Conservative Principles Now

When President Obama held his health care summit at the White House, Rep. Dave Camp (R-MI) pointed out that a key part of containing medical costs was completely missing from the debate: medical malpractice legal reform. The cost of defensive medicine alone (without taking into account the direct costs of such claims) “could be as high as $239 billion” according to a study by PriceWaterhouseCoopers cited by Camp.

So what was President Obama’s response? He basically interrupted Camp and told him to “finish up.” On March 3, when Obama gave his speech in the East Room on health care reform, his only mention of this issue was about “funding state grants on medical malpractice reform.” Of course, he has said that before – in his address to Congress on health care last fall. Then he offered to fund “pilot” projects even though states like Texas and Mississippi have instituted such reform and we already know what works.

The House bill actually tries to kill effective malpractice remedies such as caps on noneconomic damages. It provides incentive payments to states that provide “an alternative medical liability law” that prompts the “fair resolution” of disputes – but no such incentive will be paid to any state that limits “attorneys’ fees or imposes caps on damages.”

Now according to a source, Rep. Cuellar (D-TX) is trying to convince his fellow legislators that this problem can be solved through an amendment to H.R. 3590. His proposed amendment states that “[t]he development, recognition, or implementation of any guideline or other standard under any provision of this Act shall not be construed to establish the standard of care or duty of care owed by health care providers to their patients in any medical malpractice action or claim.” The amendment also says that nothing in the federal law will “modify or impair State law governing legal standards or procedures used in medical malpractice cases.”

However, arguably this provision may be worse than useless from the standpoint of protecting medical providers from medical malpractice claims because it may give medical providers a false sense of security. Even if defendants will be able to argue that federal guidelines do not automatically establish a standard of care, plaintiffs’ lawyers will compare the doctor’s conduct to that federal guideline whenever the doctor’s actions deviate from it. So, the doctor will still be at risk. Second, this amendment will not preclude a plaintiff’s lawyer from arguing that a doctor should have done more than the minimum federal guideline, turning it into the equivalent of a standard. Third, only a state legislature can stop state courts from adopting the federal guideline as the state’s standard of care for medical treatment. Finally, this provision gives the states no reason or incentive to implement specific reforms that are known to work like capping damages for noneconomic damages (like “pain and suffering”).

The bottom line is that so far in this extended debate over healthcare, there is absolutely nothing substantive in the president’s proposals or the House or Senate bills that would implement any real medical malpractice reforms.

In order to pay for a massive health care bill (H.R. 3590), Majority Leader Harry Reid (D-NV) creates a host of new taxes. These taxes will total $370.2 billion in the next ten years, and many of the taxes will start being collected in 2010, even as the economy continues to struggle.

The most shocking tax increase is a payroll tax increase that will permanently sever the link between the Medicare Payroll tax and its contributions to Medicare. This payroll tax increase of .5% on earnings above $200,000 for singles and $250,000 for joint couples will contribute money to the general fund for health care instead of directly for Medicare payments.

This change means that Medicare taxes are no longer solely dedicated to social insurance and safeguarding Medicare. Instead, Medicare payroll taxes will be used for other government programs. It is ironic, that the shift emerges from the liberals as they have long been worried about turning social insurance programs into welfare programs that redistribute wealth. The Reid payroll tax is a huge step down the road of using social insurance payroll taxes as regular taxes to transfer income.

Senator Reid also keeps the excise tax on high value of insurance companies. This tax is expected to be $150 billion and is very similar to the similar tax in the Senate Finance Committee, but at a higher threshold level.

Senator Reid also imposes a host of new taxes on the health insurance industry. These range from taxes on branded drug companies to the makers of medical devices. The effect of these new taxes will be to increase medical costs and premiums for individuals. These taxes do nothing but raise the cost of health care as the companies will pass on these tax increases to the consumers of health care.

Reid Taxes as calculated by the Joint Tax Committee:

1. 40% Excise tax on High Value plans such as $8,500 for Individual and $23,000 for a couple. $149.1 billion in new taxes over the next ten years.
2. 0.5% Hike in Medicare Payroll Tax Hike, for single earners over $200,000 and joint earners over $250,000. $53.8 billion in new taxes over the next ten years.
3. Changes to Health Savings Accounts, Archer Medical Spending Accounts and Health Flexible Spending Accounts and Health Reimbursement Arrangements, $5 billion in new taxes.
4. Cap Flexible Spending Accounts at $2500 in cafeteria plans from the current status of unlimited FSA, $14.6 billion.
5. Increase Penalty for early non-qualified Health Savings Accounts Withdrawals from 10 to 20 Percent, $1.3 Billion.
6. Tax on Branded Drugs: manufacturers and importers of branded drugs that will cost taxpayers $22.2 billion.
7. Annual tax on the health insurers. $60.4 billion in new taxes over ten years.
8. Tax on companies who manufacture or import medical devices that will generate $19.3 billion in new taxes over the next ten years.
9. 0. 5% excise tax on cosmetic surgery. This is basically a new 5% federal sales tax on cosmetic surgeries and procedures. $5.8 Billion in new taxes over ten years.
10. Increase the floor of the Medical Expenses Deduction from 7.5% of Adjusted Gross Income to 10%. The floor for seniors will be maintained at 7.5%. This means that the cost of being sick has increased, and sick taxpayers will pay $15.2 billion in new taxes in the next ten years.
11. Eliminate the Deduction of Medicare Part D(prescription Drug Plan) generates $5.4 billion in new taxes over the next ten years.
12. Cap salaries for all employees of health insurance companies at $500,000 by making any remuneration all of that not deductible for tax purposes. $.6 billion over ten years.
13. Established mandates on employers of companies with more than fifty employees to provide health coverage or pay a fee, and requires individuals to maintain qualified health coverage or pay a fee. Companies would pay a penalty of $750 per employee if any employee obtained coverage through the insurance exchange. Full-time workers would have to accept company coverage unless company coverage would cost more than 9.8 percent when they could be on the government exchange, but companies would still face the $750 penalty yielding $36 billion over ten years.