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http://fixhealthcarepolicy.com/ Latest Research February 24, 2010

The President’s Health Reform Proposal: More Like $2.5 Trillion
The White House estimates that the President’s Proposal for health care reform would cost approximately $950 billion over a ten year window. Here, James Capretta explains why this is unlikely to be the case and how President Obama’s plan would far exceed this cost estimate.

The President’s Health Reform Proposal: More Like $2.5 Trillion
Published on February 24, 2010 by James C. Capretta President Barack Obama released an updated health care reform plan this week. The Congressional Budget Office (CBO) has not yet had an opportunity to review and assess this latest offering. However, Administration officials have claimed that it would cost $950 billion over a decade, is “fully paid for,” and would cut the deficit in the short and long term. Each of these claims, which were made also about the House- and Senate-approved bills, rests on highly questionable assumptions. A closer look at the President’s plan shows that:
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Its costs are likely to come in well over $1 trillion over 10 years, Ten full years of implementation would cost closer to $2.5 trillion, and The plan would make the nation’s budget outlook much worse, not better.

The Missing “Doc Fix” Both the President and congressional leaders have signaled that they will not allow a scheduled 21 percent reduction in Medicare physician fees to go into effect in 2010 or later years. But the President did not include a permanent fix in his health care plan. This is ironic, because the plan includes scores of other Medicare provisions, touching on just about every possible feature of the program. The only provision seemingly left out of the package is a long-term fix for physician fees, perhaps Medicare’s most pressing problem and one that all sides acknowledge must be addressed soon. Of course, the reason the so-called “doc fix” is not in the President’s plan is cost. The Administration and Democratic leaders have said they want to pass a physician fee reform—but in a separate bill that does not provide any offsetting spending reductions or tax increases. In other words, their “doc fix” solution would require additional federal borrowing of at least $200 billion over the coming decade. But it does not matter to taxpayers whether the Democratic health care agenda is passed in one bill, two, or even three. The total cost is the same. And when a permanent solution for the “doc fix” is properly included in the accounting of the President’s health care plan, the total costs are pushed up to at least $1.15 trillion. Moreover, the added spending is enough to wipe out entirely all of the claimed deficit reduction between now and 2019. Non-Coverage Spending in the Senate Bill When the President placed a $900 billion limit on the total amount of spending in the health care bills, he did not say it was for a “net” number, with tax increases offsetting part of the cost. Nor did he say it was a limit for only some of the spending in the health care bills. In the Senate-passed legislation, CBO said the cost of the coverage expansion would be $871 billion between 2010 and 2019. The Administration says it has made changes adding another $75 billion. In addition, the Senate bill included about $90 billion more in non-coverage spending, not counting closing the “donut hole” in the Medicare drug benefit, which would add billions more to the cost of the non-coverage provisions of the bill. Adding 2020 to the Cost Estimate Last year, CBO assessed the Democratic health care plans over the 2010–2019 time period. However, in January, the agency extended its baseline projection out to 2020. That means that any assessment of the Obama health plan should now go from 2011 through 2020. Adding one more year to the cost estimate will substantially increase the 10-year price tag. CBO estimated that the coverage provisions of the Senate-passed health care bill

would cost about $200 billion by 2019. If those costs were to increase by 8 percent each year, as CBO estimated, that would put the 2020 cost at $216 billion. The CLASS Act Gimmick The President’s health care proposal picks up the Community Living Assistance Services and Supports Act, or CLASS Act, which was in both the House- and Senate-passed bills. The CLASS Act would stand up an entirely new entitlement program for long-term care services. Eligible participants would be required to pay premiums well in advance of receiving any benefit payments. Consequently, starting this new program from scratch would produce one-time “savings” from premium collections before any cohort of beneficiaries starts drawing benefits. But the premium collections would be needed later to liquidate entitlement obligations, which means the premiums are being double-counted. The premiums are set aside in a fund to pay future claims, but they are also counted by the bills’ sponsors as an offset for expanding health coverage. The CLASS Act premiums total $72 billion over 10 years in the Senate bill. The True 10-Year Window The President argues that expeditious enactment of his plan is necessary to provide better services to the uninsured, but none of the key provisions to expand coverage would go into effect until 2014. Meanwhile, many of the spending reductions, such as the cut in Medicare Advantage payment rates, would kick in much earlier, as would the tax increases. Consequently, the President’s plan has 10 years worth of spending and revenue “offsets” paying for only seven years worth of spending. Looking at these bills over a true 10-year window of full implementation reveals much higher costs. The Senate bill’s provisions—even excluding the “doc fix”—would total $2.3 trillion over the period 2014–2023, with the coverage provisions fully in place. [1]Adding the “doc fix,” the Obama team’s admitted $75 billion add-on, at least $90 billion in non-coverage spending, and $72 billion for the CLASS Act, the true 10-year cost of the President’s plan is almost certainly over $2.5 trillion. The Certainty of Future of Entitlement Expansions The President’s plan assumes that the new entitlement spending for coverage expansion can be held in check with so-called “firewall” provisions. These are the rules that essentially preclude many tens of millions of individuals from gaining access to premium subsidies. If an employer offers “qualified” insurance coverage to a worker, the employee really has no choice but to take it if he wants to avoid paying the penalty for going uninsured. They could not go into the so-called “exchanges” to get insurance subsidized with federal tax support.

These firewall rules would create large disparities in the federal subsidies made available to workers inside and outside the exchanges. Under the Senate-passed bill, a family of four with an income of $60,000 with employer-sponsored health care (and thus not qualified for the exchange) would get $4,500 less in federal support than a similar family inside the exchange would get in 2016.[2] And, according to CBO, there would be many tens of millions more families outside the exchange than in it. Today, there are about 127 million Americans under the age of 65 with incomes between 100 and 400 percent of the federal poverty line, but CBO expects that only about 18 million people will be getting exchange subsidies in 2016. If the bill is enacted as currently written, pressure would build to treat all Americans fairly, regardless of where they get their insurance. One way or another, the subsidies provided to those in the exchanges would be made more widely available, driving the costs of reform much higher than CBO’s estimates currently indicate. Highly Questionable Tax Increases and Medicare Cuts The President proposes to pay for his expensive health care program with a series of tax increases and Medicare spending cuts. But these tax increases and spending reductions are far less likely to occur than the entitlement expansions that are promised. For instance, the President has proposed a new excise tax on “high cost” insurance plans, but he would not start the tax until 2018, well after any potential second term for his Administration. Yet he and his aides claim that hundreds of billions of dollars in revenue will come from this tax in the second decade of the program, thus more than offsetting the exploding entitlement costs that the bill would provide. But if the President is unwilling to impose this tax during his term, it is hard to see that another President or another Congress would be willing to do so later. Similarly, the President’s plan relies on deep cuts in Medicare payments to hospitals and other institutional providers. But the chief actuary of the Medicare program has said repeatedly that these cuts are not realistic because they would push many institutions into serious financial distress. Still, the Administration claims that hundreds of billions of dollars from these cuts will materialize from 2020 to 2030, thus justifying its claim of large deficit reduction during that time. But it is far more likely that the Medicare cuts and tax increases will never be sustained, even as the entitlement costs from the Obama plan soar. Making Matters Worse The President has said that he wants a health reform bill in large part because it is necessary to get better control of the federal budget. But his plan has evolved into a large entitlement expansion effort and not much more. The offsets are unrealistic, and the entitlement promises will grow with time. If enacted, the President’s health care program would make a very dire federal budgetary outlook much, much worse.

James C. Capretta served in the Office of Management and Budget (OMB) during the Bush Administration and is a Fellow in the Economics and Ethics Program of the Ethics and Public Policy Center. ________________________

References
http://budget.senate.gov/republican/pressarchive/2009-12-22BudgetPerspective.pdf (February 24, 2010). [2]Eugene Steurle, “Health Care Reform: Implications of a Two Subsidy System,” American Enterprise Institute, December 4, 2009, at http://www.aei.org/docLib/Eugene %20Steuerle-%20AEI%2012-4-09.pdf (February 24, 2010).
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Other articles by James Capretta

WebMemo posted February 24, 2010 by James C. Capretta The President’s Health Reform Proposal: More Like $2.5 Trillion President Barack Obama released an updated health care reform plan this week. The Congressional Budget Office (CBO) has not yet had an opportunity to review and assess this latest offering. However, Administration officials have claimed that it would cost $950 billion over a decade, is “fully paid for,” and would… Read more

WebMemo posted January 14, 2010 by James C. Capretta The Real Budgetary Impact of the House and Senate Health Bills President Barack Obama pledged in an address to a joint session of Congress in September 2009 that any health care bill he signed would cost no more than $900 billion over 10 years and would not worsen the federal budget deficit in the short or long term.[1] … Read more

WebMemo posted December 15, 2009 by James C. Capretta Entitlement Reform Should Precede Health Care Expansion The Treasury Department expects the U.S. government to bump up against the statutory limit on federal borrowing sometime near the end of this month.[1]

Consequently, the Obama Administration is now urging Congress to quickly pass a debt limit increase of almost $2 trillion. … Read more

WebMemo posted December 11, 2009 by James C. Capretta The Senate Health Care Bill's "Firewall" Creates Disparate Subsidies The Congressional Budget Office's (CBO) recent cost estimate for the Senate health care bill, sponsored by Senator Majority Leader Harry Reid (D-NV), creates the impression that Senate Democrats have succeeded in crafting a deficitneutral, fiscally responsible legislative package. But it is an illusion. Like its House-passed counterpart, the… Read more

WebMemo posted October 30, 2009 by James C. Capretta The Wrong Medicare Advantage Reform: Cutting Benefits, Limiting Choices, and Increasing Costs The health care bills currently under active consideration in Congress would substantially modify the Medicare Advantage (MA) program, imposing deep benefit cuts to partially offset new non-Medicare entitlement spending while reducing health plan choices for seniors and bending the cost curve in the wrong direction. Over 9.9 million… Read more

WebMemo posted June 22, 2009 by James C. Capretta The Senate Health Care Bills: $1.5 Trillion Sticker Shock Taxpayers are in for sticker shock. Key committees in the both the House and Senate are racing to get health care reform bills to the floors of their respective chambers over the coming weeks. According to press accounts, however, a key, unresolved issue is how to pay for the expensive insurance subsidies many in… Read more

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The President’s Health Care Proposal
By Kisa Smith

Read the summary at: http://www.pdfdownload.org/pdf2html/view_online.php?url=http %3A%2F%2Fwww.whitehouse.gov%2Fsites%2Fdefault%2Ffiles%2Fsummarypresidents-proposal.pdf

Read the President’s letter sent to Congressional leaders on March 2, 2010 here: The White House Office of the Press Secretary For Immediate Release March 02, 2010

Letter to Congressional Leaders on Health Insurance Reform
Please find below a letter from President Obama to Congressional leaders on moving forward with health insurance reform legislation. View the letter as a PDF. March 2, 2010 Dear Speaker Pelosi, Senator Reid, Senator McConnell, and Representative Boehner: Thank you again for the time, energy, and preparation you invested in last Thursday’s bipartisan meeting on health insurance reform. I have always believed that our legislative process works best when both sides can discuss our differences and common goals openly and honestly, and I’m very pleased that our meeting at Blair House offered the American people and their elected representatives a rare opportunity to explore different health reform proposals in extraordinary depth. The meeting was a good opportunity to move past the usual rhetoric and sound-bites that have come to characterize this debate and identify areas on which we agree and disagree. And one point on which everyone expressed agreement was that the cost of health care is a large and growing problem that, left untended, threatens families, businesses and the solvency of our government itself. I also left convinced that the Republican and Democratic approaches to health care have more in common than most people think. For example, we agree on the need to reform our insurance markets. We agree on the idea of allowing small businesses and individuals who lack insurance to join together to increase their purchasing power so they can enjoy greater choices and lower prices. And we agree on the dire need to wring out waste, fraud and abuse and get control of skyrocketing health care costs. But there were also important areas of disagreement. There was a fundamental disagreement about what role the oversight of the health insurance industry should play in reform. I believe we must insist on some common-sense rules of the road to

hold insurance companies accountable for the decisions they make to raise premiums and deny coverage. I don’t believe we can afford to leave life-and-death decisions about health care for America’s families to the discretion of insurance company executives alone. No matter how we move forward, there are at least four policy priorities identified by Republican Members at the meeting that I am exploring. I said throughout this process that I’d continue to draw on the best ideas from both parties, and I’m open to these proposals in that spirit: 1. Although the proposal I released last week included a comprehensive set of initiatives to combat fraud, waste, and abuse, Senator Coburn had an interesting suggestion that we engage medical professionals to conduct random undercover investigations of health care providers that receive reimbursements from Medicare, Medicaid, and other Federal programs. 2. My proposal also included a provision from the Senate health reform bill that authorizes funding to states for demonstrations of alternatives to resolving medical malpractice disputes, including health courts. Last Thursday, we discussed the provision in the bills cosponsored by Senators Coburn and Burr and Representatives Ryan and Nunes (S. 1099) that provides a similar program of grants to states for demonstration projects. Senator Enzi offered a similar proposal in a health insurance reform bill he sponsored in the last Congress. As we discussed, my Administration is already moving forward in funding demonstration projects through the Department of Health and Human Services, and Secretary Sebelius will be awarding $23 million for these grants in the near future. However, in order to advance our shared interest in incentivizing states to explore what works in this arena, I am open to including an appropriation of $50 million in my proposal for additional grants. Currently there is only an authorization, which does not guarantee that the grants will be funded. 3. At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner. 4. Senator Barrasso raised a suggestion that we expand Health Savings Accounts (HSAs). I know many Republicans believe that HSAs, when used in conjunction with high-deductible health plans, are a good vehicle to encourage more cost-consciousness in consumers’ use of health care services. I believe that high-deductible health plans could be offered in the exchange under my proposal, and I’m open to including language to ensure that is clear. This could help to encourage more people to take advantage of HSAs. There are provisions that were added to the legislation that shouldn’t have been. That’s why my proposal does not include the Medicare Advantage provision,

mentioned by Senator McCain at the meeting, which provided transitional extra benefits for Florida and other states. My proposal eliminates those payments, gradually reducing Medicare Advantage payments across the country relative to feefor service Medicare in an equitable fashion (page 8). My proposal rewards highquality and high-performing plans. In addition, my proposal eliminates the Nebraska FMAP provision, replacing it with additional federal financing to all states for the expansion of Medicaid. Admittedly, there are areas on which Republicans and Democrats don’t agree. While we all believe that reform must be built around our existing private health insurance system, I believe that we must hold the insurance industry to clear rules, so they can’t arbitrarily raise rates or reduce or eliminate coverage. That must be a part of any serious reform to make it work for the many Americans who have insurance coverage today, as well as those who don’t. I also believe that piecemeal reform is not the best way to effectively reduce premiums, end the exclusion of people with pre-existing conditions or offer Americans the security of knowing that they will never lose coverage, even if they lose or change jobs. My ideas have been informed by discussions with Republicans and Democrats, doctors and nurses, health care experts, and everyday Americans – not just last Thursday, but over the course of a yearlong dialogue. Both parties agree that the health care status quo is unsustainable. And both should agree that it’s just not an option to walk away from the millions of American families and business owners counting on reform. After decades of trying, we’re closer than we’ve ever been to making health insurance reform a reality. I look forward to working with you to complete what would be a truly historic achievement. Sincerely,

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Click here to read Senate Republican Leader Mitch McConnell’s (R-KY) letter to President Obama regarding the White House Health Care Summit. Mar 02 2010

McConnell Calls for ‘Better Way’ on Health Reform
WASHINGTON, D.C. – U.S. Senate Republican Leader Mitch McConnell sent the following letter to President Obama regarding the White House Health Care Summit. The text of the letter appears below (a PDF of the signed letter can be downloaded below):

Mr. President, Thank you for your letter. Republicans also believe that last week’s health care summit at Blair House was productive. It provided a forum for the kind of open and broad-based discussion of ideas that our constituents have been demanding for months. It should be clear by now that most Americans oppose the massive health spending bills that Democrats in Washington have been attempting to push through Congress. Last week’s summit gave us an opportunity to show our constituents that there is a better way to proceed with the kind reforms they truly want. Particularly encouraging was your apparent support at the summit for a number of commonsense ideas that Republicans have long promoted as a way of targeting the high cost of health care. All of us agree that cost is the core problem, and following last week’s summit many of us were hopeful that these proposals could form the basis for a health care bill that Americans would actually embrace. Indeed, that’s what many of us thought the summit was all about: finding areas of agreement upon which we could build a new bill, since Americans clearly oppose the old ones. It was with this in mind that we were surprised and disappointed with your latest proposal to simply paper a few of these commonsense proposals over an unsalvageable bill. The American people are asking us for step-by-step reforms that target cost and expand access, not a couple of commonsense ideas layered over a rewrite of one-sixth of the economy, a massive expansion of the federal government’s role in their daily lives, and higher taxes and cuts to Medicare to pay for it. The virtue of the ideas we all agreed upon at the summit is that they would lower costs and expand access without requiring these things. That’s the kind of reform Americans will support. We respectfully encourage you to consider a new approach to reform, one that does not cut Medicare to fund a trillion dollar takeover of the health care system or impose job-killing taxes in the middle of a recession. We

encourage you to join with Democrats and Republicans in Congress in listening to what the American people have been telling us for more than a year now. Americans are telling us quite plainly that in order to reform health care, we should scrap the bills they have already rejected and start over with commonsense, step-by-step reforms we can all agree on. We would also ask you to encourage Democrats in Congress to scrap something else; namely, their last-ditch plan to jam some version of their original bill through Congress and past the American people by way of the highly partisan process known as Reconciliation. It should be clear by now how Americans feel about forcing massive policy changes through Congress with a back room deal. The fact that Democrats in Congress still seem intent on this approach suggests that they are completely out of step with the public. Now is not the time to repeat the same mistakes that brought us here. It’s time to listen to the people, and start over with reforms that lower costs. Sincerely, Mitch McConnell

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A Piecrust Promise from Pelosi and Reid?
Posted March 8th, 2010 at 11:19am in Family and Religion, Health Care

A piecrust promise is one that is easily made and easily broken. The promise – more a rumor than anything else – that the U.S. Senate will use the reconciliation process to adopt a strong ban on abortion funding if the House passes the Senate-approved bill is flakier than most. Never before in the history of the 34-year abortion funding debate have pro-life members of Congress approved a bill containing abortion funding on the promise that a subsequent vote will fix the problem. The scenario being discussed in the media requires some explanation. The House-passed version of health care reform includes the blanket provision known as Stupak-Pitts. This provision applies to all the terms of the House bill, makes the traditional Hyde Amendment language on abortion (allowing funding only when the life of the mother is at stake and in instances of rape and incest) permanent, and permits individuals to buy abortion coverage only as a personally elected and paid for rider on their policy. The Senate-passed bill, H.R 3590, include numerous mechanisms whereby abortion is either directly funded, subsidized through the state and federal exchanges created under the bill, or susceptible to inclusion via interpretations by the Department of Health and Human Services and the Office of Personnel Management. Reports have surfaced of a deal whereby the House would approve the Senate bill on a promise that the abortion language would be fixed in reconciliation. There are at least two (related) problems with this scenario. First, it would require the U.S. Senate, with a maximum of 45 votes for strong limits on abortion funding, to approve a permanent prolife amendment that meets the stringent standard set by Stupak-Pitts. Second, it would require Stupak and a cadre of pro-life Democrats that numbers a dozen or more to vote for a bill that the National Right to Life Committee has described as “the most proabortion single piece of legislation that has ever come to the House floor for a vote, since Roe v. Wade” and a “career-defining” vote on abortion policy. In this scenario, members in both chambers execute votes that are the polar opposite of their actual views and against the desires of their strongest supporters. Both would be

doing so on the basis of promises that no one can predict will be kept. The pro-life House members are being asked to believe that once the Senate-passed bill is adopted in toto by the House and signed by President Obama, the Senate, with its pro-abortion majority, will proceed to enact a permanent abortion funding limitation and other provisions that it did not deem wise to include in its own bill, which will be the law of the land. The senators who opposed Stupak-Pitts will be asked to believe that they can return next year, or at some other distant date, and join with President Obama in repealing the permanent Stupak-Pitts law and install full federal funding of elective abortion. President Obama for his part says the bill he supports has no federal funding for abortion, a finesse at best. Is it credible that the President will proceed in 2011 and 2012 and support repeal of Stupak-Pitts, a measure that the latest surveys say has as much as 72 percent public support, as he seeks reelection in 2012? Senators opposed to Stupak-Pitts have no reason to believe this, and thus pro-life House Democrats have no reason to believe that the “reconciliation fix” on abortion is anything more than a piecrust promise. If they were to proceed anyway and vote for H.R. 3590, it would indeed be “career-defining” for these House members who have so far stood tall for their, and their constituents’, convictions. ________________________ March 16, 2010

Piecrust Promises: Part Two

Ever since the U.S. Senate voted in December to provide new funding for Federally Qualified Health Centers in its version of health care reform, analysts have pointed out that these monies are not covered by the Hyde Amendment, the measure dating from 1976 that sharply limits federal financing of abortion. As a consequence, these new funds appropriated by the Senate bill, which is now being moved through the House of Representatives by an extraordinary legislative device, are available without statutory limit to underwrite elective abortions.

Yesterday the Obama Administration issued a internal memorandum from the Department of Health and Human Services (HHS) attempting to undercut this conclusion. The memo states that even in the absence of the statutory prohibition contained in the Hyde Amendment, longstanding regulations in place at HHS would “prohibit federal funds from being used for abortion services.” The memo notes that “[t]he president and Secretary [of HHS Kathleen] Sebelius have repeatedly stated their strong commitment to ensuring that health insurance reform does not change the status quo on abortion policy.” The HHS memo has little or no status as a matter of law. It amounts to the issuance of another promise that legislators and citizens can evaluate on the merits. Because the regulations cited in the memo would be applied voluntarily by HHS to any funds not included in a future appropriations measure containing the Hyde Amendment (the FQHC funds appropriated by the Senate bill cover five full years of spending), HHS would not be obligated to apply the standards of the Hyde Amendment to these funds. The flexibility of federal agencies to expand or limit reasonable interpretations of the law has been demonstrated both in the context of abortion policy in federally funded family planning clinics and in the Obama administration’s rescission of conscience regulations last March. The Obama administration’s argument also relies on a press release from the National Association of Community Health Centers, which asserted that these centers “do not plan to, nor are they seeking to, become providers of abortion.” While the release may have been issued in good faith, it has no policy force with respect to the nation’s 1,250 FQHCs. These centers, moreover, are under intense public scrutiny at a moment of decision on the President’s “signature” domestic policy issue. It is more instructive to look to their views when that scrutiny was largely absent. In 2009 First Lady Michelle Obama paid her first visit to a nonprofit organization in the nation’s capital – choosing a clinic network called Mary’s Center. The Center is an FQHC and it focuses on promoting “healthy pregnancies, improv[ing] birth outcomes, and reduc[ing] infant mortality.” While Mary’s Center does not publicize a policy on providing abortion, its President/CEO Maria S. Gomez proudly lists on her official biography her receipt of the 2002 “Champions of Choice” Award from Planned Parenthood of Washington, D.C., a major area abortion provider. The award is given each year to an advocate of “choice,” a standard locution for abortion. More significantly, key personnel from Mary’s Center were participants in a 2001 National Consortium convened by the National Abortion Federation. The Consortium issued a report titled “Increasing Access to Abortion for Women in Diverse Communities.” The report issued formal recommendations for policy changes. The singular domestic policy change: repeal of the Hyde Amendment. The report described this recommendation as “the universal consensus at the Consortium.” With passage of the Senate bill and signature by the President, the Consortium will be well on its way to that goal.

By Arthur Donaven

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March 16, 2010

Morning Bell: Is Now Really the Time To Create a New $2.5 Trillion Entitlement?
In theory, the federal government has $2.5 trillion stashed away in a nondescript office building in the sleepy little town of Parkersburg, West Virginia. That is where the Treasury Department keeps stacks of nonnegotiable Treasury bonds payable to the Social Security Administration. But as the Associated Press reported yesterday, for the first time since the 1980s, the federal government will not be adding to that stack. Thanks to an aging population and slow economy, Social Security will pay out $29 billion more this year than it takes in. And the Congressional Budget Office reports that after small surpluses in 2014 and 2015, the program is projected to be in the red from 2016 until forever. But what about Al Gore’s Social Security “Lock Box?” Can’t we just spend that $2.5 trillion in the Social Security Trust Fund? As Heritage experts David John and Brian Reidl explain, since 1939 federal law has required Social Security to “invest” its extra money in Treasury bonds. Those bonds are really just IOUs from the government to the government. The feds already spent that $2.5 trillion long ago on programs such as education, foreign aid and defense. Add the $2.5 trillion Social Security obligation onto our other obligations and our current national debt stands at $12.5 trillion, or nearly $42,000 for every man, woman, and child in the country. And it will only get worse under President Barack Obama’s Budget. It would: 1) borrow 42 cents for each dollar spent in 2010; 2) leave permanent annual deficits that top $1 trillion as late as 2020; and 3) dump an additional $74,000 per household of debt into the laps of our children and grandchildren. Responding to such unsustainable borrowing, Moody’s rating agency announced Monday that the United States needs to make deep spending cuts or risk losing its AAA credit rating. From the report: “growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.” Losing our AAA rating would send interest rates higher, increase our borrowing costs, and send the percentage of GDP we spend servicing our debt sky rocketing. Bloomberg adds: “the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013.” The message from Moody’s was clear: the U.S. federal government must change direction on spending or face economic disaster.

The leftist majorities in Congress and the White House are not listening. Instead of reining in federal spending and tackling our existing Entitlement crisis, they are locked in an all out push to create a brand new $2.5 trillion health care entitlement. The President may say his plan is deficit neutral, but the American people do not believe him. And they are wise not to. The President tries to pay for his plan with over half a trillion dollars in Medicare cuts over the next decade. The president’s own Centers for Medicare and Medicaid Services reports that these cuts would cause one-fifth of all health care providers to go bankrupt. Congress would never allow those hospitals to go out of business. Congress will never actually make those Medicare cuts. So already Obamacare is half a trillion dollars in the red, and we haven’t even tacked on the hundreds of billion of dollars the doc fix adds on. Reducing our entitlement obligations is the only way to prevent our nation from becoming another Greece. We need to: 1) to show these programs’ long-term obligations in the budget; target these programs to only who that need them; and strengthen personal responsibility by making it easier for people to build personal retirement savings and use health care savings accounts. But first we must avoid the fiscal insanity that is Obamacare.

By Conn Carroll _____________________________________________________________________

March 16, 2010

Karl Rove: Repealing Obamacare Will Be Easier If Congress Skirts Normal Process

“Deeming” and “reconciliation” are hardly household words, but for the next week Americans will come to know them as key procedural maneuvers that could push Obamacare across the finish line. But while they might deliver a bill to President Obama’s desk, they will also make it easier to repeal the measure, says former White House deputy chief of staff Karl Rove. On the road for his “Courage and Consequence” book tour, Rove chatted with The Heritage Foundation about Obamacare, his defense of President George W. Bush’s conservatism, the growth of Tea Parties and anger toward government spending. Listen to the full 30-minute interview. Rove, who joined Heritage for the launch of our San Francisco Community Committee last September, recalled how even in the heart of Speaker Nancy Pelosi’s (D-CA) district, conservatives were teeming with energy and enthusiasm. Rove will appear at a Heritage Foundation community committee event in Naples, FL, next week. During the interview, he did not hold back his criticism of conservatives, particularly those who took issue with Bush’s support of No Child Left Behind, the Medicare prescription drug benefit and TARP. He also singled out conservatives, in addition to congressional Democrats, for the failure of Social Security reform in 2005. Rove, however, has a positive vibe about the future of conservatism, particularly leaders such as Reps. Paul Ryan (R-WI) and Kevin McCarthy (R-CA); Sens. Richard Burr (RNC), Lamar Alexander (R-TN) and Jon Kyl (R-AZ); and Govs. Tim Pawlenty (R-WI), Mitch Daniels (R-IN) and Bobby Jindal (R-LA). What follows is a partial transcript of the interview. This is crunch time in Congress for Obamacare, and Rove said he was surprised at the procedural tactics Democrats are willing to use: “They’re going to use every tool at their disposal, no matter how weird and perverted its use will be. This idea that they’re going to take a major piece of legislation and use in the House what’s called deeming … is pretty extraordinary. And then for the Senate to use budget reconciliation—not to adjust the dials on spending and tax rates on existing law, but in essence to create new law—is an enormous perversion of the system.” “If they pass this bill using these procedures, they will come to regret that because the procedures used to pass it may also be used to repeal it. And if they use 51 votes in the Senate to make a major substantive change in legislation, that’s going to be a problem.” Rove also debunked claims by liberals about reconciliation, specifically its use during the 2001 tax cut legislation signed by Bush:

“We used reconciliation on the passage of the tax cuts in 2001. Well, guess what? Onequarter of Democrats in the Senate were supportive of the tax cuts, so there was bipartisanship. Reconciliation is generally used as a way to smooth the consideration of budget and tax measures that are changes in existing law. It was not designed and was never intended to be used to pass major, dramatic, big, huge, economy-affecting policy that the Democrats are trying to do in this instance.” Rove also spoke at length about Bush’s conservatism, specifically programs such as No Child Left Behind, the Medicare prescription drug benefit and TARP, which have raised questions about his fiscal conservatism. His defense of No Child Left Behind: “[Rep.] John Boehner and [Sen.] Judd Gregg were the two Republicans who worked with [then-Sen.] Ted Kennedy and [Rep.] George Miller and the administration to put No Child Left Behind into place. I believe it is conservative legislation. It says states are in charge. If you get federal money, a state has to have standards. We don’t care what those standards are; you just have to have standards.” “The education oligopoly doesn’t like to be held to account. And having standards— expectations about what children are expected to learn and when they’re expected to learn it—is a conservative principle. …” “What’s so odd to me is that a lot of conservatives have come to join with the teacher unions in objecting to children being tested. … Conservatives should not get in bed with the teacher unions and give them what they want, which is weakening or an end to a tool that gives parents and communities a chance to demand success and to blow the whistle on failure.” His defense of the Medicare prescription drug benefit: “We had two competing plans: We had an $800 billion Democratic plan that was government-run. The government set the formulary. It decided what drugs you got and set their prices. And it was not paid for. The Republican plan was free-market oriented and was scored by the CBO at $450 billion, and included other reforms of Medicare and the creation of health savings accounts.” “Because it was based on free-market principles, in which private companies competed to deliver the benefit, guess what? The program is costing one-third less than what CBO anticipated. … Why? Because it’s based around markets and markets have a wonderful way of lowering prices and increasing benefit. …” “It’s the only government-sponsored health program in the history of the country which has come in under its original estimates. …”

“I understand if a conservative says to me, ‘I think we ought to repeal Medicare and it ought to be gone. And I, therefore, object to a Medicare prescription drug benefit.’ I salute them as being consistent. But if Medicare is going to exist, then we need to have Medicare driven by market forces and we need to have it as modern as possible. …” “It was a wise decision for conservatives to say, while we have this moment—a Republican President, a Republican House, a Republican Senate—let us pass a conservative, market-oriented version of this benefit, rather than allowing them to pass a much more expensive, much larger, big government, price-fixing form of service.” On the use of TARP I, supported by Bush, and TARP II, supported by Obama: “The difference between those two are clear: We have one where a Republican, conservative president said, I don’t like doing this, but if we’re going to have to do this to save the economy, we better make certain the taxpayer is protected and at the end of the day we get made whole and we make money. And we have a Democrat president who says, I’ve got a big pot of money, let me use it to reward my friends, punish my enemies and engage in industrial policy.” What went wrong in the Social Security reform debate of 2005: “When it came to Social Security reform, we had problems on the left and the right. The political left in Congress was not the same as thoughtful liberals like [the late Sen.] Daniel Patrick Moynihan, who said we better repair the safety net before it breaks. We had no political support among Democrats. …” “Let’s be candid about this. Republicans applauded when Bush talked about this in the 2000 and 2004 campaigns, and there were a lot of reformers like [Sens.] Elizabeth Dole, John Sununu and Jim DeMint who got elected to the Congress by talking about this. But when it came time for the rubber to meet the road in 2005, there was little enthusiasm among Republicans for taking this up, and particularly striking among some conservative leaders whom you would’ve thought would’ve understood the special moment we had and the responsibility we had to save this program, who said, nope, sorry, not going to do it.” The role of Tea Party groups: “I don’t want them to become an adjunct of the Republican Party. I think they are far more powerful and influential if they remain as they are today, which is a movement that holds the feet of elected officials in both parties to account for what they do on spending, deficits, debt and powers of government.” The best reporter to cover the Bush White House: “I hate to sound like I’m flacking for my friends at Fox, but the Fox reporters were always good in that they were tough but fair. I thought also, surprising enough, that Jake

Tapper, who is an ABC reporter, who is a lefty, was nonetheless reasonably fair and tough. You could count on him to ask you tough questions.” Rove’s thoughts on those who call Obama a “socialist”: “We’ve got to be very careful about our language in order not to give our adversaries cheap shots to make at us, while at the same time making the case against President Obama and liberal policies. …” “President Obama wants things to remain in the hands of private owners and operators. It’s just that he wants them to be subjected to a level of regulation, scrutiny and restraint by government that would be stifling.” “We have to remember our target: It’s not our fellow conservatives. Our object here is to say things and make the case to people whose ears and eyes are open, but who don’t necessarily view themselves as conservatives.” How technology is changing politics: “We need to as a movement avail ourselves of all these channels because they are ways to reach people, particularly younger people who are otherwise not available to us. Just remember this, 2008 in the presidential election, it’s the first election in history that more people said they got their information about the election from the Internet than from local newspapers.”

By Rob Bluey

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March 16, 2010

The Slaughter Rule: Yet Another Reason Obamacare Would Be Unconstitutional

As written, the current health care bill before Congress already is guaranteed to face serious constitutional challenges on enumerated powers, 5th Amendment, racial discrimination, and unequal state treatment. Now the White House seems determined to add a whole new reason courts will throw out Obamacare on sight. Director of the Stanford Constitutional Law Center at Stanford Law School and former-federal judge Michael McConnell explains: “To become law—hence eligible for amendment via reconciliation—the Senate healthcare bill must actually be signed into law. The Constitution speaks directly to how that is done. According to Article I, Section 7, in order for a ‘Bill’ to ‘become a Law,’ it ’shall have passed the House of Representatives and the Senate’ and be ‘presented to the President of the United States’ for signature or veto. Unless a bill actually has ‘passed’ both Houses, it cannot be presented to the president and cannot become a law.” “To be sure, each House of Congress has power to ‘determine the Rules of its Proceedings.’ Each house can thus determine how much debate to permit, whether to allow amendments from the floor, and even to require supermajority votes for some types of proceeding. But House and Senate rules cannot dispense with the bare-bones requirements of the Constitution. Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another.” “The Slaughter solution attempts to allow the House to pass the Senate bill, plus a bill amending it, with a single vote. The senators would then vote only on the amendatory bill. But this means that no single bill will have passed both houses in the same form. As the Supreme Court wrote in Clinton v. City of New York (1998), a bill containing the ‘exact text’ must be approved by one house; the other house must approve ‘precisely the same text.’”

“These constitutional rules set forth in Article I are not mere exercises in formalism. They ensure the democratic accountability of our representatives. Under Section 7, no bill can become law unless it is put up for public vote by both houses of Congress, and under Section 5 ‘the Yeas and Nays of the Members of either House on any question . . . shall be entered on the Journal.’ These requirements enable the people to evaluate whether their representatives are promoting their interests and the public good. Democratic leaders have not announced whether they will pursue the Slaughter solution. But the very purpose of it is to enable members of the House to vote for something without appearing to do so. The Constitution was drafted to prevent that.”

By Conn Carroll

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March 15, 2010

Health Care Provisions Buried in The Unemployment Benefits Extenders Bill

Congressional liberals are working overtime. In case you missed it, hidden behind the non-stop news coverage of the health care debate, the Senate-passed extenders bill includes several health care provisions that follow the same flawed policies of the big

Stimulus Bill. Once again, these provisions move the health care system in the wrong direction. – COBRA or Nothing. The bill would give premium relief only to those unemployed workers who opt for COBRA coverage. It is well documented that COBRA coverage is one of the most expensive options available to those who lose their jobs. Workers would be better served if they were able to decide whether to use this temporary assistance on COBRA or another more affordable option, including policies available in the individual market. – Another Medicaid Bailout. The bill would continue to use federal taxpayer funds to bailout state Medicaid programs. While state budgets are crippled by Medicaid, the solution is not to transfer the cost on the federal taxpayers. Instead, Congress should get serious about Medicaid reform and grant states the flexibility they need to fix the program. – More Delay on the Doctor Fix. The bill would delay automatic Medicare reimbursement cuts to doctors. Cleverly, Congressional leaders removed this costly fix from their health care overhaul and instead have kicked the can down the road one more time. This will enable them to say that the health care legislation is deficit neutral. Senate Congressional leaders should get serious about a permanent fix of the Medicare reimbursement for doctors once and for all, and find some way to offset its cost, rather than adding the additional costs to the deficit. This bill is a good reminder that even if the massive health care overhaul fails, health care is not dead. Ill-advised health care proposals gain support in different forms, and can be enacted in bite-sized bits.

By Nina Owcharenko

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March 15, 2010

The Democrats’ Tangled Web

In 2009, Democrats chose to proceed with a health-care bill under the regular order – that is, they sought to pass the legislation under normal House and Senate rules. They did not put together a budget reconciliation bill with health care in it, something that could have passed the Senate with a simple majority vote. They conceded that such an approach would likely produce a flawed product, as many non-budgetary provisions in a healthcare plan would not survive the reconciliation process. And so they decided to try and pass a bill without resorting to reconciliation, even though they knew they would need sixty votes in the Senate to succeed. It worked. They passed a bill in the House in November, and a somewhat different version in the Senate in December. Then came Scott Brown. His stunning election to the Senate on January 19 upended the Democrats’ end-game. They were going to work out the differences between the House and Senate-passed bills in January and proceed to pass an agreed-upon version in both chambers as expeditiously as possible. But that plan was contingent on getting sixty votes again in the Senate. With Brown’s election, Senate Republicans increased their numbers from forty to forty-one, thus forcing Democrats to find at least one Republican Senator to support their final bill. For the past two months, the White House and Democrats in Congress have been weaving ever-more complicated legislative webs all with the express intent of avoiding at all costs any need to negotiate with the now slightly enlarged Senate minority. In effect, what Democratic leaders want to do is – at the very end of the legislative process – switch from regular order to a reconciliation process in order to avoid having to deal seriously with any elected Republicans. But it’s become increasingly clear that the Democratic scheming and maneuvering necessary to pull off such a high-wire act has created a web of entanglements that could very well doom passage of the entire effort. In particular, there now appear to be two huge hurdles standing directly in the way of a plan to jam a bill through in the coming days. First, there is the matter of the liberal abortion provisions in the Senate bill. As the Catholic Bishops conference has noted the Senate-passed bill includes several provisions that would allow taxpayer funding of elective abortions. Consequently, the Bishops opposed passage of that bill when it was considered in the Senate, and now oppose its passage by the House. The problem for House Democrats is that every version of the end-

game they are now considering is predicated on having the House take up the Senate bill and pass it unchanged for presidential signature. That is entirely unacceptable to the Catholic Bishops. They oppose House passage of the Senate’s pro-abortion health bill. Period. And their opposition hasn’t come with procedural loopholes that would let members off the hook if they promised to pass a fix separately. That would be fool’s bargain, and the Bishops know it. So pro-life House Democrats, led by Congressman Bart Stupak, really have no choice here. They can’t support the Senate bill unless they want to be known for supporting the most pro-abortion bill ever considered in Congress. Their only real option is to force House leaders to amend the Senate bill before passing it to include strong restrictions on funding of abortion. Yes, that would mean the bill would have to go back through the Senate again before going to the president, but so be it. That’s not the Bishops’ problem. It would mean the president and the Democrats would have to really negotiate to get some Republican support, which is of course the norm for sweeping and important legislation. This post originally appeared at National Review Online.

By James Capretta

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March 15, 2010

Morning Bell: Obamacare at Any Cost
Yesterday the White House circulated a memo by pollster Joel Benenson. It was designed to create momentum for Obamacare by convincing wayward House Democrats that support for the President’s plan has been building since the State of the Union. As with everything else that comes out of the White House on health care these days, the memo is nothing but pure fantasy. This Tuesday, Gallup released its latest poll showing that by a 48%-45% margin Americans would tell their representative in Congress to vote against President Obama’s health plan. Compare that to the last time Gallup asked the question in January, Americans supported the President’s plan 49%-46%. That’s a net six point loss in support for the President’s plan since the State of the Union. That is momentum. Against Obamacare. And Gallup isn’t alone. The Associated Press released a poll this week showing that 68% of Americans believe the President and Congressional Democrats shouldn’t pass their health care plan without Republican support. “Nothing has been more disconcerting than

to watch Democratic politicians and their media supporters deceive themselves into believing that the public favors the Democrats’ current health-care plan,” Democratic pollsters Pat Caddell and Doug Schoen add in today’s Washington Post, “A solid majority of Americans opposes the massive health-reform plan.” Yesterday was particularly tough for the President’s plan. First, the White House underwhelmed the Democratic Caucus in a presentation of the new (still unwritten) reconciliation bill. Then, the Senate Parliamentarian killed the Democrats favored procedural path for passage by signaling he would rule that President Obama must sign the original Senate bill into law before the Senate could act on the President’s new reconciliation package. Finally, the Associated Press reported that House leaders have abandoned all hope of finding language to satisfy Rep. Bart Stupak’s (D-MI) concerns that the Senate bill funds abortion. By the end of the day, the leftist firedoglake site had dropped its count of committed House Democrats for passage to 189 (Speaker Pelosi needs 216 for passage). With the loss of Stupak and his 7-12 member caucus opposed to taxpayer-fundedabortions, Speaker Pelosi will have to find the remaining dozen plus votes from the ranks of cost conscious Blue Dog Democrats. For example, Rep. Suzanne Kosmas (D-FL) who voted against the House bill in the fall explained at the time: “According to the Congressional Budget Office, the House health care bill will actually increase federal health care spending over the long term, while proposals being considered by the Senate would have a net decrease.” But according to a new CBO score of the Senate bill passed on Christmas Eve (the one with the Cornhusker Kickback), it actually increases health care spending. And the reconciliation bill only make things worse, since, among other increased spending measures, President Obama “fixed” the Cornhusker Kickback not by eliminating the new spending, but by extending it to all 50 states. With no votes piling up, and “yes” votes materializing, the Democratic plans to shove Obamacare down the throats of the American people are becoming more and more desperate. This Monday, the House Budget Committee will begin markup on the new reconciliation bill even though actual legislative text does not exist for it yet. The Democrats plan to pass a shell of a bill through the appropriate committees so that the Rules Committee can then substitute the bill that is being drafted completely behind closed doors by the White House and Senate and Democrat leaders. Politico reports that despite the Parliamentarian’s initial verbal ruling, they will press on with their Slaughter Rule plan to pass the Senate bill without voting on it. NRO’s Yuval Levin quips: “Democratic leaders should be asking themselves just how they have gotten to the point that their strategy is to amend a law that doesn’t exist yet by passing a bill without voting on it.” But President Obama’s progressive base is way past rational thought when it comes to health care. They want it passed at any cost. And as George Will pointed out yesterday, the very essence of progressivism sublimates the democratic process to the rule of experts

in Washington. No one can say if this bill will finally pass, but if it does, it is abundantly clear that our republican form of government will be permanently damaged by it.

By Conn Carroll ____________________________________________________________________

The House and Senate Bills
The Senate Health Bill can be found here: http://www.pdfdownload.org/pdf2html/view_online.php?url=http%3A%2F %2Fdemocrats.senate.gov%2Freform%2Fpatient-protection-affordable-care-act-aspassed.pdf (An in-depth look at the Senate Health Bill by Heritage analysts). http://www.pdfdownload.org/pdf2html/view_online.php?url=http%3A%2F %2Fs3.amazonaws.com%2Fthf_media%2F2009%2Fpdf%2Fbg_2353.pdf The House Health Bill can be found here.

(An in-depth look at the House Health Bill by Heritage analysts) http://www.pdfdownload.org/pdf2html/view_online.php?url=http%3A%2F %2Fwww.heritage.org%2FResearch%2FHealthCare%2Fupload%2Fwm_2684.pdf

Read about the Key Differences Between the House and Senate Bills http://www.pdfdownload.org/pdf2html/view_online.php?url=http%3A%2F %2Fs3.amazonaws.com%2Fthf_media%2F2009%2Fpdf%2Fwm2740.pdf _____________________________________________________________________

Twelve Anti-Family Gifts from Congress

Published on December 22, 2009 by Kiki Bradley As Congress wraps up its final business for the year, there are at least a dozen detrimental policies included in the omnibus spending bill recently signed into law by the President. Taken as a whole, these policies devalue human life, weaken civil society, and undermine the family. Unfortunately, these provisions have largely gone unnoticed by the general public. The Dirty Dozen The Fiscal Year 2010 Omnibus Appropriations bill passed by Congress includes a slew of offensive items: 1. Elimination of abstinence education. Despite polling showing the vast majority of parents want their children to be taught that abstinence is best,[1] the omnibus defunds the abstinence-based education program. In its place Congress creates another condom-based sex education program. 2. Spreading the wealth. The omnibus bill, as well as the other appropriation measures that have passed this year, represent a fulfillment of President Obama's promise to "spread the wealth." His 2010 budget reflects a 30 percent increase over President Bush's last year in office on means-tested welfare programs such as housing, food stamps, and health care. Unfortunately, these programs do little or nothing to help recipients move off of the welfare rolls and into jobs where they can achieve independence and provide for their families. 3. Needle exchange. Tucked into the health portion of the bill is an allowance of federal taxpayer funds to be used for needle exchange programs whereby drug addicts can get new needles for turning in used needles. Ostensibly to prevent the spread of infection, these programs settle for "harm reduction" rather than overcoming drug addiction. The provision does allow local health agencies and local law enforcement to "opt-out." 4. Planned Parenthood funding. Despite the country's towering deficit, the omnibus bill boosts Title X family planning funding by $10 million to $315.5 million. The largest recipient of Title X funds is Planned Parenthood. 5. United Nations Population Fund (UNFPA). Despite its stated mission to "ensure that every pregnancy is wanted," the UNFPA would receive $5 million more from U.S. taxpayers to, among other things, support China's mandatory onechild policy, under which millions of wanted pregnancies have been ended. 6. International family planning. Shortly after his inauguration, President Obama rescinded the "Mexico City policy," which banned funding to organizations that promote and/or perform abortion overseas. The omnibus bills would give these groups an additional $103 million. 7. Limiting free speech. The omnibus bill drops a ban on federal funds being used to enforce or implement the "Fairness Doctrine." This policy would have the effect of shutting down conservative talk radio programs.

The section of the bill that funds the District of Columbia includes these disturbing provisions: 1. Ending the D.C. Scholarship Program. For five years, thousands of D.C. families have been able to send their children to safe and effective private schools. But the omnibus bill allows no new entrants into the program--despite a 2009 Department of Education report showing a statistically significant increase in reading scores for scholarship students.[2] 2. Public funding of abortion. The bill lifts a ban on D.C. using local funds to promote and fund abortions for District residents. 3. Taxpayer-financed domestic partner benefits. The bill lifts a longstanding ban on the use of federal taxpayer funds to pay for health care benefits for domestic partners of D.C. employees. Federal funds would also now be used for domestic partnership registration. 4. Legalized medical marijuana. The bill gives D.C. the ability to use local funds to start and implement a medical marijuana program. This comes at a time when, according to a recent article in the Wall Street Journal, Los Angeles is attempting to reel in its program. Medical marijuana dispensaries have become one of the fastest-growing industries in the city, with some 1,000 dispensaries cropping up since 2004.[3] 5. Needle exchange for drug abusers. A decade-long ban is lifted in the bill to allow D.C. to use local funds to run a needle exchange program for drug addicts. Unfortunately, a provision keeping these programs from within 1,000 feet of any school, day care, or youth center was stripped out in the final bill. Unwelcome Christmas Gifts The Christmas season is a time when Americans celebrate life, family, and community. Unfortunately, the 12 unwelcome Christmas gifts in the omnibus bill, signed into law by President Obama last week, undermine these pillars of American civil society. Katherine Bradley is Visiting Fellow in the Richard and Helen DeVos Center for Religion and Civil Society at The Heritage Foundation. Show references in this report [1]See Robert E. Rector, Melissa G. Pardue, and Shannon Martin, "What Do Parents Want Taught in Sex Education Programs?," Heritage Foundation Backgrounder No.1722, January 28, 2004, at http://www.heritage.org/Research/Abstinence/bg1722.cfm. [2]See Dan Lips, "D.C. Opportunity Scholarships Boost Reading Scores, Family Satisfaction," Heritage Foundation WebMemo No.2396, April 10, 2009, at http://www.heritage.org/Research/Education/wm2391.cfm.

[3]Tamara Audi, "L.A. Agrees to Limit Medical Marijuana Dispensaries," The Wall Street Journal, December 9, 2009, at http://online.wsj.com/article/SB126033084958883141.html (December 19, 2009).

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January 20, 2010

Employer Letter to Pelosi and Reid
On January 19th, 2010, 675 businesses sent a letter to Speaker Pelosi and Leader Reid asking them to step back from the health care bills they passed and return to the basics of health reform. Read the complete letter, Click Here. http://www.pdfdownload.org/pdf2html/pdf2html.php?url=http%3A%2F %2Fs3.amazonaws.com%2Fthf_media%2F2010%2Fpdf %2FConference.011910.pdf&images=yes January 19, 2010 The Honorable Nancy Pelosi Speaker U.S. House of Representatives Washington, D. C. 20515 The Honorable Harry Reid Senate Majority Leader United States Senate Washington, D.C. 20510 Dear Speaker Pelosi and Leader Reid:

Employers are united with the Members of Congress in both parties who understand that ever-rising health care costs are threatening the viability of U.S.

businesses and job security for millions of Americans. Collectively, America's employers provide health coverage to over 170 million Americans, and we have a major stake in achieving meaningful reform of our health care system this year. We want to help to enact legislation that will: Bend the cost curve for the overall health care system Improve the long-term fiscal outlook for federal and state governments Produce greater quality and value in our health care system Help facilitate our long term economic recovery But not any health reform will do. The final legislative framework must get the fundamentals of health reform right. We, therefore, urge you to not merge the House and Senate passed bills. Health care reform is not only about changing the rules for our health care system, it also results in restructuring one-sixth of our economy and comes in the midst of historic economic turmoil. At no time in this long debate has it been more important than now to take a fresh look to make sure that health reform will achieve its intended goals. In our view, the most important goals that negotiators should focus on are strengthening the employment-based system, achieving meaningful reductions in the rate of growth in healthcare costs and significantly improving its quality. Legislation that does not bend the cost curve for both public and private health plans is not accomplishing its goal and contradicts the strong bipartisan

consensus that has driven the case for health care reform. Legislation limiting the flexibility and innovation in the private sector to improve health care quality would erode parts of the system that are now working. Therefore, we strongly believe and have consistently stated that employer mandates will increase employer and employee costs and limit the flexibility and innovation that serves as the foundation of the employersponsored health care system. Without this flexibility, employers will be prevented from designing and offering health plans that best reflect the needs of their workforce and make health coverage as affordable as possible for their employees. Additionally, the final legislation must support the flexibility that ERISA provides in the offering of employer-sponsored health insurance coverage. The existing rules and regulations governing the administration of these benefit plans provide the right level of flexibility so that employers can develop the coverage that fits the changing needs of their workforce. Allowing states to require employers to comply with varying state or local mandates would further raise employer costs, stifle innovation in employer-sponsored coverage and result in unequal benefits for employees. We should not disrupt the delicate balance that ERISA's regulatory framework provides or risk hurting those who are highly satisfied with the health care coverage that they currently receive.

Finally, we need to be sure that any legislation maintains supportive tax policy and not undermine employer-sponsored coverage or add to its costs. In particular, excise taxes on so-called "high cost" plans without adequate recognition of demographic or geographic disparities or the actuarial value of benefits, new federal premium taxes, and the taxation of retiree drug subsidies are inconsistent with making health care more affordable. Additionally, we are deeply concerned about reports of "carving-out" union negotiated plans because this merely exacerbates and concentrates the problem on all other employersponsored plans and the employees and families in them. We also urge that the final bill includes a clear safe harbor rule for high deductible health plan coverage so that there is no uncertainty about the ability of these important plans to continue to be offered alongside health savings accounts (HSAs). Similarly, we urge that any limits on contributions to flexible spending accounts (FSAs) be increased and then indexed to the medical component of the CPI to minimize any possible adverse impact of the limits in both bills to those with high unreimbursed medical expenses. We do look forward to continuing to work with you on achieving responsible and practical health care reform legislation and on getting the fundamentals right for all Americans. Working together, we can achieve positive reform

that bends the cost curve and expands access and quality for all Americans. Sincerely,
3M Company 48HourPrint.com 4T Total Lawn, Inc. A& B Insurance A.E. Machine Works, Inc. ACE Clearwater Enterprises Ace/Avant Concrete Const. Co., Inc. Acme Sample Acu International Supplies, Inc. Adams, Kvittem-Barr & Assoc. CPAs, LLP Advance Food Company, Inc. Advanced Diabetic Solutions Advantage Benefits Group Affiliated Bank Aftershift, Inc. AGL Resources Agri-Energy Solutions, Inc. AH&LA AIM Engineering, LLC Air Logistics Corporation Alamo Cement Company Albany Area Chamber of Commerce All State Mfg. Allegiance Benefit Plan Management, Inc. Alliance Bank Allied Photo Chemical Allison A. Moise DDS, LLC Aluminum Association American Architectural Manufacturers Association American Bakers Association American Benefits Council American Business Women's Association American Council of Engineering Companies American Electric Power American Farm Bureau Federation American Lighting Association American Rental Association American Staffing Association America's Finest Woodworking Team

Ames Chamber of Commerce Anderson's Fabrication, Inc. Andrews Chamber of Commerce & CVB Appalachian Log Structures Arctic Slope Telephone Association Cooperative Argyle Chamber of Commerce Arizona Chamber of Commerce and Industry Arizona Manufacturers Council Arizona-New Mexico Cable Communications Association Arkansas State Chamber of Commerce Arrow Gear Company As You Like It Tile Ascencion Recordings, Inc. Ascension Center for Women's Health, LLC Ascension Roofing and Sheet Metal Asset Profiles Associated Builders and Contractors Associated Equipment Distributors Associated Industries of Florida Associated Oregon Industries Association of Washington Business Aunt Millie's Bakeries Aureus Advanced Practice, LLC Aureus Group Aureus Medical Management Services, LLC Aureus Nursing, LLC Aureus Radiology, LLC AurHomes, LLC AurStaff Auto Truck, Inc. Automotive Aftermarket Association of the Carolinas and Tennessee, Inc. Automotive Parts Remanufacturers Association AutoNation, Inc. Avaya, Inc. B&B Trucking, Inc. Baird & Warner Real Estate Ball Corporation Barnes Builders Realty, Inc. Barracuda Coffee Company Battle Creek Orthopaedic Clinic BD Construction, Inc.

