A look at 2 states health insurance plans

A look at 2 states health insurance plans

By The Associated Press – 17 hours ago

Here's a look at the health insurance expansion efforts in Massachusetts and Tennessee.
___
Massachusetts:
POPULATION: 6.5 million.
LAW SIGNED: April 2006.
ADDITIONAL PEOPLE COVERED: 432,000.
COST TO STATE: $628 million in fiscal year 2008, about 42 percent of that reimbursed by the federal government.
HOW IT WORKS: Uninsured adults must pay tax penalties if the state says they can afford insurance. Employers with more than 10 workers must offer insurance or pay penalties of $295 per worker.
STRENGTHS: High standards for what qualifies as minimum health insurance coverage. Low-income residents now more likely to get preventive care. Employers still offer benefits, haven't been "crowded out" by the state-subsidized plan.
WEAKNESSES: Rising health care costs may force future cuts to benefits. One in five adults say they were told by a doctor's office no new patients being accepted.
ADVICE FOR CONGRESS: "Insurance is a grudge buy. Nobody goes down to the brokers on Saturday to see how fast this baby will go from zero to 60 and smell the new leather." — Jon Kingsdale, executive director, Commonwealth Health Insurance Connector Authority, Massachusetts.
___
Tennessee:
POPULATION: 6.2 million.
LAW SIGNED: June 2006.
ADDITIONAL PEOPLE COVERED: 19,000.
COST TO STATE: $10.9 million in fiscal year 2008. No federal dollars.
HOW IT WORKS: Plan targets workers at small businesses, the self-employed and recently unemployed adults. The cost of monthly premiums is shared by the state, the individual and employers.
STRENGTHS: No one is forced to participate. People who want coverage get the basics like doctor visits, prescriptions and lab tests at affordable rates.
WEAKNESSES: Covers only generic drugs, except for brand-name insulin. Annual limits on inpatient hospital visits leave people vulnerable to high bills when they most need help. Hospitals potentially lose money when people in plan hit annual maximums.
ADVICE FOR CONGRESS: "There's nothing wrong with crossing the river a stone at a time. You don't have to make a flying leap for the far bank." — Gov. Phil Bredesen of Tennessee.
Sources: Massachusetts, Tennessee, U.S. Census, Kaiser Family Foundation, Urban Institute, Health Affairs, AP interviews.

Copyright © 2009 The Associated Press. All rights reserved.

Progressive agrees to pay Mass. fine

May 26, 2009 02:25 PM Email| Comments (1)| Text size – +

Progressive Direct Insurance Co., which has long compared its rates to competitors, agreed to pay the state $120,000 to settle charges that it inflated the rates for rival companies, Massachusetts Attorney General Martha Coakley announced today.
Specifically, Coakley's office accused Ohio-based Progressive, the nation's fourth largest automobile insurer, of inaccurately comparing its six-month rates to the 12-month rates offered by other companies, such as Arbella Mutual, Liberty Mutual, and Commerce Insurance. Progressive inaccurately listed all the rates on its web site as six-month prices.
Progressive, which started offering policies in Massachusetts on May 1, 2008, stopped quoting rivals' rates on its web site and through its call center late last year, and notified Coakley's office about the mistake.
�For competition to truly work in Massachusetts, consumers must be able to easily access accurate information about rates from insurance companies,� Coakley said. �Progressive�s failure to provide correct comparison quotes harmed consumers and harmed Massachusetts� ability to introduce a competitive system in automobile insurance.�
In addition, Coakley's office said Progressive failed to follow its own official rate practices, filed with the state's Division of Insurance, by charging consumer to list additional drivers on their policies who already carried their own insurance. Progressive agreed to reimburse drivers who were improperly charged.
Coakley's office also complained that Progressive frequently failed to notify customers' former insurer when a customer switched auto insurance companies. That in turn led some insurers to cancel customers' policies for nonpayment - instead of just closing the accounts when customers switched to Progressive - potentially hurting customers' credit scores. Progressive agreed to help any customers who were affected.
Progressive spokeswoman Cristy Cote acknowledged the company mistakenly calculated the rates for some competitors when it began offering insurance in Massachusetts last May.
But the company noted that it shut down the service and notified state regulators and competitors after it discovered the errors. It also said it offered to pay the difference for customers who bought its policy when a competitor actually offered a lower rate, provided the customer wanted to switch to the other firm. The company said it also cooperated with Coakley's probe into the other issues.
"We understand that the attorney general�s role is to protect consumers and we wholeheartedly support that goal," Cote said in a written statement. "We are glad to put this matter behind us."
(By Todd Wallack, Globe staff)

