As the House of Representatives prepares for a final round of debate on the health care legislation, ordinary Americans must grasp the huge impact on the future of the country. House Speaker Nancy Pelosi is pulling out all the stops to get the 216 votes needed to pass the Senate health bill, H.R. 3590 (PDF). The Speaker is also promising to fix the Senate bill’s many objectionable components later through the budget reconciliation process, parliamentary rules normally used to reconcile tax and spending provisions with the annual congressional budget resolution.
Meanwhile, the House leadership is also reportedly pursuing the controversial “Slaughter Rule,” in which the entire Senate bill be “deemed” to have passed the House without an “up or down” vote on the Senate language.
Regardless of whatever procedural shenanigans the House leadership tries to play, the end result would be enactment of the Senate health bill as the law of the land. That’s the end game. Period.
In a recent analysis, Heritage’s Kathryn Nix and Bob Moffit examine the consequences of policies embodied in the Senate bill. It would have enormous consequences for jobs, the economy, and the health care of every American. For example, it:
- Bends the Cost Curve Up: The Senate bill is projected to further increase the cost of health care. According to the latest report (PDF) by the Congressional Budget Office (CBO), the bill would increase health care spending by $210 billion over the next ten years.Provisions in the bill such as federal regulations on insurers and taxes on medical devices and prescription drugs distort health care markets by creating the wrong economic incentives.
- Increases the Federal Deficit: The Senate leadership used accounting tricks and budgetary gimmicks to claim that the Senate Bill is “deficit neutral.” However, when government outlays and revenue collection are considered together in a 10-year period, Medicare cuts are not double-counted, and the “doc fix” is included, the bill will substantially increase the deficit, with an overall cost of approximately $2.3 trillion.
- Expands Medicaid: The bill calls for an expansion of Medicaid, an already-inefficient entitlement program. Heritage analysis has shown that Medicaid expansion is costly, and yet failures to meet the health care needs of its beneficiaries.
- Imposes additional costs on insurance. New federal regulations will include a minimum medical loss ratio, an excise tax on high-cost insurance plans, and federally defined benefits. These provisions would increase premiums
- Invites Insurance Market Instability : The combination of an individual mandate and the requirement of insurance companies to guarantee coverage regardless of preexisting conditions invites instability in health insurance markets. Younger and healthier Americans are likely to pay the cheaper mandate penalty rather than purchase a more costly health plan. The end result would be a “death spiral” with only sick people comprising the risk pool—causing a substantial increase in premiums
- Creates Incentives for Employers to Drop Group Insurance Plans: The structure of the employer mandate creates incentives for firms that hire a large percentage of low-income workers to drop health insurance all together.
- Discriminates Against Low Income Workers: Employers would be required to pay a $3000 fine for each low-income employee that opts out of the employer coverage and into the state government exchanges. This creates incentives for employers to discriminate against workers from low income families when hiring
- Creates New Inequities Among Employees: Because eligibility for subsidies in state government exchanges is determined by family income, employees making the same wage can receive vastly different enumerations based on family size and the spouse’s income. The lower the income of the entire family, the greater the amount of federal assistance an employee will receive relative to another with higher family size and/or income.
- Creates an Uneven Playing Field for Private Insurance: The legislation requires the Office of Personnel Management (OPM) to sponsor two health plans that would compete nationwide against private health plans in the state insurance exchanges. This could create a de facto public option, with separate rules on benefits, profits, and medical loss ratios Ultimately, this separate treatment under the rules could work against private plans that compete with government-sponsored plans. Worse, there is always a danger of dunning taxpayers to bailout the OPM-administered plans.
- Taxes the Middle Class: Contrary to President Obama’s campaign promises to add no new taxes to the middle class, the bill calls for several taxes that would hit the middle class, including but not limited to an excise tax on high cost insurance plans taxes on medical devices and prescription drugs and a tax on investment income included in the President’s proposal, which would presumably be included by reconciliation.
- Penalizes Marriage: The structure of health insurance subsidies are inequitable, offering more financial assistance to non-married couples than married couples with comparable incomes.
The Senate health bill fails to address many of the underlying deficiencies in health care, while it concentrates power in the hands of government officials. Contrary to what the president keeps insisting, it is indeed a federal takeover of health care.
Rick Sherwood currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/About/Internships-Young-Leaders/The-Heritage-Foundation-Internship-Program
