Chapter[ Balanced Financing for Health Reform
Section[ Reinvest & Redirect
Reinvest Savings from Efficiency Reforms: The plan makes a series of changes to improve value and performance of America’s health care system, as well as to eliminate waste. The federal savings from these policies will be reinvested to strengthen and modernize the system to make health insurance
coverage more affordable for all Americans.
Phase-out Excessive Medicare Overpayments to HMOs and Other
Managed Care Plans (Based on CBO estimate of HR 3162 Act, 8/1/07): $10 billion
Dedicate Savings from Unnecessary Medicare and Medicaid Spending
(Includes savings from Medicare/Medicaid DSH payments in the context
of coverage for all and net of new investments in the safety net)
(Based on CBO Budget Options, 2/07; MedPAC): $7 billion
Constrain Prescription Drug Costs (e.g., competition savings from biogenerics
and removal of barriers to market access for generic drugs, empowering Medicare
to negotiate, reimportation, higher Medicaid brand rebates, use of e-prescribing
technology)(Based on CBO estimate of HR 3162, 8/1/07; Express Scripts, 2/07;
CBO Budget Options, 2/07; Gorman Health Group, 7/07): $4 billion
Modernize Health System (e.g., health information technology, comparative
effectiveness, chronic disease management) (Conservative estimate based on
RAND, 9/05; Business Roundtable, 6/07; other studies; assumes implemented in
public programs and Health Choices Menu): $35 billion
Total Federal Savings from Reducing Overpayments and New Efficiencies: $56 billion
Redirect Tax Breaks: New tax credits will make health insurance affordable for working families.
These tax credits will be financed by redirecting tax breaks and closing loopholes:
Discontinue Bush Tax Cuts for Top Two Income Tax Brackets
and Bush Increases in Tax Exemptions (PEP/Pease) for
Households over $250,000 (Calculations based on Tax Policy
Center, 2/19/04, 11/2/04; CBO Budget Options, 2/07): $52 billion
Cap Federal Income Tax Exclusion of Employer Contributions
for Health Benefits for Households over $250,000
(Based on Tax Policy Center, 2/6/07): $2 billion
Total Tax Savings from Limits on High-Income Tax Breaks: $54 billion
Total Savings / Reinvestment: $110 billion
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