The Five Big Health-Care Dilemmas

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But even amid signs of a new consensus, there are at least five questions that must be settled before there can be meaningful reform:

1. Will there be a big, new government system?
No other proposal has generated as much controversy as the idea of giving everyone the option of being covered by a government-run plan similar to Medicare. To its opponents — and some of its more ardent supporters — the public plan looks like the first step toward a single-payer system like Canada's or Britain's. "Too many people are reacting like Pavlov's dog," says Senator Chris Dodd, the ranking Democrat who has been filling in on the Health Committee for the ailing Ted Kennedy. (Read "The Year in Medicine 2008: From A to Z.")

If it paid for health care the way the Medicare program does, a public plan could charge premiums 30% lower than those of comparable private plans. And if it were open to all, about 131 million people — including two-thirds of those who now have private insurance — would take that deal, according to estimates by the Lewin Group, a nonpartisan research firm.

A public plan of this magnitude could be a powerful force to contain costs. But it could also destroy the private insurance industry, while doctors and hospitals say its lower fees would drive them out of business. Their combined opposition to this single issue could sink the chances of any health-reform bill's passing. What's more, many conservatives point out that the government can't afford the Medicare program it already has, so why create a new one?

Who will win this battle? For now, it appears that lawmakers will ultimately go for a watered-down version of a public plan — one, for instance, that would have to operate like a private insurance company, sustaining itself with the premiums it brings in and paying doctors and hospitals higher reimbursements than Medicare does. Or a public plan might be created only as a fallback if insurance companies fail to make coverage affordable and accessible.

2. How can a nation already deeply in debt afford health-care reform too?
This question has not gotten nearly the amount of discussion that the public option has, but it's likely to be far more difficult to resolve. That's because under the budget rules, any plan that Congress passes will have to pay for itself within 11 years without adding to the deficit. Passing muster with government bean counters is not the same thing as writing sound health-care policy. While many health-care-reform moves promise big savings in the future for the larger economy, they will require huge up-front investments, with only a small part of the savings ever accruing to the Federal Government's bottom line.

So where will Congress find the money, especially for the government subsidies it would take to expand coverage to the 47 million or so Americans who now lack it? Lawmakers are reluctant to squeeze Medicare and Medicaid payments to hospitals and doctors much more than they already have. And while there's talk of new taxes on cigarettes and alcohol — even junk food and soda — they are not likely to bring in anything close to the $1.5 trillion that outside experts say it could cost over the next decade to bring about universal coverage.

The targets of the moment are the health-care benefits that employers now give their workers tax-free — an income loophole that costs the U.S. nearly $250 billion a year. "There's a lot of money there," says Massachusetts Institute of Technology economics professor Jonathan Gruber. "There's certainly enough there to get to universal coverage." Even taxing only those benefits that are more expensive and generous than average, he says, could raise $360 billion to $500 billion over 10 years.

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