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Health Insurance Premiums Tax Proposed

Health Insurance Premiums Tax Proposed

WASHINGTON--To maintain its world leadership in clinical care, the nation should levy a 1% tax on health care premiums to pay for clinical research, Kenneth I. Shine, MD, president of the National Academy of Sciences' Institute of Medicine (IOM), has proposed.

Traditionally, clinical research has received considerable support from patient care revenues, particularly at academic medical centers, Dr. Shine said. He placed the peak amount at $2.5 billion annually. Among other things, these funds supported young clinical investigators, underwrote research costs not covered by grants, and funded equipment and renovations not paid for by the National Institutes of Health.

However, cost controls instituted by managed care organizations and reductions in Medicare and Medicaid payments have reduced funds available to subsidize clinical research, Dr. Shine said.

"It is important to develop income streams that will substitute for these clinical revenues in an accountable manner," he said. "That is why I propose an assessment on health-care premiums and payments and even on money spent by corporations that are self-insured."

Young researchers who previously had been subsidized by clinical revenue are now forced to fully earn their salaries by delivering patient care, Dr. Shine said. As a result, "the time available to do research for them is diminished."

He also noted that if researchers have an NIH grant, they must fully pay for their salary from their grant. "I believe the effect of this development is such that it will compromise the capacity to bring innovation to health care at the bedside," he commented.

Dr. Shine outlined his tax proposal at a press conference during a two-day, IOM-sponsored conference. He suggested the assessment be implemented over four years, and estimated the levy would yield between $4 billion and $8 billion annually to support clinical research.

The proposed 1% assessment could be likened to the existing 10% tax on airline tickets and the various road-fund taxes included in the price of gasoline. "The commitment of money from health care premiums is basically to improve the product that you deliver," he said, "just as the airline tax and gasoline tax go to support infrastructure in their areas."

The IOM president urged that funds from such a tax be used for clinical research only, not for biomedical research in general. "I believe that payers, patients, and managed care organization can understand the expenditure of money when it goes for improvements in health care," he said. "It is more difficult for them to see that investment going into fundamental science, which, in my opinion, is the responsibility of government."

Dr. Shine noted, however, that about one third of the research funding provided by NIH goes to clinical investigators. By instituting a levy on premiums, NIH could reduce its funding of clinical research. "If the direct congressional appropriation to NIH were maintained, this new stream of income would, in fact, increase the amount of money available for fundamental science," he said.

A more detailed description of Dr. Shine's proposal and its rationale appeared in the July 16 issue of JAMA (278:245-246, 1997).

 
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