Heritage Foundation
Last Saturday night Speaker Nancy Pelosi (D-CA) forced through a vote on her 2,032 page health care bill only a few days after releasing it to the public. Now Senate Majority Leader Harry Reid (D-NV) is poised for another Saturday night cram down, forcing a Senate cloture vote mere days before his 2,074 page bill was given to Senators. Yet again, Congress will be forced to vote on a bill that none of them have actually read. More importantly, as we pour through the details, it becomes obvious that none of them even believe the plan will do what the bill says.
Kills Jobs: All told, the Reid Bill raises taxes by $370.2 billion over the next ten years with many of those taxes starting to be collected this year while unemployment is at 10.2% and rising. Worse, the bill includes a job killing employer mandate which taxes companies for hiring people. Specifically, companies with more than 50 employees that do not offer a health plan approved by federal bureaucrats will be forced to pay a $750 per employee job tax.
Hurts Small Businesses: The Reid Bill acknowledges it is terrible public policy for small businesses and tries to address this problem by including a “small business tax credit” to minimize the impact of the job killing employer mandates and regulation-caused rises in private health insurance premiums. But the tax credit only lasts two years and largely excludes small business owners, small businesses with high-average payrolls, and firms with 25 or more workers. After all exclusions, essentially the only eligible firms are those firms with 10 or fewer workers as well as those with low-income workers—the least likely to offer coverage even with a significant price reduction.
Hurts Families: The Reid Bill includes an individual mandate that forces any American who does not have a federal bureaucrat approved health plan to pay an annual tax penalty of $750 per adult family member and $375 per child, with a maximum penalty of $2,250 per family. These penalties are indexed for inflation, which means they are likely to increase nearly every year. These taxes are fixed amounts based on family size, not income. A family of at least two adults and two children is actually worse off under the Senate bill if they make less than $99,350 a year. The only nod to affordability is a “hardship exemption” if the lowest available premium for a bare-bones plan is more than 8 percent of your income. But that saves you money only if your income is less than $28,125 a year.
Hurts Poor: The Reid Bill’s employer mandate is especially punitive on poor families. Firms that hire an employee from a low-income family who qualify for an insurance subsidy are charged a tax penalty of $3,000. So a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children. Worse, companies only have to pay $750 an employee instead of $3,000 if one quarter of employees are low-income. This creates a situation where, if a company has a lot of low-income workers, they can actually save money by dropping their health plan and just dumping all their employees into the federal exchange at their own expense.
Hurts States: The Reid bill expands Medicaid eligibility for people below 133 percent of the Federal Poverty Level (FPL). Even with a provision aimed at Senator Landrieu’s Louisiana that picks up some state costs, the CBO estimates that state spending under the Medicaid provisions will still increase by $25 billion. The Democratic Governor of Tennessee Phil Bredesen told a state budget meeting this Wednesday: “I wish every member of Congress would have to come sit in this room and listen to the real world of what’s going on in Medicaid today. I mean how can you listen to this stuff and the stuff you are talking about eliminating just to get through this and then talk about adding a whole bunch of new expenses onto the states.”
Funds Abortion: Unlike the House-passed Stupak-Pitts amendment which treats abortion funding the same way the Federal Employee Health Benefits Plan does (the same health insurance all members of Congress have), the Reid Bill fosters taxpayer funding of elective abortion by authorizing the HHS Secretary to create a funding scheme that will permit inclusion of abortion coverage in the bill’s public option and mandates the inclusion of at least one plan with elective abortion coverage in each state’s health insurance exchange.
Hides True Costs: According to the Congressional Budget Office, the Reid Bill as written would spend less than $900 billion over the next ten years. But the CBO is only allowed to score what Congress says it will do, not what everybody knows it actually will do. So the CBO warns: “These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades which is often not the case for major legislation … The long-term budgetary impact could be quite different if key provisions of the bill were ultimately changed or not fully implemented.” The Senate bill depends on using cuts to Medicare to pay for its $1.2 Trillion coverage expansion. These dramatic savings, of course, assume that these spending cuts stay intact. Nobody believes they will. And the Massachusetts experience proves just that. Harvard Medical School Dean Dr. Jeffrey Flier explains:
There are important lessons to be learned from recent experience with reform in Massachusetts. Here, insurance mandates similar to those proposed in the federal legislation succeeded in expanding coverage but—despite initial predictions—increased total spending.
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Selling an uncertain and potentially unwelcome outcome such as this to the public would be a challenging task. It is easier to assert, confidently but disingenuously, that decreased costs and enhanced quality would result from the current legislation.
That is exactly what the Reid health care bill is: a completely disingenuous plan to increase coverage while reducing cost. Nobody believes Congress can or will follow through with spending cuts required to keep this scheme from bankrupting our country. That is why the AMA can support Obamacare despite the fact that both the House and Senate bills call for at least a 21% cut in doctor pay starting in 2011. Nobody believes those cuts are going to happen. Nobody believes in this bill.
QUICK HITS
Earl Devaney, chairman of the Recovery Accountability and Transparency Board, told a House oversight committee yesterday that the Obama administration reports on jobs “created or saved” by the $787 billion stimulus package are “riddled with inaccuracies and contradictions.”
According to new data from the Mortgage Bankers Association, more than 14 percent of borrowers were in trouble on their mortgage during the third quarter, and foreclosures may not peak until next year.
The Obama administration is attempting to reinflate the housing bubble by underwriting loans at quadruple the rate of three years ago and offering easy loans in the country’s most expensive real estate markets.
While Republicans are arguing $200 billion in TARP money should go to taxpayers, Congressional Democrats are already fighting over which of their favored programs to spend it on.
ABC News reports that Congressional Democrats and Republicans are calling for Treasury Secretary Timothy Geithner to resign.
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