Health Care Financial Reform Proposal
Name
Institution
Health Care Financial Reform Proposal
Introduction
How to finance a health care reform is usually one of the key challenges among individuals, government and employers. The main issues that are of concern to the policy makers is the effects the health care financial reforms would have on the government federal budget and government spending. Congressional leaders and President Obama have stated that any plans for health reforms should for a 10 year period never add to the government budget deficits. This implies that the extra federal spending budget coming from the reforms would be completely offset by government savings like Medicaid and Medicare and new revenues. There have been suggestions that reforms beyond this ten year period could actually aid in the reduction of the budgeted deficit gradually with new exceeds in revenue and savings that would surpass the associated reform costs. Through this implication the likely sources for added reform costs are briefly explained, the considered types of financing measures and the likely questions that the proposed plan may generate and how they may be addressed.
Cost of reform
Under a comprehensive, universal coverage plan the largest component of new budgetary spending by far is the subsidies to the uninsured mainly the 65 percent that make up the 200 percent that are below the level of poverty to make them be able to afford their health coverage. These necessary subsidiaries could be obtained through expansion of public programs coverage like (CHIP) Children’s Health Insurance Program and Medicaid, direct financial assistance towards purchasing public or private insurance or offsetting cost of coverage through tax credits. These subsidies help reduce the cost of health care for families, mainly in the effect of transferring money from the individual to government the down side to this is that they add the federal budget cost. In addition to the subsidies making the costs of coverage affordable it paves ways for other initiatives in health reforms like through smaller costs to the government would eventually help make a broader health initiative like in better infrastructure example comparative effectiveness research or IT, Other subsidiaries of reforms like assistance for smaller business and administrative expenses. Recent suggestions from the office of congressional budget stated to the Senate Committee that the costs under the health reform subsidies are estimated at 100 billion dollars annually depending on the plan specifics. This means that the type of assistance provided would determine the subsidy level as stipulated by the ten year plan, like on how fast expenses grow and the programs beginning over time
The approaches to finance reforms
These extra governmental costs in financing mean that there somehow has to be an offset on the funds so as not to add any extra costs on the federal deficits, either through additional revenue or through saving in other government programs. The approaches to financing may fall into three main categories, mainly from sources of revenue that are outside the health care system, produce savings in specific changes in existing public programs like Medicaid and Medicare, new revenues found within the health care system.
If changes occurred in the current Medicaid and Medicare they would produce saving changes as projected by relatively the next ten year of their initial estimated costs which are commonly referred to as the baseline, then these costs would be effectively implemented in offsetting the health reforms added costs. Example, in the subsequent proposals and budget requests, and subsequently in the proposals called for by the president that stress for the health reform funds creation, that include savings in Medicaid and Medicare over a period of 10 years, which is in addition to the extra revenues. Reduction of private Medicare payments is also part of the saving proposal its main advantage to the plan is that it helps maintain the system at a bidding position, mainly the increases incorporated from the wide-productivity in the economy into payments to providers within the Medicare, for treating the uninsured subsidies in the hospitals get reduced to cover the incurred expansions, Medicare reduced readmission fees to hospitals, lowering the prices for drugs and drug manufacturers paying higher rebate prices for Medicaid.
Through these strategic saving strategies the changes would accrue primarily to the federal government even though there are instances when public program changes serve as examples for leverage in the private sectors additional savings. Example, the stimulus bill that was enacted recently that included penalties and incentives under Medicaid and Medicare that encouraged the adoption of technologies that would aid in the health information by the providers (U,S. Department of Health and Human Services,2010).
New sources of revenue from within the health care system which would include health system restructuring through related provisions that would adequately help increase the federal revenues while subsequently being used to offset the new costs. Example a play or pay requirement on employers necessitating the business to either pay a fee for the subsidies provided by the government or provide for their workers coverage which would help increase revenue and encourage cover the employer based bolstering. Another example would be on the tax treatment changes on the health insurance sponsorship by the employer which has been an idea that was recently considered for consideration. Currently the health insurance contributed by employers is not considered taxable, unlike the employees’ wages. This implies that a portion of health insurance costs are being subsidized by the government, since the profits or benefits offered are not taxed. There is an estimated 245 billion dollars cost per year incurred by the federal government through these tax exemptions
The tax treatment Changes on the health insurance would both raise incentives for changes in the health care system and raise reform changes revenues. Example (FEHBP) Federal Employee Health Benefit Program capping the exemptions which are estimated to raise in over a ten year period an estimate of 418.5 billion while the exemptions at FEHBP for capping only for higher employees income is expected to raise 161 billion dollars.
