Blue Dog “Compromise” A Raw Deal for America
“Senior Congressional aides cast [the agreement] as a temporary accommodation, saying leaders had not committed to support it once the bill advances to the floor of the House in the fall.”
— Associated Press story, July 30, 2009
On Wednesday, several Blue Dog Democrats announced a “compromise” agreement with Energy and Commerce Committee Chairman Waxman regarding components of health “reform” legislation (H.R. 3200). However, the broad outlines reveal few substantive changes to Democrats’ government takeover of health care:
- Cost: The agreement reportedly would reduce proposed subsidies and entitlement expansions by $100 billion. This figure would represent a reduction of only 6 percent of the $1.6 trillion in total federal spending in the bill—and would not even reduce by half the $239 billion deficit projected by the Congressional Budget Office (CBO) for the bill as introduced. Moreover, any one-time savings would not change a fundamental dynamic in which the bill, according to CBO, “would probably generate substantial increases in federal budget deficits” in future decades.
- Payment Rates: The agreement requires the government-run health plan to negotiate with doctors and hospitals to determine payment rates. However, CBO has previously noted that a similarly constructed government-run plan in the Senate HELP Committee bill “was not projected to have premiums lower than those charged by private insurance plans.” In other words, a government-run plan as constructed by the Blue Dog agreement would not lower costs, so there should be no point in including it in the bill—unless Democrats intend to use the so-called “public option” as a stalking horse for a government takeover of health care.
- Small Business Taxes: Despite attention being given to a modest increase in the small business exemption, the bill still includes a massive $544 billion tax increase on high-income filers, more than half of whom are small businesses. The agreement increases the small business exemption for the tax on jobs—i.e., the 8 percent payroll tax for employers who cannot afford to provide their workers with coverage—up to $500,000 in annual wages; firms with between $500,000 and $750,000 in total payroll would pay reduced tax rates. However, if the agreement follows the language in Section 313 of the introduced bill, the exemption would not be linked to inflation—making any exemptions increasingly irrelevant over time. Moreover, this supposed compromise on one small business tax would not diminish the impact of more than half a trillion dollars in other new taxes imposed, as noted above.
- Deficit Impact: While Blue Dogs claimed to reduce spending in the bill by $100 billion, the proposed changes to the government-run health plan would necessitate higher insurance subsidies for individuals—and increasing the small business exemption would reduce the amount of revenue the new payroll tax will generate. In other words, the changes proposed by the Blue Dogs to purportedly limit the deficit impact of the bill would be almost entirely self-defeating.
- State Share: The Blue Dog agreement calls for States to pay some share of the proposed Medicaid expansion—which would require States to pay tens of billions in matching funds to increase the current Medicaid population by 10 million individuals. However, States cannot afford their current Medicaid programs, which is why Congress included a $90 billion Medicaid bailout in the “stimulus” package. Moreover, State Governors in both parties have already voiced significant concerns about the unfunded mandates in the underlying bill, which prohibits States from reducing or otherwise modifying their existing programs in any way after the bill’s enactment.
- “Fannie Med”: Finally, the agreement calls for the introduction of co-op health plans in addition to the government-run plan. Many question whether a co-op would function as a truly independent entity, or whether the co-op could do for health care what Fannie Mae and Freddie Mac did for the housing market—dominate the marketplace based on implicit government subsidies until the federal government steps in with a bailout.
- Provisions Left Untouched: Almost as striking for what was included in the supposed “compromise” are the onerous provisions in the underlying bill that the agreement did not address:
- Abolition of the private market for individual health insurance, effective in 2013;
- Taxes on individuals who cannot afford health coverage—or do not purchase “bureaucrat-approved” plans;
- The 53 new boards, commissions, programs, and bureaucracies created in the bill as introduced;
- Harmful cuts to Medicare Advantage plans that would cause millions of seniors to lose their current coverage;
- No prohibitions on government programs denying access to life-saving treatments on cost grounds;
- New mandates on businesses and health plans that would raise, not lower, health costs;
- New government price controls throughout the health care sector; and
- Determination of required health benefits by a board of federal bureaucrats—which would likely result in federal taxpayer funding of abortion coverage.
While Republicans support reform to make health care universally affordable, this latest “compromise” will do nothing but compromise the health of millions of American families—and the fiscal health of our nation.