Weekly Newsletter: May 18, 2009
Article of Note: Washington’s Health Care Takeover Confirmed
Writing in The New Republic this week, Jonathan Cohn provides some interesting insights behind health reform legislation. Cohn reports that Democrat efforts to draft legislation have hit two snags. First, the Congressional Budget Office (CBO) believes that, despite taxing both businesses who fail to offer and individuals who fail to purchase health insurance, the proposal as currently written will not achieve the “universal coverage” that has been the goal of many Democrat interest groups.
Second, and perhaps more importantly, CBO may in fact consider health insurance premiums paid by individuals “on-budget,” meaning that health insurance would therefore become an inherent part of the federal government’s ongoing fiscal obligations. In other words, because low-income subsidies will only be provided through a government-sponsored Exchange, and because the federal government will impose taxes on those who do not accept their “shared responsibility” to purchase insurance, CBO analysts believe that such proposals would effectively federalize the entire health insurance industry—and America’s $2.2 trillion health care sector with it.
Many Members may be concerned about the implications of such a ruling by CBO, as it would confirm fears that the majority is about to embark upon a Washington takeover of a health care sector that constitutes more than one-sixth of the American economy. Just as important, some Members may believe that the increasing involvement of government in health care will necessarily result in bureaucrats gaining additional power over patients’ health care decisions, potentially leading to delays in obtaining critical treatments or outright denials of care.
Baucus Proposes Taxing Americans Who Cannot Afford Insurance…
Last week marked the release of the second of three intended white papers by Senate Finance Committee Chairman Baucus about his intended goals for health reform legislation—this one focused on expanding health coverage. One of the central components of the coverage paper is the so-called “shared responsibility” of an individual mandate to purchase insurance. The paper proposes that individuals who do not obtain health coverage—as defined by the federal government—would pay a “surtax” on their income tax returns as a penalty for non-compliance. The tenor of the paper implies that such a tax increase will be included in any bill considered by the Finance Committee; while the paper discussed including or excluding a tax on employers, the health insurance tax on individuals was presumed as a given.
Some Members may be concerned by this development, as imposing new taxes on individuals will do nothing to help those people who cannot afford coverage currently. Moreover, Members may be concerned about the resulting intrusion of the federal government—and by extension lobbyists representing the health sector—in defining the adequacy of health coverage for all Americans, as special interests will push to create an overly rich “mandated” benefits package. Such efforts may not just not lower health costs nationwide, but actually raise them—resulting in tax increases for more Americans who cannot afford coverage.
…While Restricting Subsidies to “Bureaucrat-Approved” Health Plans
Buried in the midst of Sen. Baucus’ white paper were two critical details exposing the fallacy of Democrats’ mantra that, “If you like your current coverage, you can keep it.” First, the paper calls existing coverage options “grandfathered plans”—a term that hardly connotes a desire to maintain current plan offerings—and further notes that “no low-income tax credits would be provided to those enrolled in grandfathered plans.” Second, the proposal designates that tax credits would only be provided to health plans offered through a government-run Exchange—and proposes bureaucracies that would impose—and remove—a “seal of approval” on plans to allow them to participate in said Exchange.
Given these developments, some Members may question how Sen. Baucus can credibly claim that his plan does not represent a “big government” solution, since the only way individuals can receive assistance in purchasing health coverage is to abandon their current plan and join a bureaucrat-approved health offering. Some Members may also be concerned about the implications of ceding such power to unaccountable bureaucrats. Government care means government control and could well lead to delays in obtaining important treatment or outright denial of care.
Fuzzy Math?
In addition to the release of the Finance Committee white paper, another health-related statement was released last Monday—although both press reports and later quotes by its signatories indicate its implications remain unclear. While the White House on Monday released a letter signed by six umbrella groups pledging to reduce health spending by a total of $2 trillion over ten years, participants later said the purported agreement created “a lot of misunderstanding.” The head of the White House Office of Health Reform admitted that “the President misspoke” by overstating the implications of the agreement—only to retract that very admission an hour later.
Amidst all the claims and counter-claims, many Members, while supportive of voluntary efforts to slow the growth of health care costs, may wonder where precisely $2 trillion in savings would be achieved, particularly given the lack of detail in the statement released on Monday. Some Members may also be concerned that what one White House source called a “business decision” by the associations to endorse the savings goal could eventually result in reimbursement reductions or creation of new government bureaucracies to regulate health care and micro-manage decisions made by doctors and patients—a result that would harm not only American patients, but many of the members whom the trade associations purportedly represent.