CBO Report Shows ObamaCare Raises Premiums

December 3rd, 2009 Mike Gonzalez

Media coverage of the CBO scoring of Senate Majority Leader Harry Reid’s health care bill left out some of the fine print and heroic assumptions that were in the report. The Heritage Foundation believes they merit your consideration.

Premiums Rise

The media quotes the CBO as saying that ObamaCare would not make premiums rise for people who get their insurance through their job or other groups. This is mostly because millions of people would no longer receive coverage from their employer, and instead would buy insurance in the so-called “non-group” market that sells individual health plans. These would likely be older and sicker Americans.

While this transition could make premiums cheaper for those who would continue to receive health benefits through their workplace, they would likely see higher taxes down the road for subsidies that would be offered to people buying individual insurance, the CBO reports. And the CBO notes that other taxes imposed on medical device manufacturers, insurers and other providers would be passed onto consumers “in the form of higher premiums for private coverage.”

Additionally, the CBO said Sen. Reid’s health care bill would raise premium rates for people who buy it in the so-called “non-group” markets, and these increases would be 10 to 13 percent. So anyone who cites the CBO as saying Americans would not see their premiums jump assumes that employers will not dump their workers into an exchange where people get insurance individually.

There Is a Crowd-Out Effect

And that’s an assumption that goes too far. In fact, the CBO notes that roughly 6.4 million people who have work-based health coverage under the current law would lose it under Sen. Reid’s bill. That’s because some businesses would find it unaffordable to offer health care to their workers under the Reid bill. They’ll opt for paying the $750 fine and dumping their workers onto a health exchange. Many older and sicker employees would likely lose their job-based coverage, even if they like it, according to the CBO. Businesses would push these workers to get their health care in the “non-group” or individual market because it’s cheaper for companies. But as noted above, it’s not a better deal for the individuals.

Younger People Assumed to Fall in Line

At the other end of the spectrum, the CBO analysts make the assumption that younger, healthier workers are going to comply with the “individual mandate” in the bill. That’s the one that forces every American to buy health insurance or pay a fine (a provision whose constitutionality has been and will continue to be questioned). However, these younger workers will look at the option between a much more expensive, mandated health plan — providing benefits they don’t want or need — and a less expensive annual fine and be much more likely to forgo the health insurance plan and pay the fine. As the CBO reports, it’s the younger workers who are the biggest losers in this “reform.”

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Video: Obamacare is Not a Good Fit for Women

November 27th, 2009 Gerrit Lansing

Click here to view the embedded video.

First Lady Michelle Obama’s video on health care reform raises important issues about female patients who are falling through the cracks of the U.S. health care system. It’s not a perfect system, but Nina Owcharenko explains that ObamaCare would take women and the rest of the country in the wrong direction. Having to depend on politicians or faceless bureaucrats to make decisions about their care doesn’t empower women or improve their health care situations. Plus, the Obama health reform agenda isn’t what women want. A majority of female respondents told the Independent Women’s Forum in a recent survey that they don’t think government-run health care is best for them or their families.

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Senate Votes Obamacare One Step Closer to the Finish Line

November 21st, 2009 Brian Darling

The Senate voted on Saturday by a 60-39 majority to commence debate on Senate Majority Leader Harry Reid’s bill that would radically expand government control over private health care decisions. The bill is over 2000 pages long, costs an estimated $2.5 trillion over the first ten years of implementation and carries a half trillion dollars in new taxes. Many Americans have to be thinking right now — they have heard from their dissenting constituents at Town Hall meetings and have seen the poll numbers for Obama’s health care bill dropping like a rock so why would they keep moving this bill forward?

This debate will center around many issues including huge taxes increases, economy-killing employer mandates and:

1. Abortion: Congressman Bart Stupak (D-MI) offered an amendment to the House bill to ban all federal funds flowing into the health care system from funding abortion. Senator Reid put language in the bill that allows some funds to go to abortion services by using an accounting gimmick. This issue could take the bill down, because the House approach is far different from the Senate approach. If this bill becomes a referendum on abortion policy, it may fail.

2. Cost: Senator Reid has promoted his bill as costing the federal government $849 billion and as a budget cutting bill. Conservatives in the Senate have pointed out that the costs are more accurately $2.5 trillion over the first 10 years of implementation because the benefits are not even scheduled to be paid out until 2014. There is a huge disparity between the two sides as to the cost of the bill and if it gets bigger and bigger on the Senate floor, then it may suffer a legislative implosion.

