Before this is over, the mean-spirited Montana senator will be dubbed Mad Max.
Senate Finance Committee Chairman Max Baucus has finally achieved broad bipartisanship with his new health overhaul plan. Nobody else has been able to unite 99 Senators behind any idea in health reform. But Baucus has managed to do just that, with 99 Senators unified behind the idea of NOT supporting his plan.
The plan is carefully crafted to scare away anyone interested in good public policy or just good politics (read re-election). The Baucus bill is grossly underestimated to cost almost $1 trillion in new spending, all financed by higher taxes on health care and health insurance, particularly union health plans, and Medicare cuts for senior citizens, while still leaving at least 25 million uninsured according to the CBO. It still provides for a government takeover of health care and the bureaucratic structure for government rationing of health care, increasing rather than lowering health costs overall.
What is most instructive about the bill is that it shows why Republicans and conservatives cannot support anything like what President Obama and the Democrats are talking about on health care. Below are the features of the Baucus plan that no Republican or conservative could possibly support, even though it is too “moderate” for the rest of the Democrat party.
Higher Health Costs
The Baucus plan is carefully structured to raise health costs for everyone, federal, state and local governments, businesses, and families. The CBO estimates it will raise federal spending by almost $1 trillion over 10 years, but the bill’s spending would mostly be operational for only 6 of those years. That means the true 10-year cost once it is fully phased in would be closer to $2 trillion.
Health insurance prices will soar under the Baucus bill. One reason is that the government will force everyone to buy the health insurance coverage that the government insists you must have, which will include all the politically correct benefits like coverage for abortion that altogether add up to big costs. Insurance is also required to cover anyone who shows up no matter how sick they are and how expensive their health care will be (called guaranteed issue), and they can’t be charged more for that coverage just because they may need highly expensive care (called community rating), which will raise insurance costs even more. The government will also limit the deductibles, co-payments, and out of pocket costs that people can choose for their health insurance. The Council for Affordable Health Insurance (CAHI), which includes some of the smartest free market economists on health care in the country, estimates that these factors alone would cause health insurance premiums to almost double.
Over 50 years old, I currently enjoy a health insurance plan with a $10,000 annual deductible that costs me under $260 a month. That’s about $3,000 a year, and that is all I need because it protects me against the high costs of serious illness. But when President Obama and his socialist Democrats get done helping me, my insurance will probably cost more than twice that, which I will be compelled to pay for under threat of force.
The new taxes on health care and insurance in the Baucus bill will also increase health costs. The bill imposes a tax on higher cost health plans, mostly union health plans, equal to 35% of the cost above $8,000 for individuals and $21,000 for families. But those thresholds are indexed only to grow with general inflation, not health costs. So over time, more and more health plans will be subject to the tax. After just 10 years, the most popular plans in the Federal Employee Health Benefits program will be subject to a tax of almost $1,000 a year. This indicates that average health plans will be paying such a tax burden by that time. These higher costs will be paid by workers and employers.
But the bill includes another tax on all health insurance plans as well that has been overlooked, further increasing costs. Additional taxes are imposed on prescription drugs, medical devices, and clinical labs. All of these will mean higher costs for workers and their insurance plans. Employers who do not provide the government mandated health insurance will pay an additional tax of $400 for each worker eligible for government assistance to buy such insurance on his own. This will further increase costs for employers and cause some low and moderate income workers to lose their jobs.
A bigger impact than any of this will be the effect of incentives from the bill in increasing the demand for health care. With the government or insurance companies paid in part by the government paying the bill, consumers will have every incentive to demand more and more health care. This increased demand will just raise health care prices, meaning higher insurance costs as well.
The Baucus bill provides for a ridiculous runaway explosion in entitlement spending. Medicaid is already projected to cost almost $5 trillion over the next 10 years, reaching $674 billion for 2017. Yet the bill sharply expands Medicaid to everyone up to 133% of poverty, include childless adults not previously covered under the program.
Worse is a new middle class entitlement in the bill providing government subsidies to buy health insurance to everyone with incomes up to 400% of poverty, which is $88,000 for a family of four. Have Mr. Baucus and his fellow left-wing Democrats who think even his bill is not enough not heard of the long-term entitlement crisis? Are they completely ignorant of the long-term budget projections showing we can’t even pay for the entitlement overpromises we have already made? The unfunded liabilities for Social Security and Medicare are now over $100 trillion, while our entire economy only produces $14 trillion a year, and that will be declining even more soon enough unless the current socialist reign of error in Washington is ended.
No they are not ignorant and yes they have heard of the entitlement crisis. After next year’s midterm elections their plan will to suddenly be to announce, “Oh, my gosh, these long-term deficits are completely unacceptable.” The establishment media will echo with wise Washington greybeards intoning that of course the only responsible course is massive, unprecedented tax increases, to Swedish socialist levels and beyond. Most Congressional Democrats secretly harbor dreams of returning to the glory days of 90% top income tax rates, placing a socialist cap on success in America.
Block grant Medicaid and SCHIP back to the states like we did so successfully in 1996 for AFDC, they’ll say, and let each state design a true safety net to make sure no one suffers without essential health care. In their view, the federal government along with the states can spend enough to make sure that the uninsured that truly can’t afford basic health insurance have the money they need to do so. But no Republican, conservative, or any grown-up who can count can support the massive entitlement spending increases in the Baucus bill, or the other Democrat health overhaul plans.
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