In this paper and brief, the authors discuss alternative ways that health reform could be financed. They analyze different options including several proposals for delivery system reforms and for reduction in Medicare and Medicaid payments. They estimate the cost savings that could occur due to the introduction of a public plan option. Finally, they explore a range of revenue options.

From the report:

In this paper, we argue that there are many realistic sources of savings and many sources of revenue that could be used to support health reform. In some cases, policy initiatives plausibly would improve quality and patient experience with care while reducing spending. However, all of the measures could negatively affect some stakeholders financially and will likely be opposed by them because of that. Nevertheless, health reform will only happen if we are willing to take advantage of a variety of savings opportunities and revenue sources, thus spreading the costs broadly and minimizing burden on any single group. In this paper we show that it is possible to obtain more than enough savings or revenue to fully finance comprehensive health care reform.

In delineating an array of savings and financing strategies, we assume a health reform approach consistent with the broad outlines being actively considered by Congress and the Obama administration. The plan would have a Medicaid expansion for all those with incomes less than 100 percent of the federal poverty level; those currently on Medicaid and CHIP with higher incomes would obtain coverage in the new health insurance exchange (described below). There would be an individual mandate for all individuals to obtain health insurance coverage. The plan would have an insurance exchange offering private health insurance plans to individual and small employer purchasers (fewer than 50 workers).

Full report: How We Can Pay for Health Reform (PDF | 268.88 KB)

The Urban Institute, Health Policy Center. (2009). How we can pay for health reform. Berenson, R.A., Holahan, J., Blumberg, L.J., Bovbjerg, R.R., Waidmann, T., Cook, A. & Williams, A.