Pelosi Health “Reform” Still a Fiscal Train Wreck
Neither $894 Billion, Nor Deficit-Neutral
“I will not sign [health care legislation] if it adds one dime to the deficit—now or in the future. Period….The plan I’m proposing will cost around $900 billion over ten years.”
— President Obama, address to Joint Session of Congress
While the Democrat majority may attempt to assert that Speaker Pelosi’s health “reform” bill costs under $900 billion and will reduce the federal deficit, the CBO score of H.R. 3962 reveals that such claims amount to nothing more than a budgetary mirage:
- While Democrats claim their the coverage expansions total $894 billion, this figure represents the net costs of expanded coverage. The CBO score reveals total costs of the coverage expansion total $1.055 trillion—$425 billion in Medicaid costs, $605 billion in “low-income” subsidies for individuals to purchase coverage through government-run Exchanges, and $25 billion for small business tax credits. Democrats’ lower $894 billion number conveniently includes offsetting revenue from more than $150 billion in tax increases (only a portion of the $729.5 billion in total tax increases)—$33 billion from individuals who do not purchase, and $135 billion from employers that do not offer, government-forced insurance.
- The more than $1 trillion in spending on coverage expansions does not even include additional federal spending included in the legislation—including extension of Medicaid “stimulus” funding to the States, a new reinsurance program for retirees, and a $34 billion trust fund for public health—that totals $224.5 billion. When combined with the cost of the coverage expansions, total spending under the bill actually approaches $1.3 trillion.
- CBO estimated that the bill would increase State Medicaid spending by $34 billion over the next ten years—unlike prior versions of the legislation (H.R. 3200), which featured Medicaid expansions fully paid for by the federal government. Many may agree with what Tennessee Democrat Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon States—and view such mandates as a further budgetary gimmick designed to mask the true cost of a government takeover of health care.
- The Pelosi bill also relies on more than $70 billion in revenue from a new program for long-term care services. As the long-term care program requires individuals to contribute five years’ worth of premiums before becoming eligible for benefits, the program would find its revenue over the first ten years diverted to finance other spending in Democrats’ health care “reform.” However, as even Democrats, such as Senate Budget Committee Chairman Kent Conrad (D-ND), have called the program a “Ponzi scheme,” many may find any legislation that relies upon such a program to maintain “deficit-neutrality” fiscally irresponsible and not credible.
- Democrats claim their legislation is “deficit-neutral” by including in a separate bill (H.R. 3961) reforms to the Sustainable Growth Rate (SGR) mechanism for Medicare physician payments—the total cost of which stands at $285 billion over ten years, according to CBO. While Members may support reform of the SGR mechanism, many Members may oppose what amounts to an obvious attempt to hide the apparent cost of health “reform” by introducing separate legislation to repeal the SGR mechanism without paying for this more than $200 billion increase in federal spending.
- Because the Democrat SGR reform bill provides a permanent repeal to the SGR cost-containment mechanism, physician spending will rise compared to current law not only in bill’s first ten years, but in the years after 2019 as well. Thus any claim that the Pelosi bill decreases the long-term budget deficit must be viewed as highly suspect in light of the exclusion of hundreds of billions of dollars in new federal spending contained in H.R. 3961.
- In its rollout of the Pelosi bill, the Democrat majority released a one-page document claiming that “a previous Congress established the policy for paying Medicare doctors, so the update for 2010 is not a new policy to be paid for.” By this logic, future Congresses will not have to pay for any increases in federal deficits and spending associated with the Pelosi health “reform” bill—directly contradicting President Obama’s pledge that his bill would not increase the federal deficit by one dime. Regardless, many may note that adding hundreds of billions in new spending will be paid for—by America’s children and grandchildren, through mountains of new federal debt.
Adding in the more than $200 billion cost of Democrats’ stand-alone SGR legislation, the health “reform” agenda propounded by Speaker Pelosi totals more than $1.5 trillion—nearly double President Obama’s targeted figure—and would further break the President’s promise by increasing the deficit to the tune of hundreds of billions of dollars. At a time of record deficits, the multiple multi-billion dollar budgetary gimmicks in H.R. 3962 are designed solely to mask the full cost of Democrats’ government takeover of health care.