No thanks to feds' health-care plantation

Commentary

By STAR PARKER
Syndicated columnist

Published: Sunday, May 24, 2009 at 4:01 a.m.
Last Modified: Sunday, May 24, 2009 at 2:16 a.m.

Four Republicans - senators Tom Coburn of Oklahoma and Richard Burr of North Carolina along with congressmen Paul Ryan of Wisconsin and Devin Nunes of California - have fired the first salvo in the great health-care reform debate.

They've introduced the Patients' Choice Act. Now, although we have a pretty good idea of what Democrats have in mind, we await crystallization of their ideas into legislation.

The difference of approach of the two parties on health care rides on the same basic question that divides the country and the parties on everything else. Are the problems we're facing today the result of too much government intervention in our economy and our lives or not enough?

The Patients' Choice Act reflects Republican thinking that health-care costs are out of control and, as result, not affordable for many, because of too much government. It allows Americans to take direct control of their health-care expenditures by giving families and individuals cash in the form of a tax credit ($5,700 and $2,300, respectively) to buy insurance and set up a Health Savings Account.

Democrats will take things in the opposite direction. Rather than controlling costs and access through more competition and consumer control, they see it coming from more government and regulation. Mandates on employers to provide insurance, fines if they don't, and using those funds to finance a new subsidized government plan.

And central to cost control are government bureaucrats defining what procedures may be used and determining what physicians will be compensated.

I'd suggest two considerations in assessing whether today's runaway costs and inefficiencies are the result of too much government or not enough.

First, we already have massive government involvement in health care. Practically half of all health care delivered today comes directly from government programs - mainly those begun in the 1960s. Medicare, Medicaid, and then later the State Children's Health Insurance Program (SCHIP).

Only 35 percent of health care is paid for through private insurance. Some 87 percent of it is paid for by third parties - either government or employers. In 1960, 60 percent of Americans' health-care expenditures were out of their own pocket. Today it is 12 percent.

So massive growth in health care spending and cost escalation correlates directly with increasing government involvement in this marketplace and decreasing consumer control over their own expenditures. Does this tell you something?

Second, to see government health care at work, we don't need to look at Canada or Great Britain or Cuba. Fifty nine million Americans already have it. It's called Medicaid.

Medicaid was passed in 1965 to cover health care for poor Americans. It is a pure entitlement. If you qualify, you are covered. Government, both federal and state, pays.

Bureaucrats define what is covered and how much physicians will be paid. And, as result, there is a huge gap between being covered and actually getting health care.

On average, 40 percent of physicians won't accept Medicaid patients. They are paid less than what it costs them to provide the care. In a survey done last year by Merritt Hawkins, a health-care manpower firm, 65 percent of physicians said reimbursements from Medicaid were less than their costs.

Merritt Hawkins did a survey this year of physicians of different specialties in 15 different cities on acceptance of Medicaid patients. In Washington, D.C., for example, which has the highest incidence of children living in poverty in the country, only 63 percent of surveyed physicians in family practice will accept Medicaid patients.

A federal district appeals court ruled just a few weeks ago, affecting Alabama, Florida and Georgia, that state Medicaid programs can't be forced to pay if they disagree with a doctor's decision regarding care. In this particular case, Medicaid officials disagreed with the amount of nursing care prescribed by a physician for a teenager who suffers seizures.

