The Baucus Bill Spending Vortex

The House and Senate are clearly divided over how to pay for the massive new spending commitments the federal government is taking on.

Right now, House and Senate Democrats are meeting behind closed doors to figure out who they will tax and how much they can cut Medicare to meet what will be at least a $1 trillion commitment in new spending. Assuming for just the moment that they can make them match, Congress should look to the example of what Medicaid has done to state budgets.

Medicaid Mess. The commitment to Medicaid has become so large, it acts like a vortex, drawing everything else into itself. Congress should stop and take a good look at what happened to state budgets this past year. The extra federal matching rates for Medicaid came with strings attached—Medicaid eligibility could not be cut. But states still cut Medicaid providers. Medicaid was perhaps spared but that only meant cuts had to be found elsewhere to keep state budgets in balance. Medicaid was protected, but education, public health, mental health services, social services, child welfare programs, and public safety were cut.

Budget Gimmicks. It is understandable the President and Congressional leaders focus on what will be gained, as any politicians do to gain support for their initiatives. But there is also a time to ask, what will be lost? A trillion dollars in new spending and new revenues leave the federal government with very little margin to deal with the public health risks of a pandemic, rising unemployment, another Katrina, another crisis in world. Health care will spend real money and still rely on a lot of budget gimmicks. For example, Finance simply delayed the start of benefits and refused to fix the Medicare physician fee schedule.

Higher Family Spending. Yes, some families will get $16,500 in tax free benefits for health care under the Finance Committee version. But that money is going to come from someone else. And, under the Finance Committee plan, there will still be 25 million Americans uninsured. Many individuals and families will end up paying much more for their health care than they do today. Forget Obama’s promise of the $2500 annual reduction in family health costs.

The federal government is going to raise taxes to pay its new bill. What are families going to do? Clearly, they will have to cut costs elsewhere in their budget. Cutting Medicare payments and benefits to pay for new spending will help avoid going further into hock in regards to the federal budget, but those proposals do nothing to help family budgets.

Americans want solutions to the problems we face in the current system including the issue of the uninsured. But the legislation moving through Congress fails to meet the promise made by President Obama and what Americans as a whole want most of all—to lower the cost of health care for everyone. Failure to accomplish that now means the upheaval of our entire health care system at the cost of everything else.

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