Health Care: Complicated Concepts and Fuzzy Math

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, 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 companiesthat 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!

This post originally appeared The Financial Decoder blog on CBS Jill Schlesinger is the Editor-at-Large for CBS Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.