Senate Finance Committee Seeks Funds for Health Care Bill

Members of the Senate Finance Committee, which is working on a health care overhaul bill parallel to that proposed by the Senate Health, Education, Labor, and Pensions Committee’s Affordable Health Choices Act, have said their draft proposal now bears a total cost of just under $1 trillion.

That figure is $600 billion lower than the initial estimate for the Affordable Health Choices Act, which the nonpartisan Congressional Budget Office put at $1.6 trillion and others estimate at up to $4 trillion. Senators working on that bill say they have lowered their proposal’s cost to $600 billion (see page 13) and are still working on details.

At a July press conference Sen. Kent Conrad (D-ND) told reporters the Finance Committee managed to reduce the cost of its proposal “by limiting eligibility for various subsidies.”

Taxpayer-funded subsidies would have been available under the proposal for those with incomes up to 400 percent of the poverty level. To lower the cost, the benefit was restricted to families earning 300 percent of the poverty level or less, according to Conrad.

Struggling to Afford Overhaul

“There’s not a final bill that’s agreed to,” said Conrad. “What there is now is a clear path to having a bill that is paid for.” On July 16 Conrad told reporters he would be opposing the HELP Committee’s bill on the grounds it would “increase costs” for Americans paying for health care.

On July 9, Finance Committee Chairman Max Baucus (D-MT) presented his members with suggestions on how to help pay for their $1 trillion proposal. His suggestions included taxing employer-provided health care benefits, a move strongly criticized by President Barack Obama on the campaign trail last year but since embraced by the new administration; imposing a 5 percent tax increase on Americans making more than $500,000 a year; and issuing “tax credit bonds” to the public.

Baucus’s suggestions also included a proposal to expand the 1.45 percent earned income tax funding Medicare to apply to so-called “passive income” (capital gains, rental properties, etc.), capping tax breaks for itemized deductions or freezing the top deduction rate when the Bush tax cuts expire in 2010, and raising taxes on pharmaceutical companies and private insurance providers.

Not Cost Cuts

“Hiking taxes does not equal cutting costs,” said John R. Graham, director of health policy studies at the Pacific Research Institute. “The Senate Finance Committee is not embracing reform; they are merely proposing that the federal government decide what your health benefits should be while trying to get the cost under some magic number that the mainstream media will swallow.

“Until all parties accept that health reform is about giving health care dollars back to the patients who need them, instead of expanding government power to ‘cover’ everyone, there will be no real health reform,” Graham added.

Driving Up Costs

Though Finance Committee members expressed satisfaction over trimming the estimated cost of the proposed overhaul to under $1 trillion, not everybody is happy about the still-large price tag, particularly since so little is known about the committee’s draft bill, other than that it will include an individual and employer mandate to provide or obtain health insurance or face monetary fines.

“At a time when Americans are losing jobs by the hundreds of thousands, only a madman could actually propose another $1 trillion in new spending along with outrageous government mandates on employers,” said Georgia state Sen. Chip Rogers (R-Woodstock). “This is a recipe for economic disaster.”

“Mandating that employers pay for health care reform is not ‘cutting the price tag’—it’s imposing a new tax,” said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. “There is simply no magical way to reform health care on the cheap. Either taxes get raised, services get cut, or we add to the already-mindboggling deficit.

“In either case, adding these massive new costs onto an already-bloated federal government at a time of recession and enormous deficits is madness,” Scandlen said.

Affordability Worries

“One of my biggest concerns is that people don’t know what is in this bill,” said Iowa state Rep. Linda Upmeyer (R-Garner). “The haste involved should cause suspicion. Just recently a small-business owner told me he would close his doors if he had to pay a tax in lieu of offering health insurance. Business owners would like to offer health insurance, but they often can’t afford to. No law changes that.”

Dr. John Dunn, a physician, attorney, and policy advisor to The Heartland Institute, says the inclusion of employer and individual mandates may be designed “to drive people into government-financed health care, where rationing and price controls and reduced payments are used to project reduced costs.

“Costs are driven by utilization,” said Dunn. “The real reason people think they can reduce costs with these mandates is because they plan to ration access to care.”

Wrong Approach

The Finance Committee’s approach is unfortunately emblematic of the way Washington goes about doing things, says Merrill Matthews, Ph.D., executive director of the Council for Affordable Health Insurance.

“Major reform legislation usually starts out asking, ‘What is good policy?’ and ends up asking ‘What is good politics?’” said Matthews. “That’s pretty much where we are with the health care reform legislation. Democrats want to get the legislation under $1 trillion for no other reason than they think the public and many moderate Democrats will balk at a higher number.

“It just goes to show that the government’s primary concern is always the cost, not the quality, of care,” Matthews added.

Joe Emanuel ([email protected]) writes from Georgia.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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