The voices of Tax Policy Center's researchers and staff
On Tuesday, I participated in a Health Care Financing Roundtable at the Senate Finance Committee. Instead of the usual hearing format, a baker’s dozen of experts sat at a long table and waited to field questions. We were invited to submit statements, but had no opportunity to deliver them.
Before we could start, a woman in the audience stood up to tell us that Florence Nightingale would support a single-payer system. Committee Chair Max Baucus (D-MT) said that he’d be happy to hear Florence Nightingale’s views on health reform some other time, but despite some stern gaveling, the woman persisted. As the Capitol Police escorted Florence out, someone else took up the cry. When he was removed, another woman recited an ode to national health insurance. The orchestrated protest went on for ten minutes or so. I was beginning to feel like an extra in a bad Tom Stoppard play.
Eventually, Chairman Baucus asked us what we thought about the tax exclusion for employer-sponsored health insurance (ESI). The economists on the panel heaped scorn on the ESI exclusion because it provides large subsidies for the highest-income taxpayers and almost none for those with modest incomes, probably contributes to the high cost of health insurance, and distorts the labor market. The ESI exclusion will cost the Treasury more than $3 trillion in tax revenues over the next decade. Repealing it could more than pay for the cost of health reform.
Notwithstanding the panelists’ consensus, Baucus advised us that repealing the exclusion was not going to happen. While he assured us he really did want to hear what we had to say on the subject, it was now time for other senators to speak.
How about limiting the exclusion? Senator Olympia Snowe (R-ME) said that a uniform cap would be unfair to high-cost-states like hers. Senator Blanche Lincoln (D-Ark) countered that a cap that varied by average costs would be unfair to low-cost states like hers. Ed Kleinbard, chief of staff at the Joint Committee on Taxation, said that caps that varied with health costs would be difficult to administer and could create inequities. And so the cap followed repeal into the dustbin of politically defective financing options.
Senator Jim Bunning (R-KY/bourbon) warned witness Bob Greenstein that his proposal for higher alcohol taxes would decimate the hospitality industry. Greenstein, head of the Center on Budget and Policy Priorities, also proposed an excise tax on highly sweetened soft drinks. But Chairman Baucus (sugar beets) and Ranking Member Charles Grassley (R-IA/corn syrup) were unswayed. And so it went. No politically palatable revenue-raiser would survive this hearing.
Could they pay for health reform by slowing the growth of medical costs? the senators wondered. Harvard prof Kate Baicker explained that expanding access to health care might raise costs, not reduce them. The American Enterprise Institute’s Joe Antos added that even if the $2 trillion in savings promised by health industry lobbyists this week materialized, government costs would be reduced by just a fraction of that amount.
Some senators trotted out research showing that Medicare patients in some low-cost states get better outcomes than those in high-cost areas. If every American could get health care for what it costs at the Mayo Clinic, the problem would be solved. One senator asked about medical expenses at the end of life. (If we could only make dying more affordable!) The senators seemed unanimous in hoping that cost savings would obviate the need to pay for health insurance expansions.
This magical thinking is disturbingly familiar. For years, supply-siders advocated huge, unaffordable tax cuts, claiming the cuts would boost the economy so much they would pay for themselves. Supply-side health economics assumes that reform will make that market so efficient it will pay for universal coverage and cut overall costs.
The theater of the absurd plays on.
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