Today, the Department of Labor announced nationwide unemployment has risen to 10.2%, a loss of 190,000 jobs.  In response the House Democratic Majority intend to vote on their $1.2 trillion, job killing health care reform package, H.R. 3962. 

5.5 Million Jobs Lost in the Worst Economy in Generations:
President Obama’s Chair of the Council of Economic Advisors found this employer mandate will kill more than 5.5 million jobs during a time of growing unemployment.

$136 Billion in Business Taxes:
Not only will H.R. 3962 increase health insurance premiums for small businesses and their workers, but it imposes more than $136 billion in taxes on businesses that can’t afford government approved insurance for their workers.
 
Small Business Tax Burden Higher Than Fortune 500 Corporations: 
The non-partisan Congressional Budget Office (CBO) and the Joint Tax Committee (JTC) found that up to 1/3 of the revenues raised by the “wealthy” surtax will come from business sources, including small businesses.

The surtax proposal in H.R. 3962 would impose a tax rate on small businesses that is 10% higher than the tax imposed on the largest Fortune 500 corporations (45% versus 35%).

Two New AMTs:
The Democrat bill fails to index both the employer mandate and the surtax to inflation. As a result, more and more businesses will be subject to both the “pay-or-play” tax included in H.R. 3962 and the surtax on “high-income” earners.

According to the nonpartisan Tax Policy Center, the number of individuals and small businesses subjected to the surtax will double between 2011 and 2019.
 
Ignores Proven Methods to Lower Health Care Costs and Premiums:
Under this bill and its companion in the Senate, health insurance premiums for small businesses and individuals are expected to rise. This is not the health reform promised to the American people.

The Republican Substitute Is the Only Proposal That Would Lower Health Care Costs for Small Businesses:
The CBO found that under the Republican Substitute, the average premium paid for small business health insurance declines between 7% to 10%.  It accomplishes this goal without $1.3 trillion in new spending; without imposing more than $750 billion in new taxes on individuals, small businesses and medical devices; and without raiding our seniors’ Medicare.

Read the summary of the Republican Substitute here:  http://gopleader.gov/UploadedFiles/Summary_of_Republican_Alternative_Health_Care_plan_Updated_11-04-09.pdf

Source:  House Committee on Small Business

 

On November 4, 2009, former U.S. Surgeon General C. Everett Koop delivered a letter to Senate leaders expressing his deep concerns regarding health care reform bills being drafted by House and Senate Democrats. 

In further comments he clarified support for health care reform, but not the brand of reform currently proposed in Congress

He said, “My mood about health care is that it definitely needs reform.  But, the whole this is being discussed by people who don’t understand it.” 

Further, “I don’t favor any one approach, but I do think we’ve been misled by the president about transparency.  We were told it was all going to been an open process. And this isn’t a dumb country—I know there are a lot of very smart minds about health care out there, but those aren’t among the names that Obama seems to be leaning on.”

Read his letter below.

November 4, 2009

Dear Majority Leader Reid and Madame Speaker:

As the former Surgeon General of the United States, two terms, from 1981 to1989, I am writing to express my deep personal concerns about the direction of the health care reform bills currently being considered by the United States Congress. More specifically, I am troubled about the possibility of federal dollars being used to pay for elective abortions and Americans being forced to subsidize them. In addition, I firmly believe that strong protections must be included in this legislation so that health care providers are not force to participate in abortions against their will. Polls have recently showed an increasing number of participants opposed to abortion.

It is essential that a Hyde-like abortion funding restriction provision (like the amendment included in the annual appropriations bill for the Department (of) Health and Human Services since 1976) be included in any health care bill that is signed into law. I believe that including this legislative language is necessary to ensure that elective abortions are not financed either directly through a public plan or indirectly through federal subsidies provided to purchase health insurance through state exchanges. I also find it troubling that the legislation requires all state exchanges to offer at least one health plan that includes abortion coverage – no other federal health plan has that specific requirement today.

As a physician, I also want to ensure that laws and regulations remain intact allowing health care providers to exercise their consciences and not be forced to provide services to which they have religious or moral objections. Congress has a long history of protecting the conscience of health care providers, first passing the Church amendment in 1973.

