President Barack Obama’s determination to reform health care this year has the White House confronting a familiar dilemma: Figuring out how to pay for it.
The Senate Finance Committee this week put forward a series of options, including taxing sugary soft drinks, alcoholic beverages, tobacco products, nonprofit hospitals, private employee insurance benefits and more to create new revenue sources for health care.
Reforming the system is expected to cost $1.2 trillion over 10 years. Obama so far has set aside half that amount in the federal budget. Raising taxes to pay the balance appears increasingly likely.
“I think the American people are willing to understand the facts,” said White House press secretary Robert Gibbs. “If we don’t get a handle on our health care spending, we’re never going to see appreciable dents in our deficit and ultimately the debt we accumulate.”
There is no clear consensus on the best way to reform the health care system. And none of the latest funding options is politically popular, on Capitol Hill or within the administration.
Obama last year campaigned against taxing private health benefits. A proposal by Sen. Ron Wyden, D-Ore., would tax employer-provided benefits to pay for reforming coverage. Wyden’s proposal is drawing intense opposition by union backers of Obama’s reform agenda.
One scenario under consideration would tax health benefits for workers with salaries over $200,000 a year. Another version would tax all employees whose benefits exceeded those provided to federal employees.
Kevin Schulman, director of the Health Sector Management program at the Fuqua School of Business at Duke University, said pouring more public dollars into the nation’s already pricey health care system was the wrong approach.
“We should think of ways to make the system more productive and accountable,” Schulman said. “We need to think long and hard about whether we want to put more money into that system.”
The president’s proposal to generate revenue by limiting tax deductions has little chance of clearing Congress, said Brian Reidl, a budget analyst at the Heritage Foundation.
“I am not really sure what they are going to do; there is no easy way for the president to pay for health care,” Reidl said. “There is a chance he could seek more tax increases, but I am not sure there is any political will for that.”
Taxing consumer items like alcohol, tobacco and sweetened beverages would be a tough sell in Congress, where those industries retain powerful lobbyists.
Obama’s three guiding principles for reform are bringing down the cost of health care, allowing consumers to choose their own plans and physicians, and making quality, affordable health care available to all.
The president last week emerged from a meeting with health industry officials with a promise in hand to slow the growth of spending by $2 trillion over the next decade. It was not clear how the goal would be achieved.
An estimated 46 million Americans lack health care coverage.
