You have to read all the way to page A-25 in today’s New York Times to learn about it, but the Senate took its first floor vote on Obamacare yesterday and the White House lost. Big. The NYT reports: “Democrats lost a big test vote on health care legislation on Wednesday as the Senate blocked action on a bill to increase Medicare payments to doctors at a cost of $247 billion over 10 years. The Senate majority leader, Harry Reid, Democrat of Nevada, needed 60 votes to proceed. He won only 47. And he could not blame Republicans. A dozen Democrats and one independent crossed party lines and voted with Republicans on the 53 to 47 roll call.”
As we reported on Monday and Tuesday, yesterday’s “doc fix” vote was part of a White House Chief of Staff Rahm Emanuel strategy to smooth passage of President Barack Obama’s $1 trillion-plus health care overhaul by transferring a quarter of its cost into a separate, and completely unpaid for, bill. This transparently dishonest shell game was too much for honest Democratic Senators like Evan Bayh (D-IN), Kent Conrad (D-ND), Russ Feingold (D-WI), Claire McCaskill (D-MO), Bill Nelson (D-FL), and Ron Wyden (D-OR). Wyden told the NYT: “On the eve of a historic debate on health care, it’s essential to show a commitment to real reform,” which includes fiscal responsibility.
Yesterday’s vote marks a significant failure of the Left’s special interest approach to passing Obamacare. From the beginning, the White House thought that if it bought off all of the business interests involved (the American Medical Association, the drug industry, health insurers, hospitals, etc.) opposition to the plan would wither. In one sense, the plan worked. USA Today reports PhRMA, Pfizer, America’s Health Insurance Plans, and the Federation of American Hospitals have all ponied up millions of dollars for lobbying and television ads in support of Obamacare.
But all these special interest television ads failed to rid Americans of their common sense objections to Obamacare’s government takeover of health care. Gallup reports today that Americans now more than ever believe the costs their family pays for health care will get worse if Obamacare passes. And more Americans now believe that Obamacare will lower the quality of care they receive, reduce their health care coverage, and complicate the insurance company requirements they have to meet to get certain treatments covered.
Instead of the massive overhaul being pursued by the White House, a solid majority of Americans tell Gallup they want to see Congress move in the opposite direction. By 58% to 38%, Americans would generally prefer to see Congress deal with health care reform “on a gradual basis over several years” rather than “try to pass a comprehensive health care reform plan this year.” Bipartisan, fiscally responsible, reform such as equalizing the tax treatment of health insurance purchases, freeing customers to purchase health insurance across state lines, and allowing states more flexibility on Medicaid spending are readily doable. And that is what the people want.
Quick Hits:
- In a violation of laws against government-funded propaganda, the official, taxpayer funded, Department of Health and Human Services website urges Americans to to send an e-mail to President Barack Obama praising his health care reform plan.
- According to a new report, 7 months after President Barack Obama’s $787 billion stimulus became law, 49 of 50 states have lost jobs and America is now over 6 million jobs shy of White House promises.
- The Obama administration’s wage control czar plans to order companies that received bailout money to slash pay for each of the companies highest paid employees by an average of 50%.
- The drug and insurance industries have spent millions of dollars lobbying Congress in favor of Obamacare.
- Windmills’ propensity to kill bats is pitting endangered species advocates against climate change scaremongers.
Here’s a simple fact: It’s impossible to reform the health insurance markets and create a consumer-driven system based on personal choice and real health plan competition without reforming the federal tax treatment of health insurance. All arguments to that fact, from Republicans and Democrats alike, are nonsensical.
So, it’s heartening when self-proclaimed progressive Sen. Ron Wyden (D-Ore.) is on the same page as the Heritage Foundation and the nation’s leading conservative health policy analysts on the central issue of federal tax policy. Wyden’s comments today at the Urban Institute underline the broad bipartisan support that does exist in Washington and elsewhere for changing the tax treatment of health benefits to make it more equitable for individual consumers.
In a panel on overall tax policy, Wyden renewed his push for Congress to convert the unlimited tax break that’s available for employer-sponsored health benefits (technically called the employer-based exclusion) into a system of individual tax relief so that individuals and families could buy their own insurance plans without today’s punishing tax penalties.
“We need to convert the tax exclusion into a generous deduction or credit and put that in the hands of individuals to go into the marketplace and find policies that work for them,” Wyden said, a member of the Senate Finance Committee, which is currently marking up legislation that could dramatically overhaul the U.S. health care system. “This will result in millions of Americans getting tax cuts when they shop.”
Heritage health policy and tax expert Stuart Butler has pointed out this tax reform also would incentivize millions of Americans to help drive down soaring health care costs:
“There are two objectives behind proposals to reform the “exclusion” of [employer-sponsored] benefits from a worker’s taxable compensation:
- First, it would focus the unlimited special tax break — which, after all, is a distortion in the underlying tax code — on those who need help the most. Currently the total value of the tax exclusion is about $270 billion annually to families at the federal level (there is also tax relief from state taxes), with most going to upper-income families who are in higher tax brackets.
- Second, it would achieve efficiencies and cost reductions in health care over time by making workers more attuned to their health benefits. Economists generally agree that the tax-free status of health benefits means their true cost is essentially hidden: Their value does not even appear in paychecks or year-end W2s. This discourages workers from questioning value for money in health insurance or whether they are overusing services. This in turn pushes up the cost of these benefits and correspondingly reduces the cash income component of worker compensation. A cap would focus workers’ attention on the total cost of their insurance and make workers a self-interested partner with employers in seeking more efficient and less costly plans.
Now, this doesn’t mean that either Butler or other Heritage experts feel the rest of Sen. Wyden’s health policy agenda, including his legislative proposal with Sen. Robert Bennett (R-Utah), are desirable or sound. Nina Owcharenko had urged lawmakers to approach the bill with caution:
Despite many attractive tax reform aspects, a troubling feature of the bill is that it would replace the current health system with one that is heavily regulated by the federal government: Individuals would have access only to plans permitted by the government and would be required to purchase such a plan.
Still, giving individual consumers tax breaks to buy their own insurance plans — plans they could keep through any job changes or spells of unemployment — would greatly stabilize today’s unstable health insurance markets. Moreover, real consumer choice, in which individuals can hire and fire health insurers just like they can with other insurers, would exert intense pressure on the market, forcing it to offer competitive and affordable health plans or lose market share.
As Wyden said today, “Choice and competition are how you get to affordability in health care.” That’s the right response to the statist, central planning, bureaucratic rationing and price controls that are being proposed.