Deficits, taxes dominate healthcare debate

President Obama’s top cabinet advocates for universal healthcare were grilled on Sunday over how to raise taxes, as well budget reports questioning whether leading healthcare proposals in Congress will lower healthcare spending, a key pillar of Obama’s sales pitch on his top priority.

A leading House and two Senate healthcare plans took a big hit last week when Congressional Budget Office Director Douglas Elmendorf testified that those plans each “significantly expands the federal responsibility for healthcare costs.”

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That testimony led to a wave of criticism that an eventual health care bill will only add to the already record deficit.

Appearing on CNN’s State of the Union and Fox News Sunday, Obama’s Budget Director, Peter Orszag, tried to defray those concerns and stressed that under a new CBO report issued Friday, a new universal healthcare will not add to the deficit.

“Look at the report that came out from the Congressional Budget Office on Friday night with regard to the House legislation; once you take into account just maintaining current payments for doctors under Medicare, that bill is deficit neutral,” Orszag said on Fox.

The Friday CBO report on the House bill noted: “The bill’s long-term reform of Medicare’s physician fee schedule to eliminate the potential 21 percent cut in fees, and put payments on a sustainable basis for the future, will cost about $245 billion.”

Despite that new expenditure, CBO was able to report the House bill as being deficit neutral because including the Medicare payment fixes in the bill would significantly raise the baseline – or starting point – for calculating new cost assumptions.

“Everyone anticipates that even absent health care reform, that would be taken care of,” Orszag said on CNN regarding Medicare payments to physicians. “If you take that off the table, in terms of new policy, the House bill is deficit-neutral.”

Orszag also said that Democratic plans do “not include some important things that we’d like to put in place with regard to the fiscal trajectory after the first decade, for example we have a proposal for an independent commission made up of doctors to help bring down costs over the long term.”

Appearing on Meet the Press, Obama’s Health and Human Services Secretary, Kathleen Sebelius also said that despite any initial budgetary potholes, the proposals are still works in progress and at the end of the day won’t add to government health care spending.

“I think we know now that more has to be done,” she said. “As I say, [Obama's] got a proposal on the table that he hopes Congress will take a serious look at," she said of the proposed commission of physicians.

“I think we need to take another step, and it’s probably the MedPAC [doctor commission] idea, making sure the independent group, a step away from Congress, is able to continue to watch that cost curve," she said.

On CNN, Orszag called the idea “a big game changer.”

Sebelius and Orszag also faced harsh questioning about what kind of tax increases Obama would tolerate to help pay for a health care bill that is expected to cost over $1 trillion.

The House bill, which has survived two of three committee markups, raises $544 billion through surtaxes on the wealthiest Americans to offset the cost of universal healthcare. Senate Finance Committee Chairman Max Baucus (D-Mont.) has objected to that idea, preferring a tax on healthcare benefits.

But Obama has indicated his preference for increased taxes on income.

Sebelius said the House plan to pay for health care is “very good news.”

“The Senate is working on some other idea, the President has put forward his ideas,” Sebelius said.

Taxes on heathcare benefits could “dismantle the private market,” Sebelius said Obama has argued, undercutting his goal of ensuring that people can keep their current plans.

“He’s reluctant to move in that direction,” she said.

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