Insuring the roughly 44 million Americans who lack health coverage seems like a great idea, but how will such a project be funded? This dilemma has proven to be one of the biggest obstacles facing Obama’s health care proposal as they struggle to determine the means by which to create an estimated $1.2 trillion required over the next decade.

Much doubt has been placed upon Obama’s original proposal for financing his health care reform; namely, people fear the funds will be inadequate, and have even referred to his financing proposal as a “down payment” on the larger issue. Obama plans on generating over $300 billion over the next 10 years by incorporating tax increases on mortgage and charity deductions for wealthier Americans. This barely scratches the surface of the plans overall cost.

Realizing the task ahead, and understanding that this is a bipartisan issue- Obama has started to reconsider the Republican’s proposal to tax health care provided by businesses.
Although Democrats feel such a move could further knockdown America’s struggling middle class, there is no question the revenue generated (approximately $250 billion a year) would greatly subsidize the estimated $1.2 trillion needed.

The manner in which this proposal eventually gets funded/passed will be interesting to follow; in fact, it could be a double edged sword for private insurance companies. If the government decides to tax employer sponsored health insurance, there will be a large incentive for individuals to switch over to a private plan, since they are not receiving the tax break, and often can find equivalent coverage at a lower cost. However, with a sufficiently funded program, the Government has the ability to undercut the competitive pricing of private carriers, and could put them out of business.