A Summit Primer

Republican leaders and the White House are publicly sparring over next week’s health-reform summit, with President Obama demanding the GOP bring its own comprehensive health plan and House Republican leader John Boehner asking the White House to “assure the American people that Democratic leadership is not putting together any kind of backroom deal or plotting any kind of legislative trickery” to get its legislation passed.

This does not bode well for an open dialogue at Blair House about a bipartisan agreement on health reform.

If actions speak louder than words, then it is relatively clear the White House is using the meeting as a set-up to make one last, big push to get its huge health-care bill passed before Easter.

Congressional operatives admit they are planning to move from bipartisanship to ultra-partisanship. Aides to Speaker Pelosi have outlined a tortured parliamentary path to enactment, demanding that the Senate use its 51-vote reconciliation process to ram through changes the House wants made to the Senate bill. Only then would the House hold its nose and vote for final passage.

The scheme won’t work, but the first challenge is convincing Democrats to start over. They need to admit that the problem wasn’t the marketing but the fundamental substance of Obamacare.

A parade of independent studies shows that the legislation before Congress fails to achieve its most basic goals and would create an avalanche of unintended consequences throughout the rest of the health sector and economy. The American people simply do not want this legislation, as evidenced in the latest Rasmussen poll showing that 61 percent of those surveyed say Congress should start all over on health reform.

Here is a reminder of what would happen if the Democratic leadership’s health-care legislation passed:

*Health costs would continue to rise. The Congressional Budget Office says health-insurance premiums would continue their steady upward climb under the Reid bill. Families purchasing insurance in the individual market would see an increase of $2,100 in the year 2016, over and above increases they already would be facing as health-insurance premiums continued to rise at about twice the rate of general inflation.

That means those families would be paying $15,200 for health insurance if the Senate bill passed, and $13,100 if it didn’t. Families who get health insurance through small businesses would be paying $19,200 in six years, and those working for large firms, $20,100.

PricewaterhouseCoopers released a study, commissioned by America’s Health Insurance Plans, that showed the cost of a family plan in 2019 would be $4,000 a year higher if reform passed.

*Federal health spending would increase. Chief Medicare actuary Rick Foster estimates that under the Senate bill, “Federal expenditures would increase by a net total of $279 billion” between 2010 and 2019.

*People would lose the coverage they have today. Steep cuts in Medicare Advantage would mean that at least one-third of seniors likely would lose their comprehensive Medicare Advantage coverage as their plans withdrew from the program, cut their benefits, or raised their premiums.

As for people with employer-sponsored insurance, the CBO says that 10 million of them could lose their current coverage. Independent studies by the Lewin Group found that a full “public plan” option would mean 83 million Americans could lose private coverage.

*Taxes would increase . . . on the middle class. The bills call for nearly $500 billion in new taxes, including taxes on insurance companies, Cadillac health plans, medical devices, and “the rich” — taxes that would hit the middle class and increase prices and health-insurance costs for consumers.

And the requirement that all individuals carry health insurance would come with tax penalties for non-compliance. Congressional tax expert Thomas Barthold told the Senate Finance Committee that these penalties would amount to an excise tax that would hit the middle class.

*The bills just wouldn’t work. The American Academy of Actuaries (AAA), in a 21-page letter to Congress, critiqued the House and Senate bills and said major changes must be made to avoid a series of damaging consequences.

For example, the AAA found significant problems with the new long-term-care entitlement program (the CLASS program) that the legislation would create. The AAA said that “given the way the program is structured, severe adverse selection would result in very high premiums that are likely to be unaffordable for much of the intended population, threatening the viability of the program.”

Medicare actuary Rick Foster also concludes that “there is a very serious risk that the problem of adverse selection would make the CLASS program unsustainable.”

*The deficit would increase. Former CBO director Doug Holtz-Eakin concludes that the legislation “can claim to be deficit-neutral only because during its first decade it offers 10 years of taxes compared with six years of subsidies, making it look far cheaper initially than it really is (while still costing more than $800 billion). The Republican staff of the Senate Budget Committee estimates that, fully implemented, Democratic legislation would cost $2.4 trillion over 10 years, nearly three times the cost projected by the Congressional Budget Office.”

Further, the Congressional Budget Office shows that the Senate bill double-counts Medicare savings. Savings to the Medicare program “would be received by the government only once . . . they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.”

Rick Foster makes the same point: A series of accounting maneuvers makes it appear that Medicare’s Part A trust fund would be in better shape under the Reid bill, but that’s not so. “In practice, the improved Part A financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansion under [the Reid bill]) and to extend the trust fund,” Foster writes. Foster also says that making the cuts to Medicare that Reid’s bill requires would “represent an exceedingly difficult challenge.”

*Doctors and hospitals would become insolvent. Achieving deficit neutrality depends on Congress’s making massive cuts to physician and hospital payments under Medicare — cuts that Congress has virtually no will to implement. But if the cuts were implemented, Foster says that in a decade, one out of five hospitals and nursing homes would become unprofitable, threatening patient access to Medicare services. The 21 percent cut in Medicare payments on March 1 is the next death-defying cliff Congress must figure out how to avoid.

*Job creation would suffer: The new taxes on businesses and individuals would further retard job creation and the economic recovery, and the higher health costs would discourage small businesses — the engine of job creation — from hiring. U.S. Chamber of Commerce president Tom Donohue said: “Congress, the administration and the states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration. It’s a sure-fire recipe for double-dip recession, or worse.”

WellPoint mined its own actuarial data to model the basics of the plan incorporated in the House bill, using data from 14 states where it runs Blue Cross plans. In all 14, it found that the legislation would drive up premiums for small businesses and individuals — the very people who get economies moving.

This is just a reminder of the damage that the Democratic bills would do. Republicans need to be ready to put their own ideas on the table at next week’s summit.

Published in National Review Online: Critical Condition, February 17, 2010.

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