BEK Communications Cooperative Benefits Strategies Berne Chamber of Commerce Bill Haeger & Associates Bismarck-Mandan Chamber of Commerce Black & Decker Corporation Black Hills Bentonite, LLC Blakely Financial Blount County Chamber of Commerce Bluegrass Rental BMB Solutions Border States Electric Bottom-Up Home Inspection & Consulting Services, LLC Bowie Enterprises BPS Telephone Company Bradford White Corporation Braun Industries, Inc. Brick Industry Association Brinkman International Group, Inc. Brooks Manufacturing Co. Brownwood (TX) Chamber of Commerce Buffalo Niagara Partnership Business and Institutional Furniture Manufacturers Association International Business Council of New York State C&A Industries, Inc. C.F. Jordan Construction Camden County Chamber of Commerce Canby Telcom Capform, Inc. Capital Financial Group of Walker's Point, Inc. Carroll County Chamber of Commerce Carter Machine Company, Inc. Catawba County Chamber of Commerce Caterpillar, Inc. Celebrity Staff Cement Employers Association Center for Diagnostic Imaging, Inc. Central Alarm Signal, Inc. Central Florida Chapter Associated Builders and Contractors, Inc. Central Penn Benefits, Inc. Central Realty

Certified Home Inspection Certified Inspections CFRA, LLC Chad Allan Consulting, LLC Change Strategists, Inc. Charleston Metro Chamber of Commerce Charlotte Chamber of Commerce Chelsea Self Storage Chester County Chamber of Business & Industry Children's Discovery Center Churchtech, Inc. CKM Associates Clark & Associates of Nevada, Inc. Clean Control Corporation Climate Systems, Inc. College Park, Inc. College Publishing Collier Well Equipment & Supply Columbia Montour Chamber of Commerce Columbus Area Chamber of Commerce Combustion Services Corporation Commercial & Industrial Htg. / AC Community Foundation of West Alabama Composite Can & Tube Institute Connecticut Business and Industry Association Conrad and Dowdell Productions, Inc. Consulting Aviation Services, Inc. Cornerstone Home Inspections, LLC Corporate Health Care Coalition Councilman Farlow Marlowe & Co, PLLC Cowboy Consulting Services CP&E Marketing Credit Solutions Credit Union Plus Creekside Apartments Cress Funeral & Cremation Service CTO, Inc. CULTEC, Inc. Cummins Label Cummins, Inc. Cyber Tech, Inc. D/A Central, Inc.

D/B/A National Property Inspections Dakota Central Communications David Chapman Agency, Inc. Davison Deere & Company Delka's Repair Desert to Mountain Architecture, LLC Design the Magic Destin Area Chamber of Commerce Detroit Regional Chamber of Commerce Diakon Logistics Dick Morrow Enterprises, Inc. DIGITAL THE FRUTH GROUP Diversified Services, Inc. Dixie Printing & Packaging Don R. Fruchey, Inc. Don Shrout Insurance Agency, LLC Don Willis Furniture Drapery World and Blinds DTMV Properties Dublin (OH) Chamber of Commerce Dundee Internet Services, Inc. Durcon, Inc. E&V Engineering E.A. Fountain Consulting, LLC Earl Smith Distributing Co. Echoing Hills Village, Inc. El Ran, Inc. Electramatic, Inc. Electronic Payments Group, Inc. EMC2, Inc. Emerson Employee Benefits Group Emporia Greensville Chamber of Commerce Engineering Associates Executive Management Services, Inc. Expectec Technology Services Express Employment Professionals Express Services, Inc. Exton Region Chamber of Commerce F.N. Sheppard & Co. FACES DaySpa

Fairmont Area Chamber of Commerce Fairmount Minerals Ltd. Faspac, LLC File Management Pros, LLC Financial Executives International Financial Investments, Inc. Finders Emporium Findley Davies, Inc. Fire-Dex Fiskars Properties Florida Contract Growers, LLC Flowers 'n' Ferns Fluid Process Equipment Flying W Horse Services, Inc. FocusOne Solutions, LLC Fond du Lac Association of Commerce Food Marketing Institute Forrest Sherer, Inc. Fort Collins Area Chamber of Commerce Forward Janesville, Inc. Fountain-Ferrara & Murphy & Co. CPAs Freehold Cycle Center, Inc. G&A Consultants, Inc. G&G Avionics Gallup McKinley County Chamber of Commerce Gemini Fitness & Aquatics Club General Recovery, Inc. Georgia Chamber of Commerce Gifford TV & Electronics Glas-Col, LLC Glenwood Telephone Membership Corporation Global Cold Chain Alliance Goodin Company Goodwill Industries of Lubbock, Inc. Goshen County Chamber of Commerce Gower And Co. Real Estate Granbury Chamber of Commerce Grand Junction Area Chamber of Commerce Great Lakes Carpet & Tile, Inc. Great Pacific Chocolate Company Great Plains Energy Greater Albuquerque Chamber of Commerce

Greater Brookfield Chamber of Commerce Greater Chambersburg Chamber of Commerce Greater Columbus Georgia Chamber of Commerce Greater Easley Chamber of Commerce Greater Fresno Area Chamber of Commerce Greater Hall Chamber of Commerce Greater Irving-Las Colinas Chamber of Commerce Greater Killeen Chamber of Commerce Greater Medina Chamber of Commerce Greater Sandoval County Chamber of Commerce Greater Shreveport Chamber of Commerce Greater Springfield Chamber of Commerce Green Bay Area Chamber of Commerce Group Benefits GTC Technology US, LLC GTE ENT, LLC Guada Coma Mechanical Guthrie Chamber of Commerce Hamilton Farm Equipment Center, Inc. Harris Corporation Harrisburg Regional Chamber & CREDC Harrison CPA & Consulting, P.C. Hartman Family Dentistry Haslet Veterinary Clinic Health Insurance Consultants, LLC Henderson Area Chamber of Commerce HeraCare Inc. Herold Precision Metals, LLC Hiler Industries Hill Country Telephone Cooperative Hill County Electric & Triangle Communications Hilliard Area Chamber of Commerce Hills Flat Lumber Hilton Woodcliff Lake Hotel HintonBurdick CPA's & Advisors Hoerbiger Corporation of America, Inc. Home Telephone Co. Honeywell Hopkins Pontiac GMC Horry Telephone Cooperative, Inc. Hospitality Recruiters HPM, LLC

HR Policy Association HR Policy Association HR Resolutions, LLC HRA Services, Inc. HRI Associates HRI Financial, Inc. Huffmaster Management, Inc. Hunterdon County Chamber of Commerce Hurlen Corporation Huron County Chamber of Commerce Hydraulic Specialty Co. ICOR International, Inc. Illinois Chamber of Commerce Illinois Manufacturers Association Illinois Tool Works, Inc. INDA, Association of the Nonwoven Fabrics Industry Independent Electrical Contractors, Inc. Indiana Chamber of Commerce Indiana Manufacturers Association Industrial Fasteners Institute Industrial Minerals Association North America Industrial Packaging Alliance of North America Infinite Group, Inc. Innovative Waste Systems Insurance Concepts Financial Intel Corporation International Academy of Medical Acupuncture, Inc. International Franchise Association International Management Systems Corporation International Paper Co. Intuition Systems, Inc. J Micheal Law DDS, PC J. B. Poss & Associates, Inc. J.C. Penney Corporation, Inc. J.E. Johnson, Inc. Jandrain Benefit Plans Janssen Service, Inc. Jasper Engines J-Con Woodworking JDH Structural Engineering Jefferson Chamber of Commerce

Jeffrey Wolk and Co. Jesco Industries, Inc. Jessup Engineering, Inc. Jimmy's Grill, Inc. John Gray and Sons Johnson City-Jonesborough-Washington County Chamber of Commerce Kadairs Kalispell Chamber of Commerce KAMDEN Strategy Group, Inc. Kankakee Regional Chamber of Commerce KCI Technologies, Inc. Keep Liberty Beautiful Kelly-Moore Paint Co., Inc. Kercher Industries, Inc. Kingsport Chamber of Commerce Kiva Plastics, Inc. Koons Real Estate Law L & J Operating, Inc. L. H. Land Painting Co., Inc. La Machine Shop, Inc. Lafarge North America, Inc. Lake Glass, Inc. Lake Houston Area Chamber of Commerce Lance & Co. Land Specialties Mfg. Co., Inc. Lang Property Management Lasco Fittings, Inc. Laserfab, Inc. Leavitt Group Benefit Services of Boise Lebanon Valley Chamber of Commerce Lifoam Industries Lincoln Chamber of Commerce Lipsky Financial Group, Inc. Litchfield Chamber of Commerce Lloyd B. Baker & Associates, LLC Lockton Companies, LLC Loganville Dialysis Center Logical Computer Solutions, Inc. Logistics Consulting LONCO, Inc. Lordon Engineering

Loudoun County (VA) Chamber of Commerce Louisiana Association of Business & Industry Lynchburg Kawasaki Yamaha, Inc. Lynchburg Regional Chamber of Commerce Magnolia Blossom Cafe Magnolia-Columbia County Chamber of Commerce Manhattan Chamber of Commerce Maple Lawn Nursing Home, Inc. Marathon Oil Corporation Marietta Area Chamber of Commerce Marilyn's Natural Foods Marine & Industrial Hydraulics, Inc. Martinizing Dry Cleaning Maurer Management & Properties, Inc. McAlister's of Tuscaloosa McCallion Staffing Specialists McDonald Excavating, Inc. McKenna & Company, LLC McNaughton & Gunn, Inc. Medalist Insurance Group Meissner Tierney Fisher & Nichols S.C. Melbourne Regional Chamber of East Central Florida, Inc. Metal Finishing Co. Metal Powder Industries Federation Metal Treating Institute Metropolitan Milwaukee Association of Commerce MetroWest Chamber of Commerce Michigan Chamber of Commerce Micropub Systems International, Inc. Mid-Atlantic Hispanic Chamber of Commerce, Inc. Mid-Plains Rural Telephone Cooperative Miller Wire Works, Inc. Milton-Freewater Area Chamber of Commerce Minneapolis Regional Chamber of Commerce Minnesota Chamber of Commerce Mission Auto Connection Mississippi Lime Company Missouri Chamber of Commerce and Industry Mister Sweeper, LP Miza Foods, Inc. Modern Metal Processing Monroe and Associates

Montgomery County Chamber of Commerce Morris Certified Inspections Motor & Equipment Manufacturers Association Mount Joy Chamber of Commerce Mount Prospect Chamber of Commerce MTO Clean of Wayne County Music Go Round My Good Labor Company Naperville Area Chamber of Commerce Napolitano GMAC Real Estate Natchitoches Area Chamber of Commerce National Association of Convenience Stores National Association of Health Underwriters National Association of Manufacturers National Association of Wholesaler-Distributors National Business Group on Health National Council of Chain Restaurants National Lumber and Building Material Dealers Association National Ready Mixed Concrete Association National Retail Federation National Roofing Contractors Association National Rural Electric Cooperative Association National Teachers Associates Life Insurance Company National Telecommunications Cooperative Association Navarre Beach Chamber of Commerce Nebraska Central Telephone Company Nebraska Chamber of Commerce & Industry Nelson Telephone Cooperative Nevada Manufacturers Association New Castle Hotels & Resorts New Jersey Business & Industry Association New Jersey Chamber of Commerce New Mexico Association of Commerce & Industry Non-Ferrous Founders' Society Norfolk Southern Corporation North Myrtle Beach Chamber of Commerce North River ENT, PC Northeast Pennsylvania Manufacturers and Employers Association Northrop Grumman Corporation Northumberland County Chamber of Commerce Northwest Asphalt, Inc. Northwest Telephone Cooperative Association

Norwalk Linen Service, Inc. NPC International, Inc. NPC, Inc. NSTAR NYCO Minerals, Inc. O. F. Enterprises, LLC O. F. Mossberg & Sons, Inc. OBC Publishing Company OfficeMax Incorporated Ohio Chamber of Commerce Oklahoma Lumbermen's Association Old Stone Church, LLC OMNI Community Credit Union One Mesquite, LLC Oshkosh Chamber of Commerce Oxford Mining Company, LLC Packard Industries, Inc. Palmer Mutual Telephone Company Panhandle Telephone Cooperative, Inc. Paragon Global Resources, Inc. Partner Communications Cooperative Patrician Furniture Paulding County Chamber of Commerce Penn Color, Inc. Pennsylvania Chamber of Business and Industry Pennsylvania Manufacturers' Association Permac Industries Personnel Management, Inc. Peters Imports, Inc. Pfister & Company, Inc. Piedmont Chamber of Commerce Pine Drive Telephone Co. Pine Knob Ski Resort, Inc. Plains Cotton Cooperative Association Plastomer Corporation Plattsburgh-North Country Chamber of Commerce Pogoda Companies Poole Janitorial Service Power Curbers PowerNotebooks.com PPEP, Inc. Practical Employee Solutions

Pratt Ordway Properties PRESTON LANDS, LLC Princeton Mining Company, Inc. Princeton West of Carefree Printing Industries of America Pulaski White Rural Telephone Cooperative, Inc. Quartermaster Shop Qwest Communications International Inc. R. Hirt Jr., Co. RAK Consulting, Inc. Raleigh Chamber of Commerce Rappahannock Cellars Ray Electric Raytheon Company Renew Design Group, Inc. Reno Sparks Chamber of Commerce Rhode Island Chamber of Commerce Coalition Rhodes-Joseph & Tobiason Advisors, LLC Rich Osterman Electric Co., Inc. Richardson Collision Center LLC RIE Coatings, Inc. Roaring Spring Blank Book Co. Robert Allison Custom Homes LLC Rochester Business Alliance Rockwell Automation Rockwell Collins RogersLowell Area Chamber of Commerce ROHM Insurance Agency Rome Area Chamber of Commerce Ronnie Martin Realty, Inc. Rosebud Mining Company Rothsay Telephone Co. Rowan County Chamber of Commerce Rural Telephone Russellville Steel Company, Inc. Ruston-Lincoln Chamber of Commerce RVW, Inc. Ryder System, Inc. Sadowski's Health Insurance Specialists Saint Paul Area Chamber of Commerce Salisbury Area Chamber of Commerce Samsel Supply Company

Santa Clara Chamber of Commerce & Convention-Visitors Bureau Sawmill Creek Vineyards, Inc. Schafer Agency, Inc. Schenectady County Chamber of Commerce Schuylkill Chamber of Commerce Schweitzer Engineering Laboratories, Inc. Security Management Consulting SEEK Careers/Staffing, Inc. Self-Insurance Institute of America Seminole Economic Development Corporation ServiceMaster Clean SES, LLC Shark Industries Ltd. Sheraton Tarrytown Hotel Sherry Laboratories Sidwell & Associates SIGN Lite, Inc. Signal Metal Industries, Inc. Signature Technology Group, Inc. Slattery Enterprises, Inc. Smith Tree & Landscape Service, Inc. Smith-Doyle Contractors, Inc. Smurfit Stone Container Corporation Snider-Killingsworth Insurance Agency Snyder's of Hanover Society of American Florists Soiltest Farm Consultants, Inc. SOL, Inc. Somerset County (PA) Chamber of Commerce South Carolina Chamber of Commerce Southern Saratoga County Chamber of Commerce Southwest Area Manufacturers Association Spectra Energy SPI: The Plastics Industry Trade Association Sports Tutor, Inc. Springfield (MO) Area Chamber of Commerce St. Regis Culvert, Inc. Star Valley Chamber of Commerce State Farm Insurance Stephens Insurance Services Sterling Heights Regional Chamber of Commerce & Industry Sterling Seismic Services Ltd.

Storm Technologies, Inc. Strategic Insurance Solutions Strategic IT Security Solutions Structural Metals of Kansas City, Inc. Stuart/Martin County Chamber of Commerce Sunnyside Automotive, Inc. Superior Building Supply SUPERVALU Supreme Mid Atlantic Corporation Swantner & Gordon, LLP Systems Management & Research, Inc. Tacoma-Pierce County Chamber of Commerce Tariff Affiliates.com Tasty Baking Company TEAM Industries, Inc. Technology Service Corporation Tempe Chamber of Commerce Templeton Coal Company, Inc. Temporary Accommodations Coordinators Tennessee Chamber of Commerce & Industry Terrell County Chamber of Commerce Texas Association of Business The Ascension Chamber of Commerce The Association for Suppliers of Printing, Publishing and Converting Technologies The Boeing Company The Business Council of New York State The Business Council of Westchester The Challenge Machinery Company The Class Act The Cody The Council of Insurance Agents & Brokers The ERISA Industry Committee The Floor Shoppe, Inc. The Henry Group The Lancaster Chamber of Commerce & Industry The Libman Company The Mosser Group The Otsego County Chamber of Commerce The Ottoville Mutual Telephone Company The Philpott Rubber Company The State Chamber of Oklahoma

The Toledo Telephone Co., Inc. The William H. Miner Agricultural Research Institute Thibodaux Chamber of Commerce THOR Investment Management, Inc. Thurmond Consulting, Inc. Tidewater Prosthetic Center, Inc. Toccoa-Stephens County Chamber of Commerce Top Sail Dental TRC Global Solutions, Inc. Tri-County Communications Cooperative, Inc. Trinity Furniture TriTech Corporation of America True companies Turner & Schoel, Inc. Tuscaloosa County Park and Recreation Authority Tuscarora Area Chamber of Commerce Tyler Construction Group U.S. Apple Association U.S. Chamber of Commerce UHS Insurance Agency Universal Avionics System Corporation Universal Health Network Utah Manufacturers Association ValerieG, Inc. Van Horne Co-op Telephone Company Van Wert Area Chamber of Commerce Veranda Home Furnishings & Designs Vermeer Corporation Vie De France, Yamazaki, Inc. Villelli Enterprises, Inc. Virginia Chamber of Commerce W.W. Grainger, Inc. Walco Electric Co. Walton County Chamber of Commerce Washtenaw Engineering Co., Inc. Wausau Region Chamber of Commerce West Side Telecommunications Western Hose Gasket Company Western Reserve Bank Westfield Group Wichser Services Williams

Williamsport/Lycoming Chamber of Commerce Williams-Pyro, Inc. Willis Wilsonville Chamber of Commerce Winds Aloft, LLC Winona Area Chamber of Commerce Wisconsin College Planning, LLC Wisconsin Manufacturers & Commerce Woods Manufacturing & Machining Company Xerox Corporation X-Ray Sales & Service Co.

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January 14, 2010

Republican Governors: Health Care Bills Omit Reform
Twenty Republican governors and governors-elect sent a letter to Congressional leaders today urging them to refocus and pass “meaningful health care reform, not hastily prepared partisan legislation which omits reform and saddles American taxpayers for generations to come.” “Governors of both parties have said for months how bad this bill is for the states and our nation,” said RGA Chairman Haley Barbour. “Now is the time for leaders in Congress to finally listen and restart this process so they can get health care reform right.” The governors criticized the lack of transparency in the legislative process and called the current health care bills “a lost opportunity to improve the lives of Americans, create a sustainable system of health care and help stabilize both our state and national economies.” The governors highlighted that the House and Senate bills fail to fix the broken Medicaid and Medicare systems and instead entitle 15-20 million more people to Medicaid. The net result of this expansion “will be a significant cost shift to those privately insured around the country” and will further damage already hurting state budgets. They also criticized the inflexibility forced upon states in the current bills. The governors write that the current proposals would eliminate the ability of states to negotiate Medicaid provider rates and force the states into a one-size-fits-all, federally-designed health insurance exchange. Last, the governors urged Congress to take steps to create a system, which “eliminates red tape, empowers consumers to engage in making good health care decisions in the

private market, and guarantees affordable coverage for patients with preexisting conditions.” Full text of the letter can be found by clicking here. http://www.rga.org/homepage/republican-governors-health-care-bills-omit-reform/ Full text of the letter can be found below:

Dear Senator Reid, Senator McConnell, Speaker Pelosi, and Representative Boehner: As governors, we believe the reform of the health care system can be very beneficial to our nation’s economic future and the well-being of our citizens; however, the current health care bills are a lost opportunity to improve the lives of Americans, create a sustainable system of health care and help stabilize both our state and national economies. Health care reform should be about fixing our broken Medicaid and Medicare systems; instead, the current health care bills entitle 15-20 million more people to Medicaid. While providing health care to low income individuals is important, the net result of this entitlement expansion will be a significant cost shift to those privately insured around the country. According to the Congressional Budget Office (CBO), the unfunded mandate to states and territories is $25 billion; although many states disagree with that figure. For example, Texas costs are estimated to be $21 billion over ten years. The National Association of State Budget Directors (NASBO) has demonstrated states/territories are in no position to comply with the maintenance of effort provisions found in the bills or to accept any increased costs or additional administrative burdens to expand Medicaid. State general fund expenditures have dropped for the second year in a row. The December 2009 survey shows that the budget situation faced by states truly is unprecedented. Many states cannot afford their current share of the Medicaid program, and they will also have to face a funding cliff whenever the stimulus-enhanced FMAP dollars are exhausted. States have already been forced to cut vital services with 30 states cutting education, 29 states cutting Corrections, and 28 states already cutting Medicaid.

Current federal proposals would strip the states of our ability to negotiate Medicaid provider rates, and we believe that states and territories should be allowed to negotiate Medicaid provider rates as found in current law. The pending bills cause states and territories to lose money through the bills’ treatment of the prescription drug rebate provisions. States and territories also should not be asked to forego a share of the savings from any new Medicaid rebates collected for the dual eligible population receiving prescription drugs through the Medicare Part D program. These bills also impose a one-size-fits all federally-designed health insurance exchange and the insurance rating rules tie states’ and territories’ hands. Health insurance exchanges desired by any state should be state-based and state-designed to ensure maximum state flexibility to design and operate exchange mechanisms that facilitate the purchase of insurance. Utah should not be forced to replicate Massachusetts’ exchange, and vice versa. In the same vein, the health insurance rating rules should account for the existing variation in state and territory statutes and the state and territory should retain the authority to provide oversight and adopt tighter rating bands if necessary. In order to pay for the bills, the legislation cuts Medicare $571 billion in the House bill and $466.7 billion in the Senate bill. Also included are farreaching massive tax increases which will impact American individuals and families at all income levels. From employer mandates and taxes on high-value insurance plans to taxes on both branded and generic drugs and medical devices, these bills are funded, and thereby the bills’ costs are lowered, by taking more from taxpayers and reforming the health care system less. In particular, the Senate’s $6.7 billion insurance premium tax will be passed directly to consumers and will impose new costs on Americans who already have coverage. The unfunded mandates to states likely will require many states to necessarily raise taxes, too. Although CBO has scored the Senate bill at $842 billion and the House bill at $1.3 trillion both bills are full of budget gimmicks. The bills delay spending until the fourth year and exclude the costly “Doc Fix” which ignores the over $200 billion price tag associated with stopping the unavoidable cuts to physicians under the Medicare program. Governors agree we should work to enhance the quality of health care while making it more affordable and efficient. Unfortunately, the

opportunity to truly lower the cost of care has been lost in the rush to try to finish health reform. Both CBO and the Chief Actuary of the Centers for Medicare and Medicaid Services have warned the current legislation will increase the overall costs of health care. The federal government and the states should refocus efforts to lowering the cost of care which will in turn increase coverage, but simply increasing the number of individuals on the public plans without a plan to improve the public programs for participants is irresponsible. At this juncture, small businesses, seniors, states and territories, and taxpayers have anxiety about Congress’ pending health care legislation and rightfully so– one-sixth of our GDP is at stake. As Republican Governors, we believe in a system which eliminates red tape, empowers consumers to engage in making good health care decisions in the private market, and guarantees affordable coverage for patients with preexisting conditions. Missing from this important legislation is real medical liability reform and provisions which protect seniors’ Medicare benefits and access to care. Several states have already implemented medical liability reform with good results; no real medical reform can be accomplished without tort reform. Instead, premiums are increased and small businesses are faced with onerous mandates rather than given the power to pool together and offer health care at lower prices, just as corporations and labor unions do. Along with the majority of Americans and as leaders of 20 states and territories, we are disappointed with the lack of transparency. We urge you not to circumvent the normal committee process and to conduct an open, fully-bipartisan negotiation. It is time to slow down and pass meaningful health care reform, not hastily prepared partisan legislation which omits reform and saddles American taxpayers for generations to come. Sincerely, Governor Bob Riley, Alabama Arizona Governor Sean Parnell, Alaska Florida Governor Sonny Perdue, Georgia Camacho, Guam Governor Jan Brewer, Governor Charlie Crist, Governor Felix

Governor Linda Lingle, Hawaii Otter, Idaho Governor Mitch Daniels, Indiana Louisiana Governor Tim Pawlenty, Minnesota Barbour, Mississippi Governor Jim Gibbons, Nevada North Dakota Governor Don Carcieri, Rhode Island Sanford, South Carolina Governor Mike Rounds, South Dakota Texas Governor Gary Herbert, Utah McDonnell, Virginia
.

Governor C.L. “Butch” Governor Bobby Jindal, Governor Haley Governor John Hoeven, Governor Mark Governor Rick Perry, Governor-elect Bob

http://www.rga.org/homepage/republican-governors-health-care-bills-omitreform/

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Criminalizing Health-Care Freedom: Obamacare Supporters Would Use the Brute Force of Criminal Law for Social Engineering
Published on November 20, 2009 by Brian Walsh and Hans Von Spakovsky

The "reformers" in the White House and the House of Representatives have made all too plain their vision of the federal government's power to coerce individual Americans to make the "right" health-care choices. The highly partisan bill the House just passed includes severe penalties for individuals who do not purchase insurance approved by the federal government. By neatly tucking these penalties into the IRS code, the so-called reformers have brought them under the tax-enforcement power of the federal government. The Congressional Budget Office stated on October 29 that the House bill would generate $167 billion in revenue from "penalty payments." Individual Americans are expected to pay $33 billion of these penalties, with employers paying the rest. Former member of Congress and Heritage Foundation fellow Ernest Istook has concluded that for this revenue goal to be met, 8 to 14 million individual Americans will have to be fined over the next ten years, quite an incentive for federal bureaucrats. Who will be included among those subject to civil and criminal penalties if this provision becomes law? For starters, any family of four whose combined income in 2016 is above $102,100 ($88,200 in today's dollars) and that chooses to pay all its medical expenses out of pocket rather than pay the $15,000 a year that the CBO says will be the lowest-priced insurance option for families. Also any healthy twentysomething in a city with high costs of living who chooses to take the risk of going uninsured. And by outlawing the popular high-deductible plans that are currently among the lowest-cost health-insurance solutions, the new law would only increase the number of Americans on the rolls of those who cannot afford insurance. The CBO itself estimates that at least 18 million Americans will still be uninsured in 2016. The fact that the penalties for noncompliance are enforceable by criminal prosecution is a chilling abuse of the prosecutorial power, which Columbia law professor Herbert Wechsler pointed out 50 years ago is the greatest power that any government uses against its citizens. Using it to enforce one particular notion of appropriate insurance coverage is nothing less than a tyrannical assertion of raw government power over the private lives and economic rights of individual Americans. How would the penalties work? As a starting point, taxpaying Americans who do not satisfy the law's insurance requirement would be penalized on their federal income-tax returns. Their tax burden would be increased by the lesser of (a) the amount the government decides they should pay for government-mandated health coverage or (b) 2.5 percent of their adjusted income above a filing threshold. An otherwise law-abiding American who fails to pay this "tax penalty" could be criminally prosecuted and sentenced to a year in prison if the feds deem his refusal to be a misdemeanor. Worse, if the feds decide the refusal is felonious, the culprit may spend five years in federal prison and be fined up to $250,000. You could end up in a cell in Leavenworth even if you have paid all your family's medical bills yourself.

By transforming a refusal or failure to comply with a government mandate into a federal tax violation, the "progressives" are using the brute force of criminal law to engage in social engineering. This represents an oppressive, absolutist view of government power. What does President Obama think of the criminalization of Americans' economic choices? He trivialized the issue when he told ABC's Sunlen Miller he didn't think the question of the appropriateness of possible jail time is the "biggest question" the House and Senate are facing right now. We beg to differ. The idea of imprisoning or fining Americans who don't knuckle under to an unprecedented government mandate to purchase a particular insurance product should outrage anyone who believes in the exceptional promises and opportunities afforded by our basic American freedoms. The idea isn't progressive but highly regressive, the equivalent of reinstituting debtors' prisons, a punishment Americans eliminated 160 years ago. Of course, the prospect of winding up in prison for failing to maintain governmentmandated insurance may be of no personal concern to the president or members of Congress. They each receive a Cadillac version of health-care coverage funded by those same American taxpayers who, in the reformers' vision, will be federal criminals if they have the audacity to make their own decisions about medical insurance. If the public's objections to this provision grow loud enough, we will undoubtedly be told that criminal prosecution will be used only against really bad actors. But that same reasoning was used to justify the law that sent inventor and entrepreneur Krister Evertson to federal prison for nearly two years. Evertson testified in July at a bipartisan House hearing investigating the overcriminalization of conduct in America. In May 2004, FBI agents driving a black Suburban and wearing SWAT gear ran Evertson off the road near his mother's home in Wasilla, Alaska. When Evertson was face down on the pavement with automatic weapons trained on him, an FBI agent told him he was being arrested because he hadn't put a federally mandated sticker on a UPS package. A jury in federal court in Alaska acquitted Evertson, but the feds weren't finished. They reached into their bag of over 4,500 federal crimes and found another ridiculous crime they could use to prosecute him: supposedly "abandoning" hazardous waste (actually storing, in appropriate containers, valuable materials he was using for the clean-fuel technology he was developing). A second jury convicted him, and he spent 21 months in an Oregon federal prison. Many of the Americans who will surely ignore the government health-insurance mandate may not wind up in prison. But if noncompliance becomes too widespread, any one of us could become the example the feds prosecute to make sure the iron hand of the new Washington is clearly visible to other potential "criminals."

This is Chicago-style hardball, backed by the full power and resources of the U.S. government. It illustrates both Obamacare supporters' view of the appropriate uses of governmental power and the lengths to which they are willing to go to force us to do what they believe is best. It is a view unbefitting a free people. Unless this paternalistic juggernaut is stopped, Americans will lose some of their most fundamental freedoms, and the power of the federal government to impose novel requirements in every facet of our personal lives will have become virtually unlimited. Brian W. Walsh is Senior Legal Research Fellow in the Center for Legal and Judicial Studies at The Heritage Foundation. Hans A. von Spakovsky is a visiting Legal scholar at the Heritage Foundation. He is also a former commissioner on the Federal Election Commission and counsel to the assistant attorney general for civil rights at the Department of Justice. First Appeared in National Review Online

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Cost and Consequences of Government Health-Care Decision Making
Posted March 11th, 2009 at 12:30pm in Health Care with 32 comments Several leading European and Canadian health economists, physicians and scholars — in Washington recently for the Galen Institute’s conference, “Lessons from Abroad for Health Reform in the US” — met with analysts from the Heritage Foundation and other conservative think-tank leaders. They wanted to explain why Americans should be concerned when officials push for government-controlled, universal health care coverage that includes innocuous-sounding but largely intrusive and prohibitive health measures. “We were told single-payer health care would be a true liberation for Canada when they enacted it 40 years ago, and the opposite has become true,” says Brian Lee Crowley, president of the Atlantic Institute for Market Studies in Canada. Not only do Canadians face extraordinary wait times to get specialized treatments (the average wait time from getting a referral from a general practitioner to receiving a treatment was 17.3 weeks in 2008), but they also have limited access to new drugs, thanks in part to the country’s “comparative effectiveness” body known as the Common Drug Review, says Brett Skinner with the Fraser Institute.

In Switzerland, “compulsory health insurance has moved the objective from being access to health care and quality of care to largely cost containment measures,” says Dr. Alphonse Crespo, an orthopedic surgeon who also runs research for the Institut Constant de Rebecque in Switzerland. Next door in France, government policies are undermining patients’ choice of care and the private sector’s involvement in health care delivery. “France is on its way to joining the nationalized health care system of the United Kingdom,” says Valentin Petkantchin with the Insitut economique Molinari. British oncologist Dr. Karol Sikora says greater government control over the health care system is a bad idea for any industrialized country. “Americans may want some form of universality in health care, but entities like NICE [Britain’s National Institute for Health and Clinical Excellence] are nothing more than government-inspired, political rationing tools,” says Dr. Sikora, who has seen his cancer patients receive newer, more effective drug treatments over others simply based on their where they live. “Having seen firsthand over many years just how inhumane this system can be, it is remarkable that other countries would even consider it,” Dr. Sikora says in his latest paper presented at the Galen Institute’s conference. But indeed, Americans could face similar problems in securing high-quality health care of their choice based on the ongoing efforts in Congress and the Obama administration to centralize health-care decisions making in Washington. The many well-documented experiences of patients in countries that are America’s allies and friends certainly attest to that. ____________________________________________________________________

The Top Ten Healthcare Amendments
Published on March 9, 2010 by Brian Darling President Obama and Democrats in Congress are readying a procedure known as reconciliation to railroad Obamacare through Congress. This abuse of process has been called the Healthcare Nuclear Option, because it’s a way to avoid a filibuster in the Senate. Reconciliation was created in the early ’70s to allow Congress to balance the budget with a mere majority vote. It would allow Obamacare to be fast tracked with no hearings, no extended debate and no opportunity for members to engage in an honest give-and-take on changes to the package. Obamacare is a take-it-or-leave-it proposition. Although most Americans want Congress to "leave" it, Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-

Nev.) don’t care. Their desire to "take" power means they’ll use every means necessary to pass it. It is important for opponents to use every means at their disposal to fight this idea. One of the few resources that the minority party has is that it can offer unlimited amendments at the end of the reconciliation process in the Senate and they can be issues that have no relation whatsoever to health care. All that a senator has to do is offer the non-healthcare related amendment, then waive the rules of reconciliation that limit the subject matter of amendments. It is done on most reconciliation measures and is considered a frequently used procedure to force votes on tough issues. Liberals need the House to pass the existing Senate-passed version of Obamacare. That bill includes no public option, does provide federal funding of abortion and would slap a tax on high-end so-called Cadillac healthcare plans. Part of the deal would be to follow this bill with a reconciliation measure that would make some changes to Obamacare that are demanded by House members. If such a bill comes to the Senate, conservative senators have the right to offer an amendment on any issue—if he offers the amendment, then makes a motion to waive the budget act, then demands a roll call vote. Here are 10 ideas that would greatly complicate the Obamacare debate: 1. Restoring Second Amendment rights to the residents of the District of Columbia: Sen. John Ensign (R-Nev.) offered an amendment last year to the bill that allowed House voting rights to the representative of the District of Columbia that would have allowed D.C. residents to register a handgun. The amendment passed 62-36. This was a means to codify the D.C. v. Heller Supreme Court decision establishing that the 2nd Amendment is an individual right. 2. Expedited Supreme Court Review for Individual Mandate: A key to Obamacare is the mandate that all Americans must purchase health insurance or run afoul of the IRS. It’s reasonable for senators to offer an amendment providing for immediate Supreme Court jurisdiction of any state’s challenge to the constitutionality of the federal government’s law forcing residents of a state to buy a private service offered by private corporations. 3. Drill Baby Drill: The American people like low gas prices. During the campaign for President, John McCain (R-Ariz.) received thunderous applause when he lead the chant "Drill, Baby, Drill." Sen. Jim DeMint (R-S.C.) introduced legislation in 2008 to speed up drilling by bypassing the Department of Interior leasing process and allowing states to share in drilling revenues. 4. Permanent Repeal of the Death Tax: Right now the Estate Tax, imposed at death, is zero. Next year, though, the highest rate shoots up to 55%. Two House members,

Representatives Kevin Brady (R-Tex.) and Mac Thornberry (R-Tex.), have proposed a permanent repeal. 5. Prevent Same Sex Marriage in D.C.: Gay marriage was recently legalized in the District of Columbia. Sen. Bob Bennett (R-Utah) has legislation that would guarantee residents of D.C. the right to vote on whether gay marriage licenses should be issued. 6. Spending Freeze: Congress shouldn’t spend new money this year. Sen. Jim Bunning (R-Ky.) fought alone to offset a $10 billion package of temporary programs and Congress refused to offset this meager spending. Well, Senator Jim Inhofe (R-Okla.) has a version of a congressional spending freeze. The Senate could freeze all spending at fiscal year 2011 levels for the next three years with no waivers for any purpose to prove that it can live within its means. Lawmakers ought to show a spine and freeze spending right now, so that Congress does not reach the new debt limit ceiling of $14.3 trillion. Also, Republicans may want to include language banning earmarks for the year to see if the recent talk of an earmark ban is serious by Democrat leadership in the House. 7. No More Cash for Cloture: Sen. DeMint offered a rules change at the beginning of this Congress to ban offering an earmark for a vote. This idea needs to be expanded so that there are no quid pro quo earmarks for any vote on any issue. Vote buying is unethical, and lawmakers shouldn’t use taxpayer dollars to create things such as the "Cornhusker Kickback," inserted into the Senate version of Obamacare for Sen. Ben Nelson (D-Neb.). 8. End TARP: Sen. John Thune (R-S.D.) offered an amendment last year to end the socalled Troubled Assets Relief Program. Any discussion on the ending of bailouts would be welcome to the American people. 9. Prohibiting Global Warming Regulation and Legislation: Congress should prohibit the Environmental Protection Agency from enacting backdoor global-warming regulations by amending the Clean Air Act to prevent the Regulation of greenhouse gases. This administration will block economic growth with a new bureaucratic regulatory scheme. Furthermore, senators could create a point of order against any legislation that would raise the price Americans pay for their energy. 10. Terrorist Trials: Congress has the constitutional authority to strip the courts of jurisdiction to hear certain cases. Conservatives wouldn’t want any American citizens’ right to trial be infringed, but it’s reasonable to strip the courts of jurisdiction to hear the cases of international terrorist like Khalid Sheikh Mohammed who claims to be the mastermind of the September 11th act of war. The Obama Administration is aiming to use reconciliation to steamroll the American people and to pervert the original intent of the budget reconciliation process. Obamacare is unpopular and conservatives need to use this reconciliation procedure as an opportunity to discuss other ideas that are very important and supported by the American people.

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Beware of Obama's Healthcare Trickery
Published on September 15, 2009 by Ernest Istook When their direct path is blocked, politicians often resort to chicanery. That approach is evident in the healthcare debate. Political tricks like legislative "triggers" and putting a "co-op" label on government-run insurance are just two of the gimmicks to beware. Another deceptive practice is to claim a measure is deficit-neutral (or "won't add a dime to the deficit"), then resort to cutesy book keeping to claim the promise has been kept, when it hasn't. Trick plays are fun in football, but not in politics. It's real life, not a game. The trigger Let's start with the trigger. The gun imagery is apt because it's like being threatened with a gun at your head. The warning is that unless something happens -- or fails to happen -the trigger will be pulled. And it's those who wield the weapon who decide for themselves whether to fire. So the notion that we won't have a government-run public option for healthcare "unless X happens" is a way to give more power to those who hold the weapon. Is it unless total healthcare spending matches some arbitrary number? Unless the number of uninsured reaches a threshold? Those numbers can be juggled and adjusted to match a political agenda. The key condition might as well be "unless the sun comes up tomorrow." It's arbitrary nonsense. The notion of a trigger is just a cute legislative trick for politicians to shift and dodge blame for a program they establish. The co-op There's nothing wrong with a good private sector co-op, whether it's to buy health insurance or to run a granary. These groups have a long and good history in America. But slapping a misleading label on a government program is also a long-time and dishonorable practice. As The Heritage Foundation's Stuart Butler says, "If it walks like a duck. . . . And if it has all the characteristics of a public plan option then it is a public plan option.

"There would be federal legislation to design a new form of national or regional co-op and set rules for how these would be run. There would be yet another federal board (presumably with yet another czar) to keep a close eye on them and to make sure they remember who is in charge. And billions of dollars in federal money to keep them tied to Washington. In short, a public plan with a co-op veneer." As concluded in a Heritage report, "Cooperatives must be voluntary, open to individuals who choose to freely join together without coercion or restraint, and controlled by its members, not the government; . . . viable on their own and must not receive anticompetitive government support in any form including assumption of risk, "start-up" capital, or continuous subsidies to the organization." Fortunately, some on the left are skeptical about co-ops also. Former Democrat National Chairman Howard Dean is one such doubter, as is Rep. Pete Stark, D-Calif., who says, "You might as well talk about unicorns . . . I think this co-op is just a way of ducking the issue of having the public plan." Deficit neutral The Associated Press did a quick article to fact-check Obama's big speech to Congress, including his claim that his plan "won't add a dime to the deficit." Obama flunked the test. In fact, because federal bookkeeping is such a mess, politicians can pick and choose from a variety of budget analyses. If they don't like the version from the Congressional Budget Office, they can get different numbers from the Government Accountability Office, or the Office of Management and Budget, or the White House Council of Economic Advisors. Or they could pick a different arbitrator. Or create a special group that would give them whatever number they want. Ultimately, they'll find one to use to claim they've kept a promise about spending. But here's what the AP story said: ". . . the White House and congressional Democrats already have shown they're ready to skirt the no-new-deficits pledge. House Democrats offered a bill that the Congressional Budget Office said would add $220 billion to the deficit over 10 years. But Democrats and Obama administration officials claimed the bill actually was deficit-neutral. They said they simply didn't have to count $245 billion of it." The notion that government can expand health coverage to provide a greater variety of treatments, tests, and checkups, extend it to a larger group of people, and not raise costs, just doesn't pass the common-sense test. Ask anybody in Tennessee, where the TennCare state program found costs for the first 10 years were triple the projection and wound up consuming one-third of the state budget. It reminds me of an e-mail I received that says:

• • • • • •

"The U.S. Postal Service was established in 1775 -- you have had 234 years to get it right; it is broke. "Social Security was established in 1935 -- you have had 74 years to get it right; it is broke. "Fannie Mae was established in 1938 -- you have had 71 years to get it right; it is broke. "The "war on poverty" started in 1964 -- you have had 45 years to get it right; . . . it hasn't worked and our entire country is broke. "Medicare and Medicaid were established in 1965 -- you've had 44 years to get it right; they are broke. "Freddie Mac was established in 1970 -- you have had 39 years to get it right; it is broke."

Whether the latest claim is a trigger, a co-op, deficit neutrality, or any other gimmick, the underlying truth is that our government has a good track record of making promises but an awful track record of keeping them. Butler, of The Heritage Foundation, has a simple suggestion for everyone who claims we're going to save money with a healthcare overhaul: "Bank the savings before you spend them." That would be refreshing, to require a government program to prove it works before we use its projected benefits to justify higher spending right away. For once, that would not be a gimmick.

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Beyond the Constitution: The Healthcare Bill Violates the Rule of Law
Posted December 23rd, 2009 at 2:03pm in Health Care with 31 comments Senator Jim DeMint (R-SC) has pointed observers to a problematic section of the health care legislation now before the Senate that proposes (in Section 3403) to create an Independent Medicare Advisory Board. He rightly observes that the bill language makes it virtually impossible to repeal that part of the legislation, thereby attempting to bind future Congresses. DeMint is right about all this, but—having read through the legislation—by my read it is actually much worse than has been suggested, and much more destructive of the rule of law and democratic governance. The purpose of the Independent Medicare Advisory Board is to “reduce the per capita rate of growth in Medicare spending.” (p. 1001) Its proposals to reduce that spending

“shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and co-payments), or otherwise restrict benefits or modify eligibility criteria.” (p. 1004) (And the legislation won’t pay for abortions – yea, right.) But the Board’s proposals “shall include recommendations to reduce Medicare payments under parts C and D, such as reductions in direct subsidy payments to Medicare Advantage and prescription drug plans . . . that are related to administrative expenses (including profits) for basic coverage.” (Hmmm . . . . Sounds like rather than directly rationing health care, they just won’t pay for it.) Setting the rationing questions aside for a moment, what is most disturbing is the process by which these cost-savings dictates made by an unelected board of experts will be implemented regardless of the majority opinion of the law-making branch of government. So much for the rule of law. This Board—which is appointed by the President, is not required to hold any public meetings or take any testimony and cannot be disbanded except by a 3/5 vote of Congress —transmits a legislative proposal that implements its recommendations to the President, who shall immediately submit such proposal to Congress. (p 1011) On the day on which the proposal is submitted it shall be introduced in Congress (p 1017) and referred to the Committee on Finance in the Senate and to the Committee on Energy and Commerce and the Committee on Ways and Means in the House of Representatives (p. 1018), despite any standing rules of the Senate (p 1019). If the committee does not act fast enough, the bill shall be discharged from (ie forced through) that committee (1019). And then there is this zinger: It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report (other than pursuant to this section) that would repeal or otherwise change the recommendations of the Board” if the bill, resolution, amendment or report does not satisfy the requirements of the legislation. And here is DeMint’s troubling discovery (p 1020): It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection” other than by three-fifths of the Members of Congress. The section then goes on to promulgate the rules of debate in the Senate and House for considering the legislation, and that if the one House passes the legislation the other “shall consider the bill introduced in that House through all stages of consideration up to, but not including, passage.” No more pesky committee mark-ups and amendments.

If there is any doubt that this section of the Healthcare Bill changes the rules of the Senate and the House in violation of clear constitutional language guaranteeing each House’s determination of the rules of its proceedings (Article I, Section 5), consider this Orwellian language (p. 1028): RULES OF THE SENATE AND HOUSE OFREPRESENTATIVES.— This subsection and subsection (f)(2) are enacted by Congress— ‘(A) as an exercise of the rulemaking power of the Senate and the House of Representatives, respectively, and is deemed to be part of the rules of each House, respectively, but applicable only with respect to the procedure to be followed in that House in the case of bill under this section, and it supersedes other rules only to the extent that it is inconsistent with such rules; and (B) with full recognition of the constitutional right of either House to change the rules (so far as they relate to the procedure of that House) at any time, in the same manner, and to the same extent as in the case of any other rule of that House. Sooo, . . . the Secretary shall not implement the Board’s “recommendations” but only if Congress follows all these new rules and goes to great length to pass another law. But wait! Perhaps the bureaucrats can implement the law anyway(p. 1031): NO AFFECT ON AUTHORITY TO IMPLEMENT CERTAIN PROVISIONS.— Nothing in paragraph (3) shall be construed to affect the authority of the Secretary to implement any recommendation contained in a proposal or advisory report under this section to the extent that the Secretary otherwise has the authority to implement such recommendation administratively. Paragraph 3 is the exception under which Congress enacts legislation against the specific Board recommendation. Given the wide latitude by which bureaucrats wield their administrative authority, and the looseness of this language, the legislation could be read to give them a green light to proceed administratively despite congressional disapproval. And, just to make it clear they mean to rule us, there shall be no administrative or judicial review of this decision. It has become commonplace for Congress to pass massive pieces of legislation with little serious deliberation; it is increasingly an administrative body overseeing a vast array of bureaucratic policymakers and rule-making bodies. Although the Constitution vests legislative powers in Congress, the majority of “laws” are promulgated by administrative agencies in the guise of “regulations”—a form of rule by bureaucrats who are mostly unaccountable and invisible to the public. This bureaucracy is so overwhelming that it is unclear whether modern presidents actually can be held constitutionally responsible for “tak[ing] care that the laws be

faithfully executed.” Presidents now appoint numerous policy “czars”—megabureaucrats operating outside of the existing cabinet structure—to forward their objectives over the inertia of their own administrations. And now, in this new form of administrative governance, unelected and unresponsible experts who are beyond legislative control and the rule of law will tell us what is good for us and the rules by which we will shall live our lives. This legislation is not about health care, but about placing one sixth of the American economy—and some of the most important and personal decisions in our lives—under the permanent control of government. This section of the legislation—and the operations of this Independent Medicare Advisory Board—is a prime example of the autocratic rule that is increasingly overtaking us. Tags: IMAC, Obama Health Care Plan, rationing ____________________________________________________________________

The Lesson of State Health-Care Reforms
Posted October 7th, 2009 at 1:49pm in Health Care with 3 comments Peter Suderman, associate editor for Reason Magazine, has an op-ed in the Wall Street Journal on the track record of Obamacare like reforms at the state level. The full article is posted below and as an added service we found all the studies mentioned and provided links to view them: Supreme Court Justice Louis Brandeis famously envisioned the states serving as laboratories, trying “novel social and economic experiments without risk to the rest of the country.” And on health care, that’s just what they’ve done. Like participants in a national science fair, state governments have tested variants on most of the major components of the health-care reform plans currently being considered in Congress. The results have been dramatically increased premiums in the individual market, spiraling public health-care costs, and reduced access to care. In other words: The reforms have failed. New York is exhibit A. In 1993, the state prohibited insurers from declining to cover individuals with pre-existing health conditions (“guaranteed issue”). New York also required insurers to charge those enrolled in their plans the same premium, regardless of health status, age or sex (“community rating”). The goal was to reduce the number of uninsured by making health insurance more accessible, particularly to those who don’t have employer-provided insurance. It hasn’t worked out very well, according to a Manhattan Institute study released last month by Stephen T. Parente, a professor of finance at the University of Minnesota and

Tarren Bragdon, CEO of the Maine Heritage Policy Center. In 1994, there were just under 752,000 individuals enrolled in individual insurance plans, or about 4.7% of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today, that percentage has dropped to just 0.2% of the state’s nonelderly. In contrast, between 1994 and 2007, the total number of people insured in the individual market across the U.S. rose to 5.5% from 4.5%. The decline in the number of people enrolled in individual insurance plans, the authors say, is “attributable largely to a steep increase in premiums” because of the state’s regulations. Messrs. Parente and Bragdon estimate that repeal of community rating and guaranteed issue could reduce the price of individual coverage by 42%. New York’s experience with guaranteed issue and community rating is not unique. In 1996, similar reforms in Washington state preceded massive premium spikes in the individual market. Some premiums increased as much as 78% in the first three years of the reforms—or 10 times medical inflation—according to a study presented at the annual meeting of the Association for Health Services Research in 1999. Other results included a 25% drop in enrollment in the individual market, and a reduction in services offered. Within four years, for example, none of the state’s major carriers offered individual insurance plans that included maternity coverage. A 2008 analysis by Kaiser Permanente’s Patricia Lynch published by Health Affairs noted that in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey and Vermont “deteriorated” after the enactment of guaranteed issue. Individual insurance became significantly more expensive and there was no significant decrease in the number of uninsured. Supporters of federal health-care reform argue that the problems associated with these regulations can be addressed with the addition of an individual mandate, which is part of every ObamaCare bill in Congress. This would require every individual to purchase health insurance. Guaranteed issue alone, the argument goes, results in slightly more expensive premiums, which drives healthier individuals out of the risk pool, which in turn further drives up premiums. The end result is that many healthy people opt out, leaving a small pool of sick individuals with very high premiums. An individual mandate, however, would spread those premium costs across a larger, healthier population, thus keeping premium costs down. The experience of Massachusetts, which implemented an individual mandate in 2007, suggests otherwise. Health-insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state’s family plans are now the nation’s most expensive. Meanwhile, insurance companies are planning additional double-digit hikes,

“prompting many employers to reduce benefits and shift additional costs to workers” according to the Boston Globe. And health-care costs have continued to grow rapidly. According to a Rand Corporation study this year, the growth now exceeds state GDP by 8%. The Boston Globe recently reported that state health-insurance commissioners are now worried that medical spending could push both employers and patients into bankruptcy, and may even threaten the system’s continued existence. Meanwhile, survey data from the Massachusetts Medical Society indicate that the state’s primary-care providers are being squeezed. Family doctors report taking fewer new patients and increases in wait time. Reform measures in other states have proven to be expensive duds. Maine’s 2003 reform plan, Dirigo Health, included a government insurance option resembling the public option included in the House health-care bill. This public plan, “DirigoChoice,” was supposed to expand care to all 128,000 of Maine’s uninsured by 2009. But according to the U.S. Census Bureau, the 2007 uninsured rate remained roughly 10%—essentially unchanged. DirigoChoice’s individual insurance premiums increased by 74% over its first four years—to $499 a month from $287 a month—according to an analysis of Dirigo data by the Maine Heritage Policy Center. The cost of DirigoHealth to taxpayers so far has been $155 million. Tennessee’s plan for universal coverage, dubbed TennCare, fared even worse in the 1990s. The goal of the state-run public insurance plan was to expand coverage to the uninsured by reducing waste. But the costs of expanding coverage quickly ballooned. In 2005, facing bankruptcy, the state was forced to cut 170,000 individuals from its insurance rolls. Despite these state-level failures, President Barack Obama and congressional Democrats are pushing forward a slate of similar reforms. Unlike most high-school science fair participants, they seem unaware that the point of doing experiments is to identify what actually works. Instead, they’ve identified what doesn’t—and decided to do it again.

