You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

Show Me the Money

How do you pay for health care reform? This has always been the big challenge in crafting legislation. And it still is, as I write in my latest column with Kaiser Health News.

There's widespread agreement--at least among Democrats and Olympia Snowe, the lone Republican working with them--that the bill coming before the Sente Finance Committee isn't generous enough. Specifically, it needs bigger subsidies to help middle-class people afford insurance, in no small part to make possible a stronger guarantee against financial ruin. But there's no similar agreement on how to pay for it.

In the column, I write about Senator Jay Rockefeller, a longtime advocate for health reform who has--to his credit--made a big deal about the need for better protection in the Baucus bill. The problem, I noted, is that he's also among those who has criticized the bill's financing, which would indirectly tax private insurance plans with particularly generous benefits. That tax generates a lot of revenue and is a big reason why the Congressional Budget Office determined the Baucus bill will reduce costs. Paring it back, in other words, would create holes that needed filling.

In fairness to Rockefeller, he's got some ideas along those lines.

He's said many times he would be perfectly happy with the sort of financing they have in the House--i.e., a straight-up tax on the rich. And while such a scheme might have trouble in the Senate, Rockefeller is trying gamely to intorduce a more scaled-down version.

Among the amendments he's introduced for this week's Finance Committee hearings is a proposal to cap the deductability of charitable contributions at 35 percent--which would, in effect, reduce the deductability of contributions that very, very wealthy people make to charities. It seems to be a version of what President Obama proposed at the beginning of this process, an idea that still has a lot of merit even though many Senators rejected it out of hand.

Would they reject it again? Maybe not in scaled-back form, which might be enough. In the end, the most likely solution to the funding problem is some sort of combination strategy--a tax that hits expensive health benefits, a tax that hits the wealthy, and, maybe, some sort of tax sugary drinks or tobacco. The new Rockefeller proposal, according to Capitol Hill sources familiar with it, will probably raise about $90 to $100 billion--which is a decent chunk of change and could pay for a lot of new subsidies.

Of course, if Rockefeller also wants to reduce the tax on expensive benefits--or carve out exemptions for certain classes of workers--he and his colleagues will have to find even more money if they want to make up the difference. This idea helps, but it probably won't be enough.