Conservative Principles Now

Scott Brown’s remarkable victory in the Massachusetts Senate election speaks loud and clear: Americans across the political spectrum are unhappy with the scale and cost of the congressional health reform legislation, and the lack of transparency in the process.

Congress would be wise to see this outcome as a referendum on health care reform. The proper conclusion? It’s time to hit the reset button and scrap the doomed bills in both chambers. Then President Obama should bring together the key leaders of both parties, and craft a far more modest approach in an open process that will actually address the concerns of Americans.

What’s Wrong with Obamacare:

Both the predicted and unforeseen costs of health reform have Americans very worried. Though the Congressional Budget Office (CBO) scored both bills as deficit neutral, both the CBO itself and other analysts have been skeptical that many the assumed savings in the legislation will come to fruition. For example, the CBO cost analysis of the Senate bill, for example, has to assume that Medicare physician payments will indeed by cut by over 20 per cent next year – which is politically inconceivable. In fact, once politicians begin to feel the pressure of interest groups and worried voters, history indicates that Congress will retreat from any unpopular cost-saving provisions used to pay for part of the new spending in the legislation. Thus the cost of either bill would easily surpass CBO’s cost estimate, adding substantially to the federal deficit.

And the price tag isn’t the only problem:

• Government-run health programs to distort and interfere with the insurance market. The House bill creates a public plan as part of a federal health exchange; the Senate uses health plans run by the Office of Personnel Management. Either way, these plans would create an uneven playing field to use the power of the federal government to out-compete private plans.

• New federal regulation of health benefits. This would undermine the power of states to enact their own reforms and the consumer to choose what benefits work best for them.

• Increasing coverage via expanding Medicaid and offering subsidies. These provisions limit consumer options rather than expand them. This is especially true for low-income Americans who will have no choice but to enroll in Medicaid if they wish to obtain federal assistance to purchase insurance.

• An employer mandate. Though the structure of this penalty varies from the House to Senate bill, the results would be the same: employers would find it less costly to pay the fine and reduce wages or number of workers accordingly than to purchase insurance for employees. What is more, the House bill’s mandate would apply to many small businesses, crippling growth during a recession.

• An individual mandate. Both the House and Senate bill would compel Americans to buy health insurance or pay a fine. Not only does this raise constitution issues, but is likely to have the opposite affect as many Americans chose to pay the tax rather than buy health care coverage. In cases where the penalty is much less than the cost of insurance (which, in the Senate bill, is practically every case) most Americans would pay the tax rather than buy insurance. This could lead to only the old and sick carrying insurance, greatly increasing premiums.

Americans in Massachusetts and elsewhere are clearly rejecting Congress’ huge and centralizing strategy for health care. So it is indeed time for Washington to hit the reset button on health care reform and start over with the right kind of change that all Americans can support. What’s needed now is a truly bipartisan strategy to:

• Promote rapid state innovation. States should be given more autonomy and freedom from federal statutes and rules to address problems within their respective health care systems in the way they see fit. In addition, Americans should be able to purchase insurance across state lines.

• Reform the tax code in order to establish fairness in the tax treatment of insurance. The current system benefits those who receive employer-sponsored coverage and the wealthy, and does nothing to aid those with lower incomes or who purchase insurance independent of their employer. A cap on the amount of tax excludable benefits would discourage high-cost employer-sponsored plans and provide budget-neutral tax relief for American taxpayers who cannot afford even a basic plan.

• Get serious about entitlement reform. The Medicare and Medicaid programs continue to increase in cost as the population ages and health care costs in general rise. These programs should be reformed to offer better value to taxpayers using a defined contribution system. This would create competition among insurers to attract seniors and the poor as customers, and would give Medicare and Medicaid beneficiaries more choice.

Voters in Massachusetts and elsewhere are telling Washington what they think of Obamacare. Now Congress should go back to the drawing board. And this time, instead of pushing drastic reform of one-sixth of the nation’s economy, lawmakers should take their time and get it right, by passing incremental reform that Americans can agree on.

New analysis confirms that the health care bills moving the House and Senate will break the many promises President Obama made to the American people. As the details of the legislation are exposed, it is no wonder that Americans are growing uneasy over the direction the legislation has taken.