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The Slippery Slope of Health-Care Reform
Posted August 27th, 2009 at 12:46pm in Health Care with 1 comments

Writing for the National Review’s blog, The Corner, Heritage’s Mike Franc details at length the evolution of this summer’s health care debate, what works, what doesn’t and who to be afraid of: “Beware the modest proposals of extreme leftists.” Each day brings another twist to the health-care-reform saga. Should the president heed the braying of his hard-left allies, manipulate Senate procedural rules, and push through a massive overhaul of our entire health-care system? Or should he scale back the ambition of the proposals already approved by four congressional committees and settle for a “modest” set of reforms to protect consumers from the predations of those sinister healthinsurance companies? And, of course, there’s that nettlesome “public plan” option: Should it stay, or should it go? On some days the prognosticators see less health reform in our future. According to the Washington Post, “the outpouring of anger at town hall meetings this month has fundamentally altered the nature of the debate” and convinced lawmakers such as Iowa senator Chuck Grassley to “consider drastically scaling back the scope of the effort.” Even if this should prove true, and the reform effort ultimately gives way to a set of insurance-market reforms spun as minor tweaks to enhance our health “security,” it will be crucial for Americans to understand the slippery slope of liberal health-care reform and why liberals cannot ratchet back their reform ambitions. Those seemingly modest changes urged by the White House, you see, would fundamentally alter the terms and conditions under which Americans purchase their health insurance. Worse, those changes cannot stand alone. They would necessitate a series of additional changes, each building upon the others so as ultimately to produce reform every bit as “robust” — and every bit as lethal — as the $2-trillion government takeover now being so loudly denounced in town halls throughout the nation. Let me explain.

Start with the three “common-sense consumer protections” trumpeted by President Obama: Guaranteed issue: Require health insurers to issue a policy to everyone who walks in the door, no questions asked, and to guarantee that coverage for life. Pre-existing conditions: Bar insurers from screening prospective customers for any “preexisting” and potentially costly medical conditions. Community rating: Require insurers to charge all consumers the same premium for their coverage, regardless of relevant factors such as age, gender, occupation, and, of course, health status. Combined with other items on the White House insurance-reform wish list, such as a ban on “excessive” out-of-pocket expenses and on yearly or lifetime limits on benefits paid, these mandates would effectively socialize the market for health insurance. Everyone could get insurance whenever he decided to sign up for it, and at one guaranteed price. Insurers would become regulated utilities, answering to government-appointed boards and rate commissions. Not only would such a system drive up the cost of insurance, it would create classes of winners and losers. For example, the 55-year-old cholesterol-challenged smoker would benefit at the expense of the 27-year-old non-smoking vegetarian. That’s bad enough, but the reforms can’t just stop there. So long as the issuance of insurance is guaranteed but purchase remains voluntary, many won’t buy coverage until they absolutely need it. Why, after all, spend hundreds of hard-earned dollars each month on a product you don’t need right now, when you could be spending that money on a new car, an upgraded wardrobe, or a nice vacation? Why not wait until the morning before your surgery to walk through the front door of your local health insurer, demand a policy, and then run up your medical tab, which your insurer will be required to cover? Many will try to game the “reformed” system this way. Even liberal reformers admit it. Otherwise, they would have to deny still-fresh and fully documented history. After all, several states tried these reforms in the 1990s. And the results were nothing short of catastrophic. One review of New Jersey’s experience with community rating and guaranteed issue found “a precipitous decline in enrollment, a corresponding increase in premiums, and a change in enrollment composition toward older and potentially more expensive enrollees.” New York’s community-rating experiment flopped as well. “In the first year,” National Review’s Ed Rubenstein wrote over a decade ago, “25-year-old males were hit with premium hikes of over $500, while 55-year-olds paid about $415 less than under the riskrated system. Not surprisingly many young people decided to drop their coverage. With

fewer young, healthy policyholders available to subsidize older ones, insurance premiums skyrocketed . . . ” Despite these horrible examples, Maine enacted these same insurance rules in 2003. They have been in effect now for five years and have wrought such havoc that a healthy 30year-old male faces a monthly premium of $762 in the individual market. In neighboring New Hampshire, which shuns community rating and guaranteed issue, similar coverage costs only $222 a month. This specter of market meltdown and price spikes will cause the health-insurance lobby to demand that everyone — everyone — be required to purchase a health plan. They’ll insist that all those young, healthy consumers must pay premiums into the insurance pool each month to subsidize the exorbitant bills incurred by us older, paunchier geezers. Liberal lawmakers are just fine with that. Mandates on individuals and their employers are the second stage on the liberals’ slope to government-run health care. But there’s more they must do. You see, some Americans will find the monthly premiums of their mandated coverage downright unaffordable, eating up a fifth or more of their take-home pay. A problem, yes, but the libs have a ready answer: government subsidies. That’s their preferred way of bringing the cost of these plans down to earth for literally tens of million of consumers who live from paycheck to paycheck. Is it fiscally responsible? No. But what Speaker Nancy Pelosi disingenuously said with respect to another government power grab — the global-warming cap-and-trade bill — aptly describes the liberal’s view of health-care reform: “There should be no cost to the consumer. . . . whatever the cost is, the consumer must be held harmless.” That’s the third stage on our descent down the slippery slope: hundreds of billions of dollars in subsidies to hold consumers harmless. Of course, many of those consumers are rooted firmly in the middle class. To “offset” subsidies for the middle class, liberals have another ready answer: massive, job-destroying tax increases on “the rich” and on smallbusiness owners. But we’ve still more downhill terrain to cover. What constitutes an “acceptable” health plan (to use the paternalistic language contained in the House bill)? Which providers, health facilities, treatments, and drugs will be covered? What about coverage for certain diseases and medical conditions? With so much at stake, every interest group in Washington will spare no expense to get its treatment, medical technology, or pharmaceutical product included in the laundry list of benefits that insurers will be required to offer. Of course, Congress will succumb to the Washington lobbying community and add dozens of mandated benefits to any government-sanctioned plan. Each mandate, of

course, adds to the cost of coverage, putting further pressure on consumers and on the taxpayers who will be asked to pony up in order to “offset” these higher costs. Ultimately, the Left’s “scaled back” version of health-care reform will sprout other ominous features. For starters, we’ll need armies of federal bureaucrats to draw up and enforce thousands of pages of new insurance regulations. And then we’ll need some government muscle to enforce the individual and employer mandates — everything from penalties, fees, and fines to the use of collection agencies and garnishment of wages. As candidate Obama himself said: “Without an enforcement mechanism, there is no mandate. It’s just a political talking point.” So there we have it: the slippery slope of health reform. Drop the controversial notion of a public plan. Ask for the voters’ forgiveness. Scale back the ambition, and tone down the rhetoric. Return with a “constrained” package limited to a few “consumer-friendly” regulations on insurers. And, before you know it, Mr. Liberal Reformer, you’re back where you always wanted to be, the proud proponent of a massive legislative and regulatory overhaul that registers 9.5 on the political Richter Scale. Beware the modest proposals of extreme leftists.

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Health-Care by Committee
Published on December 31, 2008 by Edwin Feulner, Ph.D. A camel, they say, is a horse designed by committee. To take the expression further, let's call it a committee of experts. After all, only "experts" could take something as graceful as a horse and replace it with something as difficult as a camel. And that brings us to health care. During his presidential campaign, President-elect Barack Obama promised to help uninsured Americans obtain coverage. But, "If you already have health insurance, the only thing that will change under my plan is that we will lower your premiums," he told an audience in Canton, Ohio, in October. "If you don't have health insurance, you'll be able to get the same kind of health insurance that members of Congress give themselves." Unfortunately, that promise could be undermined by Obama's nominee to be secretary of Health and Human Services. Former Sen. Tom Daschle advocates creating a "Federal Health Board" to oversee the one sixth of the American economy that's spent on health care.

That's a bad idea. Moreover, it directly violates Obama's pledge that Americans will be able to retain the same kind of coverage--and coverage choices--they have now. In his recent book "Critical: What We Can Do About the Health-Care Crisis," Daschle proposes a Federal Health Board that would "help define evidence-based benefits and lower overall spending by determining which medicines, treatments, and procedures are most effective and identifying those that do not justify their high price tags." In other words, an omnipotent board of experts would determine which drugs, tests and medical treatments will--or will not--be approved for coverage. Patients and their doctors wouldn't have any say in the matter. Daschle certainly sounds a different note from his future boss. While Obama insisted patients would remain in control of decisions regarding their health, the potential HHS secretary admits, "Doctors and patients might resent any encroachment on their ability to choose certain treatments." As well they should, since each patient deserves to be treated as an individual, not as a medical condition. The former senator writes that even he has some worries. The power of the board he advocates "is not small, and delegation over health policy decisions rightly raises concerns," he writes. Still, Daschle supports massive interference in the health care market, interference that could eventually affect virtually everyone. There's a better way to cover more Americans. First, the incoming Obama administration should ask Congress to change the way the tax code treats health insurance. Today, employees get unlimited tax relief for employerprovided coverage, but families without coverage through work don't enjoy similar benefits. Experts on the left and the right agree this should be changed, by capping the benefit an employee may deduct and by providing direct assistance, either in the form of a voucher or a refundable tax credit, to help lower-income workers buy private coverage. Lawmakers could also expand coverage by exploring something called "autoenrollment." There are certainly working Americans who cannot afford to buy health insurance. But for some, the reason they aren't in a plan is because they never get around to signing up. Even worse, there are some who figure they can always get care at an Emergency Room, so having insurance isn't a real concern for them. If workers were automatically enrolled in their company's health care coverage, and were required to actively decline coverage if they didn't want it, many more Americans would have private coverage. Finally, the federal government should encourage states to experiment with new ways to cover their citizens. If Washington made it possible, states could restructure programs

and find creative ways to expand insurance. Federalism works, and often generates innovative ideas that can be applied nationwide. This New Year begins with "hope" for "change" in Washington and across the country. The president-elect can and certainly should keep his campaign promise to expand health insurance coverage -- only by expanding the private insurance market, not by replacing it with a system designed by politically appointed so-called "experts." Ed Feulner is president of The Heritage Foundation.

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Would Adam Smith Support Government-Run Healthcare?
Posted September 30th, 2009 at 10:03am in Health Care with 3 comments

So claimed Senator Jay Rockefeller (D-WV) in the Senate Finance Committee debate on Tuesday morning. The “public option” would create the “choice” of a new governmentrun health insurance plan to “compete” with private insurance in the free market. If Adam

Smith means choice, competition and free markets then he would favor the public option. Rockefeller went so far as to claim that “Adam Smith would have cooked up this amendment” establishing the public option. Members of the committee did not see it that way, and the amendment was defeated. But does Rockefeller seriously think Adam Smith’s principles are consistent with the government-run healthcare? This view depends on the patently false idea that competition would be enhanced by the addition of a new player – the government – in the insurance market. The problem is that government, by definition, isn’t just another economic player, and will always tend to want to control markets for its political purposes. That threatens economic as well as political liberty. (Hmmm . . . isn’t this why we favor free markets in the first place?) Adam Smith himself long ago debunked the idea that government charters, giving a corporation exclusive privileges to engage in a particular type of business, enhanced competition. Far from it, government intervention would prevent competition by restraining the private market from having true competition in prices, products and free exchange. Smith lamented the old mercantilist policies of Europe which, like the “public option” plan, did not allow competition and choice: The policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some employments to a smaller number than might otherwise be disposed to enter into them. The exclusive privileges of corporations are the principal means it makes use of for this purpose. The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade. Anyone who is remotely familiar with Smith’s ideas, let alone the basic ideas of introductory market capitalism, knows how implausible Rockefeller’s claim is. Adam Smith wasn’t there to defend himself in the committee hearing, but we should—not just for his sake, but for the sake of the liberty he defended and we have long enjoyed.

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Obama's Dubious Health-Care Claims
Published on May 27, 2009 by Robert Moffit, Ph.D. President Obama may pretend otherwise, but if Congress passes his health-care agenda, America will be taking a giant leap toward Canadian-style, government-run health care. And many Americans will find themselves left with no choice but to sign on.

How so? Start with the fact that government already controls almost half of America's health-care spending. Now consider that the Obama plan would give Washington a broad and powerful supervisory role over the remainder. Detailed legislative language hasn't been unveiled yet, but a key feature of the program is a government-run plan that supposedly would compete with private-sector plans. Congress would determine the benefits, premiums and co-payments of this plan, as well as reimbursements for doctors and hospitals and who would be eligible. Coverage could be offered just to citizens and legal residents who lack employer-based health care or are ineligible for other government programs, like Medicaid. Or it could extend to a much broader pool. Liberals in Congress, especially those who want a Canadian-style, "single-payer" system, can be expected to push for broad eligibility -- opening the plan to all employees and their families, starting with small companies and expanding to large ones. The Lewin Group, a leading econometric firm, estimates such broad eligibility, combined with artificially low provider-payment rates (based on those of Medicare), would result in about 119 million Americans' being forced out of private health coverage into the new government-run plan. That's because many employers would simply drop their own plans -- leaving their workers little choice but to sign up for the government's package. So much for the president's repeated promise that you can keep your private health plan if you like it. Let's be honest: The idea that Congress is going to create a genuine "level playing field" for competition between the newly created government health plan and private health plans is nonsense. Congress will be the rule-maker, financier, umpire and owner of a team in the "competition." For starters, as a wholly owned subsidiary of Congress, the government plan would be "too big to fail," assuring it periodic taxpayer bailouts and giving it a big edge over the private sector. If Medicare can run up $38 trillion in unfinanced benefit promises, after all, then a plan modeled on it (as Senate Finance Committee Chairman Max Baucus wants) could run up big debt, too -- especially if Congress sets low rates to make it "affordable." The president also champions "shared responsibility." That's code for an employer mandate, whereby employers must either offer a government-approved health-benefits package or pay a federal tax. The new tax revenues would probably be used to finance subsidies for coverage in the government health plan.

Employer mandates are sure to erode employer-based health-insurance coverage. That's because millions of companies would simply pay the tax rather than hassle with or spend more providing insurance that meets new federal specifications. Million of Americans, therefore, could find themselves left with no company health coverage. Chalk up another victory for the congressional "single-payer" caucus. Finally, congressional liberals can be expected to expand "shared responsibility" to include an individual mandate to purchase health insurance. If they do, Americans should check out the penalties imposed for not buying federally approved health insurance. This will push yet more folks onto the government plan. Obama says that if you like the health coverage you have today, nothing will change. But with Washington controlling health care, you may have no choice in the matter. Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.

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The Slippery Slope of Health-Care Reform: For liberal reformers, modesty is not an option
Published on August 28, 2009 by Michael Franc Each day brings another twist to the health-care-reform saga. Should the president heed the braying of his hard-left allies, manipulate Senate procedural rules, and push through a massive overhaul of our entire health-care system? Or should he scale back the ambition of the proposals already approved by four congressional committees and settle for a "modest" set of reforms to protect consumers from the predations of those sinister healthinsurance companies? And, of course, there's that nettlesome "public plan" option: Should it stay, or should it go? On some days the prognosticators see less health reform in our future. According to the Washington Post, "the outpouring of anger at town hall meetings this month has fundamentally altered the nature of the debate" and convinced lawmakers such as Iowa senator Chuck Grassley to "consider drastically scaling back the scope of the effort." Even if this should prove true, and the reform effort ultimately gives way to a set of insurance-market reforms spun as minor tweaks to enhance our health "security," it will be crucial for Americans to understand the slippery slope of liberal health-care reform and why liberals cannot ratchet back their reform ambitions.

Those seemingly modest changes urged by the White House, you see, would fundamentally alter the terms and conditions under which Americans purchase their health insurance. Worse, those changes cannot stand alone. They would necessitate a series of additional changes, each building upon the others so as ultimately to produce reform every bit as "robust" -- and every bit as lethal -- as the $2-trillion government takeover now being so loudly denounced in town halls throughout the nation. Let me explain. Start with the three "common-sense consumer protections" trumpeted by President Obama:
• • •

Guaranteed issue: Require health insurers to issue a policy to everyone who walks in the door, no questions asked, and to guarantee that coverage for life. Pre-existing conditions: Bar insurers from screening prospective customers for any "pre-existing" and potentially costly medical conditions. Community rating: Require insurers to charge all consumers the same premium for their coverage, regardless of relevant factors such as age, gender, occupation, and, of course, health status.

Combined with other items on the White House insurance-reform wish list, such as a ban on "excessive" out-of-pocket expenses and on yearly or lifetime limits on benefits paid, these mandates would effectively socialize the market for health insurance. Everyone could get insurance whenever he decided to sign up for it, and at one guaranteed price. Insurers would become regulated utilities, answering to government-appointed boards and rate commissions. Not only would such a system drive up the cost of insurance, it would create classes of winners and losers. For example, the 55-year-old cholesterol-challenged smoker would benefit at the expense of the 27-year-old non-smoking vegetarian. That's bad enough, but the reforms can't just stop there. So long as the issuance of insurance is guaranteed but purchase remains voluntary, many won't buy coverage until they absolutely need it. Why, after all, spend hundreds of hard-earned dollars each month on a product you don't need right now, when you could be spending that money on a new car, an upgraded wardrobe, or a nice vacation? Why not wait until the morning before your surgery to walk through the front door of your local health insurer, demand a policy, and then run up your medical tab, which your insurer will be required to cover? Many will try to game the "reformed" system this way. Even liberal reformers admit it. Otherwise, they would have to deny still-fresh and fully documented history. After all, several states tried these reforms in the 1990s. And the results were nothing short of catastrophic. One review of New Jersey's experience with community rating and guaranteed issue found "a precipitous decline in enrollment, a corresponding increase in

premiums, and a change in enrollment composition toward older and potentially more expensive enrollees." New York's community-rating experiment flopped as well. "In the first year," National Review's Ed Rubenstein wrote over a decade ago, "25-year-old males were hit with premium hikes of over $500, while 55-year-olds paid about $415 less than under the riskrated system. Not surprisingly many young people decided to drop their coverage. With fewer young, healthy policyholders available to subsidize older ones, insurance premiums skyrocketed..." Despite these horrible examples, Maine enacted these same insurance rules in 2003. They have been in effect now for five years and have wrought such havoc that a healthy 30year-old male faces a monthly premium of $762 in the individual market. In neighboring New Hampshire, which shuns community rating and guaranteed issue, similar coverage costs only $222 a month. This specter of market meltdown and price spikes will cause the health-insurance lobby to demand that everyone -- everyone -- be required to purchase a health plan. They'll insist that all those young, healthy consumers must pay premiums into the insurance pool each month to subsidize the exorbitant bills incurred by us older, paunchier geezers. Liberal lawmakers are just fine with that. Mandates on individuals and their employers are the second stage on the liberals' slope to government-run health care. But there's more they must do. You see, some Americans will find the monthly premiums of their mandated coverage downright unaffordable, eating up a fifth or more of their take-home pay. A problem, yes, but the libs have a ready answer: government subsidies. That's their preferred way of bringing the cost of these plans down to earth for literally tens of million of consumers who live from paycheck to paycheck. Is it fiscally responsible? No. But what Speaker Nancy Pelosi disingenuously said with respect to another government power grab -- the global-warming cap-and-trade bill -- aptly describes the liberal's view of health-care reform: "There should be no cost to the consumer ... whatever the cost is, the consumer must be held harmless." That's the third stage on our descent down the slippery slope: hundreds of billions of dollars in subsidies to hold consumers harmless. Of course, many of those consumers are rooted firmly in the middle class. To "offset" subsidies for the middle class, liberals have another ready answer: massive, job-destroying tax increases on "the rich" and on smallbusiness owners. But we've still more downhill terrain to cover. What constitutes an "acceptable" health plan (to use the paternalistic language contained in the House bill)? Which providers, health facilities, treatments, and drugs will be covered? What about coverage for certain diseases and medical conditions? With so much at stake, every interest group in Washington will spare no expense to get its treatment, medical technology, or

pharmaceutical product included in the laundry list of benefits that insurers will be required to offer. Of course, Congress will succumb to the Washington lobbying community and add dozens of mandated benefits to any government-sanctioned plan. Each mandate, of course, adds to the cost of coverage, putting further pressure on consumers and on the taxpayers who will be asked to pony up in order to "offset" these higher costs. Ultimately, the Left's "scaled back" version of health-care reform will sprout other ominous features. For starters, we'll need armies of federal bureaucrats to draw up and enforce thousands of pages of new insurance regulations. And then we'll need some government muscle to enforce the individual and employer mandates -- everything from penalties, fees, and fines to the use of collection agencies and garnishment of wages. As candidate Obama himself said: "Without an enforcement mechanism, there is no mandate. It's just a political talking point." So there we have it: the slippery slope of health reform. Drop the controversial notion of a public plan. Ask for the voters' forgiveness. Scale back the ambition, and tone down the rhetoric. Return with a "constrained" package limited to a few "consumer-friendly" regulations on insurers. And, before you know it, Mr. Liberal Reformer, you're back where you always wanted to be, the proud proponent of a massive legislative and regulatory overhaul that registers 9.5 on the political Richter Scale. Beware the modest proposals of extreme leftists. Mike Franc is Vice President for Government Relations at The Heritage Foundation.

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Johns Hopkins Medicine CEO: Obamacare Will Have “Catastrophic Effects” on Health-Care Safety-Net

Posted December 7th, 2009 at 2:40pm in Health Care with 13 comments Dean and CEO of Johns Hopkins Medicine Edward Miller writes in the Wall Street Journal: Both the House and Senate health-care reform bills call for a large increase in Medicaid —about 18 million more people will begin enrolling in Medicaid under the House bill starting in 2013, Centers for Medicare and Medicaid Services (CMS) Actuary Richard Foster estimates. … A flood of new patients will be seeking health services, many of whom have never seen a doctor on more than a sporadic basis. Some will also have multiple and costly chronic conditions. And almost all of them will come from poor or disadvantaged backgrounds. … We’ll meet the demands placed on us because serving poor and disadvantaged populations is part of our century-old mission. But without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement the current health-care legislation will have catastrophic effects on those of us who provide society’s health-care safety-net. In time, those effects will be felt by all of us. Read Miller’s entire op-ed here. Or Read the article below. Abortion, the public option, and the individual and employer mandates are all important issues in the health care debate. But Miller’s op-ed reminds us that not enough attention has been paid to the fact that in both the House and Senate bills, almost half of all new insurance coverage gained through “reform” is actually accomplished through expansion of Medicaid eligibility requirements. The only reason Medicaid carries such a heavy load under Obamacare is because the Congressional Budget Office scores it as an inexpensive way too expand health insurance coverage. But Medicaid does not provide ideal health care. That is why single payer advocates push for “Medicare for All” not “Medicaid for All” … which is what Obamacare may actually deliver.

Go here to see a larger, printable PDF of the chart.

______________________________________________ Health Reform Could Harm Medicaid Patients

A vast expansion of the program will impose unsustainable costs on treatment centers.
By EDWARD MILLER
Baltimore, Md. Both the House and Senate health-care reform bills call for a large increase in Medicaid—about 18 million more people will begin enrolling in Medicaid under the House bill starting in 2013, Centers for Medicare and Medicaid Services (CMS) Actuary Richard Foster estimates.

We at Johns Hopkins Medicine (JHM) endorse efforts to improve the quality and reduce the cost of health care. But we also understand all too well the impact a dramatic expansion of Medicaid will have on us and our state—and likely the country as a whole. A flood of new patients will be seeking health services, many of whom have never seen a doctor on more than a sporadic basis. Some will also have multiple and costly chronic conditions. And almost all of them will come from poor or disadvantaged backgrounds. We know this because we've been caring for Medicaid patients in a managed-care setting for 14 years, as well as providing world-class care to people from all over the country and the world. Our experience provides a glimpse of the acute cost bubble that the health-care system will suffer with the reforms now being proposed. Like Intermountain Healthcare in Utah, Geisinger Medical Center in Pennsylvania, and the Mayo Clinic, where, as President Barack Obama notes, "people fly from all over the world to Rochester, Minnesota in order to get outstanding care," people also fly from all over the world to obtain care from JHM. But unlike those other institutions, we also serve a large number of people who can't afford cab fare to the nearest hospital: poor, disadvantaged individuals, 150,000 of whom are in our Medicaid managed-care program, Priority Partners.

Priority Partners operates under a capitated system—that is, it receives a set payment per individual per month from the state. Over time, we've developed the

ability to manage the care of these individuals in a way that is both cost effective and that provides them with quality care. We've done it by tapping into our extensive delivery system, which includes four hospitals, a nursing home, the largest community-based primary care group in Maryland, and much more. We've hit above-national benchmarks on all clinical quality measures for our dialysis patients, reduced monthly costs for patients with substance abuse and highly complex medical needs, and 70% of our patients tell us they're satisfied with our care. But the learning curve has been costly and steep, and provides a cautionary tale for what will happen under the health-care reforms currently in Congress. The key fact is that for years the state did not cover all the costs our Medicaid program incurred. As a result of new patients whose costs were not completely covered by the state, Priority Partners lost $57.2 million from 1997 to 2005.

OpinionJournal Related Stories:
The Worst Bill Ever Health Costs and History Max's Mad Mandate Jeffrey Flier: Health 'Reform' Gets a Failing Grade We stanched the losses by ensuring that the payment from the state was appropriately risk adjusted to match the health conditions of our members, and by investing heavily in primary-care and care-management and disease-management programs. Yet this past year the losses began again, because the state expanded the program's eligibility to 116% of the federal poverty level up from 40%. So we are struggling with a large group of new patients—about 30,000 people. Today, like in the late 1990s, a health-care surge is overwhelming our managed-care system. The capitated rate for the new beneficiaries is not yet risk-adjusted. Priority Partners has lost a devastating $15 million in just nine months. In time, we will be able to provide cost-effective, quality care to these new patients. But it will take years and careful management to, in the administration's phrase, "bend the cost curve down." Congress can help, or at least learn from our experience to use the reform legislation to bend the cost curve if it encourages other states to institute and appropriately fund capitated systems that allow capable providers to adjust payments based on risk. There is nothing in the House or Senate legislation that does that now, even as both bills will expand Medicaid. We believe our example in Maryland can be replicated around the country. One such concept—the Healthcare

Innovation Zone, currently in the Senate bill—envisions a regional alliance of an academic medicate center, local hospitals, and physicians that coordinate and deliver the entire spectrum of patient-centric care in ways that reward quality. The key is that federal support to states for Medicaid must appropriately adjust rates to match the risk of providing health care to the group of people who are covered by Medicaid. The Senate bill would increase eligibility for Medicaid to those who make 133% or less of the federal poverty level. The Kaiser Family Foundation reports there are 308,000 people who meet that threshold in Maryland. Even if only half of those individuals seek Medicaid coverage, such a large expansion would likely have an excruciating impact on the state's budget. And Maryland is not alone. According to a Kaiser Foundation survey conducted earlier this year, three-quarters of the states have expressed concern that expanding Medicaid could add to their fiscal woes. Already, as Kaiser notes, 33 states cut or froze payment rates to those who deliver health care to Medicaid patients in fiscal year 2009; even more states (39) are slated to cut or freeze rates for fiscal year 2010. We'll meet the demands placed on us because serving poor and disadvantaged populations is part of our century-old mission. But without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement the current health-care legislation will have catastrophic effects on those of us who provide society's health-care safety-net. In time, those effects will be felt by all of us. Dr. Miller is dean and CEO of Johns Hopkins Medicine. http://online.wsj.com/article/SB10001424052748703939404574567981549184844.html

______________________________________________ Health 'Reform' Gets a Failing Grade

The changes proposed by Congress will require more draconian measures down the road. Just look at Massachusetts.
By JEFFREY S. FLIER
As the dean of Harvard Medical School I am frequently asked to comment on the health-reform debate. I'd give it a failing grade.

Instead of forthrightly dealing with the fundamental problems, discussion is dominated by rival factions struggling to enact or defeat President Barack Obama's agenda. The rhetoric on both sides is exaggerated and often deceptive. Those of us for whom the central issue is health—not politics—have been left in the lurch. And as controversy heads toward a conclusion in Washington, it appears that the people who favor the legislation are engaged in collective denial. Our health-care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. And deep flaws in Medicare and Medicaid drive spending without optimizing care. Speeches and news reports can lead you to believe that proposed congressional legislation would tackle the problems of cost, access and quality. But that's not true. The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost—and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform.

In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value.

Worse, currently proposed federal legislation would undermine any potential for real innovation in insurance and the provision of care. It would do so by overregulating the health-care system in the service of special interests such as insurance companies, hospitals, professional organizations and pharmaceutical companies, rather than the patients who should be our primary concern. In effect, while the legislation would enhance access to insurance, the trade-off would be an accelerated crisis of health-care costs and perpetuation of the current dysfunctional system—now with many more participants. This will make an eventual solution even more difficult. Ultimately, our capacity to innovate and develop new therapies would suffer most of all. There are important lessons to be learned from recent experience with reform in Massachusetts. Here, insurance mandates similar to those proposed in the federal legislation succeeded in expanding coverage but—despite initial predictions— increased total spending. A "Special Commission on the Health Care Payment System" recently declared that the Massachusetts health-care payment system must be changed over the next five years, most likely to one involving "capitated" payments instead of the traditional fee-for-service system. Capitation means that newly created organizations of physicians and other health-care providers will be given limited dollars per patient for all of their care, allowing for shared savings if spending is below the targets. Unfortunately, the details of this massive change—necessitated by skyrocketing costs and a desire to improve quality—are completely unspecified by the commission, although a new Massachusetts state bureaucracy clearly will be required. Yet it's entirely unclear how such unspecified changes would impact physician practices and compensation, hospital organizations and their capacity to invest, and the ability of patients to receive the kind and quality of care they desire. Similar challenges would eventually confront the entire country on a more explosive scale if the current legislation becomes law. Selling an uncertain and potentially unwelcome outcome such as this to the public would be a challenging task. It is easier to assert, confidently but disingenuously, that decreased costs and enhanced quality would result from the current legislation. So the majority of our representatives may congratulate themselves on reducing the number of uninsured, while quietly understanding this can only be the first step of a multiyear process to more drastically change the organization and funding of health care in America. I have met many people for whom this strategy is conscious and explicit. We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.

Dr. Flier is dean of the Harvard Medical School.

http://online.wsj.com/article/SB100014240527487044318 04574539581994054014.html ______________________________________________ The Worst Bill Ever

Epic new spending and taxes, pricier insurance, rationed care, dishonest accounting: The Pelosi health bill has it all.
Speaker Nancy Pelosi has reportedly told fellow Democrats that she's prepared to lose seats in 2010 if that's what it takes to pass ObamaCare, and little wonder. The health bill she unwrapped last Thursday, which President Obama hailed as a "critical milestone," may well be the worst piece of post-New Deal legislation ever introduced. In a rational political world, this 1,990-page runaway train would have been derailed months ago. With spending and debt already at record peacetime levels, the bill creates a new and probably unrepealable middle-class entitlement that is designed to expand over time. Taxes will need to rise precipitously, even as ObamaCare so dramatically expands government control of health care that eventually all medicine will be rationed via politics. Yet at this point, Democrats have dumped any pretense of genuine bipartisan "reform" and moved into the realm of pure power politics as they race against the unpopularity of their own agenda. The goal is to ram through whatever income-redistribution scheme they can claim to be "universal coverage." The result will be destructive on every level— for the health-care system, for the country's fiscal condition, and ultimately for American freedom and prosperity.

•The spending surge. The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of the money goes into government-run "exchanges" where people earning between 150% and 400% of the poverty level—that is, up to about $96,000 for a family of four in 2016—could buy coverage at heavily subsidized rates, tied to income. The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth. At least at first, these benefits would be offered only to those whose employers don't provide insurance or work for small businesses with 100 or fewer workers. The taxpayer costs would be far higher if not for this "firewall"—which is sure to cave in when people see the deal their neighbors are getting on "free" health care. Mrs. Pelosi knows this, like everyone else in Washington. Even so, the House disguises hundreds of billions of dollars in additional costs with budget gimmicks. It "pays for" about six years of program with a decade of revenue, with the heaviest costs concentrated in the second five years. The House also pretends Medicare payments to doctors will be cut by 21.5% next year and deeper after that, "saving" about $250 billion. ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow more after that. • Expanding Medicaid, gutting private Medicare. All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years. Mrs. Pelosi wants to steal $426 billion from future Medicare spending to "pay for" universal coverage. While Medicare's price controls on doctors and hospitals are certain to be tightened, the only cut that is a sure thing in practice is gutting Medicare Advantage to

the tune of $170 billion. Democrats loathe this program because it gives one of out five seniors private insurance options. As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level, meaning that some 15 million new people will be added to the rolls as private insurance gets crowded out at a cost of $425 billion. A decade from now more than a quarter of the population will be on a program originally intended for poor women, children and the disabled. Even though the House will assume 91% of the "matching rate" for this joint state-federal program—up from today's 57%—governors would still be forced to take on $34 billion in new burdens when budgets from Albany to Sacramento are in fiscal collapse. Washington's budget will collapse too, if anything like the House bill passes. • European levels of taxation. All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point "surcharge" on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. The burden will mostly fall on the small businesses that have organized as Subchapter S or limited liability corporations, since the truly wealthy won't have any difficulty sheltering their incomes. This surtax could hit ever more earners because, like the alternative minimum tax, it isn't indexed for inflation. Yet it still won't be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion. When Democrats end up soaking the middle class, perhaps via the European-style value-added tax that Mrs. Pelosi has endorsed, they'll claim the deficits that they created made them do it. Under another new tax, businesses would have to surrender 8% of their payroll to government if they don't offer insurance or pay at least 72.5% of their workers' premiums, which eat into wages. Such "play or pay" taxes always become "pay or pay" and will rise over time, with severe consequences for hiring, job creation and ultimately growth. While the U.S. already has one of the highest corporate income tax rates in the world, Democrats are on the way to creating a high structural unemployment rate, much as Europe has done by expanding its welfare states. Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won't buy insurance in 2019. Democrats could make this penalty even higher, but that is politically unacceptable, or they could make the subsidies even higher, but that would expose the (already ludicrous) illusion that ObamaCare will reduce the deficit. • The insurance takeover. A new "health choices commissioner" will decide what counts as "essential benefits," which all insurers will have to offer as first-dollar coverage. Private insurers will also be told how much they are allowed to charge even as they will

have to offer coverage at virtually the same price to anyone who applies, regardless of health status or medical history. The cost of insurance, naturally, will skyrocket. The insurer WellPoint estimates based on its own market data that some premiums in the individual market will triple under these new burdens. The same is likely to prove true for the employer-sponsored plans that provide private coverage to about 177 million people today. Over time, the new mandates will apply to all contracts, including for the large businesses currently given a safe harbor from bureaucratic tampering under a 1974 law called Erisa. The political incentive will always be for government to expand benefits and reduce costsharing, trampling any chance of giving individuals financial incentives to economize on care. Essentially, all insurers will become government contractors, in the business of fulfilling political demands: There will be no such thing as "private" health insurance. *** All of this is intentional, even if it isn't explicitly acknowledged. The overriding liberal ambition is to finish the work began decades ago as the Great Society of converting health care into a government responsibility. Mr. Obama's own Medicare actuaries estimate that the federal share of U.S. health dollars will quickly climb beyond 60% from 46% today. One reason Mrs. Pelosi has fought so ferociously against her own Blue Dog colleagues to include at least a scaled-back "public option" entitlement program is so that the architecture is in place for future Congresses to expand this share even further. As Congress's balance sheet drowns in trillions of dollars in new obligations, the political system will have no choice but to start making cost-minded decisions about which treatments patients are allowed to receive. Democrats can't regulate their way out of the reality that we live in a world of finite resources and infinite wants. Once health care is nationalized, or mostly nationalized, medical rationing is inevitable—especially for the innovative high-cost technologies and drugs that are the future of medicine. Mr. Obama rode into office on a wave of "change," but we doubt most voters realized that the change Democrats had in mind was making health care even more expensive and rigid than the status quo. Critics will say we are exaggerating, but we believe it is no stretch to say that Mrs. Pelosi's handiwork ranks with the Smoot-Hawley tariff and FDR's National Industrial Recovery Act as among the worst bills Congress has ever seriously contemplated. http://online.wsj.com/article/SB10001424052748703399204574505423751140690.htm l

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James Frogue & Elizabeth Noelcke On Healthcare Fraud is Worse Than You Think

Posted August 12th, 2009 at 10:30am in Health Care with 21 comments One key area that has been totally ignored in healthcare debate is the jaw-dropping amount of fraud and abuse in the Medicare and Medicaid programs. We at the Center for Health Transformation believe that $100 billion a year is a conservative estimate. Our new book, “Stop Paying the Crooks” outlines examples of that waste and offers dozens of suggestions on how to fix the problems. Consider just two examples: In January, 2009 the Government Accountability Office issued a report that said $32 billion of improper payments were made in the Medicaid program in 2007. Last year, Senator Charles Grassley of Iowa estimated that there is $60 billion in waste, fraud and abuse in Medicare annually. And now the Obama Administration and Congressional leaders want to create another government-run program along the same model. The Miami Herald reported last summer that Miami-Dade County submitted bills to Medicare for HIV infusion therapy that were 22 times higher than the rest of the country combined. There are more home health agencies in Miami Dade as of this spring than in the entire state of California. When the Office of Inspector General conducted unannounced visits to 1,581 durable medical equipment supplier in South Florida in 2007, 491 either didn’t exist or were not staffed. An important step toward real reform is to fight fraud first. A recent Zogby poll asked Americans what is their preferred way to pay for the modernization of healthcare. The biggest response, at 88 percent, was “eliminate fraud,” well-ahead of “standardize administrative forms” at 77 percent and “reduce medical errors,” at 72 percent. A second poll by Insider Advantage found that the majority of respondents – 61 percent – felt that Congress should address fraud and abuse in Medicare and Medicaid before enacting a new government-run plan. Only 27 percent thought the opposite was fine. And yet the two current bills in the House do nothing to effectively combat fraud. Indeed, the CBO score of the bill passed out of the House Ways and Means Committee contains across-the-board zeros in savings from anti-fraud efforts across ten key metrics for the next decade. It is unfathomable that the current Congressional leadership is so out-oftouch with reality. Thus far, their efforts represent an enormous missed opportunity to divert scarce taxpayer dollars away from thieves. Consider another massive and highly complex industry and how well it fights fraud relative to health care. The credit card industry handles over $2 trillion a year in billing, involves 700 million credit cards, millions of vendors, and countless products available for purchase. Their rate of fraud is below one-tenth of one percent, making fraud in Medicare and Medicaid at least 100 times higher. As legislators spend August poring over healthcare legislation constituents and experts alike it is incumbent on them to take seriously the issue of fraud in our existing programs.

Simple steps that cost virtually nothing to deploy would begin saving billions instantly. Aggressive use of predictive modeling for payments common in the commercial market, requiring enhanced coordination of benefits and identification of third party coverage particularly in Medicaid, and flagging the Medicare ID numbers billing in the highest 1 percent for further scrutiny would be a good start. Simply adding the line “under penalty of perjury” to CMS form 855 that prospective suppliers to Medicare must fill out would be a big step in the right direction. Unfortunately, it appears that the people who run Medicare and Medicaid are pathologically incapable of dealing with fraud and abuse in any serious way. We at the Center for Health Transformation continue to actively gather the most egregious stories of fraud and the most effective actions for eliminating it. It is our hope that you will join our efforts to ensure that policymakers in Washington and in state capitals from coast to coast take this issue with the gravity it deserves. Before creating a new government-run health care program, increasing spending on those we’ve got, or raising taxes, let’s fight fraud first. James Frogue is Vice President of the Center for Health Transformation where Elizabeth Noelcke is the State Project Coordinator. Please visit www.healthtransformation.net for more anti-fraud action items, as well as information about the latest CHT Press Book, Stop Paying the Crooks, edited by James Frogue. The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.

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Obama’s Health Plan – Taxes, Taxes Everywhere
Posted February 24th, 2010 at 12:59pm in Entitlements, Health Care with 3 comments The White House recently released President Obama’s health care reform proposal. The plan incorporates a mixture of the many tax increases passed by the House and Senate, hiking taxes by almost $750 billion over ten years. This is on top of $1.3 trillion in other tax increases the President recently proposed in his 2011 budget. Not that there is ever a good time to raise taxes, but doing so as the economy is still emerging from a deep recession is particularly ill-advised and will likely prolong full recovery. Moreover, the President’s proposal deviates from his stated goal to address the soaring spending and debt problem the nation faces by piling on massive new spending and taxes. Payroll tax hikes: Obama accepted the Senate’s plan to break long-held policy by raising the Hospital Insurance (HI) portion of the payroll tax on high-income earners to pay for a new and unrelated health care entitlement. He then doubled-down on this

dangerous new precedent by separately applying the HI tax to investment income for the first time. The tax code already taxes investment too much. Higher taxes still on dividends, interest and business income increases the cost of capital which will further depress investment and thus job creation. Ironic to propose this at the very time the President wants employers to create jobs. Medicare payroll tax would hit seniors: His proposed tax hike on investment will hammer seniors particularly hard because their investment income is a major supplement to their pension and Social Security checks. Seniors also sell assets to raise income, so raising the tax on capital gains further reduces their resources. Lastly, raising the taxes on capital income and capital gains will lower asset values. Nearly 30 percent of all stocks are held in retirement savings plans. Most of the seniors that rely on the income from these plans for their livelihood are not “fat cat” investors that have been the target of other populist tax hikes. They are people that spent their working years saving money for their own retirement in mutual funds, 401(k)s, IRAs, and other savings vehicles. This would just punish them for a lifetime of careful planning and saving. Cadillac tax: The President also adopted an excise tax on “Cadillac” health insurance plans similar to that in the Senate plan. Obama’s proposal would levy a 40% tax on plans that cost over $10,200 a year for individuals and $27,500 for families, but wouldn’t be effective until 2018. The delay will no doubt give unions and other favored groups time to negotiate their way out of the tax through collective bargaining or gain a complete legislative exemption at some point in the future before the tax kicks in. It also means delaying political pain. All the same criticisms of the excise tax apply as before. For example, insurers will embed the tax in the price of their plans. This will hide its cost from their customers. The tax will also fall heavily on middle and low-income workers whose taxes President Obama pledged not to increase. The President would have been better off capping the value of health insurance employers can provide their employees tax free. This is something that has wide support among policy experts on the right and the left and would be a real show towards openness to the bipartisan ideas he is purporting. Still more taxes: Just like the Senate and the House, his plan incorporates a multitude of other tax hikes and fees that will go towards paying for the monstrously expensive bill. Some will raise taxes on people making less than $250,000 a year, breaking a key campaign pledge. Prime examples include: • Excise tax on medical device manufacturers; • Fee on brand name pharmaceuticals; • 10 percent tax on tanning services; • Reduce the amount families can place in Flexible Spending Accounts (FSA) and increase the penalties for non-medical deductions from Health Savings Accounts (HSA); and • Higher taxes on health insurance companies and producers of medicine.

Each of these taxes will fall explicitly on those making less than $250,000 or will be passed down to them. And this is just a sample of the taxes that will hit those making less than $250,000 in the President’s plan. There are many more. In fact, the mandate on all individuals to purchase health insurance could also be considered another steep tax hike on those making less than $250,000. Bottom Line: There is never a good time to raise taxes, but even the talk of doing so now continues to cause uncertainty in the economy. Sadly, the President’s plan is no better than those of the House or Senate: massive new benefits paid for by a myriad of harmful new taxes. Better to drop this plan and start over. Without crushing new taxes. http://blog.heritage.org/2010/02/24/obama%E2%80%99s-health-plan-taxes-taxeseverywhere

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Obama’s Health Plan Has Dangerous New Taxes
Posted February 23rd, 2010 at 6:35pm in Entitlements, Health Care with 20 comments

The health care plan President Obama recently released is mostly a combination of the different plans passed by the House of Representatives and the Senate. But in one major way it breaks with long-standing precedent, proposing a fundamental wrong-headed change to both entitlement policy and tax policy. He proposes for the first time to tax capital income to support entitlement programs. Payroll taxes have always applied just to wages and salaries and the revenue those taxes raise has gone solely to pay for entitlements like Social Security and Medicare. The deal has always been that we pay payroll taxes during our working years and receive the

benefits they fund after we retire. President Obama’s health care plan would shatter this compact forever. The Hospital Insurance (HI) portion of the payroll tax is 2.9 percent on all wages and salary that is paid half (1.45 percent) by workers and half (the remaining 1.45 percent) by employers. It is supposed to pay only for the hospital insurance portion of Medicare benefits that retirees receive. President Obama’s plan adopts this break with long-held policy and doubles down by further severing the link between HI and Medicare benefits. Obama’s plan not only increases the HI tax on wages and salaries for high-income earners similar to the Senate bill, it also applies the HI tax to investment income for the first time. Obama’s unprecedented plan would levy the current 2.9 percent HI tax on what the administration obnoxiously refers to as “unearned” income, which includes capital gains, interest, dividends, annuities, royalties and rents for families earning more than $250,000 a year ($200,000 for single filers). Applying the HI tax to investment income would also continue to transform entitlements and how they are paid for. Using the revenue raised by levying the HI tax on investment income would open the floodgates for future rate increases to pay for other new spending programs. Adding a new revenue stream for Congress to tap when it needs more money is always dangerous and should be resisted at all costs, otherwise expanding government will be too easy for Congress. Yet this is likely the reason President Obama wants to levy the HI tax on investment. Applying the HI tax separately to investment income will forever give Congress yet another tax to hike whenever it wants to fund a new program. If Congress can raise payroll taxes easily to pay for any spending it desires, payroll taxes will no longer be used to pay for entitlements, but as an ATM for Congress to go back each time it needs more cash. http://blog.heritage.org/2010/02/23/obama%E2%80%99s-health-plan-hasdangerous-new-taxes/

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The President Health Proposal: Taxing Investment Income
Posted February 25th, 2010 at 5:00pm in Health Care with 8 comments

In preparation for today’s bipartisan Health Care Summit, President Obama released his own version of health care reform earlier this week. The President’s proposal includes several high-ticket provisions for expanding coverage. Since he has promised time and again not to raise taxes on the middle-class in order to pay for health care reform, the President’s bill imposes a Medicare tax on the investment income of high-individuals to off-set some of the cost of expanding Medicaid and financing other provisions of his health agenda. But, as Heritage analysts Karen Campbell and Guinevere Nell explain in a recent paper, these new taxes would have widespread adverse effects for all Americans, not just the wealthy that they target. This is partially due to the very nature of a tax: “A well-established economic regularity is that if you tax something, you get less of it. For example, policymakers in the Senate recently proposed a tax on “Cadillac” health insurance plans. The justification was that it would not only generate revenue to help pay for subsidized insurance but also reduce demand for high-priced premiums, putting downward pressure on all health insurance premiums.” The Cadillac health insurance plan tax is intended to reduce the usage of high-cost insurance plans. Similarly, the President’s proposal’s tax on tanning beds discourages their use; the same is the case with cigarette taxes. In several instances, taxes are imposed as punitive measures. So why on earth would the President impose a tax that would discourage investment, delaying recovery from the current economic downturn? Moreover, Campbell and Nell lay out several ways in which this tax would hit average American households hard. First, the tax would reduce overall household wealth of American families by $274 billion per year. “The value of the investment portfolios of many households–not just the high-income households that directly pay the tax–are reduced by the tax on investment income.”

Second, reducing investment would decrease capital in the U.S. economy, which would reduce potential for economical growth. This affects not only the rate of job creation and wage increase: it would have a dramatic effect on the ability of the federal government to borrow money. According to Campbell and Nell, “A lower U.S. economic potential also harms the ability of the government to borrow, because investors lend to the U.S. based on the expected potential of the U.S. economy. Thus a lower potential economy puts upward pressure on government interest rates in order to attract financing for the nation’s deficit.” Raising government interest rates will add further to the financial burden on taxpayers. “Because investment is what drives productivity and economic growth, less investment– even if only slightly less–leads to lower productivity, slower economic growth, weaker wages and salaries, and lower household wealth. How much less depends on the underlying supply and demand for investment.” President Obama’s health care proposal would expand health coverage—but is the detriment to the U.S. economy and the burden on the taxpayer worth the cost?

______________________________________________ Gov. Brewer: Arizona Cannot Afford Unconstitutional ObamaCare

Posted by Arizona Tea Party on March 18, 2010 at 7:00am

Gov. Brewer Writes Anti-Health Bill Letter
Updated: Wednesday, 17 Mar 2010, 9:50 PM MDT Published : Wednesday, 17 Mar 2010, 9:47 PM MDT PHOENIX - Arizona Governor Jan Brewer sent a letter to House Speaker Nancy Pelosi and Majority Leader Larry Reid Wednesday, challenging the President's health care bill. She says, "Arizona simply cannot afford the unfunded mandate that will result from this legislation and outlined the disproportionate impact it will have on Arizona citizens." She also notes that the expansive health care bill will rob citizens of their individual liberties and rights. "By requiring all citizens to purchase health insurance or be penalized, this bill would impose on the people an unprecedented mandate by the federal government."

________________________ The full letter:

On December 30, 2009, the Attorneys General from several states wrote you expressing grave concerns about the Senate version of the Patient Protection and Affordable Care Act (H.R. 3590). Although amendments have been made to this bill since then, the primary constitutional defects remain. It is reported that Democratic Congressional leaders intend to move forward with legislation that uses this bill as its starting point. I therefore, on behalf of the State of Arizona, join these Attorneys General and urge you to reject H.R. 3590 and any legislation that contains similar legal deficiencies. As Governor and the statutory officer authorized to communicate with Congress on behalf of the State of Arizona, I have contacted Arizonas delegation on more than one occasion expressing my serious policy concerns with H.R. 3590. Last week I wrote President Obama and told him quite clearly that Arizona simply cannot afford the unfunded mandate that will result from this legislation and outlined the disproportionate impact it will have on Arizona citizens. The devastating impacts of the federal legislation will rob Arizonans of their rights and pocketbooks alike. One of the core principles of our nations system of government is the critical balance between the power of the federal government and the protection of individual liberties. The constitutional framers granted Congress only certain enumerated powers and provided that all other powers are reserved to the states or the people pursuant to the Tenth Amendment. H.R. 3590 represents a sweeping violation of these fundamental principles established by the founding fathers. By requiring all citizens to purchase health insurance or be penalized, this bill would impose on the people an unprecedented mandate by the federal government. As emphasized by the non-partisan Congressional Budget Office: The government has never required people to buy any good or service as a condition of lawful residence in the United States. This mandate violates the founders intent to limit the intrusion of the federal government upon the rights of the individual.

The Commerce Clause is erroneously cited as a legitimate basis for Congress to impose the requirement to purchase insurance. As you are aware, the congressional power to regulate commerce is not without limits. The sole basis for claiming constitutional authority under the Commerce Clause is seemingly derived by coercing Americans to engage in commerce through the purchase of insurance and then regulating that coerced transaction. Even the non-partisan and independent Congressional Research Service raised serious concerns about the constitutionality of this proposal, noting that it may very well go beyond the bounds of the Commerce Clause. I must also strenuously object to the benefit exchanges the proposed legislation would impose upon states. H.R. 3590 requires states to either enact state legislation and regulations to implement these exchanges or be forced to allow the Secretary of Health and Human Services to take over and do it for them. This requirement is not a condition to receive federal funding, but rather an absolute mandate to the states in direct contravention of the Tenth Amendment. For the foregoing reasons, I will coordinate with the other State Attorneys General on behalf of the State of Arizona to challenge H.R. 3590 or any health care proposal that becomes law with any of the unconstitutional provisions I have outlined in this letter. Thank you on behalf of the citizens of Arizona for your consideration of these matters. Sincerely, Janice K. Brewer Governor
********* http://arizonateaparty.ning.com/profiles/blogs/gov-brewer-arizona-cannot

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An Entitlement Certain to Grow
Posted January 7th, 2010 at 1:14pm in Health Care with 2 comments

One of the main arguments President Barack Obama and other Democrats have made on behalf of the health care bills that have passed the House and the Senate is that they would reduce the federal budget deficit in the coming decade and in the years following as well. Their claim is backed up by the official cost estimates provided by the Congressional Budget Office that show modest improvements in the budget outlook through 2019 if the bills become law. But there are important reasons to be very skeptical that a final health care bill will improve the nation’s budget outlook, both in the short and the long term. For starters, neither bill addresses the impending cut in the fees paid to physicians under the Medicare program. There is bipartisan opposition to these cuts, but the cost of fixing the problem would exceed $200 billion over 10 years. Consequently, congressional Democrats aren’t providing a permanent solution in the health care bills; they are in effect understating the cost of the reform program they have promised to deliver. If the so-called “doc fix” were included in the accounting, the health care reform effort would no longer be a deficit reducer at all. In addition, CBO expects the financing provisions of the bill to produce revenue and spending reductions that more than offset the growing cost of the new health entitlement expansions contemplated in the legislation. That would be no small feat, because the entitlement spending is expected to increase at a very rapid rate indeed, just as Medicare and Medicaid spending have for more than four decades. By 2019, the Medicaid expansion and the subsidies for health-insurance premiums in the exchanges are expected to cost about $200 billion annually, and grow at an eight percent rate every year thereafter. On paper, of course, CBO is right. The “pay fors” would grow at an equally rapid rate, as they are currently written in the bills. But that’s only because they assume key indexing provisions that function like a tightening of the vise over time. The House bill includes a new surtax for upper income taxpayers, while the Senate passed an increase in the Medicare payroll tax for high earners as well as a new excise tax on high-cost insurance plans. In all instances, the thresholds used to determine tax liability would be set in ways that capture more taxpayers over time. The threshold for application of the Medicare payroll tax hike — $200,000 for individuals — would not be indexed at all to keep up with inflation. Nor would the House-passed income-tax surtax. Meanwhile, the threshold for what constitutes a “high-cost” insurance plan would be indexed below expected medical inflation. Consequently, in 10 or 15 years’ time, many more Americans would find themselves in plans deemed to be unacceptably costly. CBO also gives both the House and Senate bills credit for substantial savings in the Medicare program. A large part of that would come from shaving off a half percentage point every year from the normal Medicare inflation update for hospitals and other service providers; that annual cut assumes improvements in productivity.

