On June 29, the Center for American Progress released a report outlining a plan to ensure that a $1.2 trillion health care reform proposal remains deficit neutral.  The plan, endorsed by former senator Tom Daschle and Center for American Progress President John Podesta, supports taxing employer health benefits.  Authored by Harvard University economics professor David Cutler and Georgetown University public policy professor Judy Feder, the report proposes holding national health care spending to a set growth rate and initiating fail-safe proposals for the following year if cost growth exceeds the pre-set limit.

From the report:

Financing issues are among the most difficult problems in health care. Because of the deteriorating federal budget, health care reform needs to be budget-neutral over the course of the next decade. After that interval, health reform needs to reduce projected deficits, or the budgetary situation will become untenable. To make this happen, health care reform needs to insure that all Americans have health insurance coverage. Increasing coverage and saving money requires a complex combination of short- and long-run policies. In this paper, we lay out a set of policies that focus particularly on how the medical care system can be modernized so that it costs less and delivers more in terms of quality care. Alongside these policy proposals, we present options for guaranteeing the budget neutrality of health care reform through a series of “failsafe” policy proposals that could be implemented as needed. 

Full report: Financing Health Care Reform: A Plan to Ensure the Cost is Budget Neutral (PDF | 294.29 KB)

Center for American Progress. (2009). Financing health care reform: a plan to ensure the cost is budget neutral. Cutler, D.M. & Feder, J.