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The Senate Finance Committee Peers Behind the Couch


The Senate Finance Committee just released its package (pdf) of financing options for comprehensive health care reform. None of them are painless. They all require raising taxes or cutting profits on one group to pay for health services for another group. But this is it. This is where health reform lives or dies. For all the talk of a public plan, all the talk of the individual mandate, the bottom line question in health care reform is simple enough: Can you pay for it?

There's little in the options packet that will surprise observers. What's more interesting is what's not in the packet. A tobacco tax, for instance. One staffer recently suggested that there's a good reason for this: We now tax tobacco so heavily, and have cut the ranks of smokers so dramatically, that there just isn't much new revenue you can find in a pack of cigarettes. Plus, we just raised taxes on them to fund the expansion in the Children's Health Insurance Plan. Putting more energy into tobacco taxes would be both excessive and, in all likelihood, ineffective.

The more important omission is any kind of tax that's not related to health care. There is no talk of a value-added tax, or a rise in the marginal tax rates. Some of PresidentBarack Obama's revenue proposals are included in what's essentially an appendix, but that's about it. At the end of the day, the health care system will pay for health care reform. The final price tag may prove significant, but it represents a shift in spending rather than a rise in spending.

(Photo credit: Senate Finance Committee web site.)

By Ezra Klein  |  May 19, 2009; 11:07 AM ET
Categories:  Health Economics , Health Reform  
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I have read others who suggest that the tax on health benefits will be designed to kick in for incomes above $160K.

I'm not in favor of that because 1) those incomes are already going to get hit with other taxes, and 2) it doesn't highlight to the bulk of the population how much health costs and thus dampen demand for more health benefits.

I'd rather see the proposal where benefits over some predetermined amount ($13K?) are added to income and taxed. Of course unions don't want this because their members usually don't pull in the highest incomes, but I think it shares the pain of coverage more equitably.

Posted by: RedBird27 | May 19, 2009 11:25 AM | Report abuse

I haven't read the pdf yet, but I do hope they included an option to tax High Fructrose Corn Syrup rather than a narrower target of Soda Pop.

Posted by: MyrtleParker | May 19, 2009 11:43 AM | Report abuse

Ugh, the Soda Pop tax would not extend to other uses of HFCS. Just to Soda Pop. I guess the agriculture lobby would protest too much.

Posted by: MyrtleParker | May 19, 2009 11:51 AM | Report abuse

Pay for it? Pay for what?

Put a bunch of money on the table upfront, and the grubbers will come running. Actually the money grubbers have already shown up at recent Finance committee meetings. Fill the trough too soon without a solid public plan to fund, and the private plan leaches will be first in line to slop.

Posted by: jc263field | May 19, 2009 12:45 PM | Report abuse

Ezra, I thought of a question yesterday I thought you might be able to answer. I have dental insurance, but much of my adult life have not. I've had it now for about three years but have only gone for a routine cleaning once in that time. (Bad, I know). I had a bridge fall out this weekend and really have to go now, so I finally made an appointment. I suspect that my reluctance to get routine maintenance is related to the fact that while I was uninsured I internalized getting routine care as very expensive and something to be postponed whenever possible. I further suspect my future health costs, especially dental care, might be greater because of this learned perception. What's the data on health care use by the currently insured who've spent a considerable amount of time uninsured?

Posted by: Hana1 | May 19, 2009 2:20 PM | Report abuse

One other serious omission in the proposed reforms is any reduction in capitation payments for Medicare Advantage plans.
Which strikes me as a fairly glaring omission. They've got reductions for medical education, disproportionate share payments, home health payments, physician payments and medical equipment -- but no reductions for health insurance plans.

AHIP's lobbyists strike again? Here's a topic for you -- how much money have AHIP members contributed to Finance Committe campaigns?

Posted by: flory | May 19, 2009 3:33 PM | Report abuse

Testing comments.

Posted by: Bob Greiner | May 20, 2009 8:48 AM | Report abuse

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