In their feverish effort to enact the Senate health bill, the House leadership recently released their 153 page bill to fix the underlying 2,409 page Senate legislation through the budget reconciliation process. As a matter of health policy, there is little that is substantively different between the Senate bill and this “fix it” bill. A closer look at the fine print shows that the latest version would only make the massive and unpopular Senate health bill even worse.
Based on a preliminary review of the key provisions, taxpayers should be aware of the following features of the legislation.
More Spending
- The House reconciliation bill increases taxpayer subsidies and lowers cost sharing for individuals receiving a federal subsidy to buy health coverage. This change adds to the overall cost of the bill, while depending on unproven savings and tax hikes to pay for it.
- Instead of removing special deals, the bill extends additional federal funding to all states for Medicaid. This “fix” is supposed to replace the scandalous requirement that federal taxpayers fund the Nebraska Medicaid expansion. In both case, however, the burden is back on the backs of federal taxpayers.
Raising Taxes on Americans for all Income Brackets
- The reconciliation bill increases the individual mandate penalty for some by requiring the penalty be the greater of two options. This mandate amounts to a new tax on those people who choose not to purchase a government-approved health plan regardless of income.
- The bill also increases taxes on all consumers who use prescription drugs, medical devices or have health insurance.
- The bill also keeps the Cadillac tax, the tax on high value health plans. But by delaying its start date and indexing the application of the tax to general inflation, it will hit more families harder when it goes into affect.
- Finally, the reconciliation bill adds a new Medicare tax on upper income individuals and families that extends to investment earnings as well.
Undercutting Job Creation and the Economy
- The reconciliation bill increases the penalties on businesses for not offering health insurance and continues the penalty on businesses whose employees claim the new health care subsidy.
Moving Backward on Entitlement Reform
- The reconciliation bill makes changes to Medicare and Medicaid that reverse course for reforming these struggling health care programs.
- The bill increases costs to seniors by requiring prescription drug plans in Medicare to offer more coverage and
- The bill also undercuts any reform of Medicare by linking Medicare Advantage payments to the flawed fee for services system and by eliminating demonstration projects that utilize competitive bidding to show how an alternative that would use real market pricing would work in practice.
- Although the sponsors of the House bill claim to address long term costs to Medicare, the bill’s dependence on traditional cuts to providers is not fundamental entitlement reform. It’s basically the same, old, tired cuts in hospital and physician payment.
- The bill would add millions of Americans to the already broken Medicaid program. Medicaid remains fiscally unsustainable (for state or federal taxpayers) and it is a notoriously poorly performing program for those who are forced depend on it. Moreover, when new federal funding expires, states will be left with an even heftier cost.
Taking Power Away from the States
- The House reconciliation bill would secure a massive federal take over of the regulation of health insurance. It nullifies state authority in rate regulation of premiums, setting standards for solvency and reserves. It creates, instead, a new federal rate authority in charge of authorizing changes in politically approved premium levels and imposing penalties on health insurance companies.
- The reconciliation bill would undercut the ability of state and local governments to control state and local government employee health plans. As a condition of receiving federal money, state and local governments must abide by the new federal regulations and bureaucracy.
Provides for Taxpayer Funded Abortions
- The House reconciliation bill includes major funding for community health centers with no Hyde Amendment type restrictions on federal taxpayer funding of abortions.
- The bill, of course, does not in any way address the large loopholes for taxpayer funded abortions included in the underlying Senate bill, which it is supposed to “fix”.
Co-authored by Ed Haislmaier and Robert Moffit.
During his State of the Union Address, President Obama declared that “there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.” One public servant providing practical solutions is Rep. Paul Ryan (R-WI), who recently introduced his Roadmap for America’s Future Act of 2010. The Ryan bill outlines clear, sound principles to reform entitlement spending and health care. The Roadmap’s health care provisions would bend the cost curve in health spending, make insurance more affordable and accessible, and create a consumer-driven, highly-competitive system. This is how it is done:
1. Changing the Tax Treatment of Health Coverage
Current tax treatment of health insurance gives preference to employer-based coverage by making benefits tax free to the employee and the employer alike. Obviously, this tax policy only benefits those who receive coverage through their employer. It benefits those who also have the biggest benefit packages, usually, but not always, the wealthy. Ryan’s “Roadmap”replaces this inequitable system through creating a system of refundable tax credits of $2,300 for individuals and $5,700 for families for the purchase of health coverage. As Heritage experts have pointed out this will transform the market to respond to patients’ needs, allow portability of insurance between jobs, and further the goal of universal access.
Replacing the tax exclusion with a health care tax credit would not only help the middle class buy insurance and extend coverage to the uninsured; it would also set in place powerful incentives to reduce the rapid growth in health care expenditures…individuals and families will have the ability to choose the health plan they want, own it, and take it with them from job to job. This tax credit would also have the added benefit of allowing individuals and families to decide how much of their compensation comes to them in the form of health insurance
2. Promoting State- Based Reform and Exchanges
The Ryan “Roadmap” would create a Federal-State partnership to help states that wanted to do so create State Health Insurance Exchanges, featuring high-risk pools combined with guaranteed access to care with affordable premiums. A state health insurance exchange can be designed many different ways. The key question is what is the objective of such an exchange. For consumers who want to own and control their health insurance, and take it with them from job to job, a properly designed state exchange, as Heritage’s Robert Moffit argues, can make it easy for employees , especially those in small businesses to compare and buy affordable health plans. It can unleash the free market forces of choice and competition. An exchange designed to restrict health options, as is now being promoted by the Left, is just another regulatory roadblock to personal freedom.
3. Allow Interstate Purchasing of Health Coverage
Congressman Ryan’s proposal would also allow individuals to use their refundable tax credits towards the purchase of health insurance policies in any state. As Moffit explains, interstate competition would lead to broader and more intense competition, greater personal choice and more affordable coverage, and would secure value for consumers’ dollars.
The nonpartisan Congressional Budget Office evaluated Congressman Ryan’s Roadmap favorably, finding that “[The health insurance tax credit] could impose significant downward pressure on… the growth of overall spending on health care.” The Roadmap would also reform Medicare, putting it on more solid fiscal ground and molding it into a more consumer-driven system.
Even the President has kind words to say about the Rep. Ryan’s Roadmap, calling it a “detailed” and “legitimate” plan to tackle our fiscal crisis. The question before the taxpayers is whether the president and the congressional leadership are really serious about pursuing bipartisan reform, or whether they want to continue to push the massive and unpopular House and Senate bills that are so unpopular with the American people.