Some Thoughts on the Health Care Reform Bills

One of the primary objectives of the health care bill is health care cost control. One estimate of the cost of the measures in the bill by the CBO was around $1 trillion. This looks like cost increase and not cost control or at least not cost reduction. All of the statistics indicate that the percentage of GDP represented by health care costs is increasing precipitously. Another less talked about objective is to make the taxation for delivery of health care in the U.S. fairer. Control costs and spread the burden more fairly then are two objectives of the bill. Statistics show that the tax burden for middle income wage earners overall has gone up over the past decade and especially as a result of regressive taxes on everything from sales taxes to motor vehicle fees, while the percentage tax burden on big business has been reduced. While it may be argued that the “people” are the beneficiaries of personal health care and the burden for the cost of providing that care “should” be their responsibility, given the way our laws for business are structured and their place in society is engineered i.e. corporation law, if the cost of this bill is to be around $1 trillion and the taxation burden trend has been to increase the amount paid by middle income wage earners and lower the share of burden for corporations, and I expect this trend to continue or endure, I deem this not to be a more fair distribution of the burden of the cost. Nor does it appear to control costs unless one is willing to assume that if nothing is done the increase cost to the federal government for health care over the same period would exceed $1 trillion – (this is not a given) . Given that the bill is clearly an expansion of entitlements and additional people are going to be franchised into the health care system in a new way, it seems likely that costs will in fact rise as predicted by the CBO and if the trend with taxation continues, middle class taxpayers will shoulder an increased burden. What I would change in the bill, to properly address the goals of cost control and fair distribution of the burden, that would be an improvement, would be to include more and more serious investment (meaning on a scale commensurate with the size of the problem) to reduce the COST of healthcare. This means direct investments (tax incentives, subsidies, grants and scholarships) that yield efficiencies and lower costs through lower prices, i.e. availability, accessibility and increased competition for goods and services e.g. more doctors, nurses, medical schools and lower drug costs accomplished by increased direct government subsidy of biomedical and pharma research and development. These things would address the supply side. To affect cost from a demand side, the bill should have more targeted incentives and disincentives for behavior that improves public health morbidity rates and reduces societal healthcare costs. This would come in the form of subsidies and tax incentives for promoting physical fitness, healthy eating and education mandates for teaching “health” in public schools starting at K and continuing through high school. There also must be incentives for promoting healthy lifestyle in the workplace and disincentives for companies that ignore employee health concerns. To make the tax burden more fairly distributed, I would extend the mandate to provide coverage to all businesses that employ more than 5 people le regardless of size, but scale the contribution to account for small businesses more limited economic means.