Wednesday, March 4, 2009

Ten Facts about President Obama’s Health Proposals

President Obama’s budget proposal includes nearly $1 trillion in new health care spending—a $634 billion reserve fund as a “down payment” for expanded coverage, and nearly $350 billion in un-offset increases to physician reimbursements and other government programs.  The fund would be paid for in part through $318 billion in tax increases on filers who itemize, “competitive bidding” for Medicare Advantage plans, and tighter government price controls on drug makers:

  1. More Spending Will Not Control Costs.  At a time when government actuaries projected that health spending will jump from 16.6% to 17.6% of GDP this year alone, President Obama’s plan would propose nearly $1 trillion in new health spending—on top of the $150 billion in health spending already passed in the “stimulus” bill.
  2. Government Spending Means Government Control.  Administration officials confirmed they will seek legislative authority to impose a “least costly alternative” reimbursement policy for Medicare—a policy of rationing access to care consistent with a draft House Committee report saying that “more expensive [treatments] will no longer be prescribed” as the result of research into the effectiveness of various treatments.
  3. “Competitive Bidding” a Sham.  The budget proposes a new “competitive bidding” program for Medicare Advantage plans—but traditional Medicare will not be required to be competitive.  Moreover, this one-sided “competition” will only occur after Medicare Advantage plans receive three years of arbitrary and harmful cuts that will drive plans from this successful program and limit seniors’ choice of insurance options.
  4. Undermines Cancer Agenda.  The budget proposes $6 billion in new cancer funding for the National Institutes of Health—but limits individuals’ ability to deduct donations to charities like the American Cancer Society, and imposes new drug price controls that will discourage companies from developing new cancer therapies.
  5. Weakens Medicare’s Solvency.  Because the budget includes $330 billion in increases to physician reimbursements—without proposing offsets for this new spending, as Congress has done in the past—Medicare spending will actually rise under the President’s proposals, exacerbating Medicare’s nearly $86 trillion in unfunded obligations.
  6. Prolongs Downturn in Housing Market.  In order to pay for the health care reserve fund, the budget proposes to reduce certain individuals’ ability to deduct mortgage interest—even though the Congressional Budget Office predicts that housing starts in 2011 will still be at or below levels last seen in the early 1990s.
  7. Undermines Parental Control.  A proposed expansion of family planning programs through Medicaid would permit children of any income level to qualify for family planning services without parental approval.
  8. Raids Medicare and Medicaid Funds.  The budget includes proposed $24 billion in savings from the Medicare and Medicaid Improvement Funds.  According to current law, the Medicare Improvement Fund is designated specifically “to make improvements under the original Medicare fee-for-service program.”
  9. Harms Medical Innovation.  The budget would generate nearly $20 billion in savings from increased government price controls on the pharmaceutical industry—a one-time savings that would do nothing to slow the long-term growth in health costs, while permanently harming the research on treatments that can cure or improve a myriad of diseases.
  10. Budgetary Gimmick.  The budget presumes that spending on the State Children’s Health Insurance Program will drop by 66% in Fiscal Year 2014—a reduction many Members may consider unrealistic, and therefore intended to mask the true size of the Administration’s spending proposals.