Health Legislation Misses the Mark

By James R. Edwards, Jr.
12/31/2009

Health reform has devolved into a cesspool. Congress should scrap its ugly bills and start over.

The “solution” doesn’t solve the central challenges facing American health care. The legislation breaks President Obama’s promises. And the process used to legislate makes the old Tammany Hall politicians look like amateurs.

The legislation puts big government, not consumers, patients and doctors, in charge of medicine. It omits market-based approaches that would both contain costs and improve quality. It doesn’t “bend the cost curve,” at least not downward. It won’t curb frivolous lawsuits. It limits insurance plans to a handful of benefit designs, limiting consumer options.

President Obama made big promises: If you like the health coverage you have, you can keep it. Nobody earning less than $250,000 will see any tax increases. Illegal aliens won’t bleed taxpayers for coverage. Health reform won’t add to the federal deficit and instead will reduce costs.

None of President Obama’s promises is kept in health legislation.

The House bill kills off existing health insurance plans through attrition. Plans can’t enroll new people and eventually will die. The Senate bill isn’t quite as heavy-handed, but no new insurance plans can enter the group or individual markets. So, if you change jobs, you’ll lose your former insurance.

On taxes, the Senate bill slaps a Medicare tax increase on individuals (including the self-employed and those whose small business is taxed on an individual, instead of corporate, basis) with gross income above $200,000.  People who pay for pain relievers, prenatal vitamins and other over-the-counter medication with a health savings account or flexible spending account face a 40 percent tax, according to the Competitive Enterprise Institute.

In addition, the Senate bill slaps excise taxes on higher-value, job-based health benefits (even for working class families).  The Senate also imposes excise taxes on health sectors:  health insurers, pharmaceutical makers, medical device companies (the House taxes the latter).  These amount to an indirect tax increase on most Americans, as extra costs are passed along to consumers.

Despite denials and figleaf “exclusion” language, the House allows illegal aliens access to the “exchange,” the so-called “market” that will micromanage health insurance, and to the government-run “public option.”  The Senate’s eligibility verification system for checking immigration status leaks badly with loopholes.  Neither bill screens out illegal aliens from expanded Medicaid, and the House automatically covers the “anchor babies” of illegal immigrants.

Health reform not only isn’t paid for, it adds massively to the national debt.  Medicare’s chief actuary says the Senate bill, over the first decade, could have a net cost of $234 billion.  The Joint Economic Committee notes how most health cost estimates before adoption of new programs, such as Medicare, have woefully underestimated the actual amount.

Further, Senate Democrats count the half-trillion-dollar Medicare cuts (mostly to the popular Medicare Advantage, private health plan options in the program) twice, as Sen. Jeff Sessions points out.  That grossly distorts the budgetary look of health reform.

As the Congressional Budget Office says:  “To describe the full amount of HI [Medicare Part A] trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.”

Besides double-counting the “savings,” there’s another budget gimmick that makes health reform’s costs appear much lower than they actually will be.  The tax increases kick in right away, while new spending items phase in after several years.  That trick distorts the 10-year budget numbers.  The real costs of “health reform” will inevitably run well north of a trillion dollars.

The Senate bill outsources Medicare spending-cut decisionmaking to an unelected board.  The process gives the bureaucratic board’s recommendations a decided advantage for taking effect.  Congress escapes the blame, and can browbeat the board and come to the rescue when the public objects to the most outrageous cuts.  This is institutionalized irresponsibility.

So much for keeping promises.  Congress and the White House are guilty of false advertising.  And the way they’ve run the show stoops to new lows.

The White House began the grotesque process early in 2009.  Private meetings, according to some participants, involved hardball tactics.  For instance, a major association signed a letter to Congress asking that health reform not be enacted under special budget reconciliation rules.  That group was kicked out of the White House’s discussions.  Thus, each health sector cut its deal with the Obamites, seeking self-preservation.

Democrats in Congress refused to honor the agreements with the health industry that the White House brokered.  Three House and two Senate committees engaged in dictatorial, partisan processes.  Majority Democrats rejected meaningful bipartisan input.  They beat nearly all GOP amendments, often on party-line votes.  They employed procedures that mightily restricted debate in one of the most important policy debates in years.

The only way to rescue health reform now is to start over.  Much progress could be achieved by enacting a more incremental package of policies on which there is wide bipartisan support.

But this “my way or the highway” approach the administration and Congress has pursued risks unforeseen consequences, jeopardizes many of the things about the current health system most Americans like and could well bankrupt the country.