Without an open-ended tax subsidy employees and employers in addition might move towards plans that are less generous example those that have higher sharing costs that would probably end in their dependents and workers paying more from their pockets and using less health care. There are other alternative means in which the health care expenses are stabilized mainly through the tax system, which by specific medications often manage to generate more income. Example a proposal by the Senate Finance Committee could help eliminate or limit the ability of workers to pay for their insurance or health care by putting aside money that is regarded tax free through (FSAs) flexible spending accounts (U,S, department of Health and human services, CMS,2010).
New sources of revenue from outside the health care system which would if viewed from the perspective of the accounting of the federal budget; it would not matter if there are other current revenues that are related to the health care example, the proposed capping of deduction amounts for people with higher income and dedicating the estimated revenue of 267 billion dollars on the funds of the health care reform in a period over 10 years. In addition for a single tax payer the house tri-committee proposes a surcharge in the taxes gradually mainly of 1-5.4 percent on their excess income and other similarly tailored for families and single taxpayers to generate an estimated 540 billion dollars in tax revenue in a period over 10 years. There are suggestions that the health reform federal costs could be met through the value-added tax. Other suggestions in relation to tax have been on lifestyle which currently is outside the financing system of the current health care could encourage healthier behaviors example, Senate Finance Committee proposal that includes a uniform tax on new excise tax on sugar-sweetened drinks and alcohol content based beverages
Sustainability of the plan
There has been a suggestion on the health care reforms by policy makers that stress on the budgets being neutral that for the period over ten years is not added to the federal deficit. However an essential query is mainly on the balancing of the new costs against the gradual programs savings gradually and new revenues that exceed the initial 10-year period. Reviewing this issue incorporates a large uncertainty amount, since it is often hard to foresee economic and health indicators over a prolonged period of time, leaving alone the reform effects. However, several factors often affect the fiscal sustainability likelihood over an extended period, including for example the sponsored proposed Healthy Americans Act by Senators that ties the subsidiaries for modest and low income people to a package benefits whose value has grown within the economy per capita which, would help control subsidy cost growth. But in instances that the cost of health care has grown faster than the economy which is usually the case then the economy growth value coverage would subsequently erode the available protection to the gradual subsidies receivership by the people (Baker, J..J. et al, 2011).
The savings timing
A variety of steps have been discussed by Policymakers that are aimed at making the delivery of the health care system to be more efficient. Example it has been pointed out by analysts that health care amount used by people vary subsequently from each geographical location, without any measurable difference in outcome and quality. A number of ideas proposed to improve value in the health system and narrow these cost disparities that incorporate greater information’s adoption on technology, research to review which treatment and technologies are effective and which are not appropriate, better prevention and better management of chronic disease, and systems of payments that reward the providers for improved efficiency and improved quality. The health care delivery system changes may produce savings in insurance programs provided by the government health, but it would still take many years for these savings to be actually realized. An example of an effective financial plan would include the implementation of these proposed plans in their long term reforms however uncertain savings should not be ignored in the extended periods since implementing them would improve the federal fiscal plans over extended periods.
Conclusion
Any health reform plan is likely to be judged by people based on its implication for their family and them. With financing exceptions, many factors of reform would seem to benefit many people and this suggest there is a guarantee on the ease of accessing insurance regardless of subsidies that make coverage more accessible and pre-existing conditions within the health care. However, it is in the reforms that many costs come into effect, whether additional taxes that employers or people are liable to play, or public health insurance program savings that impact the beneficiaries, mainly the insurers, or providers of health care. It is with this in mind that any reform assessment would ultimately depend on a full picture of loses and benefits, that are largely based on its financing.
Reference
Baker, J..J., & Baker, R, W (2011).Health care Finance (3rd ed.).Sudbury, MA; Jones and Bartlett publishers, LLC
U,S, department of Health and human services, CMS (2010) Centers for Medicare and Medicaid Services ,prescribing (eRX) Incentives program.
Retrieved
http://.cms.gov/ErXIncentive/
U,S. Department of Health and Human Services, (2010)Health Information Technology. Health IT. hhs. gov. Information related to the American recovery and reinvestment act of 2009, Meaning full Use
Retrieved from
http;//healthit.hhs.gov/portal/server.pt?open=512&modecached=true&objiD=1233
Jermaine Byrant
Nicole Johnson
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