A study cited by Dr. Scott Gottlieb, a physician and health-care expert at the American Enterprise Institute, showed Medicaid patients to be 50 percent more likely to die after heart bypass surgery than patients with private coverage or Medicare.

Move the whole nation onto a new government health care plantation?

No thanks. I'll take freedom and personal responsibility.

Star Parker is an author and president of CURE, Coalition on Urban Renewal and Education (www.urbancure.org). She can be reached at parker@urbancure.org.

Health plans are not health insurance

May 24, 8:49 PM · 3 comments

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Recently there has been a proliferation of advertisements, both on television and on line, for health cards. These cards claim to offer access to high quality and affordable medical care, dental care, prescription drugs, vision and other health care services. The rates vary but may be as little as $20 a month for an individual to as high of $225 a month for a family. The two big selling points of these plans are that they are affordable and that you cannot be turned down.

Exactly what are you buying? Health cards can also be called discount medical programs or plans. This industry has grown so large that they have their own trade association, the Consumer Health Alliance. Here is the definition of a health card given by the Consumer Health Alliance. "Our member companies make health care products and services, including prescription drugs, dental, chiropractic, eye care, physician, hospital and laboratory services, available to millions of Americans by providing opportunities for consumers to directly purchase health care services and products at discounted rates." According to the Consumer Health Alliance more then 28 million consumers have purchased these plans for various companies.

The problem lies not in the concept of the programs but in the sale and execution. The most important fact you must know about these health cards is that they are NOT health insurance. Many consumers have failed to understand what they are buying and as a result have been saddled with hundreds and even thousands of dollars in medical bills they assumed would be covered by their health card.

These plans advertise that they are affiliated with networks of medical providers. That is generally true. Their affiliation may even be with some of the national networks that insurance companies use themselves. The plan representative tells you that if you use the services of a network provider, you will get a discount on the service similar to the discounts that insurance companies negotiate when providers join their networks.

One company, for instance, gives you an example. If you see a network provider, that doctor's normal charge for an office visit may be $120. But with your discount health card, you will only be charged $90 thus saving you $30 each time you visit the doctor, On the surface that may sound good, but remember, the consumer, and only the consumer, has to pay the provider $90 every time he visits that doctor.

What happens if we review a hospitalization rather than a doctor's visit. You need a hip replacement. According the American Academy of Orthopedic Surgeons, the average cost of a hip replacement in 2007 was $42,000. You see a doctor who is in the network used by your $29.95 a month health card. You expect to get a significant discount for the procedure because you used a network provider. Remember the doctor visit.? You got a $25% discount and only had to pay the doctor $90 of the $120 bill.

But now you have a bill from the hospital for your hip replacement for $42,000. It is also discounted at 25%. That means you owe the hospital $31,500. And you have to pay it. It is better than owing $42,000 of course, but $31,500 is still a pretty significant amount of money that the consumer has to pay out. Unfortunately, the companies that sell these cards focus your attention on the small services. But, if consumers are smart, they will focus on the big items, which is the real risk of not having health insurance.

For some people who don't qualify for medical insurance, discount cards may be the only option. Individual health insurance generally is medically underwritten which means if a person has a medical condition that the insurance company does not want to insure, they will be unable to get health insurance. Many states have what are called pool plans, which will insure persons with medical conditions, but as you can imagine, these plans are extremely expensive. Not all states have pool plans, but Connecicut does.

The real danger of these health cards is the aggressive methods used to sell them. Many of these plans are actually sold as Multi Level Marketing plans. The sales representatives do not have to be licensed insurance agents, because the plans are not insurance. Their interest is in adding people to their downline as that is how they make money. Learning the programs and carefully advising consumers as to what they are buying may not be the most important thing to these sales representatives.

