Commentary

Health-Care Reform: Who Pays Is So Taboo


When considering proposals for extending health-care benefits to 47 million uninsured, keep in mind that there are only three ways to pay for universal coverage: Raise taxes, cut payments to medical providers, or ration care. Is there a politician willing to have an honest discussion with the public about these tough choices?

The Congressional Budget Office estimates that covering the uninsured could add anywhere from $1 trillion to $2 trillion to the federal budget over 10 years. On top of that, government economists expect Medicare to run out of money in 2017 if current spending trends continue. "When do the adults show up and say the part about needing to eat our vegetables?" asks Benjamin E. Sasse, Assistant Secretary of Health & Human Services from 2007 to 2009. "Every politician wants to solve the uninsured problem, but that's the ice cream. Being honest about the price is the spinach, and they're ducking."

The Senate Finance Committee did quietly release a 40-page document on May 18 laying out payment options for universal coverage. They range from taxing employee health insurance to fining companies that don't offer benefits to levying taxes on alcohol and soda. None will be an easy sell.

Corporate Clout

Economists tend to favor a tax on employee health-care benefits, which could bring in more than $200 billion a year (now these benefits are tax-exempt). But given the shaky economy, Congress is unlikely to take any action that might encourage companies to drop employee insurance or reduce a worker's take-home pay, says Robert J. Blendon, professor of health policy at Harvard University. Some 60% of insured Americans get coverage through their jobs, and that gives corporate employers tremendous sway over the debate. Besides, President Obama boxed himself in by rejecting the notion of taxing employee benefits when Senator John McCain (R-Ariz.) proposed it during the Presidential campaign.

How about the white coats? Hospitals and doctors account for 62% of the nation's health spending, but they have shown little interest in taking a hit to their income. Look what happened after the President announced a pact on May 11 with leaders from the insurance, pharmaceutical, medical device, and hospital industries to cut $2 trillion out of health-care costs over 10 years. The pact contained no firm details or enforcement measures, and still American Hospital Assn. President Richard Umbdenstock backpedaled just two days later. In a conference call with his members, Umbdenstock said he had made no hard promises.

Then there's rationing. Actually, there's not. Telling patients they can't have every treatment they want is not remotely on the table. There is some hope that patients may respond to financial incentives to choose healthier lifestyles, but—given that two-thirds of adults are overweight and half of all patients do not take their medications as prescribed—nobody is banking on it.

In policy circles there's some optimism that the political class knows it has to address the funding question soon. "In both the Administration and Congress there are a lot of people who understand the need, at a pretty sophisticated level, to bring down costs," says Douglas A. Hastings, a Washington health-care attorney with Epstein Becker & Green. Now all they need to do is educate the voters.

Arnst is a senior writer for BusinessWeek based in New York.

Arnst is a senior writer for BusinessWeek based in New York.

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