Paying for Health Care Reform

President Obama’s ambitious health care reform plans may have run into an immovable object – money.

In order to move forward on his plan the President has to find and/or reallocate something on the order of a trillion dollars or so.

One means of expanding health care coverage while containing health care costs is “efficiency” a fuzzy and hard to predict concept at best, especially while expanding insurance coverage.

Other potential means are been discussed by various constituencies, in no particular order:

Taxing the rich (also discussed to solve the deficit and other problems)

Tax some or all employer-paid health care benefits

Tax soda

Tax all sorts of “sin” products

Broaden the Medicare tax base

Cut payer reimbursements, possibly offset by insuring most Americans

Create new reimbursement systems for providers, perhaps “outcomes based”

Reduce or eliminate the tax sheltering benefits of Flex Savings Arrangements (FSAs)

Alter Health Savings Accounts (HSAs)

A national value added tax (VAT) or sales tax


Accomplishing this in the midst of a nasty and deep national recession may prove to be difficult if not impossible, but it appears Congress is going to move ahead and give it a try in the next few months.

Now or Never

as reported today by the Associated Press

President Obama, on a conference call from Air Force 1 with a coalition of supporters, warned that if health care reform is not accomplished this year it may never be.

(Ed: Never is a long time .......)

Obama is trying to enlist his political organization, Organzing for America, active and engaged in the political process.

Obama is leaving the details of health care reform to Congress, apparently having learned something from the 1993 mistakes of the Clinton administration, which did an end run on Congress.

Rationing or Evidence-Based?

Medicare has decided not to pay for virtual CT colonoscopies.

Medicare does cover regular invasive colonoscopies.

The x-ray procedure is a substitute for invasive colonoscopies. It is cheaper and non-invasive, but does involve x-ray radiation.

The invasive colonoscopy allows the surgeons to excise any pre-cancerous polyps found, saving a second procedure.

If the CT colonoscopy finds pre-cancerous growths, then a regular colo must be done to excise the polyps, thus causing two procedures instead of one.

Medicare does point out that the Medicare population, almost all of whom are 65 and over, may not be a good indicator for the under-65 population. Medicare is willing to look at future data.

These are the sorts of dilemmas health insurers must wrestle with. No decision will make everyone happy.

Rationing or evidenced-based medicine? Depends on your point of view.

Tax Discussion Update

May 12, 2009 - from the AP

Senators weigh tax hikes to pay for health care

By RICARDO ALONSO-ZALDIVAR, Associated Press Writer Ricardo Alonso-zaldivar, Associated Press Writer 1 hr 12 mins ago

WASHINGTON – Senators are considering limiting — but not eliminating — the tax-free status of employer-provided health benefits to help pay for President Barack Obama's plan to provide coverage to 50 million uninsured Americans.

Finance Committee Chairman Max Baucus, D-Mont., said Tuesday that there are no easy options. Senators began grappling with how to finance guaranteed coverage, a cornerstone of Obama's plan to overhaul the health care system. Independent experts put the costs at about $1.5 trillion over 10 years......

The Great Tax Debate

Employer-paid health insurance is usually a non-taxable benefit to the employee. IRC S106.

Over the years this “loophole” has popped up in various discussions of tax fairness and expanding health care coverage.

The Obama administration has floated various trial balloons, and Senator Baucus (D. Montana), an influential player in the health care reform debate, thinks the time for change may have come.

Rep. Charles Rangel (D. New York) a veteran representative and powerful chairman of the House Ways and Means Committee says simply, “no way.” All tax legislation originates in Ways and Means.

Candidate Obama criticized John McCain for proposing the taxation of health insurance benefits, but advisors to President Obama will not close the door, including new DHHS secretary Sebelius.

President Obama needs a major funding source to help close the deficit and to provide a $600M plus health care reserve fund.

Some labor unions fiercely defend the tax break, as middle class union members would be hit hard by a tax on health insurance benefits.

(Using real tax family returns and creating pro formas by adding policy amounts, the tax increase could range from about $1500 - $5000, depending on the structure of the tax, the possible applicability of FICA and Medicare taxes, and the taxation policies of state and local governments.)

In theory, employers would save some money because enhanced government programs would slow or eliminate “cost shifting” from the uninsured to the insured. However, employers might end up paying higher matching FICA taxes. Employees would be unlikely to see any of the savings (if any).

This could be a nasty debate, with some strange bedfellows.

Electronic Medical Records Held for Ransom

A drama is playing out in Virginia as computer hackers claim to have hacked a data base used to monitor patients for prescription drug abuse.

The hackers are demanding a $10 million ransom for the data, or the data goes on the internet.

Virginia health officials and the FBI believe the threat may be credible.

The future of EMR?