January 13 2010
Policy Brief #28: The Worst Aspects of the Current Health Reform Proposals: More Taxes, Higher Costs, More Government Control, and Less Individual Freedom
Nicole Kurokawa Neily
The House and Senate health care bills are riddled with policies that will be bad for America and threaten our health care freedom. By centralizing an unprecedented amount of power in the hands of Washington bureaucrats, both bills dramatically expand the government's control over one-sixth of the nation's economy. No legislation built on a foundation of handouts, earmarks, and shameless payoffs can be expected to coherently address the long-term drivers of health care costs. While there are countless bad policies contained in thousands of pages of legislation, several aspects of the existing bills are particularly problematic.
Due to deceptive accounting and budgetary gimmicks, the bills' estimated costs are far below what their actual impact will be. Such out-of-control spending will add to the deficit, worsening the national debt. For many Americans, health insurance premiums will rise. Americans will begin paying for health care reform legislation immediately, through higher taxes, fees and penalties, but don't actually begin receiving benefits until 2014.
Both bills contain a plethora of new taxes to defray the costs of this national health care takeover. There is agreement on the general scope of taxes-individual mandates, employer mandates, taxes on medical device manufacturers, taxes on medical cabinet goods, caps on flexible spending accounts, higher penalties for health savings account withdrawals, and a slew of other penalties on vulnerable industries. However, conference negotiations are likely to hit a sticking point on their main funding mechanism. The Senate bill plans to impose a 40 percent tax on "Cadillac" health insurance plans valued at $8,500 per individual or $23,000 per family; the House bill plans to tax the wealthy, imposing a 5.4 percent surtax on individuals earning over $500,000, or couples earning over $1 million filing jointly.
A slew of new regulations are set to be imposed on the insurance industry, which will drive premium costs even higher for consumers. From guaranteed issue to community rating to ending coverage caps, these provisions interfere with the health insurance market, raising costs for the young and healthy in order to cover the sick and elderly. To force individuals to carry this overpriced insurance, draconian mandate policies will be imposed on individuals and employers-carrying penalties up to and including jail time.
Any final bill is certain to include an expansion of Medicaid, much to the chagrin of governors on both sides of the aisle. Rightly seen as an unfunded mandate, states will be forced to raise income, sales, and property taxes on residents to cover these new bills. Meanwhile, Medicare's budget will be cut, with savings ostensibly coming from streamlining services and eliminating waste. But in reality, these Medicare cuts we lead to reduced access to and quality of care.
There are better ways to address the nation's health care woes without a wholesale government takeover. In the long-term, the only way to truly bend the cost curve is by providing consumers with ownership and control over their health care dollars so that they will make smart, conscious choices. These bills, and their many provisions, are not in the best interest of the nation's health, nor long-term fiscal outlook. Should legislators truly be interested in addressing the nation's health care woes, they will scrap these bills entirely and begin anew.