The Worst Bill Ever
This article is from the Wall Street Journal Editorial Page and did not have an attributed author. This is not a “Tea Party” author but spelled out some of our concerns, so it seemed worth re-posting.
Speaker Nancy Pelosi has reportedly told fellow Democrats that she’s prepared to lose seats in 2010 if that’s what it takes to pass ObamaCare, and little wonder. The health bill she unwrapped last Thursday, which President Obama hailed as a “critical milestone,” may well be the worst piece of post-New Deal legislation ever introduced.
In a rational political world, this 1,990-page runaway train would have been derailed months ago. With spending and debt already at record peacetime levels, the bill creates a new and probably unrepealable middle-class entitlement that is designed to expand over time. Taxes will need to rise precipitously, even as ObamaCare so dramatically expands government control of health care that eventually all medicine will be rationed via politics.
Yet at this point, Democrats have dumped any pretense of genuine bipartisan “reform” and moved into the realm of pure power politics as they race against the unpopularity of their own agenda. The goal is to ram through whatever income-redistribution scheme they can claim to be “universal coverage.” The result will be destructive on every level—for the health-care system, for the country’s fiscal condition, and ultimately for American freedom and prosperity.
.•The spending surge. The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of the money goes into government-run “exchanges” where people earning between 150% and 400% of the poverty level—that is, up to about $96,000 for a family of four in 2016—could buy coverage at heavily subsidized rates, tied to income. The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth.
At least at first, these benefits would be offered only to those whose employers don’t provide insurance or work for small businesses with 100 or fewer workers. The taxpayer costs would be far higher if not for this “firewall”—which is sure to cave in when people see the deal their neighbors are getting on “free” health care. Mrs. Pelosi knows this, like everyone else in Washington.
Even so, the House disguises hundreds of billions of dollars in additional costs with budget gimmicks. It “pays for” about six years of program with a decade of revenue, with the heaviest costs concentrated in the second five years. The House also pretends Medicare payments to doctors will be cut by 21.5% next year and deeper after that, “saving” about $250 billion. ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow more after that.
• Expanding Medicaid, gutting private Medicare. All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years. Mrs. Pelosi wants to steal $426 billion from future Medicare spending to “pay for” universal coverage. While Medicare’s price controls on doctors and hospitals are certain to be tightened, the only cut that is a sure thing in practice is gutting Medicare Advantage to the tune of $170 billion. Democrats loathe this program because it gives one of out five seniors private insurance options.
As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level, meaning that some 15 million new people will be added to the rolls as private insurance gets crowded out at a cost of $425 billion. A decade from now more than a quarter of the population will be on a program originally intended for poor women, children and the disabled.
Even though the House will assume 91% of the “matching rate” for this joint state-federal program—up from today’s 57%—governors would still be forced to take on $34 billion in new burdens when budgets from Albany to Sacramento are in fiscal collapse. Washington’s budget will collapse too, if anything like the House bill passes.
• European levels of taxation. All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point “surcharge” on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. The burden will mostly fall on the small businesses that have organized as Subchapter S or limited liability corporations, since the truly wealthy won’t have any difficulty sheltering their incomes.
This surtax could hit ever more earners because, like the alternative minimum tax, it isn’t indexed for inflation. Yet it still won’t be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion. When Democrats end up soaking the middle class, perhaps via the European-style value-added tax that Mrs. Pelosi has endorsed, they’ll claim the deficits that they created made them do it.
Under another new tax, businesses would have to surrender 8% of their payroll to government if they don’t offer insurance or pay at least 72.5% of their workers’ premiums, which eat into wages. Such “play or pay” taxes always become “pay or pay” and will rise over time, with severe consequences for hiring, job creation and ultimately growth. While the U.S. already has one of the highest corporate income tax rates in the world, Democrats are on the way to creating a high structural unemployment rate, much as Europe has done by expanding its welfare states.
Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won’t buy insurance in 2019. Democrats could make this penalty even higher, but that is politically unacceptable, or they could make the subsidies even higher, but that would expose the (already ludicrous) illusion that ObamaCare will reduce the deficit.
• The insurance takeover. A new “health choices commissioner” will decide what counts as “essential benefits,” which all insurers will have to offer as first-dollar coverage. Private insurers will also be told how much they are allowed to charge even as they will have to offer coverage at virtually the same price to anyone who applies, regardless of health status or medical history.
The cost of insurance, naturally, will skyrocket. The insurer WellPoint estimates based on its own market data that some premiums in the individual market will triple under these new burdens. The same is likely to prove true for the employer-sponsored plans that provide private coverage to about 177 million people today. Over time, the new mandates will apply to all contracts, including for the large businesses currently given a safe harbor from bureaucratic tampering under a 1974 law called Erisa.
The political incentive will always be for government to expand benefits and reduce cost-sharing, trampling any chance of giving individuals financial incentives to economize on care. Essentially, all insurers will become government contractors, in the business of fulfilling political demands: There will be no such thing as “private” health insurance.
***
All of this is intentional, even if it isn’t explicitly acknowledged. The overriding liberal ambition is to finish the work began decades ago as the Great Society of converting health care into a government responsibility. Mr. Obama’s own Medicare actuaries estimate that the federal share of U.S. health dollars will quickly climb beyond 60% from 46% today. One reason Mrs. Pelosi has fought so ferociously against her own Blue Dog colleagues to include at least a scaled-back “public option” entitlement program is so that the architecture is in place for future Congresses to expand this share even further.
As Congress’s balance sheet drowns in trillions of dollars in new obligations, the political system will have no choice but to start making cost-minded decisions about which treatments patients are allowed to receive. Democrats can’t regulate their way out of the reality that we live in a world of finite resources and infinite wants. Once health care is nationalized, or mostly nationalized, medical rationing is inevitable—especially for the innovative high-cost technologies and drugs that are the future of medicine.