If you are considering buying a health plan, be careful and ask questions. Understand first and foremost, that you are NOT buying insurance. Be wary of extravagant promises of discounts up to 60%. In our hip replacement example, for instance, a 60% discount would mean the service would only cost you $16,800. It is unlikely that a provider hospital would give you that kind of discount. Ask for specifics about hospitals, doctors and procedures. Ask if all the providers honor the advertised discounts. Sometimes doctors and other providers are not even aware they are listed as participants in these plans. Ask about hidden fees. Often there are administrative fees hidden in the fine print. Be especially careful if there are fees charged for each use of your card. These fees may eat up almost all of your discount.

Discount health cards are never a substitute for health insurance. Before you consider buying one, think about how you will use it. If your need is for less expensive services, such as routine doctor's visits, dental or vision discounts, they may be worth it. Remember, if you need an expensive procedure such as a hospitalization or surgery, you will be paying most of the bill yourself. No matter what the representative tells you or the advertisements imply, your card will never pay one single cent to any provider. The consumer will always be responsible for the amount of the charge less any discount that might be applied.

Consider your needs and the needs of your family. If you can afford it, buy real health insurance. Even a plan with a high deductible such as an HSA will be a better option because at some point after the deductible is met, the insurance will pay the balance of the bill. If you can't afford insurance or you cannot qualify because of medical problems, a health card may be useful. But before your buy, understand what it is and what it can really do for you.

Is Employer-Based Health Insurance Worth Saving?

May 22, 2009, 6:05 am

Is Employer-Based Health Insurance Worth Saving?

By Uwe E. Reinhardt

Uwe E. Reinhardt is an economics professor at Princeton.

The Takeaway With Uwe E. Reinhardt

Ask any group of health policy experts whether they would have put in place our employment-based health insurance system, had they had the luxury of designing our health system from scratch, the resounding answer most likely would be “No.” In fact, no other industrialized country has quite this arrangement. It is uniquely American in origin and in modus operandi.

Our employment-based system was not the product of a carefully designed health policy. It was a byproduct of evading wage controls during World War II.

At the time it was thought that, as the nation’s drafted military personnel risked their limbs and life on foreign battlefields at low, tightly controlled pay, those who stayed behind should have their wages controlled as well.

But with the wink of the eye with which Congress routinely puts loopholes into the tax laws or regulations it imposes, the wage controls imposed in World War II did not extend to fringe benefits. And thus, employer-paid fringe benefits, including employment-based health insurance, were born.

As was noted in last week’s post, Congress further encouraged the growth of employment-based health insurance by treating the employers’ contribution to their employees’ health insurance as a tax-deductible business expense. On the other hand, it was also not viewed as taxable compensation of the employee.

Remarkably, and quite unfairly, that tax preference was not granted to families forced to purchase health insurance on their own. They had to buy it with after-tax dollars.

From the perspective of employed Americans and their families, this model appears to have served them reasonably well. In opinion surveys, over 80 percent of the respondents typically declare themselves satisfied with that coverage. It can explain why Americans have grown so attached to that system and why so many politicians are keen to shore it up.

From the perspective of health policy experts, however, that approach has serious shortcomings.

First, it keeps opaque who actually pays for the health care used by employees.

Both employers and employees seem to believe that the “company” absorbs the cost of the employer’s contributions to the group health insurance premiums for their employees — typically 80 percent of the premium.

Employers believe that these costs must either be recovered through the prices of the goods or services they sell (i.e., passing along the rising costs of health care to their customers in the form of higher prices), or taken out of the return to the company’s owners. On that belief, American executives now complain pitiably that the high cost of American health care makes their enterprises uncompetitive in the global marketplace.

For their part, employees tend to view employer-paid health insurance as a gift, on top of their pay. Therefore they see little personal gain in attempts to control the cost of their care.

Most economists are persuaded by theory and evidence that, over the longer run, the contributions employers make toward the fringe benefits of their employees come out of the employees’ take-home pay. Economists think of employers as pickpockets, so to speak, who take a chunk of the employee’s total compensation and buy with it whatever fringe benefits they “give” their employees. That process blinds employees to the inroads that their health care makes into their families’ livelihood.