Both the Chief Actuary of the Department of Health and Human Services, as well as CBO, have essentially raised serious doubts about whether such a perpetual cut in payment rates can be sustained without leading large numbers of hospitals and other service suppliers to drop out of the Medicare program, and thus harm beneficiary access to timely care. Nonetheless, that’s what the House and Senate sponsors of the health legislation are relying on when they claim their bills will improve the nation’s fiscal standing. But even if all of the offsets work out as planned, which is not likely, the House and Senate bills would still create substantial budgetary risks because of the pressures for entitlement expansion they would unleash. Both bills assume the new entitlement spending can be held down with the so-called “firewall” provisions. These are the rules that essentially preclude individuals from gaining access to premium subsidies available in the exchanges. If an employer offers “qualified” insurance coverage to a worker, the employee really has no choice but to take it if he wants to avoid paying the penalty for going uninsured. But these rules would create large disparities in the federal subsidies made available to workers inside and outside the exchanges. Gene Steuerle of the Urban Institute has calculated that, under the Senate bill, a family of four with an income of $60,000 with employer-sponsored health care would get $4,500 less in federal support outside of the exchange than a similar family inside the exchange would get in 2016. And there would be many tens of millions more families outside the exchange than in it, according to CBO. Today, there are about 127 million Americans under the age of 65 with incomes between 100 and 400 percent of the federal poverty line, but CBO expects only about 18 million people will be getting exchange subsidies in 2016. If enacted as currently written, it’s entirely predictable what would happen next. Pressure would build to treat all Americans fairly, regardless of where they get their insurance. One way or another, the subsidies provided to those in the exchanges would be made more widely available, driving the costs of reform well above the $900 billion limit the administration has set for the initiative. The president has said that he wants a health reform bill in large part because it’s necessary to get better control of the federal budget. But the bills that have been developed in Congress fall far short of his stated objective. The new entitlement expansions are certain to occur, followed quickly by irresistible pressure to make them even more widely available and generous. Meanwhile, Congress would have to show heroic restraint to allow the tax increases and spending cuts to play out as written. That’s a recipe for another unfunded federal program.

http://blog.heritage.org/2010/01/07/an-entitlement-certain-togrow/
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As Heritage experts have pointed out, there are major differences between the Senate and House Health Reform Bills. The Tri-Committee House Staff recently compiled a document highlighting the major differences, entitled “House-Senate Comparison of Key Provisions”, which can be found here.

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JCT Says Obama Health Plan is a $414 Billion Tax Hike
Posted February 25th, 2010 at 3:43pm in Entitlements, Health Care with 4 comments President Obama keeps rolling out the tax hikes. In his budget released earlier this month, excluding the tax hikes he assumed to pay for health care, he called for $1.3 trillion in higher taxes over the next decade. Now in his recently released health reform plan, he calls for even more tax increases. Today, the Joint Committee on Taxation (JCT) released their analysis of the tax increases in the President’s plan. According to the JCT, the plan will raise taxes by another $414 billion between 2010 and 2019. The taxes the President Obama proposed hiking are as follows (the year the tax kicks in and the amount the tax will raise between 2010 and 2019 are in parentheses):
• • • •

• •

Require information reporting on payments to corporations (2011 – $17.1 billion) Exclusion of unprocessed fuels from the cellulosic biofuel produce credit (immediately upon passage – $23.9 billion) Codify economic substance doctrine and impose penalties for underpayments (immediately upon passage – $4.9 billion) Increase Hospital Insurance portion of the payroll tax and apply it to investment income for families earning more than $250,000 a year ($200,000 for single filers) (2012 – $183.6) Excise tax on “Cadillac” insurance plans valued at more than $10,200 for individuals and $27,500 for families (2018 – $32.7 billion)* Impose annual fee on manufacturers and importers of branded drugs (2011 – $33.4 billion)* Impose excise tax on manufacturers and importers of medical devices (2012 – $20 billion)*

• • • • • • • •

Impose annual fee on health insurance companies (2014 – $59.5 billion)* Excise tax on indoor tanning services (2010 – $2.7 billion)* Limit Health Savings Accounts (HSA) (2011 – $5.0 billion)* Increase taxes on unqualified distributions from HSAs (2011 – $1.4 billion)* Limit Flexible Spending Accounts (FSA) (2014 – $11.4 billion)* Eliminate deduction of expenses allocable to Medicare Part D subsidy (2012 – $2.6 billion)* Limit deductions for medical expenses (2013 – $15.2 billion)* Higher taxes on compensation above $500,000 paid to officers, employees, directors and service providers of covered health insurance providers (2013 – $0.6 billion) Higher taxes on certain health organizations (2010 – $0.4 billion)*

The taxes with the (*) will directly apply, or will be passed on to, families earning less than $250,000 a year. This is a contradiction of President Obama’s campaign pledge not to raise taxes on these families. Almost all of these taxes came out of the separate bills passed by the House of Representatives and the Senate. The only new tax the President proposed is applying the Hospital Insurance (HI) portion of the payroll tax to investment income for the first time. This would be a dangerous break with past precedent and would slow economic growth at the worst time. The President’s plan assumes raising $24 billion by excluding paper companies from taking the celluslosic biofuel producer credit. This credit was only supposed to apply to producers of biofuels, but a technicality in the law allowed paper companies to qualify. The Senate already laid claim to this exclusion in their recently passed “jobs” bill. It that becomes law, policy and germaneness aside, the President will have to conjure up some more new taxes or spending cuts to pay for his new plan. The hefty tax increases are a heavy blow to a struggling economy, but they do not come close to covering the full cost of the President’s plan which will cost more than $1 trillion over ten years. The President has repeatedly insisted that his plan will not increase the deficit. If that is so, he needs to explain how he will fill the $600 billion shortfall. The gap could mean even more tax increases are on the way. Unfortunately, such calls are now commonplace for the President.

http://blog.heritage.org/2010/02/25/the-taxes-just-keep-oncoming

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Obamacare – The Raw and Undeniable Facts
Posted January 19th, 2010 at 5:30pm in Health Care with 8 comments

Each time a new study or report sheds light on the Obamacare’s true effects on Americans’ health care, the left fights back with tiresome accusations that the source is disreputable, partisan or “sides” with the insurance companies, ad nauseum. How many professional experts are going to have to find fault with the House and Senate health bills before the Left and their allies in Congress stop repeating the age-old adage:

“Everyone else is crazy, I alone am sane”? The terrible truth, of course, is that these reports are right. In study after study, a few things about Obamacare stand out. Both the House and Senate bills will impose new taxes to pay for health care reform, many of which will affect low and middle income Americans, not just the rich. Both bills expand coverage by adding millions of Americans to Medicaid, one of the lowest-quality government health programs. Despite the President’s promise that “if you like it, you can keep it,” millions of Americans will lose the private insurance they currently have. And, no matter how you slice it, neither bill will “bend the cost curve” in health care spending; to the contrary, both bills increase national health expenditures above official projections under current law. It’s no surprise, then, that the majority of Americans oppose the big Congressional health bills , with 57% of Americans believing Obamacare will cause health care costs to go up, and 52% expecting the quality of care to decrease as well. Though each study uses different methodology and looks at slightly different things, here are three different independent reports to show that Americans’ expectations for the future under Obamacare are correct. The Department of Health And Human Services’ own Office of the Actuary for Centers for Medicare and Medicaid Services (CMS), the Lewin Group, and the RAND Corporation’s study. In the following table (a full version, including footnotes and sources, can be found here), we put these estimates side-by-side so ordinary Americans can judge for themselves who is and who is not telling the truth about the legislation. http://blog.heritage.org/2010/01/19/obamacare-the-raw-and-undeniable-facts/

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Effects of the House and Senate Health Care Bills: A Look at the Estimates
Health Care heritage.org

Senate Bill -- 10 new taxes raising $398.1 billion in revenue
3

CMS
1

Lewin
2

Number of Americans that remain uninsured
23 million 22 million

Number of newly-insured Americans added to Medicaid
18 million 13.7 million

Percentage of newly insured that will fall into Medicaid
53%

50%

Number of Americans that will lose their current employer-sponsored coverage
17 million 16.1 million

Number of Americans that will pay a penalty for not obtaining insurance
18 million 8.1 million

Total amount of cuts to Medicare
$541 billion $497 billion

Increase in overall national health spending
$222 billion $305 billion Increase in deficit n/a $196 billion

House Bill -- 11 new taxes raising $560.5 billion in revenue
3

CMS
1

Lewin
2

Rand
4

Number of Americans that remain uninsured
23 million 19.5 million 24 million

Number of newly-insured Americans added to Medicaid
21 million 11.8 billion 10 million

Percentage of newly insured that will fall into Medicaid
62% 40% 34%

Number of Americans that will lose their current employer-sponsored coverage
12 million 18.1 million n/a

Number of Americans that will pay a penalty for not obtaining insurance
18 million 10.8 million n/a

Total amount of cuts to Medicare
$571 billion $436 billion n/a

Increase in overall national health spending
$289 billion $425 billion n/a

Increase in deficit
n/a $77 billion n/a
Notes

1 Estimates are for the 20102019 ten-year window.

2 Estimates pertaining to coverage are for 2011. Estimates of cost impacts are for the 20102019 ten-year window. 3 Estimates are for the 20102019 ten-year window. 4 Estimates are for the 20102019 ten-year window and are for the initial version of H.R.3962. Sources: Richard S. Foster, "Estimated Financial Effects of the `Patient Protection and Affordable Care Act of 2009,' as proposed by the Senate Majority Leader on November 18, 2009," U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, at http://www.cms.hhs. gov/ActuarialStudies/05_HealthCareReform.asp#TopOfPage (January 8, 2010), and "Estimated Financial Effects of the `America's Affordable Health Choices Act of 2009 (H.R.3962)' as Passed by the House on November 7, 2009," U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, at http://www.cms.hhs.gov/ActuarialStudies/Downloads/HR3962_2009-11-13.pdf (November 13, 2009); John Sheils and Randy Haught, the Lewin Group, "Comparing the Cost and Coverage Impacts of the House and Senate Leadership Health Reform Bills: Long Term Costs for Governments, Employers, Families, and Providers", at http://www.lewin.com/content/publications/Lewin_Senate_and_House_Bill_Compared.pdf (December 9, 2009); The Joint Committee on Taxation, "Estimated Revenue Effects of the Manager's Amendment to the Revenue Provisions Contained in the `Patient Protection and Affordable Care Act'", at http://www.jct.gov/publications.html?func=startdown&id=3641 (December 19, 2009), and "Estimated Revenue Effects of the Revenue Provisions Contained in H.R.3962, `The Affordable Health Care for America Act,' Scheduled for Consideration by the House of Representatives", at http://www.jct.gov/ publications.html?func=startdown&id=3633 (November 6, 2009); Elizabeth A. McGlynn, Jeanne S. Ringel, Federico Girosi for RAND Corporation, "Analysis of the Affordable Health Care for America Act (H.R. 3962)", at http://www.rand.org/pubs/research_briefs/2010/RAND_RB9504.pdf (January 15, 2010). 214 Massachusetts Avenue, NE · Washington, DC 20002 · (202) 546-4400 · heritage.org

http://www.pdfdownload.org/pdf2html/pdf2html.php?url=http%3A%2F %2Fblog.heritage.org%2Fwp-content%2Fuploads %2Fspecial_health_care_cost_fact_sheet_pdf.pdf&images=yes

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Democrats’ Health Care Plans Come at High Cost to the Young
Posted January 29th, 2010 at 10:49am in Health Care with 6 comments

Extending health care to the uninsured and those who can’t get coverage for pre-existing conditions is the epicenter of Democrats’ health care bills, but achieving that goal requires adding younger, healthier Americans to insurance pools to hold down costs. And achieving coverage for sicker populations comes at a significant price to young Americans, according to a recent report by Rea Hederman and Paul Winfree of Heritage’s Center for Data Analysis. Two provisions in the bills ensure that those with pre-existing conditions will be able to get coverage at an affordable cost. ”Guaranteed issue” requires that insurance companies provide coverage to anyone, regardless of their medical history, and age rating would entail insurance companies charging older or sick customers no more than twice as much (three times as much in Senate bill) as they charge younger enrollees. This guarantees that premiums for the young will increase to subsidize the cost of covering the older and more sickly population. Increased premiums would inevitably discourage more youth, not less, from purchasing insurance. In order to counter this effect, the bills include provisions to ensure that younger Americans still join the risk pool: an individual mandate to purchase insurance and subsidies to purchase insurance for low and middle-income singles and families. But, according to Hederman and Winfree, “Unfortunately, trying to fix one flawed policy (the rating restrictions and guaranteed issue requirements) by adding another flawed policy (the mandate and costly subsidies) only makes the policy outcome even worse.” CDA’s findings echo predictions from the Congressional Budget Office that premiums in the non-group market will increase as a result of the bills. CDA shows these premiums increasing 10 to 13 percent. Rather than encouraging younger Americans to purchase insurance, this will achieve the opposite, thereby increasing premiums for the older and sicker population who must purchase insurance as younger Americans leave the market.

The individual mandate is intended to force youth into the market, but further CDA analysis shows that this will not occur. Instead, most youth will opt out, largely because of the higher premiums that would result from the guaranteed issue and age rating provisions, but also because the penalty for not purchasing insurance would be significantly lower than premiums. For those to whom the individual mandate will apply and who are eligible for the health exchange, CDA predicts only 12 percent of single uninsured individuals under 35 will purchase insurance. Only 20 percent of families in the same category would bcome insured, and of the uninsured that don’t qualify for subsidies in the exchange, only 5 percent are expected to buy insurance. Altogether, CDA finds that greater than 93 percent of insured households would sooner pay the penalty and than purchase insurance at higher premiums. As Hederman and Winfree explain, “this quickly becomes a downward cycle as insurance costs increase, which will drive out more and more of those who are less costly to insure. Insurers will have no choice but to raise premiums, as they face paying out far more in benefits to cover a sicker pool…” Clearly, the consequences of Obamacare are disadvantageous for everyone. http://blog.heritage.org/2010/01/29/democrats-health-care-plans-come-athigh-cost-to-the-young/

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The Crushing Costs of Addressing the Crushing Cost of Health Care
Posted March 2nd, 2009 at 11:02am in American Leadership, Health Care with 6 comments\ President Obama vows to “address the crushing cost of health care” by, among other things, “invest[ing] in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives.” Sounds great. Let’s take a quick trip across the Atlantic to see how that’s worked out for the British. In two words, not well. In 2002, Tony Blair ordered Britain’s National Health Service to participate in the National Programme for IT, and thus launched an ambitious attempt to computerize the entire Service. The initial projected cost: 2.3 billion pounds. It was widely described as the largest IT project in the history of the world. Fast forward to late 2008. Costs had risen to a minimum of 12.7 billion pounds, and since the system was 4 years late – and counting – its final cost, actual full in-service date, and

even whether it would ever work at all remained up in the air. The Financial Times described it as exhibiting an unhealthy level of ‘Great Leap Forward Syndrome.’ So what went wrong? Where to start. There was the crass malignancy of the government’s attitude to its suppliers. The official responsible for delivering the system compared the project to a sled team and failing suppliers to dogs who would be shot and fed to the survivors to motivate them. A year later, he abruptly quit the project after one key firm was accused of accounting irregularities and another major contractor dropped out and threatened to sue the government to escape from the affair. Then there was the incompetence of the Department of Health. The 2007 ‘competence review’ of the Department by the Cabinet Office is richly amusing. Of the 12 assessed areas, the Department got a green light in zero of them. The “Base Choices on Evidence” area was described, for instance, as an “Urgent Development Area.” In other words, the Department was pathetically bad at the elementary job of making decisions based on facts, and equally bad at learning from past errors. The House of Commons’ Public Accounts Committee produced a 180 page report on the system in April 2007 listing a similar avalanche of misjudgments: no delivery timetable, no cost controls, and no cost-benefit analysis. Above all, there was the faith in the top down model, and the resulting failure to realize that creating a system linking all doctors, hospitals, and administrators was going to be immensely expensive and complicated, and that building the system had no necessary connection to solving substantive problems. The Public Accounts Committee’s report summed it up by noting that the entire project was afflicted with a worshipful attitude to IT, which led to the delusion that it would be easy to fix complex social problems and simultaneously save money by applying large amounts of centralized technology. All of this led a senior executive at Fujitsu, which at the time had an 896 million pound contract for the system, to publicly compare it to a camel, a tightrope walker, and a sinking ship, and to sum up by saying: It isn’t working, and it isn’t going to work. There is a belief that the national programme is somehow going to propel transformation in the NHS simply by delivering an IT system. Nothing could be further from the truth. A vacuum, a chasm, is opening up. When Gordon Brown appeared before the Commons Liaison Committee two weeks ago, he was still defending the indefensible. Meanwhile, the chief executive of London’s Royal Free Hospital described the system’s trial deployment as “incredibly disappointing” and said it would cost the hospital an addition 10 million pounds a year to cope with it. In 2007, 91 percent of all doctors opposed it. A later survey found that most NHS hospitals were simply refusing to implement parts of the system. The Department of Health’s response was to impose massive fines on any hospital that refused to cooperate in full.

And then there’s the question of privacy, which Obama raised. Many individual doctors are refusing to use the system: as one put it, “Any lock that can be opened by 50,000 keys is not secure.” That’s a wise attitude: in late January, the government came forward with a proposal, hidden in an obscure corner of the Coroners and Justice Bill, to allow ministers to “draw up new information-sharing orders that would allow them to release private data – such as tax returns, personal details or medical records – to any public or private body.” Naturally, there will be safeguards. Naturally. But the only defense the government could make of the proposal was that it would “reduce the number of people who need to be notified of a death, thereby helping to relieve distress.” That’s right: a vast, comprehensive medical database is being compiled in Britain, with widespread information sharing by ministerial order, just so Britons will be spared the pain of notifying the gas company that their aunt has died. If you believe that, you probably believe Obama’s proposal will work too. http://blog.heritage.org/2009/03/02/the-crushing-costs-of-addressing-thecrushing-cost-of-health-care/ _____________________________________________________________________

The Magical Properties of Socialized Medicine
Posted January 23rd, 2009 at 9:55am in Health Care with 17 comments Blogging for the AFL-CIO, Mike Hall extols the benefits of socialized medicine, including: (1) lower heath care costs, and (2) higher health care costs. Here’s how he puts it: The incoming Obama administration is developing a comprehensive plan to address a broad range of health care concerns. The AFL-CIO has not endorsed a specific plan but has established certain principles that any plan should be built around. Reform must secure high-quality health care for all; lower the costs that are now crushing working families and businesses and share responsibility among employers, government and individuals among other principles. … Earlier this week, the California Nurses Association/National Nurses Organizing Committee (CNA/NNOC), which backs a single-payer, Medicare-for-all health care reform plan, released a study that says such a plan would not only guarantee health care for all, but would be a major boost to the nation’s staggering economy. The study, conducted by the Institute of Health and Socio-Economic Policy, says a single-payer plan would provide a major stimulus for the U.S. economy by creating 2.6 million new jobs and infusing $317 billion in new business and public revenues, with another $100 billion in wages into the U.S. economy.

Got that? Socialized medicine will “lower the costs” but also “infuse $317 billion in new … revenues.” What are those new revenues, other than higher costs for whoever is paying those revenues? The California Nurses Association summarized their study as follows: Medicare for All (Single Payer) Reform Would Be Major Stimulus for Economy with 2.6 Million New Jobs, $317 Billion in Business Revenue, $100 Billion in Wages. The number of jobs created by a single payer system, expanding and upgrading Medicare to cover everyone, parallels almost exactly the total job loss in 2008, according to the findings of a groundbreaking study released today.” How convenient! Of course, for years the Physicians for a National Health Program (PNHP) have been telling us we need socialized medicine because it will result in $350 billion in lower health care costs. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars. Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do. That $350 billion saved in paperwork of course means $350 billion in lost jobs for whoever is doing that paperwork. So socialized medicine will both create jobs by spending over $300 billion more – and save money by spending over $300 billion less. Now that’s magic! UPDATE: The duplicity of the left goes even further than originally believed. Just three months ago, the same California Nurses Association posted an article by John Geyman of Physicians for a National Health Program (PNHP), claiming that Medicare for All was a good idea because it will result in $350 billion in lower health care costs. So the California Nurses Association is claiming both that “Medicare for All” is good because it will save $350 billion, and good because it will cost an extra $317 billion. How it will do both of these is not – and cannot – be explained. But regardless of the predicted outcome – it’s nationalized health care, so they’re in favor of it.

http://blog.heritage.org/2009/01/23/the-magical-properties-of-socialized-medicine/

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Learn from Britain’s Mistakes: Don’t Centralize Health Care in Washington
Posted February 2nd, 2010 at 10:45am in Health Care with 1 comments

To understand the dangers of a government takeover of health care, America should study Britain’s system, which exemplifies the shortcomings of heavily regulated, nationalized health care. A recent report by Robin Harris of the Heritage Foundation outlines the deterioration of Britain’s health care system due to years of liberal health policy marked by heavy concentration of power, higher taxes and the proliferation of rules and restrictions by the National Health Service (NHS). The NHS is Britain’s government-run health care system. It acts as a single-payer system which originated with the nationalization of thousands of Britain’s hospitals. According to Harris, this “centralized, single-payer health service, free at the point of consumption, was an ideal prescription for waste, rationing by queues, and inordinate public expenditure.” The woes caused by the NHS are multitudinous. As a result of the long waits to receive care, patients have instead begun to purchase treatment themselves, even going abroad to receive care. Access and quality of care are low, and rationing of services has led to discrimination against the elderly. As with any government-run system, more wealthy citizens have a higher level of mobility within the system, and are more able to obtain a higher quality of care than others. It is thus that the NHS has led to increased inequality in care received by Britons. Since 1997, Prime Ministers Tony Blair and Gordon Brown both significantly increased NHS spending. However, according to Harris, health care has not significantly improved due to the spending splurge, and Britain remains well behind other European nations in measures of quality of care. Clearly, the NHS is a failing institution that has sacrificed the health and the quality of care received by the people it serves.

The British health care system should serve as a bleak warning for lawmakers pursuing health care reform. Though congressional Democrats’ proposed legislation would not impose the same structure of government-run health care as the NHS, the concentration of control over health benefits and regulatory restrictions on the kinds of insurance Americans could have would put America on a glide path to a system of national health insurance, with many of the characteristics of the NHS. A public option, whether explicit or not, would create an unlevel playing field for insurers which could ultimately put private insurers out of business. Even without a public option, government regulation of premiums, insurers’ medical loss ratios, and detailed health benefits packages would give Washington the ability to manipulate the private insurance industry as it desired. Increased federal power would put decision-making into the hands of politicians, rather than the patients and doctors with whom it belongs. Government control of health care can be avoided with true reform. Without true reform, and the progressive growth of government control will entail longterm costs. Market inefficiencies ensue, resulting in less innovation, a decreased focus on increasing value, fewer consumer choices and control over health providers, waste, and even political manipulation of the system. European Parliament member Daniel Hannan remarked that the “US would be making a bad mistake if it adopted the failed model of the U.K. National Health Service.” Policymakers should heed his advice. Co-authored by Rick Sherwood. http://blog.heritage.org/2010/02/02/learn-from-britain%E2%80%99s-mistakes-don %E2%80%99t-centralize-health-care-in-washington/

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What Obamacare and the NHS Have in Common
Posted December 24th, 2009 at 10:00am in Health Care with 6 comments As US legislators continue to advance the largest expansion of government control over health care in the US, many Americans may need some comic relief. Although such massive consolidation of federal control over health care is by no means a laughing matter, the following 2-minute clip from a popular BBC Documentary Series “Yes, Minister” illustrates the ridiculousness of the efforts.

This not an entirely trivial story contrived for political satire; in fact, even early this year, the 2009 opening to an NHS hospital was canceled until “early 2010” for among other items not being able to “[control] the heat of the floor in some parts of the hospital.” In 2008, a survey by the (British) Health Care Commission found that roughly 11 million

hospital meals were simply wasted. Moreover, the Taxpayers’ Alliance in England, find that “misguided directive[s]” lead to a “total waste of NHS resources”, and most importantly, divert global health care resources “at a time when people are struggling to get life-saving operations and medication”. While the US healthcare system is not (yet) the socialized health care system of the British NHS, Obamacare does continue a massive transfer of regulatory power in the health care and health insurance markets to the federal government. In the attempt to bring more equity into the US health care system by granting the federal government even greater power, even an advanced socialized health care system faces great concerns of inequality. This is highlighted best by Steve Webb, MP and Liberal Democrat Shadow Health Secretary, stating of the NHS that “health inequalities still run deeply through our society. People still face an unfair postcode lottery in accessing health services across the country, which bears little relation to need. Health needs around the country would be best met by democratic community bodies giving local people a direct say in the services they need.” This underscores the gravity of the current health reform debate in the US where the federal government has progressively consolidated regulatory and financing power in health care for the last 30 years. Rather than moving more towards a decentralized system that many in Britain now want (and polls have shown US voters want) US legislators want to centralize more of the power in Washington. http://www.quinnipiac.edu/x1295.xml?ReleaseID=1408 http://blog.heritage.org/2009/12/24/what-obamacare-and-the-nhs-have-in-common/

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Obama Knows Obamacare Increases Government Control, Right?
Posted February 10th, 2010 at 7:00pm in Health Care with 24 comments

At his impromptu press conference yesterday, President Barack Obama again defended his health care plan this time claiming: I don’t know if people noted, because during the health care debate everybody was saying the President is trying to take over — a government takeover of health care. I don’t know if anybody noticed that for the first time this year you saw more people getting health care from government than you did from the private sector — not because of anything we did, but because more and more people are losing their health care from their employers. It’s becoming unaffordable. That’s what we’re trying to prevent. First of all, we definitely noted the Centers for Medicare and Medicaid Services (CMS) report the President references above. But more importantly, if we are to take the President at his word, and believe him when he says he wants to prevent a government takeover of health care, then he should know that his plan is the exact wrong direction to go.

In a separate report on the Senate health bill issued earlier this year, the CMS projected that over half (18 million) of the 33 million Americans who would gain health insurance because of Obamacare, would do so by enrolling in Medicaid … which is a government run health care program. And another 2 million would enroll in Medicaid for supplemental coverage. The President also said yesterday: We’ve got to control costs, both for families and businesses, but also for our government. Everybody out there who talks about deficits has to acknowledge that the single biggest driver of our deficits is health care spending. We cannot deal with our deficits and debt long term unless we get a handle on that. So that has to be part of a package. But guess what? According to that same CMS report, Obamacare would increase, not decrease, U.S. health expenditures by $234 billion by 2019. President Obama said of his February 25th health care infomercial: Let’s establish some common facts. Let’s establish what the issues are, what the problems are, and let’s test out in front of the American people what ideas work and what ideas don’t. And if we can establish that factual accuracy about how different approaches would work, then I think we can make some progress. As the facts above clearly show, if reducing health care spending and stopping the government take http://blog.heritage.org/2010/02/10/obama-knows-obamacare-increasesgovernment-control-right/

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Surgeons Oppose Government Takeover of Health Care
Posted December 2nd, 2009 at 11:30am in Health Care with 0 comments Yesterday a coalition of 19 surgical organizations representing over 240,000 doctors nationwide sent a letter to Majority Leader Harry Reid (D-NV), with copies to the entire U.S. Senate, explaining why they must oppose the Senate’s version of Obamacare. Read the whole letter here, or skip to their list of specific problems with the bill below the fold. You’ll see that almost all of their complaints have to do with the tremendous amount of authority this bill rips away from doctors and patients and transfers to bureaucrats in Washington DC. Heritage scholar Bob Moffit details just some of the DC

power grab here, and the Washington Examiner’s Susan Ferrechio covers the behemoth the Department of Health and Human Services would become, here.

The surgeons oppose:

• •

Establishment and proposed implementation of an Independent Medicare Advisory Board whose recommendations could become law without congressional action; Mandatory participation in a seriously flawed Physician Quality Reporting Initiative (PQRI) program with penalties for nonparticipation; Budget-neutral bonus payments to primary care physicians and rural general surgeons; Creation of a budget-neutral value-based payment modifier which CMS does not have the capability to implement and places the provision on an unrealistic and unachievable timeline; Requirement that physicians pay an application fee to cover a background check for participation in Medicare despite already being obligated to meet considerable requirements of training, licensure, and board certification; Relying solely on the limited recommendations of the United States Preventive Services Task Force (USPSTF) in determining a minimum coverage standard for preventive services and associated cost-sharing protections; The so-called “non-discrimination in health care” provision that would create patient confusion over greatly differing levels of education, skills and training among health care professionals while inappropriately interjecting civil rights concepts into state scope of practice laws; The absence of a permanent fix to Medicare’s broken physician payment system and any meaningful proven medical liability reforms; and The last-minute addition of the excise tax on elective cosmetic medical procedures. This tax discriminates against women and the middle class. Experience at the state level has demonstrated that it is a failed policy which will not result in the projected revenue. Furthermore, this provision is arbitrary, difficult to administer, unfairly puts the physician in the role of tax collector, and raises serious patient confidentiality issues.

http://blog.heritage.org/2009/12/02/surgeons-oppose-government-takeover-ofhealth-care/ ____________________________________________________________________

Bending the Cost Curve in the Wrong Direction
Posted December 9th, 2009 at 1:20pm in Health Care with 1 comments This week the Commonwealth Fund released a report purporting to explain, as the title says, “Why Health Reform Will Bend the Cost Curve.” It is an exercise in pure, unsubstantiated speculation. They resurrect the long-discredited claim that the bill passed by the House and a somewhat similar but different bill currently before the Senate would not only slow the rate of growth in health care spending, but would reduce average family premiums. Ironically, most of the sources of alleged “cost savings” cited in the report are due to factors that will actually increase health care spending and/or health insurance premiums – and which are counted as such by other studies of the effects of proposed reform. Even more ironically, they attribute the difference between their conclusions and those of other studies that show an increase in costs and premiums (by groups such as the CBO and the CMS Office of the Actuary) as due to the fact that the other studies “rely largely on peer-reviewed studies utilizing carefully controlled comparison groups,” whereas their own study is based on a “less formal, but no less important literature that sees the world very differently.” They also note that front-line physicians see vast amounts of waste due to misaligned incentives in the current system. However, doing a study less “carefully” and looking at “the world very differently” will not change the fact that the current proposals under consideration in Congress would, in the real world, establish a system with even more drastically misaligned incentives, increasing waste and costs for almost all categories of patients and providers. The report concedes that “Extending health insurance coverage to essentially all Americans would increase medical spending, at least in the short run,” as the previouslyuninsured enjoy greater access to health care. However, they assume that this is almost offset by reductions in Medicare and Medicaid benefits. According to the CBO report (Table 3), almost half of the reduction in the number of uninsured is accounted for by an increase in number covered by Medicaid. So in effect, they are saying we can obtain coverage for the uninsured by expanding Medicaid, and then pay for it by cutting Medicaid (and also by cutting Medicare). Somehow, providing health care to some poor people by taking it away from other poor people and the elderly is supposed to save money. Next is a claim that “insurance exchanges … would group individuals and small firms into larger entities and thus drive down those administrative costs.” This is approximately the opposite of what these exchanges are designed to do, which is to break up groups so not everyone with the same small employer has to be in the same health plan. In other

words, it breaks up groups. Also, any savings in administrative costs such as underwriting would be offset by increases in advertising to influence the choice of customers – and by the compliance costs associated with the regulations in the new exchanges. Both the House and Senate bills require insurers to seek regulatory approval individually for both the benefit package and the premium each health plan they offer – in addition to complying with existing state laws. They also claim that: “In many areas of the country, there is little meaningful insurance competition. … A public option would contribute to this effort.” This claim is implausible on two counts. First, while there is some evidence of higher premiums due to limited competition in the large-employer market, the neither the exchanges nor the public option would be available to large employers. Second, while the exchanges and the public option would be available to individual purchasers, there is no evidence of a lack of competition in the individual market. There are over 1,300 companies, including not-for-profit organizations, currently competing in the individual market; it is hard to imagine one more playing on a level playing field making much difference. They also claim that “a requirement that plans devote 85 percent of premiums to medical care, and authority for states [and in the House bill, the federal government] to review and reject premium increases. These can be expected to place downward pressure on administrative costs.” This is precisely backwards. Meeting the 85 percent requirement can be accomplished by either decreasing administrative costs or increasing medical costs. With most of their administration managing compliance with federal and state regulations, there will be little ability to reduce administrative costs. On the other hand, a plan that finds itself out of compliance with the 85 percent rule can always increase payments to physicians and hospitals, and increase premiums until the more-or-less fixed administrative costs fall below 15 percent. As a result the 85 percent rule would bend the cost curve upward, not downward. The remainder of the author’s argument consists of a list of new categories of increased expenditures, together with the claim that all this increased spending will eventually decrease spending. For most of these, the reverse is true. For example:

“Pay-for-performance incentives for Medicare providers,” despite

their name, are really extra payments for providing (and documenting the provision of) specific lists of “recommended” interventions. “Higher reimbursements for preventive care services” and “increased emphasis on prevention and wellness” may benefit patients and physicians, but the overwhelming evidence is that it only rarely saves money and usually increases spending. “Increased funding for comparative effectiveness research” will cost money in the short run, with benefits in the long run that are purely speculative at best. Furthermore, as the recent controversy

over the recommended mammogram schedule shows, government-run programs such as Medicare, Medicaid, and the proposed “public option” are subject to political pressure, making them less able to derive cost-saving benefits of such research. “An excise tax on high-cost insurance plans (in the Senate bill).” The Senate bill would impose a 40 percent excise tax on health premiums in excess of specified thresholds health plans would be forced to pass these taxes on to those paying the premiums, making high premiums even higher.. Cutting benefits to lower premiums could be difficult given a government-mandated benefit package.

http://blog.heritage.org/2009/12/09/bending-the-cost-curve-in-the-wrongdirection/

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Charging Obamacare to the Federal Credit Card
Posted January 28th, 2010 at 5:29pm in Ongoing Priorities with 4 comments Despite the recent focus of Congress and the White House on fiscal responsibility in federal spending, passing Democrat’s health care agenda will add significantly to, not reduce, the federal deficit. Pushing Obamacare through Congress would fly directly in the face of any rhetoric spoken in favor of reducing the deficit. The necessity for Congress to raise the debt limit has spurred a nationwide conversation on the enormity of the federal debt and the recklessness of federal spending. Several proposals have been made within Congress to create commissions to suggest legislation to deal with the out-of-control budget. Even external organizations have begun to take on the task of solving America’s impending fiscal crisis. The latest development is the freeze on discretionary spending that President Obama proposed during his State of the Union Address. And yet none of this means anything if spending, especially on entitlements, is not controlled. Unfortunately, adopting the Senate’s health care bill which would increase entitlement spending and add tremendously to the deficit. Though the Congressional Budget Office (CBO) initially reported the Senate health care bill would reduce the deficit, a more recent report from CBO confirms that, in actuality, the bill would increase the deficit by more than $200 billion.

The reason for this discrepancy is that the bill “double-counted” savings from Medicare by claiming that they would both fund other provisions in the bill and increase the solvency of the Medicare program. Senator Jeff Sessions (R-AL) inquired of CBO to clarify. CBO responded that if the savings from Medicare are applied back to the program, the Senate health care bill would add $226 billion to the federal deficit in the next ten years. This staggering number is in addition to the other budgetary gimmicks the bill’s authors employed to make it appear fiscally sound. For example, the removal of the “doc fix” legislation from the Senate bill. This legislation would permanently repeal the cuts to physician payment rates under Medicare that Congress already suspends every year. Pretending these cuts won’t occur is pure fantasy—in reality, they will also add over $200 billion to the federal deficit between now and 2019. Democrats also manipulated the spending and savings provisions of the bill in order to maximize revenue during the first ten year window while minimizing expenditures. New taxes and other revenue-raising provisions become effective immediately, while expenditures, like the subsidies for the lower and middle class to purchase health insurance, would not occur until years later. This creates a convenient spending cushion to hide the true costliness of the bill. Finally, though it may seem perverse, the growing unpopularity of health care reform is causing its price tag to grow as well. First there was the Nebraska deal, where Senate Majority leaders promised Senator Ben Nelson (D-NE) a sweet Medicaid deal if he would vote for the bill. Now all the other states want it, too. According to CBO, this would add $35 billion to the Senate bill. Then there was the excise tax on high-cost insurance plans, which had unions hopping mad because many union members would see their health benefits taxed under the plan. So the Senate Majority cut another deal, exempting unions from the tax until 2018. This means about $55 billion of lost revenue, which would either have to be made up elsewhere or—you guessed it—added to the deficit. Clearly, our elected officials don’t understand the meaning of “spending problem”. With the amount of United States’ debt held by the public set to reach 100% of the Gross Domestic Product by 2019, it’s time for Congress to look beyond the ten-year window of CBO’s cost estimates and acknowledge the threat that deficit spending on health care has on the fiscal future of America. http://blog.heritage.org/2010/01/28/charging-obamacare-to-the-federalcredit-card/

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The Public Option Threat Still Buried in the Senate Bill
Posted February 4th, 2010 at 3:45pm in Health Care with 2 comments

Most Americans now believe that major health care legislation will not pass this year. But as Heritage Vice President Stuart Butler explains in The New England Journal Medicine one seemingly minor proposal in the Senate health care bill could end up having huge repercussions for our entire health care system: The Senate legislation contains strong directives to the OPM, requiring it to negotiate medical-loss ratios (the percentage of premiums that insurers actually spend on medical care for enrollees), minimum benefits, profit margins, premiums, and “such other terms and conditions of coverage as are in the interests of enrollees in such plans.” Crucially, the legislation also specifies that the OPM-administered plans would automatically be deemed to meet all the requirements for plans to be offered through the health exchanges created by the legislation.1 This means that OPM-administered plans could in practice operate free of many of the financial regulations that exchanges might impose on other plans, allowing the plans to operate under their own OPM-designed regulations. How might the health care system evolve if this OPM feature were implemented as part of a modest reform package? Congress rarely gives an agency powers that it does not intend to be used. It also seems reasonable to assume that the people appointed to administer the new bureau within the OPM will be more likely to embrace the adversarial and regulatory philosophy of the leading congressional reformers and the CMS than the traditional “hands-off” culture of the OPM. Managed by such a transformed agency, the private plans that were part of an OPM alternative would probably come, over time, to

look more and more like third-party administrators of a federally designed competitor plan, operating under rules significantly different from those governing competing private plans. The result in a few years could be functionally indistinguishable from a public option. Butler identifies another proposal seen in the House bill that also could spell the death of private health care. Read his whole article here. More on the Senate’s OPM provisions, here and here.

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Risking Big Changes with Small Reforms
Posted by NEJM • February 3rd, 2010 Stuart M. Butler, Ph.D. As the prospects for health care reform ebb and flow by the day, one school of thought holds that making modest adjustments rather than enacting large-scale reform could help to avert controversy and command more broad support. Perhaps — but seemingly modest changes could also unleash huge pressures that would profoundly alter the system’s future structure and function. Since perceptive lawmakers and congressional staff members recognize this fact, there may well be bitter debate over the enactment of certain apparently modest elements of a smaller reform package submitted to Congress. History shows that changing even seemingly minor features of legislation or administrative decision making with regard to health care can have major — and sometimes unintended — consequences for the system’s evolution. For instance, when President Lyndon Johnson made an apparently minor concession to the American Medical Association in 1965 by allowing “usual and customary charges” to become the basis of Medicare payments, he essentially permitted doctors to set their own fees simply by adding a charge on top of the costs they incurred. This triggered powerful inflationary pressure that has impeded spending control and frustrated payment reform for many years. Similarly, rulings exempting fringe benefits from taxation after World War II created a strong incentive for employers to expand tax-free health insurance relative to taxable cash compensation for their employees. Economists broadly agree that this move boosted employer-sponsored insurance in the United States and, unfortunately, blunted patients’ incentives to seek out cost-effective health care. The current goal of “bending the cost curve” emerged largely in response to this unintended dynamic. Design decisions in a pared-down proposal or reconstituted Senate bill are also likely to create dynamics that will reshape the system in ways unforeseen by many lawmakers. Consider two possible design elements that might be particularly influential. One is the

alternative to a public option in which the government would offer a menu of nationwide private insurance plans to be overseen by the federal Office of Personnel Management (OPM). The shift to this approach was seen as a major setback for supporters of a public option during the Senate–House negotiations, particularly for those who saw a public option as a crucial step toward a single-payer system. But proponents of the public option might not be so disappointed in the long run if this alternative becomes part of a smaller bill. The OPM currently administers several nationwide private plans and hundreds of local plans that are available to about 8 million federal employees and retirees and their dependents. The cultures in various government agencies are often quite different, and this can affect the ways in which the agencies operate; whereas the culture at the Centers for Medicare and Medicaid Services (CMS) might best be described as adversarial, with a strong focus on rule making and rate setting, the attitude at the OPM is more similar to that of a large private employer that negotiates benefits with private insurers. OPM officials conduct these negotiations with private plans in an atmosphere of cordial cooperation in an effort to provide employees with economical, high-quality benefits. The OPM actually has considerable latitude and powers to set prices and demand specific benefit designs. But in practice, it chooses not to fully utilize these powers. Now imagine that reform legislation is enacted requiring the OPM to administer a set of private plans designed to achieve what many key leaders in Congress really believe can be obtained only through a strong public option or a single-payer system. The Senate legislation contains strong directives to the OPM, requiring it to negotiate medical-loss ratios (the percentage of premiums that insurers actually spend on medical care for enrollees), minimum benefits, profit margins, premiums, and “such other terms and conditions of coverage as are in the interests of enrollees in such plans.” Crucially, the legislation also specifies that the OPM-administered plans would automatically be deemed to meet all the requirements for plans to be offered through the health exchanges created by the legislation.1 This means that OPM-administered plans could in practice operate free of many of the financial regulations that exchanges might impose on other plans, allowing the plans to operate under their own OPM-designed regulations. How might the health care system evolve if this OPM feature were implemented as part of a modest reform package? Congress rarely gives an agency powers that it does not intend to be used. It also seems reasonable to assume that the people appointed to administer the new bureau within the OPM will be more likely to embrace the adversarial and regulatory philosophy of the leading congressional reformers and the CMS than the traditional “hands-off” culture of the OPM. Managed by such a transformed agency, the private plans that were part of an OPM alternative would probably come, over time, to look more and more like third-party administrators of a federally designed competitor plan, operating under rules significantly different from those governing competing private plans. The result in a few years could be functionally indistinguishable from a public option.

Now consider another design element that might be particularly influential — the broadly supported idea of health insurance exchanges. The critical design issues are whether the exchanges would be primarily national or state-based and what the relationship would be between an exchange and the regulation of insurance. The House legislation would create a national exchange modeled on the federal employees’ system, whereas the Senate has opted for a more state-centered approach. This is not a small distinction. Legislation calling for state exchanges could still set broad national guidelines, such as general criteria for the provision of consumer information or basic requirements for enrollment procedures. But a permissive state-led exchange system would trigger significant variation in the design of exchanges meeting the federal guidelines. This flexibility would make it easier to incorporate existing exchanges, such as the Health Connector in Massachusetts or the more recently created Utah Health Exchange. But more important, the state-centered approach would make it easier for states to be innovators in exchange design and to link their exchanges more closely with state reforms in insurance regulation and coverage innovations. Such an approach would therefore improve the likelihood that we would see both state diversity and continuous evolution in the U.S. health care system, at least in the private sector. A national exchange, on the other hand, would increase the probability of evolution toward a public-utility model of private insurance. A national exchange would reflect the more regulatory culture of the Department of Health and Human Services and congressional committees and would thus be more likely to be used in combination with federal insurance regulation to reshape the private market. As the Commonwealth Fund observes in its recent analysis of the health care reform bills, the House version’s national exchange would have stronger regulatory and market power to control insurance premiums and companies, thanks to the federal government’s ability to negotiate directly with insurers.2 These features would open up the possibility, if not probability, of a high degree of price regulation, especially if they were combined with greater standardization of benefits, restrictions on plan–provider relations, set minimums for medical-loss ratios, and federal review of premium rates. With these federal powers in place within a national exchange, insurance would essentially become a regulated utility. Although many people might applaud that result, it would be very different from the probable result of establishing state-based exchanges. Examination of these two “minor” design features — OPM-administered private plans and the choice of national or state-based exchanges — underscores the complex nature of health care policymaking. Taking even small steps to improve coverage, it turns out, involves decisions that could have profound effects on the future of the U.S. health care system. Thus, it would be unwise to try to rush through a scaled-back bill on the assumption that minor changes do not require careful scrutiny. It is important to take the time to think through the implications of any new legislation. Financial and other disclosures provided by the author are available with the full text of this article at NEJM.org. Source Information

From the Heritage Foundation, Washington, DC. This article (10.1056/NEJMp1001054) was published on February 3, 2010, at NEJM.org. References 1. Senate-passed Patient Protection and Affordability Act (H.R. 3590) § 1334(a) and (c) (2009). 2. Collins SR, Davis K, Nicholson JL, Rustgi SD, Nuzum R. The health insurance provisions of the 2009 congressional health reform bills: implications for coverage, affordability, and costs. New York: Commonwealth Fund, January 2010. (Accessed February 2, 2010, at http://www.commonwealthfund.org/Content/Publications/FundReports/2010/Jan/Health-Insurance-Provisions.aspx.) http://healthcarereform.nejm.org/?p=2934&query=home

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The Specter of Financial Armageddon — Health Care and Federal Debt in the United States
Posted by NEJM • March 17th, 2010 • Michael E. Chernew, Ph.D., Katherine Baicker, Ph.D., and John Hsu, M.D., M.B.A., M.S.C.E. The most important force shaping the U.S. health care system over the coming decades may well be the federal debt. The government now pays for approximately half of all health care costs in the United States, and projections of growing federal debt largely reflect anticipated increases in health care spending. Because federal debt and health care policy in the United States are so deeply entwined, it is important to understand the basics of deficits and debt and their implications for health care reform. The deficit is the gap between expenditures and revenues in any given year ($1.4 trillion in the United States in 2009), whereas debt is defined as accumulated past deficits, or the stock of what we owe ($7.5 trillion at the end of 2009).1 Economists distinguish between two types of deficit: cyclical and structural. Cyclical deficits rise or fall in the short term in response to economic conditions. In economic downturns, tax revenue falls and government spending on public programs such as unemployment insurance increases, leading to larger deficits and higher debt. These deficits are not necessarily a problem: they can boost economic activity and mitigate economic downturns. When the economy expands, revenues rise and spending falls, creating a cyclical surplus that, holding all else constant, can reduce the debt.

In contrast, structural deficits represent an underlying, persistent imbalance between revenues and expenditures. The United States has a substantial, growing structural deficit, much of which reflects current and projected increases in federal spending on Medicare and Medicaid. This federal health care spending amounted to 5% of the gross domestic product (GDP) and 20% of federal outlays in 2009 and is forecast to reach 12% of the GDP by 2050.1 Health care spending is thus a key driver of long-term debt. This does not mean that we cannot run a structural deficit, but deficits must be small enough that debt grows more slowly than the GDP. So why does debt matter, and how much is too much? Economists often measure the size of the debt relative to the overall economy, or the debt-to-GDP ratio. To finance this debt, the government issues interest-bearing bonds. Doing so imposes several economic costs. First, interest payments consume an increasing share of income (1.3% of the GDP in 2009, or 5.3% of total federal spending),1 thereby reducing the resources available for public programs. Second, growing debt can lead to higher interest rates for all borrowers (government, businesses, and individuals), thus impeding economic growth. Finally, high debt reduces our capacity to respond to sudden economic shocks and magnifies the detrimental effects of any deficit. Economies can bear substantial debt without dire economic consequences, but there is a limit to how high debt can rise and still be financed without causing serious economic harm. Economists, however, do not agree on where the threshold lies. The European Union has set a target debt-to-GDP maximum of 60% for its member countries (although the table shows that a number of them exceeded this threshold in 20082), but some economic research suggests that levels approaching 90% can be managed without substantial economic harm. In 2009, the U.S. debt-to-GDP ratio was 53%, according to the Congressional Budget Office. Although this figure suggests that we have some shortterm flexibility, our large and increasing structural deficits will push us past the 90% mark by the end of 2020, absent major policy changes.1

The consequences of high debt levels depend on the treatments that policymakers prescribe. One approach is generating inflation to erode the value of the debt, but the adverse economic consequences of this strategy can be severe. Another option is raising taxes. Taxes reduce economic growth. Projections made by the Congressional Budget Office in 2007, before the current fiscal crisis began, suggest that to finance federal spending, the highest federal tax bracket would have to rise to 92% by 2050, assuming health care spending grows 2.5 percentage points faster than GDP, which is approximately the historical average.3 A final option is cutting spending on valued public programs. For Medicare and Medicaid beneficiaries, this approach could mean large increases in cost sharing, poorer benefits, limited eligibility, and diminished access. For health care providers, it could mean drastic reductions in Medicare and Medicaid payments. Most likely, some combination of tax increases and spending cuts will be needed to avoid unsustainable debt, but the higher our debt climbs, the more likely it is that we will find ourselves in an economic crisis and the more painful the unavoidable response will be. The economic stresses apparent in Greece and in California provide some glimpse into what such a fiscal Armageddon might bring. The clear implication for health care reform is that as we evaluate options (or the possibility of maintaining the status quo), we should focus on the path to a sustainable fiscal situation rather than on short-run deficits. Growth in health care spending is one of the primary contributors to increases in debt over the long run, so the long-term strategy must involve slowing that growth. The current reform proposals incorporate a number of promising strategies for controlling spending and raising revenue (see Proposed Strategies for Reducing Health Care Spending4). The impact of these strategies will depend on the details and the effectiveness of implementation, and no one knows which strategies will prove successful. Projections suggest that the reform package, including additional revenues, will reduce the deficit (relative to the unsustainable baseline). If the entire reform package is required in order to achieve the deficit reduction — perhaps because of an interaction between expanded coverage and the fiscal effects of reform or perhaps because expanded coverage is needed to generate sufficient support for passage — then the fiscal case for reform is much stronger. However, if the provisions for cost savings and revenue gains can be implemented without expanding coverage, we must ask whether the money saved should be spent on coverage expansions (or any other policy goal) or on debt reduction. The net impact of reform on the deficit should not be the metric of fiscal virtue. If all the money saved through reductions in future spending on existing health care programs were devoted to new health care programs, our fiscal situation would be little improved. Similarly, if other fiscal tools, such as tax increases, are used to cover new programs, those tools will not be available to achieve broader reductions of the structural deficit. Thus, although covering the uninsured is a laudable policy goal that would improve

access to health care for many, it would also add substantially to our structural spending and thus necessitate more draconian fiscal austerity elsewhere. This does not mean that we should not expand coverage — but rather that we must evaluate the cost of doing so in the context of the extent to which it will limit our options to address our broader fiscal imbalances, recognizing that the challenge posed by these imbalances is Herculean. Even if we halve the gap between the growth in health care spending and the growth in the GDP, some estimates suggest that our debt-to-GDP ratio would drop only from 300% to 200% by 2050.5 The goals of health care reform must therefore be addressed in light of our short-term and long-term fiscal situation. Our current debt is manageable, and we can afford projected deficits for several years, but our structural deficits place us on a path of debt growth that is unsustainable, largely because of health care programs. The sooner we start to rein in health care spending, the less painful the changes may be (since slowing spending now will help us avoid drastic cuts in the future), and the more time we will have to find the most effective strategies. Physicians and the health care community must play a strong role in this process, preparing their practices for the inevitable changes that will come as we address spending growth and helping to identify clinically informed strategies that permit quality to improve in an environment of slower spending growth. Proposed Strategies for Reducing Health Care Spending. Establish insurance exchanges. Reduce excessive Medicare payments. Shift from a volume-based to a value-based payment system in Medicare. Tax generous insurance plans. Empower an independent Medicare advisory board. Address and reduce fraud and abuse within the Medicare program. Enact malpractice reform. Invest in information technology and comparative-effectiveness research. Invest in prevention. Adapted from Cutler.4

Disclosure forms provided by the authors are available with the full text of this article at NEJM.org. Source Information From the Department of Health Care Policy, Harvard Medical School (M.E.C., J.H.); the Department of Health Economics, Harvard School of Public Health (K.B.); and the Mongan Institute for Health Policy, Massachusetts General Hospital and Harvard Medical School (J.H.) — all in Boston. This article (10.1056/NEJMp1002873) was published on March 17, 2010, at NEJM.org. References 1. Letter from Douglas W. Elmendorf, director of the Congressional Budget Office, to Senator Daniel K. Inouye, March 5, 2010. (Accessed March 15, 2010, at http://www.cbo.gov/ftpdocs/112xx/doc11231/03-05-apb.pdf.) 2. Organization for Economic Cooperation and Development (OECD). Gross domestic product. (Accessed March 15, 2010, at http://stats.oecd.org/Index.aspx? DatasetCode=SNA_TABLE1.) 3. Letter from Peter R. Orszag, director of the Congressional Budget Office, to Senator Judd Gregg, July 9, 2007. (Accessed March 15, 2010, at http://www.cbo.gov/ftpdocs/82xx/doc8295/07-09-Financing_Spending.pdf.) 4. Cutler D. Health reform passes the cost test. Wall Street Journal. March 9, 2010. 5. Kogan R, Cox K, Horney J. The long-term fiscal outlook is bleak: restoring fiscal sustainability will require major changes to programs, revenues, and the nation’s health care system. Washington, DC: Center on Budget and Policy Priorities, December 16, 2008. http://healthcarereform.nejm.org/?p=3170&query=home

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Beware a Public Health Plan in Private Disguise
Posted January 6th, 2010 at 12:34pm in Health Care with 10 comments

In the ongoing attempts of Congress to find an alternative to the “public plan” in health reform, the Senate bill includes a provision to give the Office of Personnel Management (OPM), which oversees the Federal Employee Health Benefit Program (FEHBP) a new role: sponsoring health plans to compete against private health plans in every state in the nation. As Kay Cole James, a former director of OPM, points out in a recent op-ed, the FEHBP works because OPM plays the neutral role of an umpire: federal employees choose the private plan they like from a wide variety of different plans, all of which compete against each other to attract the most enrollees. The federal government provides its employees with a defined contribution towards their health costs, and it doesn’t micromanage their choices. OPM allows variety and flexibility in the program, and limits its regulatory role to ensuring consumer protections. Sen. Reid’s proposal would have OPM sponsor new multi-state plans. OPM would set the premiums for plans it sponsors. This new role for OPM is the Senate alternative to the House passed “public option”. But ordinary Americans should be leery of the difference. According to Kay Cole James, “this arrangement seems to be a “public option” in “private” option disguise… Because OPM would not merely serve as the umpire overseeing competition among private health plans. It would also become a health-plan sponsor, fielding its own team of players to compete against the existing private plans in every state.” Given this new role, OPM could engineer a crowd out other private insurers in the market. Furthermore, Section 1334 of the Senate health care bill allocates “such sums as may be necessary to carry out this section”. If the OPM-sponsored health plans were not profitable, it is thus conceivable that the taxpayer could end up footing the bill. This, along with the federal power to set rates and benefits, could easily end up as the public option that Senate liberals envisioned all along. Says James, “OPM’s job is to serve the federal civilian work force and its retirees, while enforcing merit principles in hiring and stopping prohibited personnel practices. It’s not

OPM’s job to compete against private health plans.” The best features of the FEHBPbroad consumer choice and intense Multi-plan competition, free of heavy regulation and massive bureaucracy, and governed by approximately 80 pages of statutory text- are worthy of replication. Giving OPM the power to sponsor “multi-state” health plans in competition against the private sector is not the same thing.

http://blog.heritage.org/2010/01/06/beware-a-public-health-plan-in-privatedisguise/

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Six Ways the Senate Health Care Bill Raises Health Care Costs, Kills Jobs, and Weakens the Economy
Posted March 18th, 2010 at 1:55pm in Health Care On the eve of the House of Representatives push to jam through the misguided and highly unpopular Senate health care bill, , the President continues to try and convince the American people that the health care bill would reduce cost while showing his commitment to creating jobs and improving the economy. The raw facts make it clear that he cannot keep either of these promises. For example:

The President claims the health care proposals would reduce health care spending. The reality is health care spending would increase. According to the latest Congressional Budget Office report of the Senate bill, health care spending under the Senate bill would increase by $210 billion over the next 10 years. This is similar to the results found by the President’s Chief Actuary which estimated an increase of $222 billion. While CBO predicts spending would decrease in the second decade, history shows spending rarely, if ever, goes down on government health programs. Medicare is hurtling toward a financial crisis, and Medicaid is breaking state budgets. The President claims the health care proposals would reduce premiums. The reality is premiums will go up for many under the Senate bill. The Congressional Budget Office and the Joint Committee on Taxation have estimated premiums in the non-group market would be 10 to 13 percent higher in 2016 than they would be with no bill and cost would likely fall higher on young and healthy families. In addition, this is before the government specifies and locks into place new federal benefit mandates that will no doubt further increase premiums for all Americans. There is little or no experience of government officials reversing these trends.

