Health care reform will ultimately come down to one basic question:
Who should pay and how much?
Politicians would like to duck this question, of course, because the politics of requiring someone to pay more, especially if they are paying more so someone else can get care, are tough.
Realistically, the options come down to these:
-Require that employers provide coverage to their employees or pay a penalty
-Require that individuals buy coverage, if they are able to afford it
-Require that individuals contribute a share of the cost through higher premiums and cost-sharing, which could be income-based
-Pass the costs onto future taxpayers by borrowing the money and driving up the deficit.
It likely will end up being a combination of these options.
During the campaign, President-elect Obama proposed to pay for his health care proposal by repealing some of the Bush tax cuts for people with incomes above $250,000; to require "larger" employers to "pay or play"; and to mandate that parents buy coverage for their kids. Although he argued that his plan pays for itself this, this assumes cost savings from reforms, like prevention and health information technology, that may not add up in the end.
As controversial as the "who pays" issue will be, the current method of financing health care, which is largely through employee and employer contributions administered through direct contributions and deductions from wages, probably cannot be sustained.
Economist Uwe Reinhardt writes that rising health care costs will soon swamp the wages of many workers. He writes that for a family who today has an assumed gross wage base of $60,000, that gross wage might grow by 3 percent per year over the next decade, to $80,600 by 2017, while total family health spending might grow by, say, 8 percent per year over the same time frame, to $33,700 by 2017. For this worker, 41 percent of the family's gross wage base would be taken up by health care alone, before any deductions for taxes or fringe benefits.
"Before long the gross wage base earned by American households will become too small a donkey to carry the load of the family's spending on health care."
This, he says, will leave the country with only two unpalatable choices: require higher income workers to pay more, or have a two tiered system where the well off get a rich package of benefits and lower wage workers get only "bare-bones" health care.
Today's questions: How do you think that affordable coverage for all can be paid for? Should higher income persons be required to pay more?