Critical Condition

Harry Reid and the Dirty Dozen

The 2,074-page health reform bill that Senate Majority Leader Harry Reid unveiled last night is a maze of complexity and duplicity. It spends $848 billion over ten years to provide new subsidies for health coverage, increases taxes by $486 billion, and allegedly cuts spending by $491 billion. Yet it still leaves 24 million people without insurance.

The new taxes never will be enough to pay for Reid’s reform plan because Congress does not have the will to make the cuts to Medicare and Medicaid he uses to bring down the bill’s advertised cost.

The American people continue to tell pollsters that they believe the health-reform bills that Congress is considering would increase the deficit, drive up health costs, reduce the quality of care, and increase government bureaucracy.

They are correct. Here are a dozen reasons why:

1. Bait and Switch:  The bill starts collecting new and higher taxes next year, but the coverage benefits don’t start until 2014 or later. Sending collections agents out four years before benefits begin is one of the budget gimmicks Senator Reid used so he can claim that the cost of his bill is under $900 billion, as President Obama has demanded.

2. The real cost:  The actual ten-year cost of the legislation, once the spending begins, will be $2.5 trillion.

3. The uninsured are still with us.  Only 92 percent of all residents will have health insurance by 2019, not even close to the goal of universal coverage.

4. Cuts to hospitals:  This will be a serious problem for hospitals that will still be treating uninsured people, including illegal immigrants. The bill reduces payments to these hospitals that serve a large number of low-income patients by $43 billion.

5. Job-killing taxes on employers:  Employers will be faced with new penalties and taxes, especially if they hire workers who qualify for any of the new federal subsidies for health insurance. According to the Congressional Budget Office, “Firms with more than 50 workers that did not offer coverage would have to pay a penalty of $750 for each full-time worker if any of their workers obtained subsidized coverage through the insurance exchanges.”

6. Doc-Fix gimmick:  And Reid is playing more games with the so-called “doc-fix,” providing a slight increase for next year but then pretending that Medicare payments to doctors will be cut by 23 percent the following year and that they will stay at that level for good. Doctors should be hopping mad, and the American Medical Association might want to rethink its endorsement of these bills.

7. Abortion:  Reid would allow the new government insurance plan to cover abortions and would allow companies that receive federal funds to offer insurance plans that include abortion coverage — using premium funds rather than taxpayer money. The National Right to Life Committee said the language is “completely unacceptable.” This will surely lead to a major floor battle.

8. Losing current coverage:  About 5 million people would lose their current employment-based coverage, and millions of seniors would lose their private Medicare Advantage coverage as the program is cut by $118 billion. This is especially problematic because many of the 11 million seniors in Medicare Advantage plans are lower-income seniors who have chosen to enroll because the program provides better benefits and lower costs than traditional Medicare.

9. Scarce subsidies:  Despite spending $338 billion on new subsidies through the health-insurance exchanges, just 19 million people will qualify for help with their costs — even though everyone is required to have government-defined health insurance or pay a penalty.

10. Worst-of-both-worlds mandates:  Individuals will be required to purchase health insurance, but the penalties are relatively light, providing an incentive for the young and healthy to opt out of coverage. But health-insurance companies still will be required to sell policies to anyone who applies. Which means people can wait until they need expensive medical treatment to buy coverage. Which means premiums for everyone in the pool will soar.

11. Millions more on the dole: ReidCare would add 15 million more people to the rolls of Medicare and the State Children’s Health Insurance Program, exacerbating the budget problems of the states that must share in the costs of this expanded coverage. And in addition to new subsidies for health insurance for the middle class, the bill also creates a new government entitlement program for long-term-care insurance. (In another budget gimmick, the government will be collecting taxes within the ten-year budget window but putting off spending until after 2019.)

12. Progressive payroll tax: The bill increases the Medicare payroll tax for wealthier Americans, creating a new progressive tax schedule for this tax that surely will be raised over and over again. And the revenue goes into the health-reform pot, paying for benefits that have nothing to do with Medicare. This is a dangerous precedent, and only one of the plethora of new and higher taxes included in the plan.

Taxes will go up, bureaucracy will grow, the deficit will swell, and the quality of care will suffer. The American people are right to be very worried about this plan.

— Grace-Marie Turner is president of the Galen Institute.