The Five Big Health-Care Dilemmas

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Arithmetic aside, the idea of taxing employer-provided health insurance as income has plenty of merit. The current system is regressive, with three-quarters of the tax break going to those who are in the top half of the income-distribution scale. And because these more privileged Americans are not buying health care with after-tax money, they have less incentive to use it carefully.

Taxing benefits has already run into opposition from unions that have given up wage gains in favor of health benefits in recent rounds of negotiations. There is also the inconvenient fact that Obama attacked John McCain in last year's election for proposing exactly such a tax on something workers believe they get for free. Still, Baucus says, "Not all those benefits should be tax-free. The bulk should be tax-free, but not all of them. That's part of the solution." (See the top 10 medical breakthroughs of 2008.)

3. Can we really cover everyone?
No issue did more to sink the Clinton health-care plan than its imposition of an employer mandate — a requirement that companies provide health insurance to their workers. And there's little evidence it will be any easier to include one this time around. "It will be a job killer, because employers who cannot afford it will reduce payroll and not hire new workers," warns Bruce Josten of the U.S. Chamber of Commerce. What business would prefer to see — and what Obama rejected during his presidential campaign — is an individual mandate requiring everyone who doesn't get health coverage at work to go out and buy it, just as car owners have to carry automobile insurance. But that means the Federal Government would have to subsidize people who couldn't afford it themselves, upping the health-care-reform price tag considerably. Obama says he can support an individual mandate only if it has a "hardship waiver to exempt Americans who cannot afford it," and he also says small businesses face a "number of special challenges in affording health benefits and should be exempted."

Without one mandate or the other, or a combination of the two, it will be impossible to get truly universal coverage. Some people — maybe a lot of them — are going to fall through the cracks. More pessimistic veterans of previous battles over health-care reform predict privately that even if a bill passes this year, more than half the nation's uninsured could remain that way.

4. What will be covered?
For universal coverage to have any meaning, there will have to be a minimum set of guaranteed services. But what does that mean? Does it include preventive care? How about mental-health care? Abortion services? These are the kinds of decisions that will determine how expensive health-care reform will be for consumers, business and government. And what goes into the basic benefits package is a political minefield — which is why many health-care experts say they don't want it left in the hands of Congress and lobbyists. "If you start fighting over whether chiropractors should be in the benefits package, this bill is dead," says MIT's Gruber.

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