Overhaul May Boost Coverage, But What About Costs?

Extending insurance coverage to tens of millions of people who don't have it is one thing. Slowing the rise of health spending is another, and a lot harder task at that.

Critics of Democrats' plans to overhaul the nation's health system say the proposals to date skirt the fundamental cost problem of American health care.

"The bills are directionally correct, but they're not going far enough," George Halvorson, CEO of Kaiser Permanente, tells the Washington Post.

 

What's missing?

For starters, there's no tax on employer-sponsored health insurance. Skipping the politically unpopular but economically sensible tax of all insurance provided on the job leaves behind a powerful lever for reducing costs. White House Budget Director Peter Orszag tells the Post, the tax "is among the most important single things that could be done to constrain costs and improve quality."

House Republicans, who came out finally, with a legislative counterproposal on health, also argue for stronger action to contain malpractice costs, though the savings remain a subject for debate. House Republican leader John Boehner of Ohio said the bill would "lower costs and expand access at a price our nation can afford."

The New Republic's Jonathan Cohn says not to worry. The administration has plenty of provisions to control costs, including "a tax on high-end benefits, incentives for doctors to form integrated care groups, a commission with far-reaching powers to set Medicare reimbursement rates, and other reforms that should—if successful—actually make medical care less expensive."