Thursday, March 25, 2010

Step 2 for cost control

I have a column in today's Raleigh, N.C. News and Observer, that proposes a step 2 for addressing cost inflation in health care: capping or ending the tax exclusion of employer paid health insurance. An obvious way to motivate this policy is via momentum for such a proposal from the Deficit Reduction commission created by President Obama. I believe that all of the Republicans on the commission have supported this policy, and members Rep. Ryan and Sen. Coburn proposed total repeal of the exclusion as the primary financing mechanism for tax credits to finance private health insurance (that should sound familiar) as part of the Patients' Choice Act, of which they were co-sponsors. Sen. Richard Burr, my Senator is also a co-sponsor of the Patients' Choice Act.

And President Obama fought hard to maintain the tax on high cost insurance plans, a de facto capping of this exclusion (even as delayed by the reconciliation bill), at some political cost within the Democratic party. His main health policy advisors know this is an important step, and the Deficit Commission could help build momentum for this policy as a part of its overall work.

The new law signed by the President is a very good step 1. It expands coverage, and employs a kitchen sink approach of trying a variety of measures to slow cost inflation, most importantly an Independent Medicare Advisory Commission. However, step 2 (and 3 and 4 and so on) will be needed to get a handle on health care cost inflation.

In health policy terms, there is no single policy that will more clearly slow health care cost inflation than limiting or ending the tax exclusion. I have written a lot about this over the past 9 months, here and here and here and here. And while most people say that politicians will never summon the courage to actually get around to enacting hard policies necessary to slow health care cost inflation, I say those who most fundamentally aren't willing to do it are us, the patients.

But, we can change our minds. We need to.

1 comment:

  1. Ending the tax exclusion is a good step in the right direction for a step 2. Your faith in Obamacare to carry out step 1 borders on hilarity.
    Starting in 2014 it will cost 2.4 trillion the first 10 years.
    HHS says it will increase expenditures by more than $200 billion.
    CMS reports that the plan will cost more than if we had done nothing.
    What happens when the reduced payments of Medicare to physicians ends their participation?
    CBO estimates that the limited menu of government approved plans could end up costing the average American more than $12,000 a year.
    This thing is an unmitigated disaster.