California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

IOM Calls for Significant Increase in Annual U.S. Public Health Spending

The U.S. government should be spending at least $24 billion annually on public health care, or more than double the $11.6 billion it spends now, to meet the needs of public health departments, according to recommendations outlined in a new report released Tuesday by an Institute of Medicine panel, The Hill's "Healthwatch" reports.

The report -- by IOM's Committee on Public Health Strategies to Improve Health -- notes that in 2009 health care spending per person was $8,086, compared with $251 in public health spending per person.

The report adds that although the U.S. spends more on health care than any other industrialized nation, it lags behind many countries in life expectancy and childhood mortality rates because public health care systems are "chronically" underfunded (Pecquet, "Healthwatch," The Hill, 4/10).

Panel Recommends Medical Care Tax

The report suggests that the government implement a medical care tax to boost public health spending and help transition the health care system from a clinical care-based system to one that focuses on preventive care (Zigmond, Modern Healthcare, 4/10).

According to the Wall Street Journal, panel members considered other funding-generating options, such as new taxes on sugary beverages, estates and life-insurance proceeds.

However, they settled on a tax that could be imposed on health care services and health insurance because it would serve as a "broad-based tax to benefit a common good." They noted that "although [the tax] imposes a small amount of financial burden on the clinical encounter, a tax on medical-care transactions is unlikely to have a substantial deleterious economic effect." The tax would be levied on individuals with private insurance plans and Medicare beneficiaries and would apply to physician's visits and prescription medications.

Although the panel suggested that a 2% tax on health care transactions could generate about $50 billion, its report doesn't specify a tax level, the Journal reports. The report calls on the U.S. government to close within 20 years the life-expectancy gap with other industrialized nations.

Response to Report's Medical Tax Proposal

Republicans and some supporters for increased public health spending argued that a tax on medical care would not garner adequate support for approval in the current political environment, according to the Journal.

Senate Finance Committee ranking member Orrin Hatch (R-Utah) called the medical care tax "an absurd and misguided proposal from an organization that is becoming increasingly irrelevant," adding that "[h]alf-baked ideas like this do nothing to address the challenge of rising costs in our health care."

Although HHS did not immediately respond to the IOM report's recommendations, HHS Secretary Kathleen Sebelius -- during a speech at an event on Tuesday -- said it is "about time" that the U.S. "got serious about prevention" (Radnofsky, Wall Street Journal, 4/10).

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