Conservative Principles Now

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.

On the eve of the House of Representatives push to jam through the misguided and highly unpopular Senate health care bill, , the President continues to try and convince the American people that the health care bill would reduce cost while showing his commitment to creating jobs and improving the economy. The raw facts make it clear that he cannot keep either of these promises. For example:

• The President claims the health care proposals would reduce health care spending. The reality is health care spending would increase. According to the latest Congressional Budget Office report of the Senate bill, health care spending under the Senate bill would increase by $210 billion over the next 10 years. This is similar to the results found by the President’s Chief Actuary which estimated an increase of $222 billion. While CBO predicts spending would decrease in the second decade, history shows spending rarely, if ever, goes down on government health programs. Medicare is hurtling toward a financial crisis, and Medicaid is breaking state budgets.
• The President claims the health care proposals would reduce premiums. The reality is premiums will go up for many under the Senate bill. The Congressional Budget Office and the Joint Committee on Taxation have estimated premiums in the non-group market would be 10 to 13 percent higher in 2016 than they would be with no bill and cost would likely fall higher on young and healthy families. In addition, this is before the government specifies and locks into place new federal benefit mandates that will no doubt further increase premiums for all Americans. There is little or no experience of government officials reversing these trends.
• The President claims the health care proposals would cost under a trillion. But, that figure excludes major health care provisions – like filling the Medicare “donut hole”, fixing Medicare reimbursement to physicians, and creating a new long-term entitlement program – pushing the price tag to over $2 trillion. Only in Washington does spending more money equal saving money.
• The President claims the health care proposals would reduce the deficit. Unlike CBO’s restricted scope of analysis, the independent analysis by the Lewin Group estimates that when taken in its entirety, which means accounting for the expected $200 billion plus boost in Medicare reimbursement for physicians, the proposal would actually add to the deficit, not reduce it.
• The President claims he is committed to improving jobs and the economy. Based on his own policies, the opposite is true. The Senate bill would result in 620,000 fewer job opportunities and would increase the national debt by $755 billion through its lethal combination of mandates, taxes, and government spending. As Heritage analysts have pointed out, “Because investment is what drives productivity and economic growth, less investment–even if only slightly less–leads to lower productivity, slower economic growth, weaker wages and salaries, and lower household wealth.” Even worse, his own proposal to “fix” the bill adds a new tax on investment income that would result in 115,000 lost job opportunities and disposable income is estimated to be $17.3 billion less per year than it otherwise would be.
• The President claims he will “fix” the bill. Although he promised to ensure no federal funding would be used for abortions and eliminate the repugnant special deals, House passage of the Senate bill would lock these into place, and they could only be undone through a highly uncertain reconciliation process to “fix” the bill in the Senate.  Not only is taxpayer funding of abortion not fixed, it is expanded under the Senate bill. Moreover, the ugly special state deals at the expense of the taxpayers still remain.