Mr. Obama rode into office on a wave of “change,” but we doubt most voters realized that the change Democrats had in mind was making health care even more expensive and rigid than the status quo. Critics will say we are exaggerating, but we believe it is no stretch to say that Mrs. Pelosi’s handiwork ranks with the Smoot-Hawley tariff and FDR’s National Industrial Recovery Act as among the worst bills Congress has ever seriously contemplated.
Link to article and additional info: http://online.wsj.com/article/SB10001424052748703399204574505423751140690.html
November 4th, 2009 at 1:07 am
Are you a professional journalist? You write very well.
November 4th, 2009 at 9:55 am
Mackeran – this came from the editorial page in the Wall Street Journal. No author was listed.
November 5th, 2009 at 10:27 am
I don’t think, at this stage, that it is fair to call the House bill “ObamaCare” any more. It’s plainly obvious to most of us that the house of representatives is pushing forward with legislation that is in conflict with many of the white house’s wishes. The author even points out a few of these later on in the article, but fails to reconcile this mistake above.
Every time a conservative refers to the congressional bills as “ObamaCare”, it makes me hurl. Word to the wise: stop using this label, this is not the 1990’s. Congress is actually doing all the heavy lifting. While I disagree with some of their direction, I think it sets a much better precedent than the “old way” of having the executive branch slide their own draft legislation through the congressional back-door, mainly to get through procedure.
Second mistake? “With spending and debt already at record peacetime levels”
Really? What country is this author living in? Australia? I am sorry, maybe that is the problem right now. If I was as deluded as the author to believe that we were in “peacetime” I might be even more outraged by the spending that is going on. In spite of this statemetn that the author makes regarding “peacetime spending”, they make absolutely no reference critical to the vastly more expensive (about 70 times more expensive!), yet according to the author’s assumptions, frivolous spending being dumped into two conflicts that we are apparently not even participating in!.
I’m sorry, the rest of the article is just opinionated blather. Reagan from the 1960’s called, he wants his baseless paranoia back. Secret takeover of the health care industry? Hardly. Medicare itself hasn’t even caused that to occur, and the exact same story was sung back then. What credibility do you have today?
The author even goes in to use WellPoint’s research findings to back up their claims about health-care premium inflation. Yeah, that’s right, WellPoint is non-biased. Keep lying to yourself. There’s a whole marketplace in the US for paying people to present information supportive of your own interests: Advertising.
I wasn’t completely fair in my assessment of the author’s writing. The author does have a point about Medicare and its funding system. However, the benefits passed under the previous administration which are currently under the chopping block have grown even more quickly in cost than the base benefits plan. If the proposal is “kill medicare” because it is “badly funded”, then why argue to preserve this even more costly and non-beneficial additional program?
Personally, I think that the current Medicare is a good, productive program that deserves to be funded. It is one of the best reasons why our grandparents live much longer today than their grandparents did 60-70 years ago. It is working really well in this regard. In fact, Medicare has become a victim of its own success. As it helps keep people alive longer (much better than the previous private system) they stay in the system, and the program keeps growing. Older folks in this country are staying alive at rates that exceed income levels. I say we fix the system, now that we have experimental data to show what effects can be expected over decades of its existence. Use this data to figure out a funding model that is better for the program. This seems to be more rational and logical than “throw out the Medicare program” because you can take issue with how it is funded. That’s killing it purely on a technicality, which I don’t think is how any of us want to run everything in America.
November 7th, 2009 at 10:36 pm
As for earlier comments related to calling Rep. Driehaus a “lap dog” for nancy pelosi:
http://driehaus.house.gov/images/stories/Freshman_Healthcare_Letter.pdf
Driehaus has been doing 100 times the work that Chabot ever did in Congress, such as actually writing meaningful legislation. Most of Chabot’s work centered around 1) trying to make abortion illegal at the federal level, 2) Attempting to keep local control over things that he thought local gov’t back home did in a socially conservative manner, and 3) Attempted to put things under federal control that he felt local government back home did too “liberally”, such as land-use disputes and banning online poker.
November 7th, 2009 at 10:37 pm
Oh yeah, and the Democrats have Congress working over the weekend. Something the GOP would never do, unless it meant overstepping the federal authority to prevent a state from executing the wishes outlined in a legally-binding living will. Then, and only then, did the congressional GOP think it was necessary to put in over time (which meant four work days a week, instead of three).
November 8th, 2009 at 8:31 am
bottom line, it is a program that is another tax!
A tax on the person who goes to work everyday, a tax on the person who takes the risk in building a business, a tax on all consumers because the cost will be passed along to the consumer! Goverment cannot madate savings! There is no incentive except their reelection
November 10th, 2009 at 7:28 pm
Hard working Democrats in Congress? Really?
http://www.politico.com/news/stories/1009/28015.html
I guess they pull it off when they think they can get something past us.
Honestly, I’m okay if they lazy around most of the time and only work a day or two a month (year?).
November 11th, 2009 at 11:46 am
Honestly, I’m okay if they lazy around most of the time and only work a day or two a month (year?).
I’m sorry, but that attitude is the problem. If you’re okay with that, then why are you complaining about Congress in the first place? You get what you deserve, which is a bunch of incompetent buffoons propping their children up at floor votes because they can’t actually articulate a reasoned argument against the legislation, which they themselves don’t understand beyond the TV catch-phrases “Gov’t takeover”, “taxes”, and “death panels”.
That is FAIL.
November 11th, 2009 at 11:48 am
Forgot to mention, the “days worked” quoted in that article is roughly twice the total number of days worked in the last year of the GOP congress in 2006.