Senate Group Ponders Health Care Reforms

Testifying at the hearing, former Treasury Secretary Paul O’Neill called on lawmakers to consider overhauling the system significantly.

“American health care policy is in desperate need of reframing and rethinking based on a return to first principles,” he said. “Fundamental tax reform, financial security for retirees and access to medical care for all Americans are not separate subjects. In the absence of coordinated policy and legislative action by this committee, there is no hope.”

Among O’Neill’s proposals was to require all Americans to purchase a minimum level of health coverage, with those with a higher income subsidizing lower-income individuals. Additionally, he advocated improving the performance of health care professionals.

Leonard Burman, senior fellow at the Urban Institute and codirector of the Tax Policy Center, suggested fixing what he called the “upside down” tax subsidy.

“Currently, the largest subsidies go to those who have a strong incentive to get health insurance, even absent a subsidy, while those for whom health insurance is unaffordable get little or nothing,” he said. “A better option would replace the tax exclusion with a refundable credit targeted at those earning less than the median income.”

The simplest proposal was offered by Robert Lane, chairman and chief executive officer of Deere & Company, who appeared as a representative of the Business Roundtable. To reduce the costs of health care, Lane suggested lawmakers increase the availability of products such as health savings accounts, flexible spending accounts and health reimbursement arrangements. These products decrease the overuse of healthcare services, he argued.

He called for increasing opportunities for individuals to use these products, and to allow FSA accounts to be used to help cover the HSA deductible. He also urged increasing the FSA contribution limit and allowing employers to vary the contribution amount to an FSA for different types of employees.