Evaluating The Latest Health Care Proposal

 
By Tom Donohue, President and CEO, U.S. Chamber of Commerce
October 27, 2009

The health care reform debate has had more plot twists and drama than a soap opera--and there's more to come! The latest development is passage of a bill by the Senate Finance Committee. Although it is the best bill yet, the committee missed an opportunity to craft truly bipartisan legislation. Here's what the U.S. Chamber likes and doesn't like about it.

On the plus side, the Finance Committee bill streamlines enrollment for the 11 million uninsured Americans who are already eligible--but have yet to sign up--for Medicaid and SCHIP; pays doctors to be efficient, effective, and keep you healthy; and includes broad new flexibility for the continuing improvement of programs like Medicare through the creation of an "innovation center" that will help control costs. This legislation also creates health insurance exchanges, giving individuals and small businesses a streamlined marketplace where they can make apples-to-apples comparisons and choose the plan that best meets their needs.

But when it comes to reducing the ever-escalating cost of care for both consumers and employers, this bill makes things worse. It imposes a vast array of new taxes on medical devices ($40 billion), pharmaceuticals ($23 billion), and insurance policies ($67 billion), all of which will serve to increase the costs for everyone who buys health insurance. And don't forget the $200 billion tax on benefits!

The plan would also create a new, budget-busting entitlement in the form of health insurance credits ($461 billion in the first 10 years) for those making up to 400% of the federal poverty level. The true cost of the bill is hidden, as it is based on the assumption that Medicare will cut payments to medical providers by 20%. This will never happen, and Congress will surely spend more than $200 billion--in addition to the bill's price tag--to prevent provider cuts.

The bill also punishes employers who don't offer health insurance--or whose plan is deemed "unaffordable"--by imposing a new excise tax. Employees who receive insurance credits should not represent burdens on employers--this could have the unintended consequence of discouraging businesses from hiring low-wage workers.

In the weeks ahead, the U.S. Chamber is going to work with members of Congress from both parties to try and ensure that the final version of health care reform addresses the major challenges--controlling costs, improving quality, and expanding access--without adding to the deficit, raising taxes in uncertain economic times, or burdening America's job creators. The American people deserve a bipartisan solution to ensure that they have access to affordable, high-quality care.