The House’s Hidden Health Care Train Wreck

via: Heritage

Yesterday, House Democrats unveiled their much-anticipated health care plan– the same day that the Congressional Budget Office (CBO) released a preliminary scoring of the bill putting a $1.3 trillion price tag on the effort. Weighing in at 1,018 pages, that comes to $1.264 billion per page. But even this analysis understates the true costs of the bill. The CBO only scores bills on a ten-year time frame, and House Democrats have designed their bill to obscure the catastrophic long-term fiscal path on which it places our country.

This Monday, President Barack Obama met with Blue Dog Democrats and assured them health reform would produce savings “beyond the 10-year budget window.” Every objective piece of independent evidence thoroughly contradicts this claim. According to the CBO, the cost for the first four years is just $84 billion, but then it accelerates sharply. By 2019, the new entitlement is set to cost American taxpayers $254 billion. So while many Americans may look at the $1.3 trillion price tag over ten years and conclude the plan will cost $130 billion a year, in reality it will cost nearly double that. By backloading all the spending, the House is hiding the true cost of their plan from the American people. Between 2018 and 2019, federal costs for the new entitlement and the enlargement of Medicaid would increase by a combined 8.9%.

The House bill does nothing to control these exploding costs. But this shouldn’t be a surprise. CBO Director Doug Elmendorf has repeatedly told Congress that expanding coverage without more fundamental reform of Medicare “puts an additional long-term burden on top of an already unsustainable path.”

Worse than the cost of the House bill is how they plan to pay for it. One element includes a “pay-or-play” requirement that forces employers to either purchase health insurance for their employees or pay a fine. The CBO released a separate study Monday showing that this provision would kill jobs: “[I]f employers who did not offer insurance were required to pay a fee, employees’ wages and other forms of compensation would generally decline by the amount of that fee from what they would otherwise have been.”

And that’s not even the biggest revenue enhancer. The House plans to pay for the lion’s share of their bill with a new surtax on households earning $350,000 and above. It starts at 1%, bumping up to 1.5% at $500,000 in income and to 5.4% at $1 million. Since many small business owners fall within this income range, this surtax will also be a huge job killer.

Editorializing on the House’s surtax, The Washington Post writes:

[T]here is no case to be made for the House Democratic majority’s proposal to fund health-care legislation through an ad hoc income tax surcharge for top-earning households. …There is simply no way to close the gap by taxing a handful of high earners. … Pretending that “the rich” alone can fund government, let alone the kind of activist government that the president and Congress envision, is bad policy any way you look at it.

Quick Hits:

  • During yesterday’s confirmation hearings, Supreme Court nominee Sonia Sotomayor contradicted President Obama saying she took issue with his 2007 statement that a judge’s “heart” should dictate the outcome in a small number of cases.
  • Commenting on Sotomayor’s testimony yesterday, Georgetown law professor and Critical Legal Studies cofounder Mike Seidman said: “I was completely disgusted by Judge Sotomayor’s testimony today. If she was not perjuring herself, she is intellectually unqualified to be on the Supreme Court. If she was perjuring herself, she is morally unqualified.”
  • Counting those who have given up looking for a job and those part-time workers who want to be working full time, the New York Times calculates the unemployment rate has reached 23.5% in Oregon, 21.5% in both Michigan and Rhode Island and 20.3% in California.
  • Community groups and agencies faulted in the past for mismanaging thousands of dollars a year in federal aid are being overwhelmed as they receive millions of dollars from President Obama’s $787 billion stimulus plan.
  • President Barack Obama’s political organization, Organizing for America, is running its first television ads in Arkansas, Indiana, Florida, Louisiana, Maine, North Dakota, Nebraska and Ohio. The group is refusing to reveal the cost of the ad campaign which urges Americans to support Obama’s trillion-dollar health care plan.
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