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Making a Bad Bill Worse

Posted By Kathryn Nix On January 12, 2010 @ 11:28 am In Obamacare | Comments Disabled

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The Washington Post’s EJ Dionne’s had an op-ed [1] yesterday detailing six policy areas where House Democrats believes they can pull the Senate health care bill further to the left. For every issue that Dionne identifies, a House victory would lead America even further down the path to government run medicine:

1. A National Health Insurance Exchange
A national exchange would create a vehicle for federal regulation of insurance policies and one-size-fits-all health plans that don’t necessarily meet the needs of all Americans. This threatens the federalist division of power between the national government and the states [2], and undermines the capacity of the states to function in this vital area of public policy. A national exchange would also pre-empt the states in pursuing their own efforts to expand coverage, or, for those states that would like to experiment with an exchange, it would encroach on the states’ abilities to tailor their state-based exchanges to their specific needs. A health insurance exchange, unfortunately, can mean many different things, from a facilitator of consumer choice and open competition to a restriction on both. For those interested in the concept, states based insurance exchanges have to be done right. Simply having the states administer a federal exchange makes matters worse, by hampering or even killing off state innovation [3].

2. Higher Subsidies for Exchange Enrollees
Offering higher subsidies to the few who are able to join the exchange will heighten the effect of the inequity among workers [4] created by the Senate bill. This change would also add billions to the cost of the bill at the same time that other changes would lower revenue. This increases the likelihood that billions of dollars spent on health care reform will be added to the federal deficit.

3. Further Expansion of Medicaid
Both bills already significantly expand Medicaid eligibility. If the negotiations result in the raising Medicaid eligibility to 150 percent of the federal poverty level (FPL), as the House bill does, the Office of the Actuary estimates that TK million uninsured Americans would gain coverage through Medicaid. Anytime there is a public program expansion, one is going to see a “crowd-out” of private health coverage. Americans should not be fooled—the real story is these bills would expand coverage by putting millions of Americans into Medicaid, one of the country’s most poorly functioning health care programs. In that sense, contrary to false rhetoric by Congressional champions, both bills are a deliberate prescription for lower quality of care for millions of Americans.

4. A Weaker Excise Tax on High-Cost “Cadillac” Insurance Plans
To pay for the proposal, both bills depend on raising taxes to help pay for its trillion dollar “reforms.” The President has indicated he supports the Senate version, which would impose a new excise tax on so-called “Cadillac” plans. There is great opposition to the tax among unions, whose members, overwhelmingly middle class, tend to enroll in such plans. But, getting rid of the excise tax all together is not an option since it would have to be replaced with another revenue raiser; higher taxes somewhere else. Negotiations could end up creating more special interest exemptions – this time for unions – and leaving the non-union workers with “Cadillac Plans” to foot more of the bill. Look for new inequities being piled upon the variety of inequities already created by the House and Senate legislation.

5. The Ugly Nelson Deal: More Cost-Shifting All Around
Politicians, eager for “free” federal taxpayers money, are now looking to secure the same sweetheart deal for their states that Senator Ben Nelson (D-NE) got for Nebraska. Called the “Cornhusker Kickback”, in the Senate bill, Nebraska’s Medicaid expansion would be paid for with federal taxpayer dollars. Under the Nelson-Reid agreement, the federal government would fully fund the expansion of Medicaid in Nebraska. Extending this deal to all 50 states would superficially appeal only to those state taxpayers who don’t share the sense of national embarrassment that stirs the massive opposition of the straight shooting, good hearted, solid folks in Nebraska. But of course, such a “deal” would only sharply increase the federal cost of the bill, shifting these costs back to state taxpayers as federal taxpayers instead. In an absurd process, taxpayers would see the costs shifted right back to themselves by the politicians promising something for nothing. Furthermore, if and when, if ever, the federal Medicaid matching rate expires, state taxpayers would be forced to make up the difference [5] in funding on their own, forcing them to either cut funding to other programs or raise taxes, yet again.

6. More Micromanagement of Health Insurance
Both bills already transfer massive regulatory authority over health insurance plans to the federal government. Negotiations will likely add additional control to regulate and oversee the management of insurance companies. This could include increasing the medical loss ratio, removing antitrust exemption for insurance companies, more stringent age rating for premiums, and a heightened ability of the Department of Health and Human Services (HHS) to review premium increases. All of these regulatory schemes would stifle consumer choice in the insurance market, undercut real market competition, and result in a government-run health care system, with or without the public option.

More and more, it seems that members of Congress are less interested in enacting meaningful change to the health care system that Americans actually want; and they are more concerned with getting the right number of votes for something, anything, that they can somehow call “reform”, even though the vast majority of Americans vehemently disapprove of what they are doing.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/01/12/making-a-bad-bill-worse/

URLs in this post:

[1] op-ed: http://www.washingtonpost.com/wp-dyn/content/article/2010/01/10/AR2010011002145.html

[2] threatens the federalist division of power between the national government and the states: http://www.foundry.org/2009/11/05/killing-federalism-in-health-care/

[3] Simply having the states administer a federal exchange makes matters worse, by hampering or even killing off state innovation: http://www.heritage.org/Press/Commentary/ed111308c.cfm

[4] heighten the effect of the inequity among workers: http://www.foundry.org/2009/12/07/how-the-senate-health-bill-creates-inequities-among-american-workers/

[5] state taxpayers would be forced to make up the difference: http://www.heritage.org/Research/HealthCare/wm2744.cfm

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