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Responsible Revenues Are the Key to Lasting Health Reform

If business as usual prevails, vested interests will shoot down responsible sources of taxation and the general public will not be heard. But this is not the time for business as usual.
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Imagine it's the year 2020. The United States has had greatly expanded health coverage for more than a decade. Things were going quite well for a number of years, but now the costs are starting to outstrip federal revenues. When the health care legislation was enacted, special interests successfully opposed any number of funding sources. Taxes on carbonated drinks and saturated fats were enacted despite protests by the fizz and fry industries, but they weren't enough to keep pace with escalating health care costs.

Congress is now forced to look at ways to scale back benefits and to delay Medicare until people turn 68. Rush Limbaugh, who is frail but still able to fill the airwaves, harangues that the failure of socialized medicine was inevitable.

As we struggle today toward meaningful health care reform, it is hard to see past a divided Congress lobbied ceaselessly by the health care industry, corporations and tax break artists. In trying to maneuver our way around these obstacles, however, we cannot lose sight of one fact: getting health care right means figuring out how to pay for it -- adequately, fairly, and responsibly.

Because we are a very wealthy nation, paying for health care is certainly affordable. Consider this proposal from Citizens for Tax Justice: raise the Medicare tax for individuals with incomes exceeding $200,000 (or more than $250,000 for couples), and apply the tax to investment income as well as earnings. Why should income from work be taxed to pay for Medicare but investment income exempted? If you worry that retirees might be hurt by such a plan, so does Citizens for Tax Justice -- they suggest exempting the first $50,000 - $100,000 in investment income from the Medicare tax. Even with this generous exemption, the proposal would raise about $500 billion over 10 years. This is a good example of holding the wealthiest households accountable for sharing the cost of providing health care.

There are many other ways to raise revenues responsibly. President Obama has suggested hundreds of billions in fair revenues, including a reduction in the value of income tax deductions for the wealthiest households. Right now, if your income is $30,000, you're in the 15 percent tax bracket. That means a charitable contribution or mortgage interest payment of $100 reduces your taxes by $15. But if your income is $400,000, you're in the 35 percent bracket. Your hundred dollar deduction gets you $35. If the value of the upper income person's deduction were reduced to 28 percent, as the president proposed, it would generate $267 billion in revenue over 10 years. And the $400,000 household would still get close to double the value of deductions as those with $30,000 in income, dollar for dollar.

No responsible proposal would pay for health care reform solely through increased revenues -- we need savings too. Again, the Obama Administration has proposed saving hundreds of billions of dollars through such measures as reducing overgenerous payments to private Medicare providers, negotiating lower prices for prescription drugs and encouraging competition through the option of a strong public plan. But savings alone will not pay for the cost of comprehensive, affordable health care to cover at least 47 million uninsured and protect and improve the care of many millions more.

A few representatives from advocacy groups, including the Coalition on Human Needs, visited a Congressional office the other day to make the case for fair taxes to pay for health care. The staffer told them to keep doing what they were doing, but to be aware that they are badly outgunned. Recent news accounts confirm the large numbers of well-paid and well-connected lobbyists representing the health care industry and other businesses knocking on Capitol Hill doors.

The good news? Some in Congress are listening to what the public wants. And their constituents have made it clear that what they want is health reform. But when it comes to revenues, they are mostly hearing from a lot of special interests who would prefer not to pay.

This is starting to change. Hundreds of national, state, and local organizations from every state have signed a statement (PDF) and released reports calling upon Congress to fund investments for the common good through responsible and fair taxation. Individuals can join in this effort by sending a letter to their senators and representative. The letter points out: "For health care reform to work, the nation needs tax policies that will raise enough over time, collected fairly according to ability to pay, to sustain comprehensive reform without saddling future generations with burdensome levels of debt."

The future is calling out to us to ensure that health care reform not only works when it is enacted but will be a lasting achievement. If business as usual prevails in Washington, vested interests will shoot down responsible sources of taxation and the general public will not be heard. But this is not the time for business as usual. Even a few constituents telling Congress that sustainable health reform requires fair and adequate revenues will send a powerful message of change. If this is the change you want, send that letter.

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