Research Briefing

Pelosi’s Version Of Obama’s Health Care Experiment Adds New Bad Ideas To Old Bad Ideas

PELOSI’S NEW BILL INCLUDES MORE TAXES, REGULATIONS & SPENDING SCHEMES  …

House Dems’ Bill Imposes New Excise Tax On Medical Devices. “[I]mpose an excise tax of 2.5 percent on medical devices used in the United States…” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Detailed Summary Of Affordable Health Care For America Act,” Fact Sheet, 10/29/09)

• Similar To Tax In Senate Dems’ Bill That Would Stifle Medical “Research And Development” And “Jeopardize Thousands Of High-Paying” Jobs. “The proposed tax would have a significant and unfair impact on our industry, a worldwide leader in biomedical innovation … Such a rate would dramatically increase our overall effective tax rate, and, in turn constrain resources used for research and development and investment in physical manufacturing capacity. In short, the tax would jeopardize thousands of high-paying scientific and engineering jobs ...” (California Health Care Institute et. al., Letter To Sen. Dianne Feinstein (D-CA), 9/18/09)

House Dems’ Bill Eliminates Tax Deduction On Over-The-Counter Drugs. “[E]liminates nontaxable reimbursements of over the counter medications from HSAs, HRAs, and health FSAs…” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Detailed Summary Of Affordable Health Care For America Act,” Fact Sheet, 10/29/09)

• Making Those Drugs More Expensive, Forcing People To Pay For More Costly Treatments. “[T]he primary House of Representatives bill (HR 3200) includes the removal of over-the-counter drugs (‘OTCs’) from the category of reimbursable items through a Health FSA or other tax-favored plan … the tax-favored status of OTCs helps encourage individuals to opt for less expensive options instead of more expensive prescriptions that may be covered by their health insurance plans. Removing OTC items … would likely result in a long-term cost increase to health plans and all individuals.” (Gary Knight, Op-Ed, “Flexible Spending Accounts, And Tax Savings In Jeopardy,” The Winston-Salem Journal, 9/5/09)

Just Like Senate Dems, House Dems’ Shifts Costs Of Their Bill To States By Expanding Unfunded Mandates From Medicaid. “Raises threshold for mandatory Medicaid coverage from 133 percent of poverty to 150 percent. Retains 100 percent federal matching rate for costs of expansion populations in 2013 and 2014, then reduces rate to 91 percent in 2015 and beyond.” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Topline Changes From Introduced Bill To Blended Bill,” Fact Sheet, 10/29/09)

• Governors Have “Bipartisan Animosity” Because It Could Force Them To Raise Taxes. “The nation’s governors, Democrats as well as Republicans, voiced deep concern … fearing that Washington was about to hand them expensive new Medicaid obligations without money to pay for them … with bipartisan animosity voiced against the plan ... they said their deep-seated fiscal troubles made it a terrible time to shift costs to the states. With the recession draining states of tax revenues even as their Medicaid rolls are surging, the National Governors Association projects that states will face aggregate deficits of $200 billion over the next three years.” (Kevin Sack And Robert Pear, “Governors Fear Medicaid Costs In Health Plan,” The New York Times, 7/20/09)

House Dems’ Bill Eliminates Anti-Trust Exemption From Health Coverage Providers. “The bill promotes competition among health insurers and medical malpractice insurers by removing the antitrust exemption so that it no longer shields these insurers from liability for fixing prices, dividing up territories, or monopolizing their market.” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Detailed Summary Of Affordable Health Care For America Act,” Fact Sheet, 10/29/09)

• That Will Hurt Small Insurers, Decrease Choice And Competition In Health Insurance Market. “Moreover, insurance companies are partially exempt from federal antitrust law for an important reason: so they can share rate-making data. This function actually benefits small insurers who would not otherwise have sufficient data to properly adjust premiums. Paradoxically, removing the legal cover for data sharing would harm small insurers more than large ones.” (Austin Frakt & Ian Crosby, “Antitrust And Health Reform,” TheIncidentalEconomist.Com, 10/15/09)

House Dems’ Bill Creates New Entitlement Program For Long Term Care. “Creates a new, voluntary, public, long-term care insurance program to help purchase services and supports for people who have functional limitations … CLASS would supplement, not supplant, traditional payers of long-term care (e.g. Medicaid and/or private long term care insurance).” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Topline Changes From Introduced Bill To Blended Bill,” Fact Sheet, 10/29/09)

• That A Democrat Senator Called Budget-Busting “Ponzi Scheme Of The First Order.” “But deficit hawks and the American Academy of Actuaries have questioned the design of the program, warning that it could require infusions of taxpayer money to cover benefits after 2019.  Sen. Kent Conrad (D-N.D.) has also expressed concern about the CLASS Act, calling it ‘a Ponzi scheme of the first order,’ and vowed to block its inclusion in the Senate bill.” (Shailagh Murray And Lori Montgomery, “Centrists Unsure About Reid's Public Option,” The Washington Post, 10/28/09)

ALONG WITH ALL OF THE OLD TAXES, REGULATIONS AND SPENDING SCHEMES

House Dems’ Bill Will Impose $460 Billion Income Tax Increase. (“Estimated Revenue Effects Of Possible Modifications To The Revenue Provisions Of H.R. 3962, The ‘Affordable Health Care For America Act’,” Joint Committee On Taxation Publication, 10/29/09)

• That Will Hit Many Small Businesses, Killing Jobs. “This [surtax] would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study... America’s successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world ...” (Editorial, “The Small Business Surtax,” The Wall Street Journal, 7/14/09)

House Dems’ Bill Taxes Employers Who Can’t Afford To Cover Their Employees 8 Percent Of Their Payroll. “Employers who do not offer qualified coverage contribute 8 percent of their payroll to help cover expenses of employees who seek coverage through the Exchange.” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Detailed Summary Of Affordable Health Care For America Act,” Fact Sheet, 10/29/09)

• Which Will Make It More Difficult For Them To Hire Workers They Need. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Jeff Zeleny & Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

House Dems’ Bill Taxes Individuals Who Can’t Afford Insurance 2.5 Percent Of Their Income. “Individuals are required to obtain health insurance coverage or pay a fee equal to lower of 2.5 percent of their adjusted income above the filing threshold or the average premium on the Exchange.” (House Committees On Ways & Means, Energy & Commerce, And Education & Labor, “Detailed Summary Of Affordable Health Care For America Act,” Fact Sheet, 10/29/09)

• A Tax Obama’s HHS Assistant Secretary Says Is “Very Regressive.” “The individual mandate offers new options, but it also introduces risks. The mandate is in many respects analogous to a tax. … [T]he mandate will act as a very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage.” (Sherry A. Glied, “Universal Coverage One Head At A Time — The Risks And Benefits Of Individual Health Insurance Mandates,” New England Journal Of Medicine, 4/10/08)

House Dems’ Bill Cuts $456 Billion From Medicare And Medicaid.  (Congressional Budget Office, Letter To Honor Charles B. Rangel, 10/29/09)

• Cuts Rep. Eric Massa (D-NY) Already Admitted Would Force Doctors To Decline Medicare Patients. “Rep. Eric Massa said tightening provider payments could lead to access problems for patients. ‘We will force doctors to decline Medicare patients,’ he said after a raucous town-hall meeting in Upstate New York. ‘If we believe these savings are there, let’s test the concept. But we can’t hinge the entire funding of this bill on these not-yet-seen savings.’” (Ceci Connolly, “Seniors Remain Wary of Health-Care Reform,” The Washington Post, 8/9/09)