July 30, 2009
By Robert E. Moffit, Ph.D.
President Obama and congressional leaders are desperately
searching for a way to finance their fast-track power grab over the
health-care sector. Both the House and Senate bills, backed by the
administration, would cost well over $1 trillion over 10 years.
At this point, it's worth looking back at how far we've come in
the last six months.
Go back to last year, long before the House and Senate leaders
drafted their bills. The president and his campaign advisers told
us that his ambitious health-care plan would have a net cost of $50
billion to $65 billion a year. It would be paid for, among other
things, by repealing those hated Bush tax cuts.
Even better, Obama said that if his agenda were adopted, the
typical family would save $2,500 per year on its health-insurance
Then the president and his advisers said the health plan could
also "pay for itself" through mandatory changes in the way doctors
and hospitals deliver medical services. These would include a
greater reliance on health-information technology, better disease
management and the use of research on the comparative effectiveness
of various treatments and procedures.
Problem was, the Congressional Budget Office questioned the
savings these measures would supposedly bring -- and noted a lack
of strong empirical evidence to support such savings.
Then, in February, Obama sent his budget to Capitol Hill and
proposed to set aside $634 billion over 10 years to pay for reform.
His budget outlined savings from reductions in Medicare and
Medicaid (mostly by cutting payments to doctors and other medical
professionals), plus new taxes on upper-income households,
including a reduction in the tax deductibility of their charitable
Cutting Medicare is an old trick to fund new government
health-care programs, but it can be politically poisonous when
seniors get wind of it. The proposal to limit charitable deductions
barely had a chance to float before it was dead in the water.
Now that the president's promises have been put into ugly
legislative language -- the size of a telephone book in both the
House and the Senate -- everything is becoming even clearer. In the
$1.3 trillion House bill, congressional leaders have replaced the
earlier "soak the rich" taxes with a new surtax of up to 5.4
percent on upper-income citizens. Combined with the tax penalties
from the mandates, that amounts to $818 billion in taxes over 10
And it's still not enough. While the president has said
that health-care legislation must be deficit-neutral, the CBO says
that the House bill would add $239 billion to the deficit over 10
Over in the Senate, the big bill reported out of the Health
Education Labor and Pensions Committee is another $1 trillion baby.
It would have systemic consequences similar to the House bill, with
an employer mandate reducing workers' wages, a reduction in
employer-sponsored coverage for millions of American workers and a
vast increase in government spending.
And the CBO has determined that the House and Senate bills would
each increase, not decrease, future health-care spending.
In other words, contrary to the president's stated intention to
"bend the curve" downward, both pieces of legislation would bend it
In another bid for savings, Obama proposes transforming the
Medicare Payment Advisory Committee, a toothless panel that makes
recommendations to Congress on Medicare payment issues, into a
tough cost-control agency and Independent Medicare Advisory
But CBO isn't buying that one, either. It has judged that such
an approach could yield substantial savings, but more
likely only modest ones -- a total of $2 billion over the 2010-2019
By the way, that $2,500 a year in savings on typical family
health premiums? The Lewin Group just finished an analysis of the
House bill. Its findings: Thanks to the "public plan," where
doctors and hospitals would be paid on the basis of Medicare rates,
families could expect to pay $460 more each year for their
health insurance -- because health-care providers would need to
charge the rest of us more to cover their losses from serving those
stuck in the public plan.
Some "family savings."
Some health-care reform.
E. Moffit, Ph.D. is Director of the Center for Health Policy
Studies at The Heritage Foundation.
First appeared in the New York Post
President Obama and congressional leaders are desperately searching for a way to finance their fast-track power grab over the health-care sector. Both the House and Senate bills, backed by the administration, would cost well over $1 trillion over 10 years.
Robert E. Moffit, Ph.D.
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