A second major shortcoming of employment-based health insurance is that it is only temporary. It is tied to a particular job in a particular company, and it is lost with that job. Nowhere else in the industrialized world does a family, already down on its luck over a job loss, also suffer the loss of its health insurance. It happens only in America, under employment-based insurance.

Finally, the group health-insurance premiums employers pay to private insurers are “experience rated” over that employer’s group of employees. This means that the group premium is based on the claims experience – that is, the health history — of just that small group of employees.

For small employers, it can mean that if serious illness befalls one or several employees in the group, it can drastically and unpredictably drive up the premium for every employee in the group. Not surprisingly, only 49 percent of employers with three to nine employees sponsored health insurance for their employees in 2008, as did only 62 percent of employers with three to 199 workers (Exhibit 10 here).

The objective of current health reform efforts should not be to abolish the employment-based system to which so many Americans feel attached, brittle and expensive as that system may be. Instead, the aim should be to develop a robust, parallel system of fully portable insurance that individuals or families can purchase on their own, in a properly regulated and organized market, with public subsidies where deemed necessary. As my earlier posts to this blog sought to explain, this can be done in a variety of ways.

The success or failure of the current efforts by President Obama and Congress to reform the American health system can be gauged by the degree to which that goal has been accomplished a year from now. If success in this regard serves to shrink the traditional employment-based insurance system, so be it.

Tax on Medical Benefits Gains Traction

Health-Care Overhaul Could Be Funded by Levy on Employer-Paid Insurance Premiums

By Lori Montgomery

Washington Post Staff Writer


Friday, May 22, 2009

A new tax on employer-provided health insurance is emerging as a likely
option to finance an overhaul of the nation's health-care system, key
Democrats say, despite opposition from organized labor and possibly the
Obama administration.


Critical details have yet to be resolved, including whether to tax
the benefits of all workers regardless of income and what portion of
their employer-paid insurance premiums to tax. But the idea won a
surprising degree of acceptance during a closed-door meeting of the
Senate Finance Committee this week, according to several people
present. And once-fierce opposition among House Democrats is softening
as lawmakers confront their limited options for raising the estimated
$1.2 trillion that will be needed to pay for reform over the next
decade.

"There's a strong sentiment that still exists in the House" against
taxing employer-provided benefits, said Rep. John B. Larson (D-Conn.),
a member of House leadership who sits on the tax-writing Ways and Means
Committee. "But we understand how important it is to get a package
through."

Implementing such a tax would create a tricky
political situation for President Obama, who last year spent millions
on campaign ads that harshly criticized a similar idea advanced by his
Republican opponent, Sen. John McCain of Arizona. But while continuing
to express opposition to the proposal, White House officials have
repeatedly stated that all financing options are on the table. And some
Democrats are already calculating how to explain a reversal.

That task may have been made easier this week when congressional Republicans
proposed using the tax to finance their own health-reform blueprint, lending the idea a bipartisan stamp of approval.

Excluding employer-provided benefits from taxation "is one of the
distortions in the health-care marketplace that needs to be fixed,"
said Rep. Paul D. Ryan (R-Wis.), one of the plan's authors. "It was put
in place in the mid-20th century when everyone had the same jobs for
most of their lives. And we don't live like that anymore."

According to U.S. Census data, 177 million Americans received health
insurance from their employers in 2007, the most recent year for which
data are available. Nearly two-thirds of people under 65 have at least
some of their insurance premiums paid by their own employer or that of
a family member.

Under current law, those benefits are not taxed as income, one of
the largest loopholes in the U.S. tax code. If the loophole were
eliminated, congressional tax analysts estimate that the IRS would have
collected an extra $133 billion last year alone.

Senate Finance Committee Chairman Max Baucus (D-Mont.), who expects
to unveil health-reform legislation next month, has said he is not
interested in closing the loophole, but in establishing limits. Among
the options: Taxing only the benefits of high-earning individuals who
make at least $200,000 a year ($400,000 for families). Or taxing
benefits for all workers above some pre-set amount. One figure under
discussion is $13,000, the national average value of employer-provided
coverage for families.

