Health Care: Complicated Concepts and Fuzzy Math

(MoneyWatch)  It's no wonder that Americans are struggling to understand health care reform: the stuff is complicated and dense. I learned my lesson on The Early Show this morning, when trying to succinctly describe who will pay for the plan.


I got off the air and was scolded for not providing viewers with a better means for understanding the issue at hand. As penance, I'm going to try to lay it out here.

First of all, there is no single health care reform plan--there are Senate and House subcommittee plans that must pass through their full chambers and then get merged into one bill that President Obama would sign. Because a unified bill does not yet exist, analysts and the public are forced to guess what the most likely feature of a combined bill might be. That's what makes morning show appearances so difficult.

Last night, President Obama said that health care reform would cost $900 billion over the next ten years, a reduction from the $1.04 trillion House plan, but more than the $611 billion Senate health committee one. Here are some of the likely ways to pay the tab:

• Reduce spending for Medicare and Medicaid, which is expected to save $400-500B over 10 years--fears abound that quality of care may suffer as a result.
• Tax the rich: House bill proposed 1-5.4% surtax on income starting at $350,000 for families and $280,000 for individuals; some lawmakers calling for higher threshold. Also under consideration is limitation of itemized deductions for wealthy.
• Penalize businesses that don't offer insurance: up to 8% of payroll (or flat $750/employee in Senate version). Exemptions for companies with payroll under $400,000 or fewer than 25 employees.
• Don't help as many people pay for insurance: The government was going to offer subsidies for families with low-middle incomes. Current bills allow up to 4X poverty level ($43,320 individual/$88,200 for family of 4), but final version could see that amount reduced to 3X.

The President said he wouldn't sign a plan that added a dime to the deficit. But the Congressional Budget Office said that health care reform would add $239 billion to the deficit over 10 years. Here are two other possible ways to make health care deficit neutral:

• Employ a "trigger" that would require the administration to produce more cuts if health care savings are not achieved.
• Impose a tax on health insurance companies that offer expensive plans (defined as costing more than $8,000 for an individual and $21,000 for families). This would encourage employers to buy cheaper plans, OR insurers might pass cost along to employees through higher premiums.

Not exactly a two-minute television segment, but hopefully a more thorough explanation!