Experts, lawmakers wonder if Obama can pay for his health reform push

President Obama and Democrats are scrambling to find a way to pay for the specifics that he laid out in his speech Wednesday night, and they are pushing for a trigger that would rein in spending if cost containment for health care reform isn't met.

NPR: "The president did vow that he wouldn't sign a bill that would add to the federal deficit. 'And to prove that I'm serious,' he said, 'there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize.' But he was a bit more vague about exactly what those cuts are. Most of the plan, Obama said, 'can be paid for by finding savings within the existing health care system — a system that is currently full of waste and abuse'" (Rovner, 9/10).

The Los Angeles Times reports that this type of budgetary trigger would force the government to make cuts if health care spending exceeded projections: "The idea is to apply it to Medicare's payments to doctors and others who provide services to the elderly. Reimbursing them accounts for a major chunk of federal healthcare spending, and readjusting the payment schedule could be relatively simple. Under Obama's proposal, providers who failed to make sufficient progress in controlling costs would see their Medicare payments reduced" (Oliphant, 9/11).

Kaiser Health News reports that the idea was originally floated by two economists, who said such a "fail-safe" could kick in as soon as 2015: "It could also include changing tax policy and strengthening a public plan — one of the more controversial elements of the reforms Obama supports — to pressure the insurance industry to change its costs. … What's unclear is just who will make these cuts, although some experts have suggested that the Medicare Payment Advisory Commission could make the cuts under new powers it may be given to reform payment structures as part of the health care overhaul" (Villegas, 9/10).

The New York Times: "But once in law, such automatic triggers have not proved effective as a way to reduce federal spending. In the past, Congress and the White House have simply overridden or ignored them. This time, advocates insist, would be different. … The beauty of a trigger, according to administration officials and its supporters, is two-fold: Initially it would help secure the budget office's fiscal blessing. Once in law, the trigger would never be pulled because big savings eventually would be realized" (Calmes, 9/10).

The Wall Street Journal on finding funding for reform: President Obama "singled out two areas to tap for funding. Most would come from squeezing money out of Medicare, particularly by cutting payments to private insurance companies that cover some of the elderly via so-called Medicare Advantage plans. The president also endorsed new fees for insurance companies on their most generous health plans. He stressed that most of the plan will be paid for by money already being spent on health care. But based on early estimates, those two items won't be enough, and earlier White House proposals weren't addressed in the speech" (Adamy, 9/11).

The Washington Post: "Obama did specify one policy change to help pay for reform, singling out the proposal of Sen. John F. Kerry (D-Mass.) to tax insurance companies on high-priced 'Cadillac' policies. Aides could not say at what level the tax would begin or how high it would be, but Pfeiffer noted that Obama has previously endorsed other financing ideas" (Connolly, 9/11).

The New York Times in a second story: "Senate staffers say their proposed fees on rich insurance plans would potentially generate more than $200 billion toward the cost of the legislation. … The logic of taxing high-end plans is that the existing federal tax-exemption for employer-provided health plans has long encouraged employers to pour money into health benefits rather than offer cash raises to workers. And that in turn promotes greater — and often unnecessary — spending on medical services. Or so goes the logic" (Herszenhorn, 9/11).

CBS News reports that other likely ways to pay for reform include penalizing business up to 8 percent of payroll for not offering insurance and not helping as many people pay for insurance through subsidies (Schlesinger, 9/10).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.