Finally, I believe that it must be made clear through this legislation that state laws are protected and not pre-empted through this legislation, especially those that prohibit abortion coverage. Since 2004, additional conscience protections were included in the annual appropriations legislation for the Department (of) Health and Human Services to include health care entities such as hospitals, provider-sponsored organizations, health maintenance organizations (HMOs), health insurance plans, or any other kind of health care facility, organization or plan. Today, virtually all states have conscience law protections for medical providers.

From my first days as Surgeon General until today, I have always been honest and straightforward with the American people. Therefore, before this legislation becomes law, I believe that the important issues outlined above must be addressed so that it is consistent with current laws regarding abortion coverage conscience protection. I would appreciate your serious consideration of these matters before this legislation is debated and approved by the Senate and the House of Representatives.

Sincerely yours,

C. Everett Koop, MD, ScD U.S. Surgeon General (1981-1989)

 

 

Speaker Nancy Pelosi's health care reform bill, H.R. 3962, introduced last week is 1990 pages long and will cost over $1.3 trillion dollars.  Seniors may be concerned about multiple provisions in the bill including the following changes.

Medicare Advantage Cuts
The House health care reform bill, H.R. 3962, cuts Medicare Advantage by $170 billion.  These cuts could cause 3 million seniors to lose their current coverage. 

Medicare Part D Premium Increases Likely
H.R. 3962 would fill in the Medicare Part D prescription drug coverage “doughnut hole.”  The Congressional Budget Office (CBO) has previously concluded filing in the doughnut hole immediately would cause a 50% spike in average Part D premiums.

Medicare’s Long-Term Health Still in Jeopardy
Medicare is still scheduled to go broke in 2019 and this bill does little to address this looming problem.  In fact, the Obama Administration’s actuaries conclude the bill will increase overall health spending, therefore exacerbating the already strained Medicare system.

Medicare End-of-Life Counseling
H.R. 3962 would allow for Medicare reimbursement of physician consultations on end-of-life decision-making.  Some may be concerned this will allow physician consultations of assisted suicide, specifically in the state of Oregon and Washington which legally allow “death with dignity.”

Compromising Retiree Coverage
H.R. 3962 prohibits private, group health plans from “reducing the benefits provided under the plan to a retired participant, or beneficiary of such participant” after the worker retires “unless such restriction is also made with respect to active participants.”  Reducing options for employers may encourage firms to drop their retiree health plans entirely.

Taxes on Medical Products
H.R. 3962 creates a 2.5% excise tax on medical devices seniors commonly use.  This $20 billion tax will be passed onto the consumers in the form of higher prices and less medical innovation.

New Entitlement Threatens Fiscal Health
H.R. 3962 creates a new entitlement to long-term care services. All individuals over 18 will pay premiums through deductions in their paychecks, to receive $50 per day later in life.  It hardly seems wise to create a new $70 billion entitlement program when existing entitlement programs, such as Medicare, Social Security, and Medicaid, are fiscally straining our Nation’s fiscal health.

Speaker Nancy Pelosi's health care reform bill, H.R. 3962, costs over $1.3 trillion.  Employers and individuals will help pay through 13 new or increases taxes. 

Employer Mandate Excise Tax -- Page 275, Sec. 413:

Employers will be penalized with an 8% (of average wages) excise tax if they are not covering at least 72.5% of a single employee’s health premium (65% of a family employee).  Smaller employers will pay less based on their payroll size:  0% tax if payroll is <$500,000, 2% if payroll is between $500,000-$585,000, 4% if payroll is between $585,000-$670,000, and 6% tax if payroll is between $670,000-$750,000.  Total cost to employers = $188 billion.

Individual Mandate Surtax -- Page 296, Sec. 512: 

imposes a 2.5% tax on all individuals who do not purchase “qualified” health insurance plans approved by the federal government.  Total cost to individuals = $33 billion.

Medicine Cabinet Tax -- Page 324, Sec. 531:

Non-prescription medications, excluding insulin, will no longer be eligible for tax-free purchase under health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs).