The President claims the health care proposals would cost under a trillion. But, that figure excludes major health care provisions – like filling the Medicare “donut hole”, fixing Medicare reimbursement to physicians, and creating a new long-term entitlement program – pushing the price tag to over $2 trillion. Only in Washington does spending more money equal saving money. The President claims the health care proposals would reduce the deficit. Unlike CBO’s restricted scope of analysis, the independent analysis by the Lewin Group estimates that when taken in its entirety, which means accounting for the expected $200 billion plus boost in Medicare reimbursement for physicians, the proposal would actually add to the deficit, not reduce it. The President claims he is committed to improving jobs and the economy. Based on his own policies, the opposite is true. The Senate bill would result in 620,000 fewer job opportunities and would increase the national debt by $755 billion through its lethal combination of mandates, taxes, and government spending. As Heritage analysts have pointed out, “Because investment is what drives productivity and economic growth, less investment–even if only slightly less–leads to lower productivity, slower economic growth, weaker wages and salaries, and lower household wealth.” Even worse, his own proposal to “fix” the bill adds a new tax on investment income that would result in 115,000 lost job opportunities and disposable income is estimated to be $17.3 billion less per year than it otherwise would be. The President claims he will “fix” the bill. Although he promised to ensure no federal funding would be used for abortions and eliminate the repugnant special deals, House passage of the Senate bill would lock these into place, and they could only be undone through a highly uncertain reconciliation process to “fix” the bill in the Senate. Not only is taxpayer funding of abortion not fixed, it is expanded under the Senate bill. Moreover, the ugly special state deals at the expense of the taxpayers still remain.

http://blog.heritage.org/2010/03/18/six-ways-the-senate-health-care-billraises-health-care-costs-kills-jobs-and-weakens-the-economy/

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The Senate Health Bill: Budget Gimmicks Galore
Posted November 20th, 2009 at 7:21am in Health Care with 6 comments Senate Majority Leader Harry Reid unveiled his 2,074 page health care bill with claims that the massive measure falls under the $900 billion cost threshold promised by the President.

To put it charitably, the truth is more complicated. The bill depends on budget gimmicks and unrealistic assumptions and projected savings to reach this goal over the 10 year budget window. Consider the four most outrageous “Budget Tricks”. By its construction, the bill:

Excludes the Costly “Doctor Fix”. Like the House bill, the Senate bill conveniently ignores the over $200 billion price tag associated with stopping the unavoidable cuts to physicians under the Medicare program. Separating the health care bill like this enables Senator Reid to claim his bill will reduce the deficit. However, in a letter released today, CBO estimates that combining the House bill (H.R. 3961) with the “Dr. Fix” bill (H.R. 3962) would actually “add $89 billion to budget deficits over the 2010–2019 period.” Manipulates the new CLASS Act. The Senate bill, like the House, also includes a new government health care program for long term health insurance, the CLASS Act. The structure of the CLASS Act has premium collections raising revenues for the government in the first 10 years, appearing to aid in reducing the deficit. But the CBO points out that while the CLASS Act would generate net receipts for the government in the initial years when premiums would exceed total benefit payments, but would eventually lead to net outlays when benefits exceed premiums.” Delays Costly Benefits. The Senate bill is cleverly designed to gather revenues (higher taxes, fees, and other offsets) over the full 10 year window but delays paying out the major benefits, like subsidies, until the last 6 years. So, the 2010-2019 estimate is not a full cost estimate of all provisions fully implemented and will certainly add significantly to the true cost of the bill. Moreover, as with all government programs, they always cost more than originally promised. Depends on Uncertain Cuts to Medicare. The Senate bill depends on using cuts to Medicare to pay for its $1.2 Trillion coverage expansion. As explained by the CBO Director:
Adjusting for inflation, Medicare spending per beneficiary under the bill would increase at an average annual rate of roughly 2 percent during the next two decades—much less than the roughly 4 percent annual growth rate of the past two decades.

These dramatic savings, of course, assume that these spending cuts stay intact. If the “Dr. Fix” is an illustration, it is highly unlikely that Congress will live up to the deep cuts it proposes for Medicare. As the first round of cuts get close, a frenzied team of high powered lobbyists for the health care industry will no doubt be wearing out shoe leather going door to door in the corridors of Congress. They’ve been successful just about every time. Moreover, these cuts include over $118 billion in ‘savings’ resulting from changes to the highly popular Medicare Advantage plans, a move that will directly impact the benefits of millions of seniors. In his analysis of the House bill, where the House of Representatives enacted similar reductions, the Chief Actuary for the Centers of Medicare and Medicaid Services has confirmed, these changes will result in “less generous packages” and enrollment “would decrease by about 64 percent.” True Costs Unknown The reality is this Senate bill, like its House counterpart, costs far more than the President’s $900 billion promise and is more likely to run in the trillions. How is it that a bill whose purpose is to save money starts out, with careful caveats and unrealistic assumptions, by spending nearly a trillion dollars? http://blog.heritage.org/2009/11/20/the-senate-health-bill-the-true-costs-are-unknown/

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The Senate Bill’s Fiscal Madness: Rep. Ryan’s Damning Indictment
Posted March 5th, 2010 at 2:00pm in Health Care with 3 comments

As Heritage analysts have noted time and again, spending from congressional liberals’ health care proposals would be in the trillions, growing the federal deficit. The President has proposed a modification of the Senate bill with provisions that would make it even more expensive. At last week’s Health Care Summit, hosted by the White House, Rep. Paul Ryan (R-WI) echoed these same concerns over the true cost of the President’s proposal for health care reform. Thus far, neither the President nor the leaders of Congress- not one- have responded to Ryan’s indictment:

Budget Gimmicks Galore: “[W]hat has been placed in front of [CBO] is a bill that is full of gimmicks and smoke-and-mirrors… first off, the bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending…Now, what’s the true 10year cost of this bill in 10 years? That’s $2.3 trillion.” Double-Counted Savings: “It takes $52 billion in higher Social Security tax revenues and counts them as offsets. But that’s really reserved for Social Security. So either we’re double-counting them or we don’t intend on paying those Social Security benefits…It takes $72 billion and claims money from the CLASS Act. That’s the long-term care insurance program. It takes the money from premiums that are designed for that benefit and instead counts them as offsets.” Later, Rep. Ryan went on to point out, “You can’t say that you’re using this money to either extend Medicare solvency and also offset the cost of this new program. That’s double counting.” Medicare as a Piggy Bank: “Now, when you take a look at the Medicare cuts, what this bill essentially does — it treats Medicare like a piggy bank. It raids a half a trillion dollars out of Medicare, not to shore up Medicare solvency, but to spend on this new government program…Now, when you take a look at what this does…as much as 20 percent of Medicare’s providers will either go out of business or will have to stop seeing Medicare beneficiaries.” Ignoring the Doc Fix: “…[T]he doc fix, according to your numbers, costs $371 billion. It was in the first iteration of all of these bills, but because it was a big price tag and it made the score look bad, made it look like a deficit, that bill was — that provision was taken out, and it’s been going on in stand-alone legislation. But ignoring these costs does not remove them from the backs of taxpayers. Hiding spending does not reduce spending.”

Rep. Ryan’s arguments are reinforced by Heritage research regarding the true cost of the House and Senate health bills and other reliable sources. As an article in the Wall Street Journal points out, “No one in the political class has even tried to refute Mr. Ryan’s arguments, though he made them directly to the President and his allies, no doubt because they are irrefutable. If Democrats are willing to ignore overwhelming public opposition to Obamacare and pass it anyway, then what’s a trifling dispute over a couple of trillion dollars?” The President and congressional Democrats have recently made quite a show of concern over the sustainability of current levels of federal spending. Ignoring the fiscal reality of their health proposals questions the seriousness of their intentions to control spending and reduce the federal deficit. The prosecution rests. http://blog.heritage.org/2010/03/05/the-senate-bills-fiscal-madness-rep-ryansdamning-indictment/

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Left Now Admitting Obamacare Full of Budget Gimmicks
Posted December 21st, 2009 at 1:27pm in Health Care with 22 comments President Barack Obama again asserted today that his health care plan would be deficit neutral chiding: “The argument that opponents are making against this bill does not hold water.” But while the President’s most ardent supporters are trying to explain to each other why the benefits of the bill do not start until 2014, they are openly admitting that Obama’s deficit busting claims are complete fiction: The Washington Post’s Ezra Klein: “The delay is a budget trick, an attempt to lower the 10-year cost of the bill at the expense of the very people we’re trying to help.” Mother Jones‘ Kevin Drum: “I’m pretty sure the 2014 date is mostly due to budget finagling. This stuff can’t be done overnight, but I’ll bet most of it could be implemented within 12 months, and it could certainly be implemented within 24.” Talking Points Memo’s Josh Marshall: “My impression is that some of the delays are there because it makes the budgetary accounting work better in terms of deficit neutrality. And I know the Dems would likely lose critical support without being able to show that the overall bill actually lowers the deficit. But if that’s the main reason, I suspect the

legislative authors may be too clever by half since they may be slitting the bill’s and perhaps their own throats in the process.” The conveniently shifted budget window of the bill’s spending benefits is just the tip of the iceberg when it comes to Obamacare’s deficit spending chicanery. Heritage’s health care team reports: The Costly “Doctor Fix.” Every year, because of congressionally created formulas in Medicare physician payment, Congress must vote to suspend these pre-ordained payment systems that would automatically cut Medicare payments to physicians. If enacted this year, these cuts would reduce physician payment rates by 21 percent. Physicians believe, correctly, that unless there is a fundamental reform of Medicare payment, many physicians will reduce their Medicare practice or stop seeing new Medicare patients, thereby reducing the accessibility of Medicare beneficiaries to physician care. Both the House and the Senate have acknowledged this as part of their agendas for health care reform. However, to make their bills appear less costly, the leadership of both houses has removed the doctor fix and its more than $200 billion price tag from their health care bills and presented it as a separate bill. This enables Senator Reid to claim that his bill will reduce the deficit, but the CBO estimates that the House bill (H.R. 3961), combined with the “doctor fix” bill (H.R. 3962), would “add $89 billion to budget deficits over the 20102019 period.” The Senate bill plays the same shell game, creating the appearance of deficit reduction by ignoring the inevitable cost of the doctor fix. The True Costs of the CLASS Act. The Senate bill, like the House bill, includes the Community Living Assistance Services and Supports (CLASS) Act, which would create a new government health care program for long-term health insurance. This provision creates a national insurance trust that would provide benefits for seniors and the disabled by creating a payment update in Medicare for skilled nursing facilities and home health care providers. The CLASS Act is intended to pay for itself with collected premiums. The premiums would produce positive revenues for the government for the first 10 years, appearing to reduce the federal deficit during this time. However, as the CBO points out, while “the program’s cash flows would show net receipts for a number of years, [this would be] followed by net outlays in subsequent decades.” Thus, the CLASS Act appears selfsufficient for the first 10 years but starts running a deficit soon thereafter. … Unreliable Medicare Cuts. The Senate bill depends on cutting Medicare to pay for its $1.2 trillion coverage expansion. Concerning the impact on Medicare enrollees, as CBO Director Doug Elemendorf explained, the bill would require a substantial reduction in the future growth of per capita beneficiary spending over the next 20 years compared to the previous 20 years.

Proponents of the Senate legislation claim that Medicare spending reductions would result in higher efficiencies. But as James C. Capretta, a Fellow at the Ethics and Public Policy Center, argues, “despite all of the talk of ‘delivery system reform,’ the Senate Democratic plan would not transform American medicine to make it more efficient.”[16] The dramatic savings depend on conventional Medicare provider cuts, not on meaningful Medicare reform. Furthermore, as demonstrated by the ongoing effort to correct the Medicare physician payment formula, it is unlikely that Congress would allow such deep cuts to occur in Medicare. Moreover, these Medicare cuts include more than $100 billion in “savings” from changes in Medicare Advantage plans, a move that would directly affect the benefits of millions of seniors. In his analysis of the Senate bill, Foster confirmed that these changes would result in “less generous packages” and that enrollment “would decrease by about 33 percent.”

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Washington Post: Obamacare “Unsustainable”
Posted December 21st, 2009 at 11:53am in Health Care with 11 comments The Washington Post editorial board writes on the Community Living Assistance Services and Supports (CLASS) Act tucked into Obamacare: But both the Congressional Budget Office and the chief actuary for the Medicare program have expressed misgivings. The Medicare actuary, Richard S. Foster, cited “a very serious risk”: Adverse selection — sicker people signing up for the program and the healthier staying away — “would make the CLASS program unsustainable.” He said that even beginning premiums would have to be $240 a month. Likewise, CBO director Douglas W. Elmendorf warned that “the CLASS program could be subject to considerable financial risk in the future if it were unable to attract a sufficiently healthy group of enrollees.” The Washington Post is dead on. Here is how Heritage’s health care team analyzed the CLASS Act portions of Obamacare: The True Costs of the CLASS Act. The Senate bill, like the House bill, includes the Community Living Assistance Services and Supports (CLASS) Act, which would create a new government health care program for long-term health insurance. This provision creates a national insurance trust that would provide benefits for seniors and the disabled

by creating a payment update in Medicare for skilled nursing facilities and home health care providers. The CLASS Act is intended to pay for itself with collected premiums. The premiums would produce positive revenues for the government for the first 10 years, appearing to reduce the federal deficit during this time. However, as the CBO points out, while “the program’s cash flows would show net receipts for a number of years, [this would be] followed by net outlays in subsequent decades.”[14] Thus, the CLASS Act appears selfsufficient for the first 10 years but starts running a deficit soon thereafter. Read Heritage’s full analysis here. Or below. _________________________

An Analysis of the Senate Democrats' Health Care Bill
Published on December 18, 2009 Abstract: The Senate health care bill would overhaul the entire health care sector of the U.S. economy by erecting massive federal controls over private health insurance, dictating the content of insurance benefit packages and the use of medical treatments, procedures, and medical devices. It would alter the relationship between the federal government and the states, transferring massive regulatory power to the federal government. The bill would also restrict the personal and economic freedom of American citizens by imposing controversial and unprecedented mandates on businesses and individuals, including an individual mandate to buy insurance. The U.S. Senate is locked in an intense floor debate over the Patient Protection and Affordable Care Act (H.R. 3590), a massive 2,074-page health care bill that would directly affect every man, woman, and child in the United States. Its enactment would shape the character and quality of life in America for generations to come. The Senate bill's complex and sweeping provisions would affect virtually every aspect of the huge health care sector of the U.S. economy.

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Like the House bill,[1] it would transfer massive regulatory authority from the states to the federal government and make enormous changes in the nation's health insurance markets; It would dramatically alter the financing and content of employer-provided and individual health insurance and significantly change Medicare and Medicaid; It would change how hospitals, doctors, and other medical professionals are paid and how physicians and other medical professionals deliver care; and It would impose controversial and unprecedented mandates on businesses and individuals, including an individual mandate to buy insurance,[2] thus restricting the personal and economic freedom of American citizens.

In effect, the Senate bill would produce the greatest concentration of political and economic power over one major sector of the U.S. economy in the nation's history. It is not surprising that the Senate bill is highly unpopular.[3] For ordinary Americans, the legislative process has definitely not been a demonstration of the way a law is made as portrayed in civics textbooks or the kind of rational deliberation envisioned by the Founding Fathers. Surprising provisions, unintended consequences, and unreliable assumptions characterize this proposal. Key provisions, such as the provision of a "public plan" to compete against private health plans, are particularly controversial, and the Senate leadership is rapidly floating and rejecting new schemes to secure the 60 votes necessary to end the debate and quickly pass the bill. Without the benefit of legislative language, hearings, expert testimony, or committee deliberation and debate, various untested proposals have been floated for press and popular consumption. Writing of the latest scheme to secure a compromise, the editors of The Washington Post noted, "The only thing more unsettling than watching legislative sausage being made is watching it being made on the fly."[4] Regardless of one's views of the Senate bill, it does not comport with the broad popular themes articulated by President Barack Obama and the many congressional leaders who have championed these policies. Contrary to the President's repeated promises to the American people,[5] the Senate bill, like its House counterpart, would:

Cause many Americans to lose their current health insurance. The Congressional Budget Office (CBO) estimates that up to 10 million Americans would no longer be covered by their employers.[6] Given the bill's incentives for employers to discontinue job-based coverage, independent analysts expect the loss of employer-based coverage to be much higher. Bend the cost curve up. According to independent analysts and government actuaries, the bill would substantially increase total health care spending instead of reducing it as promised. Richard Foster, Chief Actuary of the Centers for Medicare and Medicaid Services (CMS), recently judged the projected savings from the Medicare updates as "doubtful" and estimated that the total national spending on health care would increase.[7] Impose many new taxes on middle-class Americans. The Senate bill contains over a dozen new taxes, including a 40 percent excise tax on high-priced health plans and special fees and taxes on insurance, drugs, medical devices, and anyone who violates the new mandates.[8] Reduce many seniors' access to Medicare benefits and services. The bill would reduce Medicare payments by an estimated $493 billion over 10 years, [9] including payment reductions for Medicare Advantage, hospital care, home health care, and nursing homes. Provide federal funding for abortion. Contrary to the President's clear statement to Congress and the nation on health care reform,[10] the Senate bill would provide funding for abortion. The House would prohibit using

taxpayers' dollars to finance abortion, but a similar amendment to the Senate bill was tabled without even a floor vote.[11] Surveys consistently show that the American people clearly want health care reform but do not support the bills sponsored by the House and Senate leadership. While they want Congress to enact policies that would increase choice and competition, and thereby help to control costs and rectify inequities in the health insurance markets, they do not favor a federal takeover of the health care system. Nor do they want the power to make key health care decisions transferred from individuals, families, and medical professionals to government agencies, departments, commissions, and advisory boards. Much better options are available. Reform of the tax treatment of health insurance is a top priority. Eliminating the federal tax code's discrimination against workers who do not or cannot obtain health insurance through the workplace would expand health insurance coverage; today these persons get no tax relief for the purchase of health insurance coverage. Removing the legal barriers to individuals and families who wish to buy health insurance in a state other than their state of residence would also open health insurance markets to real free-market competition. Promoting state-based health insurance market reforms, designed by state and not federal officials, could dramatically expand coverage, cope with adverse selection in the markets, and secure affordable health insurance under the varying conditions that prevail within the states for the poorest and most vulnerable members of society. Beyond these options, if Congress were truly serious about "bending the cost curve down," it should focus on the huge and growing programs under its direct jurisdiction: Medicare and Medicaid. This means initiating serious entitlement reform that goes well beyond modifying administrative payment systems and cutting physician and hospital reimbursements. Hiding the True Cost to the Taxpayers When Senate Majority Leader Harry Reid (D-NV) unveiled his bill, he claimed that the massive reform package would fall under the $900 billion cost threshold promised by President Obama. But Senator Max Baucus (D-MT) recently conceded that the real cost of the bill was much higher: "Just for a second-- health care reform, whether you use a ten year number or when you start in 2010 or start in 2014, wherever you start at, so it is still either $1 trillion or it's $2.5 trillion, depending on where you start."[12] There is a simple reason for this public confusion over cost. The bill uses budget gimmicks, unrealistic assumptions, and highly unreliable projected savings to stay under the stated threshold. Among these are four egregious "budget tricks." The Costly "Doctor Fix." Every year, because of congressionally created formulas in Medicare physician payment, Congress must vote to suspend these pre-ordained payment systems that would automatically cut Medicare payments to physicians. If enacted this year, these cuts would reduce physician payment rates by 21 percent.

Physicians believe, correctly, that unless there is a fundamental reform of Medicare payment, many physicians will reduce their Medicare practice or stop seeing new Medicare patients, thereby reducing the accessibility of Medicare beneficiaries to physician care. Both the House and the Senate have acknowledged this as part of their agendas for health care reform. However, to make their bills appear less costly, the leadership of both houses has removed the doctor fix and its more than $200 billion price tag from their health care bills and presented it as a separate bill. This enables Senator Reid to claim that his bill will reduce the deficit, but the CBO estimates that the House bill (H.R. 3961), combined with the "doctor fix" bill (H.R. 3962), would "add $89 billion to budget deficits over the 20102019 period."[13] The Senate bill plays the same shell game, creating the appearance of deficit reduction by ignoring the inevitable cost of the doctor fix. The True Costs of the CLASS Act. The Senate bill, like the House bill, includes the Community Living Assistance Services and Supports (CLASS) Act, which would create a new government health care program for long-term health insurance. This provision creates a national insurance trust that would provide benefits for seniors and the disabled by creating a payment update in Medicare for skilled nursing facilities and home health care providers. The CLASS Act is intended to pay for itself with collected premiums. The premiums would produce positive revenues for the government for the first 10 years, appearing to reduce the federal deficit during this time. However, as the CBO points out, while "the program's cash flows would show net receipts for a number of years, [this would be] followed by net outlays in subsequent decades."[14] Thus, the CLASS Act appears selfsufficient for the first 10 years but starts running a deficit soon thereafter. Delays of Costly Benefits. The Senate health care bill is paid for by newly enacted taxes and spending cuts. However, to meet President Obama's $900 billion maximum over the first 10 years, new spending does not begin until years after new taxes and spending cuts are enacted. This clever design allows Congress to collect revenues (higher taxes, fees, and other offsets) for the full 10-year window but pay out the major benefits over only the last six years. This spending cushion makes the bill appear much less costly than it would if 10 years of spending were included. The true costs of the bill would quickly become apparent in the second 10 years of enactment. Moreover, as with most government programs, it will almost certainly cost more than originally promised. Unreliable Medicare Cuts. The Senate bill depends on cutting Medicare to pay for its $1.2 trillion coverage expansion. Concerning the impact on Medicare enrollees, as CBO Director Doug Elemendorf explained, the bill would require a substantial reduction in the future growth of per capita beneficiary spending over the next 20 years compared to the previous 20 years. [15]

Proponents of the Senate legislation claim that Medicare spending reductions would result in higher efficiencies. But as James C. Capretta, a Fellow at the Ethics and Public Policy Center, argues, "despite all of the talk of 'delivery system reform,' the Senate Democratic plan would not transform American medicine to make it more efficient."[16] The dramatic savings depend on conventional Medicare provider cuts, not on meaningful Medicare reform. Furthermore, as demonstrated by the ongoing effort to correct the Medicare physician payment formula, it is unlikely that Congress would allow such deep cuts to occur in Medicare. Moreover, these Medicare cuts include more than $100 billion in "savings" from changes in Medicare Advantage plans, a move that would directly affect the benefits of millions of seniors. In his analysis of the Senate bill, Foster confirmed that these changes would result in "less generous packages" and that enrollment "would decrease by about 33 percent."[17] Bending the Cost Curve Up. According the Office of the Actuary, the Senate bill would increase, not decrease, health care spending by $234 billion between 2010 and 2019.[18] The Senate bill, like its House counterpart, would cost far more than the President's $900 billion limit, likely running up a tab in the trillions of dollars. Assuming both full funding and spending over the first 10 years and that both are combined, as Senator Baucus conceded, the bill would cost $2.5 trillion. Capretta estimates the true cost of the bill at $4.9 trillion over 20 years.[19] The devil, as always, is in the details. First, Senator Reid's bill relies on "bracket creep" to raise taxes to pay for its costs. The new 40 percent excise tax on high-cost insurance plans is indexed to general inflation plus 1 percent, which is lower than health care cost inflation.[20] This means that as health care costs grow, more Americans will pay the tax. Second, the bill increases the Medicare payroll tax for individuals making $200,000 and families making $250,000 per year. This tax hike is not indexed to inflation, which means that inflation will steadily push more middle-class Americans into that tax bracket. Thus, Senator Reid plans to finance $2.2 trillion of his health care bill by continuously raising taxes on more and more Americans. In the second 10 years of enactment, the bill's coverage provisions would cost $3.1 trillion.[21] When the additional Medicare spending for the so-called doctor fix is included in the calculation, the cost over 20 years would total $4.9 trillion. Clearly, raising taxes alone will not cover this, so the remainder is expected to be funded by big cuts in Medicare (assuming they actually occur). The Senate bill would require raising taxes on middle-class Americans and cutting senior citizens' health benefits by nearly $5 trillion. As often happens in Washington, D.C., a bill touted for saving money will end up costing the taxpayers a fortune.

Reducing Personal Freedom and Imposing Mandates In a remarkable twist in public policy, the Senate bill would use taxes and penalties to punish uninsured Americans and companies that hire workers from low-income families. The Individual Mandate. The Senate bill includes an unprecedented act of Congress to force Americans to buy a commodity: health insurance.[22] The "individual responsibility" provision in Section 1501 requires anyone who fails to obtain a qualifying health plan to pay an annual tax penalty of $750 per adult family member and $375 per child, up to a maximum penalty of $2,250 per family. These penalties would be phased in from 2014 to 2016 and then indexed for inflation, which means they would likely increase every year. Because these new taxes are fixed amounts based on family size, families of the same size will pay the same amount regardless of income, although the poor may qualify for exemptions. This is different from the House bill, which would impose a 2.5 percent tax on modified adjusted gross income above the minimum income at which filing a tax return is required. A family of two adults and two children is actually worse off under the Senate bill if they make less than $99,350 per year and worse off under the House bill if they make more. The bill provides for only a few exemptions. For example, a person can be exempt if the lowest available premium for a bare-bones plan, as defined by federal authorities, is more than 8 percent of one's income. However, this would apply only to those making less than $28,125 per year. The Employer Mandate. Sections 1511-1513 of the Senate bill contain an "employer responsibility" provision that requires companies with more than 50 employees to offer qualified health plans-- as defined by government bureaucrats--to their full-time employees or to pay a tax of $750 per full-time employee. Since the penalty is much cheaper than providing health insurance, employers are likely to just pay the $750 tax. For employees, however, this means they lose their employer contribution toward their premium costs. There is another catch. An employer who offers qualifying insurance must pay a penalty of $3,000 for every employee from a low-income family who qualifies for and accepts a premium subsidy in the "health insurance exchange."[23] The employer's total penalty is capped at $750 times the total number of full-time employees if more than a quarter of the employees receive the subsidy. In summary, if a company employs many low-income workers, it can save money by dropping its health plan and paying the $750-per-employee tax or by reducing as many employees as possible to working part-time. However, if a company has mostly middleincome workers, it faces a $3,000-per-year penalty for hiring a worker from a lowincome family who elects the subsidy. Also, this penalty applies to the employee's family income, not the income that the employee is paid by any particular company.

Therefore, a company would save $3,000 by hiring someone with a working spouse or a teenager with working parents whose family income is higher instead of a single mother with three children. Even worse, if one-fourth of its employees qualify for a premium subsidy based on income and family size, the company would still pay the $750-peremployee tax whether it offers insurance or not. The Senate bill would create many perverse incentives that would encourage companies with many low-income employees to drop their health plans entirely. Unlike the lowerincome workers who would qualify for the subsidies, higher-income workers would have to obtain coverage on their own with no assistance.[24] Micromanaging Health Insurance The Senate bill provides for federal micromanagement of all private health insurance. It would subject all private health insurance, whether purchased from an insurance company by employer groups or individuals or provided through an employer or union self-insured plan, to detailed federal regulation. These "insurance reform" provisions amount to a de facto nationalization of health insurance, whether or not Congress creates a government-run health insurance plan. Instead of protecting patients, heavy regulation will stifle choice and competition in the health insurance market. Benefit Control. Of particular concern to patients, the U.S. Department of Health and Human Services (HHS) would decide the details of their health insurance coverage. Americans recently received a foretaste of what such federal regulation would look like when the U.S. Preventive Services Task Force downgraded its recommendation for breast cancer screening (mammography) for women ages 40 to 50 from "B" (recommended) to "C" (not recommended). Normally, such recommendations would not create controversy, because until now they have merely been suggestions to guide providers and health plans, which make their own decisions for their patients and members. However, the proposed legislation would give such recommendations the force of law because it would require all plans to provide coverage (with no patient co-pays) for "items or services that have in effect a rating of 'A' or 'B' in the current recommendations of the U.S. Preventive Services Task Force."[25] Thus, a recommendation on a specific medical service by the heretofore obscure HHS task force would carry the force of law and impose additional costs on insurers and employer health plans. Conversely, a "C" or "D" rating, such as the recent decision on breast cancer screening, would give insurers and employers justification to discontinue coverage. Cost Impact. Over time, the more specific HHS is in its benefit requirements--driving up the cost of coverage--the greater the incentive will be for insurers and employers to control the escalating costs by covering only what federal law requires. The eventual result will be little to no variation among private health insurance plans and little variation in cost. At that point, Congress will effectively have nationalized the entire

American health insurance system under HHS supervision without formally setting up another government-run health insurance program. A Federally Designed Health Insurance Exchange for the States The original version of the Senate health bill contained a "public option," a new government-run health plan to "compete" against private health plans within a federally designed system of state health insurance exchanges. Recently, the Senate leadership agreed to remove that provision and replace it with a Medicare expansion--on top of the Medicaid expansion--and a new health plan option sponsored by the U.S. Office of Personnel Management (OPM), the federal agency that runs the Federal Employees Health Benefits Program (FEHBP). Then, in response to political opposition from "moderate" Senate Democrats, the Senate leadership recently announced that they were dropping the Medicare expansion. Mandatory State Health Exchanges. Under Section 1311 of the bill, the Secretary of Health and Human Services would be required to provide states with grants to establish American Health Benefit Exchanges. By 2014, states would be required to establish these exchanges for the purchase of "qualified" health plans. Plans would be qualified only if they met federal rules governing benefit packages, provider networks, "essential community providers," quality standards and measures of uniformity of enrollment procedures, rating systems, outreach, reinsurance and risk adjustment, and a variety of other requirements. States could require the qualified health plans to offer additional benefits, which would make the health plans more expensive, but they could not allow benefit changes that differ from the federal standards. Administration of the exchanges would have to be "self-sustaining," so the states would be allowed to impose assessments or fees on health plans and enrollees to cover the administrative costs. Section 1321 requires states to implement standards for the health exchanges by 2014. If a state fails or refuses to implement an exchange in accordance with federal rules, the HHS Secretary is required to intervene in the state, operate an exchange, and unilaterally implement the federal standards. Co-ops. Section 1322 requires the HHS Secretary to award loans and grant monies to "member-run" nonprofits that offer "qualified health plans." In effect, this would create a federal "co-op" option. The co-ops would make purchasing decisions but could not fix provider payment rates. Under the terms of the bill, neither existing private health insurance companies nor government organizations could set up co-ops. The bill directs the U.S. Comptroller General to appoint an advisory board to oversee this new program and provides $6 billion in federal funding for start-up costs. As Heritage analysts have noted, none of this is necessary. A change in federal tax law would allow private-sector co-ops to offer health insurance.[26]

A Broken Compromise.Section 1323 of the original version of the bill would have required the HHS Secretary to create a "community health insurance option" to participate through the authorized health insurance exchanges.[27] This is the government-run plan that would compete against private insurance, but states could opt out of offering the prescribed public health plan in the state-based exchanges.[28] More recently, Senator Reid has proposed a compromise that would replace this government-run plan with a couple of private nonprofit health plans sponsored by the U.S. Office of Personnel Management. According to press accounts, these OPMsponsored plans would compete nationwide in the state-based health insurance exchanges created under the bill just as the recently discarded "public option" would have under the original version of the bill. The Senate leadership's OPM proposal is novel. The OPM administers the FEHBP, a consumer-driven system of hundreds of competing private health plans that serve federal workers, federal retirees, and their dependents. As the federal paymaster, the OPM provides federal enrollees with a defined contribution, which they use to purchase the private plans. The OPM acts as an umpire, enforcing the rules of the market competition. However, Senator Reid and his colleagues apparently would have the OPM play a much different role as the sponsor and overseer of "at least two" nonprofit health plans that would compete against private plans.[29] Presumably, they would compete in the statebased health insurance exchanges. Two key issues in this proposal need to be clarified: How would the OPM set premiums for the two plans, and would these plans be eligible for taxpayer subsidies to cover any shortfalls? If the OPM could set premiums below market prices to undercut private health plans and access taxpayer subsidies, then the two nonprofit plans could erode private and employer-based coverage much as a Medicare-style public plan would. Briefly, the Senate leadership also promoted and then quickly jettisoned a major Medicare expansion--expanding eligibility to citizens between the ages of 55 and 64. The reasons for the Senate leadership's decision to discard the Medicare "buy in" are not hard to fathom. The proposal was burdened by a number of practical difficulties. The New York Times reported that the program would have been quickly initiated in 2011 but restricted to individuals, not families. It would have been financed by premiums, estimated at $7,600 per person and $15,200 per couple.[30] But for many persons in that age category, such premiums would have been unaffordable without special government subsidies to offset their costs. This could have added significantly to the cost of the bill. But without such subsidies, premiums for enrollees could have been higher than those obtained in private health plans. Worse, Medicare is already deficient as a health care plan because it does not cover many needed benefits, such as catastrophic coverage. Nine out of 10 current Medicare beneficiaries rely on private, employer-based, or supplemental coverage as a "wrap-

around" plan for Medicare. A common concern among health policy analysts was that the Medicare expansion provision could further erode employment-based coverage among older workers while adding significantly to Medicare costs. Federal Control. Beyond the provisions for a "public plan" or its potential substitutes, the Senate bill sets up a federally designed system of health insurance exchanges modeled after the provisions of a bill reported out of the Senate Health, Education, Labor, and Pensions Committee in July. The federal government would control the creation, design, and operation of health insurance exchanges and, depending on whether states opt out, enter as a direct competitor against private health plans. While states would become vehicles of federal health policy, they could pursue independent arrangements in health insurance only by seeking a "waiver" from federal authorities. Thus, the Senate health care bill would radically centralize power and control over the content of health benefits packages and health insurance in Washington. In other words, the very text of the bill and the powers it would confer on the federal government would, for all intents and purposes, constitute a "public plan" without even the formal creation of such an institution. New Middle-Class Taxes The Senate bill creates a host of new taxes, totaling $370.2 billion in taxes and another $36 billion in taxes from the individual mandate penalty over the next 10 years. The government would start collecting many of these taxes in 2010, even as the economy continues to struggle. The most significant is a 0.5 percent increase in the payroll tax on earnings above $200,000 for individuals and $250,000 for couples filing joint returns. The new tax provisions would also permanently sever the link between the Medicare payroll tax and Medicare benefits because the additional revenue would go to the general fund for health care instead of directly to Medicare payments. This is a bad decision and represents a major policy shift. It means that Medicare taxes would no longer be dedicated solely to social insurance and safeguarding Medicare. Instead, Medicare payroll taxes would be used for other government programs. It is ironic that congressional liberals have proposed this shift because liberal champions of social insurance historically have worried about turning social insurance programs into welfare programs that redistribute wealth. The Senate payroll tax is a giant step down that road of using social insurance payroll taxes to transfer income. The Senate bill would also impose an excise tax on "high value" health care plans. This tax is expected to be almost $150 billion and is very similar to the tax reported earlier out of the Senate Finance Committee, but it uses a higher threshold level. While the health benefits packages of corporate plans may be rich, it does not follow that the subscribers are wealthy. This tax will disproportionately affect middle-income households.

The Senate bill would also impose a host of new taxes on the health insurance industry, ranging from a tax on branded drugs to a tax on medical devices. These new taxes would increase medical costs and premiums for individuals regardless of income. They would only raise the cost of health care because companies would pass these tax increases on to health care consumers.

The bill has over a dozen new taxes, including:

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A 40 percent excise tax on "high value" health care plans of $8,500 or more for an individual and $23,000 or more for a couple ($149.1 billion in new taxes over the next 10 years); A 0.5 percent hike in the Medicare payroll tax for single earners over $200,000 and joint earners over $250,000 ($53.8 billion); Changes in health savings accounts (HSAs), Archer Medical Spending Accounts, health flexible spending accounts (FSAs), and health reimbursement arrangements ($5 billion); A $2,500 cap on FSAs in cafeteria plans ($14.6 billion); An increase from 10 percent to 20 percent in the penalty for early non-qualified HSA withdrawals ($1.3 billion); A tax on branded drugs ($22.2 billion); An annual tax on the health insurers[31] ($60.4 billion); A tax on companies that manufacture or import medical devices ($19.3 billion); A 0.5 percent excise tax on cosmetic surgery ($5.8 billion over 10 years); An increase in the floor of the medical expenses deduction from 7.5 percent of adjusted gross income to 10 percent, except for seniors, who will stay at 7.5 percent ($15.2 billion); Elimination of the Medicare Part D (prescription drug) deduction ($5.4 billion); A $500,000 cap on the tax deduction for the salaries of employees of health insurance companies ($0.6 billion over 10 years)[32]; and A mandate on companies with more than 50 employees to provide health coverage or pay a $750 penalty per employee for those who obtain coverage through the insurance exchange ($36 billion over 10 years) and a mandate on individuals to obtain coverage or pay a tax penalty.[33]

Expanding Medicaid and Long-Term Care Entitlements

The Senate health care bill generally follows the earlier versions, which would expand Medicaid and create a new health care program, the CLASS Act.

More Welfare. The Senate bill expands Medicaid eligibility to all Americans below 133 percent of the federal poverty level, changing it to a purely income-based federal entitlement. It also changes the federal matching rates for different populations and states. For example, Section 2006, a special provision aimed at Louisiana, provides a special "disaster recovery" match rate for states that have had a major disaster declared. The CBO estimates that this will increase total Medicaid spending by $25 billion. Of course, millions of persons at or below 133 percent of the federal poverty level carry private health insurance. The Senate bill, based on all previous experience, would further crowd out private health care coverage. It would also encourage employers to drop coverage for employees that would qualify for Medicaid after the expansion, compounding this effect. Less State Authority.States should be alarmed at the aggressive federal encroachment on state authority over the management of Medicaid. Section 2801 is clearly intended to increase the federal government's direct control of the program. In addition, states would become vulnerable to federal lawsuits by individuals under the expanded definition of medical assistance in Section 2304. This would likely be used to overturn recent federal court decisions won by states that limit private lawsuits against them. The Senate makes another major exception to current law governing the eligibility of immigrants for welfare benefits. Previously, legal immigrants have been prohibited from receiving public benefits, including Medicaid, until five years after their date of entry into the United States. The Senate bill would reverse this, making legal immigrants immediately eligible for the new federal subsidies upon enactment. This raises an equity issue that has been overlooked: 60 million U.S. citizens would be excluded from the generous federal subsidies. Class-Based Inequity. Instead of expanding high-quality coverage to all, the Senate bill would create a rigid, two-tiered health care system. Individuals at the lowest income levels would be forced into Medicaid, while individuals just above the poverty level would qualify for generous subsidies worth more than Medicaid on a per capita basis. The Senate bill further promotes this inequity by giving non-citizens the federal subsidies that are denied to the lowest-income Americans.

A New Program. The CLASS Act has been included in the Senate bill despite criticism that it is not fiscally sound over the long term. The CLASS Act would create a new federal program for long-term health care insurance to compete against private insurance. Individuals who pay into the program for five years and experience limitations in their daily activities would become eligible for cash benefits. These limitations do not meet the current disability test, which opens the program to abuse. Perhaps more problematic, according to the CMS, the program is particularly vulnerable to adverse selection, which would make it "unsustainable."[34] The CLASS Act also serves as a budget gimmick, enabling the federal government to collect revenues for five years before paying out any benefits. As noted, this up-front revenue collection, along with other taxes and fees, allows the Senate sponsors to claim that the bill is fiscally responsible and offsets the cost of the Senate bill by $72 billion over the first 10 years. The problem is that the program's costs will explode when the benefit payouts start to accumulate. As the CMS has indicated, the program will generate net costs, not net savings.[35]
Conclusion The Senate is engaged in a deadly serious debate on a 2,074-page bill that would overhaul the entire health care sector of the economy, profoundly affecting the personal lives of 300 million Americans. It would erect massive federal controls over private health insurance, dictating the content of insurance benefit packages and the use of medical treatments, procedures, and medical devices. The bill would also make major changes in payments to doctors, hospitals, and medical professionals in Medicare, Medicaid, and other programs; establish new federal agencies, bureaus, and commissions to oversee various aspects of the health care system, including how physicians and other medical professionals deliver care; and alter the relationship between the federal government and the states, transferring massive regulatory power to the federal government while reducing the flexibility of state officials to manage Medicaid and limiting their capacity to initiate health insurance reforms within their own states. The Senate bill would impose enormous costs on the American people, totaling at least $2.5 trillion for the first 10 years. After the first 10 years, as costs escalated, Congress would need to impose additional major tax increases and impose major cuts in benefits to pay for this health care agenda. The American people want and need health reform, but the Senate bill is clearly not what they have in mind.

Show references in this report [1]For an overview of the House-passed bill, see "A Closer Look at the House Democrats' Health Care Bill," Heritage Foundation WebMemo No. 2684, November 6, 2009, at http://www.heritage.org/Research/HealthCare/wm2684.cfm. [2]While House Speaker Nancy Pelosi (D-CA) dismissed as unserious a question about the constitutionality of imposing a health insurance mandate on individuals, the question is very serious indeed. See Randy Barnett, Nathaniel Stewart, and Todd F. Gaziano, "Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional," Heritage Foundation Legal Memorandum No. 49, December 9, 2009, at http://www.heritage.org/Research/LegalIssues/lm0049.cfm. [3]The latest CNN poll shows that 61 percent of Americans oppose the bill. See "CNN Opinion Research Poll," December 10, 2009, at http://i.a.cnn.net/cnn/2007/images/12/10/rel12a.pdf (December 18, 2009). A new Rasmussen poll found that only 34 percent of Americans say that passing health care is better than passing nothing. See "Just 34% Say Passing Health Care Bill Is Better Than Passing Nothing," December 18, 2009, at http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/dec ember_2009/just_34_say_passing_health_care_bill_is_better_than_passing_nothing (December 18, 2009). Finally, a Galen Institute survey found that key components of the legislation, particularly the individual mandate, are highly unpopular. See "Galen Institute Releases Poll Showing Overwhelming Opposition to the Individual Mandate and Other Key Components of Congressional Health Care Proposal," October 18, 2009, at http://www.galen.org/component,8/action,show_content/id,71/blog_id,1291/type,33/? _highlight=survey (December 18, 2009). [4]Editorial, "Medicare Sausage?"The Washington Post, December 10, 2009, p. A28, at http://www.washingtonpost.com/wpdyn/content/article/2009/12/09/AR2009120903902.html (December 14, 2009). [5]Barack Obama, "Remarks by the President to a Joint Session of Congress on Health Care," September 9, 2009, at http://www.whitehouse.gov/the_press_office/Remarks-bythe-President-to-a-Joint-Session-of-Congress-on-Health-Care (December 15, 2009). [6]"We estimate that between 9 million and 10 million other people who would be covered by an employment-based plan under current law would not have an offer of such coverage under the proposal." Congressional Budget Office staff e-mail to the Office of Senator Mike Enzi (R-WY), December 7, 2009, at http://enzi.senate.gov/public/index.cfm? FuseAction=Files.View&FileStore_id=24239e66-4ab7-4135-8b66-e84c32056c37 and http://enzi.senate.gov/public/index.cfm? FuseAction=NewsRoom.NewsReleases&ContentRecord_id=6f4cab2a-802a-23ad-43795430a0a3bb03&Region_id=&Issue_id (December 18, 2009).

[7]Richard S. Foster, "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act of 2009,' as proposed by the Senate Majority Leader on November 18, 2009," U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 10, 2009, pp. 19-20 at http://src.senate.gov/files/OACTMemorandumonFinancialImpactofPPAA(HR3590)(1210-09).pdf (December 14, 2009). [8]Joint Committee on Taxation, "Estimated Revenue Effects of the Revenue Provisions Contained in the Patient Protection And Affordable Care Act," November 18, 2009, at http://jct.gov/publications.html?func=startdown&id=3635. Also, for a discussion of the taxes proposed in the House and Senate bills, see Curtis S. Dubay, "Taxes Proposed to Pay for Health Care Reform," Heritage Foundation WebMemo No. 2706, November 20, 2009, at http://www.heritage.org/research/healthcare/wm2706.cfm. [9]Foster, "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act of 2009,'" p. 8. [10]Obama, "Remarks by the President to a Joint Session of Congress on Health Care." [11]For more discussion, see Chuck Donovan and Robert Moffit, "House Bill Wrong on Values," Centre Daily Times (State College, Pennsylvania), November 23, 2009. [12]Senator Max Baucus (D-MT) Remarks on the Senate Floor, December 2, 2009. [13]Congressional Budget Office, "Information on Medicare's Payments to Physicians and the Budgetary Effects of H.R. 3961, the Medicare Physicians Payment Reform Act of 2009," November 19, 2009, at http://www.house.gov/budget_republicans/press/2007/pr20091119cboscore.pdf (December 14, 2009). [14]Douglas W. Elmendorf, Congressional Budget Office, letter to Senator Harry Reid, November 18, 2009, at http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf (December 14, 2009). [15]Congressional Budget Office, "Preliminary Analysis of the Affordable Health Care for America Act as Introduced in the House of Representatives on October 29," Director's Blog, October 29, 2009, at http://cboblog.cbo.gov/?p=403 (December 14, 2009). [16]James C. Capretta, "A $4.9 Trillion Spending Increase," National Review Online, November 19, 2009, at http://healthcare.nationalreview.com/post/? q=OTc1MjEzYjI5NzM0M2Y1YjUwNzZhZmVhZGFhYTQxYjI (December 14, 2009). [17]Foster, "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act of 2009,'" p. 10.

[18]Ibid., p. 14. [19]Capretta, "A $4.9 Trillion Spending Increase." [20]Ibid. [21]Ibid. [22]See Barnett et al., "Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional." [23]See Sections 1401-1402, Patient Protection and Affordable Care Act of 2009. The Senate bill provides a generous tax credit and cost-sharing assistances for individuals and families earning between 100 percent of the federal poverty level (FPL) and 400 percent FPL. Premiums would be based on percent of income, ranging from a 2 percent cap to a 9.8 percent cap. The cost-sharing assistance would also be income-based. [24]For a more detailed discussion of this unusual set of problems and the inequities created under the Senate bill, see Robert A. Book, "How the Senate Health Bill Punishes Businesses That Hire Low-Income Workers," Heritage Foundation WebMemoNo. 2716, December 3, 2009, at http://www.heritage.org/research/healthcare/wm2716.cfm, and James C. Capretta, "The Senate Health Care Bill's Firewall Creates Disparate Subsidies," Heritage Foundation WebMemo No 2730, December 11, 2009, at www.heritage.org/researchy/healthcare/wm2730.cfm. [25]H.R. 3962 (House Bill), Sections 222(b)(8) and 222(c)(1)(A). Section 1001(1) of the Senate bill (H.R. 3590) amends the Public Health Services Act, including adding these provisions as a new Section 2713(a)(1) in the PHSA. [26]See Edmund F. Haislmaier, "Health Insurance Co-ops: How Congress Could Adopt the Right Design," Heritage Foundation Backgrounder No. 2290, June 25, 2009, at http://www.heritage.org/Research/healthcare/bg2290.cfm. [27]The original version of the bill required the new government-run plan to offer the "essential" health benefits, as defined by federal authorities, but the states could require the plan to offer more benefits in states where the plan competed against private plans. The HHS Secretary would set rates for the government-run plan and be empowered to negotiate the rates for doctors and hospitals. Under the bill, the rates must not be higher than the "average" rates paid to doctors and hospitals by the qualified private health plans. The CBO has estimated that the rates for the government-run health plan would be higher than private-sector rates for a variety of reasons, including "adverse selection," the likelihood that the public plan would attract proportionally more older or sicker enrollees. Congress would provide start-up funding for the government health plan, but premiums would cover claims, administrative costs, and contingency reserves. The government plan would be subject to both federal and state solvency and consumer protection laws.

[28]In its initial analysis of the original version of the Senate's "public plan," the CBO estimated that most Americans would live in states with a government plan. But without the imposition of Medicare rates to reduce payments to doctors and hospitals well below those of the private sector and with a low estimated take-up rate (3 million to 4 million according to an earlier CBO projection), some liberal analysts who championed a "robust public option" started to question the point of the Senate's "public option" proposal. Many liberals, such as Representative Anthony Weiner (D-NY), saw the Senate leadership's recent proposal to expand Medicare to include persons well below the normal retirement age as a superior way to move toward a single-payer system of national health insurance, but the Senate leadership, as noted, discarded this option as well. [29]David M. Herszenhorn and Robert Pear, "High Premiums in Senate Democrats' Health Plan," The New York Times, December 10, 2009, at http://www.nytimes.com/2009/12/11/health/policy/11insure.html (December 14, 2009). [30]Ibid. [31]This tax would also apply to Medicare Advantage plans and private plans offered in the FEHBP, meaning that seniors and federal employees would also pay higher taxes. For a discussion of the special health insurance premium tax, see Edmund F. Haislmaier, "The Senate Health Bill: Cost of the Insurance Premium Tax to Individuals and Families," Heritage Foundation Backgrounder No. 2350, December 9, 2009, at http://www.heritage.org/research/healthcare/bg2350.cfm. [32]Joint Committee on Taxation, "Estimated Revenue Effects of the Revenue Provisions Contained in the Patient Protection And Affordable Care Act." [33]Under the federal tax code, similar employees with similar incomes are treated very differently in their purchase of health insurance. Those who receive health insurance through employers get unlimited tax breaks for that purchase; those who obtain health insurance outside the workplace receive no tax relief. As noted, the Senate bill includes this strange new provision, which introduces a whole new set of inequities into the health care system. See Book, "How the Senate Health Bill Punishes Businesses That Hire LowIncome Workers." [34]Foster, "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act of 2009,'" p. 14. [35]Ibid., p. 13.

http://www.heritage.org/Research/Reports/2009/12/AnAnalysis-of-the-Senate-Democrats-Health-Care-Bill

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Obamacare Increases Unemployment, Insurance Premiums, Deficit, and Debt
Posted March 17th, 2010 at 10:27am in Health Care with 6 comments President Barack Obama and congressional leaders claim that the Senate health bill, which will likely face a vote in the House by the end of the week, will decrease the deficit and bend the cost curve related to health care spending. However, recent analysis by The Heritage Foundation’s Center for Data Analysis (CDA) shows that this is far from true. Instead, the bill’s mandates and numerous new taxes will have tumultuous effects. Passing Obamacare will come at the expense of the American people as it would grow the federal debt, increase premiums, and stifle economic growth. The Senate bill would have disastrous effects on the economy and federal spending. CDA shows that the bill:

Increases the federal deficit and national debt. The Congressional Budget

Office shows deficit neutrality for the Senate bill—however, this is based on static analysis which ignores the effects new taxes and an individual and employer mandate would have on economic growth. These provisions would decrease investment in the economy, resulting in lower wages and salaries. This means less taxable income, lowering federal revenues and growing the debt. Increased borrowing puts upward pressure on interest rates causing some private sector productive investment opportunities to be foregone. This also increases the interest owed on the national debt, such that the government would pay, on average, $20 billion more in interest between 2010 and 2020. By the end of the decade, CDA estimates the publicly held debt would be $755 billion dollars more than under current law.

