Health Care Budget Hijinks

The Senate Finance Committee submitted its 1,500-page health care bill this week. S. 1796, the brainchild of Chairman Max Baucus, has drawn the ire of Republicans and some Democrats because it includes a 40 percent tax on so-called “Cadillac” health insurance plans valued at $8,000 or more for individuals and $21,000 for families. This tax is supposed to help fund the bill and is targeted at the wealthy, but, just like the Alternative Minimum Tax, it will inevitably hit the middle class as time passes.

There are additional tricks that Democrats have relied on to make the bill seem more affordable than it really is, including front-loading it with revenue proposals and back-loading it with spending measures. Taxes on the pharmaceutical industry, medical device manufacturers and insurance companies will kick in almost immediately, while the costly elements of the bill, namely coverage for the uninsured, will not begin until 2013. In short, Obama tells us that “Now is the season for action,” but we won’t be able to assess the full consequences of such action until after he’s stood for re-election.

Fortunately, conservatives won a small victory by preventing the so-called “Doc Fix” bill from coming to the floor. It would have frozen $247 billion in Medicare payment cuts in order to garner support from doctors for the overall bill, but 13 Democrats defected. Apparently adding a quarter-trillion dollars to the $1.4 trillion deficit was too big a pill for even some Democrats to swallow.

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