Cap on Flexible Spending Accounts (FSAs) -- Page 325, Sec. 532:

For the first time FSAs would be capped at $2500 annually.  Currently 35 million Americans use FSAs to help pay out-of-pocket health expenses.

Increased Additional Tax on Non-Qualified HSA Distributions -- Page 326, Sec. 533:

Taxes on non-qualified distributions from HSAs would increase from 20%.  Total Cost = $19.6 billion.

Health Plans Coordinating with Medicare Part D -- Page 327, Sec. 534:

This section would eliminate tax deductions for employer health plans coordinating with Medicare Part D.  This would further erode private sector participation in delivery of Medicare services.

Surtax on Individuals and Small Businesses --Page 336, 551:

Imposes an income surtax of 5.4% with income over $1 million for joint filers and $500,000 for single earners.  This would raise the top marginal tax rate in 2011 from 39.6% to 45%.

Excise Tax on Medical Devices -- Page 339, 552:

Imposes a new excise tax on medical device manufacturers equal to 2.5% of the wholesale price.  It excludes retail sales and unspecified medical devices sold to the general public.  Total cost = $20 billion.

Corporate 1099-MISC Information Reporting --Page 344, Sec. 553:

Expands 1099-MISC reporting requirements from small businesses to include corporations.  Also expands reporting to exchanges of property.

Worldwide Allocation of Interest -- Page 345, Sec. 554:

Delays for 9 years an American Jobs Creation Act provision that allows U.S. corporation to elect special interest allocation rules that reduce the amount of interest allocation to foreign assets.

Limitation on Tax Treaty Benefits for Certain Payments -- Page 346, Sec. 561:

U.S. based employers with operations in the U.S. and abroad will face increased taxes on earnings.

Codification of the “Economic Substance Doctrine” -- Page 349, 562:

Allows the IRS to disallow certain tax business-related tax deductions if the transaction was not done for economic benefit but might have been done to reduce tax liability.

Application of “More Likely Than Not” Rule -- Page 357, 563: 

If there is a tax underpayment by publicly-traded partnerships and corporation with gross receipts over $100 million, they must be able to prove that the estimated tax paid would have more likely than not been sufficient to cover final tax liability.

Source:  H.R. 3962 and Americans for Tax Reform www.atr.org

"Affordable Health Care for America Act"

 
Read it here.

---

Here is a list of important page numbers and provisions in the 1,990-page “Affordable Health Care for America Act:”
 
Page 94 - Section 202(c) prohibits the sale of private individual health insurance policies, beginning in 2013, forcing individuals to purchase coverage through the federal government
 
Page 110 - Section 222(e) requires the use of federal dollars to fund abortions through the government-run health plan—and, if the Hyde Amendment were ever not renewed, would require the plan to fund elective abortions
 
Page 111 - Section 223 establishes a new board of federal bureaucrats (the “Health Benefits Advisory Committee”) to dictate the health plans that all individuals must purchase.
 
Page 211 - Section 321 establishes a new government-run health plan that, according to non-partisan actuaries at the Lewin Group, would cause as many as 114 million Americans to lose their existing coverage
 
Page 225 - Section 330 permits—but does not require—Members of Congress to enroll in government-run health care
 
Page 255 - Section 345 includes language requiring verification of income for individuals wishing to receive federal health care subsidies under the bill—while the bill includes a requirement for applicants to verify their citizenship, it does not include a similar requirement to verify applicants’ identity, thus encouraging identity fraud for undocumented immigrants and others wishing to receive taxpayer-subsidized health benefits
 
Page 297 - Section 501 imposes a 2.5 percent tax on all individuals who do not purchase “bureaucrat-approved” health insurance - the tax would apply on individuals with incomes under $250,000, thus breaking a central promise of then-Senator Obama’s presidential campaign
 
Page 313 - Section 512 imposes an 8 percent “tax on jobs” for firms that cannot afford to purchase “bureaucrat-approved” health coverage; according to an analysis by Harvard Professor Kate Baicker, such a tax would place millions “at substantial risk of unemployment”—with minority workers losing their jobs at twice the rate of their white counterparts.
 
