Questions Over How to Pay for Health Reform

How is the government going to pay the upfront 10-year costs of health-care reform (a.k.a. health-insurance reform)? Well, despite months of hearings, committee markups, and backstage negotiating, the White House and Hill Democrats are still making up the answer as they go along. That's my conclusion based on what I was told─and not told─during and after a White House background briefing before the president's address to Congress last week. As outlined, Barack Obama's preferred compromise plan would cost $900 billion over 10 years. At the briefing, I and a group of other reporters and columnists were told that $600 billion of that cost would be recouped through savings in the administration and the medical practices of Medicare, Medicaid, and other existing (and presumably very wasteful and poorly designed) programs. Another $200 billion, we were told, would come from proceeds of a new "fee" on high-end "Cadillac" health-care plans.

But what about the other $100 billion? I asked, and was told I'd get an answer before the end of the briefing. Then I was told that I would an answer that night. I'm still asking, and have never gotten an answer. The reason, I think, is that the White House and various power centers in the Senate can't agree on where that other money ought to come from. One version I hear is that there will be other fees and taxes on other parts of the health-care industry.         

Still, if that rather large element is missing, it makes you wonder how close to an agreement─even with the Senate, not to mention the whole Congress─Obama really is. And it is significant that you haven't heard much talk about raising general income taxes on the rich by cutting their across-the-board basic deductions. Why? Because the Obama White House is withholding that one─it raises a lot of money─for a big deficit-cutting push later, perhaps next year.