Increases insurance premiums. Mandates in the Senate bill would require health plans to offer more generous coverage, increasing the cost of insurance. Increased spending on premiums, accompanied by increased medical spending, would create upward pressure on prices. This would further increase government spending, since offering the current levels of care covered by Medicaid and the proposed subsidies would cost significantly more. Another choice would be to ration provider payments even more severely. Increases unemployment. The bill also places new taxes on “the rich”—or, in more realistic terms, small businesses and those who create jobs. CDA’s dynamic analysis of the bill shows that an

average 690,000 jobs per year would be lost due to the effects described above.
Americans have recently voiced that Congress’ top legislative priority should be restoring jobs and the economy. Instead, congressional leaders have focused their agenda on passing the Senate health care bill, which would have the opposite effect of killing jobs growth, suppressing economic growth, and adding to the nation’s already unsustainable levels of federal spending. http://blog.heritage.org/2010/03/17/obamacare-increases-unemploymentinsurance-premiums-deficit-and-debt/

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Health Reform That Breaks the Bank
Posted March 8th, 2010 at 4:00pm in Health Care with 8 comments

During last month’s Blair House health care summit, President Barack Obama was forced to change the subject after Rep. Paul Ryan(R-WI) Blair House thoroughly refuted the President’s claim that his health care plan would reduce the deficit. It took over a week for the White House to respond to Ryan, but last Thursday they finally produced this blog post by OMB director Peter Orszag followed by a Washington Post op-ed Friday titled: Health reform that won’t break the bank. Ethics and Public Policy Center fellow James Capretta responded to the White House that same day at NRO: Orszag and DeParle start by agreeing with Ryan that delaying the start date of an entitlement expansion is a tried-and-true budget gimmick, designed to push the full cost of the additional spending outside of the “budget window” covered by a cost estimate.

But, not to worry, they say. In this instance, it’s not a gimmick because the deficit reduction from their plan just keeps growing over time. They claim the president’s health plan would produce deficit reduction of $100 billion over ten years and $1 trillion in the second decade. Of course, there’s another reason besides balancing revenue and spending to push the start of an entitlement back, and that’s to make the ten-year cost look much smaller than it really is. Recall that the president promised in his address to Congress last September to deliver a bill that costs only “$900 billion” over a decade. The new entitlements the Democrats want to create would cost much, much more than $90 billion per year. In fact, the Congressional Budget Office (CBO) says they will cost about $200 billion per year by 2019. And so, to get the media to now say his plan costs only “$1 trillion” (what’s $100 billion among friends!), the administration delays the coverage expansion provisions until 2014. Never mind that the president also says the uninsured can’t wait a day longer for the legislation. Once enacted, he would make them wait — for four years. As Ryan noted, however, once the program did get up and running, costs would soar. The Senate Budget Committee Republican staff estimates the Senate bill’s cost at $2.3 trillion over ten years when fully implemented. In their Post op-ed, Orszag and DeParle do not even attempt to address the many other points Ryan made which expose the dubious assumptions and sleight of hand behind their deficit-cutting claims. For instance, the health-reform bill is filled to the brim with Medicare changes, but the one Medicare provision the president and the Democrats want to pass separately from the health bill is the so-called “doc fix,” which would repeal a cut in Medicare physician fees at a cost of $371 billion over ten years. Of course, splitting their agenda into two or three bills doesn’t change the total cost. When the “doc fix” is properly included in a tally of what the president is pushing, all of the supposed deficit reduction vanishes. Then there’s the double-counting that Ryan exposed. The president’s plan starts up yet another entitlement program, providing long-term care insurance. Enrollees have to pay premiums for a number of years before they qualify for any benefits. Consequently, at startup, there’s a surplus of premium collections — $73 billion over ten years, according to CBO — because no one qualifies for the benefits yet. The president and his team count these savings against the cost of health reform — even though the money will be needed later to pay out long-term-care insurance claims. When this gimmick is taken out of the accounting, the president’s health proposal goes even deeper into the red. Over the long-run, the administration’s claim of large-scale deficit reduction hinges on the dubious assumption that future elected officials will demonstrate more political courage than those in office today. For most of last year, the president said that he would “bend the cost-curve” in large part by imposing a new tax on “high-cost” insurance plans. The tax would hit more and more

middle-class beneficiaries each year because the threshold for determining what constitutes a “high-cost” plan would grow much more slowly than medical costs. In fact, after a number of years, virtually all Americans would be in plans at or above the “highcost” threshold. House Democrats and their union allies despise this tax. Last week, the president caved in to their pressure and pushed the start date of the tax back to 2018, well past the point when he will have left office. Even so, Orszag and DeParle still claim credit for the massive revenue hike that would occur in a second decade of implementation. They want us to believe we can finance a permanent, expensive, and rapidly growing new entitlement program with a tax the president himself was never willing to collect. In Medicare, Orszag and DeParle like to highlight so-called “delivery system reforms” the administration has touted. In the main, these are extremely small-scale initiatives and pilot programs. CBO says they will amount to virtually no savings. The big Medicare cuts in the president’s plan come from across-the-board payment-rate reductions. In particular, the president wants to cut the inflation update for hospitals, nursing homes, and others by half a percentage point every year, in perpetuity. On paper, this change produces huge long-run savings. But it does nothing to control the underlying cost of treating patients. It just pays everyone less, without regard to patient need or quality of care. The chief actuary of the program has said repeatedly that these cuts are completely unrealistic for these very reasons. If implemented, he expects they would drive one in five facilities into serious financial distress. And yet Orszag and DeParle want us to believe these savings can be counted to finance the president’s massive entitlement promises. And massive they are. CBO says the coverage expansion provisions in the Senate-passed bill would cost about $200 billion by 2019, and that cost would rise 8 percent every year thereafter. But even these estimates understate the true cost of Obamacare. The president’s plan, like the House and Senate bills, would extend generous new insurance subsidies to low- and moderate-wage workers getting insurance through the new “exchanges.” Workers in jobbased plans would get no additional help. That means two workers with identical incomes would be treated very differently. Gene Steuerle of the Urban Institute has estimated that, in 2016, a worker with job-based coverage and a $60,000 income would get $4,500 less than someone with the same income but health insurance through the exchange. This kind of inequitable treatment would never last: one way or another, the entitlement would get extended to everyone in the targeted income range, sending the overall costs of the program soaring. The president started off last year by saying he wanted to “bend the cost-curve” even as he broadened coverage. But after a year of partisan political and legislative maneuvering, all that’s left is a massive entitlement expansion. The new costs would get piled on top of the unreformed and unaffordable entitlements already on the books. It’s a budgetary disaster in the making.

http://blog.heritage.org/2010/03/08/health-reform-that-breaks-the-bank/ ____________________________________________________________________

Morning Bell: What the Senate Bill Would Do To America
Posted March 18th, 2010 at 9:19am in Health Care with 15 comments Another day, another no-show for the Obamacare reconciliation bill. House Democrats were quick to shift blame to the Congressional Budget Office (CBO) with Rep. Robert Andrews telling The Hill that the delay “has been much more technical than substantive. … It’s not like what tax has to go or what spending has to go.” Which is an interesting claim, since Politico reported that AFL-CIO President Richard Trumka was summoned to the White House yesterday afternoon “to discuss a higher-than-expected excise tax on some health care plans.” In fact, Politico added: “A labor source said Trumka’s meeting would focus on the entire bill, not just the excise tax question.” Sounds like more than just technical details are still in flux. But in reality, none of these discussions really matter. The reconciliation bill being drafted is nothing more than thin political cover for House Democrats who believe the Senate bill is terrible public policy but want to please their leadership and the President by voting for it anyway. As we detailed yesterday, there is no bill but the Senate bill. Once the House passes the Senate bill, the President will sign it. Game over. It has been almost three months since the Senate passed their bill in the dead of night on Christmas Eve. A review of just how terrible it really is, is in order: New Middle-Class Taxes: Throughout his campaign, President Barack Obama promised he would not raise taxes on American households making less than $250,000. The Senate bill shatters that promise. For starters, just look at the reason Trumka went to the White House yesterday: the excise tax on high-cost health insurance plans. This tax would overwhelmingly hit middle-class taxpayers. Taxes on prescription drugs, wheel chairs and other medical devices would also be passed on to all consumers, hitting the lowerand middle- classes the hardest. Increased Health Care Costs: The Senate bill manifestly does nothing to bend the health care cost curve downward. According to the latest CBO report, the Senate bill would actually increase health care spending by $210 billion over the next 10 years. This follows a previous report from the President’s own Center for Medicare and Medicaid Services (CMS) showing the Senate bill would result in $234 billion in additional health care spending over 10 years. Increased Health Insurance Premiums: The President initially promised that Americans would see a $2,500 annual reduction in their family health care costs. But

under the Senate bill, premiums would go up for millions of Americans. In fact, according to the CBO, estimated premiums in the individual market would be 10–13 percent higher by 2016 than they would be under current law. Increased Deficits: Despite claiming to be comprehensive health care reform, the Senate bill does not address the fact that Medicare’s current price-fixing doctor reimbursement scheme is set to reduce doctor payments by 21% this year. That simply is not going to happen. Congress will pass that fix separately. If that cost were included, Obamacare is already $200 billion in the red. Now throw in the fact that the Senate bill is paid for with another $463 billion in Medicare cuts to health care providers. CMS says if these cuts occur, one-fifth of all health care providers will face bankruptcy. That simply is not going to happen. Just like the doctor reimbursement cuts have never happened, the Obamacare Medicare cuts will never happen. So in reality, Obamacare will add almost $700 billion to our national deficit in the next ten years alone. Increases Unemployment and Puts Millions of Americans on Welfare: According to The Heritage Foundation’s Center for Data Analysis (CDA), a dynamic analysis of the tax hikes and deficits created by the Senate bill shows that an average 690,000 jobs per year would be lost if it became law. In addition, over half of all Americans who would gain health insurance through the bill (18 million out of 33 million) would do so by being placed on Medicaid, which is a welfare program. Higher taxes, higher health care costs, higher health insurance premiums, higher deficits, more unemployment and more Americans on welfare. That is America’s future should the Senate Obamacare bill become law. Quick Hits:

According to the Treasury Department, the National Debt has increased over $2 trillion over the 421 days since President Obama took office. If the House does pass the Senate bill, dozens of conservative lawmakers and candidates have signed a pledge to back an effort to repeal the measure. Yesterday Mark Levin posted the complaint his Landmark Legal Foundation will file in federal court if the House uses the Slaughter Rule to pass the Senate bill. Over half of the Americans who gain health insurance through the Senate bill will not be able to get their drugs from Washington state Walgreens, since they announced yesterday that as of April 16th they will not accept any new Medicaid patients. According to Gallup, Americans firmly prioritize the economy over the environment and fewer than half of Democrats now believe environmental protection is the more important goal.

http://blog.heritage.org/2010/03/18/morning-bell-what-the-senate-bill-would-doto-america/

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Health Coverage for All Americans? Not Under the Senate Health Bill
Posted March 17th, 2010 at 4:30pm in Health Care with 1 comments

As Congressional leaders continue to search for ways to pass the Senate health bill in the House later this week, Americans continue to be subjected to dubious rhetoric surrounding the bill’s provisions. The Senate bill’s supporters claim that their legislation must be made law, no matter the cost, in order to achieve universal coverage in the United

States. However, even if the Senate bill does pass, this will not be the case. Despite the fact that the proposed legislation is exorbitantly expensive, it would still fail to achieve universal health coverage. According to the Congressional Budget Office (CBO), by 2019, the legislation would cost (PDF) $196 billion annually and still leave 24 million Americans uninsured. The fact that 24 million people remain would uninsured with enactment of the Senate health bill is remarkable. Under current law, there would be 55 million uninsured Americans in 2019. That means that over 43 percent of the projected uninsured would be unaffected by the legislation, continuing to go without coverage ten years from now. Yet according to research by Heritage expert James Capretta, the bill would cost well over $1 trillion over the next ten years. Capretta shows that the true ten year cost of the plan is more likely to be close to $1.2 trillion, but even this estimate significantly underestimates the true long term cost of the plan. Capretta further points out that this estimate includes ten years of new revenues, but only 6 or 7 years of new spending, skewing the Congressional Budget Office’s ten-year cost analysis to make the bill appear less expensive than it really is. He says that a true ten year estimate would put the price tag closer to $2.3 trillion. Congressional leaders claim that the cost is justified because the bill extends health care coverage to 31 million uninsured Americans. It depends on what one means by “coverage”. Much of the increased coverage would come in the form of Medicaid expansion, as well as exchange subsidies. But Medicaid is characterized by low-quality care and it often fails to meet the health needs of its beneficiaries. According to recent analysis by Heritage Health Policy Fellow Brian Blase, Medicaid expansion in Tennessee actually decreased the quality of care relative to surrounding states that did not expand their own Medicaid programs. In the four years after expanding Medicaid, Tennessee’s improvements in general mortality were more than 50 percent lower than its neighbors. In many states, Medicaid beneficiaries end up in the hospital emergency rooms because they can’t find a doctor who’ll take artificially low Medicaid payment rates. Clearly, Medicaid is not a vehicle for improving the quality of care for millions of Americans. And coverage without efficient access to medical services is probably not

what ordinary Americans have in mind when it comes to health care reform. If the highly unpopular health care legislation is going to cost taxpayers over $196 billion annually ten years from now, while leaving an estimated 24 million Americans without coverage, perhaps that is yet another reason why Congress ought to pause, come to its senses, and press the re-set button. Americans expect and deserve better.
Rick Sherwood currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit:http://www.heritage.org/about/departments/ylp.cfm

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Medicaid Expansion Neglects Program’s Current Failures
Posted March 17th, 2010 at 2:00pm in Health Care with 0 comments

This week, the House is preparing to vote on the Senate-passed health care bill, which depends on a massive expansion of Medicaid to reduce the number of uninsured.

However, as has become apparent in the months of debate surrounding Democrats’ health care proposals, all that glitters is not gold—especially in the case of expanding Medicaid, a low-quality, poorly-functioning federal-state program which fails to meet the needs of its beneficiaries. Increasing the number of citizens dependent on this program fails to address its numerous shortcomings, and instead applies them to millions more. A recent article in the New York Times portrays the plights of current Medicaid beneficiaries which are slowly becoming the norm. Since Medicaid reimburses doctors significantly below the cost of providing care, more and more doctors are being forced to turn patients away. According to Dr. Saed J. Sahouri, “…we’re really losing money on seeing those patients, not even breaking even. We were starting to lose more and more money, month after month.” As it becomes harder for Medicaid beneficiaries to find providers, more and more rely on emergency room care—in fact, Medicaid enrollees are more likely than even the uninsured to end up in emergency rooms in lieu of primary care. As former Heritage analyst Dennis Smith points out, Medicaid spending is demanding a larger portion of state budgets, squeezing out other state priorities from education to transportation. This is a trend which is expected to continue in the years ahead. If the federal government is serious about health care reform, expanding Medicaid is the worst way to go. Making more Americans dependent on this program may decrease the number of uninsured, but will do nothing to improve the access and quality issues plaguing the program. Moreover, federal funding to cover the expansion only offers states temporary relief and simply shifts these costs to federal taxpayers. Eventually states (and state taxpayers) will be left to pick up the cost, only intensifying the problems in the future. Washington can do better by reforming Medicaid so that it works for those who currently use it. Heritage analyst Nina Owcharenko outlines what states legislators and Congress can do to improve the quality of Medicaid: States … should mainstream some Medicaid enrollees into private coverage and adopt consumer-directed models to promote personal responsibility and enable individuals to take control of their health care decisions… federal policymakers should look for ways to make this process easier and remove obstacles to change. …Congress should enact key health care initiatives, such as health care tax credits, and private long-term care incentives that complement Medicaid reform and relieve the increasing pressures on state Medicaid budgets. Millions of Americans currently struggle to receive adequate care due to Medicaid’s inadequacies. Adding more families to these poor performing programs will make these problems worse.

http://blog.heritage.org/2010/03/17/medicaid-expansion-neglects-program %E2%80%99s-current-failures/

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Slaughter Solution: Still the Senate Bill
Posted March 17th, 2010 at 12:55pm in Health Care with 6 comments

The House Rules Committee will meet this afternoon to discuss what has been dubbed the “Slaughter Solution” to passage of the Senate health care bill. The precedent cited by Rules Chairman Louise Slaughter to justify the proposed maneuver (to “deem” passage of the Senate Health Care bill when in fact the bill has never been actually “passed”) simply does not support the planned manipulation of the House rules and may well violate the US Constitution. As early as 1933 House rules were interpreted to permit House acceptance of Senate Amendments in a bill simultaneously with House passage of a Resolution on a separate matter. But that precedent clearly included House concurrence in (or “passage” of) the Senate Amendments. The new maneuver planned for this week’s health care bill is not designed to be an up or down vote on Senate Amendments to a bill or a bill itself. Instead the proposed Rule will “deem”, or pretend, that a Senate bill that will never have been in fact “passed”, was instead “deemed” to have been passed. The United State’s Constitution says: Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States.

House precedents do allow more that one matter to be “passed” by the same vote. But a member’s vote in favor of the bill and the other matter is a simultaneous vote on both the merits and passage of both propositions. Either the US House has had an actual vote to “pass” a bill, or it has not meet Constitutional requirements for a bill to become law. The House can not “deem” that a majority voted for a bill and simultaneously maintain that there was never actually a vote on the bill. The House is ultimately the arbiter of its own internal Rules, but it cannot avoid Constitutional prerequisites for a bill to become law. Parliamentary slight of hand does not trump the US Constitution. The Honorable Thomas C. Feeney is Senior Visiting Fellow at The Heritage Foundation.

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Obamacare’s Procedural Fraud on the American People
Posted March 10th, 2010 at 11:33am in Health Care with 46 comments

The Health Care Nuclear Option is still the stated plan to get Obamacare to the President’s desk. The latest wrinkle is designed to allow pro-life Democrats to vote for the Senate’s taxpayer funded abortion language while still claiming they never voted for taxpayer funded abortions. Don’t be fooled.

First, let’s be clear that the Senate bill allows tax dollars to be used for abortions. According to Chuck Donovan of The Heritage Foundation, the Senate passed Obamacare bill funds abortion in several ways, even creating an appropriation for Community Health Centers that contains no restriction on abortion subsidies. If the Senate version of Obamacare is passed by the House and sent to the President, then the House has consented to the federal funding of abortion. House members have come up with a unique way to structure a vote that attempts to avoid the House voting on legislation before it goes to the president. First, the House Budget Committee will report out a reconciliation bill. It is unclear as to whether the Stupak Amendment will be added. This reconciliation measure would be reported for consideration by the House of Representatives as a whole. Speaker Nancy Pelosi (D-CA) would then package the Senate passed Obamacare bill and the House reconciliation measure into one measure. The House rules committee will report out a rule that will allow the Senate passed Obamacare bill to pass the House without a vote. The rule will be self-executing in the sense that the House will have been deemed to pass the Senate Obamacare bill if the House can muster the votes to pass the reconciliation measure. The House has used this procedure in the past during a debate on funding the Global War on Terror and in passing debt limit increases under the “Gephardt Rule.” There is a constitutional issue raised by this procedure. Article 1, Section 7, of the Constitution states in part “Every Bill which shall have passed the House of Representatives and the Senate, shall, before it becomes a law, be presented to the President of the United States.” If the House does not vote on a bill, is it considered to “have passed the House of Representatives?” Don’t expect the Supreme Court to take up this case, because this is in the realm of a political issue that the Courts tend to want resolved by the House and Senate through the democratic process. It is a Constitutional concern and should be discussed by all Americans. If any member of Congress claims to have not voted for the pro-abortion Senate passed bill, one can point to this provision in the Constitution to argue the opposite. Procedurally, this would happen in the following order. The House Rules Committee would approve this self-executing rule. The House would vote on the rule that allows this scenario. Then the House will vote on the reconciliation measure. Upon passage of the reconciliation measure the Senate Obamacare bill will be deemed to have passed the House and the reconciliation measure will be sent to the Senate. This so called “Deeming Resolution” is a trick that allows the House to pass a bill they never voted upon. Therefore, the real vote on the pro-abortion Senate passed bill will be the vote on the rule to allow this scenario to roll out on the House floor. One provision that may make the rule is a provision that does not allow the House to report the Senate passed Obamacare bill to the President until the Senate passes a reconciliation bill. Bills are enrolled before being sent to the President for his signature and the House can prevent the enrollment and delivery of Obamacare to the President

until the Senate completes work on the reconciliation measure. Sound complicated? Yes and it is supposed to so the American people can’t understand that the House is on the verge of passing an unpopular Obamacare bill, yet they are reserving the right to claim that they did not vote for the Senate passed bill. If the liberals in the House can pull off this trick, this would have allowed Senate Majority Leader Harry Reid (D-NV) to have secretly written the version of Obamacare going to the President’s desk. Do you remember Harry Reid and the Chamber of Secrets? Reid merged, without any official proceedings, the Senate HELP and Senate Finance Committee versions of Obamacare, with his personal additions to the bill including a Public Option with an opt out for states, in closed door meetings with political elites. Basically, White House Chief of Staff Rahm Emanuel, HHS Secretary Kathleen Sebelius, OMB Director Peter Orszag, Senators Harry Reid (D-NV), Max Baucus (D-MT), Chris Dodd (D-CT) and a few other liberal Senators have rewritten health care law in secret closed door meetings. After those meeting the Senate moved to proceed to this bill, without any hearings or opportunity for public review. During debate in the Senate, Senator Harry Reid crafted a manager’s package of amendments and added the Cornhusker Kickback for Nebraska, a Louisiana Purchase and a Gator-Aid earmark. Now the House is preparing to pass this bill without a vote. The American people should demand that Congress start over. This secretive and non-transparent procedure is not way to force through Obamacare.

http://blog.heritage.org/2010/03/10/obamacare%E2%80%99s-proceduralfraud-on-the-american-people/

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Morning Bell: There Is No Bill But the Senate Bill
Posted March 17th, 2010 at 9:23am in Health Care with 48 comments Print This Post Another day, another poll showing President Barack Obama’s health care plan is wildly unpopular with the American people. Yesterday NBC News/The Wall Street Journal released their latest poll showing that the percentage of Americans who believe President Obama’s health care plan is a bad idea (48%) is at the highest level since they started asking the question last year. Only 36% of Americans are willing to call the plan a “good idea” which is up a whole four points from the time when House Rules Committee Chair Louise Slaughter (D-NY) wrote this about the Senate health plan:

[U]nder the Senate plan, millions of Americans will be forced into private insurance company plans, which will be subsidized by taxpayers. That alternative will do almost nothing to reform health care but will be a windfall for insurance companies. … Supporters of the weak Senate bill say “just pass it — any bill is better than no bill.” I strongly disagree — a conference report is unlikely to sufficiently bridge the gap between these two very different bills. It’s time that we draw the line on this weak bill and ask the Senate to go back to the drawing board. The American people deserve at least that.

The Senate health bill is so unpopular, even among House Democrats, that the leftist House leadership is desperately trying to trick the American people into believing that the House can pass the Senate bill without voting on it. Hence the Slaughter Rule which would deem the Senate bill passed at the same time the House would approve a new reconciliation bill. Speaker Nancy Pelosi (D-CA) was crystal clear on her motives this week telling a group of leftist bloggers: “It’s more insider and process-oriented than most people want to know. But I like it because people don’t have to vote on the Senate bill.”
There is one increasingly glaring problem with Pelosi’s pass-the-bill-without-voting plan: it is proving impossible to draft that reconciliation bill. The Democrats first promised to unveil their new bill last Wednesday. Then Thursday. Then Friday. Then Monday. Then last night. As of this morning, still nothing. Democrats say they are waiting for a score from the Congressional Budget Office before they release their bill, but there is nothing stopping them from releasing whatever text they have now and then publicizing the CBO score when it comes back. But they are not choosing that open and transparent path. As we reported last week, getting a CBO score consistent with reconciliation is going to be very difficult. According to House rules, a reconciliation measure must reduce the deficit by at least $2 billion over five years compared to existing law. In this case, however, “existing law” would be the yet-to-be-passed Senate bill. And all of the changes Democrats want to make to the Senate bill (scaling back the tax on high-end health insurance policies; closing the Medicare D loophole; boosting insurance subsidies; increasing Medicaid payments; and expanding the Cornhusker Kickback to all) either increase spending or decrease revenue. Which means the Democrats have to identify new revenues to make the CBO score work. And as Congressional Quarterly reported yesterday, Democrats have not yet identified the right pay-fors to game the CBO right. That is why House Leadership has not unveiled their new bill yet: they can’t figure out how to pay for it. Not that it really matters if they ever do. The reconciliation bill is never going to become law. The Senate will never pass it. They have no reason to. The Senate likes the existing Senate bill. That’s why it’s called “the Senate bill” … they are the ones who passed it. The White House also likes the Senate bill. As soon as the House passes it, President

Obama will sign it and then leave for Asia. That’s it. Obamacare will be, as White House Press Secretary Robert Gibbs promised last Sunday, “the law of the land.” After the Senate bill is law, what could possibly motivate the White House, let alone the Senate, to ever pick up the yet-to-be-written House reconciliation bill? This is why the White House political machine is pulling out all the stops to get the House to pass the toxic Senate bill. Democratic National Committee Vice Chair Donna Brazile is actively encouraging primary challenges to Democrats who vote against the Senate bill. One House Democrat aide tells Politico: “We’re having donors, even donors outside of our district, that are being called and asked to urge support.” For her part Speaker Pelosi is relishing the bare knuckle fight telling reporters yesterday: “I never stop whipping. There’s no beginning, there’s no middle, and there’s no end.” Let’s just hope her members remember which bill she’s really whipping them on. Quick Hits:

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Testifying before the House Appropriations Committee, Attorney General Eric Holder refused to answer whether or not the Obama administration would read Osama bin Laden his Miranda rights, insisting that bin Laden would never be taken alive. Cash strapped states like Illinois and California are coming hat in hand to Washington for hundreds of billions of federal taxpayer dollars in bailouts. Homeland Security Secretary Janet Napolitano announced yesterday the Obama administration will delay the virtual U.S.Mexico border fence. The Chinese government is setting the foundation for Internet giant Google to pull out of the country. Former-Democrat and current Massachusetts State Treasurer Timothy Cahill tells The Boston Globe: “If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years.”

http://blog.heritage.org/2010/03/17/morning-bell-there-is-no-bill-but-thesenate-bill/

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Morning Bell: Is Now Really the Time To Create a New $2.5 Trillion Entitlement?

Posted March 16th, 2010 at 9:31am in Entitlements with 44 comments In theory, the federal government has $2.5 trillion stashed away in a nondescript office building in the sleepy little town of Parkersburg, West Virginia. That is where the Treasury Department keeps stacks of nonnegotiable Treasury bonds payable to the Social Security Administration. But as the Associated Press reported yesterday, for the first time since the 1980s, the federal government will not be adding to that stack. Thanks to an aging population and slow economy, Social Security will pay out $29 billion more this year than it takes in. And the Congressional Budget Office reports that after small surpluses in 2014 and 2015, the program is projected to be in the red from 2016 until forever. But what about Al Gore’s Social Security “Lock Box?” Can’t we just spend that $2.5 trillion in the Social Security Trust Fund? As Heritage experts David John and Brian Riedl explain, since 1939 federal law has required Social Security to “invest” its extra money in Treasury bonds. Those bonds are really just IOUs from the government to the government. The feds already spent that $2.5 trillion long ago on programs such as education, foreign aid and defense. Add the $2.5 trillion Social Security obligation onto our other obligations and our current national debt stands at $12.5 trillion, or nearly $42,000 for every man, woman, and child in the country. And it will only get worse under President Barack Obama’s Budget. It would: 1) borrow 42 cents for each dollar spent in 2010; 2) leave permanent annual deficits that top $1 trillion as late as 2020; and 3) dump an additional $74,000 per household of debt into the laps of our children and grandchildren. Responding to such unsustainable borrowing, Moody’s rating agency announced Monday that the United States needs to make deep spending cuts or risk losing its AAA credit rating. From the report: “growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.” Losing our AAA rating would send interest rates higher, increase our borrowing costs, and send the percentage of GDP we spend servicing our debt sky rocketing. Bloomberg adds: “the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013.” The message from Moody’s was clear: the U.S. federal government must change direction on spending or face economic disaster. The leftist majorities in Congress and the White House are not listening. Instead of reining in federal spending and tackling our existing Entitlement crisis, they are locked in an all out push to create a brand new $2.5 trillion health care entitlement. The President may say his plan is deficit neutral, but the American people do not believe him. And they are wise not to. The President tries to pay for his plan with over half a trillion dollars in Medicare cuts over the next decade. The president’s own Centers for Medicare and

Medicaid Services reports that these cuts would cause one-fifth of all

health care providers to go bankrupt. Congress would never allow those
hospitals to go out of business. Congress will never actually make those Medicare cuts. So already Obamacare is half a trillion dollars in the red, and we haven’t even tacked on the hundreds of billion of dollars the doc fix adds on. Reducing our entitlement obligations is the only way to prevent our nation from becoming another Greece. We need to: 1) to show these programs’ long-term obligations in the budget; target these programs to only who that need them; and strengthen personal responsibility by making it easier for people to build personal retirement savings and use health care savings accounts. But first we must avoid the fiscal insanity that is Obamacare. Quick Hits:
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Finance ministers from the 16 nations that use the euro failed to produce a detailed bailout plan for the $74 billion Greek budget deficit. Speaker Nancy Pelosi (D-CA) told leftist bloggers yesterday that the Senate health bill does contain a public option (18 million more Americans placed on Medicaid) and said of passing the Senate bill: “Once we kick through this door, there’ll be more legislation to follow.” Speaking of those 18 million Americans Obamacare would place on Medicaid (a welfare program), The New York Times reports that: “With states squeezing payments to providers even as the economy fuels explosive growth in enrollment, [Medicaid] patients are finding it increasingly difficult to locate doctors and dentists who will accept their coverage.” The Los Angeles Department of Water and Power is set to jack their consumer’s electric bills up between 8.8% and 28.4% in order to pay for a solar plan and a 20% renewable energy mandate. According to Gallup, Americans are less worried about each of eight specific environmental problems than they were a year ago and are worried least about global warming.

http://blog.heritage.org/2010/03/16/morning-bell-is-now-really-the-time-to-create-anew-2-5-trillion-entitlement/

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Morning Bell: What the Senate Bill Would Do To America
Posted March 18th, 2010 at 9:19am in Health Care with 19 comments

Another day, another no-show for the Obamacare reconciliation bill. House Democrats were quick to shift blame to the Congressional Budget Office (CBO) with Rep. Robert Andrews telling The Hill that the delay “has been much more technical than substantive. … It’s not like what tax has to go or what spending has to go.” Which is an interesting claim, since Politico reported that AFL-CIO President Richard Trumka was summoned to the White House yesterday afternoon “to discuss a higher-than-expected excise tax on some health care plans.” In fact, Politico added: “A labor source said Trumka’s meeting would focus on the entire bill, not just the excise tax question.” Sounds like more than just technical details are still in flux. But in reality, none of these discussions really matter. The reconciliation bill being drafted is nothing more than thin political cover for House Democrats who believe the Senate bill is terrible public policy but want to please their leadership and the President by voting for it anyway. As we detailed yesterday, there is no bill but the Senate bill. Once the House passes the Senate bill, the President will sign it. Game over. It has been almost three months since the Senate passed their bill in the dead of night on Christmas Eve. A review of just how terrible it really is, is in order:

New Middle-Class Taxes: Throughout his campaign, President Barack Obama
promised he would not raise taxes on American households making less than $250,000. The Senate bill shatters that promise. For starters, just look at the reason Trumka went to the White House yesterday: the excise tax on high-cost health insurance plans. This tax would overwhelmingly hit middle-class

taxpayers. Taxes on prescription drugs, wheel chairs and other medical devices would also be passed on to all consumers, hitting the lower- and middle- classes the hardest. Increased Health Care Costs: The Senate bill manifestly does nothing to bend
the health care cost curve downward. According to the latest CBO report, the Senate bill would actually increase health care spending by $210 billion over the next 10 years. This follows a previous report from the President’s own Center for Medicare and Medicaid Services (CMS) showing the Senate bill would result in $234 billion in additional health care spending over 10 years.

Increased Health Insurance Premiums: The President initially promised that
Americans would see a $2,500 annual reduction in their family health care costs. But under the Senate bill, premiums would go up for millions of Americans. In fact, according to the CBO, estimated premiums in the individual market would be 10–13 percent higher by 2016 than they would be under current law.

Increased Deficits: Despite claiming to be comprehensive health care reform, the
Senate bill does not address the fact that Medicare’s current price-fixing doctor reimbursement scheme is set to reduce doctor payments by 21% this year. That simply is not going to happen. Congress will pass that fix separately. If that cost were included, Obamacare is already $200 billion in the red. Now throw in the fact

that the Senate bill is paid for with another $463 billion in Medicare cuts to health care providers. CMS says if these cuts occur, one-fifth of all health care providers will face bankruptcy. That simply is not going to happen. Just like the doctor reimbursement cuts have never happened, the Obamacare Medicare cuts will never happen. So in reality, Obamacare will add almost $700 billion to our national deficit in the next ten years alone.

Increases Unemployment and Puts Millions of Americans on Welfare:
According to The Heritage Foundation’s Center for Data Analysis (CDA), a dynamic analysis of the tax hikes and deficits created by the Senate bill shows that an average 690,000 jobs per year would be lost if it became law. In addition, over half of all Americans who would gain health insurance through the bill (18 million out of 33 million) would do so by being placed on Medicaid, which is a welfare program.

Higher taxes, higher health care costs, higher health insurance premiums, higher deficits, more unemployment and more Americans on welfare. That is America’s future should the Senate Obamacare bill become law.
Quick Hits:

According to the Treasury Department, the National Debt has increased over $2 trillion over the 421 days since President Obama took office.
If the House does pass the Senate bill, dozens of conservative lawmakers and candidates have signed a pledge to back an effort to repeal the measure. Yesterday Mark Levin posted the complaint his Landmark Legal Foundation will file in federal court if the House uses the Slaughter Rule to pass the Senate bill. Over half of the Americans who gain health insurance through the Senate bill will not be able to get their drugs from Washington state Walgreens, since they announced yesterday that as of April 16th they will not accept any new Medicaid patients. According to Gallup, Americans firmly prioritize the economy over the environment and fewer than half of Democrats now believe environmental protection is the more important goal.

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http://blog.heritage.org/2010/03/18/morning-bell-what-the-senate-bill-would-doto-america/

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Obamacare: It's Not Getting Better
Published on March 15, 2010 The Process

Deeming Resolution: Step 1 of the latest strategy to get health care reform across the finish line is to use a "deeming resolution" to deem the Senate-passed version of Obamacare passed in the House. House members would technically never vote on the bill--instead they would vote on a resolution that deems the bill passed. This is completely unconstitutional and an all-out attack on the rule of law. Reconciliation: Once the House passes the Senatepassed bill, step 2 would be for both chambers to then pass a reconciliation bill with the changes they want. Reconciliation is a complicated procedure normally used for budgetary matters and therefore requires only a simple majority of votes to pass instead of the usual 60. Liberals are trying to use reconciliation to get around the filibuster in the Senate and put in some lastminute special provisions that can't pass in the Senate using regular procedure. Will It Work? Despite the potential constitutional questions of "deeming" a bill passed, the Senate Parliamentarian has signaled that the House would have to pass--and the President would need to sign into law--the Senate version of Obamacare before a reconciliation bill could be considered in the Senate. Thus, any changes proposed in reconciliation may never be signed into law.

The Senate Bill (Soon to be in the House)

The Real Cost: With tricky accounting and budget gimmicks, Obamacare
supporters would like you to believe that the cost of this bill is less than a trillion dollars. However, this figure excludes items such as the costly but inevitable "doc fix" and cleverly disguises a new long-term-care entitlement. Also, it is based on benefits not taking effect until 2014, even though taxes begin immediately. The true 10-year cost of this bill is at least $2.5 trillion. No Stupak Amendment: The Senate bill lacks the Stupak Amendment, which is designed to protect the new health care legislation from funding or subsidizing abortions with federal tax dollars. Congressional Democratic leaders have said they will march on with or without the support of the prolife members of their caucus. Kickbacks: The Senate bill still contains the "Cornhusker Kickback," the "Gator-Aid," and the "Louisiana Purchase." The President promises to fix

these in reconciliation, but there are already moves to backtrack by calling the "Louisiana Purchase" an emergency and by extending the "Cornhusker Kickback" to all states. This outlandish spending will make the cost of the bill skyrocket. Increased Medicaid Costs for States: Eventually the states would be forced to pick up the costs of the largest expansion of the Medicaid program in history. This unfunded mandate would likely require state tax hikes, more cuts to Medicaid providers (further lowering the quality of care for those on the program), or a push by the states to have the federal taxpayers bail them out once again. And Still a Public Option: The Senate bill authorizes the Office of Personnel Management (OPM), a federal agency that administers the civil service, to create government-sponsored health plans that would "compete" against private health plans nationwide. These government-sponsored health plans would have their premiums, profit margins, and benefit offerings set by OPM. This holds the potential for creating an un-level playing field between the government-sponsored health plans and private insurance. It could also mean that the taxpayers could be liable for making up any shortfalls incurred by the government-sponsored plans.

A Better Strategy

Start Over: Go back to the drawing board with a bipartisan group of lawmakers and consider reform options that lower costs, lower premiums, and increase competition without increasing federal control. Focus on Free-Market Solutions: Tax reform, sensible insurance market reforms (including allowing Americans to purchase coverage from other states), meaningful entitlement reform, and letting states take the lead should be the cornerstones for real reform.

For more information, please visit: http://fixhealthcarepolicy.com/

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The Health Care Summit: A Chance to Start Over and Get It Right
Published on February 24, 2010 by Nina Owcharenko Abstract: America's health care system is in need of change, but not change that consists of overhauling one-sixth of America's economy by centralizing health care decisions in

Washington. The cornerstone provisions of the House and Senate bills, along with the President's recent recommendations, would put more power in the hands of bureaucrats and politicians. The legislative process thus far has been characterized by little transparency or bipartisanship. To be successful, the health care summit must begin by setting aside the highly unpopular House and Senate bills. Simply adjusting the magnitude of these proposals or adding new "conservative" provisions does not change their fundamental direction. Congress and the Administration should instead pursue bipartisan reform that gives Americans greater personal control of health care decisions. This week, President Barack Obama is inviting key Members of Congress from both parties to meet with him, ostensibly in search of a bipartisan agreement on health care reform. A real bipartisan agreement should not be a public relations exercise to spread blame for political failure or a pretext to justify ramming a preordained partisan result through Congress. Real bipartisan outreach should have taken place at the very beginning of the Administration, emphasizing key elements of health reform upon which the President, moderates and conservatives in Congress, and others could have agreed.[1] If the President is sincere and the summit is going to be successful, it must begin by setting aside the highly unpopular bills that the House and Senate have developed. Simply adjusting the magnitude of these proposals or adding new "conservative" provisions as suggested in the President's latest proposal, does not change their fundamental direction. As Yuval Levin has explained, the crucial differences between Congress and the nation at large are not differences in degree; they are differences in policy direction.[2] Most Americans want problems in the health insurance markets fixed, but they do not want a federal takeover of the health care sector of the economy. Regrettably, the cornerstone elements of these proposals would put more power in the hands of Washington bureaucrats and politicians.[3] Instead, Congress and the Administration should pursue bipartisan reforms that give Americans greater personal control of their health care decisions. Changing Direction. Clearly, America's health care needs reform. Simply protecting the status quo ignores the real challenges facing the health care system. Congress therefore needs to pursue a fresh and more incremental approach to health care reform. This means taking specific steps that lead health care reform in a direction that is very different from that embodied in the unpopular House and Senate bills. It is a policy direction that would give individuals and families, not the government, more control of their health care decisions. Specifically, Congress should focus on very specific areas of common agreement: promoting state innovation, fixing entitlement programs, addressing the tax treatment of health insurance, and establishing fair rules for insurance.

Real Bipartisanship: The Case for Restoring Public Trust The simple truth is that the congressional legislation is not only unpopular, but also fails to meet the standards for health reform that the President himself established at the inception of the national debate. The People Have Spoken. The American people have spoken. The health care reform proposals pending before Congress and endorsed by this Administration are unpopular, and most Americans feel that Congress should start over.
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49 percent of the public oppose and 40 percent favor the Obama health care plan.[4] 61 percent of voters believe Congress should drop health care and focus on jobs and the economy.[5] 56 percent of Americans believe Congress should adopt a step-bystep approach.[6]

Rhetoric Versus Reality. There are many reasons why popular support for the health care bills has been dropping. One important reason is that the American people have looked beyond the rhetoric and clearly understand the consequences of the legislation itself. The reality is that the bills before Congress produce results that are far different from the promises upon which the President campaigned and that he continues to espouse. The contradictions between Presidential rhetoric and legislative reality are numerous.

Keeping Your Doctors and Your Health Plan. In his State of the Union address, the President continued to reiterate that health care reform would "preserve the right of Americans who have insurance to keep their doctor and their plan."[7] But millions of Americans would see their health care coverage change under the House and Senate bills, including those workers whose employer drops health care coverage altogether. The Office of the Actuary at the Centers for Medicare and Medicaid Services estimates that 17 million fewer people would have employer-based coverage under the Senate bill and 12 million fewer people would have it under the House bill.[8] Moreover, the sweeping and complex federal regulation of health insurance embodied in both the House and Senate bills, like the establishment of an essential benefits package and cost-sharing

limitations, puts the federal government in control of health care services and the delivery of care, guaranteeing that virtually every health plan will change over time.[9]

Imposing No New Taxes for Working-Class Americans. In his State of the Union address, the President spoke about 95 percent of working families receiving a tax cut. The President also campaigned on the promise that he would never raise taxes on those earning less than $250,000. But the health care bills include numerous new taxes that apply regardless of income. For example, both bills include an individual mandate that would penalize millions of Americans, likely young and healthy, for not buying government-approved coverage.[10] The bills also include various new taxes and fees on consumer products such as medical devices; pharmaceuticals; and insurance plans.[11] With regard to the "Cadillac" plan tax, J. D. Foster, tax economist at The Heritage Foundation, points out: Despite being a tax on high-end insurance plans, taxpayers with incomes of $200,000 or less annually will pay over 85 percent of the additional tax burden under the excise tax. Thus the tax would clearly violate President Obama's pledge not to raise taxes on families with incomes below $250,000.[12]

Reining in Health Care Costs and Reducing the Deficit. The President continues to stress that health care reform is necessary to bend the health care cost curve and bring down premiums and the deficit. Regrettably, the bills before Congress do not meet that test. The Chief Actuary at the Center for Medicare and Medicaid Services has found that health care spending would actually increase by an estimated $289 billion under the House bill and an estimated $234 billion under the Senate bill between 2010 and 2019.[13] Moreover, the Lewin Group found that while some families would save, others would have to spend more. For example, families with at least one uninsured family member would face $1,225 in new health care spending under the Senate bill and $1,308 in new spending under the House bill.[14] In addition, younger families

would pay an average of $287 more under the Senate bill and $376 more under the House bill, and families with low health care costs (less than $1,000 a year) would face $758 more in spending under the Senate bill and $811 more under the House bill.[15] Finally, while some estimates claim that the bills would reduce the deficit, the Lewin Group found that when taking the bills in their entirety, which means taking into account the expected billiondollar boost in Medicare reimbursement for physicians, the bills would add to the deficit, not reduce it. When the Medicare physician payment increase is included, the House bill would add $77 billion to the deficit by 2019 and $591 billion by 2029, and the Senate bill would add $196 billion to the deficit by 2019 and $765 billion by 2029.[16]

Strengthening the Fiscal Health of Medicare. The President claimed in his State of the Union address that the health care bill would "strengthen Medicare."[17] The Medicare program does indeed need strengthening.[18] With an estimated long-term liability of approximately $38 trillion, it faces a fiscal crisis of monumental proportions. But instead of focusing on restoring solvency to Medicare, the bills in Congress would take unproven savings from Medicare to pay for costly, trillion-dollar nonMedicare health care coverage initiatives. In addition, the provision that would dramatically reduce Medicare payments to Medicare Advantage plans would jeopardize millions of seniors' existing coverage. The Chief Actuary of Medicare and Medicaid Services estimates that these Medicare Advantage changes would "result in less generous benefit packages" and that enrollment would decline by 64 percent under the House bill and 33 percent in the Senate bill.[19]

Improving the Economy and Creating Jobs. While the President tries to pivot toward jobs and the economy, the pending health care proposals create a serious obstacle to achieving success in these areas. Both bills would impose an employer mandate, requiring employers to offer health insurance or pay a fine. Mandates would not only discourage growth in the economy, but also undermine job creation. According to Mark Wilson of

Applied Economic Strategies, "The mandates will cost businesses at least $49 billion per year and put 5.2 million low-wage workers at risk of unemployment or reduced working hours."[20] Moreover, mandates and taxes on business would not only undermine job creation, but also discourage growth in the economy, as Heritage analysts point out.[21]
How to Pursue Real Bipartisan Reform To regain the trust of the American people on health care reform, the President and Congress should abandon their highly unpopular proposals and focus instead on those areas where an incremental approach can lead to long-term improvements in the health care system. Specifically, this means concentrating on:

State-Based Partnerships, Not Centralized Planning. Health care reform is needed. Too many people slip through the cracks. However, health care challenges vary greatly across the country. Some states face high health care costs, while others face high rates of uninsurance. And the challenges faced by rural states are different from those faced by urban states. It is difficult to imagine a federal solution that can address the unique challenges in each state effectively. Although the current bills claim to promote state flexibility, the reality is that they would reduce governors and other elected state officials to mere administrators for federal dictates. They would take away significant state authority with regard to regulating insurance products and replace it with a massive, federal one-sizefits-all health care system. Instead of depending on a federal one-size-fits-all solution, Congress should embrace a federal- state partnership that would allow states to develop innovative ways to address their unique health care challenges. The federal government should set broad, national goals and then give wide leeway for states to try different approaches and learn from one another.[22] There are bipartisan proposals that are based on this vision, including bills introduced by Representatives Tom Price (R-GA) and Tammy Baldwin (D-WI); Senators George Voinovich (R-OH) and Jeff Bingaman (D-NM); and Senators Lindsay Graham (R-SC) and Russ Feingold (D-WI).[23] These proposals contrast sharply with other state-based approaches in which the federal government sets explicit requirements and imposes on the states the onerous task of administering its federal reform.

Fixing Broken Government Health Programs, Not Expanding Them.

Government at all levels, but mostly at the federal level, already controls almost half of all American health care spending. Reform should begin with Congress reforming the flawed programs it already controls rather than overhauling onesixth of the national economy. Giant government-run programs like Medicare and Medicaid are fiscally unsustainable, leaving those who depend on them most vulnerable to inevitable reimbursement reductions. As noted, Medicare alone has an almost $38 trillion unfunded liability,[24] and the rapidly growing Medicaid program is displacing private coverage for low-income persons and squeezing other state budget priorities like education, transportation, and public safety.[25] In addition, these programs are too poorly designed to meet the health care needs of the growing populations that depend on them. Because of traditional Medicare's large gaps in coverage, approximately nine out of 10 seniors today must rely on other sources of coverage -- mostly private, employer-based, or other forms of supplemental coverage. Compared to private coverage, Medicaid delivers a poor quality of care. Medicaid enrollees have difficulty securing primary care doctors, largely because of Medicaid's routinely low administrative payment rates, and are more likely than even the uninsured to arrive in the emergency room for non-emergency services.[26] Instead of fixing the structural problems of these government programs, the giant House and Senate bills would simply expand them. In fact, the House and Senate bills would add millions of the uninsured to the Medicaid rolls. Medicaid would become the single largest platform for expanding coverage. Both bills include a mandatory Medicaid expansion: 133 percent of the federal poverty level (FPL) in the Senate bill and 150 percent of FPL in the House bill. In Senate negotiations, there was even consideration of opening the financially troubled Medicare program to certain individuals over 55 years of age. There are many problems with such a proposal: a future demand for generous subsidies, a further government-stimulated erosion of existing private coverage options, and the guaranteed exacerbation of Medicare's already enormous fiscal troubles.[27] Congress needs to get serious about its own fiduciary responsibility for the government programs under its control. In principle, any savings in Medicare and Medicaid should go back into those programs and be used for reducing their costs or, in the case of Medicare, long-term unfunded liabilities, not to finance the expansion of a new government health program [28] Beyond that, Congress needs to make broader structural changes that get these giant government entitlements under control and on a path toward reducing their obligations. For a start, Congress could take the President's proposal for competitive bidding in Medicare Advantage and broaden it to include traditional Medicare, making sure that all Medicare beneficiaries operate on a level playing

field. Congress should also reverse provisions in the recently enacted economic stimulus bill that deliberately weaken the ability of governors and state legislators to manage their Medicaid programs more effectively. In addition, Congress should favor more state flexibility in Medicaid, not less.

Tax Fairness, Not More Inequity. There is broad bipartisan agreement, especially among health care economists and policy experts, liberals and conservatives alike, that the current tax treatment of employer-based coverage is inequitable and regressive.[29] Today, individuals who purchase coverage through their place of work receive an unlimited tax break on the value of their health care benefits. However, those who purchase coverage on their own receive no comparable tax break, thus undercutting their access to affordable and portable health insurance. This flaw in existing tax policy affects millions of Americans and contributes to unnecessarily high rates of uninsurance. There is a huge difference between adopting tax reform to change the structure and efficiency of the health insurance markets and simply increasing taxes to raise revenue to expand government health programs. Congress, instead of reforming the federal tax treatment of health insurance, seems determined to raise taxes on the middle class. In the case of the Senate bill, the Senate would impose a new excise tax on insurance plans for selling "Cadillac" plans. The structure of the excise tax would create additional inequities, whether through exemptions or because of state differences.[30] Moreover, this hidden tax would ultimately be paid by workers, not insurers or employers. Ideally, Congress should replace the current tax exclusion with a fairer and more equitable system of universal tax credits. Short of that, Congress should begin to realign the tax breaks for work-based health insurance with other tax-preferred forms of compensation by capping the tax exclusion. As explained by Stuart Butler, Vice President for Domestic and Economic Policy Studies at The Heritage Foundation, capping the exclusion is a fairer and more transparent way to help bring "efficiencies and cost reduction in the health care system over time."[31] Concurrently, Congress should extend some tax relief for those who purchase coverage on their own and redirect other health care spending to help low-income individuals and families purchase private health insurance coverage. Both should be done in a way that is tax- and spending-neutral. Finally, instead of an employer mandate, Congress should give employers more choices by allowing them to contribute to their workers' individual health insurance policies without tax penalties on either workers or their employers.

Targeted Insurance Reforms, Not a Federal Takeover. The current health insurance rules do not work for everyone, but the solution is not for the federal government to take over private health insurance, determining

in excruciating detail the benefits that must be offered or the premiums that must be charged or paid. Congress can correct the gaps in the current system to make the market work better for those it serves without destroying the market for others. The proposals before Congress require a massive imposition of new federal rules and regulations, such as insurance price controls. They would subject all private health insurance, whether purchased from an insurance company by employer groups or individuals or provided through an employer or union self-insured plan, to detailed federal regulation. These "insurance reform" provisions amount to a de facto nationalization of health insurance, whether or not Congress creates a "public" plan. Instead of protecting patients, heavy regulation would stifle choice and competition in the health insurance market. There are several reasonable health insurance reforms that could be enacted to bring stability to the marketplace.[32] First, Congress should simplify the basic rules for extending preexistingcondition protections for individuals with credible coverage. Second, Congress should work with the states to balance providing security for those with credible coverage with mechanisms for insurers who end up with highcost enrollees. In addition, individuals should be able to change insurers without losing protections. For those without credible coverage, Congress should work with the states to establish a path for these individuals to gain these protections on a conditional basis. Finally, Congress should allow individuals who buy their own health insurance to purchase coverage from outside their states. This would bothallow consumers to shop on a national basis for health insurance that best suits their needs and expand the coverage options available to them. A New Way Forward America's health care system is in need of change, but not change that consists of overhauling one-sixth of America's economy by centralizing health care decisions in Washington. If the President and Congress are sincere and the health care summit is going to be a success, they must set aside these highly unpopular proposals and shift direction by taking an incremental approach to health care reform: one that puts health care reform on a path toward empowering individuals and families to control more of the financing and delivery of health care. Nina Owcharenko is Deputy Director of the Center for Health Policy Studies at The Heritage Foundation.