Page 336 - Section 551 imposes additional job-killing taxes, in the form of a half-trillion dollar “surcharge,” more than half of which will hit small businesses; according to a model developed by President Obama’s senior economic advisor, such taxes could cost up to 5.5 million jobs
 
Page 520 - Section 1161 cuts more than $150 billion from Medicare Advantage plans, potentially jeopardizing millions of seniors’ existing coverage
 
Page 733 - Section 1401 establishes a new Center for Comparative Effectiveness Research; the bill includes no provisions preventing the government-run health plan from using such research to deny access to life-saving treatments on cost grounds, similar to Britain’s National Health Service, which denies patient treatments costing more than £35,000
 
Page 1174 - Section 1802(b) includes provisions entitled “TAXES ON CERTAIN INSURANCE POLICIES” to fund comparative effectiveness research, breaking Speaker Pelosi’s promise that “We will not be taxing [health] benefits in any bill that passes the House,” and the President’s promise not to raise taxes on families with incomes under $250,000

Congressional Budget Office (CBO)

“Our judgment is that that piece of legislation would raise insurance premiums.”                                                                                                                                                                               (CBO Director Douglas Elmendorf, Senate Finance Committee, U.S. Senate, Hearing, 9/22/09)

“[P]remiums in the new insurance exchanges would tend to be higher than the average premiums in the current-law individual market...” 
(CBO Director Douglas Elmendorf, Letter To Senator Max Baucus, p. 6, 9/22/09)

“[The public plan] would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges.” 
(CBO Director Douglas Elmendorf, Letter to Rep. Charles Rangel, p.6, 10/29/09)

Outside Study – Oliver-Wyman

“We estimate that in most states, premiums for the youngest 30 percent of the population will increase by 69 percent under a 2:1 age band included in the Senate HELP and House Committee bills compared to a 5:1 age band. With the Senate Finance Committee provision of 4:1 age bands, premiums will increase for younger purchasers, reducing the likelihood that some will purchase coverage.” 
(Oliver Wyman, “Insurance Reforms Must Include A Strong Individual Mandate And Other Key Provisions To Ensure Affordability,” p.2, 10/14/09)

“Average premiums for small employers will increase: Under reform, small employers will experience premium increases as a result of rating rule changes and minimum benefit requirements.” 
(Oliver Wyman, “Insurance Reforms Must Include A Strong Individual Mandate And Other Key Provisions To Ensure Affordability,” p.3, 10/14/09)

Outside Study – PricewaterhouseCoopers

“There are four provisions included in the Senate Finance Committee proposal that could increase private health insurance premiums above the levels projected under current law.” 
(PricewaterhouseCoopers, “Potential Impact Of Health Reform On The Cost Of Private Health Insurance Coverage,” p.3, 10/11/09)

Outside Study – Milliman Group

“The combined effect of immediate implementation of the reform initiatives described above would be expected to increase average premiums over and above normal trend levels in both the small group and individual insurance markets.”                                                                          (Milliman, “Analysis Of Impact Of Certain Healthcare Reform Initiatives on Health Insurance,” p. 4, 7/13/09)

Outside Study – Wellpoint

“Health care reform legislation introduces several new broad taxes and fees that will further drive up health insurance premiums…” 
(Wellpoint, “Health Care Reform Premium Impact In Ohio,” p.17, 2009)

In an August 11, 2009 town hall meeting, President Barack Obama said,

“If you like your health care plan, you can keep your health care plan.”

What if someone has a Flexible Spending Account (FSA)?  Will they get to keep it?  Likely not.

The Senate Finance Committee health care reform proposal would cap annual FSA contributions at $2,500 for individuals and family plans.  The cap would NOT be indexed, so over time the real value of the $2,500 contribution will diminish. 

As the chart below demonstrates, within the first 10 years, the real value of FSAs will decline to less than $1,700.

