The Power of A

Over the past 24 hours, a series of events has moved the question of how to pay for health care reform to the forefront of the debate.  The following timeline shows how this issue has become the biggest roadblock to comprehensive health care reform:

•   On June 15, the Congressional Budget Office (CBO) sent a letter to Senator Kennedy (D-MA) and the Health Education Labor and Pensions (HELP) Committee scoring their draft proposal as costing $1 trillion over 10 years but only covering an additional 16 million Americans.  This plan lacked firm language on a public plan or an employer mandate
•   On June 16, CBO also released a score of an unreleased Senate Finance Committee proposal, placing its cost at $1.5 trillion over ten years.  Committee Chair Max Baucus (D-MT) responded that the scored proposal was two weeks old.
•   CBO also told the committee that the president’s plans for expanding health coverage would add to the nation’s federal debt without offsets.  The letter states “without meaningful reforms, the substantial costs of many current proposals to expand federal subsidies for health insurance would be much more likely to worsen the long-run budget outlook than to improve it.”

With these updates, the Democratic leadership has been exploring new ways to pay for their health care plans.  CongressDaily obtained a document circulated by Ways and Means Committee Democrats with a series of proposals to pay for their legislation.  In addition to listing removing the tax-exemption for employers and increasing the tax on soda and alcohol, the document lists the following new ideas as “pay-fors”:

- Reducing deductions taken by pharmaceutical companies for prescription drug advertising expenses
- A 2 percent surtax on individuals earning more than $200,000 and households with $250,000 or more in adjusted gross income
- A 0.375% increase in the Medicare tax on both employers and employees, which will be controversial with small businesses
- Valued-Added Tax (VAT) on goods and services similar to a tax imposed by most European countries.

Interestingly, the limit on charitable tax deductions proposed by the president is not in the document, likely due to the resistance from members of the caucus.

Quick Hits

CBO Director says health care reform is a “hard slog” in USA Today… House Energy and Commerce Committee will release health care bill Thursday or Friday and “it will include some numbers”… The House Republican task force on health care releases its health care outline (details from ASAE to come)… Former U.S. Senate majority leaders Howard Baker, Tom Daschle, and Bob Dole release their bipartisan health care reform plan.