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How Could Health Insurance Reform Reduce the Deficit?

(Image: stopnlook under CC 3.0)

It seems like somewhat of a paradox: a piece of legislation costing nearly $1 trillion reducing the national deficit? Yet that’s what proponents of health insurance reform believe will happen.

Of course, the American government’s debt won’t be wiped out immediately. Rather, it is supposed to be a process with four steps:

  1. Controlling costs through insurance exchanges intended to make the market more competitive.
  2. Creating an Independent Medicare Advisory Board, which will suggest methods to save money on the expensive program. The members, appointed and confirmed, will not be as beholden to politics. If Congress rejects their proposals, they will have to come up with alternative measures that will result in as much savings.
  3. Taxing the most expensive employer-based health insurance plans. Many believe that such high-cost health plans encourage the overuse of care. Employers and consumers will be more likely to choose more frugal plans, which will remain tax-exempt.
  4. Promoting the bundling of health care services over a period of time, instead of paying doctors on a per-procedure basis. It will start with Medicare, and will expand to private insurers if proven successful.

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