For 35 million individuals, families, and seniors who currently rely on FSAs to pay for out-of-pocket medical expenses not covered by their health insurance plans, this will result in higher medical expenses. 

FSA participants will likely face a double whammy because of the proposed tax on “Cadillac” health plans.  The Senate Finance health care reform proposal will impose a 40% excise tax on high-cost insurance plans costing over $8,000 per year for individuals and $21,000 for families beginning in 2013.  Therefore, if an employer offers an employee an insurance plan plus an FSA, any benefit that exceeds the $8,000 or $21,000 threshold will be taxed at 40%.  This will discourage employers, who will pay for part of the tax, from offering multiple benefits or it will encourage employers to cap FSA contributions at less than $2,500.

Source:  Joint Economic Committee, “Senate Finance Bill Will Effectively Eliminate FSAs,” 10/15/09

Health care reform currently being debated in Congress may create a “public option,” which is a new federal entitlement program akin to Medicare or the quasi state/federal Medicaid program. Estimates for the cost of health care reform approach $1 trillion for 10 years. 

But how much will a new government run health care program really cost?

If history is a good predictor, the $1 trillion is significantly short of the true cost.  The Joint Economic Committee has analyzed the original estimated costs and the actual costs of the below health care programs.  Federal programs, state efforts, and even the United Kingdom’s National Health Service have all cost substantially more than the highest cost estimates published while the legislation was pending.

Historical Examples of Health Care Cost Estimates
Benefit	Year	Estimated Cost at time of enactment	Actual Cost	Increase
Medicare	1965	12 billion	110 billion	816%
Medicare Hospital Insurance	1965	9 billion	67 billion	644%
Medicare ERSD (end stage renal disease)	1972	100 million	229 million	129%
Medicaid DSH (hospital)	1987	1 billion	17 billion	1600%
Medicare home care benefit	1988	4 billion	10 billion	150%
Medicare catastrophic coverage**	1988	5.7 billion	11.8 billion	107%
SCHIP	1997	5.4 billion	~6.3 billion	16%
UK National Health Service	1946	260 pounds	359 pounds	38%
Massachusetts Health Reform	2006	725 million	869 million	19%
Source:  Joint Economic Committee, "Are Health Care Cost Estimates Reliable?," 7/31/09 *UK example is in British pounds.  All figures are per-year or for a single specified year unless otherwise states.**Multi-year estimate.

Democrats are going to great lengths to keep others from reading the health care reform bill.

Transparency?

On September 23, the Senate Finance Committee defeated an amendment to make health care reform legislation available 72 hours in advance of a Committee vote. 

In response to the proposal, Senator Max Baucus (D-MT) said,

“I would like to remind our colleagues the effect of this amendment will be this:  After we complete action, we will have to wait another two to three weeks before we can vote on it.”  “We don’t do things that way,” and, “We have never, ever, ever, ever done that in this committee.”  (Politico, 9/24/09)

Click here to read the Politico article. 

Unlike the Democrats, who have broken their promise to make legislation available to the public before it’s voted on, I have cosponsored a resolution requiring all legislation to be posted online at least 72 hours in advance of a vote, which House leadership has refused to bring up for a vote. 

Click here to learn more about the resolution, H.Res. 554.

Waste of Time?

Senator John Kerry (D-MA) suggests posting lengthy, complicated legislation, such as the health care reform bill, is not necessary because nobody actually reads the bills.  He says,

“Let’s be honest about it, most people don’t read the legislative language.” (Politico, 9/23/09, www.politico.com)

I disagree.  I have taken the Responsible Healthcare Reform Pledge to commit to reading in full any health care legislation before voting in favor of reform. 

Reforming America’s health care system is one of the most pressing challenges that this country must face and accomplish.Despite claims that Republicans have produced no viable health care reform proposals, Republicans have alternative ideas to a government-run, tax-laden health care reform approach, and they have put their ideas into legislative form.

My bill, H.R. 3438, the “Access to Insurance for All Americans Act” addresses access, affordability, portability, and pre-existing conditions without mandating, controlling, or taxing the American people.

Click here to learn more about my proposal and the over 30 other House Republican bills.