Show references in this report

http://www.heritage.org/Research/Reports/2010/02/The-Health-CareSummit-A-Chance-to-Start-Over-and-Get-It-Right _____________________________________________________________________

What the House Would Have to Swallow in the Senate Bill
Posted March 8th, 2010 at 5:00pm in Health Care with 23 comments

Amidst all the intense speculation about quickly passing the President’s health care agenda through the Budget Reconciliation process before the Easter Recess, ordinary Americans should remember one thing: the House of Representatives must first pass the 2,700-page, $2.5 trillion, Senate health bill. So, the next big step in the national health care debate is floor action in the House of Representatives, where House Speaker Nancy Pelosi must round up at least 216 votes. Heritage analysts have conducted some extensive research and analysis of the provisions of the giant Senate bill. If the House passes the Senate bill and it goes to the President’s desk for signature, it then would become the law of the land. For all intents and purposes, the legislative debate would then be over. Regardless of Administration or Senate leadership promises to “fix” the new law (the Senate bill) through the Budget Reconciliation process, there are no guarantees. Any

“fixes”—if they did come about—would have to survive another round of Senate floor action. So it is worth recalling what the Senate bill would mean for Americans were it to become law.

Failure to address the drivers behind rising spending in health care. The Senate bill attempts to control costs by imposing heavy new federal regulations and punitive taxes on high-ticket medical expenditures such as medical devices, prescription drugs, and high-cost insurance plans. This top-down approach focuses on the symptoms, rather than the causes, of increasing health spending. Health insurance premiums, particularly in the individual market, will go up. An individual mandate with disastrous unintended consequences. To expand coverage, the bill includes guaranteed issue of coverage combined with an individual mandate. However, rather than encourage “young invincibles” to carry insurance, the mandate, which would be less expensive than insurance coverage, would create incentives for young and healthy adults to pay the penalty rather than buy and carry a costly health plan. This would destabilize the insurance market by reducing the spread of risk, leaving the elderly and sickly in insurance risk pools. Premiums would thus skyrocket—further discouraging healthy individuals from obtaining care. Stringent federal requirement push private insurers towards insolvency. The combination of an excise tax on high-cost insurance plans, a federally-defined minimum medical-loss ratio, and federally-defined required benefits could push private insurers to going out of business, should they be incapable of meeting all three requirements and simultaneously covering the cost of enrollees’ care. Alternatively, it could mean that health insurers, “too big to fail”, would become the next big industry recipients of taxpayer bailouts. A public option in disguise. The Senate bill requires the Office of Personnel Management to establish and manage health plans in the state exchanges to compete against private health plans. The bill expands the powers of this federal agency. This could lead to a de facto public option with federally defined premiums, benefits, etc: private insurance in name only. Of course, if the government sponsored health plans do not effectively compete against the

other plans, it is likely that they will also be eligible for future federal bailouts at the taxpayers’ expense. Government subsidies which penalize marriage. The structure of the subsidies offered by the Senate bill to purchase insurance are inequitable, offering more financial assistance to non-married couples than to a married couple with comparable income. This is bizarre social policy. Trillions in new federal spending, questionable savings. Congressional liberals claim that their health care proposals are deficit neutral. In fact, they are based on budgetary gimmicks and hidden costs. When these are accounted for, the real cost of the Senate bill skyrockets, further augmented by the implausibility of the many promised savings in the bill. A special Medicaid deal for Nebraska. The Senate bill would force all federal taxpayers to cover the extra cost of expanding Medicaid in Nebraska. It is worthy to note that the President’s proposal would extend the taxpayer subsidies to all states, increasing the total cost of the bill. Expanding Medicaid on the states’ budgets. Though the federal government would initially cover most of the cost of expanding Medicaid, states would eventually have to pick up a portion of the cost. This comes at a time when states are cutting spending in Medicaid and other areas to accrue savings and avoid increasing debt. In fact, we show that states could save significantly if they were to drop their Medicaid programs altogether, which could become an appealing option after adoption of the Senate bill. Encourages employment discrimination. The structure of the bill’s employer mandate would discourage employers from hiring workers from low-income families and from offering insurance to all employees if a large portion of a firm’s workforce consists of low-income workers. Disparate federal assistance for families of comparable income. The generous subsidies available to purchase insurance in the exchanges would be available to only a select few of the millions that fall within the eligible income bracket. This would result in thousands of dollars in additional federal assistance for some individuals and little to no assistance for others, regardless of equal income. Taxing families’ health benefits. An excise tax on high-cost insurance plans is included in the Senate bill with the intention of

lowering premiums. However, this tax on insurers would be passed down to the consumer, further raising premiums. Numerous new taxes—and not just for the wealthy. President Obama has promised not to introduce new taxes that would affect the middle-class, but the Senate bill would impose several new punitive taxes on to Americans of every financial background.

These policies are all embodied in the Senate health bill. For further analysis of the Senate bill, click here. Congress should take a different route and start over to do health care reform right. http://blog.heritage.org/2010/03/08/what-the-house-would-have-to-swallowin-the-senate-bill/

http://fixhealthcarepolicy.com/reality/ ______________________________________________

Breaking: Excerpts from Reconciliation Bill
Page 7 TITLE IV—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 Subtitle A—Shared Responsibility PART 1—INDIVIDUAL RESPONSIBILITY Sec. 401. Tax on individuals without acceptable health care coverage. PART 2—EMPLOYER RESPONSIBILITY Sec. 411. Election to satisfy health coverage participation requirements. Sec. 412. Responsibilities of nonelecting employers. Subtitle B—Credit for Small Business Employee Health Coverage Expenses Sec. 421. Credit for small business employee health coverage expenses.

Subtitle C—Disclosures to Carry Out Health Insurance Exchange Subsidies Sec. 431. Disclosures to carry out health insurance exchange subsidies. Subtitle D—Other Revenue Provisions PART 1—GENERAL PROVISIONS Sec. 441. Surcharge on high income individuals. Sec. 442. Distributions for medicine qualified only if for prescribed drug or insulin. Sec. 443. Delay in application of worldwide allocation of interest. PART 2—PREVENTION OF TAX AVOIDANCE Sec. 451. Limitation on treaty benefits for certain deductible payments. Sec. 452. Codification of economic substance doctrine. Sec. 453. Penalties for underpayments. Page 8 PART 3—PARITY IN HEALTH BENEFITS Sec. 461. Certain health related benefits applicable to spouses and dependents extended to eligible beneficiaries. 1054 19 SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN 20 MENTAL HEALTH AND SUBSTANCE ABUSE 21 DISORDER BENEFITS. 22 (a) NONDISCRIMINATION IN BENEFITS.—A qualified 23 health benefits plan shall comply with standards estab 24 lished by the Commissioner to prohibit discrimination in 25 health benefits or benefit structures for qualified health 1055 1 benefits plans, building from sections 702 of Employee 2 Retirement Income Security Act of 1974, 2702 of the

3 Public Health Service Act, and section 9802 of the Inter 4 nal Revenue Code of 1986. 5 (b) PARITY IN MENTAL HEALTH AND SUBSTANCE 6 ABUSE DISORDER BENEFITS.—To the extent such provi 7 sions are not superceded by or inconsistent with subtitle 8 C, the provisions of section 2705 (other than subsections 9 (a)(1), (a)(2), and (c)) of section 2705 of the Public 10 Health Service Act shall apply to a qualified health bene 11 fits plan, regardless of whether it is offered in the indi 12 vidual or group market, in the same manner as such provi 13 sions apply to health insurance coverage offered in the 14 large group market. 1223 11 TITLE IV—AMENDMENTS TO IN 12 TERNAL REVENUE CODE OF 13 1986 14 Subtitle A—Shared Responsibility 15 PART 1—INDIVIDUAL RESPONSIBILITY 16 SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE 17 HEALTH CARE COVERAGE. 18 (a) IN GENERAL.—Subchapter A of chapter 1 of the 19 Internal Revenue Code of 1986 is amended by adding at 20 the end the following new part: 21 ‘‘PART VIII—HEALTH CARE RELATED TAXES ‘‘SUBPART A. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE. 22 ‘‘Subpart A—Tax on Individuals Without Acceptable 23 Health Care Coverage ‘‘Sec. 59B. Tax on individuals without acceptable health care coverage. 1224 1 ‘‘SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE 2 HEALTH CARE COVERAGE.

3 ‘‘(a) TAX IMPOSED.—In the case of any individual 4 who does not meet the requirements of subsection (d) at 5 any time during the taxable year, there is hereby imposed 6 a tax equal to 2.5 percent of the excess of— 7 ‘‘(1) the taxpayer’s modified adjusted gross in 8 come for the taxable year, over 9 ‘‘(2) the amount of gross income specified in 10 section 6012(a)(1) with respect to the taxpayer. 11 ‘‘(b) LIMITATIONS.— 12 ‘‘(1) TAX LIMITED TO AVERAGE PREMIUM.— 13 ‘‘(A) IN GENERAL.—The tax imposed 14 under subsection (a) with respect to any tax 15 payer for any taxable year shall not exceed the 16 applicable national average premium for such 17 taxable year. 18 ‘‘(B) APPLICABLE NATIONAL AVERAGE 19 PREMIUM.— 20 ‘‘(i) IN GENERAL.—For purposes of 21 subparagraph (A), the ‘applicable national 22 average premium’ means, with respect to 23 any taxable year, the average premium (as 24 determined by the Secretary, in coordina 25 tion with the Health Choices Commis 26 sioner) for self-only coverage under a basic 1225 1 plan which is offered in a Health Insur 2 ance Exchange for the calendar year in 3 which such taxable year begins. 4 ‘‘(ii) FAILURE TO PROVIDE COVERAGE 5 FOR MORE THAN ONE INDIVIDUAL.—In the 6 case of any taxpayer who fails to meet the 7 requirements of subsection (e) with respect 8 to more than one individual during the tax 9 able year, clause (i) shall be applied by 10 substituting ‘family coverage’ for ‘self-only 11 coverage’.

12 ‘‘(2) PRORATION FOR PART YEAR FAILURES.— 13 The tax imposed under subsection (a) with respect 14 to any taxpayer for any taxable year shall not exceed 15 the amount which bears the same ratio to the 16 amount of tax so imposed (determined without re 17 gard to this paragraph and after application of para 18 graph (1)) as— 19 ‘‘(A) the aggregate periods during such 20 taxable year for which such individual failed to 21 meet the requirements of subsection (d), bears 22 to 23 ‘‘(B) the entire taxable year. 24 ‘‘(c) EXCEPTIONS.— 1226 1 ‘‘(1) DEPENDENTS.—Subsection (a) shall not 2 apply to any individual for any taxable year if a de 3 duction is allowable under section 151 with respect 4 to such individual to another taxpayer for any tax 5 able year beginning in the same calendar year as 6 such taxable year. 7 ‘‘(2) NONRESIDENT ALIENS.—Subsection (a) 8 shall not apply to any individual who is a non 9 resident alien. 10 ‘‘(3) INDIVIDUALS RESIDING OUTSIDE UNITED 11 STATES.—Any qualified individual (as defined in 12 section 911(d)) (and any qualifying child residing 13 with such individual) shall be treated for purposes of 14 this section as covered by acceptable coverage during 15 the period described in subparagraph (A) or (B) of 16 section 911(d)(1), whichever is applicable. 17 ‘‘(4) INDIVIDUALS RESIDING IN POSSESSIONS 18 OF THE UNITED STATES.—Any individual who is a 19 bona fide resident of any possession of the United 20 States (as determined under section 937(a)) for any 21 taxable year (and any qualifying child residing with 22 such individual) shall be treated for purposes of this 23 section as covered by acceptable coverage during 24 such taxable year.

25 ‘‘(5) RELIGIOUS CONSCIENCE EXEMPTION.— 1227 1 ‘‘(A) IN GENERAL.—Subsection (a) shall 2 not apply to any individual (and any qualifying 3 child residing with such individual) for any pe 4 riod if such individual has in effect an exemp 5 tion which certifies that such individual is a 6 member of a recognized religious sect or divi 7 sion thereof described in section 1402(g)(1) and 8 an adherent of established tenets or teachings 9 of such sect or division as described in such sec 10 tion. 11 ‘‘(B) EXEMPTION.—An application for the 12 exemption described in subparagraph (A) shall 13 be filed with the Secretary at such time and in 14 such form and manner as the Secretary may 15 prescribe. Any such exemption granted by the 16 Secretary shall be effective for such period as 17 the Secretary determines appropriate. 18 ‘‘(d) ACCEPTABLE COVERAGE REQUIREMENT.— 19 ‘‘(1) IN GENERAL.—The requirements of this 20 subsection are met with respect to any individual for 21 any period if such individual (and each qualifying 22 child of such individual) is covered by acceptable 23 coverage at all times during such period. 1228 1 ‘‘(2) ACCEPTABLE COVERAGE.—For purposes 2 of this section, the term ‘acceptable coverage’ means 3 any of the following: 4 ‘‘(A) QUALIFIED HEALTH BENEFITS PLAN 5 COVERAGE.—Coverage under a qualified health 6 benefits plan (as defined in section 100(c) of 7 the America’s Affordable Health Choices Act of 8 2009). 9 ‘‘(B) GRANDFATHERED HEALTH INSUR 10 ANCE COVERAGE; COVERAGE UNDER GRAND 11 FATHERED EMPLOYMENT-BASED HEALTH

12 PLAN.—Coverage under a grandfathered health 13 insurance coverage (as defined in subsection (a) 14 of section 102 of the America’s Affordable 15 Health Choices Act of 2009) or under a current 16 employment-based health plan (within the 17 meaning of subsection (b) of such section). 18 ‘‘(C) MEDICARE.—Coverage under part A 19 of title XVIII of the Social Security Act. 20 ‘‘(D) MEDICAID.—Coverage for medical as 21 sistance under title XIX of the Social Security 22 Act. 23 ‘‘(E) MEMBERS OF THE ARMED FORCES 24 AND DEPENDENTS (INCLUDING TRICARE).— 25 Coverage under chapter 55 of title 10, United 1229 1 States Code, including similar coverage fur 2 nished under section 1781 of title 38 of such 3 Code. 4 ‘‘(F) VA.—Coverage under the veteran’s 5 health care program under chapter 17 of title 6 38, United States Code, but only if the cov 7 erage for the individual involved is determined 8 by the Secretary in coordination with the 9 Health Choices Commissioner to be not less 10 than the level specified by the Secretary of the 11 Treasury, in coordination with the Secretary of 12 Veteran’s Affairs and the Health Choices Com 13 missioner, based on the individual’s priority for 14 services as provided under section 1705(a) of 15 such title. 16 ‘‘(G) OTHER COVERAGE.—Such other 17 health benefits coverage as the Secretary, in co 18 ordination with the Health Choices Commis 19 sioner, recognizes for purposes of this sub 20 section. 21 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

22 ‘‘(1) QUALIFYING CHILD.—For purposes of this 23 section, the term ‘qualifying child’ has the meaning 24 given such term by section 152(c). 1230 1 ‘‘(2) BASIC PLAN.—For purposes of this sec 2 tion, the term ‘basic plan’ has the meaning given 3 such term under section 100(c) of the America’s Af 4 fordable Health Choices Act of 2009. 5 ‘‘(3) HEALTH INSURANCE EXCHANGE.—For 6 purposes of this section, the term ‘Health Insurance 7 Exchange’ has the meaning given such term under 8 section 100(c) of the America’s Affordable Health 9 Choices Act of 2009, including any State-based 10 health insurance exchange approved for operation 11 under section 208 of such Act. 12 ‘‘(4) FAMILY COVERAGE.—For purposes of this 13 section, the term ‘family coverage’ means any cov 14 erage other than self-only coverage. 15 ‘‘(5) MODIFIED ADJUSTED GROSS INCOME.— 16 For purposes of this section, the term ‘modified ad 17 justed gross income’ means adjusted gross income— 18 ‘‘(A) determined without regard to section 19 911, and 20 ‘‘(B) increased by the amount of interest 21 received or accrued by the taxpayer during the 22 taxable year which is exempt from tax. 23 ‘‘(6) NOT TREATED AS TAX IMPOSED BY THIS 24 CHAPTER FOR CERTAIN PURPOSES.—The tax im 25 posed under this section shall not be treated as tax 1231 1 imposed by this chapter for purposes of determining 2 the amount of any credit under this chapter or for 3 purposes of section 55. 4 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 5 such regulations or other guidance as may be necessary

6 or appropriate to carry out the purposes of this section, 7 including regulations or other guidance (developed in co8 ordination with the Health Choices Commissioner) which 9 provide— 10 ‘‘(1) exemption from the tax imposed under 11 subsection (a) in cases of de minimis lapses of ac12 ceptable coverage, and 13 ‘‘(2) a process for applying for a waiver of the 14 application of subsection (a) in cases of hardship.’’. 15 (b) INFORMATION REPORTING.— 16 (1) IN GENERAL.—Subpart B of part III of 17 subchapter A of chapter 61 of such Code is amended 18 by inserting after section 6050W the following new 19 section: 20 ‘‘SEC. 6050X. RETURNS RELATING TO HEALTH INSURANCE 21 COVERAGE. 22 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 23 who provides acceptable coverage (as defined in section 24 59B(d)) to any individual during any calendar year shall, 25 at such time as the Secretary may prescribe, make the 1232 1 return described in subsection (b) with respect to such in 2 dividual. 3 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 4 is described in this subsection if such return— 5 ‘‘(1) is in such form as the Secretary may pre 6 scribe, and 7 ‘‘(2) contains— 8 ‘‘(A) the name, address, and TIN of the 9 primary insured and the name of each other in 10 dividual obtaining coverage under the policy,

11 ‘‘(B) the period for which each such indi 12 vidual was provided with the coverage referred 13 to in subsection (a), and 14 ‘‘(C) such other information as the Sec 15 retary may require. 16 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID 17 UALS WITH RESPECT TO WHOM INFORMATION IS RE 18 QUIRED.—Every person required to make a return under 19 subsection (a) shall furnish to each primary insured whose 20 name is required to be set forth in such return a written 21 statement showing— 22 ‘‘(1) the name and address of the person re 23 quired to make such return and the phone number 24 of the information contact for such person, and 1233 1 ‘‘(2) the information required to be shown on 2 the return with respect to such individual. 3 The written statement required under the preceding sen 4 tence shall be furnished on or before January 31 of the 5 year following the calendar year for which the return 6 under subsection (a) is required to be made. 7 ‘‘(d) COVERAGE PROVIDED BY GOVERNMENTAL 8 UNITS.—In the case of coverage provided by any govern 9 mental unit or any agency or instrumentality thereof, the 10 officer or employee who enters into the agreement to pro 11 vide such coverage (or the person appropriately designated 12 for purposes of this section) shall make the returns and 13 statements required by this section.’’. 14 (2) PENALTY FOR FAILURE TO FILE.— 15 (A) RETURN.—Subparagraph (B) of sec 16 tion 6724(d)(1) of such Code is amended by 17 striking ‘‘or’’ at the end of clause (xxii), by 18 striking ‘‘and’’ at the end of clause (xxiii) and 19 inserting ‘‘or’’, and by adding at the end the 20 following new clause:

21 ‘‘(xxiv) section 6050X (relating to re 22 turns relating to health insurance cov 23 erage), and’’. 24 (B) STATEMENT.—Paragraph (2) of sec 25 tion 6724(d) of such Code is amended by strik 1234 1 ing ‘‘or’’ at the end of subparagraph (EE), by 2 striking the period at the end of subparagraph 3 (FF) and inserting ‘‘, or’’, and by inserting 4 after subparagraph (FF) the following new sub 5 paragraph: 6 ‘‘(GG) section 6050X (relating to returns 7 relating to health insurance coverage).’’. 8 (c) RETURN REQUIREMENT.—Subsection (a) of sec 9 tion 6012 of such Code is amended by inserting after 10 paragraph (9) the following new paragraph: 11 ‘‘(10) Every individual to whom section 59B(a) 12 applies and who fails to meet the requirements of 13 section 59B(d) with respect to such individual or 14 any qualifying child (as defined in section 152(c)) of 15 such individual.’’. 16 (d) CLERICAL AMENDMENTS.— 17 (1) The table of parts for subchapter A of chap 18 ter 1 of the Internal Revenue Code of 1986 is 19 amended by adding at the end the following new 20 item: ‘‘PART VIII. HEALTH CARE RELATED TAXES.’’. 21 (2) The table of sections for subpart B of part 22 III of subchapter A of chapter 61 is amended by 23 adding at the end the following new item: ‘‘Sec. 6050X.Returns relating to health insurance coverage.’’. 1235 1 (e) SECTION 15 NOT TO APPLY.—The amendment 2 made by subsection (a) shall not be treated as a change

3 in a rate of tax for purposes of section 15 of the Internal 4 Revenue Code of 1986. 5 (f) EFFECTIVE DATE.— 6 (1) IN GENERAL.—The amendments made by 7 this section shall apply to taxable years beginning 8 after December 31, 2012. 9 (2) RETURNS.—The amendments made by sub 10 section (b) shall apply to calendar years beginning 11 after December 31, 2012. 1253 13 Subtitle D—Other Revenue 14 Provisions 15 PART 1—GENERAL PROVISIONS 16 SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS. 17 (a) IN GENERAL.—Part VIII of subchapter A of 18 chapter 1 of the Internal Revenue Code of 1986, as added 19 by this title, is amended by adding at the end the following 20 new subpart: 21 ‘‘Subpart B—Surcharge on High Income Individuals ‘‘Sec. 59C.Surcharge on high income individuals. 22 ‘‘SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS. 23 ‘‘(a) GENERAL RULE.—In the case of a taxpayer 24 other than a corporation, there is hereby imposed (in addi 1254 1 tion to any other tax imposed by this subtitle) a tax equal 2 to— 3 ‘‘(1) 1 percent of so much of the modified ad 4 justed gross income of the taxpayer as exceeds 5 $350,000 but does not exceed $500,000,

6 ‘‘(2) 1.5 percent of so much of the modified ad 7 justed gross income of the taxpayer as exceeds 8 $500,000 but does not exceed $1,000,000, and 9 ‘‘(3) 5.4 percent of so much of the modified ad 10 justed gross income of the taxpayer as exceeds 11 $1,000,000. 12 ‘‘(b) TAXPAYERS NOT MAKING A JOINT RETURN.— 13 In the case of any taxpayer other than a taxpayer making 14 a joint return under section 6013 or a surviving spouse 15 (as defined in section 2(a)), subsection (a) shall be applied 16 by substituting for each of the dollar amounts therein 17 (after any increase determined under subsection (e)) a dol 18 lar amount equal to— 19 ‘‘(1) 50 percent of the dollar amount so in ef 20 fect in the case of a married individual filing a sepa 21 rate return, and 22 ‘‘(2) 80 percent of the dollar amount so in ef 23 fect in any other case. 24 ‘‘(c) ADJUSTMENTS Complete text of the bill: at: http://budget.house.gov/doc-library/FY2010/03.15.2010_reconciliation2010.PDF

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December 27, 2009
Is it Unconstitutional to Mandate Health Insurance?
By MARK HALL

Is it unconstitutional to mandate health insurance? It seems unprecedented to require citizens to purchase insurance simply because they live in the U.S. (rather than as a condition of driving a car or owning a business, for instance).

Therefore, several credentialed, conservative lawyers think that compulsory health insurance is unconstitutional. See here and here and here. Their reasoning is unconvincing and deeply flawed. Since I’m writing in part for a non-legal audience, I’ll start with some basics and provide a lay explanation. (Go here for a fuller account). Constitutional attacks fall into two basic categories: (1) lack of federal power (Congress simply lacks any power to do this under the main body of the Constitution); and (2) violation of individual rights protected by the “Bill of Rights.” Considering (1), Congress has ample power and precedent through the Constitution’s “Commerce Clause” to regulate just about any aspect of the national economy. Health insurance is quintessentially an economic good. The only possible objection is that mandating its purchase is not the same as “regulating” its purchase, but a mandate is just a stronger form of regulation. When Congressional power exists, nothing in law says that stronger actions are less supported than weaker ones. An insurance mandate would be enforced through income tax laws, so even if a simple mandate were not a valid “regulation,” it still could fall easily within Congress’s plenary power to tax or not tax income. For instance, anyone purchasing insurance could be given an income tax credit, and those not purchasing could be assessed an income tax penalty. The only possible constitutional restriction is an archaic provision saying that if Congress imposes anything that amounts to a “head tax” or “poll tax” (that is, taxing people simply as people rather than taxing their income), then it must do so uniformly (that is, the same amount per person). This technical restriction is easily avoided by using income tax laws. Purists complain that taxes should be proportional to actual income and should not be used mainly to regulate economic behavior, but our tax code, for better or worse, is riddled with such regulatory provisions and so they are clearly constitutional. Arguments about federal authority deal mainly with states’ rights and sovereign power, but the real basis for opposition is motivated more by sentiments about individual rights the notion that government should not use its recognized authority to tell people how to spend their money. This notion of economic liberty had much greater traction in a prior era, but it has little basis in modern constitutional law. Eighty years ago, the Supreme Court used the concept of “substantive due process” to protect individual economic liberties, but the Court has thoroughly and repeatedly repudiated this body of law since the 1930s. Today, even Justice Scalia regards substantive due process as an “oxymoron.” Under both liberal and conservative jurisprudence, the Constitution protects individual autonomy strongly only when “fundamental rights” are involved. There may be fundamental rights to decide about medical treatments, but having insurance does not require anyone to undergo treatment. It only requires them to have a means to pay for any treatment they might choose to receive. The liberty in question is purely economic and has none of the strong elements of personal or bodily integrity that invoke Constitutional protection. In short, there is no fundamental right to be uninsured, and so various arguments based on the Bill of Rights fall flat. The closest plausible argument is one based on a federal statute protecting religious liberty, but Congress is Constitutionally free to override one statute with another.

If Constitutional concerns still remain, the simplest fix (ironically) would be simply to enact social insurance (as we currently do for Medicare and social security retirement) but allow people to opt out if they purchase private insurance. Politically, of course, this is not in the cards, but the fact that social insurance faces none of the alleged Constitutional infirmities of mandating private insurance points to this basic realization: Congress is on solid Constitutional ground in expanding health insurance coverage in essentially any fashion that is politically and socially feasible. Mark A. Hall, J.D., is the Fred D. & Elizabeth L. Turnage Professor of Law at Wake Forest University School of Law. He is one of the nation’s leading scholars in the areas of health care law and policy and medical and bioethics and a frequent contributor to Health Reform Watch. The author or editor of fifteen books, including Making Medical Spending Decisions (Oxford University Press), and Health Care Law and Ethics (Aspen), he is currently engaged in research in the areas of consumer-driven health care, doctor/patient trust, insurance regulation, and genetics. He has published scholarship in the law reviews at Berkeley, Chicago, Duke, Michigan, Pennsylvania, and Stanford, and his articles have been reprinted in a dozen casebooks and anthologies. Professor Hall also teaches in the MBA program at the Babcock School and is on the research faculty at Wake Forest’s Medical School. He regularly consults with government officials, foundations and think tanks about health care public policy issues, and was recently awarded the American Society of Law, Medicine and Ethics distinguished teaching award. http://www.thehealthcareblog.com/the_health_care_blog/2009/12/is-itunconstitutional-to-mandate-health-insurance.html

_____________________________________________________________________ March 18, 2010

ObamaCare is Tyranny, Not Legislation
By Janice Shaw Crouse What we're seeing in Washington, D.C. is not "politics as usual" with the arm twisting and "horse-trading" that is typical in getting a bill passed; instead, it is ideological warfare. What Obama, Reid, and Pelosi are doing is not legislating; it is an act of tyranny -- overturning all the rules and principles of government in a representative democracy. Attempting to pass the Senate version of ObamaCare in the House under the ironically named "Slaughter Rule" (to circumvent the objections of the Stupak coalition to taxpayer funding of abortion) is an exercise in raw power akin to the many acts of judicial tyranny the American public has endured over the last forty years from judges who have little regard for the Constitution.

Apparently Obama, Reid, and Pelosi aren't worried about losing control of Congress in 2010 or even the presidency in 2012, because their higher goal is to irrevocably institutionalize their ideology. Once government control of health care is established, their leftist principles will be implemented by an unelected bureaucracy that rules without accountability to the general public, whether or not the Democratic Party is the majority in Congress or holds the presidency. Obama, Reid, and Pelosi have learned nothing from history; they are as blind to their own tyranny as were King George and the British Parliament. They show no comprehension of the moral outrage that will ignite in this country if they ram through ObamaCare, a bill that requires taxpayer funding for abortion, usurps an individual's right to choose her own personal health care options, and saddles the nation with a growing flood of debt which will drown our children and grandchildren. Last Friday morning, you could see workers beginning to set up barricades around the Capitol in preparation for the demonstrations they expect in response to the Democrats' autocratic actions. They mistakenly think that the Tea Party protests are temporary flareups that mere barricades can contain, but their legislative and executive tyranny is unleashing emotions that have the potential to rival the antislavery movement of the Civil War era and the Civil Rights protests of the 1960s. Having abandoned those transcendent moral principles upon which this nation was founded for a false ideology of their own imagining, these people have no understanding of the righteous fury that will build in this nation when her citizens see their government sanction morally reprehensible acts. Leaders across the nation --- nearly half a million strong --- have already signed the Manhattan Declaration declaring that moral principles take precedence over laws that ignore the value of human life and individual freedom. These deeply-held religious beliefs are inviolable, non-negotiable, and protected under the U.S. Constitution. Thousands of America's Orthodox, Catholic, and evangelical Christian leaders have laid down a gauntlet: By reaffirming the fundamental truth that life and liberty come not from man-made laws, but from God, we have joined together "to defend the sanctity of life, the dignity of marriage as the conjugal union of husband and wife, and the rights of conscience and religious liberty." We have, in good faith, expressed our objections and righteous indignation over and over again, only to be repeatedly rebuffed and ignored. Poll after poll demonstrates that U.S. citizens are strongly opposed to ObamaCare and its impact on our nation. Yet the Obama/Reid/Pelosi axis is determined to ignore the will of the people that they were elected to represent and to dictatorially impose on the nation their ideas of what's best. They have lived so long in the rarefied air of elitism that they think that the "masses" will simply accept their "superior wisdom." These unprecedented assaults on basic American principles compel Manhattan Declaration signers to forcefully mount a defense of human life, marriage, and religious freedom.

Manhattan Declaration-signers have said that civil disobedience is necessary when faced with gravely unjust laws requiring submission to other laws that violate our principled moral beliefs about abortion, marriage, and religious freedom. As the Manhattan Declaration states, "We will fully and ungrudgingly render to Caesar what is Caesar's. But under no circumstances will we render to Caesar what is God's."
Janice Shaw Crouse, Ph.D., author of Children at Risk, heads the think-tank for Concerned Women for America.

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March 15, 2010

Pelosi and Marx on 'Freedom'
By Ed Kaitz Nancy Pelosi wants to give birth to a new kind of freedom in America -- the freedom from being "job-locked." In an interview with Rachel Maddow Thursday evening, Pelosi asked Americans to "think" about a bright, new, liberating kind of utopia: Think of an economy where people could be an artist or a photographer, a writer without worrying about keeping their day job in order to have health insurance. Or that people could start a business and be entrepreneurial and take risks, but not be job-locked because a child has a child has asthma or diabetes or someone in the family is bipolar. You name it, any condition is job-locking. Maddow was so overwhelmed and smitten with Pelosi's remarks that she posted the interview on her website under the following title: "Finally! Pelosi frames health reform for the win. (Hint: It's about freedom.)" The problem with Pelosi's remarks, however, is that from hindsight, they are not bright, new, or liberating. On the contrary, almost identical words were penned over a hundred years ago by another champion of economic "freedom": Karl Marx. Marx criticized the private economy because it led to the "renunciation of life and of human needs." Like Pelosi, Marx was deeply troubled by an economic system that left most people joblocked and unable to satisfy their "human need" to become more authentic. In other words, the more you have to work, said Marx, "the less you eat, drink, buy books, go to the theater or to balls, or to the public house, and the less you think, love, theorize, sing, paint, fence, etc."

Marx chastised the middle class in England for being "so incurably debased by selfinterest" and thirsty for a "quick profit" that they were incapable of recognizing the alienation from their true selves. Communist society, then, was the cure that could liberate us from our false selves and usher in a new kind of creativity and authenticity. Says Marx: [C]ommunist society ... regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, as the spirit moves me ..." This kind of sheer lunacy could have been hatched only by an unemployed academic and journalist like Marx, who, by the way, was supported financially in his authentically jobliberated struggle against capitalism by his wealthy colleague Friedrich Engels. What's most disturbing is the number of wild-eyed crusaders, both then and now, who have fallen for Marx's creative definition of "freedom." As for that nagging issue of just how "communist society" will "regulate the general production" after the socialist revolution, Engels had this to say: The community will have to calculate what it can produce with the means at its disposal; and in accordance with the relationship of this productive power to the mass of consumers it will determine how far it has to raise or lower production. In other words, leave it to the "community" (government) to worry about levels of production and consumption in order for the newly liberated and formerly "job-locked" citizens to pursue their lifelong dreams of being artists, writers, or photographers. Friedrich Hayek wrote about this subtle shift in the word "freedom" over sixty years ago. He argued that as socialists began coming under fire for promoting servitude and control, they made the creative decision to harness to their "cart the strongest of all political motives -- the craving for freedom." For Hayek, The subtle change in meaning to which the word ‘freedom' was subjected in order that this argument sound plausible is important. To the great apostles of political freedom the word had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. For the socialists, however, "before man could be truly free, the 'despotism of physical want' had to be broken, the ‘restraints of the economic system' relaxed." For Hayek, this new definition of freedom was simply "another name for the old demand for an equal distribution of wealth." Hayek asks a fascinating question that each and every American needs to consider before deciding whether to return any Obamacare-supporting politician to power this fall:

Who can seriously doubt ... that the power which a multi-millionaire, who may be my neighbor and perhaps my employer, has over me is very much less than that which the smallest [bureaucrat] possess who wields the coercive power of the state and on whose discretion it depends whether and how I am to be allowed to live or to work? Nancy Pelosi's theory of "economic freedom," you see, requires legions of new bureaucrats wielding the power of the state so that you can be liberated from your inauthentic, job-locked selves. If we take freedom in its true meaning -- as freedom from coercion -- we see instantly, however, that indeed, I am less coerced by a neighboring millionaire than by the tiniest government bureaucrat deciding where and when I can see a doctor, go to school, or become job-locked. Years ago, before he died, I asked my father what he liked most about working in the home-building industry. After having been "job-locked" in the housing industry for over twenty years, he told me the following: "For me, the best thing of all is seeing a new family move into one of our homes." My father wasn't a writer or an artist, but he was a kind, decent, hardworking man who loved his job and his family. Rather than struggle against the system and neglect his children like Marx did, my father felt it was part of his job, not the government's, to take care of his family -- including our health care. Sounds pretty authentic to me. 66 Comments on "Pelosi and Marx on 'Freedom'" http://www.americanthinker.com/2010/03/pelosi_and_marx_on_freedom.html

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March 13, 2010

The Big Lie of Health Care Reform
By Robert Gelinas One-sixth of the U.S. economy is threatened with a takeover by the federal government on the erroneous rationale that "tens of millions of people in the U.S. are without health care insurance, and therefore are being denied access to adequate health care." Unjust! Unfair! This is, of course, an absolute lie. Nor does some large number of people "die every day from lack of health insurance coverage." That too is a lie. Access to the health care providers (professional services) and medicine (products) of the best health care system in the world is already universal and available to every U.S. citizen, legal resident, illegal alien, prisoner, detainee, or visitor -- regardless of whether anyone is covered by any insurance policy or health plan. For heaven's sake, even the

illegal aliens have figured out that anyone who walks into an emergency room is required by law (EMTALA) to be treated, regardless of the person's ability to pay. The Big Lie: Without health care insurance, there is no access to health care. Health care insurance coverage is but one method of paying for health care products and services. Doctors and hospitals are quite open to accepting cash, checks, or credit cards for their services rendered and have no problem with getting paid directly -- meaning they get their money right away, don't have to fill out and file mounds of bureaucratic paperwork with insurance companies, don't have to worry about what treatments are approved and reimbursable by the insurance companies, etc. In fact, when health care is directly paid for by a patient, then issues like preexisting conditions, escalating premium rates, denied claims, dropped policies, and all of the regularly lamented shortcomings of the health insurance industry become moot. Case in point: Elective surgery such as breast augmentation is a medical procedure that isn't covered by any health insurance, but somehow, there doesn't seem to be any access issues to the procedure or lack of them occurring. And yet most people are led to believe that they simply can't afford to pay for their own health services directly. That's why they purchase health insurance, or their employer purchases it for them as an employee benefit. Actually, this too is a great misunderstanding of the problems with respect to health insurance coverage, which are completely distinct issues from access to actual health care services. Any form of insurance (home, car, flood, health care, etc.) is nothing more than a financial instrument used to mitigate an unacceptable potential financial risk. Insurance doesn't work unless more people are paying into a common pool than are taking money out of it. The whole idea of insurance coverage is to spread financial risk among many people so that any one member isn't hit with some catastrophic expense should a major need occur. But in many respects, most health insurance coverage has been expanded in scope to become some kind of "Health Services Subscription Club" that pays for many services that really don't represent unacceptable financial risks by themselves. Indeed, overpaying beyond an individual's actual needs via insurance premiums is a viable means to avoid getting hit with major medical expenses. However, that's why they invented Catastrophic Insurance Policies -- i.e. those cheaper, high-deductible plans that don't kick in until direct expenses go over a few thousand dollars. Regardless, even without any kind of health insurance policy whatsoever or ObamaCare, if someone gets in a car wreck, the ambulance will still respond and take the injured to the emergency room, where he or she will be treated regardless of ability to pay. It's already the law. The whole ObamaCare health care reform debate isn't really about people who already have health insurance; rather, it's being crafted supposedly for the benefit of all those who

are without coverage and who need it, but can't afford it. Nevertheless, if tomorrow the government bought health insurance policies for everyone who doesn't have one, that wouldn't make access to health care services any more available than it already is. To the contrary, the law of supply and demand dictates that if 30 million or more new customers are added to a marketplace (the demand) and there is no proportional increase in the number of service providers (the supply), then prices will go up as service availability goes down -- which means that the whole system gets worse for everyone, not better. The real issue is that there are those who wish to argue that despite all the adverse (if not catastrophic) consequences of ObamaCare to the system, health care is a "basic human right" and therefore the basis for a massive new government entitlement program. But health care isn't an "inalienable right" -- it's a basic human necessity, just like food, clothing, and shelter. All of these basic human necessities are bought and sold every day in the free market in the context of the goods and services that they really are. The simple reality is this: There are those in our society who can afford these necessities, and there are those in our society who can't. For those who can't afford the basic human necessity of proper health care -- just like food, clothing, and shelter -- that need becomes the basis of voluntary charity and aid. Conversely, the government version of involuntary charity via taxation is called "welfare." So whether it's private charity or a government welfare program that helps people buy something they otherwise couldn't afford but need, that's fine. Just recognize that that's the issue -- not an entitled right, not an access or availability problem, not a lack of insurance policies. Now, if making health care more affordable for everyone is really the goal -- to thereby lower the threshold of who can readily pay for it directly and/or indirectly via an insurance policy, and thus reduce the necessity of charity and/or welfare for those who need assistance -- then free-market business forces and scientific and technological advances, along with increased competition -- not intrusive government forces -- are the answers. Consider one mathematical fact: The purchase of 30 million new insurance policies that cost $5,000 each is only $150 billion, which is a fraction of the real price tag of ObamaCare. One can therefore reasonably conclude that ObamaCare isn't really about making health care more available or affordable to those who need it and can't afford it. It isn't about lowering insurance costs or reducing the federal deficit. What has been proposed achieves none of these objectives. ObamaCare is simply a leviathan of a lie, whose only practical impact for generations to come will be increased welfare-state dependency on government, greater government

intrusion and control over people's personal lives and privacy, reduced availability of health care providers as more of them are driven from their professions -- all of which translates to higher and higher costs, which only accelerates the country's financial death spiral. But that's to be expected: Most grandiose plans predicated on lies don't end well.
Robert Gelinas is a technology executive at JPE Inc. Consulting, the publisher of ArcheBooks Publishing, and the author of The Mustard Seed and five other novels.

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March 11, 2010

Emperor Obama and the Kamikaze House Democrats
By Jeannie DeAngelis "I am not going on this mission for the Emperor or for the Empire...I am going because I was ordered to." These words were spoken by one of Japan's first kamikaze pilots, Lieutenant Yukio Seki, after being compelled to volunteer for a suicide mission. Though apprehensive, the pilot maintained the insight to comprehend that "Japan's future was pale if it was forced to kill one of its best pilots." So it is in Washington, D.C. as a "divine wind" blows through the nation's capital. Although in the majority, Democrats are experiencing decreased capacity to successfully wage political war. Disregarding plummeting polls and lost elections, which comprise a formidable opposing armada amassing on the horizon; Barack Obama remains resolute in his reluctance to surrender. During WWII, Takijiro Onishi, Vice-Admiral of the Japanese Navy, faced down a huge invasion in the Philippines. Anticipating crushing defeat, Onishi requested that the suicide Thunder God Corps be utilized as a tactic to assure that Japanese bombs made contact with American warships. Human being-guided, bomb-laden aircraft on a volatile suicide collision with enemy targets is a tactic that bomb-thrower Obama may employ if he passes health care reform by detonating the "nuclear option" of reconciliation. Presently, when it comes to health care reform, the future of the Democrat Party is as pale as Japan's ability to prevail with a hundred operational aircraft confronted by an American flotilla. In response, Obama has decided to implement a similar last-ditch effort in an attempt to "snatch victory from the jaws of defeat." Under the command of Emperor Obama, and in an attempt to avoid a rout, Democrats are being coercively recruited to take part in assault death units. What's the mission? Prevail in the president's policy war -- even if it costs political lives.

For a year now, winning the health care reform battle has been a difficult hit-or-miss undertaking for Obama. Blue Dog Democrats and conservative Representatives in the House and Senate, aware that constituents are opposed to the cost and control aspects of the sweeping health care reform bill, resist supporting Obama's legislation. Thus the war drags on and on as Democrats portend the scope of defeat. As a result, Emperor Obama has requested that Democrats transform themselves into health care reform "smart bombs," sacrificing all for the cause. "Senator Lamar Alexandar (R-Tenn) said that if Democrats push health care through under the majority only process known as reconciliation, it will be a 'political kamikaze mission'." Obviously the senator uses the word "kamikaze" in a "hyperbolic or metaphorical fashion to refer to non-fatal actions which result in significant loss for the attacker, such as injury or the end of a career" -- and career-ending it will be! Yet Obama considers the goal of reforming health care critical enough to warrant the sacrifice of seats in November, and apparently even the Oval Office in 2012. Encouraging a pervasive self-slaughter mentality, Obama daily reminds indecisive liberals that "[t]o maintain a strong presidency, we need to pass the bill." President Obama pushed wavering House members to OK health-care legislation for his own political standing and for theirs, as the battle came down to a bare-knuckle brawl for votes. Obama met with groups of liberal and more conservative Democrats in the White House to try to assemble a winning coalition. Well aware that first-term presidents typically suffer party losses, the president continues to pressure Democrat troops on a mission of self-destruction, saying, "I don't want you to feel discouraged. I want you to understand that we've got to push that much harder." And so, Thunder Gods in the House and Senate strap themselves to a poorly constructed bill resembling a rickety, wooden kamikaze plane, built solely to crash and burn. Obama demands that Democrats disregard generic ballot poll predictions and constituent sentiment and willingly sacrifice political life and limb for what is deemed honorable partisan death. The result: Democrats are presently being subjected to "brutal training" similar to that of a WWII kamikaze pilot, whose preparation for death was "justified by the idea that it would instill a soldier's fighting spirit." Volunteering to "fall on the sword," a nonverbal proclamation has been issued by Democrats similar to that of 24th kamikaze pilot Commander Seki, who said, "It is better to die, rather than to live as a coward." Why is the party of Pelosi and Reid responding in such a dramatic way? Because in an attempt to rouse pusillanimous politicians to make the ultimate sacrifice, reverberating through the hallowed halls of power, the virtuous voice of the Speaker of the House can be heard. Nancy Pelosi, whose seat is not in jeopardy, is of the opinion that "[i]t will take courage to pass health care." Pelosi posed and answered her own question, saying, "But why are

we here? We're not here just to self-perpetuate our service in Congress ... Time is up, we really have to go forth." Emperor Barack contributes further inspiration to Democrats, reluctantly adjusting rising sun hachimakis on clammy foreheads. Obama claims to "[k]now some ... might feel discouraged because changing the ways of Washington is hard. It's harder than a lot of [Democrats] thought it might be. Sometimes [Democrats] feel ... that it's not possible. You might want to give up." Obama pleaded, "Don't give up." It is not surprising that discord prevails within Democrat ranks. Japan's special suicide program was a divisive matter within Japanese military circles as well. Veteran field commanders considered the notion of one-way death missions a colossal waste of valuable lives. Nevertheless, many naysayers were eventually convinced because the kamikaze "sure-hitting attack crafts" delivered "virtually all late war losses." In like manner, as die-hard Blue Dog ideologues refuse to self-destruct over issues like abortion language, it is probably only a matter of time before Bart Stupak (D-MI) is persuaded to relinquish opposition and shout "banzai" on behalf of the Democratic Party. WWII wound down with the Japanese steadfastly believing that "because they were fighting for their Emperor God, the Kamikaze would bring them deliverance at the darkest hour." Twenty-five hundred dead human torpedoes and a lost war later, the faithful were the misguided ones. Pausing for a moment from memorizing the inspiring health care bill and slamming back warm socialist sake while shouting "hissatsu" for the cause -- it would serve Democrats well to reacquaint themselves with history. "On the eve of the Japanese surrender, Takijiro Onishi ended his own life, leaving a note of apology to his dead pilots -- their sacrifice had been in vain." As Election Day draws near, the suicidal harakiri that Obamacare demands from the Democrat Party will likewise be proven futile, because in the end -- it's the American people who will win this war.
Author's content: jeannie-ology.com

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______________________________________________ Health care reform in Washington meets the Chicago Way

Reform effort finds its fall guys in Congress

John Kass http://www.chicagotribune.com/news/columnists/ct-met-kass-031720100316,0,3195139,full.column Not even three or four pipes full of Hopium could have convinced me that the Congress of the United States would ever start looking like the Chicago City Council. But now, with the Chicago Way White House twisting arms for its federal health care legislation, Democrats in Congress and Chicago aldermen are beginning to share a remarkable resemblance. They're starting to look like fall guys. "The Congress? They're acting like aldermen. Like fall guys. And we know all about fall guys in the city of Chicago," said Jim Laski, a former Chicago alderman and former federal inmate who is now a WGN radio talk show host. Laski was an alderman for years, representing the 23rd Ward on the Southwest Side. We met centuries ago, when he was a political aide and I was a new reporter. I felt bad for his family when Laski, who'd climbed to the job of city clerk, was convicted on corruption charges. But he made the choice to take the money. He admitted taking $48,000 from a family friend. He did his time without complaint. He apologized to his family and constituents. And he learned that in federal custody, one of the most valuable commodities is a pouch of tuna. "It's the protein. The weightlifters like it," Laski said. "They call it a ‘can' of tuna. As in, ‘You want this, or that, it'll cost two cans.' But it's really a vacuum-packed pouch of tuna. Why do they call it a can? Don't ask me." Unlike others who talk about politics, he's actually done it. And as we stood outside the Tribune Tower on Tuesday after he'd done a show, we didn't discuss the merits of the president's plan. We were talking about the tactics. "These congressmen are starting to understand what it's like in Chicago, with the Chicago guys running the White House. They (the Democrats) have to know they're the fall guys," Laski said. "Otherwise, why would they so desperate to keep their fingerprints off the health care thing?" Things are looking more Chicago in Washington all the time. In Chicago, the mayor gets what he wants, and the mayor's friends get what they want. And the aldermen? They get the ridicule and the blame.

If the president gets what he desires — a health care victory — then Congress will pay for it in the midterm elections in November, and they know it. The proof is in that latest congressional trick announced on Tuesday, a ploy so weaselly that it could have been hatched by Chicago politicians. House Majority Leader Steny Hoyer of Maryland is now talking about allowing his members to pass the president's health care package — whatever's in it exactly, no one really knows — without a direct up-or-down vote on the current bill. "It's consistent with the rules," Hoyer was quoted as saying on Tuesday. "It's consistent with former practice." Consistent with the rules? Perhaps, but it sure isn't what President Barack Obama promised when he was talking like a reformer. Democrats in the Congress want to appease the president and his crew, but they don't want the federal health vote tied to their necks for the November midterm elections. Their constituents don't want it and they've said so, loudly. So Democrats in Congress desire a rhetorical out. With the Hoyer plan, they can say they support the health care package and then tell their constituents they didn't vote for it, exactly. Their only trouble is that now, the entire country is watching. "They've got to do something," Laski said. "The president wants the vote now. He doesn't want the Congress going back home, talking to their constituents. Their knees are already wobbling. If you've been in a legislative body, you can see what's going on. They want to get it done." But what is it exactly that they want to get done? No one seems to know exactly, except that it will cost a trillion dollars we don't have, and force an increase in taxes and fees in years to come. There's talk that Congress will fix the bill, but only after it becomes law. And if you believe they'll revisit it, then just fill yourself another pipe of Hopium. "This whole health care thing is Chicago," Laski said. Except, that in Chicago, the mayor's guy doesn't meet you naked in the shower to twist your arm. It's just not done. "But in Chicago, you're an alderman and the mayor's guy comes in your office, drops a legislative package on your desk, and then says, ‘You vote ‘yes' on this tomorrow, OK?' "You haven't read it, you really don't know who's going to make a score, there are no real details, but you're expected to vote for it.

"The same thing with health care in Washington. Who knows what's really in it? Nobody. But the president's guys tell the congressmen, ‘You vote on this or else.' It's called armtwisting but it's really arm-breaking. That's the Chicago Way." Obviously, this isn't exactly what the president promised while campaigning, promising to transcend the broken politics of the past. This is the broken politics of the past. So get those Hopium pipes ready. It might look like Washington. But after a few puffs, it'll start looking more Chicago every day. jskass@tribune.com

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Rigging the Healthcare Debate with Dishonest Numbers
by Dan Mitchell President Obama and congressional Democrats are claiming that a giant new entitlement program will reduce red ink. It’s tempting to laugh and dismiss such a preposterous claim. After all, these are the same people who told us that squandering $787 billion on a so-called stimulus would create jobs. Unfortunately, the joke’s on us. According to the “official” scoring estimates on Capitol Hill, Obamacare supposedly will lower the deficit because taxes are being increased more than spending is being increased (not that this should matter since America’s fiscal crisis is spending and deficits are merely a symptom). But these numbers, produced by the Congressional Budget Office and Joint Committee on Taxation, are highly suspect. I’ve explained elsewhere why the spending projections from the CBO are grossly flawed, and many other experts have made similar observations. The same problem exists on the revenue side of the ledger. This video explains why we should be very skeptical of any numbers produced by the Joint Committee on Taxation. http://www.youtube.com/watch?v=Mw7LtVwDCbs&feature=player_embedded Let’s put this in context by reviewing the supposedly nonpartisan numbers that the JCT has produced. The Senate bill has big tax increases on insurance companies, medical device makers, and so-called cadillac health plans. The House plan, meanwhile, largely relies on higher income tax rates on investors and entrpreneurs. And both bills impose huge marginal tax rate increases on middle class taxpayers thanks to the phase out of subsidies, as explained in gruesome detail by my Cato Institue colleage Michael Cannon.

While we don’t know at this point all of the tax increases that might be part of a reconciliation bill (which House Democrats are demanding in order to modify the Senate bill), the big implicit marginal tax rate increases on the middle class would become law if and when the House approves the Senate bill. These higher tax rates, along with the higher tax rates that are agreed as part of reconciliation, will discourage productive behavior. And as explained in the video above (as well as in Part I and Part II of the Laffer Curve series), this will result in less taxable income. This, of course, means that the JCT revenue estimates are artificially optimistic. Combined with the deeply flawed spending numbers produced by CBO, this means the road to healthcare disaster is paved with fraudulent numbers. P.S. Some people doubtlessly are wondering why Republicans did not fix the problems at CBO and JCT during the 12 years they controlled Congress. I also wish I knew the answer to that question.
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Obama's Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums
by Michael F. Cannon Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Health Care and How to Free It. Published on January 13, 2010 House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation. Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent— and even reach as high as 82 percent—over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent. Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.

Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Health Care and How to Free It. More by Michael F. Cannon In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage "adverse selection"—an unstable situation that would drive insurance premiums, government spending, and taxes even higher. Read his POLICY ANALYSIS at :

http://www.cato.org/pubs/pas/html/pa656/pa656index.html

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Our Man Ken–There He Goes Again!
by Christian Josi In yet another admirable display of the right kind of Attorney General activism, Virginia AG Ken Cuccinelli has put House Speaker Nancy Pelosi on notice that what she and the Democratic leadership are reportedly scheming to pass Health Care ‘reform’ is not only wrong — it’s unconstitutional.

