The health care bill that emerged from the House this week probably represents the liberal end against which Congress will try to wrangle, amend and compromise its way to a passable health care plan in the next few months. The bill -- which provides coverage for about 97 percent of Americans at the cost of more than $1 trillion -- will be judged in Washington primarily on the basis of how we will pay for it. Our health care crisis, after all, is not just a health crisis, but a fiscal crisis, as health spending is projected to devour increasing government and personal spending. When DC bigwigs call for the plan to be "deficit-neutral" in ten years, it means they're looking for a way to set health care spending on a fiscally sustainable course and pay for the upfront changes within the next decade without further burdening the deficit.
How does this bill do that? It promises Medicare/Medicaid savings and forces almost all employers to cover their workers. But most importantly, it taxes the rich.
Wherever you fall on the ideological spectrum, this additional federal tax on the top one percent -- known as a surtax -- should not be terribly surprising, even if it is troubling. There are other options for paying for health care reform, but they all come with their particular political challenges. The argument for rationing has few friends in Congress facing 2010 reelections. We could repeal the tax break for employer-paid health insurance, but labor unions will scream bloody murder. We could reduce the charitable deduction rate, but that idea has already caused a stink. We could legislate all sorts of sin taxes on soda, and cigarettes, and calories, but those are the most regressive taxes in the bunch, and will likely face strong public opposition. We could also promise that a host of smart cost-saving innovations -- like electronic records and a national database of best practices to keep individual districts from falling back on expensive, unnecessary treatments -- but it's very hard to say exactly how much these programs would actually save, and we should probably do them anyway. So tactically, it's no surprise that the House bill comes with a hint of Robin Hood.