Both options have disadvantages. Taxing only wealthy families, for
example, "doesn't make sense," said Sen. John F. Kerry (D-Mass.),
because it would raise too little money -- only about $160 billion over
10 years, according to Finance Committee aides. But "you've got to be
very careful how far you go" down the income ladder, Kerry said. "If
you come down too low, you're impacting workers and threatening the
employer-based system."

Some Democrats are particularly concerned that the tax would fall
heavily on union members, who tend to have generous health packages
sometimes derided as "Cadillac" plans. But those plans are expensive
because they include dental and vision benefits, large provider
networks and low co-payments -- "things every American wants and should
have," said Richard Kirsch, national campaign manager of Health Care
for America Now, a coalition of unions and community organizations.
Kirsch yesterday endorsed an alternative tax plan drafted by Citizens
for Tax Justice that would target corporations and the wealthy for $1
trillion in tax increases over the next decade.

Capping employer-provided health benefits would generate around $500
billion over the next 10 years, by various estimates, and key Democrats
say it may be the only politically viable option for raising that kind
of cash.

"Everyone hates it," said a member of the House Ways and Means
Committee, speaking on condition of anonymity because he has yet to
discuss the issue with his colleagues. "But where else do you go?"

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National Health Care?

Economic Scene
Health Care, a Lesson in Pain
Pablo Martinez Monsivais/Associated Press

Thirteen prominent health experts took part in a round table Tuesday on overhauling health care. Many urged senators to limit the tax deduction for employer-provided health insurance.

By DAVID LEONHARDT
Published: May 12, 2009

The events of the last few weeks have raised the odds that a health care overhaul will really happen this year.
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Pablo Martinez Monsivais/Associated Press

Senator Max Baucus, left, head of the finance committee, and Senator Charles Grassley, its ranking Republican.
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Democrats have suggested that they are willing to play hardball and pass a bill without Republican support. Arlen Specter, the senior Pennsylvania senator, became a Democrat, potentially adding one more vote. At the White House on Monday, lobbyists for doctors, insurers and other industry groups pledged to reduce the growth of medical spending.

Yet none of these developments has removed the main hurdle to health care reform: the matter of the missing $90 billion.

Providing health insurance to the roughly 50 million people without it will cost something like $120 billion a year. President Obama has proposed $60 billion or so in new revenue for this purpose — a “down payment,” his advisers say. But Congress seems set to reject about half of the down payment (a plan to limit high-income families’ tax deductions for charitable giving and other such things). That makes for the $90 billion health care hole.

And no one is quite sure how to fill it.

Because Mr. Obama has made it clear that health care is his top legislative priority, the $90 billion hole has become one of the biggest political issues of 2009. The Obama administration’s health care team is now preoccupied by it. On Tuesday, the Senate began to consider it, at a packed round-table discussion among 13 prominent health experts and members of the finance committee.

“Now it’s time to think about money,” said Max Baucus, the Montana Democrat who heads the committee.

The experts at the round table — liberal and conservative — actually agreed to an impressive degree about the best way to fill the hole. They urged the senators to limit the tax deduction for employer-provided health insurance.

The deduction may seem a wonderful thing, but it isn’t. It benefits the wealthy more than anyone else. It encourages employers to overspend on health insurance, because $100 in untaxed medical benefits is more valuable to workers than $100 in taxed income. And, as Mr. Baucus said, the deduction has a certain Willie Sutton appeal for Congress: it’s where the money is.

The government forgoes $250 billion a year in taxes because of the deduction. Capping it, to apply only to reasonably priced health plans, would bring in enough money to fill most of the $90 billion hole.

The idea seems to be classic Obama: empirical, pragmatic, bipartisan. Unfortunately, it happens to be an idea that John McCain campaigned on last year and that Mr. Obama, sensing a political opening, blasted as a tax increase. “Taxing health care instead of fixing it,” intoned the narrator in an Obama campaign advertisement, with ominous music playing in the background. “We can’t afford John McCain.”

