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Health Reform Ideas in the Primeval Soup
Unformatted Document Text:  18 pass through the federal government, thus creating substantially greater public sector expenditures. At least in part these would be offset by reduction in premiums paid and cost sharing at the point of service. Because all funds pass through the federal government under the social insurance model, the advocates have argued this provides administrative leverage in the reimbursement process. Such control of the flow of money may be an advantage in the negotiation with providers over reimbursement. For this reason the social insurance approach has often been called a single payer model. Descriptive words have meaning in a policy debate. This label probably does a great disservice to the idea because it reduces it to a payment mechanism. The real essence of the idea is universal coverage with the whole community bearing the risk. The term social insurance more aptly describes the idea. Even if total system costs remained constant, it is clear that a completely different financing system alters the relative contributions of various segments of the population. It is quite likely those with higher incomes would tend to subsidize lower income citizens to a greater extent than now. Higher income individuals pay a higher share of total system costs than they do now since the system would be financed at least in part by the income tax system. Income to run the system is likely to flow more from those with high incomes, and conversely those with lower income pay proportionately less. Despite generally dire predictions on the prospects for legislative enactment, those in the social insurance policy advocacy coalition continue to advocate this approach with some updating adjustments. Tax Credits Origins Political leaders from left, right, and center of the political spectrum for two generations have sought to use the tax code to achieve policy goals in a variety of fields. In the health arena the obvious and often cited example is the tax deductibility and sheltering from taxation of health insurance premiums paid by employers. Therefore, the long existence of tax credit policy ideas is no surprise. The early 1970s was a fertile time for the development of health policy ideas. Because it was widely believed at the time some type of legislation was going to pass, many players who had been in opposition to change decided to get in the game with a proposal. The AMA endorsed an approach with a minimal departure from the status quo. They supported the tax credit idea. In the 1970s this does not appear to have been a policy idea with either broad support or prospects for passage. The AMA may have regarded it as a plan whose major purpose was to give them a seat the table. However, in the 1974 debate on the issue in the Ways and Means Committee a tax incentive amendment pushed by AMA lobbyists gained twelve votes, including some Southern Democrats. It would be more than a decade later in the late 1980s when the tax credit approach began to be taken seriously. The first President Bush offered a tax credit proposal as his

Authors: Brasfield, James.
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pass through the federal government, thus creating substantially greater public sector
expenditures. At least in part these would be offset by reduction in premiums paid and
cost sharing at the point of service.
Because all funds pass through the federal government under the social insurance model,
the advocates have argued this provides administrative leverage in the reimbursement
process. Such control of the flow of money may be an advantage in the negotiation with
providers over reimbursement. For this reason the social insurance approach has often
been called a single payer model. Descriptive words have meaning in a policy debate.
This label probably does a great disservice to the idea because it reduces it to a payment
mechanism. The real essence of the idea is universal coverage with the whole community
bearing the risk. The term social insurance more aptly describes the idea.
Even if total system costs remained constant, it is clear that a completely different
financing system alters the relative contributions of various segments of the population. It
is quite likely those with higher incomes would tend to subsidize lower income citizens to
a greater extent than now. Higher income individuals pay a higher share of total system
costs than they do now since the system would be financed at least in part by the income
tax system. Income to run the system is likely to flow more from those with high
incomes, and conversely those with lower income pay proportionately less.
Despite generally dire predictions on the prospects for legislative enactment, those in the
social insurance policy advocacy coalition continue to advocate this approach with some
updating adjustments.
Tax Credits
Origins
Political leaders from left, right, and center of the political spectrum for two generations
have sought to use the tax code to achieve policy goals in a variety of fields. In the health
arena the obvious and often cited example is the tax deductibility and sheltering from
taxation of health insurance premiums paid by employers. Therefore, the long existence
of tax credit policy ideas is no surprise.
The early 1970s was a fertile time for the development of health policy ideas. Because it
was widely believed at the time some type of legislation was going to pass, many players
who had been in opposition to change decided to get in the game with a proposal. The
AMA endorsed an approach with a minimal departure from the status quo.
They supported the tax credit idea. In the 1970s this does not appear to have been a
policy idea with either broad support or prospects for passage. The AMA may have
regarded it as a plan whose major purpose was to give them a seat the table. However, in
the 1974 debate on the issue in the Ways and Means Committee a tax incentive
amendment pushed by AMA lobbyists gained twelve votes, including some Southern
Democrats.
It would be more than a decade later in the late 1980s when the tax credit approach began
to be taken seriously. The first President Bush offered a tax credit proposal as his


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