spectrum.
There are other thorny issues. The House, for example, envisions giving insurance to about 10 million currently uninsured by broadening the guidelines of Medicaid, the state/federal program for the poor. The problem is that many governors of already cash-strapped states are voicing their opposition to this proposal; while the current bill says Washington would foot the bill for these new Medicaid enrollees, states that are having a hard enough time as it is paying their share of the program are wary of what might happen several years from now. At the same time, Blue Dogs in the House are upset at some of the proposed cuts to Medicare insurers. They worry that these cuts will lead to a dangerous decrease in Medicare services in already underserved rural areas. This was the biggest sticking point in House negotiations over the weekend.