The Chief Actuary for the President’s own Centers for Medicare and Medicaid Services issued an extensive analysis of the pending Reid bill and House-passed bill. The Lewin Group also released an analysis of the House and Senate bills. These reports provide a comprehensive overview and impact of the legislation. Here are a few important facts from the reports:

More Health Care Spending, Not Less
A key argument by the President and Congress for health care has been to bring health care spending down. However, both studies expose that instead of bring health care spending down, the House and Senate bills would increase health care spending.

• The Actuaries report estimates that health care spending would increase under the Senate bill by $234 billion between 2010 and 2019 and $750 billion between 2010 and 2019 under the House bill.
• The Lewin Group estimates the Senate bill would increase health care spending by $305 billion between 2010 and 2019 and $781 billion in the second decade. Under the House bill, Lewin Group estimates health care spending would increase by $425 billion between 2010 and 2019 and $955 billion in the second decade.

Adds to the Deficit, Not Reduces
In his address to Congress, the President promised the American people the bill would not add one dime to the deficit. While that may be technically correct, it is does not show the whole picture. The House and Senate bills excluded – not by accident – the costly provisions to the Medicare physician payment formula. The Lewin Group considered the impact of incorporating the costly physician payments changes into the larger health care bill to show the full impact on the deficit.

• The Lewin Group estimates that when including the impact of correcting the Medicare physician payments, the federal deficit would increase by $196 between 2010 and 2019 and $765 billion in the second decade under the Senate bill. Under the House-passed bill, the federal deficit would increase by $77 billion between 2010 and 2019 and $591 billion in the second decade.

Costs and Premiums Go Up for Many
Although not highlighted as often anymore, the President promised that health insurance premiums would go down as a result of these bills. The analysis by Lewin Group actually shows there are big losers under the Senate and House bills.

• Once fully implemented, health care spending per worker will increase for all employers who do not currently offer coverage — $316 per worker under the Senate bill and $800 increase per worker under the House bill. Depending on the firm size, it can get even worse. For example, under the Senate bill, employers with fewer than 10 workers would see a cost increase of $374 per worker. Under the House bill, employers with more than 100 workers would see an increase of $1,182 per worker.
• Once fully implemented, average annual health care spending per family would also increase — $66 per family under the Senate bill and $83 per family under the House bill. While spending may go down for lower income families, families earning over $50,000 would see an increase of over $200 in annual health care spending under both the Senate and House bills, increasing further by income.
• Currently uninsured families (with one or more uninsured members) would face significant increase in health care spending. The Lewin Group estimates uninsured families would pay $1,225 more per family/per year under the Senate bill and $1,308 more per family/per year under the House bill.

Loss of Employer Based Coverage
As a result of the structure of the House and Senate bills, many employers would find it advantageous to drop their existing coverage. Therefore, workers who currently have employer-based coverage would be transitioned out of their existing coverage.

• The Actuary’s report estimates that the number of people currently with employer based coverage would drop by 17 million under the Senate bill and 12 million under the House-passed bill.
• The Lewin Group estimates 16 million employers would drop coverage under the Senate bill and 18 million employers would drop coverage under the House bill.

No Choice for the Poor
One major theme of the health care debate has been to increase choice and competition in the health care system. Unfortunately, according the Actuary’s report and the Lewin Group, millions of uninsured Americans will not have choice, but forced to join a poor quality, government-run health care plan – Medicaid.

• The Actuary’s report estimates about half (18 million) of the newly insured will end up on Medicaid as a result of the Senate bill and House bills.
• The Lewin Group estimates 14 million more people would end up on Medicaid under the Senate bill and 12 million more under the House bill.

Millions Remain Uninsured
Besides claims to bend health care spending down, advocates for these proposals claim expanding coverage as a major goal for the trillion dollars legislative proposals. However, according to the Actuaries report and the Lewin analysis, millions of people would still remain uninsured under the House and Senate bills.

• The Actuary report estimates 19 million Americans would remain uninsured under the Senate bill and 18 million Americans would remain uninsured under the House bill.
• The Lewin Group analysis estimates 18 million Americans would remain uninsured under the Senate bill and 16 million would remain uninsured under the House bill.