3. The Public Plan: Senator Joe Lieberman (D-CT) has pledged to support a filibuster of any bill containing the public option. Senator Olympia Snowe (R-ME) will only accept a public option with a trigger. Other Senators have expressed reservations about different permutations of the public option. A bill with a too strong public option may not have the support to pass the Senate.

4. Wild Card: As with all these debates, there may be an issue that comes out of the blue and becomes central to the bill. There were debates over “death panels” during initial stages of the debates and controversies over coverage for illegal immigrants. Some other issue may be offered as an amendment or may be buried in the 2000 pages of the bill that may become the next controversy to prevent passage.

The week after Thanksgiving, the Senate will start the process of considering and voting on amendments to the bill. This process may go in one of two directions. It is possible that Reid uses the amendment process to buy just enough votes to pass the bill through targeted special interest amendments. Expect Connecticut, Nebraska, Arkansas, and, yet again, Louisiana to receive special treatment in the amendment process. If Senator Reid is able to buy support during this process, the bill will pass and the President will sign Obamacare before his State of the Union.

Scenario two kicks in if opponents of the bill play hardball. If opposing Senators offer non-germane amendments, like the legislation to restore the 2nd Amendment in the District of Columbia or a resolution of disapproval for Attorney General Eric Holder’s decision to try Kahlid Sheik Mohammed in federal courts, then the Senate would be mixing some volatile issues into the health care mix. Regardless the course of action, this bill will either pass or fail as a direct result of the actions of a handful of Senators.

Read more about the five major flaws of Majority Leader Harry Reid’s health care bill here and at FixHealthCarePolicy.org.

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Comparing Senate Democrats’ Health Care Reform Bill to HCR Bill Passed by House

November 20th, 2009 Tax Foundation - Tax Foundation's "Tax Policy Blog"

Late Wednesday night, the Congressional Budget Office released its report on the proposed piece of legislation: the gross price tag for the coverage provisions is $848 billion. It would cut the deficit by $130 billion if fully enacted, according to CBO estimates. The main financing mechanisms would be cuts to Medicare, a new excise tax on high-valued “Cadillac” health insurance plans, a 1/2 percentage point increase in the Medicare tax rate for high-income earners, and various tax hikes imposed on the health care sector including fees on manufacturers and insurance companies.

Meanwhile, the CBO has released an update to its estimate of the House health care bill that passed two weeks ago. That House health care reform bill’s financing differs from the version outlined by Senate leadership. In addition to the House bill having a larger gross price tag (over $1 trillion), the House bill is financed largely via a surtax on high-income taxpayers, which the Senate bill does not include. Furthermore, the House bill has more cuts to Medicare than the Senate bill, although the Senate bill does cut more non-Medicare spending than the House bill.

For a pie chart comparison of how the two bills are financed, click here for the Senate bill and click here for the House bill. The table below also presents the data that is in the pie chart.

Note that all figures are from the most recent CBO scores of the two bills. Totals may not add up due to rounding.

Financing Mechanism Senate Bill
(as proposed by Reid)
House Bill
(as passed by the House)
Medicare Cuts to Providers (Net) $331 billion $440 billion
Other Health Care Spending Cuts (Net) $150 billion $14 billion
Surtax on high-income taxpayers $0 $460 billion
Excise Tax on Cadillac Plans $149 billion $0
Fees/Taxes on Medical Devices, Manufacturers & Insurers $102 billion $22 billion
Penalties on Individuals/Businesses for no insurance $36 billion $168 billion
Other Taxes and Revenues $156 billion $88 billion
Increase in Medicare Tax Rate for high-wage earners $54 billion $0
Gross Price Tag $848 billion $1,052 billion
Deficit Reduction $130 billion $138 billion

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Health Care Hoops

November 19th, 2009 Billy Hallowell

CMPI had released another excellent health care video.  See how a simply game of hoops compares to the one’s you’ll be jumping through once the government takes over the American health care system:

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Government Cable

November 13th, 2009 Billy Hallowell

The Center for Medicine in the Public Interest has an excellent (and hilarious) video that focuses on American health care and where we may be headed.  Check it out:

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“Fix The Docs” Without Driving Up The Deficit

November 13th, 2009 Bob Moffit

Congress and the Administration are breaking records. They just piled up a deficit of over $1.4 trillion in 2009 alone. Needless to say moderates and fiscal conservatives in both political parties have cause for very bad night’s sleep.

