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Originally published October 19, 2009 at 4:10 PM | Page modified October 20, 2009 at 9:38 AM

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Guest columnist

Time for real reform of health care and taxes

The health-care reform bills pending in Congress are based on flawed underlying programs and are too tied to the federal income-tax code. Congressman Brian Baird, a former health-care provider, offers another track that could move the debate forward

Special to The Times

IN spite of all the work that has gone into the House and Senate health-reform bills, both suffer from two debilitating problems.

First, they build upon an already too complicated and costly web of underlying programs: Medicare A B and D, Medicaid, Social Security, FSAs, etc. Second, health care and insurance are tied to the most complex and reviled of all federal programs, the income-tax code.

It is not too late to change course and solve both problems while we have the opportunity.

As a starting point, we must assure anyone who has health insurance that they are perfectly free to keep what they have, while those in genuine financial need will still receive assistance. With those assurances, all current federal and state government-funded health programs for people of all ages should be eliminated and replaced with the following:

• All government provided financial support should be based on financial means. Regardless of age, participants should pay as their financial resources allow.

• Basic prepaid health care would provide routine medical, dental, vision and mental-health care with no insurance forms. Catastrophic insurance would then cover high-cost occurrences plus long-term care. Individuals could choose for-profit or not-for-profit plans that are state, regional or national, but coverage would be mandatory. A national commission would assure financial soundness and quality of care for cross state plans.

• Discrimination against pre-existing conditions or genetics would be banned, but incentives would promote positive health and prevention.

• Student aid plus increased compensation would encourage general and family practice and other high-need health-care providers.

• Comprehensive malpractice reforms would provide alternatives to litigation and reduce defensive medicine and abusive lawsuits.

• Service members and veterans could choose existing Veterans Affairs or Department of Defense care or participate in the alternative program, with the government funding their costs as their situation warrants.

• The program would be funded by money from existing federal and state programs that would be replaced; with cost savings from malpractice reforms, paperwork reduction, national risk pools and improved preventive care; and through direct payments and premiums from individuals and employers (but no new taxes would be placed on existing insurance).

While we're simplifying health care, we should do the same with the tax code by eliminating all income and payroll taxes along with all of the current health care tax exemptions, deductions, etc. In their place should be:

• A simple, progressive national sales tax on all sales of all goods and services with tax rates increasing commensurate with product cost.

• Price indexed exemptions would apply to purchases of primary residences.

• A modest, time-indexed capital-gains tax to reward long-term savings by lowering capital-gains rates commensurate with the time assets are held.

• The estate tax would be replaced by a tax on inheritance with sufficient exemptions to preserve family businesses and farms.

• Selected tariffs or taxes would apply to such things as cigarettes to incentivize healthier choices and gasoline to pay for transportation.

Levels of the combined taxes should by law be set to produce revenues sufficient to pay for all federal spending, including health care, so deficits will be eventually eliminated and the debt reduced over time.

That's it. A simple, straightforward health-care and tax system with means-based assistance for those in need, existing private plans preserved and a balanced budget. Let's not lock in the costs, complexities, bureaucracies and inefficiencies of today in the name of reform when we have the opportunity to make real, needed and lasting change.

U.S. Rep. Brian Baird represents Washington's 3rd Congressional District.

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