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.