The Doc Mess. The latest chapter in this crazy drama is to be played out next week when the House deals with the Medicare Doc Fix. At issue is the congressionally created formula for annually updating Medicare physician payment. The congressional formula ties physician payment to general economic growth: if physician payment increases faster than economic growth, payment is proportionally reduced. Of course, the basic concept is bizarre: there is no rational relationship between the supply and demand for medical services and the performance of the general economy, any more then there is a relationship in the demand for tonsillectomies and the phases of the Moon. But this official stupidity is the law; expect similar stupidities if Congress is successful in creating another government-run health plan made in the image and likeness of Medicare.

So, to avoid its own prescribed draconian cuts in Medicare doctors’ payments, Congress goes through an annual Chinese fire drill to prevent its goofy formula from being implemented each year. As a budgetary matter, the accumulated cuts now amount to an automatic reduction in physician payment of 21 percent effective next year. That prospect has the professional medical organizations in a tizzy, and they are willing to do anything – anything, mind you- to avoid that fate worse than death, even to the point of formally embracing H.R. 3962, the gargantuan 2032 page House health care bill.

Bigger Deficits. To lure the desperate doctors into bed with the liberals, their big ugly “public option” and all (analogously, a longer prison sentence, but better food and more yard time), the Congressional leadership included a “permanent fix” to Medicare physician payment in the original version of the 1018 page House bill, small increases, no cuts. But they carved it out because its cost made the House health care bill appear too expensive. So, to keep that version “looking cheaper”, they created another vehicle (H.R 3961), a companion bill, that would provide for a permanent Medicare “doc fix” at a ten year cost of $210 billion. Under the rule for debate in the House, however, as Byron York points out in November 13, The Washington Examiner, this $210 billion “fix” is not “paid for”; like a similar (but unsuccessful) Senate attempt, it would simply add hugely to the deficit. In fact, a former Medicare Trustee says that it will also add trillions to the already crushing unfunded obligations of the Medicare program.

Paying for the Spending. As President Obama warned, Congress should not add one dime to the deficit. If it is going to increase Medicare payment by over $200 billion over the next ten years, it should offset those increases with cuts elsewhere, preferably within the Medicare or other government health care programs.

Fortunately, the Obama Administration has surfaced a potential solution: the introduction of competitive bidding in Medicare Advantage. The Administration projected an estimated $177 billion in savings over ten years. But Obama’s Medicare savings were not earmarked for Medicare, but rather would finance his health care agenda. Senator Max Baucus (D-MT) proposed a variant on Medicare competitive bidding that would benchmark government payment to Medicare Advantage plans to actual plan costs rather than Medicare’s administrative pricing for Medicare Part A and B services. CBO estimated a $117 billion savings from that change.

This is a start. Congress could build on the Baucus proposal and secure the projected savings, while creating a “robust” Medicare competitive bidding system. Government payment to health plans in Medicare would based on the weighted average costs of actual health plans, as Baucus has proposed, but the competition would be extended to traditional Medicare fee for service program itself. As former Senator John Breaux (D-LA) has suggested, traditional Medicare should be granted managerial flexibility. This would enable the traditional Medicare program to compete effectively with private health plans, guaranteeing a level playing field, and thus keep the rest of the private health plans “honest”, as they say.

Not only would such an approach guarantee payment for the “doc fix”, but it might even reduce the deficit and ease the pressure on long-term Medicare costs. Such an approach should have direct appeal, not only to moderates and fiscal conservatives in both political parties, but also to the many members of Congress who identify themselves as champions of a “public option” that would compete fairly against private health plans; it would provide an excellent test of such public-private health plan competition, as well as the sincerity of its advocates. All options would compete fairly on a level playing field and guarantee real Medicare savings and rational physician reimbursement in the process.

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Listening To Young Americans On The Deficit

November 13th, 2009 Francie Grace

You wouldn’t think the bottom line on the $1.6 trillion federal budget deficit and $11.9 trillion national debt crisis could be summed up in a single sentence, but when the right words whizzed by, the Wall Street Journal’s David Wessel was quick to point them out. Words to remember, in a speech by Douglas Elmendorf, director of the Congressional Budget Office: “The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.”