3.18.10 KConPelosi
Amidst discussion and arguments surrounding health care reform, is the effect passage will have on the re-election of Democrats in the Fall. The health care reform legislation currently in front of Congress is so widely unpopular on both sides of the aisle that Democrats have taken up the idea for a process called, “deem and pass” to get health care reform passed through. Deem and pass is a process by which House Democrats will be able to avoid taking recorded votes on the Senate health care bill. Given the political environment and

discussion within the blogosphere and mainstream media, the motives behind enacting this process specifically for this bill are highly transparent. In a letter to the Speaker, above, Cuccinelli wrote, “A bill of this magnitude

should not be passed using this maneuver. As the President noted last week, the American people are entitled to an up or down vote.” (He’s not exaggerating when he talks of the “magnitude” of this bill. It’s said to project up 2.5 trillion dollars in new spending). “Based upon media interviews and statements which I have seen, you are considering this approach because it might somehow shield members of Congress from taking a recorded vote on an overwhelmingly unpopular Senate bill.”
“Deem and pass,” in this context, is an egregious violation to the democratic process. I applaud AG Ken Cuccinelli for not only acknowledging this, but also for being willing to stand against the crazies pursuing it. http://biggovernment.com/cjosi/2010/03/18/our-man-ken-there-he-goes-again/print/

http://www.docstoc.com/docs/30054514/31810-KConPelosi
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Sen. Coburn Vows To Block Special Deals for House Members Who Switch Obamacare Vote from ‘No’ to to ‘Yes’
by Publius

Transcript: SEN. TOM COBURN (R), OKLAHOMA: I want to send a couple of messages

to my colleagues in the House.

If you voted no and you vote yes, and you lose your election, and you think any nomination to a federal position isn’t going to be held in the Senate, I’ve got news for you. It’s going to be held. Number two is, if you get a deal, a parochial deal for you or your district, I’ve already instructed my staff and the staff of seven other senators that we will look at every appropriations bill, at every level, at every instance, and we will outline it by district, and we will associate that with the buying of your vote. So, if you think you can cut a deal now, and it not come out until after the election, I want to tell you that isn’t going to happen. And be prepared to defend selling your vote in the House. http://www.youtube.com/watch?v=bA0EOugizPY
http://biggovernment.com/publius/2010/03/18/sen-coburn-vows-to-block-specialdeals-for-house-members-who-switch-obamacare-vote-from-no-to-to-yes/

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Landmark Legal Foundation to Slaughter House butchers: Not without a fight; Update: The states’ revolt
By Michelle Malkin • March 17, 2010 05:29 PM

Not without a fight, Deem-o-crats: Mark R. Levin, president of Landmark Legal Foundation, today issued a warning to the leadership of the U.S. House of Representatives about the possible use of the so-called “deem and pass,” “self-executing,” or “Slaughter Rule” to enact H.R. 3590, the legislative version of President Obama’s healthcare proposal that has been previously approved by the Senate. If this tactic is employed, Landmark will immediately sue the President, Attorney General Eric Holder and other relevant cabinet members to prevent them from instituting this unconstitutional contrivance. “Landmark has already prepared a lawsuit that will be filed in federal court the moment the House acts. Such a brazen violation of the core functions of Congress simply cannot be ignored. Article I, Section 7 of the Constitution is clear respecting the manner in which a bill becomes law. Members are required to vote on this bill, not claim they did when they didn’t. The Speaker of the House and her lieutenants are temporary custodians of congressional authority. They are not empowered to do permanent violence to our Constitution.” Read the full draft complaint here. Related: Republican lawyers warn Democrats of “deem and pass” consequences. Update: I noted the states’ brewing revolt against Demcare’s individual mandate back in January.

The revolt continues to spread. Idaho acted today: Idaho Gov. C.L. “Butch” Otter on Wednesday became the first state chief executive to sign a measure requiring his attorney general to sue Congress if it passes health reforms that force residents to buy insurance. Similar legislation is pending in 37 other states nationwide.

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Draft of Complaint For Landmark Legal Foundation below

PAGE 8…Continue from PAGE 7, #30 above :
……Chambers, the federal courts stand aside. When the adopted procedure is no longer to seek observance of the commands of the Constitution, as in this case, the self-imposed limits on judicial review cannot apply. 31. The courts risk much in not acting in this case. For if the Enrolled Bill Rule were to block consideration of this deliberate adoption of a procedure to repeal the Bicameralism Clause, then the House and Senate will be free to adopt any such procedures in the future, assured that they will be immune from judicial review under any and all circumstances. After all, if the House can pass a rule that “deems approved” one measure on adoption of a separate measure and keep that maneuver from judicial scrutiny, then it, and its companion Chamber the Senate, can do anything. There can be no doubt that the day after a ruling in this case that no judicial review is permitted, the House and Senate would be free to adopt as procedures a lineitem veto through use of multiple enrollments of unitary appropriations bills, deeming every item in the bill as a separate bill. See, e.g., Gressman, Observation: Is the Item Veto Constitutional?, 64 N. Car. L. Rev. 819 (1986). Everything about the House’s action invites chaos: economic, political, and constitutional. Under the specific facts presented here, the Congress has forfeited any claim to judicial deference. 32. By separate motion, Plaintiffs will ask this Court to expedite consideration of the threshold issue of the applicability of the Enrolled Bill Rule. If, as Plaintiffs seek, this Court determines that it may adjudicate the merits of this Complaint, then Plaintiffs would accept immediate certification to the United States Court of Appeals. 33. Plaintiffs seek the protection of this Court, empowered by Article III of the Constitution to insulate the people of this country from the exercise over them of powers not granted to officials acting under color of law in the Executive Branch.

PAGE 9

PRAYER FOR RELIEF WHEREFORE, Plaintiffs request for expeditious proceedings in this action and that judgment be entered in their favor and against Defendants as follows: 1. An order declaring the Senate Bill unconstitutional; 2. An order permanently enjoining Defendants, their officers, agents, servants, employees, and all persons in active concert or participation with them who receive actual notice of the injunction, from enforcing the Senate Bill under color of law; 3. Costs of suit, including attorney fees and costs; 4. Declaratory relief consistent with the injunction; and 5. Any other further relief as the Court deems just and appropriate. Respectfully submitted, ____________________________________ Arthur F. Fergenson (DC Bar No.:200840) Ansa Assuncao, LLP 3545 Ellicott Mills Drive Ellicott City, Maryland 21043 410-370-1139 arthur.fergenson@ansalaw.com Attorney for Plaintiffs Landmark Legal Foundation and Mark R. Levin Of Counsel: Matthew Meyer Michael J. O’Neill Emmett Collazo Ansa Assuncao, LLP 1600 JFK Blvd., Suite 900 Philadelphia, PA 19103

http://landmarklegal.org

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Tuesday, August 18, 2009

Obamacare Is Shredding The Constitution
Rush Limbaugh recently addressed the unconstitutionality of Obamacare on his radio program, and I think it's absolutely something we should understand: The Heritage Foundation today: "Is Obamacare Consistent with Our First Principles?" And this is a piece from the Heritage Foundation about how all of this health care is really just unconstitutional. "During one of Sen. Arlen Specter's (D-PA) early health care townhalls in Lebanon, Pennsylvania; mother of two Katy Abram told the audience: 'I don't believe this is just about health care. It's not about TARP. It's not about left and right. This is about the systematic dismantling of this country. I'm only 35 years-old. I've never been interested in politics. You have awakened the sleeping giant.' Abrams is dead on. Our federal government has, unfortunately, long been drifting away from the limited government principles first envisioned by our founders. But over the past eleven months, that drift has turned into an all out sprint towards an undemocratic, technocratic, leviathan state … a type of government that our Constitution was specifically designed to prevent. "As Abram points out, both political parties have been complicit in the rapid deterioration of our founding principles. It was after all President Bush who pushed for and signed the Emergency Economic Stabilization Act of 2008 which created the Troubled Asset Relief Program (TARP). When the Bush administration submitted their legislation to Congress we warned: 'From a constitutional standpoint, the current versions of the legislation are different in scope, and especially in kind, from almost any federal legislation that has come before.' Specifically we identified: (1) Congress's enumerated power -or lack thereof -- to intervene with private markets in the manner contemplated, (2) the lack of meaningful standards to guide the extremely broad grant of discretion to the Treasury secretary (the 'legislative delegation' problem), (3) limitations on judicial review over the exercise of that almost limitless discretion, and (4) related separation of powers concerns." And they were exactly right. Congress doesn't have the right constitutionally to intervene in the private sector the way they are doing and did. Now, the Heritage Foundation piece here says: "The only thing that truly surprised us after the legislation's passage was just how quickly our worst fears were realized. The TARP plan, as sold to Congress, was never even implemented and, instead, it quickly devolved into a political slush fund," and there were people that warned that that's what it was all about in the first place. "Even worse is what is not yet in the bill, but is desperately wanted by the Obama administration. A

super-empowered Medicare Payment Advisory Commission that is specifically designed to 'save money in an apolitical, technocratic way.' The entire purpose of this part of Obamacare would be to take medical decisions away from patients and vest it in a panel of experts specifically designed to be completely unaccountable to the American people. Is this what the Framers of the Constitution had in mind?" Let me translate this for you. Right now Congress decides on Medicare payments, how much, where they go, as a matter of legislation. Rahm

Emanuel has said the most important thing in any health care legislation is transferring that control to the White House. Obama wants to set up a panel of people, czars that are not accountable to anybody, that will make these decisions, and that's where the end-of-life stuff has come into question and the death panels and all of that. And that is clearly unconstitutional. The powers delegated by the Constitution to
the federal government are few and defined. Most of the Constitution tells the government what it cannot do. Obama doesn't like that. So this entire health care legislation is not even constitutional. We're watching it being shredded before our eyes.

This is basically the question of whether or not health care is a 'right' according to the Constitution. Obama and many liberals would say (in fact, Obama did say this in one of the debates last fall) that it is. Conservatives would say that it is not. Another good analysis that addresses this idea can be found at RedState. Excerpts: [A 'right' is] something the government cannot forbid. A basic right which is implied but not mentioned in the Constitution is the right to travel. The government should not interfere in our movement from place to place. But there is no right to transportation, either to a specific form of transport or to have any provided, Cash For Clunkers notwithstanding. If there were, one couldn't pass by a hitchhiker (and they would choke every intersection demanding that their rights be satisfied). Similarly, the government should not be able to bar anyone from receiving health care. That is very different thing from supplying it to everyone, or forcing health care workers to serve anyone who appears before them. But in their usual manner, the left have found a way to redefine the word "right" in this context, from that which the government cannot prevent to that which it must provide. That's the key, I think, and something that many Americans seem to

have forgotten. Get that firmly in your head as the foundation of this argument: a 'right', defined as something the government cannot prevent, does not equate to something that the government must provide. I remember reading another description some time ago (can't remember where, or I'd cite it) that said a true constitutional right is something that is granted to all without taking something away from any. To call health care a 'right' fails that definition, too, since the masses will be forced to fund via their taxpayer dollars the 'right' to 'free' health care for others. RedState also hits on this idea in a larger context:

Like other socialists, Barack Obama believes rights to include things the government must provide, and it is from that unfortunate perspective that he was able to give the clear response that he did. Indeed, positive rights are the essence of socialism, and cause an insidious mission creep for an ever-expanding government. Positive rights also lead inevitably to forcing one citizen, whether driver or physician, to serve another. From a reading of the Constitution and an understanding of how the Founders intended it, the idea that health care is a 'right' is wholly inaccurate.
The fact that so many Americans even accept that premise shows us the results of decades of liberal indoctrination in our education system, and the danger in allowing words to be redefined. Ultimately, the shredding of the Constitution will only be stopped when Americans get back to it, understand it, and rely upon it rather than the redefinition du jour.

http://www.theresmytwocents.com/2009/08/obamacare-is-shreddingconstitution.html

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USE RELIGIOUS FREEDOMS TO CHALLENGE OBAMA CARE
By MICHAEL SAVAGE

(MichaelSavage.com) OBAMA IS PREPARING TO SHOVE
SOCIALIZED MEDICINE DOWN OUR THROATS. AND IN ORDER TO DO SO, HE’S DECIDED TO BLOW UP THE U.S. SENATE. HE ANNOUNCED THAT RATHER THAN FOLLOW THE RULES OF THE U.S. SENATE, WHICH REQUIRE 60 VOTES TO END DEBATE ON ANY ISSUE, THE DEMONCATS WILL USE A METHOD CALLED "RECONCILIATION" TO PASS THE BILL WITH ONLY 51 SENATE VOTES. OBAMA HAS DECIDED TO USE THE NUCLEAR OPTION TO FORCE HIS WILL ON THE AMERICAN PEOPLE. NOW YOU KNOW THAT THE DEMONCATS ATTACKED THIS SAME METHOD WHEN THEY THOUGHT THE REPUBLICANS WERE GOING TO USE IT IN 2005. BUT THAT DOESN’T MATTER TO THEM BECAUSE THEY’RE IN POWER NOW. ON TOP OF THAT HE’S GOING TO MAKE YOUNG PEOPLE WHO DON’T NEED HEALTH INSURANCE PAY TO SUPPORT ILLEGAL ALIENS WHO DON’T PAY FOR HEALTHCARE AT ALL. MAYBE YOU DON’T KNOW THIS, BUT MAKING INDIVIDUAL AMERICANS BUY HEALTH INSURANCE IS UNCONSTITUTIONAL. IT’S TRUE THAT ARTICLE I, SECTION 8 OF THE CONSITUTION GIVES CONGRESS THE POWER TO REGULATE INTERSTATE COMMERCE. BUT IN ORDER FOR THIS TO APPLY, CONGRESS MUST BE REGULATING SOME KIND OF ECONOMIC ACTIVITY. BUT A HEALTHCARE MANDATE DOESN’T REGULATE ANY SORT OF "ACTIVITY.” JUST BEING AN AMERICAN WOULD TRIGGER IT. THIS ISN’T THE FIRST TIME THAT BIG GOVERNMENT HAS TRIED TO FORCE NONSENSICAL AND DRACONIAN REGULATION ON THE AMERICAN PEOPLE. THIS WAS FRANKLIN ROOSEVELT’S APPROACH IN THE 1930s UNDER HIS SOCIALIST “NEW DEAL” PROGRAM. BUT HIS DICTATORIAL SCHEMES CAME INTO CONFLICT WITH FOUR JEWISH BROTHERS IN NEW YORK, THE SCHECHTER BROTHERS WHO RAN TWO KOSHER BUTCHER SHOPS IN BROOKLYN.

ROOSEVELT CREATED THE NATIONAL RECOVERY ADMINISTRATION (NRA) DURING THE DEPRESSION TO SOCIALIZE AMERICA. IT DREW UP ALL KINDS OF DETAILED CODES FOR INDIVIDUAL INDUSTRIES, TELLING HOW FIRMS HAD TO DO THEIR BUSINESS. THE SCHECHTER BROTHERS, THE KOSHER BUTCHERS FROM BROOKLYN, FELL UNDER RULES WHICH SAID CUSTOMERS COULD BUY A WHOLE OR HALF COOP OF CHICKENS, BUT COULDN’T MAKE A SELECTION OF PARTICULAR BIRDS. THIS WAS IN CONFLICT WITH JEWISH KOSHER LAWS, WHICH REQUIRED THE REMOVAL OF UNHEALTHY ANIMALS FROM THE STOCK. IT WAS A VIOLATION OF THEIR RELIGIOUS FREEDOM. BUT THE COURTS FOUND THE SCHECHTER BROTHERS GUILTY OF ALLOWING THEIR CUSTOMERS TO BUY INDIVIDUAL CHICKENS INSTEAD OF WHOLE COOPS AND THEY ALL SERVED JAIL TIME. BUT ON APPEAL, THE CASE MADE IT TO THE SUPREME COURT, WHERE THEY FOUND IN FAVOR OF THE SCHECHTER BROTHERS BY A UNANIMOUS DECSION. THE COURT HELD THAT FDR’S REGULATIONS WERE IN EXCESS OF CONGRESSIONAL POWER UNDER THE COMMERCE CLAUSE OF THE CONSTITUTION AND INVALIDATED THEM. SPEAKING TO AIDES OF ROOSEVELT, JUSTICE LOUIS BRANDEIS REMARKED THAT, “THIS IS THE END OF THIS BUSINESS OF CENTRALIZATION, AND I WANT YOU TO GO BACK AND TELL THE PRESIDENT THAT WE'RE NOT GOING TO LET THIS GOVERNMENT CENTRALIZE EVERYTHING.” THE SAME MESSAGE SHOULD BE SENT TO OBAMA. IT’S INTERESTING TO NOTE THAT IN THE CASE OF THE SCHECHTER BROTHERS, GOVERNMENT REGULATION CAME INTO CONFLICT WITH JEWISH DIETARY LAWS. IF THEIR LAWYERS HAD TAKEN ANOTHER TACK, THEY PROBABLY COULD HAVE WON ON THE BASIS THAT THEIR RELIGIOUS FREEDOM WAS BEING VIOLATED. BUT THIS TIME AROUND,

OBAMA THE DICTATOR HAS MADE RELIGIOUS EXEMPTIONS FOR HEALTHCARE INSURANCE. THE AMISH WON’T BE REQUIRED TO BUY HEALTH INSURANCE. CHRISTIAN SCIENTISTS WON’T BE REQUIRED TO BUY IT, AS MODERN MEDICAL CARE VIOLATES THEIR RELIGIOUS CONVICTIONS. SO HERE’S MY SUGGESTION: IF THEY CAN MAKE EXCEPTIONS FOR THESE RELIGIOUS GROUPS, LET’S FIND OTHER RELIGIOUS GROUPS THAT THEY’LL HAVE TO FIND EXCEPTIONS FOR UNTIL THERE ARE SO MANY PEOPLE EXEMPTED FROM THE SYSTEM, THAT THEY WON’T POSSIBLY BE ABLE TO PAY FOR IT. LET’S THINK ABOUT THE POSSIBILITIES:

WILL RELIGIOUS JEWS BE FORCED TO PAY FOR MEDICAL CARE ON SATURDAY, THE JEWISH SABBATH, ON WHICH THEY’RE NOT ALLOWED TO RECEIVE MEDICAL CARE?

WILL OBAMA CARE PAY FOR RELIGIOUS CIRCUMCISION IN JEWISH FAMILIES?

DEVOUT MUSLIMS ARE NOT SUPPOSED TO BE IN THE PRESENCE OF ALCOHOL? DOES THIS MEAN THEY WON’T BE ABLE TO PARTICIPATE IN AN OBAMA CARE PROGRAM WHICH COVERS ALCOHOL SWABS?

THE POSSIBILITIES ARE ENDLESS. WHAT OTHER RELIGIOUS EXEMPTIONS DO YOU THINK YOU MIGHT BE ABLE TO USE TO AVOID OBAMA’S SOCIALIZED MEDICINE PLAN? AMERICA MUST ACT QUICKLY ON THIS, BECAUSE OBAMA IS

SHOVING THIS THROUGH THE SENATE AS WE SPEAK. OBAMA’S NUCLEAR OPTION FLIES IN THE FACE OF OVER 200 YEARS OF SENATE TRADITION. REQUIRING ONLY 51 VOTES INSTEAD OF 60 FLIES IN THE FACE OF THE INTENT OF THE CONSTITUTION. WHEN THE FOUNDERS DESIGNED THE LEGISLATIVE BRANCH OF THE GOVERNMENT, THEY MADE THE HOUSE OF REPRESENTATIVES THE BODY THAT WAS MEANT TO BE DIRECTLY AND IMMEDIATELY RESPONSIVE TO THE VOTERS. THAT’S WHY THEY HAVE SHORT, TWO-YEAR TERMS. THAT’S WHY THEY REPRESENT SMALL DISTRICTS AND HAVE A MORE DIRECT RELATIONSHIP TO THE VOTERS. THE SENATE, ON THE OTHER HAND, WAS DESIGNED TO BE A MODERATING INFLUENCE ON THE PASSIONS OF THE ELECTORATE. THAT’S WHY THEY HAVE SIX-YEAR TERMS, LONGER THAN THAT OF THE PRESIDENT, SO THEY COULD WEATHER THE STORMS OF A POPULACE STIRRED UP BY A POTENTIAL DICTATOR. THAT’S WHY THEY REPRESENT ENTIRE STATES INSTEAD OF JUST DISTRICTS. UNTIL THE EARLY 20TH CENTURY, SENATORS WEREN’T EVEN ELECTED DIRECTLY BY THE VOTERS. EVEN GEORGE WASHINGTON UNDERSTOOD THAT THE SENATE WAS MEANT TO ACT AS A BULWARK AGAINST THE ACTIONS OF THOSE WHO WOULD TRY TO QUICKLY IMPOSE THEIR WILL ON THE NATION. IN A LEGENDARY CONVERSATION, THOMAS JEFFERSON HAD RETURNED FROM FRANCE AND WAS BREAKFASTING WITH WASHINGTON AS THE CONSTITUTION WAS BEING CREATED. JEFFERSON ASKED WASHINGTON WHY HE AGREED TO HAVE A SENATE. “WHY,” SAID WASHINGTON, “DID YOU JUST NOW POUR THAT COFFEE INTO YOUR CUP BEFORE DRINKING IT?” “TO COOL IT,” SAID JEFFERSON; “MY THROAT IS NOT MADE OF BRASS.” “EVEN SO,” SAID WASHINGTON, “WE POUR OUR LEGISLATION INTO THE SENATORIAL CUP TO COOL IT.”

THAT IS WHAT THE U.S. SENATE WAS DESIGNED TO DO – STOP BABY DICTATORS LIKE OBAMA FROM RUNNING TOO HOT AND PUSHING THROUGH THEIR RADICAL AGENDAS BEFORE THE PEOPLE OF THE UNITED STATES HAD A CHANCE TO UNDERSTAND WHAT WAS GOING ON. BUT OBAMA HAS DECIDED TO BLOW UP OVER 200 YEARS OF SENATE TRADITION, BLOW UP THE INTENT OF GEORGE WASHINGTON AND THOMAS JEFFERSON, AND BLOW UP THE ESSENCE OF THE CONSTITUTION IN ORDER TO PASS SOCIALIZED MEDICINE WITH THE NUCLEAR OPTION. YOU HAVE TO UNDERSTAND THAT THIS COULD BE MORE THAN JUST A DEFEAT FOR CONSERVATIVES OR REPUBLICANS. IF OBAMA SUCCEEDS IN DROPPING HIS BOMB, IT WILL DESTROY THE VERY CORE OF THE CONSTITUTION. IT’S AN ATTACK AGAINST EVERYTHING GUARANTEED BY THE BILL OF RIGHTS, EVEN THOSE CHERISHED BY LIBERALS. BECAUSE IF OBAMA CAN DESTROY ONE PART OF THE CONSTITUTION, HE CAN DESTROY ANY PART OF IT. AND DON’T THINK FOR A MINUTE THAT SOCIALIZED MEDICINE WILL BE THE LAST STOP ON THE TRAIN BOUND FOR PERDITION. © 2010 SPI

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Obamacare: Cooked Books You Can Believe In
by Deroy Murdock 03/13/2010

Wouldn’t it be nice if you could use a $100 bill to buy groceries and then deposit that same Benjamin in the bank to help pay your monthly credit card statement? Regular Americans would call this either magic or fraud. Washington Democrats call this “health care reform.” ObamaCare rests upon such double counting. It repeatedly shanghais taxpayer funds for Obama’s plan while simultaneously shielding that same money for Medicare, Social Security, and other programs. Such chicanery may explain why only 32 percent of adults support ObamaCare, according to a new Investor’s Business Daily/TIPP survey. “You can’t count a dollar twice,” Senator Charles Grassley (R – Iowa) observed at President Obama’s February 25 reform summit. “Common sense tells you that. You don’t even have to have an accountant tell you that.” Team Obama clearly ignores Grassley. They should not count a dollar twice, and yet they do.

The health care reform bill that Senate Democrats passed last Christmas Eve, for instance, would drain $464.6 billion from Medicare’s coffers to underwrite ObamaCare. However, if “these Medicare cuts are improving the solvency of Medicare,” Congressman Paul Ryan (R – Wisconsin) explained, “then you can’t use that money to spend on the creation of another government program.” Ryan, the House Budget Committee’s top Republican, said on February 28’s Fox News Sunday: “You can’t count it both for paying benefits and reducing the deficit.” The non-partisan Congressional Budget Office (CBO) likewise warned last December 23 that ObamaCare’s putative savings “would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs…” The Senate’s ObamaCare bill would take $52 billion in anticipated Social Security revenues and divert them to offset ObamaCare’s overall net cost. But wait: Those who have been promised future Social Security payments expect those $52 billion to be available to prevent their pension checks from bouncing. This bill also includes something called Community Living Services and Support. This “CLASS Act” would offer long-term-care insurance with premiums invoiced immediately, but with benefits commencing in 2016. In the interim, CBO expects a $72 billion surplus to accumulate. Congressional Democrats already have dedicated that sum to counterbalance and, thus, lower ObamaCare’s perceived cost. But the Treasury will need those same $72 billion to finance the CLASS Act’s medical services. So, which is it? Senate Budget Committee Chairman Kent Conrad (D – North Dakota) described this scam in the Washington Post as “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” Conrad is right. At its core, ObamaCare relies on Madoff-style accounting. The convicted swindler routinely took cash belonging to one group of investors and used it to pay off a different set of stakeholders. When the investors requested their money, it already was gone.

Future retirees similarly will demand their Medicare benefits. But much of that money already will have been swiped for ObamaCare. And that’s when this double counting will sparkle in all its crooked splendor. So what would un-cooking ObamaCare’s books do to its price tag? CBO says the Senate bill would reduce the federal deficit by $132 billion in its first 10 years. Rep. Ryan disputes this figure without blaming CBO. Like a scale that dutifully measures something as weighing 12 ounces, whether gold or lead, CBO loyally accepts the assumptions in the bills it analyzes, no matter their luster. “If you take all the double counting out of the bill,” Ryan told Fox News Sunday’s Chris Wallace, “this thing has a $460 billion deficit in the first 10 years, a $1.4 trillion deficit in the second 10 years.” President Obama claims his proposal “does not add one dime to the deficit.” In truth, ObamaCare just keeps the red ink coming. And it does so as deviously as possible.
Mr. Murdock, a New York-based commentator to HUMAN EVENTS, is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. http://www.humanevents.com/article.php?id=36018 _____________________________________________________________

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Obamacare vs. the United States Constitution
by Deroy Murdock 02/15/2010

Public support for ObamaCare legislation is dismal. According to a February 2 – 3 Fox News/Opinion Dynamics poll, among 900 registered voters

surveyed, only 23 percent want it enacted. Fully 70 percent disagree. Among them, 47 percent would start over, and 23 percent would do nothing. (Margin of error: +/- 3 percent.) Nonetheless, ObamaCare is like a quietly rumbling volcano -- dormant, but not yet dead. President Obama and Washington Democrats oscillate between tears over their stalled pet project and cheers that “We’re moving forward,” as Obama recently chirped. The White House’s February 25 bipartisan healthcare summit is a sulfurous puff of smoke that should worry ObamaCare opponents. Consequently, those who want to stop this ruinous measure should keep highlighting its shortcomings until this initiative is extinct. Consider, then, that ObamaCare flunks the first test of any potential federal law: It is not constitutional. ObamaCare critics deem the individual mandate unconstitutional, since Congress lacks the power to force Americans to buy anything, especially health insurance they wisely or foolishly may not want.

Congress’ legitimate power to regulate interstate commerce has been stretched like saltwater taffy. “It is one thing, however, for Congress to regulate economic activity in which individuals choose to engage; it is another to require that individuals engage in such activity,” Senator Orrin Hatch (R – Utah), former Ohio Secretary of State J. Kenneth Blackwell, and the American Civil Rights Union’s Kenneth Klukowski observed in the January 2 Wall Street Journal. “That is not a difference in degree, but instead a difference in kind.” Beyond this lies another problem. The individual mandate would be enforced by penalizing Americans $495 or 0.5 percent of Adjusted Gross Income, whichever is higher, if they do not acquire health insurance by 2014. Two years later, that fine would rise to 2 percent of AGI, equal to $640 today. Anticipated fines total some $15 billion. The IRS would collect these payments and require Americans to certify on their tax returns that they carry health coverage. This represents a “direct” tax on U.S. citizens, based solely on the status of living in America. This is not a tax on income. It is not an excise tax either, since there is no tax on any

transaction; if one refuses to purchase insurance, there is no transaction on which to slap an excise tax. As Senator John Ensign (R – Nevada) told his colleagues on the Senate floor: “Anything we have ever done, somebody actually had to have an action before we could tax or regulate it.” “Without precedent, Congress is attempting to punish the non-purchase of a private product,” says Robert Levy, senior fellow for constitutional studies at the Cato Institute, which he chairs. “That would be an intolerable affront to the Constitution and personal autonomy.” Nonetheless, the individual mandate’s IRS enforcement scheme operates, in essence, as a tax. The hitch is that Article I, Section 8 of the U.S. Constitution states: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” Section 9 adds that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” A penalty collected via the IRS would be a direct tax on individuals, independent of anything reflected in the Census or tied to enumeration of citizens among the states. As such, the individual mandate’s enforcement mechanism would fail Constitutional scrutiny. And a mandate without enforcement is just a suggestion. If ObamaCare somehow re-erupts into active status, it likely would rely on this ultimately toothless individual suggestion, which many Americans gladly would ignore. Without Washington’s capacity to pressure Americans into submission, the number of participants in ObamaCare likely would fall well below projections, and this entire, glorious experiment would implode. One of the most compelling arguments against ObamaCare is that it is selfdefeatingly unconstitutional. That is yet another reason why this menacing monster must be silenced.
Mr. Murdock, a New York-based commentator to HUMAN EVENTS, is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. http://www.humanevents.com/article.php?id=35612

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State's Rights could trump ObamaCare
Posted by Michael Laprarie Published: March 13, 2010 - 9:58 AM Earlier this week, the Oklahoma House of Representatives passed House Joint Resolution 1054, by Reps. Mike Ritze and Mike Reynolds, tentatively titled the "Freedom of Healthcare Choice Act":

Modeled after similar legislation from Arizona, the resolution is a proposed constitutional amendment allowing citizens of the state to opt out of a federal health care plan. If the resolution is passed and the amendment is voted into the Oklahoma Constitution, it would prohibit any law or rule from directly or indirectly compelling a person or employer to participate in any health care system, allowing both the individual and the health care provider to do business without penalties or fines and allow citizens to maintain private health insurance.
As the above quote indicates, several states including Arizona, Maryland, Idaho, Missouri, Virginia, and Texas have introduced measures that would amend state constitutions to stop a presumed Federal health care mandate.

At the heart of the issue is the Tenth Amendment to the US Constitution: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Opponents of a Federal health care mandate have already vowed to challenge the constitutionality of any Federal healthcare law that contains such a provision, stating that such a mandate goes far beyond the enumerated powers given to the Federal government by the Constitution. The various state healthcare freedom amendments are simply an attempt to further extend this argument.
Sadly we live in an era where proponents of an increasingly powerful Federal government have largely succeeded in turning the phrase "state's rights" into a euphemism for "racism." Because big government liberals portray themselves as the champions of progress and justice, they always view any attempt to oppose bigger government as a de facto defense of greed, injustice, and white power.

Of course any mandate by the Federal government that would force citizens to buy anything under penalty of law is simply outrageous, and deserves to be challenged on the merits of individual freedom alone. However, we should expect proponents of a Federal health care mandate to once again characterize exemption amendments by individual states as "racism," most probably by resorting to their standard "women, minorities hardest hit" argument. Even though completely undoing ObamaCare (if it is signed into law) may be difficult for a new Republican Congress in 2011, we should at least be thankful that our Constitution provides a number of effective ways for individual citizens and states to challenge the enormous Federal government power grabs attempted by the Obama Administration and the Democrats.

____________________________________________________________________ [Jonathan Adler, August 22, 2009 at 6:50pm] Trackbacks

Is ObamaCare Unconstitutional?
David Rivkin and Lee Casey argue that a federal mandate requiring all individuals to obtain health insurance would lie beyond the scope of Congress' enumerated powers. Specifically, they argue that neither the power to "regulate commerce among the several states" nor the taxing and spending power could support such an all-encompassing mandate. Here is a taste of their argument: Although the Supreme Court has interpreted Congress's commerce power expansively, this type of mandate would not pass muster even under the most aggressive commerce clause cases. In Wickard v. Filburn (1942), the court upheld a federal law regulating the national wheat markets. The law was drawn so broadly that wheat grown for consumption on individual farms also was regulated. Even though this rule reached purely local (rather than interstate) activity, the court reasoned that the consumption of homegrown wheat by individual farms would, in the aggregate, have a substantial economic effect on interstate commerce, and so was within Congress's reach. The court reaffirmed this rationale in 2005 in Gonzales v. Raich, when it validated Congress's authority to regulate the home cultivation of marijuana for personal use. In doing so, however, the justices emphasized that — as in the wheat case — "the activities regulated by the [Controlled Substances Act] are quintessentially economic." That simply would not be true with regard to an individual health insurance mandate. The otherwise uninsured would be required to buy coverage, not because they were even tangentially engaged in the "production, distribution or consumption of commodities," but for no other reason than that people without health insurance exist. The federal

government does not have the power to regulate Americans simply because they are there. Significantly, in two key cases, United States v. Lopez (1995) and United States v. Morrison (2000), the Supreme Court specifically rejected the proposition that the commerce clause allowed Congress to regulate noneconomic activities merely because, through a chain of causal effects, they might have an economic impact. These decisions reflect judicial recognition that the commerce clause is not infinitely elastic and that, by enumerating its powers, the framers denied Congress the type of general police power that is freely exercised by the states. As much as I oppose the various health care reforms promoted by the Obama Administration and current Congressional leadership (and as much as I would like to see a more restrictive commerce clause jurisprudence), I do not find this argument particularly convincing. While I agree that the recent commerce clause cases hold that Congress may not regulate noneconomic activity, as such, they also state that Congress may reach otherwise unregulable conduct as part of an overarching regulatory scheme, where the regulation of such conduct is necessary and proper to the success of such scheme. In this case, the overall scheme would involve the regulation of "commerce" as the Supreme Court has defined it for several decades, as it would involve the regulation of health care markets. And the success of such a regulatory scheme would depend upon requiring all to participate. (Among other things, if health care reform requires insurers to issue insurance to all comers, and prohibits refusals for pre-existing conditions, then a mandate is necessary to prevent opportunistic behavior by individuals who simply wait to purchase insurance until they get sick.) Jack Balkin is similarly unconvinced. I generally agree with his bottom line, but would question some of his argument as well. First, he chides Rivkin and Casey for making an argument that would effectively invalidate the New Deal. I am not sure this is true. While some post-1937 programs might be at risk, one might also distinguish Wickard on the grounds that it involved a commodity sold in interstate commerce (wheat), whereas health insurance is a service. One might also argue that there is a difference between seeking to control the conditions of any commodity sale (its price, quantity, etc.) and mandating that a sale take place. This line would be similar to that embraced in some New Deal commerce clause cases that upheld federal regulations setting conditions on the manufacture of goods sold in interstate commerce while ostensibly leaving the manufacture of goods not sold in interstate markets untouched. If I recall correctly, this line was maintained until Maryland v. Wirtz in 1968. So while The Rivkin-Casey argument is aggressive, I don't think it would completely overturn the New Deal. Balkin also chides Rivkin and Casey for citing Bailey v. Drexel Furniture, "a case from the Lochner Era," to make their case. Well, like it or not, Bailey has never been expressly overturned, and I think there's a good reason for that. In Bailey, the Court held that Congress could not use the taxing power to regulate behavior that would otherwise lie beyond the scope of the federal government's other enumerated powers. This may well be true. The problem with Bailey, then, is not its view of the taxing power, but rather the Bailey court's restrained view of the federal commerce power. What makes Bailey and other cases largely irrelevant today is that there is so little that the federal government

seeks to tax that it cannot otherwise regulate. I'd also note that it is not as if the Court is averse to relying upon other cases with Lochner-era pedigrees. Indeed, Meyer v. Nebraska and Pierce v. Society of Sisters are still good law, and each is closer kin to Lochner than Bailey, as they relied upon Lochner's substantive due process rationale. Speaking of substantive due process, there may be other constitutional problems arising from national health care reform — but not of the enumerated powers variety. While the federal government may be able to require national health insurance coverage, could it require all individuals to purchase plans that cover certain procedures? What if the guidelines for acceptable plans include contraception, abortion, and certain types of endof-life care? Could the federal government require devout Catholics to purchase such plans for themselves? Insofar as a new federal entitlement and regulatory scheme severely limits the ability of individuals to make fundamental health-related choices for themselves without undue federal interference, might it also run up against Griswold, Cruzan, etc.? So long as individuals retain a choice of health care providers such concerns may be quite marginal, but were a "public plan" to become a de facto singlepayer plan, the constitutional issue could grow. If limitations on abortion procedures must contain a health exception in order to be constitutional under Casey, would this complicate efforts to control costs by excluding some potentially life-saving treatments under s single-payer system? Of course, these sorts of arguments are more likely to come from libertarians than conservatives, as the latter may be uncomfortable with expanding the scope of the Court's fundamental rights jurisprudence. UPDATE: Calvin Massey adds his thoughts here. ________________________

Is Obama Care Unconstitutional? - Part Deux:
David Rivkin and Lee Casey are back on the WSJ editorial page, arguing once again that current health care proposals are unconstitutional. Specifically, they argue that an "individual mandate" would exceed the scope of Congressional power under current precedent. Further, they argue that this limitation cannot be avoided by using the taxing power to impose a tax on those who fail to purchase a qualifying health care plan. As with their last effort in this vein, I am unconvinced. I agree with them that an individual mandate would, in many respects, "expand the federal government’s authority over individual Americans to an unprecedented degree," but I disagree that such a mandate would be unconstitutional under current precedent, particularly if adopted as part of a comprehensive health care reform plan. There is a strong temptation to believe that every onerous or oppressive government policy is unconstitutional Were it only so. Even were the federal government confined to those powers expressly enumerated in the text, it would retain ample ability to enact many bad ideas into law, and current precedent is far more permissive. Opponents of

current health care reform proposals should defeat them the old fashioned way, through the political process, and not depend upon salvation from the courts. ____________________________________________________________________ Randy Barnett, September 18, 2009 at 12:17pm] Trackbacks

Is Mandatory Health Insurance Unconstitutional?
: In the The Politico's Arena, we are debating Rivkin and Casey's Wall Street Journal Oped that Jonathan notes below. While my take on this issue differs somewhat from his, in my contribution (here), I respond to this rather catty post by Washington & Lee law professor Timothy Stoltzfus Jost. This is what I wrote: OK, let's be old fashioned and start with what the Constitution says. After the Preamble, the very first sentence of the Constitution says "All legislative powers herein granted shall be vested in a Congress of the United States. . . ." And again the Necessary and Proper Clause gives Congress the power "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof." The Tenth Amendment is not required to see that Congressional power must be found somewhere in the document.("Tenthers"? What's next? "Firsters"? "Necessary and Proper Clausers"?Enough with the derogatory labels, already.) So where in the document is the power to mandate that individuals buy health insurance? The power "to regulate commerce . . . . among the several states"? This clause was designed to deprive states of their powers under the Articles to erect trade barriers to commerce among the several states. It accomplished this by giving Congress the exclusive power over interstate sales and transport of goods (subject to the requirement that its regulations be both "necessary and proper"). It did not reach activities that were neither commerce, nor interstate. The business of providing health insurance is now an entirely intrastate activity. Reduce... The "spending power"? There is no such enumerated power. There is only the enumerated power to tax. Laws spending tax revenues are authorized, again, if they are "necessary and proper for carrying into execution the foregoing powers." So we return to the previous issue: what enumerated end or object is Congress spending money to accomplish? But following the text of the Constitution is so Eighteenth Century. Professor Jost tells us that "a basic principle of our constitutional system for the last two centuries has been that the Supreme Court is the ultimate authority on the Constitution, and the Constitution the Court now recognizes would permit Congress to adopt health care reform." So the Supreme Court gets to rewrite the written Constitution as we go along. Never mind Dred Scott, Plessy, Korematsu and other not-so-famous Supreme Court "mistakes." The Constitution was what the Supreme Court said it was--until it changed its mind. And the Supreme Court has certainly not limited either the enumerated commerce

power or the implied spending power to the original meaning of the text. Fine. But has the the Constitution of the Supreme Court been extended to include mandating that individuals buy insurance? Professor Jost admits "the absence of a clear precedent." Really! So what has the Supreme Court's Constitution told us about the Commerce Clause Power? Professor Jost cites the medical marijuana case of Gonzales v. Raich. As Angel Raich's lawyer, who argued the case in the Supreme Court, I think the Court erred (6-3) in reading the interstate commerce power broadly enough to allow Congress to prohibit you from growing a plant in your back yard for your own consumption. By all accounts, however, this is the most far reaching interpretation of the Commerce Power ever adopted by a majority, exceeding the reach of the past champion, Wickard v. Filburn. But even the six Justices in the majority did not say that Congress had the power to mandate you grow a plant in your back yard. Do you think a majority would find that power today? Perhaps. But under Professor Jost's approach to constitutional law, we must await the Supreme Court's ruling before we know what "the Constitution" requires or prohibits. Until then, the Supreme Court's First Amendment still gives even "two former Bush officials" the right to publish their opinion that the written Constitution delegates to Congress no such power, provided of course they are not trying to influence the outcome of a federal election. Maybe a bare majority will decide this matter by reviewing the text. Stranger things have happened. After all, without any precedent standing in their way, a majority of the Supreme Court decided to follow the original meaning of the text of the Second Amendment in DC. v. Heller. And when we are done examining Congress's power to mandate that you buy a particular service--or pay a fine, er "tax"--we can then consider its power to restrict the exercise of a person's fundamental right to preserve his or her life.

http://volokh.com/archives/archive_2009_09_13-2009_09_19.shtml#1253290664 ____________________________________________________________________

Post from John McSherry's Blog:

Obama Care is Unconstitutional
Obama Care is Unconstitutional The following presentation supports the fact that Obama’s Health Care bill, H.R. 3200, or any other Health Care yet undisclosed, is Unconstitutional.

Obama’s collection of thugs; ACLU, SEIU, AARP, ACORN, Progress for America are entities of the Democratic Party, thus do not represent any governmental agency, (i.e.) Executive, Legislative or Judicial. According to the 1st. 4th and 10th Amendments, free speech represents a universal privilege free from oppression by any political or governmental entity and only the States and the People have the right to delegate powers, not the federal government. Article 1, Section 8 mentions “general welfare” which means “the state of doing well, especially in respect to good fortune, happiness, well-being, or prosperity.” The following quote was from the Webster’s Dictionary. The founding fathers saw welfare as the respect of human existence beyond that of colonial oppression. To assume that welfare implies a monetary subsidy, only applies to charitable contributions, efforts of the church to help the poor and disadvantaged and non-profit organizations. Welfare as a monetary entitlement was initiated in the 1930s with Roosevelt's so-called New Deal, but was never intended to become a subsidy allowance built upon generational dependence. What is prosperity or happiness when it is not you generating that happiness or prosperity? Welfare implies work or a force to produce welfare for others, not to use welfare without recognizing it must be returned. Social Security, Medicare and Medicaid are federal programs which fund retirement and minimal medical attention to individuals over the age of 65. Medicare is optional for those who have other insurance. The federal government also provides minimal care to military veterans and Native Americans. Unfortunately, the federal government has failed in its ability to “provide the general welfare” to our senior American citizens by bankrupting Social Security, Medicare, Medicaid and Welfare in all forms of entitlement to the disadvantaged. So if the advocates persist on focusing on the Constitutional clause on Welfare, then you know why the Constitution only sites the States and the People as delegates of power. The founding fathers realized that if the British Crown failed as a Parliamentary Power, so to would any federal power as written in the Constitution. Politics is not part of any governmental “Chain of Command”, but represents an abusive coercion where the federal government confiscates individual freedoms, to dictate instead of representing. The monumental hypocrisy is a federal dictatorial power offering health care while holding its citizens on total contempt and rebuke. Governments only survive off the resources from its citizens, where markets, trade and finances represent taxable assets; in return, the government ensures security and encouragement to its citizens to grow in prosperity. Obama’s Health Care Bill, H.R. 3200 neither offers prosperity or medical attention when the citizens are un-employed, discouraged or trivialized.

H.R. 3200, no where in the bill does it mention "R&D" (research and development) or medical improvements. That means all federal patents or royalties from federal patents will be confiscated from the corporations who discovered them. H.R. 3200, page 28, cost sharing means “rationed care” for all its citizens. As the economy collapses, any health care will be non-existent based on available resources beyond what the federal government can pay. H.R. 3200, page 41, the Health Choices Administrator is appointed by the President. As part of the Health Choices Administrator, there are some 9-10 other bureaucracies which require both funding and staffing which represents a monumental burden, yet does not represent any benefit to general health or welfare to the people. Is there any guarantee that the Health Choices Administrator will follow H.R. 3200 without bias, discrimination or prejudice? No guarantee. H.R. 3200 page 93 paragraph A, B, C - GRIEVANCE AND COMPLAINT MECHANISMS. It appears that any grievance is instant termination of services as per paragraph C (i). If the Federal government has the ability to terminate service, as similarly on page 425 with end of life services, then is this a representative government or a dictatorship? The Public Option is “No Option” where the Socialist forces within the federal government can determine who lives and who dies based on the democrats view of a “Living Constitution”. Charlie Wilson, the congressional representative of Ohio’s 6th District believes in Obama’s Czars, the tyrannical ploy of health care, wholesale murder of parental counseling and abortion, and every other socialistic initiative about to be presented to Congress. Obama care is Unconstitutional, period. When the Constitutional is dissolved by Congress, then they can do whatever, but until that point, the Constitution stands. Charlie Wilson, would you commit to dissolving the America’s Constitution? John W. McSherry – Grays’ Plutonium USN (Retired) Appalachia Ohio 6th District

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ObamaCare to “Rip This Nation to Pieces”

Posted by Brian Darling (Profile) Monday, March 8th at 9:00PM EST

Congressman Eric Massa (D-NY) gave us a glimpse into the inner workings of the House Democrat Caucus. Massa voted against ObamaCare when it came up in the House last year. He alleged on a New York radio station that he is being forced out of Congress because of his stance on ObamaCare. Aside from the validity of the allegations against him, Massa gives us a glimpse into a fight within the Democrat Caucus on the political viability of the President’s health care reform proposal. Massa shows us that there are some Democrats pleading with Speaker Pelosi (D-Ca) to back away from ObamaCare. According to Politico: Rep. Eric Massa (D-N.Y.) says the House ethics committee is investigating him for inappropriate comments he made to a male staffer on New Year’s Eve — and that he’s the victim of a power play by Democratic leaders who want him out of Congress because he’s a “no” vote on health care reform. If this is true and Democrat Leaders are forcing Massa out of Congress to help pass ObamaCare, this something that should be investigated by the House Ethics Committee. When did Democrat Leadership know about the allegations against Massa? Was the timing of the disclosure of the allegations part of a plan to help pass ObamaCare? Massa claims that the Democrat Leadership will “stop at nothing” to get what they want. More Politico: And this administration and this House leadership have said, quote-unquote, they will stop at nothing to pass this health care bill. Were they willing to force a member out of Congress to pass ObamaCare? Much of this story came from a radio broadcast of Massa on WKPQ (TH to Brietbart.tv). Massa claims that one pressure point that Dems used was to have union leaders threaten him to vote for ObamaCare or get no union money.

I have had union leaders tell me point blank we are not going to contribute to your campaign unless you vote for this health care bill. Is that or is that not a bribe? I don’t know. It seems unethical. The promise of campaign contributions for a vote for health care may be considered a quid pro quo bribe under current law. A bigger question is whether this threat was made at the behest of Members of Congress or Obama Administration officials. Massa alleges that Democrats have lost their way. They railed against Republicans for using strong arm tactics to pass bills, like the Medicare Prescription Drug Benefit, yet now they are engaging in unethical behavior to pass health care reform. The leadership of the Democratic party have become exactly what they said they were running against they have become exactly what we all ran against. This anger and rage is coming from an elected member of the Democrat party. This is a member that attended closed door meetings with leaders. One of the points Massa made is that Democrats are ignoring Republican claims that the American people do not like ObamaCare and have repeatedly rejected it. You can not effectively govern this country without the consent of governed. The entire nation has said let’s rewrite the health care bill. Let’s find what we can agree upon. No. No. No. We are going to ram this down the throats of the American people. Consent of the governed is an important concept and the Democrats have ignored the polls calling for Congress to start over and people of Massachusetts who sent Senator Scott Brown (R-MA) to the Capitol to kill ObamaCare. Massa, a Democrat, was a voice in the caucus saying to rewrite the bill and listen to the American people. The American people have lost faith in this piece of legislation and if we pass this bill using reconciliation it will tear this country to pieces. It will rip this country asunder. And I have made this argument over and over and over and over again with House Leadership. And the House leadership ignored him and others saying that reconciliation, the Health Care Nuclear Option, will destroy our nation politically. The people will be very angry and our populace will become more polarized.

I have said we are supposed to be as democrats the party of unity. We are supposed to be the party that builds consensus. We are supposed be the part that governs equally without malice towards anyone. We are supposed to be the ones that find the solutions. The promise — the covenant Democrat leadership had with the American people has been broken. They have not been the party of unity, nor the party of consensus, nor the party that governs without malice, nor the ones that find solutions. They have been the party of a faction that ignores broad based solutions in favor of using strong arm tactics to force through a left wing approach to health care reform. But instead of actually trying finding the solutions and writing a piece of legislation that will get you a 90 percent solution with 70 percent agreement among the American people. They are going to ram this bill down the throats of this country and it is going to rip this nation to pieces politically and it will be a generation for this nation to recover. These are strong words from Congressman Massa, but, his words give us some evidence that elements of the Democrat party are pleading for ObamaCare to be shelved. One may be skeptical of his claims of innocence, yet still give credence to his strong claims of unethical behavior on the part of Dem Leadership. ObamaCare is taking on some water and the bill may yet stink because of the dangerous tactics Dems have used to railroad the bill through Congress against the will of the American people.

http://www.redstate.com/brian_d/2010/03/08/obamacare-to-rip-this-nation-to-pieces/ ____________________________________________________________________

ObamaCare is Tyranny, Not Legislation
By John Frisby • Mar 18th, 2010 •

What we’re seeing in Washington, D.C. is not “politics as usual” with the arm twisting and “horse trading” that is typical in getting a bill passed; instead, it is ideological warfare. What Obama, Reid and Pelosi are doing is not legislating; it is an act of tyranny — overturning all the rules and principles of government in a representative democracy. Attempting to pass the Senate version of ObamaCare in the House under the ironically named “Slaughter Rule” (to circumvent the objections of the Stupak coalition to taxpayer funding of abortion) is an exercise in raw power akin to the many acts of judicial tyranny the American public has endured over the last 40 years from judges who have little regard for the Constitution. Apparently Obama, Reid and Pelosi aren’t worried about losing control of Congress in 2010 or even the presidency in 2012, because their higher goal is to irrevocably institutionalize their ideology. Once government control of health care is established, their leftist principles will be implemented by an unelected bureaucracy that rules without accountability to the general public, whether or not the Democratic Party is the majority in Congress or holds the presidency. Obama, Reid and Pelosi have learned nothing from history; they are as blind to their own tyranny as were King George and the British Parliament. They show no comprehension of the moral outrage that will ignite in this country if they ram through ObamaCare ObamaCare , a bill that requires taxpayer funding for abortion, usurps individual rights to choose their own personal health care options, and saddles the nation with a growing flood of debt which will drown our children and grandchildren. Last Friday morning you could see workers beginning to set up barricades around the Capitol in preparation for the demonstrations they expect in response to the Democrats’ autocratic actions. They mistakenly think that the Tea Party protests are temporary flare ups that mere barricades can contain, but their legislative and executive tyranny is unleashing emotions that have the potential to rival the anti-slavery movement of the Civil War era and the Civil Rights protests of the 1960s. Having abandoned those transcendent moral principles upon which this nation was founded for a false ideology of their own imagining, they have no understanding of the righteous fury that will build in this nation when her citizens see their government sanction morally reprehensible acts. Leaders across the nation — nearly half a million strong — have already signed the Manhattan Declaration declaring that moral principles take precedence over laws that ignore the value of human life and individual freedom. These deeply-held religious beliefs are inviolable, non-negotiable, and they are protected under the U.S. Constitution. Thousands of America’s

Orthodox, Catholic and evangelical Christian leaders have laid down a gauntlet: By reaffirming the fundamental truth that life and liberty come, not from man-made laws, but from God, we have joined together “to defend the sanctity of life, the dignity of marriage as the conjugal union of husband and wife, and the rights of conscience and religious liberty.” We have, in good faith, expressed our objections and righteous indignation over and over again only to be repeatedly rebuffed and ignored. Poll after poll demonstrates that U.S. citizens are strongly opposed to ObamaCare and its impact on our nation. Yet the Obama Obama /Reid/Pelosi axis is determined to ignore the will of the people that they were elected to represent and to dictatorially impose on the nation their ideas of what’s best. They have lived so long in the rarified air of elitism that they think the “masses” will simply accept their “superior wisdom.” These unprecedented assaults on basic American principles compel Manhattan Declaration signers to forcefully mount a defense of human life, marriage and religious freedom. Manhattan Declaration signers have said that civil disobedience is necessary when faced with gravely unjust laws requiring submission to laws that violate our principled moral beliefs about abortion, marriage, and religious freedom. As the Manhattan Declaration states, “We will fully and ungrudgingly render to Caesar what is Caesar’s. But under no circumstances will we render to Caesar what is God’s.”
Read at: http://www.americanthinker.com/2010/03/obamacare_is_tyranny_not_legis.html http://www.luxlibertas.com/obamacare-is-tyranny-not-legislation/ ____________________________________________________________________

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