Mr. Obama’s economic advisers would be happy to see him reverse his position. But his political advisers remember that ad and know it could be used against him. Further complicating matters, labor unions and Charles Rangel, the influential Democratic House member, say they remain firmly opposed to capping the deduction.

All of which means that filling the $90 billion hole is going to be very tricky.

•

If the tax deduction can’t be touched, the first alternative is simply to add the $90 billion a year to the deficit, to cover the uninsured now and pay for it later, as President George W. Bush did with his tax cuts, the Iraq war and the Medicare prescription drug benefit. In another time, this might have been politically palatable. But it isn’t now, not when this year’s deficit is projected to be larger than any since the end of World War II.

That leaves two ways to pay for an expansion of health insurance: raise taxes or cut health spending.

Economically, spending cuts have a lot to recommend them. The United States spends vastly more per person on medical care than any other country. Much of that spending does nothing to improve health, as chronicled in this newspaper’s recent “Evidence Gap” series. Getting rid of such waste could pay for universal health insurance, several times over, and prevent Medicare from going bankrupt.

The $30 billion that remains of Mr. Obama’s down payment plucks the low-hanging fruit of cost reduction, like the subsidies for private insurers to provide the same coverage as Medicare at a higher cost. But the precise strategy for finding a lot more savings is still murky. “Reducing spending without also affecting services that do improve health,” says Douglas Elmendorf, director of the Congressional Budget Office, “is challenging.”

The Obama administration is laying the groundwork for a more efficient system by pushing for more research into medical effectiveness. But we’re not there yet, and getting there won’t be easy. Consider that some of the same industry groups that pledged to reduce medical spending this week are also trying to block effectiveness research — the very thing that would tell us how to reduce spending without damaging people’s health.

So over the short term, tax increases are probably necessary, though they have their own problems. Will the 85 percent of people with health insurance be willing to pay higher taxes for something approaching universal coverage?

Congress has already rejected several of Mr. Obama’s proposals to reduce the budget deficit, including the plan to limit charitable deductions for the affluent. The other ideas that have been floated, like taxing high-calorie sodas, wouldn’t raise anywhere near $90 billion a year.

You can imagine a bill that mixes together lots of different revenue sources, in typical sausage-making style. But it’s hard to get to $90 billion without changing the deduction for employer-provided health insurance. “I just don’t know where else you get enough money,” says Jonathan Gruber, an M.I.T. economist and one of the round-table panelists.

One possibility is that Congress will pass a bill capping the deduction, and Mr. Obama will be able to claim that he is signing it reluctantly. Another possibility, however, is that we need to begin thinking about whether health care reform is possible even if some significant number of people remain uninsured.

What might that look like?

The subsidies for insurance, which make up most of the $120 billion price tag, would have to be reduced, leaving some people unable to afford coverage but also cutting the bill’s cost. That would be the painful compromise.

The second, crucial step would be doing everything possible to get rid of wasteful medical spending: using the force of law to hold medical providers to their cost-reduction pledges; moving Medicare away from a fee-for-service model that pays for quantity, not quality; encouraging low-cost hospitals to grow and high-cost hospitals to change — or shrink.

During the campaign, Mr. Obama emphasized universal insurance more than costs. Since taking office, he has shifted his focus somewhat. “What we have done,” Rahm Emanuel, the White House chief of staff, told me this week, “is raise cost control to the same level as expanded coverage.”

Cost control has the political benefit of appealing to the 85 percent of people with insurance. And it has enormous economic benefits, too. If costs can be reduced, the price of covering the uninsured will come way down. Put differently, the only way to have a sustainable universal health care system is to control costs.

In an ideal world, Congress and Mr. Obama would find the $90 billion to cover all the uninsured now. But if they don’t, health care reform is not an all-or-nothing proposition.

E-mail: leonhardt@nytimes.com
More Articles in Business » A version of this article appeared in print on May 13, 2009, on page B1 of the New York edition.