These words underscore the fact that no matter how complicated and increasingly urgent this problem is, it is one which can be understood by most Americans – who can then consider, debate, and decide on options for the best way to reduce the deficit before its sheer weight makes many decisions for us.

Through PublicAgenda.org, FacingUp.org and our Students Face Up to the Nation’s Finances interactive curriculum for college students, we’ve been helping people understand the problem, why it matters, and how to get involved in the process of charting a path to fiscal health. This fall, we extended the reach of the Facing Up curriculum to include high school and middle school students, who have been using our learning materials as part of the University of Virginia’s Youth Leadership Initiative program.

Through that partnership, we also got a chance to hear more about how young people feel about the fiscal crisis which is shaping all of our futures. In a mock election held to give students a chance to speak out on a range of issues, 77 percent favored a balanced budget; an increase in the age for Social Security eligibility was supported by 64 percent; and increasing payroll taxes was favored by 53 percent. Reducing Social Security benefits was opposed by 69 percent.

We’ll be hearing a lot more about these issues beginning on Monday, when we start accepting entries for the Students Face Up to the Nation’s Finances contest for students, with $500 prizes for the best essays and best multimedia presentations on the federal budget deficit and national debt and what ought to be done about it. The contest has two divisions - one for college students, and another for high school students – and all will have a chance to comment on and discuss each other’s ideas.

December 11 is the entry deadline; click here to see the full contest rules. Students Face Up to the Nation’s Finances, a nonpartisan curriculum available at FacingUp.org, is available to users free of charge thanks to a grant from the Peter G. Peterson Foundation.

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For Abortion Supporters, A Lesson in Federal Control of Health Benefits

November 11th, 2009 Dennis Smith

Ironically, the very first group to feel the effects of the pending federal government takeover of the health care system are among the closest political allies of President Obama and House Speaker Nancy Pelosi—those who strongly support the cause of “abortion rights”.

Opponents of the latest House restriction on taxpayer funding of abortion are trying to argue that they merely desire to preserve the status quo. They apparently failed to grasp what conservatives have been warning them, and everyone else who will listen, all along—the status quo cannot, and will not, continue to exist. Change, as the President likes to say, is coming. Big Change.

When government is put in the position of making decisions about what will be funded and what will not be funded, that is exactly what it will do—decide what and who gets the funding. It is not a personal decision anymore; its not a market decision, nor even an economic decision. It’s a political decision.

Chances are that someone on the receiving end will not like those decisions. Today, millions of Americans in every other sector of the economy- with the notable exception of health insurance - can vote with their feet, taking their business elsewhere, and buying and owning a different policy. Tomorrow, there will be fewer and fewer choices. The authors of the House and Senate health bills will make sure of that.

Abortion was the first political decision on government funding of a “medical procedure”; it will not be the last. Want treatment for erectile dysfunction? Medicare and Medicaid will not pay for those drugs. Will the “public option”, the new government-run health plan? Who knows? The Secretary of the Department of Health and Human Services will ultimately decide. Patients will get what the federal government gives them.

Government will be making all sorts of treatment decisions for millions of Americans. Half of the people to become insured will be through Medicaid. Government has nothing to say about you using your own money for cosmetic purposes, but Medicaid will not pay for it. Will the public plan pay for cosmetic surgeries? What about expensive fertility treatments? Not covered by Medicaid. Medicaid will not pay for mental illness treatment for adults in an institution for mental diseases. What happens if your family physician does not take Medicaid because of low reimbursement rates? Can you pay extra out of your own pocket? No, not allowed.

Like the “abortion rights” supporters, many Americans will ultimately realize the health care legislation is not the change they were expecting.

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Video: The Real Fiscal Cost of Government Run Health Care

November 10th, 2009 Conn Carroll

The Cato Institute’s Dan Mitchell and the Center for Freedom and Prosperity Foundation, have produced videos explaining why Keynesian economics is wrong, presenting the evidence that big government hurts economic growth, explaining how big government hurts economic growth, and making the case against the Value Added Tax.

Now Mitchell is back talking health care with a new video title, A Red-Ink Train Wreck: The Real Fiscal Cost of Government-Run Healthcare. Watch:

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